Hbt Financial, Inc. · NASDAQ:HBT
Hbt Financial — Q1 2023 Earnings Presentation
37 slides from Hbt Financial's earnings presentation, Apr 26, 2023
Slide 1: Q1 2023 Results Presentation
S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L Q1 2023 Results Presentation A p r i l 2 6 , 2023 HBT Financial, Inc.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Readers should note that in addition to the historical information contained herein, this presentation contains, and future oral and written statements of HBT Financial, Inc. (the “Company” or “HBT”) and its management may contain, "forward-looking statements" within the m
Slide 3: Q1 2023 Highlights
Q1 2023 Highlights M&A continues to contribute to value of HBT franchise ◼ Completed merger with Town and Country on February 1, 2023 ➢ Expands HBT’s Central Illinois footprint while adding exposure to St. Louis MSA ➢ Adds high performing, highly compatible commercial banking franchise with low-cost
Slide 4: Company Snapshot
Noninterest-bearing demand 28% Interest-bearing demand 30% Money Market 15% Savings 17% Time 10% Financial highlights ($mm) C&I 10% CRE–Owner occupied 10% CRE–Non-owner occupied 27% C&D 12% Multi-family 11% 1-4 Family residential 15% Agricultural & farmland 8% Municipal, consumer & other 7% Company
Slide 5: Earnings Overview
Earnings Overview 4 ($000) 1Q23 Non-GAAP Adjustments2 Adjusted 1Q232 Interest and dividend income $51,779 -- $51,779 Interest expense 4,942 -- 4,942 Net interest income 46,837 -- 46,837 Provision for credit losses 6,210 (5,924) 286 Net interest income after provision for credit losses 40,627 5,924 4
Slide 6: Deposits Overview
Deposits Overview 5 0.25% 4.69% 0.07% 0.24% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Fed Funds Rate Cost of Deposits * Deposit beta (4Q21 to 1Q23): 3.8% Source: St. Louis FRED * Annualized measure; 1 Represents quarterly average of federal funds target rate upper limit; 2 Weighted average spot interest rates d
Slide 7: Net Interest Margin
◼ First quarter 2023 net interest margin increased 10 basis points from the prior quarter, primarily due to higher yields on earning assets, more favorable earning asset mix, partially offset by increase in funding costs and decrease in nonaccrual interest recoveries ◼ 36% of the loan portfolio matu
Slide 8: Loan Portfolio Overview: Commercial and Commercial Real Estate
Loan Portfolio Overview: Commercial and Commercial Real Estate ◼ $1.61 billion portfolio as of March 31, 2023 ➢ $854 million in non-owner occupied CRE primarily supported by rental cash flow of the underlying properties ➢ $389 million in construction and land development loans primarily to developer
Slide 9: Loan Portfolio Overview: Selected Portfolios
Loan Portfolio Overview: Selected Portfolios Agriculture and Farmland ◼ $243 million portfolio as of March 31, 2023 ◼ Elevated corn and soybean prices and generally solid crop yields since 2020 improved borrower profitability ◼ Federal crop insurance programs mitigate production risks ◼ No customer
Slide 10: Loan Portfolio Overview: Adoption of CECL and Asset Quality
Loan Portfolio Overview: Adoption of CECL and Asset Quality 1Q23 ACL Activity ($000) CECL Methodology and Oversight ◼ Discounted cash flow method utilized for majority of loan segments, except weighted average remaining maturity method used for consumer loans ◼ Credit loss drivers determined by regr
Slide 11: Wealth Management Overview
Wealth Management Overview 10 Comprehensive Wealth Management Services ◼ Proprietary investment management solutions ◼ Financial planning ◼ Trust and estate administration 4.5 4.8 5.9 5.7 1.6 1.6 1.7 2.0 2.4 0.5 0.4 0.4 0.2 0.8 0.2 0.3 0.3 0.3 0.3 $6.8 $7.2 $8.4 $9.2 $2.3 $0 $1 $2 $3 $4 $5 $6 $7 $8
Slide 12: Securities Portfolio Overview
U.S. Treasury 12% Book Yield: 1.38% U.S. Gov't Agency 10% Book Yield: 2.50% Municipal 21% Book Yield: 2.05% Agency RMBS 22% Book Yield: 2.81% Agency CMBS 31% Book Yield: 1.97% Corporate 4% Book Yield: 4.09% Securities Portfolio Overview Financial data as of March 31, 2023, unless otherwise indicated
Slide 13: Capital and Liquidity Overview
Capital and Liquidity Overview CET 1 Risk-based Capital Ratio (%) Tangible Common Equity to Tangible Assets (%)1 Liquidity Sources ($000) 12.15 13.06 13.37 13.07 11.79 2019 2020 2021 2022 1Q23 9.49 9.27 8.89 8.06 7.45 2019 2020 2021 2022 1Q23 1 Non-GAAP financial measure. See “Non-GAAP Reconciliatio
Slide 14: Near-Term Outlook
Near-Term Outlook ◼ Full quarter impact of Town and Country merger expected to increase net interest income and noninterest income in 2Q23 ◼ Loan growth in low single digits on an annualized basis expected for remainder of 2023 ◼ Deposits are expected to decrease by low to mid single digits on annua
Slide 15: Our History
Our History – Long track record of organic and acquisitive growth Fred Drake named President and CEO of Heartland Bank and Trust Company and leads its entry into Bloomington-Normal 1992 1964 - 1982 George Drake purchases El Paso National Bank and assembles group of banks in rural communities in Cent
Slide 16: Town and Country Financial Corporation Merger Overview
◼ After business combination accounting adjustments, Town and Country added $906 million in assets, $635 million in loans, and $720 million in deposits ◼ Anticipated EPS accretion of 17% in first full year with cost savings (excluding transaction expenses) ◼ Short TBV dilution earnback period of 2 y
Slide 17: Our Markets
Our Markets Full-service branch locations Chicago MSA 29% Legacy HBT Central Illinois 52% Acquired from Town and Country 16% Iowa 3% Deposits Chicago MSA 40% Legacy HBT Central Illinois 31% Acquired from Town and Country 20% Iowa 9% Chicago MSA 26% Legacy HBT Central Illinois 53% Acquired from Town
Slide 18: 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 19: Experienced executive management team
Experienced executive management team with deep community ties Fred L. Drake Chairman and CEO1 40 years with Company 43 years in industry J. Lance Carter President and Chief Operating Officer1 21 years with Company 29 years in industry Lawrence J. Horvath Chief Lending Officer 13 years with Company
Slide 20: 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 • 40 years with Company • 43 years in industry J. Lance Carter Director • Director since 2011 • President and COO of HBT Financial • 21 years with Company
Slide 21: Investment Highlights
Investment Highlights 3 1 2 4 Track record of successfully integrating acquisitions Consistent performance through cycles Strong, granular, low-cost deposit base provides funding for loan growth opportunities Prudent risk management 20
Slide 22: 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% 2006 2007 2008 2009 2010 2011¹ 2012¹ 2013¹ 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: S&P Capital IQ; For 2
Slide 23: Tangible book value growth
4.69 5.38 6.10 6.91 10.15 12.56 12.93 14.72 15.33 16.25 16.23 17.27 17.80 10.54 11.12 12.29 13.13 11.94 11.45 (7.26) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q19 3Q19 2019 2020 2021 2022 1Q23 .. . . drives compelling tangible book value growth Tangible book value per share over t
Slide 24: Strong, granular, low-cost deposit base
0.17 0.21 0.29 0.14 0.07 0.07 0.33 0.60 0.87 0.48 0.21 0.36 2017 2018 2019 2020 2021 2022 HBT High Performing Peers Strong, granular, low-cost deposit base. . . Cost of deposits (%) remains consistently below peers Source: S&P Capital IQ Note: 1 Represents median of 34 high performing major exchange
Slide 25: Provides funding for loan growth opportunities
2 . . . provides funding for loan growth opportunities 24 Chicago MSA ◼ Entered market in 2011 with acquisition of Western Springs National Bank ◼ In-market disruption from recent bank M&A in Chicago MSA has provided attractive source of local talent ◼ Scale and diversity of Chicago MSA provides con
Slide 26: Track record of successfully integrating acquisitions
Track record of successfully integrating acquisitions BankPlus Morton, IL $231mm deposits 2007 2012 Bank of Illinois Normal, IL FDIC-assisted $176mm deposits Western Springs National Bank Western Springs, IL FDIC-assisted $184mm deposits 2011 Citizens First National Bank Princeton, IL FDIC-assisted
Slide 27: Prudent risk management
Prudent risk management ◼ Risk management culture instilled by management ◼ Well-diversified loan portfolio across commercial, regulatory CRE, and residential ◼ Primarily originated across in-footprint borrowers ◼ Centralized credit underwriting group that evaluates all exposures over $750,000 to en
Slide 28: Appendix
Appendix 27
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted net income and adjusted ROAA ($000) 2020 2021 2022 1Q23 Net income $36,845 $56,271 $56,456 $9,208 Adjustments: Acquisition expenses 1 -- (1,416) (1,092) (13,064) Branch closure expenses -- (748) -- -- Charges related to termination of certain employee benefit plans
Slide 30: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) ROATCE, adjusted return on average stockholders’ equity, and adjusted ROATCE ($000) 2020 2021 2022 1Q23 Total stockholders’ equity $350,703 $380,080 $383,306 $422,212 Less: goodwill (23,620) (25,057) (29,322) (49,352) Less: core deposit intangible assets (3,436) (2,
Slide 31: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) ($000) 2018 2019 2020 2021 2022 Net interest income $129,442 $133,800 $117,605 $122,403 $145,874 Tax equivalent adjustment 2,661 2,309 1,943 2,028 2,499 Net interest income (tax-equivalent basis) $132,103 $136,109 $119,548 $124,431 $148,373 Average interest-earnings
Slide 32: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Efficiency ratio (tax-equivalent basis) ($000) 2020 2021 2022 1Q23 Total noninterest expense $91,956 $91,246 $105,107 $35,933 Less: amortization of intangible assets (1,232) (1,054) (873) (510) Adjusted noninterest expense $90,724 $90,192 $104,234 $35,423 Net intere
Slide 33: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Tangible book value per share and cumulative effect of dividends (2007 to 3Q19) ($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 $349 Less go
Slide 34: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) IPO adjusted tangible book value per share ($mm) IPO Adjusted 3Q19 2019 2020 2021 2022 1Q23 Tangible book value per share Total equity $333 $364 $412 $374 $450 Less goodwill (24) (24) (29) (29) (60) Less core deposit intangible (4) (3) (2) (1) (23) Tangible common e
Slide 35: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) ($000) 2019 2020 2021 2022 1Q23 Tangible common equity Total equity $332,918 $363,917 $411,881 $373,632 $450,098 Less goodwill (23,620) (23,620) (29,322) (29,322) (59,876) Less core deposit intangible (4,030) (2,798) (1,943) (1,070) (22,842) Tangible common equity $
Slide 36: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) ($000) 2020 2021 2022 1Q23 Total deposits $3,130,534 $3,738,185 $3,587,024 $4,310,521 Less time deposits of $250,000 or more (26,687) (59,512) (27,158) (59,816) Less brokered deposits -- (4,238) -- -- Core deposits $3,103,847 $3,674,435 $3,559,866 $4,250,705 Core de
Slide 37: HBT Financial, Inc.
HBT Financial, Inc.