Slide 1: Q3 2021 Results Presentation
STRICTLY PRIVATE AND CONFIDENTIAL Q3 2021 Results Presentation October 25, 2021 HBT Financial, Inc.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this presentation are forward-looking statements. Forward-looking statements may include statements relating to our future plans, strategies and expectations, as well as the economic impact of COVID-19 and the related impacts on our future f
Slide 3: Q3 2021 highlights
Q3 2021 highlights Continued disciplined growth ◼ Total assets decreased $5 million, or 0.1%, from Q2 2021 ◼ Total loans excluding PPP loans increased 3% from Q2 2021 aided by purchases of participations of new loans originated by NXT Bank ahead of the acquisition’s Oct. 1 close ◼ Total deposits dec
Slide 4: Company snapshot
C&I 12% CRE–Owner occupied 9% Agricultural & farm land 11% CRE–Non-owner occupied 27% C&D 11% Multi-family 10% 1-4 Family residential 14% Municipal, consumer & other 6% Company snapshot ✓ Company incorporated in 1982 from base of family-owned banks and completed its IPO in October 2019 ✓ Headquarter
Slide 5: Paycheck Protection Program (PPP) Details
Paycheck Protection Program (PPP) Details PPP Loans by Portfolio as of June 30, 2021 Portfolio Balance ($000) Commercial and industrial $115,538 Agricultural and farmland $8,711 Municipal, consumer, and other $1,273 Total PPP Loans $125,522 ◼ PPP loan balances, net of deferred origination fees, tota
Slide 6: Loan Portfolio Overview: Commercial Real Estate
Loan Portfolio Overview: Commercial Real Estate ◼ $1,027 million portfolio as of September 30, 2021 ➢ $580 million in non-owner occupied CRE primarily supported by rental cash flow of the underlying properties ➢ $215 million in multi-family loans secured by 5+ unit apartment buildings ➢ $232 million
Slide 7: Loan Portfolio Overview: Commercial
Loan Portfolio Overview: Commercial ◼ $262 million C&I loans outstanding as of September 30, 2021 ➢ For working capital, asset acquisition, and other business purposes ➢ Underwritten primarily based on borrower’s cash flow and majority further supported by collateral and personal guarantees; loans b
Slide 8: Loan Portfolio Overview: Agriculture and Farmland
Loan Portfolio Overview: Agriculture and Farmland ◼ $230 million portfolio as of September 30, 2021 ◼ Significant increase in corn and soybean prices compared to 2020 will improve borrower profitability and should reduce portfolio credit risk ◼ Federal crop insurance programs mitigate production ris
Slide 9: Loan Portfolio Overview: 1-4 Family Residential Mortgage
Loan Portfolio Overview: 1-4 Family Residential Mortgage ◼ $295 million in-house portfolio as of September 30, 2021 ◼ 2.8% is rated substandard 1st Mortgages Non-owner Occupied 51% 1st Mortgages Owner Occupied 28% HELOCs and 2nd Mortgages 21% 1-4 Family Residential Loan Mix ◼ $1.03 billion sold to t
Slide 10: Loan Portfolio Overview: Municipal, Consumer and Other
Loan Portfolio Overview: Municipal, Consumer and Other ◼ $131 million portfolio as of September 30, 2021 ➢ Loans to municipalities are primarily federally tax-exempt ➢ Consumer loans include loans to individuals for consumer purposes and typically consist of small balance loans ◼ Commercial Tax-Exem
Slide 11: Loan Portfolio Overview: Asset Quality and Reserves
Loan Portfolio Overview: Asset Quality and Reserves ◼ At September 30, 2021, non-performing assets were $12.8 million, or 0.33% of total assets compared to $15.2 million, or 0.38% of total assets at June 30, 2021 ◼ Net recoveries were $21 thousand, or 0.00%, for the quarter ended September 30, 2021
Slide 12: Revolving Line Utilization Remains Below Historical Levels
Revolving Line Utilization Remains Below Historical Levels ◼ Revolving line utilization rate ticked up to 41% at September 30, 2021 compared to 39% at June 30, 2021 ◼ Revolving line utilization at September 30, 2021 was 9 percentage points below the recent peak of 50% at March 31, 2019 Revolving lin
Slide 13: Securities Portfolio Overview
U.S. Treasury 5% Yield:1.33% U.S. Gov't Agency 12% Yield: 1.64% Municipal 26% Yield: 2.03% Agency RMBS 16% Yield: 1.64% Agency CMBS 36% Yield: 1.81% Corporate 5% Yield: 3.57% Securities Portfolio Overview ◼ Company’s debt securities consist primarily of the following types of fixed income instrument
Slide 14: Net Interest Margin
◼ The low interest rate environment has pressured the net interest margin ◼ 41% of the loan portfolio matures or reprices within the next 12 months ◼ Loan mix is 65% fixed rate and 35% variable rate; 73% of variable rate loans have floors and 89% of those loans have hit their floors Net Interest Mar
Slide 15: Wealth Management Overview
Wealth Management Overview 14 Comprehensive Wealth Management Services ◼ Proprietary investment management solutions ◼ Financial planning ◼ Trust and estate administration $4.4 $4.5 $4.8 $4.3 $1.6 $1.6 $1.7 $1.3 $0.4 $0.4 $0.4 $0.2 $0.4 $0.3 $0.3 $0.2 $0.6 $0 $1 $2 $3 $4 $5 $6 $7 $8 2018 2019 2020 Q
Slide 16: Capital and Liquidity Overview
Capital and Liquidity Overview CET 1 Risk-based Capital Ratio (%) Leverage Ratio (%) Tangible Common Equity to Tangible Assets (%)1 Liquidity Sources ($000) 12.09 12.71 12.15 13.06 14.08 2017 2018 2019 2020 Q3 2021 9.94 10.80 10.38 9.94 9.83 2017 2018 2019 2020 Q3 2021 8.94 9.67 9.49 9.27 9.00 2017
Slide 17: Near-Term Outlook
Near-Term Outlook ◼ Loan balances (excluding the impact of PPP loans and acquired loans) expected to grow in the mid-single digits on an annualized basis as demand improves along with a more sustained economic recovery ➢ Disruption in the Chicago banking market following recently announced acquisiti
Slide 18: Our history
Our history Fred Drake named President and CEO of Heartland Bank and Trust Company and led its entry into Bloomington- Normal 1992 1964 - 1982 George Drake purchases El Paso National Bank and assembles group of banks in rural communities in Central IL M.B. Drake starts bank in Central IL 1920 HBT Fi
Slide 19: NXT Bancorporation Acquisition Overview
◼ As of September 30, 2021, NXT had approximately $232 million in assets, $196 million in loans, and $181 million in deposits ◼ Provides opportunity to utilize existing HBT excess liquidity to replace higher cost acquired deposits and to repurchase loan participations sold ◼ Increases loan-to-deposi
Slide 20: Our markets
Our markets Branch locations Chicago MSA 35% Mid-sized Illinois markets 65% Deposits Chicago MSA 53% Mid-sized Illinois markets 47% Loans Chicago MSA 32% Mid-sized Illinois markets 68% Branches $2.1bn $3.4bn 57 branches Note: Financial data as of September 30, 2021 19 Source: S&P Global Market Intel
Slide 21: Business strategy
Business strategy ◼ Drake family involved in Central IL banking since 1920 ◼ Management lives and works in our communities ◼ Community banking and relationship-based approach stems from adherence to our Midwestern values ◼ Committed to providing products and services to support the unique needs of o
Slide 22: Our core operating principles
Our core operating principles Continue disciplined growth ◼ Grow conservatively in our core mid-sized markets and in the Chicago MSA via organic channels and through M&A ◼ Pursue strategically compelling and financially attractive growth opportunities that are consistent with our culture Uphold our
Slide 23: Experienced executive management team with deep community ties
Experienced executive management team with deep community ties Fred L. Drake Chairman and CEO 38 years with Company 41 years in industry J. Lance Carter President and Chief Operating Officer 20 years with Company 27 years in industry Patrick F. Busch Chief Lending Officer, President of Heartland Ban
Slide 24: Talented Board of Directors
Talented Board of Directors with deep financial services industry experience Fred L. Drake Chairman • Director since 1984 • CEO of HBT Financial • 38 years with Company • 41 years in industry J. Lance Carter Director • Director since 2011 • President and COO of HBT Financial • 20 years with Company
Slide 25: Investment highlights
Investment highlights 4 1 2 3 5 Track record of successfully integrating acquisitions Consistent performance through cycles Leading market position in core mid-sized markets, with growth opportunity in the Chicago MSA Stable, low-cost deposit base Prudent risk management 24
Slide 26: Consistent performance through cycles
Consistent performance through cycles… Drivers of profitability Pre-tax return on average assets (%) 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 2.75% 3.00% Source: S&P Global Market Intelligence; For 2006 through June 30, 2012, the Company’s pre-tax ROAA does not include Linco
Slide 27: Tangible book value growth
. . . drives compelling tangible book value growth Tangible book value per share over time ($ per share)1 1 For reconciliation with GAAP metric, see “Non-GAAP reconciliations” in Appendix; 2 In 2019, HBT Financial issued and sold 9,429,794 shares of common stock at a price of $16 per share. Total pr
Slide 28: Leading market position in core mid-sized markets
Leading market position in core mid-sized markets . . . Top 3 deposit share rank in 6 of 7 largest core mid-sized markets in Central Illinois Company Market County % of Company deposits Deposits ($mm) Branches Market share Rank Population (000) Money Center share1 McLean $635 9 16.7% 2 171 10.0% DeK
Slide 29: Growth opportunity in the Chicago MSA
Loans within the Chicago MSA ($mm) CAGR of 5.1% .. . . with growth opportunity in the Chicago MSA ◼ Entered market in 2011 with acquisition of Western Springs National Bank ◼ Chicago MSA is home to >9.5mm residents, with an annual GDP >$675bn ◼ Second largest MSA in the country for middle market bus
Slide 30: Stable, low-cost deposit base
18% 19% 8% 12% 2016 2Q19 2016 1Q19 0.17% 0.16% 0.16%0.15% 0.17% 0.17% 0.18% 0.17% 0.17% 0.20% 0.23% 0.24% 0.29% 0.30% 0.29% 0.26% 0.24% 0.14% 0.11%0.09% 0.08% 0.07% 0.07% 0.27% 0.28% 0.26% 0.27% 0.26% 0.30% 0.36% 0.36% 0.40% 0.51% 0.61% 0.70% 0.76%0.85% 0.89% 0.81% 0.70% 0.48% 0.35% 0.32% 0.24% 0.20
Slide 31: Track record of successfully integrating acquisitions
Farmer City State Bank Farmer City, IL $70mm deposits Citizens First National Bank Princeton, IL FDIC-assisted $808mm deposits Track record of successfully integrating acquisitions BankPlus Morton, IL $231mm deposits 2007 2012 Bank of Illinois Normal, IL FDIC-assisted $176mm deposits Western Springs
Slide 32: Prudent risk management
Prudent risk management Framework and key policies Balance sheet composition as of September 30, 2021 Originated and acquired loans1 ($mm) ◼ Risk management culture instilled by management ◼ Well-diversified loan portfolio across commercial, regulatory CRE, and residential ◼ Primarily originated acr
Slide 33: Appendix
Appendix meet,
Slide 34: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted net income and adjusted ROAA ($000) 2018 2019 2020 3Q21 Q3-21 YTD Net income $63,799 $66,865 $36,845 $13,715 $42,677 C-Corp equivalent adjustment 2 (15,502) (13,493) -- -- -- C-Corp equivalent net income 2 $48,297 $53,372 $36,845 $13,715 $42,677 Adjustments: Acquisi
Slide 35: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Average tangible common equity and adjusted ROATCE ($000) 2018 2019 2020 3Q21 Q3-21 YTD Total stockholders’ equity $330,214 $341,544 $350,703 $380,863 $369,933 Less: goodwill (23,620) (23,620) (23,620) (23,620) (23,620) Less: core deposit intangible assets (6,256) (
Slide 36: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 2020 3Q20 4Q20 1Q21 2Q21 3Q21 Q3-21 YTD Net interest income $120,998 $129,442 $133,800 $117,605 $28,871 $29,164 $29,129 $29,700 $30,715 $89,544 Tax equivalent adjustment 5,527 2,661 2,309 1,943 495 502 503 503 508 1,514 Net interest income (tax
Slide 37: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Efficiency ratio (tax-equivalent basis) ($000) 2018 2019 2020 3Q21 Q3-21 YTD Total noninterest expense $90,317 $91,026 $91,956 $22,167 $66,685 Less: amortization of intangible assets (1,559) (1,423) (1,232) (252) (799) Adjusted noninterest expense $88,758 $89,603 $9
Slide 38: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 2020 3Q21 Q3-21 YTD Net charge-offs (recoveries) $3,082 $4,953 $1,614 $993 ($21) ($257) Net charge-offs (recoveries) -(originated) 1 2,500 3,137 732 345 (116) (650) Net charge-offs (recoveries) -(acquired) 1 582 1,816 882 648 95 393 Average loa
Slide 39: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 2020 3Q21 Non-performing loans 2 $22,102 $15,913 $19,049 $9,960 $5,528 Foreclosed assets 16,545 9,559 5,099 4,168 7,315 Non-performing assets 2 $38,647 $25,472 $24,148 $14,128 $12,843 Loans, before allowance for loan losses $2,115,946 $2,144,25
Slide 40: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Tangible book value per share and cumulative effect of dividends (2007 to 3Q19) ($mm) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q19 Tangible book value per share Total equity $109 $120 $130 $143 $197 $262 $257 $287 $311 $326 $324 $340 $349 Less go
Slide 41: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) IPO adjusted tangible book value per share ($mm) IPO Adjusted 3Q19 2019 2020 3Q21 Tangible book value per share Total equity $333 $364 $379 Less goodwill (24) (24) (24) Less core deposit intangible (4) (3) (2) Tangible common equity $305 $338 $353 Shares outstanding
Slide 42: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 2020 3Q21 Tangible common equity Total equity $323,916 $340,396 $332,918 $363,917 $378,821 Less goodwill (23,620) (23,620) (23,620) (23,620) (23,620) Less core deposit intangible (7,012) (5,453) (4,030) (2,798) (1,999) Tangible common equity $2
Slide 43: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2018 2019 2020 3Q21 Total deposits $2,795,970 $2,776,855 $3,130,534 $3,419,556 Less time deposits of $250,000 or more (36,875) (44,754) (26,687) (24,319) Less brokered deposits -- -- -- -- Core deposits $2,759,095 $2,732,101 $3,103,847 $3,395,237 Core deposit
Slide 44: HBT Financial, Inc.
HBT Financial, Inc.