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目錄

美國

證券交易委員會

華盛頓特區20549

表格 10-Q

x    根據1934年證券交易法第13或15(d)節的季度報告

截至季度結束日期的財務報告2024年9月30日

或者

o    根據1934年證券交易法第13或15(d)節的轉型報告書

過渡期從______到

委託報告文件號碼： 001-39085

HBt金融股份有限公司。

（註冊人章程中規定的確切名稱）

特拉華州			37-1117216
（國家或其他管轄區的 公司成立或組織）			（IRS僱主 唯一識別號碼）
401北海舍路 布魯明頓, 伊利諾伊州 61704			(309) 662-4444
（包括郵政編碼） 包括郵政編碼)			（註冊人電話號碼） （如有變化，請提供前名稱或前地址）

在法案第12(b)條的規定下注冊的證券：

每一類的名稱			交易標誌			在其上註冊的交易所的名稱
普通股，每股面值0.01美元			HBT			納斯達克證券交易所 LLC

請勾選以下選項以指示註冊人是否在過去12個月內(或在註冊人需要提交此類報告的較短時間內)已提交證券交易法1934年第13或15(d)條所要求提交的所有報告，並且在過去90天內已受到此類報告提交要求的影響。是 x否o

請在以下複選框內表明註冊者是否已在過去的12個月內（或註冊者被要求提交這些文件的較短期間內）提交了根據規則405 of Regulation S-T所需提交的每個交互式數據文件。是 x否o

請勾選註冊者是大型加速文件提交者、加速文件提交者、非加速文件提交者、小型報告公司還是新興增長公司。請參見《證交易法》規則120億.2 中「大型加速文件提交者」、「加速文件提交者」、「小型報告公司」和「新興增長公司」的定義。

大型加速報告人			o			加速文件提交人			x
非加速文件提交人			o			較小的報告公司			x
新興成長公司			x

如果是新興成長型企業，請勾選複選標記，表明註冊者已選擇不使用延長過渡期來符合根據證券交易法第13(a)條規定提供的任何新財務會計準則。 o

請勾選以下選項以指示註冊人是否爲外殼公司(根據交易所法規則12b-2定義)。是o否x

截至2024年10月23日，此前有 31,559,366 申報人普通股餘額爲31,559,366股，每股面值爲0.01美元。

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目錄

目錄

HBt金融股份有限公司。

						頁面
第一部分財務信息						3
第 1 項。			合併財務報表			3
			合併資產負債表			3
			合併收益表			4
			合併綜合收益表			5
			合併股東權益變動表			6
			合併現金流量表			8
			合併財務報表附註			10
第 2 項。			管理層對財務狀況和經營業績的討論和分析			59
第 3 項。			關於市場風險的定量和定性披露			95
第 4 項。			控制和程序			97
第二部分。其他信息						98
第 1 項。			法律訴訟			98
第 1A 項。			風險因素			98
第 2 項。			未註冊的股權證券銷售、所得款項的使用和發行人購買股權證券			98
第 3 項。			優先證券違約			98
第 4 項。			礦山安全披露			98
第 5 項。			其他信息			99
第 6 項。			展品			99

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關於前瞻性陳述的注意事項

本季度報告中包含一些前瞻性聲明。前瞻性聲明可能涉及我們的計劃、策略和期望，近期貸款增長、淨利息收益率、住房抵押利潤、财富管理費用、支出、資產質量、資本水平、持續盈利和流動性。前瞻性聲明通常可以通過使用"相信"，"可能"，"將"，"應當"，"可能"，"期望"，"估計"，"意圖"，"預計"，"計劃"或類似表達方式來辨識。前瞻性聲明通常基於可能實現或未能實現等假設，並承受着許多不確定性，這可能會導致實際結果與前瞻性聲明中預期的結果大不相同。可能實現或未能實現的因素以及可能從根本上並且不利地影響我們的運營結果、財務狀況或前景的因素包括但不限於：

•當地、州、國家和國際經濟的實力（包括通貨膨脹壓力和供應鏈約束的影響）；

•任何未來恐怖威脅和襲擊、廣泛傳播的疾病或大流行病、戰爭行爲或其他威脅（包括中東衝突和俄羅斯入侵烏克蘭），或其他可能導致經濟惡化或信貸市場不穩定的不利外部事件，以及地方、州和國家政府對此類不利外部事件的響應；

•會計政策和做法的變更，可能會得到州和聯邦監管機構、財務會計準則委員會或上市公司會計監督委員會的採納;

•州和聯邦法律、法規以及政府政策對公司業務的一般變化，以及對其他銀行失敗或2024年總統選舉結果的任何變化的響應。

•公司資產利率期貨和提前償還率的變化；

•金融服務領域的競爭加劇，包括來自信用合作社和「金融科技」公司等非銀行競爭對手，以及無法吸引新客戶；

•科技發展的變化和開發、維護安全可靠的電子系統的能力；

•收購的意外結果可能包括未能實現預期的收購益處以及交易成本可能大於預期;

•關鍵高管或員工的流失;

•消費支出的變化；

•公司涉及的現有或新訴訟的意外後果;

•像龍捲風、洪水和暴風雪等特殊天氣事件對經濟的影響;

•我們證券投資組合中持有的證券價值波動;

•我們貸款投資組合（包括商業房地產貸款），向某些借款人發放的大額貸款，以及來自某些客戶的超出當前FDIC限額的大額存款，這些客戶可能會撤回存款以分散風險。

•我們資產負債表上不良資產的水平；

•涉及我們的信息科技和通信系統或第三方服務提供商的中斷;

•我們信息安全控制或網絡安全概念相關事件的侵犯或失敗;

•我們的資產質量和任何貸款覈銷；

•the effects of changes in interest rates on our net interest income, net interest margin, our investments, our loan originations, and our modeling estimates relating to interest rate changes;

•our access to sources of liquidity and capital to address our liquidity needs;

•our inability to receive dividends from the Bank, pay dividends to our common stockholders or satisfy obligations as they become due;

•the effects of problems encountered by other financial institutions;

•our ability to achieve organic loan and deposit growth and the composition of such growth;

•our ability to successfully develop and commercialize new or enhanced products and services;

•current and future business, economic and market conditions in the United States ("U.S.") generally or in the States of Illinois and Iowa in particular;

•the geographic concentration of our operations in the States of Illinois and Iowa;

•our ability to attract and retain customer deposits;

•our ability to maintain the Bank’s reputation;

•possible impairment of our goodwill and other intangible assets;

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•the effectiveness of our risk management and internal disclosure controls and procedures;

•market perceptions associated with certain aspects of our business;

•our ability to meet our obligations as a public company, including our obligations under Section 404 of the Sarbanes-Oxley Act of 2002;

•our success at managing the risks involved in the foregoing items; and

•the factors discussed in "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" or elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange (“SEC”) Commission on March 6, 2024.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update any forward-looking statement in the future, or to reflect circumstances and events that occur after the date on which the forward-looking statement was made.

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PART I. FINANCIAL INFORMATION

ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS

HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

			(Unaudited)
(dollars in thousands, except per share data)			September 30, 2024						December 31, 2023
ASSETS
Cash and due from banks			$	26,776					$	26,256
Interest-bearing deposits with banks			152,895						114,996
Cash and cash equivalents			179,671						141,252
Interest-bearing time deposits with banks			—						509
Debt securities available-for-sale, at fair value			710,303						759,461
Debt securities held-to-maturity (fair value of $463,259 at 2024 and $466,496 at 2023)			505,075						521,439
Equity securities with readily determinable fair value			3,364						3,360
Equity securities with no readily determinable fair value			2,638						2,505
Restricted stock, at cost			5,086						7,160
Loans held for sale			2,959						2,318
Loans, before allowance for credit losses			3,369,830						3,404,417
Allowance for credit losses			(40,966)						(40,048)
Loans, net of allowance for credit losses			3,328,864						3,364,369
Bank owned life insurance			24,405						23,905
Bank premises and equipment, net			65,919						65,150
Bank premises held for sale			317						—
Foreclosed assets			376						852
Goodwill			59,820						59,820
Intangible assets, net			18,552						20,682
Mortgage servicing rights, at fair value			17,496						19,001
Investments in unconsolidated subsidiaries			1,614						1,614
Accrued interest receivable			24,160						24,534
Other assets			40,109						55,239
Total assets			$	4,990,728					$	5,073,170
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing			$	1,008,359					$	1,072,407
Interest-bearing			3,272,341						3,329,030
Total deposits			4,280,700						4,401,437
Securities sold under agreements to repurchase			29,029						42,442
Federal Home Loan Bank advances			13,435						12,623
Subordinated notes			39,533						39,474
Junior subordinated debentures issued to capital trusts			52,834						52,789
Other liabilities			37,535						34,909
Total liabilities			4,453,066						4,583,674
COMMITMENTS AND CONTINGENCIES (Note 14)
Stockholders' Equity
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding			—						—
Common stock, $0.01 par value; 125,000,000 shares authorized; shares issued of 32,827,039 at 2024 and 32,730,698 at 2023; shares outstanding of 31,559,366 at 2024 and 31,695,828 at 2023			328						327
Surplus			296,810						295,877
Retained earnings			302,532						269,051
Accumulated other comprehensive income (loss)			(38,989)						(57,163)
Treasury stock at cost, 1,267,673 shares at 2024 and 1,034,870 at 2023			(23,019)						(18,596)
Total stockholders’ equity			537,662						489,496
Total liabilities and stockholders’ equity			$	4,990,728					$	5,073,170

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands, except per share data)			2024						2023						2024						2023
INTEREST AND DIVIDEND INCOME
Loans, including fees:
Taxable			$	53,650					$	49,640					$	157,753					$	138,948
Federally tax exempt			1,133						1,072						3,324						3,064
Debt securities:
Taxable			6,453						6,402						18,972						19,460
Federally tax exempt			502						978						1,620						3,337
Interest-bearing deposits in bank			2,230						714						6,752						2,234
Other interest and dividend income			149						235						481						545
Total interest and dividend income			64,117						59,041						188,902						167,588
INTEREST EXPENSE
Deposits			14,649						7,211						42,375						13,908
Securities sold under agreements to repurchase			134						35						415						107
Borrowings			119						2,108						365						5,594
Subordinated notes			470						470						1,409						1,409
Junior subordinated debentures issued to capital trusts			1,012						938						2,889						2,582
Total interest expense			16,384						10,762						47,453						23,600
Net interest income			47,733						48,279						141,449						143,988
PROVISION FOR CREDIT LOSSES			603						480						2,306						6,460
Net interest income after provision for credit losses			47,130						47,799						139,143						137,528
NONINTEREST INCOME
Card income			2,753						2,763						8,254						8,326
Wealth management fees			2,670						2,381						7,840						6,998
Service charges on deposit accounts			2,081						2,040						5,852						5,830
Mortgage servicing			1,113						1,169						3,279						3,522
Mortgage servicing rights fair value adjustment			(1,488)						23						(1,505)						(460)
Gains on sale of mortgage loans			461						476						1,202						1,125
Realized gains (losses) on sales of securities			—						(813)						(3,382)						(1,820)
Unrealized gains (losses) on equity securities			136						(46)						24						(61)
Gains (losses) on foreclosed assets			(44)						550						15						443
Gains (losses) on other assets			(2)						52						(637)						161
Income on bank owned life insurance			170						153						500						415
Other noninterest income			855						742						2,499						2,362
Total noninterest income			8,705						9,490						23,941						26,841
NONINTEREST EXPENSE
Salaries			16,325						15,644						49,346						51,715
Employee benefits			2,997						2,616						8,662						7,658
Occupancy of bank premises			2,695						2,573						7,520						7,460
Furniture and equipment			446						667						1,544						2,135
Data processing			2,640						2,581						8,171						9,787
Marketing and customer relations			1,380						1,679						3,372						3,874
Amortization of intangible assets			710						720						2,130						1,950
FDIC insurance			572						512						1,697						1,705
Loan collection and servicing			476						345						1,403						971
Foreclosed assets			19						76						78						234
Other noninterest expense			3,062						3,258						9,176						13,088
Total noninterest expense			31,322						30,671						93,099						100,577
INCOME BEFORE INCOME TAX EXPENSE			24,513						26,618						69,985						63,792
INCOME TAX EXPENSE			6,333						6,903						18,477						16,396
NET INCOME			$	18,180					$	19,715					$	51,508					$	47,396
EARNINGS PER SHARE - BASIC			$	0.58					$	0.62					$	1.63					$	1.50
EARNINGS PER SHARE - DILUTED			$	0.57					$	0.62					$	1.62					$	1.49
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING			31,559,366						31,829,250						31,600,442						31,598,650

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
NET INCOME			$	18,180					$	19,715					$	51,508					$	47,396
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gains (losses) on debt securities available-for-sale			21,334						(11,326)						20,603						(12,521)
Reclassification adjustment for losses on sale of debt securities available-for-sale realized in income			—						13						3,382						1,820
Reclassification adjustment for amortization of net unrealized losses on debt securities transferred to held-to-maturity			506						518						1,495						1,483
Unrealized gains (losses) on derivative instruments			(24)						58						54						219
Reclassification adjustment for net settlements on derivative instruments			(55)						(131)						(305)						(334)
Total other comprehensive income (loss), before tax			21,761						(10,868)						25,229						(9,333)
Income tax expense (benefit)			6,094						(3,098)						7,055						(2,660)
Total other comprehensive income (loss)			15,667						(7,770)						18,174						(6,673)
TOTAL COMPREHENSIVE INCOME			$	33,847					$	11,945					$	69,682					$	40,723

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)

			Common Stock																								Accumulated Other Comprehensive Income (Loss)												Total Stockholders’ Equity
(dollars in thousands, except per share data)			Shares Outstanding						Amount						Surplus						Retained Earnings												Treasury Stock
Balance, June 30, 2024			31,559,366						$	328					$	296,430					$	290,386					$	(54,656)					$	(23,019)					$	509,469
Net income			—						—						—						18,180						—						—						18,180
Other comprehensive income			—						—						—						—						15,667						—						15,667
Stock-based compensation			—						—						380						—						—						—						380
Cash dividends and dividend equivalents ($0.19 per share)			—						—						—						(6,034)						—						—						(6,034)
Balance, September 30, 2024			31,559,366						$	328					$	296,810					$	302,532					$	(38,989)					$	(23,019)					$	537,662
Balance, June 30, 2023			31,865,868						$	327					$	294,875					$	241,777					$	(70,662)					$	(15,465)					$	450,852
Net income			—						—						—						19,715						—						—						19,715
Other comprehensive loss			—						—						—						—						(7,770)						—						(7,770)
Stock-based compensation			—						—						608						—						—						—						608
Repurchase of common stock			(91,728)						—						—						—						—						(1,712)						(1,712)
Cash dividends and dividend equivalents ($0.17 per share)			—						—						—						(5,442)						—						—						(5,442)
Balance, September 30, 2023			31,774,140						$	327					$	295,483					$	256,050					$	(78,432)					$	(17,177)					$	456,251

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
(Unaudited)

			Common Stock																								Accumulated Other Comprehensive Income (Loss)												Total Stockholders’ Equity
(dollars in thousands, except per share data)			Shares Outstanding						Amount						Surplus						Retained Earnings												Treasury Stock
Balance, December 31, 2023			31,695,828						$	327					$	295,877					$	269,051					$	(57,163)					$	(18,596)					$	489,496
Cumulative effect of change in accounting principle (ASU 2023-02)			—						—						—						116						—						—						116
Net income			—						—						—						51,508						—						—						51,508
Other comprehensive income			—						—						—						—						18,174						—						18,174
Stock-based compensation			—						—						1,265						—						—						—						1,265
Issuance of common stock upon vesting of restricted stock units, net of tax withholdings			96,341						1						(332)						—						—						—						(331)
Repurchase of common stock			(232,803)						—						—						—						—						(4,423)						(4,423)
Cash dividends and dividend equivalents ($0.57 per share)			—						—						—						(18,143)						—						—						(18,143)
Balance, September 30, 2024			31,559,366						$	328					$	296,810					$	302,532					$	(38,989)					$	(23,019)					$	537,662
Balance, December 31, 2022			28,752,626						$	293					$	222,783					$	232,004					$	(71,759)					$	(9,689)					$	373,632
Cumulative effect of change in accounting principle (ASU 2016-13)			—						—						—						(6,922)						—						—						(6,922)
Net income			—						—						—						47,396						—						—						47,396
Other comprehensive loss			—						—						—						—						(6,673)						—						(6,673)
Stock-based compensation			—						—						1,559						—						—						—						1,559
Issuance of common stock upon vesting of restricted stock units, net of tax withholdings			43,607						—						(181)						—						—						—						(181)
Issuance of common stock in Town and Country acquisition			3,378,600						34						71,322						—						—						—						71,356
Repurchase of common stock			(400,693)						—						—						—						—						(7,488)						(7,488)
Cash dividends and dividend equivalents ($0.51 per share)			—						—						—						(16,428)						—						—						(16,428)
Balance, September 30, 2023			31,774,140						$	327					$	295,483					$	256,050					$	(78,432)					$	(17,177)					$	456,251

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

			Nine Months Ended September 30,
(dollars in thousands)			2024						2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income			$	51,508					$	47,396
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense			2,207						2,362
Provision for credit losses			2,306						6,460
Net amortization of debt securities			2,886						4,391
Deferred income tax expense			361						2,492
Stock-based compensation			1,265						1,559
Net accretion of discount and deferred loan fees on loans			(5,497)						(5,312)
Net realized loss on sales of securities			3,382						1,820
Net unrealized loss (gain) on equity securities			(24)						61
Net loss (gain) on disposals of bank premises and equipment			57						(84)
Net gain on sales of bank premises held for sale			—						(75)
Impairment losses on bank premises held for sale			580						—
Net gain on sales of foreclosed assets			(105)						(632)
Write-down of foreclosed assets			90						189
Amortization of intangibles			2,130						1,950
Decrease in mortgage servicing rights			1,505						460
Amortization of discount and issuance costs on subordinated notes and debentures			104						104
Amortization of discount on Federal Home Loan Bank advances			305						275
Amortization of premium on time deposits			(86)						(330)
Mortgage loans originated for sale			(46,706)						(53,187)
Proceeds from sale of mortgage loans			47,267						52,976
Net gain on sale of mortgage loans			(1,202)						(1,125)
Increase in cash surrender value of bank owned life insurance			(500)						(408)
Decrease (increase) in accrued interest receivable			374						(828)
Decrease in other assets			5,003						12,530
Increase (decrease) in other liabilities			4,879						(20,198)
Net cash provided by operating activities			72,089						52,846
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of interest-bearing time deposits with banks			520						249
Purchase of interest-bearing time deposits with banks			(11)						(500)
Proceeds from sales of debt securities			66,812						185,280
Proceeds from sales and redemptions of equity securities			58						—
Proceeds from paydowns, maturities, and calls of debt securities			85,208						74,616
Purchase of debt securities			(67,286)						(2,640)
Purchase of equity securities			(171)						(370)
Purchase of loans			(4,448)						(49,859)
Net decrease (increase) in loans			42,815						(32,506)
Purchase of restricted stock			—						(20,143)
Proceeds from redemption of restricted stock			2,074						19,765
Purchases of bank premises and equipment			(3,930)						(1,951)
Proceeds from sales of bank premises and equipment			—						222
Proceeds from sales of bank premises held for sale			—						310
Proceeds from sales of foreclosed assets			1,143						3,274
Net cash paid for acquisition of Town and Country			—						(14,454)
Net cash provided by investing activities			122,784						161,293

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)

			Nine Months Ended September 30,
(dollars in thousands)			2024						2023
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits			(120,651)						(109,043)
Net decrease in repurchase agreements			(13,413)						(14,181)
Net decrease in short-term Federal Home Loan Bank advances			—						(69,064)
Proceeds from long-term Federal Home Loan Bank advances			907						—
Repayment of long-term Federal Home Loan Bank advances			(400)						—
Taxes paid related to the vesting of restricted stock units			(331)						(181)
Repurchase of common stock			(4,423)						(7,488)
Cash dividends and dividend equivalents paid			(18,143)						(16,428)
Net cash used in financing activities			(156,454)						(216,385)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			38,419						(2,246)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			141,252						114,159
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	179,671					$	111,913
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest			$	47,745					$	21,788
Net cash paid for income taxes			$	17,326					$	15,867
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES
Transfers of loans to foreclosed assets			$	652					$	1,049
Transfers of bank premises and equipment to bank premises held for sale			$	317					$	35

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – ACCOUNTING POLICIES

Basis of Presentation

HBT Financial, Inc. (“HBT Financial” or the “Company”) is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company (“Heartland Bank” or the “Bank”). The Bank provides a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa. Additionally, the Company is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory agencies.

The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) interim reporting requirements. Certain information in footnote disclosures normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to rules and regulations of the SEC. These interim unaudited consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 6, 2024.

The unaudited consolidated financial statements include all normal, recurring adjustments necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

The Company qualifies as an "emerging growth company" as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act permits emerging growth companies an extended transition period for complying with new or revised accounting standards affecting public companies. The Company may remain an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the completion of our initial public offering, which is December 31, 2024, (2) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues, (3) the date on which the Company is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (4) the date on which the Company has, during the previous three year period, issued, publicly or privately, more than $1.0 billion in non-convertible debt securities. The Company has elected to use the extended transition period until the Company is no longer an emerging growth company or until the Company chooses to affirmatively and irrevocably opt out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies. The Company expects to exit its status as an emerging growth company as of December 31, 2024.

Use of Estimates

The accompanying consolidated financial statements have been prepared in conformity with GAAP. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and the reported results of operations for the periods then ended.

Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit losses.

Low Income Housing Tax Credits

The Company holds an ownership interest in a limited liability company, as a limited member, that invests in affordable housing projects. This investment is designed to generate a return primarily through the realization of federal tax credits and deductions, which may be subject to recapture by taxing authorities if compliance requirements are not met. The Company accounts for its low income housing investments using the proportional amortization method.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The Company’s investment in the qualified affordable housing project meets the definition of a variable interest entity ("VIE") as the entity is structured such that the limited partner investors lack substantive voting rights. The managing member has both the power to direct the activities that most significantly impact the economic performance of the entity and the obligation to absorb losses or the right to receive benefits that could be significant to the entity. Accordingly, the Company is not the primary beneficiary and is not required to consolidate this entity. The Company's maximum exposure to loss is limited to the carrying amount of the investment, which was $7.3 million as of September 30, 2024.

Segment Reporting

The Company’s operations consist of one reportable segment. The Company’s chief operating decision maker evaluates the operations of the Company using consolidated information for purposes of allocating resources and assessing performance.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation without any impact on the reported amounts of net income or stockholders’ equity.

Subsequent Events

In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

Impact of Recently Adopted Accounting Standards

On January 1, 2024, the Company adopted ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323). ASU 2023-02 permits an election to use the proportional amortization method to account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits, regardless of the tax credit program from which the income tax credits are received, provided that certain conditions are met. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense. The Company adopted ASU 2023-02 using the modified retrospective method. The Company recorded a $0.1 million increase to retained earnings and decrease to deferred tax liability, as well as a $7.2 million increase to other assets and other liabilities, as a result of the adoption.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value and that contractual sale restrictions cannot be recognized and measured as a separate unit of account. The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years. This standard did not have an impact on the Company’s consolidated results of operations or financial position.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. ASU 2022-01 replaces the current last-of-layer hedge accounting method with an expanded portfolio layer method that permits multiple hedged layers of a single closed portfolio. The scope of the portfolio layer method is also expanded to include non-prepayable financial assets. ASU 2022-01 also provides additional guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to disclosure which are included in this standard may be applied on a prospective basis from the initial application date, or on a retrospective basis to each prior period presented after the date of adoption of the amendments in ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years. Early adoption is permitted. This standard did not have an impact on the Company’s consolidated results of operations or financial position.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 expands disclosure requirements for significant segment expenses under Topic 280. The amendments require public entities to disclose significant expense categories for each reportable segment, other segment items, the title and position of the chief operating decision-maker, and interim disclosures of certain segment-related information previously required only on an annual basis. The amendments clarify that entities reporting single segments must disclose both the new and existing segment disclosures under Topic 280, and a public entity is permitted to disclose multiple measures of segment profit or loss if certain criteria are met. The amendments in this update are effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 31, 2024. ASU 2023-07 must be applied on a retrospective basis. Early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 expands income tax disclosure requirements. The amendments require annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (loss) from continuing operations before income tax expense (benefit) disaggregated between domestic and foreign, income tax expense (benefit) from continuing operations disaggregated by federal (national), state, and foreign. The amendments also eliminate certain requirements relating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. The amendments in this update are effective for years beginning after December 15, 2024. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. Early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 2 – ACQUISITIONS

Town and Country Financial Corporation

On February 1, 2023, HBT Financial acquired 100% of the issued and outstanding common stock of Town and Country Financial Corporation (“Town and Country”), the holding company for Town and Country Bank, pursuant to an Agreement and Plan of Merger dated August 23, 2022. Under the Agreement and Plan of Merger, Town and Country merged with and into HBT Financial, with HBT Financial as the surviving entity, immediately followed by the merger of Town and Country Bank with and into Heartland Bank, with Heartland Bank as the surviving entity.

At the effective time of the merger, each share of Town and Country was converted into the right to receive, subject to the election and proration procedures as provided in the Merger Agreement, one of the following: (i) 1.9010 shares of HBT Financial’s common stock, or (ii) $35.66 in cash, or (iii) a combination of cash and HBT Financial common stock. Total consideration consisted of 3,378,600 shares of HBT Financial’s common stock and $38.0 million in cash. In lieu of fractional shares, holders of Town and Country common stock received cash. Based upon the closing price of HBT Financial common stock of $21.12 on February 1, 2023, the aggregate transaction value was approximately $109.4 million.

This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair values on the date of acquisition. Fair values are subject to refinement for up to one year after the closing date of February 1, 2023. Measurement period adjustments of $0.1 million were recorded in the third quarter of 2023 as more information became available regarding Town and Country's tax assets and liabilities. Goodwill of $30.5 million was recorded in the acquisition, which reflects expected synergies from combining the operations of HBT Financial and Town and Country, and is nondeductible for tax purposes.

The acquisition of Town and Country further enhanced HBT Financial’s footprint in central Illinois, and expanded our footprint into metro-east St. Louis. Acquisition-related expenses recognized during the nine months ended September 30, 2023 are summarized below. There were no Town and Country acquisition-related expenses recognized subsequent to the second quarter of 2023.

(dollars in thousands)						Nine Months Ended September 30, 2023
PROVISION FOR CREDIT LOSSES						$	5,924
NONINTEREST EXPENSE
Salaries						3,584
Furniture and equipment						39
Data processing						2,031
Marketing and customer relations						24
Loan collection and servicing						125
Legal fees and other noninterest expense						1,964
Total noninterest expense						7,767
Total Town and Country acquisition-related expenses						$	13,691

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The fair value of the assets acquired and liabilities assumed from Town and Country on the acquisition date of February 1, 2023 were as follows (dollars in thousands):

			Fair Value
Assets acquired:
Cash and cash equivalents			$	23,542
Interest-bearing time deposits with banks			249
Debt securities			167,869
Equity securities			301
Restricted stock			2,822
Loans held for sale			1,612
Loans, before allowance for credit losses			635,376
Allowance for credit losses			(1,247)
Loans, net of allowance for credit losses			634,129
Bank owned life insurance			15,782
Bank premises and equipment			14,828
Foreclosed assets			271
Intangible assets			22,282
Mortgage servicing rights			10,469
Investments in unconsolidated subsidiaries			449
Accrued interest receivable			3,113
Other assets			8,940
Total assets acquired			906,658
Liabilities assumed:
Deposits			720,417
FHLB advances			86,439
Junior subordinated debentures			14,949
Other liabilities			5,999
Total liabilities assumed			827,804
Net assets acquired			$	78,854
Consideration paid:
Cash			$	37,996
Common stock			71,356
Total consideration paid			$	109,352
Goodwill			$	30,498

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Of the loans acquired, there were $89.8 million which exhibited more-than-insignificant credit deterioration on the acquisition date. The following table provides a summary of these PCD loans at acquisition (dollars in thousands):

Unpaid principal balance			$	89,822
Allowance for credit losses at acquisition			(1,247)
Non-credit discount			(2,218)
Purchase price			$	86,357

Additionally, subsequent to the Town and Country acquisition, HBT Financial recognized an allowance for credit losses on non-PCD loans of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million through an increase to the provision for credit losses.

The following table provides the pro forma information for the results of operations for the three and nine months ended September 30, 2023 as if the acquisition of Town and Country had occurred on January 1, 2022. The pro forma results combine the historical results of Town and Country into HBT Financial’s consolidated statements of income, including the impact of certain acquisition accounting adjustments, which include loan discount accretion, intangible assets amortization, deposit premium amortization, and borrowing premium amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2022. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for credit losses, expense efficiencies or asset dispositions. The acquisition-related expenses that have been recognized are included in net income in the following table.

						Pro Forma
(dollars in thousands, except per share data)						Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
Total revenues (net interest income and noninterest income)						$	57,459					$	174,015
Net income						19,497						47,697
Earnings per share - basic						0.61						1.49
Earnings per share - diluted						0.61						1.49

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 3 – SECURITIES

Debt Securities

The amortized cost and fair values of debt securities, with gross unrealized gains and losses and allowance for credit losses, are as follows:

						September 30, 2024
(dollars in thousands)						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Allowance for Credit Losses						Fair Value
Available-for-sale:
U.S. Treasury						$	139,692					$	—					$	(7,320)					$	—					$	132,372
U.S. government agency						59,167						101						(1,969)						—						57,299
Municipal						154,042						15						(16,185)						—						137,872
Mortgage-backed:
Agency residential						212,551						1,007						(10,309)						—						203,249
Agency commercial						131,313						8						(10,229)						—						121,092
Corporate						61,716						96						(3,393)						—						58,419
Total available-for-sale						$	758,481					$	1,227					$	(49,405)					$	—					$	710,303
						September 30, 2024
(dollars in thousands)						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Allowance for Credit Losses
Held-to-maturity:
U.S. government agency						$	88,465					$	—					$	(6,031)					$	82,434					$	—
Municipal						36,319						353						(138)						36,534						—
Mortgage-backed:
Agency residential						88,232						21						(3,595)						84,658						—
Agency commercial						292,059						26						(32,452)						259,633						—
Total held-to-maturity						$	505,075					$	400					$	(42,216)					$	463,259					$	—

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

						December 31, 2023
(dollars in thousands)						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Allowance for Credit Losses						Fair Value
Available-for-sale:
U.S. Treasury						$	159,715					$	—					$	(11,093)					$	—					$	148,622
U.S. government agency						55,359						—						(3,262)						—						52,097
Municipal						229,030						26						(23,499)						—						205,557
Mortgage-backed:
Agency residential						188,641						61						(14,718)						—						173,984
Agency commercial						141,214						3						(14,205)						—						127,012
Corporate						57,665						9						(5,485)						—						52,189
Total available-for-sale						$	831,624					$	99					$	(72,262)					$	—					$	759,461
						December 31, 2023
(dollars in thousands)						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Allowance for Credit Losses
Held-to-maturity:
U.S. government agency						$	88,448					$	—					$	(8,292)					$	80,156					$	—
Municipal						38,442						394						(163)						38,673						—
Mortgage-backed:
Agency residential						95,828						—						(5,569)						90,259						—
Agency commercial						298,721						—						(41,313)						257,408						—
Total held-to-maturity						$	521,439					$	394					$	(55,337)					$	466,496					$	—

As of September 30, 2024 and December 31, 2023, the Bank had debt securities with a carrying value of $549.3 million and $419.4 million, respectively, which were pledged to secure public deposits, securities sold under agreements to repurchase, available borrowing capacity, and for other purposes required or permitted by law.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The amortized cost and fair value of debt securities by contractual maturity, as of September 30, 2024, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

			Available-for-Sale												Held-to-Maturity
(dollars in thousands)			Amortized Cost						Fair Value						Amortized Cost						Fair Value
Due in 1 year or less			$	50,398					$	49,930					$	4,891					$	4,873
Due after 1 year through 5 years			184,468						174,898						49,208						47,631
Due after 5 years through 10 years			157,851						142,184						68,427						64,225
Due after 10 years			21,900						18,950						2,258						2,239
Mortgage-backed:
Agency residential			212,551						203,249						88,232						84,658
Agency commercial			131,313						121,092						292,059						259,633
Total			$	758,481					$	710,303					$	505,075					$	463,259

The following table presents gross unrealized losses and fair value of debt securities available-for-sale that do not have an associated allowance for credit losses as of September 30, 2024 and December 31, 2023, aggregated by category and length of time that individual debt securities have been in a continuous unrealized loss position:

						September 30, 2024
						Investments in a Continuous Unrealized Loss Position
						Less than 12 Months												12 Months or More												Total
(dollars in thousands)						Unrealized Loss						Fair Value						Unrealized Loss						Fair Value						Unrealized Loss						Fair Value
Available-for-sale:
U.S. Treasury						$	—					$	—					$	(7,320)					$	132,372					$	(7,320)					$	132,372
U.S. government agency						(5)						2,995						(1,964)						49,468						(1,969)						52,463
Municipal						—						—						(16,185)						135,209						(16,185)						135,209
Mortgage-backed:
Agency residential						(116)						19,691						(10,193)						137,916						(10,309)						157,607
Agency commercial						(5)						2,595						(10,224)						116,421						(10,229)						119,016
Corporate						—						—						(3,393)						44,464						(3,393)						44,464
Total available-for-sale						$	(126)					$	25,281					$	(49,279)					$	615,850					$	(49,405)					$	641,131

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

						December 31, 2023
						Investments in a Continuous Unrealized Loss Position
						Less than 12 Months												12 Months or More												Total
(dollars in thousands)						Unrealized Loss						Fair Value						Unrealized Loss						Fair Value						Unrealized Loss						Fair Value
Available-for-sale:
U.S. Treasury						$	—					$	—					$	(11,093)					$	148,622					$	(11,093)					$	148,622
U.S. government agency						(2)						168						(3,260)						51,910						(3,262)						52,078
Municipal						(26)						4,749						(23,473)						194,287						(23,499)						199,036
Mortgage-backed:
Agency residential						(163)						9,354						(14,555)						156,785						(14,718)						166,139
Agency commercial						(26)						3,016						(14,179)						123,404						(14,205)						126,420
Corporate						(414)						4,361						(5,071)						45,826						(5,485)						50,187
Total available-for-sale						$	(631)					$	21,648					$	(71,631)					$	720,834					$	(72,262)					$	742,482

As of September 30, 2024, there were 627 debt securities in an unrealized loss position for a period of twelve months or more, and 13 debt securities in an unrealized loss position for a period of less than twelve months.

U.S. Treasury, U.S. government agency, and agency mortgage-backed securities are considered to have no risk of credit loss as they are either explicitly or implicitly guaranteed by the U.S. government. The changes in fair value in these portfolios are considered to be primarily driven by changes in market interest rates and other non-credit risks, such as prepayment and liquidity risks.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Municipal securities include approximately 73% general obligation bonds as of September 30, 2024, which have a very low historical default rate due to issuers generally having taxing authority to service the debt. The remainder of the municipal securities are also of high credit quality with ratings of Aa3/AA- or better. The Company evaluates credit risk through monitoring credit ratings and reviews of available financial data. The changes in fair value in these portfolios are considered to be primarily driven by changes in market interest rates and other non-credit risks, such as call and liquidity risks. The estimated allowance for credit losses for the municipal debt securities held-to-maturity was deemed insignificant.

Corporate securities include investment grade corporate and bank subordinated debt securities. The Company evaluates credit risk through monitoring credit ratings, reviews of available issuer financial data, and sector trends. During 2024, the changes in fair value in corporate securities were considered to be primarily driven by changes in market interest rates and other non-credit risks, such as call and liquidity risks. There was no allowance for credit losses recorded on corporate debt securities as of September 30, 2024 and December 31, 2023.

During the first half of 2023, a provision for credit losses of $0.8 million was recognized, related to one bank subordinated debt security reflecting heightened potential credit risk following the failures of other banks in 2023. This heightened potential credit risk was later reduced after a merger announcement by the issuer of the bank subordinated debt security and a negative provision for credit losses of $0.8 million was recorded during the third quarter of 2023.

As of September 30, 2024, the Company did not intend to sell the debt securities that are in an unrealized loss position, and it was more likely than not that the Company would recover the amortized cost prior to being required to sell the debt securities.

Accrued interest on debt securities is excluded from the estimate of credit losses and totaled $5.0 million and $6.0 million as of September 30, 2024 and December 31, 2023, respectively.

Sales of debt securities were as follows during the three and nine months ended September 30:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Proceeds from sales			$	—					$	39,436					$	66,812					$	185,280
Gross realized gains			—						—						—						—
Gross realized losses			—						(813)						(3,382)						(1,820)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Equity Securities

Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in unrealized gains (losses) on equity securities on the consolidated statements of income. The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar securities of the same issuer.

The initial cost and carrying values of equity securities, with cumulative net unrealized gains and losses were as follows:

						September 30, 2024
(dollars in thousands)						Readily Determinable Fair Value						No Readily Determinable Fair Value
Initial cost						$	3,124					$	2,973
Cumulative net unrealized gains (losses)						240						(335)
Carrying value						$	3,364					$	2,638

						December 31, 2023
(dollars in thousands)						Readily Determinable Fair Value						No Readily Determinable Fair Value
Initial cost						$	3,143					$	2,840
Cumulative net unrealized gains (losses)						217						(335)
Carrying value						$	3,360					$	2,505

As of September 30, 2024 and December 31, 2023, the cumulative net unrealized losses on equity securities with no readily determinable fair value reflect impairments of $0.2 million and downward adjustments based on observable price changes of an identical investment of $0.2 million. There have been no upward adjustments based on observable price changes to equity securities with no readily determinable fair value.

Unrealized gains (losses) on equity securities were as follows during the three and nine months ended September 30, 2024 and 2023:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Readily determinable fair value			$	136					$	(46)					$	24					$	77
No readily determinable fair value			—						—						—						(138)
Unrealized gains (losses) on equity securities			$	136					$	(46)					$	24					$	(61)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 4 – LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

Major categories of loans are summarized as follows:

(dollars in thousands)			September 30, 2024						December 31, 2023
Commercial and industrial			$	395,598					$	427,800
Commercial real estate - owner occupied			288,838						295,842
Commercial real estate - non-owner occupied			889,188						880,681
Construction and land development			359,151						363,983
Multi-family			432,712						417,923
One-to-four family residential			472,040						491,508
Agricultural and farmland			297,102						287,294
Municipal, consumer, and other			235,201						239,386
Loans, before allowance for credit losses			3,369,830						3,404,417
Allowance for credit losses			(40,966)						(40,048)
Loans, net of allowance for credit losses			$	3,328,864					$	3,364,369

Allowance for Credit Losses

Management estimates the allowance for credit losses using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The discounted cash flow method is used to estimate expected credit losses for all loan categories, except for consumer loans where the weighted average remaining maturity method is utilized.

At September 30, 2024, the economic forecast used by management anticipates an economic slowdown, but not a recession, over the next 4 quarters considered in the forecast period, with the unemployment rate increasing and GDP growth slowing and then increasing modestly. After the forecast period, the Company reverts to long-term averages over a 4-quarter reversion period. Additionally, management has made qualitative adjustments to the loss estimates to reflect other factors that influence credit losses.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables detail activity in the allowance for credit losses:

			Three Months Ended September 30, 2024
(dollars in thousands)			Commercial and Industrial						Commercial Real Estate Owner Occupied						Commercial Real Estate Non-owner Occupied						Construction and Land Development						Multi-Family						One-to-four Family Residential						Agricultural and Farmland						Municipal, Consumer, and Other						Total
Beginning balance			$	4,761					$	2,191					$	9,816					$	6,155					$	3,712					$	4,785					$	1,059					$	8,327					$	40,806
Provision for credit losses			980						36						(598)						423						78						26						226						(425)						746
Charge-offs			(734)						(6)						—						—						—						(125)						—						(236)						(1,101)
Recoveries			27						10						329						—						—						44						2						103						515
Ending balance			$	5,034					$	2,231					$	9,547					$	6,578					$	3,790					$	4,730					$	1,287					$	7,769					$	40,966
			Three Months Ended September 30, 2023
(dollars in thousands)			Commercial and Industrial						Commercial Real Estate Owner Occupied						Commercial Real Estate Non-owner Occupied						Construction and Land Development						Multi-Family						One-to-four Family Residential						Agricultural and Farmland						Municipal, Consumer, and Other						Total
Beginning balance			$	3,735					$	2,362					$	7,538					$	5,834					$	2,603					$	4,077					$	2,607					$	9,058					$	37,814
Provision for credit losses			515						(108)						248						1,004						(348)						(21)						(337)						30						983
Charge-offs			(15)						(2)						(171)						—						—						(8)						—						(216)						(412)
Recoveries			14						2						15						44						280						40						2						81						478
Ending balance			$	4,249					$	2,254					$	7,630					$	6,882					$	2,535					$	4,088					$	2,272					$	8,953					$	38,863
			Nine Months Ended September 30, 2024
(dollars in thousands)			Commercial and Industrial						Commercial Real Estate Owner Occupied						Commercial Real Estate Non-owner Occupied						Construction and Land Development						Multi-Family						One-to-four Family Residential						Agricultural and Farmland						Municipal, Consumer, and Other						Total
Beginning balance			$	4,980					$	2,272					$	7,714					$	5,998					$	3,837					$	5,204					$	975					$	9,068					$	40,048
Provision for credit losses			1,219						(49)						1,247						578						141						(470)						302						(985)						1,983
Charge-offs			(1,242)						(6)						—						—						(188)						(200)						—						(562)						(2,198)
Recoveries			77						14						586						2						—						196						10						248						1,133
Ending balance			$	5,034					$	2,231					$	9,547					$	6,578					$	3,790					$	4,730					$	1,287					$	7,769					$	40,966
			Nine Months Ended September 30, 2023
(dollars in thousands)			Commercial and Industrial						Commercial Real Estate Owner Occupied						Commercial Real Estate Non-owner Occupied						Construction and Land Development						Multi-Family						One-to-four Family Residential						Agricultural and Farmland						Municipal, Consumer, and Other						Total
Beginning balance			$	3,279					$	1,193					$	6,721					$	4,223					$	1,472					$	1,759					$	796					$	5,890					$	25,333
Adoption of ASC 326			(822)						587						501						1,969						85						797						1,567						2,299						6,983
PCD allowance established in acquisition			69						127						239						240						68						492						5						7						1,247
Provision for credit losses			1,693						336						87						398						630						939						(100)						1,021						5,004
Charge-offs			(15)						(5)						(171)						—						—						(34)						—						(508)						(733)
Recoveries			45						16						253						52						280						135						4						244						1,029
Ending balance			$	4,249					$	2,254					$	7,630					$	6,882					$	2,535					$	4,088					$	2,272					$	8,953					$	38,863

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Gross charge-offs, further sorted by origination year, were as follows during the three months ended September 30, 2024 and 2023.

			Gross Charge-Offs for the Three Months Ended September 30, 2024
			Term Loans by Origination Year																																				Revolving Loans						Revolving Loans Converted to Term						Total
(dollars in thousands)			2024						2023						2022						2021						2020						Prior
Commercial and industrial			$	—					$	734					$	—					$	—					$	—					$	—					$	—					$	—					$	734
Commercial real estate - owner occupied			6						—						—						—						—						—						—						—						6
Commercial real estate - non-owner occupied			—						—						—						—						—						—						—						—						—
Construction and land development			—						—						—						—						—						—						—						—						—
Multi-family			—						—						—						—						—						—						—						—						—
One-to-four family residential			—						—						1						—						—						124						—						—						125
Agricultural and farmland			—						—						—						—						—						—						—						—						—
Municipal, consumer, and other			154						3						5						—						—						—						74						—						236
Total			$	160					$	737					$	6					$	—					$	—					$	124					$	74					$	—					$	1,101
			Gross Charge-Offs for the Three Months Ended September 30, 2023
			Term Loans by Origination Year																																				Revolving Loans						Revolving Loans Converted to Term						Total
(dollars in thousands)			2023						2022						2021						2020						2019						Prior
Commercial and industrial			$	—					$	—					$	—					$	—					$	—					$	—					$	15					$	—					$	15
Commercial real estate - owner occupied			—						2						—						—						—						—						—						—						2
Commercial real estate - non-owner occupied			—						—						—						—						—						—						171						—						171
Construction and land development			—						—						—						—						—						—						—						—						—
Multi-family			—						—						—						—						—						—						—						—						—
One-to-four family residential			—						—						—						—						—						8						—						—						8
Agricultural and farmland			—						—						—						—						—						—						—						—						—
Municipal, consumer, and other			141						9						—						—						—						—						66						—						216
Total			$	141					$	11					$	—					$	—					$	—					$	8					$	252					$	—					$	412

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Gross charge-offs, further sorted by origination year, were as follows during the nine months ended September 30, 2024 and 2023.

			Gross Charge-Offs for the Nine Months Ended September 30, 2024
			Term Loans by Origination Year																																				Revolving Loans						Revolving Loans Converted to Term						Total
(dollars in thousands)			2024						2023						2022						2021						2020						Prior
Commercial and industrial			$	—					$	1,063					$	75					$	—					$	—					$	11					$	93					$	—					$	1,242
Commercial real estate - owner occupied			6						—						—						—						—						—						—						—						6
Commercial real estate - non-owner occupied			—						—						—						—						—						—						—						—						—
Construction and land development			—						—						—						—						—						—						—						—						—
Multi-family			—						—						—						188						—						—						—						—						188
One-to-four family residential			—						—						8						13						4						131						44						—						200
Agricultural and farmland			—						—						—						—						—						—						—						—						—
Municipal, consumer, and other			282						59						11						—						—						—						210						—						562
Total			$	288					$	1,122					$	94					$	201					$	4					$	142					$	347					$	—					$	2,198
			Gross Charge-Offs for the Nine Months Ended September 30, 2023
			Term Loans by Origination Year																																				Revolving Loans						Revolving Loans Converted to Term						Total
(dollars in thousands)			2023						2022						2021						2020						2019						Prior
Commercial and industrial			$	—					$	—					$	—					$	—					$	—					$	—					$	15					$	—					$	15
Commercial real estate - owner occupied			—						5						—						—						—						—						—						—						5
Commercial real estate - non-owner occupied			—						—						—						—						—						—						171						—						171
Construction and land development			—						—						—						—						—						—						—						—						—
Multi-family			—						—						—						—						—						—						—						—						—
One-to-four family residential			—						—						—						—						1						33						—						—						34
Agricultural and farmland			—						—						—						—						—						—						—						—						—
Municipal, consumer, and other			276						83						—						9						—						—						140						—						508
Total			$	276					$	88					$	—					$	9					$	1					$	33					$	326					$	—					$	733

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables present loans and the related allowance for credit losses by category:

						September 30, 2024
(dollars in thousands)						Commercial and Industrial						Commercial Real Estate Owner Occupied						Commercial Real Estate Non-owner Occupied						Construction and Land Development						Multi-Family						One-to-four Family Residential						Agricultural and Farmland						Municipal, Consumer, and Other						Total
Loan balances:
Collectively evaluated for impairment						$	394,583					$	288,838					$	874,417					$	358,935					$	432,712					$	466,918					$	297,102					$	224,858					$	3,338,363
Individually evaluated for impairment						1,015						—						14,771						216						—						5,122						—						10,343						31,467
Total						$	395,598					$	288,838					$	889,188					$	359,151					$	432,712					$	472,040					$	297,102					$	235,201					$	3,369,830
Allowance for credit losses:
Collectively evaluated for impairment						$	4,840					$	2,231					$	9,004					$	6,578					$	3,790					$	4,654					$	1,287					$	5,359					$	37,743
Individually evaluated for impairment						194						—						543						—						—						76						—						2,410						3,223
Total						$	5,034					$	2,231					$	9,547					$	6,578					$	3,790					$	4,730					$	1,287					$	7,769					$	40,966
						December 31, 2023
(dollars in thousands)						Commercial and Industrial						Commercial Real Estate Owner Occupied						Commercial Real Estate Non-owner Occupied						Construction and Land Development						Multi-Family						One-to-four Family Residential						Agricultural and Farmland						Municipal, Consumer, and Other						Total
Loan balances:
Collectively evaluated for impairment						$	427,528					$	295,672					$	865,394					$	363,767					$	417,608					$	486,049					$	287,150					$	224,345					$	3,367,513
Individually evaluated for impairment						272						170						15,287						216						315						5,459						144						15,041						36,904
Total						$	427,800					$	295,842					$	880,681					$	363,983					$	417,923					$	491,508					$	287,294					$	239,386					$	3,404,417
Allowance for credit losses:
Collectively evaluated for impairment						$	4,960					$	2,272					$	6,693					$	5,998					$	3,837					$	4,957					$	975					$	6,137					$	35,829
Individually evaluated for impairment						20						—						1,021						—						—						247						—						2,931						4,219
Total						$	4,980					$	2,272					$	7,714					$	5,998					$	3,837					$	5,204					$	975					$	9,068					$	40,048

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables present collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses allocated to these loans:

						September 30, 2024
						Amortized Cost																								Allowance for Credit Losses
						Primary Collateral Type
(dollars in thousands)						Real Estate						Vehicles						Other						Total
Commercial and industrial						$	—					$	973					$	42					$	1,015					$	194
Commercial real estate - owner occupied						—						—						—						—						—
Commercial real estate - non-owner occupied						14,771						—						—						14,771						543
Construction and land development						216						—						—						216						—
Multi-family						—						—						—						—						—
One-to-four family residential						5,122						—						—						5,122						76
Agricultural and farmland						—						—						—						—						—
Municipal, consumer, and other						10,329						—						14						10,343						2,410
Total						$	30,438					$	973					$	56					$	31,467					$	3,223
						December 31, 2023
						Amortized Cost																								Allowance for Credit Losses
						Primary Collateral Type
(dollars in thousands)						Real Estate						Vehicles						Other						Total
Commercial and industrial						$	—					$	37					$	235					$	272					$	20
Commercial real estate - owner occupied						170						—						—						170						—
Commercial real estate - non-owner occupied						15,287						—						—						15,287						1,021
Construction and land development						216						—						—						216						—
Multi-family						315						—						—						315						—
One-to-four family residential						5,459						—						—						5,459						247
Agricultural and farmland						144						—						—						144						—
Municipal, consumer, and other						14,978						39						24						15,041						2,931
Total						$	36,569					$	76					$	259					$	36,904					$	4,219

Accrued interest on loans is excluded from the estimate of credit losses and totaled $18.9 million and $18.4 million as of September 30, 2024 and December 31, 2023, respectively.

Past Due and Nonaccrual Status

Past due status is based on the contractual terms of the loan. Typically, loans are placed on nonaccrual when they reach 90 days past due, or when, in management’s opinion, there is reasonable doubt regarding the collection of the amounts due through the normal means of the borrower. Interest accrued and unpaid at the time a loan is placed on nonaccrual status is reversed from interest income. Interest payments received on nonaccrual loans are recognized in accordance with our significant accounting policies. Once a loan is placed on nonaccrual status, the borrower must generally demonstrate at least six months of payment performance and we must believe that all remaining principal and interest is fully collectible, before the loan is eligible to return to accrual status.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables present loans by category based on current payment and accrual status:

						September 30, 2024
						Accruing Interest
(dollars in thousands)						Current						30 - 89 Days Past Due						90+ Days Past Due						Nonaccrual						Total Loans
Commercial and industrial						$	393,371					$	1,212					$	—					$	1,015					$	395,598
Commercial real estate - owner occupied						288,838						—						—						—						288,838
Commercial real estate - non-owner occupied						887,355						—						—						1,833						889,188
Construction and land development						358,935						—						—						216						359,151
Multi-family						432,712						—						—						—						432,712
One-to-four family residential						466,096						822						—						5,122						472,040
Agricultural and farmland						296,952						150						—						—						297,102
Municipal, consumer, and other						234,942						240						5						14						235,201
Total						$	3,359,201					$	2,424					$	5					$	8,200					$	3,369,830

						December 31, 2023
						Accruing Interest
(dollars in thousands)						Current						30 - 89 Days Past Due						90+ Days Past Due						Nonaccrual						Total Loans
Commercial and industrial						$	427,300					$	228					$	—					$	272					$	427,800
Commercial real estate - owner occupied						295,672						—						—						170						295,842
Commercial real estate - non-owner occupied						878,591						255						—						1,835						880,681
Construction and land development						363,735						32						—						216						363,983
Multi-family						417,597						11						—						315						417,923
One-to-four family residential						484,969						1,735						—						4,804						491,508
Agricultural and farmland						286,820						330						—						144						287,294
Municipal, consumer, and other						239,033						252						37						64						239,386
Total						$	3,393,717					$	2,843					$	37					$	7,820					$	3,404,417

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables present nonaccrual loans with and without a related allowance for credit losses:

						September 30, 2024
(dollars in thousands)						Nonaccrual With Allowance for Credit Losses						Nonaccrual With No Allowance for Credit Losses						Total Nonaccrual
Commercial and industrial						$	522					$	493					$	1,015
Commercial real estate - owner occupied						—						—						—
Commercial real estate - non-owner occupied						—						1,833						1,833
Construction and land development						216						—						216
Multi-family						—						—						—
One-to-four family residential						350						4,772						5,122
Agricultural and farmland						—						—						—
Municipal, consumer, and other						—						14						14
Total						$	1,088					$	7,112					$	8,200
						December 31, 2023
(dollars in thousands)						Nonaccrual With Allowance for Credit Losses						Nonaccrual With No Allowance for Credit Losses						Total Nonaccrual
Commercial and industrial						$	120					$	152					$	272
Commercial real estate - owner occupied						—						170						170
Commercial real estate - non-owner occupied						188						1,647						1,835
Construction and land development						216						—						216
Multi-family						—						315						315
One-to-four family residential						14						4,790						4,804
Agricultural and farmland						—						144						144
Municipal, consumer, and other						—						64						64
Total						$	538					$	7,282					$	7,820

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Credit Quality Indicators

In June 2024, the Company updated its risk rating categories to add a special mention category to provide another level of granularity in distinguishing risk levels of loans. As of June 30, 2024, $19.5 million of the special mention loans would have been considered pass-watch and $10.6 million would have been considered substandard under the previous risk rating categories.

The Company assigns a risk rating to all loans and periodically performs detailed internal reviews of all such loans that are part of relationships with over $750 thousand in total exposure to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to review by the Company’s regulators, external loan review, and internal loan review. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the fair values of collateral securing the loans. The risk rating is reviewed annually, at a minimum, and on an as needed basis depending on the specific circumstances of the loan. These credit quality indicators are used to assign a risk rating to each individual loan. Risk ratings are grouped into the following major categories:

Pass – a pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention.

Pass-Watch – a pass-watch loan is still considered a "pass" credit and is not a classified or criticized asset, but is a reflection of a borrower who exhibits credit weaknesses or downward trends warranting close attention and increased monitoring. These potential weaknesses may result in deterioration of the repayment prospects for the loan. No loss of principal or interest is expected, and the borrower does not pose sufficient risk to warrant a special mention, substandard, or doubtful classification.

Special Mention – a special mention loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the assets or in the institution's credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard – a substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized as probable that the borrower will not pay principal and interest in accordance with the contractual terms.

Doubtful – a doubtful loan has all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. There were no loans classified as Doubtful as of September 30, 2024 and December 31, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables present loans by category based on their assigned risk ratings determined by management:

						September 30, 2024
(dollars in thousands)						Pass						Pass-Watch						Special Mention						Substandard						Total
Commercial and industrial						$	381,336					$	7,522					$	1,198					$	5,542					$	395,598
Commercial real estate - owner occupied						266,404						13,291						2,112						7,031						288,838
Commercial real estate - non-owner occupied						814,729						36,567						—						37,892						889,188
Construction and land development						335,413						22,993						—						745						359,151
Multi-family						413,055						3,875						15,782						—						432,712
One-to-four family residential						455,867						6,684						720						8,769						472,040
Agricultural and farmland						271,779						17,968						3,634						3,721						297,102
Municipal, consumer, and other						218,851						843						4,186						11,321						235,201
Total						$	3,157,434					$	109,743					$	27,632					$	75,021					$	3,369,830

						December 31, 2023
(dollars in thousands)						Pass						Pass-Watch						Substandard						Total
Commercial and industrial						$	419,494					$	7,128					$	1,178					$	427,800
Commercial real estate - owner occupied						275,649						14,072						6,121						295,842
Commercial real estate - non-owner occupied						822,012						33,283						25,386						880,681
Construction and land development						351,087						12,604						292						363,983
Multi-family						397,951						19,656						316						417,923
One-to-four family residential						472,355						6,671						12,482						491,508
Agricultural and farmland						280,867						3,071						3,356						287,294
Municipal, consumer, and other						222,474						1,721						15,191						239,386
Total						$	3,241,889					$	98,206					$	64,322					$	3,404,417

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Risk ratings of loans, further sorted by origination year, are as follows as of September 30, 2024:

(dollars in thousands)						Term Loans by Origination Year																																				Revolving Loans						Revolving Loans Converted to Term						Total
						2024						2023						2022						2021						2020						Prior
Commercial and industrial
Pass						$	33,752					$	51,453					$	51,936					$	13,003					$	19,879					$	37,876					$	170,093					$	3,344					$	381,336
Pass-Watch						680						1,470						257						1,189						85						2,459						1,183						199						7,522
Special Mention						—						289						301						182						—						—						426						—						1,198
Substandard						37						1,994						1,083						772						—						—						812						844						5,542
Total						$	34,469					$	55,206					$	53,577					$	15,146					$	19,964					$	40,335					$	172,514					$	4,387					$	395,598
Commercial real estate - owner occupied
Pass						$	29,821					$	25,311					$	60,189					$	45,088					$	41,576					$	47,197					$	17,040					$	182					$	266,404
Pass-Watch						4,197						476						2,231						4,473						547						1,367						—						—						13,291
Special Mention						1,926						—						—						—						—						—						186						—						2,112
Substandard						—						1,004						561						3,580						1,348						538						—						—						7,031
Total						$	35,944					$	26,791					$	62,981					$	53,141					$	43,471					$	49,102					$	17,226					$	182					$	288,838
Commercial real estate - non-owner occupied
Pass						$	58,586					$	115,444					$	250,564					$	225,220					$	89,131					$	66,324					$	8,227					$	1,233					$	814,729
Pass-Watch						3,677						430						6,681						6,831						839						4,920						13,189						—						36,567
Special Mention						—						—						—						—						—						—						—						—						—
Substandard						4,844						13,431						6,638						—						—						12,979						—						—						37,892
Total						$	67,107					$	129,305					$	263,883					$	232,051					$	89,970					$	84,223					$	21,416					$	1,233					$	889,188
Construction and land development
Pass						$	140,878					$	88,022					$	72,878					$	21,229					$	840					$	1,374					$	9,931					$	261					$	335,413
Pass-Watch						—						638						8,748						12,097						—						18						695						797						22,993
Special Mention						—						—						—						—						—						—						—						—						—
Substandard						475						—						216						—						—						54						—						—						745
Total						$	141,353					$	88,660					$	81,842					$	33,326					$	840					$	1,446					$	10,626					$	1,058					$	359,151
Multi-family
Pass						$	27,106					$	85,056					$	100,132					$	102,243					$	51,365					$	42,226					$	4,087					$	840					$	413,055
Pass-Watch						2,799						—						570						—						—						500						—						6						3,875
Special Mention						6,978						—						—						—						8,804						—						—						—						15,782
Substandard						—						—						—						—						—						—						—						—						—
Total						$	36,883					$	85,056					$	100,702					$	102,243					$	60,169					$	42,726					$	4,087					$	846					$	432,712
One-to-four family residential
Pass						$	33,280					$	89,297					$	85,760					$	73,658					$	59,745					$	48,968					$	59,643					$	5,516					$	455,867
Pass-Watch						1,245						1,363						625						441						520						2,160						187						143						6,684
Special Mention						—						—						—						598						122						—						—						—						720
Substandard						203						620						962						628						386						5,429						16						525						8,769
Total						$	34,728					$	91,280					$	87,347					$	75,325					$	60,773					$	56,557					$	59,846					$	6,184					$	472,040
Agricultural and farmland
Pass						$	35,985					$	37,170					$	32,799					$	29,367					$	28,589					$	9,421					$	97,650					$	798					$	271,779
Pass-Watch						275						2,683						1,424						1,454						511						844						10,689						88						17,968
Special Mention						137						609						600						—						1,100						—						938						250						3,634
Substandard						331						—						47						10						3,183						—						—						150						3,721
Total						$	36,728					$	40,462					$	34,870					$	30,831					$	33,383					$	10,265					$	109,277					$	1,286					$	297,102

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(dollars in thousands)						Term Loans by Origination Year																																				Revolving Loans						Revolving Loans Converted to Term						Total
						2024						2023						2022						2021						2020						Prior
Municipal, Consumer, and other
Pass						$	67,066					$	37,483					$	14,694					$	23,992					$	13,178					$	39,562					$	22,876					$	—					$	218,851
Pass-Watch						—						41						25						13						—						764						—						—						843
Special Mention						—						—						—						—						—						4,163						23						—						4,186
Substandard						50						23						38						—						—						11,207						3						—						11,321
Total						$	67,116					$	37,547					$	14,757					$	24,005					$	13,178					$	55,696					$	22,902					$	—					$	235,201
Total by Risk Rating
Pass						$	426,474					$	529,236					$	668,952					$	533,800					$	304,303					$	292,948					$	389,547					$	12,174					$	3,157,434
Pass-Watch						12,873						7,101						20,561						26,498						2,502						13,032						25,943						1,233						109,743
Special Mention						9,041						898						901						780						10,026						4,163						1,573						250						27,632
Substandard						5,940						17,072						9,545						4,990						4,917						30,207						831						1,519						75,021
Total						$	454,328					$	554,307					$	699,959					$	566,068					$	321,748					$	340,350					$	417,894					$	15,176					$	3,369,830

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Risk ratings of loans, further sorted by origination year, are as follows as of December 31, 2023:

(dollars in thousands)						Term Loans by Origination Year																																				Revolving Loans						Revolving Loans Converted to Term						Total
						2023						2022						2021						2020						2019						Prior
Commercial and industrial
Pass						$	90,931					$	58,364					$	19,283					$	26,816					$	5,269					$	29,550					$	187,579					$	1,702					$	419,494
Pass-Watch						2,025						1,340						892						144						753						471						956						547						7,128
Substandard						111						73						327						60						—						—						323						284						1,178
Total						$	93,067					$	59,777					$	20,502					$	27,020					$	6,022					$	30,021					$	188,858					$	2,533					$	427,800
Commercial real estate - owner occupied
Pass						$	27,516					$	64,229					$	55,376					$	53,634					$	32,469					$	28,876					$	13,549					$	—					$	275,649
Pass-Watch						4,061						943						5,210						1,474						1,573						811						—						—						14,072
Substandard						2,734						86						1,550						64						164						1,523						—						—						6,121
Total						$	34,311					$	65,258					$	62,136					$	55,172					$	34,206					$	31,210					$	13,549					$	—					$	295,842
Commercial real estate - non-owner occupied
Pass						$	121,536					$	240,323					$	237,953					$	88,894					$	82,094					$	39,228					$	10,274					$	1,710					$	822,012
Pass-Watch						810						6,893						7,013						353						4,230						154						13,585						245						33,283
Substandard						13,376						124						286						—						2,410						9,190						—						—						25,386
Total						$	135,722					$	247,340					$	245,252					$	89,247					$	88,734					$	48,572					$	23,859					$	1,955					$	880,681
Construction and land development
Pass						$	153,499					$	119,005					$	56,954					$	5,596					$	2,662					$	796					$	12,050					$	525					$	351,087
Pass-Watch						153						10,750						—						—						—						—						163						1,538						12,604
Substandard						—						216						—						—						—						76						—						—						292
Total						$	153,652					$	129,971					$	56,954					$	5,596					$	2,662					$	872					$	12,213					$	2,063					$	363,983
Multi-family
Pass						$	83,898					$	81,507					$	115,402					$	53,126					$	34,053					$	23,570					$	5,904					$	491					$	397,951
Pass-Watch						3,111						7,197						—						8,821						51						468						—						8						19,656
Substandard						—						—						316						—						—						—						—						—						316
Total						$	87,009					$	88,704					$	115,718					$	61,947					$	34,104					$	24,038					$	5,904					$	499					$	417,923
One-to-four family residential
Pass						$	105,337					$	91,636					$	82,289					$	64,094					$	21,986					$	44,241					$	57,248					$	5,524					$	472,355
Pass-Watch						2,382						286						940						486						212						1,804						203						358						6,671
Substandard						1,507						1,527						623						646						1,037						4,166						64						2,912						12,482
Total						$	109,226					$	93,449					$	83,852					$	65,226					$	23,235					$	50,211					$	57,515					$	8,794					$	491,508
Agricultural and farmland
Pass						$	52,766					$	37,600					$	36,604					$	33,960					$	8,910					$	7,756					$	100,486					$	2,785					$	280,867
Pass-Watch						953						361						425						30						71						719						172						340						3,071
Substandard						—						—						13						3,199						—						144						—						—						3,356
Total						$	53,719					$	37,961					$	37,042					$	37,189					$	8,981					$	8,619					$	100,658					$	3,125					$	287,294
Municipal, Consumer, and other
Pass						$	43,575					$	57,404					$	27,904					$	14,342					$	1,016					$	42,499					$	35,734					$	—					$	222,474
Pass-Watch						9						6						13						—						—						1,693						—						—						1,721
Substandard						51						103						2						6						8						15,012						8						1						15,191
Total						$	43,635					$	57,513					$	27,919					$	14,348					$	1,024					$	59,204					$	35,742					$	1					$	239,386
Total by Risk Rating
Pass						$	679,058					$	750,068					$	631,765					$	340,462					$	188,459					$	216,516					$	422,824					$	12,737					$	3,241,889
Pass-Watch						13,504						27,776						14,493						11,308						6,890						6,120						15,079						3,036						98,206
Substandard						17,779						2,129						3,117						3,975						3,619						30,111						395						3,197						64,322
Total						$	710,341					$	779,973					$	649,375					$	355,745					$	198,968					$	252,747					$	438,298					$	18,970					$	3,404,417

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Modifications

There were no loan modifications to borrowers in financial distress during the three and nine months ended September 30, 2024 and 2023. There were no modified loans to borrowers in financial distress outstanding as of September 30, 2024 and December 31, 2023.

Pledged Loans

As of September 30, 2024 and December 31, 2023, the Company pledged loans totaling $1.88 billion and $1.20 billion, respectively, to the Federal Home Loan Bank of Chicago (“FHLB”) to secure available FHLB advance borrowing capacity.

NOTE 5 – LOAN SERVICING

Mortgage loans serviced for others, which are not included in the accompanying consolidated balance sheets, amounted to $1.58 billion and $1.66 billion as of September 30, 2024 and December 31, 2023, respectively. Activity in mortgage servicing rights was as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Beginning balance			$	18,984					$	20,133					$	19,001					$	10,147
Acquired			—						—						—						10,469
Capitalized servicing rights			198						227						538						526
Fair value adjustments attributable to payments and principal reductions			(598)						(631)						(1,569)						(1,621)
Fair value adjustments attributable to changes in valuation inputs and assumptions			(1,088)						427						(474)						635
Ending balance			$	17,496					$	20,156					$	17,496					$	20,156

NOTE 6 – FORECLOSED ASSETS

Foreclosed assets activity was as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Beginning balance			$	320					$	3,080					$	852					$	3,030
Acquired			—						—						—						271
Transfers from loans			278						879						652						1,049
Proceeds from sales			(178)						(2,990)						(1,143)						(3,274)
Net gain on sales			10						564						105						632
Direct write-downs			(54)						(14)						(90)						(189)
Ending balance			$	376					$	1,519					$	376					$	1,519

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Gains (losses) on foreclosed assets included the following:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Direct write-downs			$	(54)					$	(14)					$	(90)					$	(189)
Net gain on sales			10						564						105						632
Gains (losses) on foreclosed assets			$	(44)					$	550					$	15					$	443

As of September 30, 2024, there were $0.2 million foreclosed one-to-four family residential real estate properties held. As of December 31, 2023, the carrying value of foreclosed one-to-four family residential real estate properties was $0.1 million.

As of September 30, 2024, there were 24 one-to-four family residential real estate loans in the process of foreclosure totaling $1.9 million. As of December 31, 2023, there were 16 one-to-four family residential real estate loans in the process of foreclosure totaling $1.2 million.

NOTE 7 – DEPOSITS

The Company’s deposits are summarized below:

(dollars in thousands)			September 30, 2024						December 31, 2023
Noninterest-bearing deposits			$	1,008,359					$	1,072,407
Interest-bearing deposits:
Interest-bearing demand			1,076,445						1,145,092
Money market			795,150						803,381
Savings			566,783						608,424
Time			803,964						627,253
Brokered			29,999						144,880
Total interest-bearing deposits			3,272,341						3,329,030
Total deposits			$	4,280,700					$	4,401,437

Reciprocal deposits included in interest-bearing demand deposits, money market deposits, and time deposits totaled $214.2 million and $236.8 million as of September 30, 2024 and December 31, 2023, respectively. The aggregate amounts of time deposits in denominations of $250 thousand or more amounted to $214.1 million and $130.2 million as of September 30, 2024 and December 31, 2023, respectively. The aggregate amounts of time deposits in denominations of $100 thousand or more amounted to $472.7 million and $342.8 million as of September 30, 2024 and December 31, 2023, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The components of interest expense on deposits were as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Interest-bearing demand			$	1,408					$	761					$	4,148					$	1,902
Money market			4,726						2,026						14,193						4,467
Savings			396						249						1,232						616
Time			7,702						3,275						20,744						6,011
Brokered			417						900						2,058						912
Total interest expense on deposits			$	14,649					$	7,211					$	42,375					$	13,908

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are negotiated contracts entered into by two issuing counterparties containing specific agreement terms, including the underlying instrument, amount, exercise price, and maturities. The derivatives accounting guidance requires that the Company recognize all derivative financial instruments as either assets or liabilities at fair value in the consolidated balance sheets. The Company may utilize interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position.

Interest Rate Swaps Designated as Cash Flow Hedges

The Company designated certain interest rate swap agreements as cash flow hedges on variable-rate borrowings. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on interest rate swaps designated as cash flow hedging instruments, net of tax, is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings.

The interest rate swap agreements designated as cash flow hedges were as follows:

			September 30, 2024												December 31, 2023
(dollars in thousands)			Notional Amount						Fair Value						Notional Amount						Fair Value
Fair value recorded in other assets			$	7,000					$	71					$	17,000					$	322

As of September 30, 2024, the interest rate swap agreement designated as a cash flow hedge matures in April 2025. As of September 30, 2024 and December 31, 2023, counterparties had cash pledged and held on deposit by the Company of $0.4 million and $0.6 million, respectively.

The effect of interest rate swap agreements designated as cash flow hedges on the consolidated statements of income was as follows:

Location of gross gain (loss) reclassified from accumulated other comprehensive income (loss) to income						Amounts of gross gain (loss) reclassified from accumulated other comprehensive income (loss)												Amounts of gross gain (loss) reclassified from accumulated other comprehensive income (loss)
						Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)						2024						2023						2024						2023
Designated as cash flow hedges:
Junior subordinated debentures interest expense						$	55					$	131					$	305					$	334

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Interest Rate Swaps Not Designated as Hedging Instruments

The Company may offer interest rate swap agreements to its commercial borrowers in connection with their risk management needs. The Company manages the interest rate risk associated with these contracts by entering into an equal and offsetting derivative with a third-party financial institution. While these interest rate swap agreements generally work together as an economic interest rate hedge, the Company did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.

The interest rate swap agreements not designated as hedging instruments were as follows:

			September 30, 2024												December 31, 2023
(dollars in thousands)			Notional Amount						Fair Value						Notional Amount						Fair Value
Fair value recorded in other assets:
Interest rate swaps with a commercial borrower counterparty			$	—					$	—					$	—					$	—
Interest rate swaps with a financial institution counterparty			80,621						3,651						94,497						6,227
Total fair value recorded in other assets			$	80,621					$	3,651					$	94,497					$	6,227
Fair value recorded in other liabilities:
Interest rate swaps with a commercial borrower counterparty			$	80,621					$	(3,651)					$	94,497					$	(6,227)
Interest rate swaps with a financial institution counterparty			—						—						—						—
Total fair value recorded in other liabilities			$	80,621					$	(3,651)					$	94,497					$	(6,227)

As of September 30, 2024, the interest rate swap agreements not designated as hedging instruments had contractual maturities between 2027 and 2035.

The effect of interest rate contracts not designated as hedging instruments recognized in other noninterest income on the consolidated statements of income was as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Not designated as hedging instruments:
Gross gains			$	5,554					$	2,510					$	8,375					$	6,950
Gross losses			(5,554)						(2,510)						(8,375)						(6,950)
Net gains (losses)			$	—					$	—					$	—					$	—

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 9 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the activity and accumulated balances for components of other comprehensive income (loss):

						Unrealized Gains (Losses) on Debt Securities
(dollars in thousands)						Available-for-Sale						Held-to-Maturity						Derivatives						Total
Three Months Ended September 30, 2024
Balance, June 30, 2024						$	(46,658)					$	(7,841)					$	(157)					$	(54,656)
Other comprehensive income (loss) before reclassifications						21,334						—						(24)						21,310
Reclassifications						—						506						(55)						451
Other comprehensive income (loss), before tax						21,334						506						(79)						21,761
Income tax expense (benefit)						5,974						142						(22)						6,094
Other comprehensive income (loss), after tax						15,360						364						(57)						15,667
Balance, September 30, 2024						$	(31,298)					$	(7,477)					$	(214)					$	(38,989)
Three Months Ended September 30, 2023
Balance, June 30, 2023						$	(61,560)					$	(9,256)					$	154					$	(70,662)
Other comprehensive income (loss) before reclassifications						(11,326)						—						58						(11,268)
Reclassifications						13						518						(131)						400
Other comprehensive income (loss), before tax						(11,313)						518						(73)						(10,868)
Income tax expense (benefit)						(3,224)						147						(21)						(3,098)
Other comprehensive income (loss), after tax						(8,089)						371						(52)						(7,770)
Balance, September 30, 2023						$	(69,649)					$	(8,885)					$	102					$	(78,432)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

						Unrealized Gains (Losses) on Debt Securities
(dollars in thousands)						Available-for-Sale						Held-to-Maturity						Derivatives						Total
Nine Months Ended September 30, 2024
Balance, December 31, 2023						$	(48,579)					$	(8,549)					$	(35)					$	(57,163)
Other comprehensive income before reclassifications						20,603						—						54						20,657
Reclassifications						3,382						1,495						(305)						4,572
Other comprehensive income (loss), before tax						23,985						1,495						(251)						25,229
Income tax expense (benefit)						6,704						423						(72)						7,055
Other comprehensive income (loss), after tax						17,281						1,072						(179)						18,174
Balance, September 30, 2024						$	(31,298)					$	(7,477)					$	(214)					$	(38,989)
Nine Months Ended September 30, 2023
Balance, December 31, 2022						$	(61,998)					$	(9,946)					$	185					$	(71,759)
Other comprehensive income (loss) before reclassifications						(12,521)						—						219						(12,302)
Reclassifications						1,820						1,483						(334)						2,969
Other comprehensive income (loss), before tax						(10,701)						1,483						(115)						(9,333)
Income tax expense (benefit)						(3,050)						422						(32)						(2,660)
Other comprehensive income (loss), after tax						(7,651)						1,061						(83)						(6,673)
Balance, September 30, 2023						$	(69,649)					$	(8,885)					$	102					$	(78,432)

Reclassifications from accumulated other comprehensive income (loss) for unrealized gains (losses) on debt securities available-for-sale are included in either gains (losses) on sales of securities or provision for credit losses in the accompanying consolidated statements of income.

Reclassifications from accumulated other comprehensive income (loss) for unrealized gains on debt securities held-to-maturity are included in securities interest income in the accompanying consolidated statements of income.

Reclassifications from accumulated other comprehensive income (loss) for the fair value of derivative financial instruments represent net interest payments received or made on derivatives designated as cash flow hedges. See Note 8 for additional information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 10 – EARNINGS PER SHARE

The Company previously granted restricted stock units that contained non-forfeitable rights to dividend equivalents which were considered participating securities. Prior to 2024, these restricted stock units were included in the calculation of basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.

Diluted earnings per share is computed using the treasury stock method and reflects the potential dilution from the Company’s outstanding restricted stock units and performance restricted stock units.

The following table sets forth the computation of basic and diluted earnings per share:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Numerator:
Net income			$	18,180					$	19,715					$	51,508					$	47,396
Earnings allocated to participating securities			—						(10)						—						(26)
Numerator for earnings per share - basic and diluted			$	18,180					$	19,705					$	51,508					$	47,370
Denominator:
Weighted average common shares outstanding			31,559,366						31,829,250						31,600,442						31,598,650
Dilutive effect of outstanding restricted stock units			118,180						137,187						115,266						102,574
Weighted average common shares outstanding, including all dilutive potential shares			31,677,546						31,966,437						31,715,708						31,701,224
Earnings per share - Basic			$	0.58					$	0.62					$	1.63					$	1.50
Earnings per share - Diluted			$	0.57					$	0.62					$	1.62					$	1.49

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 11 – STOCK-BASED COMPENSATION PLANS

The Company has adopted the HBT Financial, Inc. Omnibus Incentive Plan (the “Omnibus Incentive Plan”). The Omnibus Incentive Plan provides for grants of (i) stock options, (ii) stock appreciation rights, (iii) restricted shares, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards and (vii) other cash-based awards to eligible employees, non-employee directors and consultants of the Company. The maximum number of shares of common stock available for issuance under the Omnibus Incentive Plan is 1,820,000 shares.

The following is a summary of stock-based compensation expense (benefit):

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Restricted stock units			$	263					$	313					$	798					$	907
Performance restricted stock units			117						295						467						652
Total awards classified as equity			380						608						1,265						1,559
Stock appreciation rights			64						3						5						(43)
Total stock-based compensation expense			$	444					$	611					$	1,270					$	1,516

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Restricted Stock Units

A restricted stock unit grants a participant the right to receive one share of the Company’s common stock, following the completion of the requisite service period. Restricted stock units are classified as equity. Compensation cost is based on the Company’s stock price on the grant date and is recognized on a straight-line basis over the service period for the entire award. Dividend equivalents on restricted stock units, which are either accrued until vested, are classified as dividends charged to retained earnings.

During the nine months ended September 30, 2024 and 2023, the total grant date fair value of the restricted stock units granted was $1.0 million and $1.0 million, respectively, based on the grant date closing prices. The total intrinsic value of restricted stock units that vested during the nine months ended September 30, 2024 and 2023 was $1.4 million and $1.1 million, respectively.

The following is a summary of restricted stock unit activity:

			Three Months Ended September 30,
			2024												2023
			Restricted Stock Units						Weighted Average Grant Date Fair Value						Restricted Stock Units						Weighted Average Grant Date Fair Value
Beginning balance			108,865						$	19.71					129,422						$	19.58
Granted			—						—						—						—
Vested			—						—						—						—
Forfeited			(131)						19.06						(520)						21.23
Ending balance			108,734						$	19.71					128,902						$	19.57
			Nine Months Ended September 30,
			2024												2023
			Restricted Stock Units						Weighted Average Grant Date Fair Value						Restricted Stock Units						Weighted Average Grant Date Fair Value
Beginning balance			128,159						$	19.56					139,986						$	18.01
Granted			51,246						19.06						41,847						22.72
Vested			(70,540)						18.96						(51,693)						17.91
Forfeited			(131)						19.06						(1,238)						18.53
Ending balance			108,734						$	19.71					128,902						$	19.57

As of September 30, 2024, unrecognized compensation cost related to the non-vested restricted stock units was $1.1 million. This cost is expected to be recognized over the weighted average remaining service period of 1.6 years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Performance Restricted Stock Units

A performance restricted stock unit is similar to a restricted stock unit, except that the number of shares of the Company’s common stock awarded is based on a performance condition and the completion of the requisite service period. The number of shares of the Company’s common stock that may be earned ranges from 0% to 150% of the number of performance restricted stock units granted. Performance restricted stock units are classified as equity. Compensation cost is based on the Company’s stock price on the grant date and an assessment of the probable outcome of the performance condition. Compensation cost is recognized on a straight-line basis over the service period of the entire award. Changes in the performance condition probability assessment result in cumulative catch-up adjustments to the compensation cost recognized. Dividend equivalents on performance restricted stock units, which are accrued until vested, are classified as dividends charged to retained earnings.

During the nine months ended September 30, 2024 and 2023, the total fair value of the performance restricted stock units granted was $0.4 million and $0.4 million, respectively, based on the grant date closing prices and an assessment of the probable outcome of the performance condition on the grant date. The total intrinsic value of performance restricted stock units that vested during the nine months ended September 30, 2024 was $0.8 million.

The following is a summary of performance restricted stock unit activity:

			Three Months Ended September 30,
			2024												2023
			Performance Restricted Stock Units						Weighted Average Grant Date Fair Value						Performance Restricted Stock Units						Weighted Average Grant Date Fair Value
Beginning balance			70,333						$	19.59					79,097						$	18.25
Granted			—						—						—						—
Adjustment for performance condition			—						—						—						—
Vested			—						—						—						—
Forfeited			—						—						—						—
Ending balance			70,333						$	19.59					79,097						$	18.25
			Nine Months Ended September 30,
			2024												2023
			Performance Restricted Stock Units						Weighted Average Grant Date Fair Value						Performance Restricted Stock Units						Weighted Average Grant Date Fair Value
Beginning balance			79,097						$	18.25					62,067						$	17.02
Granted			19,933						19.06						17,030						22.72
Adjustment for performance condition			14,349						15.53						—						—
Vested			(43,046)						15.53						—						—
Forfeited			—						—						—						—
Ending balance			70,333						$	19.59					79,097						$	18.25

As of September 30, 2024, unrecognized compensation cost related to non-vested performance restricted stock units was $0.4 million, based on the current assessment of the probable outcome of the performance conditions. This cost is expected to be recognized over the weighted average remaining service period of 1.3 years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Stock Appreciation Rights

A stock appreciation right grants a participant the right to receive an amount of cash, the value of which equals the appreciation in the Company’s stock price between the grant date and the exercise date. Stock appreciation rights are classified as liabilities. The liability is based on an option-pricing model used to estimate the fair value of the stock appreciation rights. Compensation cost for non-vested stock appreciation rights is recognized on a straight line basis over the service period of the entire award.

The following is a summary of stock appreciation rights activity:

			Three Months Ended September 30,
			2024												2023
			Stock Appreciation Rights Outstanding						Weighted Average Grant Date Assigned Value						Stock Appreciation Rights Outstanding						Weighted Average Grant Date Assigned Value
Beginning balance			73,440						$	16.32					73,440						$	16.32
Granted			—						—						—						—
Exercised			—						—						—						—
Expired			—						—						—						—
Forfeited			—						—						—						—
Ending balance			73,440						$	16.32					73,440						$	16.32
			Nine Months Ended September 30,
			2024												2023
			Stock Appreciation Rights						Weighted Average Grant Date Assigned Value						Stock Appreciation Rights						Weighted Average Grant Date Assigned Value
Beginning balance			73,440						$	16.32					73,440						$	16.32
Granted			—						—						—						—
Exercised			—						—						—						—
Expired			—						—						—						—
Forfeited			—						—						—						—
Ending balance			73,440						$	16.32					73,440						$	16.32

As of September 30, 2024, all stock appreciation rights were exercisable and had a weighted average remaining term of 4.6 years. There was no unrecognized compensation cost for stock appreciation rights as of September 30, 2024.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

As of September 30, 2024 and December 31, 2023, the liability recorded for outstanding stock appreciation rights was $0.6 million and $0.6 million, respectively. The Company uses an option pricing model to value the stock appreciation rights, using the assumptions in the following table. Expected volatility is derived from the historical volatility of the Company’s stock price and a selected peer group of industry-related companies.

			September 30, 2024						December 31, 2023
Risk-free interest rate			3.58		%				3.85		%
Expected volatility			37.23		%				37.37		%
Expected life (in years)			4.9						5.7
Expected dividend yield			3.47		%				3.22		%

As of December 31, 2023, the liability recorded for previously exercised stock appreciation rights was $0.2 million which was paid in 2024.

NOTE 12 – REGULATORY CAPITAL

The Company (on a consolidated basis) and the Bank are each subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the consolidated financial statements of the Company and the Bank. Additionally, the ability of the Company to pay dividends to its stockholders is dependent upon the ability of the Bank to pay dividends to the Company.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors. As allowed under the regulations, the Company and the Bank elected to exclude accumulated other comprehensive income, including unrealized gains and losses on debt securities, in the computation of regulatory capital. Prompt corrective action provisions are not applicable to bank holding companies.

Additionally, the Company and the Bank must maintain a “capital conservation buffer” to avoid becoming subject to restrictions on capital distributions and certain discretionary bonus payments to management. The capital conservation buffer is 2.5% of risk-weighted assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

As of September 30, 2024 and December 31, 2023, the Company and the Bank each met all capital adequacy requirements to which they were subject. The actual and required capital amounts and ratios of the Company (on a consolidated basis) and the Bank were as follows:

						September 30, 2024
						Actual												For Capital Adequacy Purposes												To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)						Amount						Ratio						Amount						Ratio						Amount						Ratio
Consolidated HBT Financial, Inc.
Total Capital (to Risk Weighted Assets)						$	637,198					16.54		%				$	308,213					8.00		%				N/A						N/A
Tier 1 Capital (to Risk Weighted Assets)						557,890						14.48						231,160						6.00						N/A						N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)						506,670						13.15						173,370						4.50						N/A						N/A
Tier 1 Capital (to Average Assets)						557,890						11.16						199,919						4.00						N/A						N/A
Heartland Bank and Trust Company
Total Capital (to Risk Weighted Assets)						$	621,289					16.13		%				$	308,063					8.00		%				$	385,079					10.00		%
Tier 1 Capital (to Risk Weighted Assets)						581,514						15.10						231,048						6.00						308,063						8.00
Common Equity Tier 1 Capital (to Risk Weighted Assets)						581,514						15.10						173,286						4.50						250,302						6.50
Tier 1 Capital (to Average Assets)						581,514						11.64						199,790						4.00						249,738						5.00

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

						December 31, 2023
						Actual												For Capital Adequacy Purposes												To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)						Amount						Ratio						Amount						Ratio						Amount						Ratio
Consolidated HBT Financial, Inc.
Total Capital (to Risk Weighted Assets)						$	603,234					15.33		%				$	314,814					8.00		%				N/A						N/A
Tier 1 Capital (to Risk Weighted Assets)						527,964						13.42						236,110						6.00						N/A						N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)						476,789						12.12						177,083						4.50						N/A						N/A
Tier 1 Capital (to Average Assets)						527,964						10.49						201,231						4.00						N/A						N/A
Heartland Bank and Trust Company
Total Capital (to Risk Weighted Assets)						$	586,604					14.92		%				$	314,496					8.00		%				$	393,119					10.00		%
Tier 1 Capital (to Risk Weighted Assets)						550,808						14.01						235,872						6.00						314,496						8.00
Common Equity Tier 1 Capital (to Risk Weighted Assets)						550,808						14.01						176,904						4.50						255,528						6.50
Tier 1 Capital (to Average Assets)						550,808						10.96						201,063						4.00						251,329						5.00

NOTE 13 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2 - Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Significant unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing as asset or liability.

The Company uses fair value to measure certain assets and liabilities on a recurring basis, such as investment securities, mortgage servicing rights, and derivatives. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period, and such measurements are therefore considered "nonrecurring" for purposes of disclosing the Company's fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for loans held for sale, collateral-dependent loans, bank premises held for sale, and foreclosed assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Recurring Basis

The following is a description of the methods and significant assumptions used to measure the fair value of assets and liabilities on a recurring basis.

Investment Securities

When available, the Company uses quoted market prices to determine the fair value of securities; such items are classified in Level 1 of the fair value hierarchy. For the Company’s securities where quoted prices are not available for identical securities in an active market, the Company determines fair value utilizing vendors who apply matrix pricing for similar bonds where no price is observable or may compile prices from various sources. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace. Fair values from these models are verified, where possible, against quoted market prices for recent trading activity of assets with similar characteristics to the security being valued. Such methods are generally classified as Level 2; however, when prices from independent sources vary, cannot be obtained or cannot be corroborated, a security is generally classified as Level 3. The change in fair value of debt securities available-for-sale is recorded through an adjustment to the consolidated statement of comprehensive income. The change in fair value of equity securities with readily determinable fair values is recorded through an adjustment to the consolidated statement of income.

Mortgage Servicing Rights

The Company has elected to record its mortgage servicing rights at fair value. Mortgage servicing rights do not trade in an active market with readily observable prices. Accordingly, the Company determines the fair value of mortgage servicing rights by estimating the fair value of the future cash flows associated with the mortgage loans being serviced as calculated by an independent third party. Key economic assumptions used in measuring the fair value of mortgage servicing rights include, but are not limited to, prepayment speeds and discount rates. Due to the nature of the valuation inputs, mortgage servicing rights are classified as Level 3. The change in fair value is recorded through an adjustment to the consolidated statement of income.

Derivative Financial Instruments

Interest rate swap agreements are carried at fair value as determined by dealer valuation models. Based on the inputs used, the derivative financial instruments subjected to recurring fair value adjustments are classified as Level 2. For derivative financial instruments designated as hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statement of comprehensive income. For derivative financial instruments not designated as hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statement of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables summarize assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 by level within the fair value hierarchy:

						September 30, 2024
(dollars in thousands)						Level 1 Inputs						Level 2 Inputs						Level 3 Inputs						Total Fair Value
Debt securities available-for-sale:
U.S. Treasury						$	—					$	132,372					$	—					$	132,372
U.S. government agency						—						57,299						—						57,299
Municipal						—						137,872						—						137,872
Mortgage-backed:
Agency residential						—						203,249						—						203,249
Agency commercial						—						121,092						—						121,092
Corporate						—						58,419						—						58,419
Equity securities with readily determinable fair values						3,364						—						—						3,364
Mortgage servicing rights						—						—						17,496						17,496
Derivative financial assets						—						3,722						—						3,722
Derivative financial liabilities						—						3,651						—						3,651

						December 31, 2023
(dollars in thousands)						Level 1 Inputs						Level 2 Inputs						Level 3 Inputs						Total Fair Value
Debt securities available-for-sale:
U.S. Treasury						$	148,622					$	—					$	—					$	148,622
U.S. government agency						—						52,097						—						52,097
Municipal						—						205,557						—						205,557
Mortgage-backed:
Agency residential						—						173,984						—						173,984
Agency commercial						—						127,012						—						127,012
Corporate						—						52,189						—						52,189
Equity securities with readily determinable fair values						3,360						—						—						3,360
Mortgage servicing rights						—						—						19,001						19,001
Derivative financial assets						—						6,549						—						6,549
Derivative financial liabilities						—						6,227						—						6,227

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables present additional information about the unobservable inputs used in the fair value measurement of the mortgage servicing rights (dollars in thousands):

September 30, 2024

Fair Value

Valuation Technique

Unobservable Inputs

Range (Weighted Average)

Mortgage servicing rights

$

17,496

Discounted cash flows

Constant pre-payment rates (CPR)

1.9% to 94.3% (9.1%)

Discount rate

9.0% to 15.3% (9.5%)

December 31, 2023

Fair Value

Valuation Technique

Unobservable Inputs

Range (Weighted Average)

Mortgage servicing rights

$

19,001

Discounted cash flows

Constant pre-payment rates (CPR)

6.2% to 49.4% (8.4%)

Discount rate

9.0% to 37.3% (9.6%)

Nonrecurring Basis

The following is a description of the methods and significant assumptions used to measure the fair value of assets and liabilities on a nonrecurring basis.

Loans Held for Sale

Mortgage loans originated and held for sale are carried at the lower of cost or estimated fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically, these quotes include a premium on the sale and thus these quotes generally indicate fair value of the held for sale loans is greater than cost. Loans held for sale have been classified as Level 2.

Collateral-Dependent Loans

Periodically, a collateral-dependent loan is evaluated individually and is reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. If the collateral value is not sufficient, a specific reserve is recorded. Collateral values are estimated using recent appraisals and customized discounting criteria. Due to the significance of unobservable inputs, fair values of collateral-dependent loans have been classified as Level 3.

Bank Premises Held for Sale

Bank premises held for sale are recorded at the lower of cost or fair value, less estimated selling costs, at the date classified as held for sale. Values are estimated using recent appraisals and customized discounting criteria. Due to the significance of unobservable inputs, fair values of collateral-dependent loans have been classified as Level 3.

Foreclosed Assets

Foreclosed assets are recorded at fair value based on property appraisals, less estimated selling costs, at the date of the transfer. Subsequent to the transfer, foreclosed assets are carried at the lower of cost or fair value, less estimated selling costs. Values are estimated using recent appraisals and customized discounting criteria. Due to the significance of unobservable inputs, fair values of collateral-dependent loans have been classified as Level 3.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables summarize assets measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023 by level within the fair value hierarchy:

						September 30, 2024
(dollars in thousands)						Level 1 Inputs						Level 2 Inputs						Level 3 Inputs						Total Fair Value
Loans held for sale						$	—					$	2,959					$	—					$	2,959
Collateral-dependent loans						—						—						28,244						28,244
Bank premises held for sale						—						—						317						317
Foreclosed assets						—						—						376						376

						December 31, 2023
(dollars in thousands)						Level 1 Inputs						Level 2 Inputs						Level 3 Inputs						Total Fair Value
Loans held for sale						$	—					$	2,318					$	—					$	2,318
Collateral-dependent loans						—						—						32,685						32,685
Foreclosed assets						—						—						852						852

The following tables present quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements (dollars in thousands):

September 30, 2024

Fair Value

Valuation Technique

Unobservable Inputs

Range (Weighted Average)

Collateral-dependent loans

$

28,244

Appraisal of collateral

Appraisal adjustments

Not meaningful

Bank premises held for sale

317

Appraisal

Appraisal adjustments

7% (7%)

Foreclosed assets

376

Appraisal

Appraisal adjustments

7% (7%)

December 31, 2023

Fair Value

Valuation Technique

Unobservable Inputs

Range (Weighted Average)

Collateral-dependent loans

$

32,685

Appraisal of collateral

Appraisal adjustments

Not meaningful

Foreclosed assets

852

Appraisal

Appraisal adjustments

7% (7%)

Other Fair Value Methods

The following methods and assumptions were used by the Company in estimating fair value disclosures of its other financial instruments.

Cash and Cash Equivalents

The carrying amounts of these financial instruments approximate their fair values.

Restricted Stock

The carrying amount of FHLB stock approximates fair value based on the redemption provisions of the FHLB.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Loans

The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts the Company believes are consistent with discounts in the marketplace. Fair values are estimated for portfolios of loans with similar characteristics. Loans are segregated by type such as commercial and industrial, agricultural and farmland, commercial real estate – owner occupied, commercial real estate – non-owner occupied, multi-family, construction and land development, one-to-four family residential, and municipal, consumer, and other. The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for similar maturities. The fair value analysis also includes other assumptions to estimate fair value, intended to approximate those a market participant would use in an orderly transaction, with adjustments for discount rates, interest rates, liquidity, and credit spreads, as appropriate.

Investments in Unconsolidated Subsidiaries

The fair values of the Company’s investments in unconsolidated subsidiaries are presumed to approximate carrying amounts.

Time and Brokered Time Deposits

Fair values of certificates of deposit with stated maturities have been estimated using the present value of estimated future cash flows discounted at rates currently offered for similar instruments. Time deposits also include public funds time deposits.

Securities Sold Under Agreements to Repurchase

The fair values of repurchase agreements with variable interest rates are presumed to approximate their recorded carrying amounts.

FHLB Advances

The fair values of FHLB advances are estimated using discounted cash flow analyses based on current rates offered for borrowings with similar remaining maturities and characteristics.

Subordinated Notes

The fair values of subordinated notes are estimated using discounted cash flow analyses based on rates observed on recent debt issuances by other financial institutions.

Junior Subordinated Debentures

The fair values of subordinated debentures are estimated using discounted cash flow analyses based on rates observed on recent debt issuances by other financial institutions.

Accrued Interest

The carrying amounts of accrued interest approximate fair value.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table provides summary information on the carrying amounts and estimated fair values of the Company’s other financial instruments:

(dollars in thousands)						Fair Value Hierarchy Level						September 30, 2024												December 31, 2023
												Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Financial assets:
Cash and cash equivalents						Level 1						$	179,671					$	179,671					$	141,252					$	141,252
Debt securities held-to-maturity						Level 2						505,075						463,259						521,439						466,496
Restricted stock						Level 3						5,086						5,086						7,160						7,160
Loans, net						Level 3						3,328,864						3,352,088						3,364,369						3,349,540
Investments in unconsolidated subsidiaries						Level 3						1,614						1,614						1,614						1,614
Accrued interest receivable						Level 2						24,160						24,160						24,534						24,534
Financial liabilities:
Time deposits						Level 3						803,964						799,328						627,253						619,682
Brokered time deposits						Level 3						29,999						30,003						144,880						144,944
Securities sold under agreements to repurchase						Level 2						29,029						29,029						42,442						42,442
FHLB advances						Level 3						13,435						13,414						12,623						12,621
Subordinated notes						Level 3						39,533						37,931						39,474						36,993
Junior subordinated debentures						Level 3						52,834						47,686						52,789						48,529
Accrued interest payable						Level 2						6,677						6,677						6,969						6,969

The Company estimated the fair value of lending related commitments as described in Note 14 to be immaterial based on limited interest rate exposure due to their variable nature, short-term commitment periods, and termination clauses provided in the agreements.

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair values have been estimated using data which management considered the best available and estimation methodologies deemed suitable for the pertinent category of financial instrument.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 14 – COMMITMENTS AND CONTINGENCIES

Financial Instruments

The Bank is party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Such commitments and conditional obligations were as follows:

			Contractual Amount
(dollars in thousands)			September 30, 2024						December 31, 2023
Commitments to extend credit			$	873,649					$	869,013
Standby letters of credit			23,560						23,732

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, by the Bank upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies, but may include real estate, accounts receivable, inventory, property, plant, and equipment, and income-producing properties.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those standby letters of credit are primarily issued to support extensions of credit. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. The Bank secures the standby letters of credit with the same collateral used to secure the related loan.

Allowance for Credit Losses on Unfunded Lending-related Commitments

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancelable by the Company. The allowance for credit losses on unfunded commitments is included in other liabilities on the consolidated balance sheets and is adjusted through a charge to provision for credit loss expense on the consolidated statements of income. The allowance for credit losses on unfunded commitments estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance for credit losses on unfunded commitments was $4.1 million and $3.8 million as of September 30, 2024 and December 31, 2023, respectively.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Legal Contingencies

In the normal course of business, the Company, or its subsidiaries, are involved in various legal proceedings. In the opinion of management, any liability resulting from pending proceedings would not be expected to have a material adverse effect on the Company's consolidated financial statements.

DeBaere, et al v. Heartland Bank and Trust Company

The Bank was a defendant in a purported class action lawsuit filed in June 2020, in the Circuit Court of Cook County, Illinois. The plaintiff, a customer of the Bank, alleges that the Bank breached its contract with the plaintiff by (1) charging multiple insufficient funds fees or overdraft fees on a single customer-initiated transaction, and (2) charging overdraft fees for transactions that were authorized on a positive account balance, but when settled, settled into a negative balance.

Miller, et al v. State Bank of Lincoln and Heartland Bank and Trust Company

The Bank was a defendant in a purported class action lawsuit filed in May 2020, in the Circuit Court of Logan County, Illinois. The plaintiff, a customer of State Bank of Lincoln, which previously merged with the Bank, alleges that the Bank breached its contract with the plaintiff by charging multiple insufficient funds fees or overdraft fees on a single customer-initiated transaction.

On May 15, 2023, the Bank reached an agreement in principle to settle both the DeBaere, et al and Miller, et al cases in which the Bank would make one-time cash payments totaling $3.4 million, without admitting fault, to release the Bank from further liability and claims in both the cases.

Definitive settlement agreements reflecting the terms of the agreement in principle were approved by the Court on December 15, 2023 in the DeBaere, et al case and on February 16, 2024 in the Miller, et al case. The Bank made the one-time cash payments totaling $3.4 million during the fourth quarter of 2023. The settlements do not include any admission of liability or wrongdoing by the Bank, and the Bank expressly denies any liability or wrongdoing with respect to any matter alleged in the Class Action and Receiver’s Action. The Bank agreed to the settlements to avoid the cost, risks and distraction of continued litigation. The Company believes the settlements are in the best interests of the Company and its shareholders.

An initial $2.6 million accrual was recognized in other noninterest expense during the fourth quarter of 2022, reflecting management’s best estimate at that time, and an additional $0.8 million accrual was recognized in other noninterest expense during the second quarter of 2023, following the agreement in principle to settle both the DeBaere, et al and Miller, et al cases.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

John Pickett v. Town and Country Bank

The Bank is a defendant in a purported class action lawsuit filed in October 2023, in the Circuit Court of Sangamon County, Illinois. The plaintiff, a customer of Town and Country Bank, which previously merged with the Bank, alleges that the Bank breached its contract with the plaintiff by charging overdraft fees for transactions that were authorized on a positive account balance, but when settled, settled into a negative balance.

On March 29, 2024, the Bank reached an agreement in principle to settle this case in which the Bank would make a one-time cash payment of $0.3 million, without admitting fault, to release the Bank from further liability and claims in the case.

A definitive settlement agreement reflecting the terms of the agreement in principle was approved by the Court on July 9, 2024. The Bank made the one-time cash payment of $0.3 million during the third quarter of 2024. The settlement does not include any admission of liability or wrongdoing by the Bank, and the Bank expressly denies any liability or wrongdoing with respect to any matter alleged in the case. The Bank has agreed to the settlement to avoid the cost, risks, and distraction of continued litigation. The Company believes the settlement is in the best interests of the Company and its shareholders.

An initial accrual of $0.2 million was recorded during the fourth quarter of 2023, reflecting management's best estimate at that time, and an additional $0.1 million accrual was recorded during the first quarter of 2024. As of December 31, 2023, the Company had $0.2 million accrued related to this matter.

Heartland Bank and Trust Company v. Meadows Mennonite Retirement Community Association, Inc.

This lawsuit arises out of a suit filed in the Circuit Court of Woodford County, Illinois, (the "Trial Court") by the Bank for breach of a note and commercial security agreement. The defendant, Meadows Mennonite Retirement Community Association, Inc. ("Meadows"), a beneficiary of a trust for which Bank was trustee, filed a counterclaim for rescission of the note seeking compensatory and punitive damages, including attorneys’ fees. In September 2024, the Appellate Court of Illinois Fourth District (the "Appellate Court") entered an order directing that summary judgment should be entered in favor of Meadows and against the Bank, rescinding the note and commercial security agreement. The Appellate Court remanded the case to the Trial Court which will now determine Meadows' compensatory and punitive damages, including reasonable attorneys’ fees.

The Bank intends to vigorously defend the lawsuit. However, the Company believes an unfavorable outcome is reasonably possible at this time, as that term is used in assessing loss contingencies. The Company is unable to predict when the matter will be resolved or potential costs or damages to be incurred.

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context requires otherwise, references in this report to the “Company,” “we,” “us” and “our” refer to HBT Financial, Inc. and its subsidiaries.

The following is management’s discussion and analysis of the financial condition as of September 30, 2024 (unaudited), as compared with December 31, 2023, and the results of operations for the three and nine months ended September 30, 2024 and 2023 (unaudited). Management’s discussion and analysis should be read in conjunction with the Company’s unaudited consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q, as well as the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 6, 2024. Results of operations for the three and nine months ended September 30, 2024 and 2023 are not necessarily indicative of results to be attained for the year ended December 31, 2024, or for any other period.

OVERVIEW

HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920. We provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa. As of September 30, 2024, the Company had total assets of $5.0 billion, loans held for investment of $3.4 billion, and total deposits of $4.3 billion.

Market Area

As of September 30, 2024, our branch network included 66 full-service branch locations throughout Illinois and eastern Iowa. We hold a leading deposit share in many of our central Illinois markets, which we define as a top three deposit share rank, providing the foundation for our strong deposit base. The stability provided by this low-cost funding is a key driver of our strong track record of financial performance. Below is a summary of our loan and deposit balances by geographic region:

			September 30, 2024												December 31, 2023
(dollars in thousands)			Loans						Deposits						Loans						Deposits
Central			$	1,665,342					$	2,956,607					$	1,693,794					$	3,094,305
Chicago MSA			1,368,243						1,213,096						1,406,348						1,197,865
Illinois			3,033,585						4,169,703						3,100,142						4,292,170
Iowa			336,245						110,997						304,275						109,267
Total			$	3,369,830					$	4,280,700					$	3,404,417					$	4,401,437

Town and Country Acquisition

On February 1, 2023, HBT Financial completed its acquisition of Town and Country, the holding company for Town and Country Bank. The acquisition of Town and Country further enhanced HBT Financial’s footprint in central Illinois and expanded our footprint into metro-east St. Louis. At the time of acquisition, Town and Country Bank operated 10 full-service branch locations which began operating as branches of Heartland Bank. The core system conversion was successfully completed in April 2023. After considering business combination accounting adjustments, Town and Country added total assets of $937 million, total loans held for investment of $635 million, and total deposits of $720 million.

Total consideration consisted of 3.4 million shares of HBT Financial’s common stock and $38.0 million in cash. Based upon the closing price of HBT Financial common stock of $21.12 on February 1, 2023, the aggregate consideration was approximately $109.4 million. Goodwill of $30.5 million was recorded in the acquisition.

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There were no acquisition-related expenses during 2024 or during the third and fourth quarter of 2023. Acquisition-related expenses totaled $13.7 million during the nine months ended September 30, 2023, including the recognition of an allowance for credit losses on non-PCD loans of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million through provision for credit losses.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Below are selected factors that could affect the Company’s operating results. For a fuller discussion of the factors that could have a material impact on the operations and future prospects of the Company, see the "Risk Factors" section included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 6, 2024.

Economic Conditions

The Company's business and financial performance are affected by economic conditions generally in the U.S. and more directly in the Illinois and Iowa markets where we primarily operate. The significant economic factors relevant to our business and our financial performance include the general economic conditions in the U.S. and in the Company's markets (including the effect of inflationary pressures), unemployment rates, real estate markets, and interest rates.

Interest Rates

Net interest income is our primary source of revenue. Net interest income is equal to the excess of interest income earned on interest earning assets (including discount accretion on purchased loans plus certain loan fees) over interest expense incurred on interest-bearing liabilities. The level of interest rates as well as the volume of interest-earning assets and interest-bearing liabilities both impact net interest income. Net interest income is also influenced by both the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as local economic conditions, competition for loans and deposits, the monetary policy of the Federal Reserve Board (“FRB”), and market interest rates.

The cost of our deposits and short-term wholesale borrowings is largely based on short-term interest rates, which are primarily driven by the FRB’s actions. The yields generated by our loans and securities are typically driven by short-term and long-term interest rates, which are set by the market and, to some degree, by the FRB’s actions. Our net interest income is therefore influenced by movements in such interest rates and the pace at which such movements occur. Generally, we expect increases in market interest rates will increase our net interest income and net interest margin in future periods, while decreases in market interest rates may decrease our net interest income and net interest margin in future periods; however, this depends upon the timing and extent of interest rate fluctuations and may not always be the case.

Credit Trends

We focus on originating loans with appropriate risk/reward profiles. We have a detailed loan policy that guides our overall loan origination philosophy and a well-established loan approval process that requires experienced credit officers to approve larger loan relationships. Although we believe our loan approval and credit review processes are strengths that allow us to maintain a high-quality loan portfolio, we recognize that credit trends in the markets in which we operate and in our loan portfolio can materially impact our financial condition and performance and that these trends are primarily driven by the economic conditions in our markets.

Competition

Our profitability and growth are affected by the highly competitive nature of the financial services industry. We compete with community banks in all our markets and, to a lesser extent, with regional and national banks, primarily in the Chicago MSA. Additionally, we compete with non-bank financial services companies, FinTechs and other financial institutions operating within the areas we serve. We compete by emphasizing personalized service and efficient decision-making tailored to individual needs. We do not rely on any individual, group, or entity for a material portion of our loans or our deposits. We continue to see significant competitive pressure on loan rates and terms, as well as deposit pricing, which may affect our financial results in the future.

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Digital Banking

Throughout the banking industry, in-person branch traffic is expected to continue to decline as more customers turn to digital banking for routine banking transactions. Additionally, widespread adoption of faster payment and instant payment technologies could require us to substantially increase our expenditures on technology and cybersecurity infrastructure, increase our regulatory compliance costs, and adversely impact the stability of our deposit base. We plan to continue investing in our digital banking platforms while maintaining an appropriately sized branch network. An inability to meet evolving customer expectations for both digital and in-person banking may adversely affect our financial results in the future.

Regulatory Environment and Trends

We are subject to federal and state regulation and supervision, which continue to evolve as the legal and regulatory framework governing our operations continues to change. The current operating environment includes extensive regulation and supervision in areas such as consumer compliance, the Bank Secrecy Act and anti-money laundering compliance, risk management, and internal audit. We anticipate that this environment of extensive regulation and supervision will continue for the industry. As a result, changes in the regulatory environment may result in additional costs for additional compliance, risk management, and audit personnel or professional fees associated with advisors and consultants.

FACTORS AFFECTING COMPARABILITY OF FINANCIAL RESULTS

JOBS Act Accounting Election

We qualify as an “emerging growth company” under the JOBS Act. The JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies. The Company may remain an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the completion of our initial public offering, which is December 31, 2024, (2) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues, (3) the date on which the Company is deemed to be a “large accelerated filer” under the Exchange Act, or (4) the date on which the Company has, during the previous three year period, issued, publicly or privately, more than $1.0 billion in non-convertible debt securities. We have elected to use the extended transition period until we are no longer an emerging growth company or until we choose to affirmatively and irrevocably opt out of the extended transition period. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies. The Company expects to exit its status as an emerging growth company as of December 31, 2024.

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RESULTS OF OPERATIONS

Overview of Recent Financial Results

The following table presents selected financial results and measures:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands, except per share amounts)			2024						2023						2024						2023
Total interest and dividend income			$	64,117					$	59,041					$	188,902					$	167,588
Total interest expense			16,384						10,762						47,453						23,600
Net interest income			47,733						48,279						141,449						143,988
Provision for credit losses			603						480						2,306						6,460
Net interest income after provision for credit losses			47,130						47,799						139,143						137,528
Total noninterest income			8,705						9,490						23,941						26,841
Total noninterest expense			31,322						30,671						93,099						100,577
Income before income tax expense			24,513						26,618						69,985						63,792
Income tax expense			6,333						6,903						18,477						16,396
Net income			$	18,180					$	19,715					$	51,508					$	47,396
Adjusted net income (1)			$	19,244					$	20,279					$	55,456					$	58,910
Net interest income (tax-equivalent basis) (1) (2)			$	48,285					$	48,954					$	143,129					$	146,080
Share and Per Share Information
Earnings per share - Diluted			$	0.57					$	0.62					$	1.62					$	1.49
Adjusted earnings per share - Diluted (1)			0.61						0.63						1.75						1.86
Weighted average shares of common stock outstanding			31,559,366						31,829,250						31,600,442						31,598,650
Summary Ratios
Net interest margin *			3.98		%				4.07		%				3.96		%				4.14		%
Net interest margin (tax-equivalent basis) * (1) (2)			4.03						4.13						4.01						4.20
Yield on loans *			6.45						6.10						6.38						5.96
Yield on interest-earning assets *			5.35						4.97						5.29						4.82
Cost of interest-bearing liabilities *			1.90						1.27						1.84						0.96
Cost of total deposits *			1.35						0.69						1.31						0.45
Cost of funds *			1.47						0.96						1.42						0.72
Efficiency ratio			54.24		%				51.85		%				55.00		%				57.73		%
Efficiency ratio (tax-equivalent basis) (1) (2)			53.71						51.25						54.45						57.04
Return on average assets *			1.44		%				1.58		%				1.37		%				1.29		%
Return on average stockholders' equity *			13.81						17.02						13.58						14.22
Return on average tangible common equity * (1)			16.25						20.70						16.11						17.17
Adjusted return on average assets * (1)			1.53		%				1.62		%				1.48		%				1.61		%
Adjusted return on average stockholders' equity * (1)			14.62						17.51						14.62						17.68
Adjusted return on average tangible common equity * (1)			17.20						21.29						17.34						21.34

_________________________________________________

*    Annualized measure.

(1)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measures to their most closely comparable GAAP measures.

(2)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.

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Comparison of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023

For the three months ended September 30, 2024, net income was $18.2 million, decreasing by $1.5 million, or 7.8%, when compared to net income for the three months ended September 30, 2023. Notable changes include the following:

•A $1.5 million negative mortgage servicing rights fair value adjustment included in the third quarter of 2024 results;

•Net losses of $0.8 million realized on the sale of debt securities included in the third quarter of 2023 results not present in the third quarter of 2024 results;

•A $0.7 million increase in salaries expense, primarily driven by annual merit increases;

•A $0.5 million decrease in net interest income, primarily attributable to higher funding costs which were partially offset by higher asset yields and an increase in interest-earning assets; and

•A $0.6 million decrease in income tax expense, primarily reflecting lower pre-tax income resulting from the above items.

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

For the nine months ended September 30, 2024, net income was $51.5 million, increasing by $4.1 million, or 8.7%, when compared to net income for the nine months ended September 30, 2023. Notable changes include the following:

•There were no Town and Country acquisition-related expenses during the nine months ended September 30, 2024, compared to $13.7 million of acquisition-related expenses incurred during the nine months ended September 30, 2023;

•Net losses of $3.4 million were realized on the sale of debt securities during the nine months ended September 30, 2024, compared to net losses of $1.8 million realized during the nine months ended September 30, 2023;

•A $2.5 million decrease in net interest income, primarily attributable to higher funding costs which were partially offset by higher asset yields and an increase in interest-earning assets;

•A $1.5 million negative mortgage servicing rights fair value adjustment included in the 2024 results, compared to a $0.5 million negative mortgage servicing rights fair value adjustment included in the 2023 results; and

•A $2.1 million increase in income tax expense, primarily reflecting higher pre-tax income resulting from the above items as well as an additional $0.5 million for a deferred tax expense write-down, primarily as a result of an Illinois tax change. This increased our effective tax rate to 26.4% during the nine months ended September 30, 2024, compared to 25.7% during the nine months ended September 30, 2023. We expect this write-down to be earned back over several years through reduced tax expense.

Net Interest Income

Net interest income equals the excess of interest income on interest earning assets (including discount accretion on acquired loans plus certain loan fees) over interest expense incurred on interest-bearing liabilities. Interest rate spread and net interest margin are utilized to measure and explain changes in net interest income. Interest rate spread is the difference between the yield on interest-earning assets and the rate paid for interest-bearing liabilities that fund those assets. The net interest margin is expressed as the percentage of net interest income to average interest-earning assets. The net interest margin exceeds the interest rate spread because noninterest-bearing sources of funds, principally noninterest-bearing demand deposits and stockholders’ equity, also support interest-earning assets.

The following tables set forth average balances, average yields and costs, and certain other information. Average balances are daily average balances. Nonaccrual loans are included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees and costs, discounts and premiums, as well as purchase accounting adjustments that are accreted or amortized to interest income or expense.

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			Three Months Ended
			September 30, 2024																		September 30, 2023
(dollars in thousands)			Average Balance						Interest						Yield/Cost *						Average Balance						Interest						Yield/Cost *
ASSETS
Loans			$	3,379,299					$	54,783					6.45		%				$	3,296,703					$	50,712					6.10		%
Debt securities			1,191,642						6,955						2.32						1,317,603						7,380						2.22
Deposits with banks			185,870						2,230						4.77						77,595						714						3.65
Other			12,660						149						4.68						16,430						235						5.68
Total interest-earning assets			4,769,471						$	64,117					5.35		%				4,708,331						$	59,041					4.97		%
Allowance for credit losses			(40,780)																		(38,317)
Noninterest-earning assets			278,030																		294,818
Total assets			$	5,006,721																	$	4,964,832
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Interest-bearing deposits:
Interest-bearing demand			$	1,085,609					$	1,408					0.52		%				$	1,160,654					$	761					0.26		%
Money market			800,651						4,726						2.35						682,772						2,026						1.18
Savings			573,077						396						0.27						639,384						249						0.15
Time			804,379						7,702						3.81						519,683						3,275						2.50
Brokered			29,996						417						5.54						66,776						900						5.34
Total interest-bearing deposits			3,293,712						14,649						1.77						3,069,269						7,211						0.93
Securities sold under agreements to repurchase			29,426						134						1.80						33,807						35						0.41
Borrowings			13,691						119						3.47						157,908						2,108						5.30
Subordinated notes			39,524						470						4.73						39,444						470						4.72
Junior subordinated debentures issued to capital trusts			52,827						1,012						7.63						52,767						938						7.05
Total interest-bearing liabilities			3,429,180						$	16,384					1.90		%				3,353,195						$	10,762					1.27		%
Noninterest-bearing deposits			1,013,893																		1,105,472
Noninterest-bearing liabilities			39,903																		46,564
Total liabilities			4,482,976																		4,505,231
Stockholders' Equity			523,745																		459,601
Total liabilities and stockholders’ equity			$	5,006,721																	$	4,964,832
Net interest income/Net interest margin (1)									$	47,733					3.98		%										$	48,279					4.07		%
Tax-equivalent adjustment (2)									552						0.05												675						0.06
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (2) (3)									$	48,285					4.03		%										$	48,954					4.13		%
Net interest rate spread (4)															3.45		%																3.70		%
Net interest-earning assets (5)			$	1,340,291																	$	1,355,136
Ratio of interest-earning assets to interest-bearing liabilities			1.39																		1.40
Cost of total deposits															1.35		%																0.69		%
Cost of funds															1.47																		0.96

_________________________________________________

*Annualized measure.

(1)Net interest margin represents net interest income divided by average total interest-earning assets.

(2)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.

(3)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures.

(4)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(5)Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

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			Nine Months Ended
			September 30, 2024																		September 30, 2023
(dollars in thousands)			Average Balance						Interest						Yield/Cost *						Average Balance						Interest						Yield/Cost *
ASSETS
Loans			$	3,374,875					$	161,077					6.38		%				$	3,183,641					$	142,012					5.96		%
Debt securities			1,197,772						20,592						2.30						1,366,298						22,797						2.23
Deposits with banks			188,087						6,752						4.80						84,720						2,234						3.53
Other			12,744						481						5.04						15,334						545						4.75
Total interest-earning assets			4,773,478						$	188,902					5.29		%				4,649,993						$	167,588					4.82		%
Allowance for credit losses			(40,611)																		(37,053)
Noninterest-earning assets			279,789																		289,843
Total assets			$	5,012,656																	$	4,902,783
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Interest-bearing deposits:
Interest-bearing demand			$	1,112,198					$	4,148					0.50		%				$	1,204,937					$	1,902					0.21		%
Money market			800,693						14,193						2.37						664,036						4,467						0.90
Savings			592,134						1,232						0.28						678,495						616						0.12
Time			744,349						20,744						3.72						441,760						6,011						1.82
Brokered			50,046						2,058						5.49						22,987						912						5.30
Total interest-bearing deposits			3,299,420						42,375						1.72						3,012,215						13,908						0.62
Securities sold under agreements to repurchase			30,769						415						1.80						35,844						107						0.40
Borrowings			13,387						365						3.64						148,443						5,594						5.04
Subordinated notes			39,504						1,409						4.76						39,424						1,409						4.78
Junior subordinated debentures issued to capital trusts			52,812						2,889						7.31						51,054						2,582						6.76
Total interest-bearing liabilities			3,435,892						$	47,453					1.84		%				3,286,980						$	23,600					0.96		%
Noninterest-bearing deposits			1,031,239																		1,123,917
Noninterest-bearing liabilities			38,943																		46,310
Total liabilities			4,506,074																		4,457,207
Stockholders' Equity			506,582																		445,576
Total liabilities and stockholders’ equity			$	5,012,656																	$	4,902,783
Net interest income/Net interest margin (1)									$	141,449					3.96		%										$	143,988					4.14		%
Tax-equivalent adjustment (2)									1,680						0.05												2,092						0.06
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (2) (3)									$	143,129					4.01		%										$	146,080					4.20		%
Net interest rate spread (4)															3.45		%																3.86		%
Net interest-earning assets (5)			$	1,337,586																	$	1,363,013
Ratio of interest-earning assets to interest-bearing liabilities			1.39																		1.41
Cost of total deposits															1.31		%																0.45		%
Cost of funds															1.42																		0.72

_________________________________________________

*Annualized measure.

(1)Net interest margin represents net interest income divided by average total interest-earning assets.

(2)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.

(3)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures.

(4)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(5)Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

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The following table sets forth the components of loan interest income and their contributions to the total loan yield.

			Three Months Ended September 30,																								Nine Months Ended September 30,
			2024												2023												2024												2023
(dollars in thousands)			Interest						Yield Contribution *						Interest						Yield Contribution *						Interest						Yield Contribution *						Interest						Yield Contribution *
Contractual interest			$	52,160					6.14		%				$	48,232					5.80		%				$	153,668					6.08		%				$	135,105					5.67		%
Loan fees (excluding PPP loans)			1,050						0.12						1,176						0.14						3,201						0.13						3,466						0.15
PPP loan fees			1						—						—						—						1						—						1						—
Accretion of acquired loan discounts			1,232						0.15						1,143						0.14						3,409						0.14						2,964						0.12
Nonaccrual interest recoveries			340						0.04						161						0.02						798						0.03						476						0.02
Total loan interest income			$	54,783					6.45		%				$	50,712					6.10		%				$	161,077					6.38		%				$	142,012					5.96		%

_________________________________________________

*    Annualized measure.

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The following table sets forth the components of net interest income and their contributions to the net interest margin.

			Three Months Ended September 30,																								Nine Months Ended September 30,
			2024												2023												2024												2023
(dollars in thousands)			Interest						Net Interest Margin Contribution *						Interest						Net Interest Margin Contribution *						Interest						Net Interest Margin Contribution *						Interest						Net Interest Margin Contribution *
Interest income:
Contractual interest on loans			$	52,160					4.35		%				$	48,232					4.06		%				$	153,668					4.30		%				$	135,105					3.89		%
Loan fees (excluding PPP loans)			1,050						0.09						1,176						0.10						3,201						0.09						3,466						0.10
PPP loan fees			1						—						—						—						1						—						1						—
Accretion of acquired loan discounts			1,232						0.10						1,143						0.10						3,409						0.10						2,964						0.09
Nonaccrual interest recoveries			340						0.03						161						0.01						798						0.02						476						0.01
Debt securities			6,955						0.58						7,380						0.62						20,592						0.58						22,797						0.66
Interest-bearing deposits in bank			2,230						0.19						714						0.06						6,752						0.19						2,234						0.06
Other			149						0.01						235						0.02						481						0.01						545						0.01
Total interest income			64,117						5.35						59,041						4.97						188,902						5.29						167,588						4.82
Interest expense:
Deposits			14,649						1.22						7,211						0.60						42,375						1.19						13,908						0.40
Other interest-bearing liabilities			1,735						0.15						3,551						0.30						5,078						0.14						9,692						0.28
Total interest expense			16,384						1.37						10,762						0.90						47,453						1.33						23,600						0.68
Net interest income			47,733						3.98						48,279						4.07						141,449						3.96						143,988						4.14
Tax-equivalent adjustment (1)			552						0.05						675						0.06						1,680						0.05						2,092						0.06
Net interest income (tax-equivalent) (1) (2)			$	48,285					4.03		%				$	48,954					4.13		%				$	143,129					4.01		%				$	146,080					4.20		%

_________________________________________________

*    Annualized measure.

(1)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.

(2)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures.

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Rate/Volume Analysis

The following table sets forth the dollar amount of changes in interest income and interest expense for the major categories of our interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to changes attributable to volume (i.e., changes in average balances multiplied by the prior-period average rate), and changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes attributable to both volume and rate that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

			Three Months Ended September 30, 2024 vs. Three Months Ended September 30, 2023																		Nine Months Ended September 30, 2024 vs. Nine Months Ended September 30, 2023
			Increase (Decrease) Due to												Total						Increase (Decrease) Due to												Total
(dollars in thousands)			Volume						Rate												Volume						Rate
Interest-earning assets:
Loans			$	1,292					$	2,779					$	4,071					$	8,806					$	10,259					$	19,065
Debt securities			(726)						301						(425)						(2,879)						674						(2,205)
Deposits with banks			1,246						270						1,516						3,486						1,032						4,518
Other			(48)						(38)						(86)						(96)						32						(64)
Total interest-earning assets			1,764						3,312						5,076						9,317						11,997						21,314
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand			(52)						699						647						(157)						2,403						2,246
Money market			401						2,299						2,700						1,087						8,639						9,726
Savings			(28)						175						147						(87)						703						616
Time			2,272						2,155						4,427						5,823						8,910						14,733
Brokered			(513)						30						(483)						1,111						35						1,146
Total interest-bearing deposits			2,080						5,358						7,438						7,777						20,690						28,467
Securities sold under agreements to repurchase			(5)						104						99						(17)						325						308
Borrowings			(1,443)						(546)						(1,989)						(4,012)						(1,217)						(5,229)
Subordinated notes			1						(1)						—						3						(3)						—
Junior subordinated debentures issued to capital trusts			1						73						74						91						216						307
Total interest-bearing liabilities			634						4,988						5,622						3,842						20,011						23,853
Change in net interest income			$	1,130					$	(1,676)					$	(546)					$	5,475					$	(8,014)					$	(2,539)

Comparison of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023

Net interest income for the three months ended September 30, 2024 was $47.7 million, decreasing $0.5 million, or 1.1%, when compared to the three months ended September 30, 2023. The decrease is primarily attributable to an increase in funding costs which were mostly offset by higher yields on interest-earning assets and an increase in interest-earning assets.

Net interest margin decreased to 3.98% for the three months ended September 30, 2024, compared to 4.07% for the three months ended September 30, 2023. The decrease was primarily attributable to increases in funding costs outpacing increases in interest-earning asset yields. The contribution of acquired loan discount accretion to net interest margin was flat for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, remaining at 10 basis points.

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Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

Net interest income for the nine months ended September 30, 2024 was $141.4 million, decreasing $2.5 million, or 1.8%, when compared to the nine months ended September 30, 2023. The decrease is primarily attributable to an increase in funding costs which were partially offset by higher yields on interest-earning assets and higher interest-earning asset balances following the Town and Country merger.

Net interest margin decreased to 3.96% for the nine months ended September 30, 2024, compared to 4.14% for the nine months ended September 30, 2023. The decrease was primarily attributable to increases in funding costs outpacing increases in interest-earning asset yields. Additionally, the contribution of acquired loan discount accretion to net interest margin increased to 10 basis points during the nine months ended September 30, 2024, compared to 9 basis points during the nine months ended September 30, 2023.

The quarterly net interest margins were as follows:

			2024						2023
Three months ended:
March 31			3.94		%				4.20		%
June 30			3.95						4.16
September 30			3.98						4.07
December 31			—						3.93

Our net interest margin decreased modestly beginning in the second quarter of 2023 as increased competition for deposits drove an increase in our funding costs. This continued during the remainder of 2023 with increases in funding costs outpacing increases in interest-earning asset yields. Our deposit balances and funding costs began to stabilize during the first quarter of 2024.

In September 2024, the Federal Open Markets Committee ("FOMC") lowered the target range for the federal funds rate by 50 basis points to a range of 4.75% to 5.00%. This decrease, and potential future decreases, may put downward pressure on our net interest margin, as the negative impact on floating rate loans may not be fully offset by the positive impacts of maturing fixed rate loans and securities repricing at higher rates or potential decreases in deposit costs. Generally, we expect increases in market interest rates will increase our net interest income and net interest margin in future periods, while decreases in market interest rates may decrease our net interest income and net interest margin in future periods; however, this depends upon the timing and extent of interest rate fluctuations and may not always be the case.

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Provision for Credit Losses

The following table sets forth the components of provision for credit losses for the periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
PROVISION FOR CREDIT LOSSES
Loans			$	746					$	983					$	1,983					$	5,004
Unfunded lending-related commitments			(143)						297						323						1,456
Debt securities			—						(800)						—						—
Total provision for credit losses			$	603					$	480					$	2,306					$	6,460

Comparison of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023

The Company recorded a provision for credit losses of $0.6 million during the three months ended September 30, 2024, compared to a $0.5 million provision during the three months ended September 30, 2023. The third quarter of 2024 provision for credit losses primarily reflects a $1.2 million increase in required reserves resulting from changes in economic forecasts; a $0.2 million increase in required reserves resulting from qualitative factor changes; a $0.6 million decrease in required reserves driven by decreased loan balances and changes within the loan portfolio; and a $0.2 million decrease in specific reserves.

Additionally, the 2023 results included the reversal of an allowance for credit losses of $0.8 million on debt securities available-for-sale related to one bank subordinated debt security after a merger announcement by the issuer.

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

The Company recorded a provision for credit losses of $2.3 million for the nine months ended September 30, 2024. The 2024 provision for credit losses primarily reflects a $3.9 million increase in required reserves resulting from changes in qualitative factors; a $0.1 million increase in required reserves resulting from changes in economic forecasts; a $1.0 million decrease in specific reserves on individually evaluated loans; and a $0.7 million decrease in required reserves driven by changes within the loan portfolio.

The 2023 results included the recognition of an allowance for credit losses on non-PCD loans of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million through provision for credit losses which were related to the Town and Country acquisition.

Additionally, the 2023 results included the establishment of an allowance for credit losses of $0.8 million on debt securities available-for-sale during the first half of 2023, related to one bank subordinated debt security, which was later reversed during the third quarter of 2023 after a merger announcement by the issuer of the bank subordinated debt security.

Credit losses are highly dependent on current and forecast economic conditions. Potential deterioration of economic conditions may lead to higher credit losses and adversely impact our financial condition and results of operations. The economic forecasts utilized in estimating the allowance for credit losses on loans and lending-related unfunded commitments include the unemployment rate and changes in GDP as macroeconomic variables, although other economic metrics are considered on a qualitative basis.

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Noninterest Income

The following table sets forth the major categories of noninterest income for the periods indicated:

			Three Months Ended September 30,																								Nine Months Ended September 30,
(dollars in thousands)			2024						2023						$ Change						% Change						2024						2023						$ Change						% Change
Card income			$	2,753					$	2,763					$	(10)					(0.4)		%				$	8,254					$	8,326					$	(72)					(0.9)		%
Wealth management fees			2,670						2,381						289						12.1						7,840						6,998						842						12.0
Service charges on deposit accounts			2,081						2,040						41						2.0						5,852						5,830						22						0.4
Mortgage servicing			1,113						1,169						(56)						(4.8)						3,279						3,522						(243)						(6.9)
Mortgage servicing rights fair value adjustment			(1,488)						23						(1,511)						NM						(1,505)						(460)						(1,045)						NM
Gains on sale of mortgage loans			461						476						(15)						(3.2)						1,202						1,125						77						6.8
Realized gains (losses) on sales of securities			—						(813)						813						NM						(3,382)						(1,820)						(1,562)						NM
Unrealized gains (losses) on equity securities			136						(46)						182						NM						24						(61)						85						NM
Gains (losses) on foreclosed assets			(44)						550						(594)						NM						15						443						(428)						(96.6)
Gains (losses) on other assets			(2)						52						(54)						NM						(637)						161						(798)						NM
Income on bank owned life insurance			170						153						17						11.1						500						415						85						20.5
Other noninterest income			855						742						113						15.2						2,499						2,362						137						5.8
Total			$	8,705					$	9,490					$	(785)					(8.3)		%				$	23,941					$	26,841					$	(2,900)					(10.8)		%

_________________________________________________

NM    Not meaningful.

Comparison of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023

Total noninterest income for the three months ended September 30, 2024, was $8.7 million, a decrease of $0.8 million, or 8.3%, from the three months ended September 30, 2023. Notable changes in noninterest income include the following:

•A $1.5 million negative mortgage servicing rights fair value adjustment included the third quarter of 2024 results, primarily due to changes in the prepayment and future interest rate assumptions utilized in the valuations, compared to a $23 thousand positive mortgage servicing rights fair value adjustment included in the third quarter 2023 results;

•Realized losses of $0.8 million on the sale of securities recognized during the third quarter of 2023, which were not present in the third quarter 2024 results;

•A $44 thousand loss on foreclosed assets was recognized during the third quarter of 2024, compared to a $0.6 million gain on foreclosed assets during the third quarter of 2023, primarily related to the sale of one property; and

•A $0.3 million increase in wealth management fees, driven by higher values of assets under management.

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Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

Total noninterest income for the nine months ended September 30, 2024, was $23.9 million, a decrease of $2.9 million, or 10.8%, from the nine months ended September 30, 2023. Notable changes in noninterest income include the following:

•Net losses of $3.4 million were realized on the sale of debt securities during the nine months ended September 30, 2024, compared to net losses of $1.8 million realized during the nine months ended September 30, 2023;

•A $1.5 million negative mortgage servicing rights fair value adjustment included in the 2024 results, primarily due to changes in the prepayment and future interest rate assumptions utilized in the valuations, compared to a $0.5 million negative mortgage servicing rights fair value adjustment included in the 2023 results;

•Impairment losses on bank premises of $0.6 million related to the closure of two branch premises, now held for sale, were recognized during 2024 which were not present in the 2023 results; and

•A $0.8 million increase in wealth management fees, driven by higher values of assets under management.

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Noninterest Expense

The following table sets forth the major categories of noninterest expense for the periods indicated:

			Three Months Ended September 30,																								Nine Months Ended September 30,
(dollars in thousands)			2024						2023						$ Change						% Change						2024						2023						$ Change						% Change
Salaries			$	16,325					$	15,644					$	681					4.4		%				$	49,346					$	51,715					$	(2,369)					(4.6)		%
Employee benefits			2,997						2,616						381						14.6						8,662						7,658						1,004						13.1
Occupancy of bank premises			2,695						2,573						122						4.7						7,520						7,460						60						0.8
Furniture and equipment			446						667						(221)						(33.1)						1,544						2,135						(591)						(27.7)
Data processing			2,640						2,581						59						2.3						8,171						9,787						(1,616)						(16.5)
Marketing and customer relations			1,380						1,679						(299)						(17.8)						3,372						3,874						(502)						(13.0)
Amortization of intangible assets			710						720						(10)						(1.4)						2,130						1,950						180						9.2
FDIC insurance			572						512						60						11.7						1,697						1,705						(8)						(0.5)
Loan collection and servicing			476						345						131						38.0						1,403						971						432						44.5
Foreclosed assets			19						76						(57)						(75.0)						78						234						(156)						(66.7)
Other noninterest expense			3,062						3,258						(196)						(6.0)						9,176						13,088						(3,912)						(29.9)
Total			$	31,322					$	30,671					$	651					2.1		%				$	93,099					$	100,577					$	(7,478)					(7.4)		%

Comparison of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023

Total noninterest expense for the three months ended September 30, 2024, was $31.3 million, an increase of $0.7 million, or 2.1%, from the three months ended September 30, 2023. Notable changes in noninterest expense include the following:

•A $0.7 million increase in salaries expense, primarily driven by annual merit increases;

•A $0.4 million increase in benefits, primarily attributable to higher medical benefits expenses; and

•A $0.3 million decrease in marketing and customer relations expense.

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

Total noninterest expense for the nine months ended September 30, 2024, was $93.1 million, a decrease of $7.5 million, or 7.4%, from the nine months ended September 30, 2023. Notable changes in noninterest expense include the following:

•There were no Town and Country acquisition-related noninterest expenses for the nine months ended September 30, 2024, but acquisition-related noninterest expenses totaled $7.8 million for the nine months ended September 30, 2023;

•Excluding Town and Country acquisition-related expenses, the $1.2 million increase in salaries expense was primarily driven by annual merit increases;

•Excluding Town and Country acquisition-related expenses, the $1.0 million increase in benefits expense was primarily attributable to higher medical benefits expenses; and

•Excluding Town and Country acquisition-related expenses, the $1.9 million decrease in other noninterest expense primarily reflects the absence of $0.8 million of legal fees and $0.8 million of accruals related to litigation matters disclosed in Note 14 to the Company's Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

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Income Taxes

During the three months ended September 30, 2024 and 2023, we recorded income tax expense of $6.3 million, or an effective tax rate of 25.8%, and $6.9 million, or an effective tax rate of 25.9%, respectively. During the nine months ended September 30, 2024 and 2023, we recorded income tax expense of $18.5 million, or an effective tax rate of 26.4%, and $16.4 million, or an effective tax rate of 25.7%, respectively. The increase in effective tax rate during 2024 was primarily attributable to an additional $0.5 million of tax expense for a deferred tax asset write-down, recognized during the second quarter of 2024, as a result of an Illinois tax change.

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FINANCIAL CONDITION

(dollars in thousands, except per share data)			September 30, 2024						December 31, 2023						$ Change						% Change
Consolidated Balance Sheet Information
Cash and cash equivalents			$	179,671					$	141,252					$	38,419					27.2		%
Debt securities available-for-sale, at fair value			710,303						759,461						(49,158)						(6.5)
Debt securities held-to-maturity			505,075						521,439						(16,364)						(3.1)
Loans held for sale			2,959						2,318						641						27.7
Loans, before allowance for credit losses			3,369,830						3,404,417						(34,587)						(1.0)
Less: allowance for credit losses			40,966						40,048						918						2.3
Loans, net of allowance for credit losses			3,328,864						3,364,369						(35,505)						(1.1)
Goodwill			59,820						59,820						—						—
Intangible assets, net			18,552						20,682						(2,130)						(10.3)
Other assets			185,484						203,829						(18,345)						(9.0)
Total assets			$	4,990,728					$	5,073,170					$	(82,442)					(1.6)		%
Total deposits			$	4,280,700					$	4,401,437					$	(120,737)					(2.7)		%
Securities sold under agreements to repurchase			29,029						42,442						(13,413)						(31.6)
Borrowings			13,435						12,623						812						6.4
Subordinated notes			39,533						39,474						59						0.1
Junior subordinated debentures			52,834						52,789						45						0.1
Other liabilities			37,535						34,909						2,626						7.5
Total liabilities			4,453,066						4,583,674						(130,608)						(2.8)
Total stockholders' equity			537,662						489,496						48,166						9.8
Total liabilities and stockholders' equity			$	4,990,728					$	5,073,170					$	(82,442)					(1.6)		%
Tangible assets (1)			$	4,912,356					$	4,992,668					$	(80,312)					(1.6)		%
Tangible common equity (1)			459,290						408,994						50,296						12.3
Core deposits (1)			$	4,036,599					$	4,126,374					$	(89,775)					(2.2)		%
Share and Per Share Information
Book value per share			$	17.04					$	15.44
Tangible book value per share (1)			14.55						12.90
Shares of common stock outstanding			31,559,366						31,695,828
Balance Sheet Ratios
Loan to deposit ratio			78.72		%				77.35		%
Core deposits to total deposits (1)			94.30						93.75
Stockholders' equity to total assets			10.77						9.65
Tangible common equity to tangible assets (1)			9.35						8.19

_________________________________________________

(1)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures.

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Notable changes in our consolidated balance sheet include the following:

•Debt securities decreased $65.5 million, largely due to the sale of $66.8 million of municipal securities with sales proceeds used to reduce wholesale funding. Additionally, paydowns, maturities, and calls of debt securities generated another $85.2 million of cash proceeds with $67.3 million being reinvested into debt securities at currently higher yields;

•Loans decreased by $34.6 million, driven by lower line of credit utilization and early payoffs of loans; and

•The $120.7 million decrease in total deposits was primarily attributable to a $114.9 million decrease in brokered deposits. Deposit balances continued to shift towards higher cost deposit products, such as time deposits which increased $176.7 million, including the addition of $65.0 million of time deposits from a State of Illinois loan matching program that are a lower cost source of funding.

Loan Portfolio

The following table sets forth the composition of the loan portfolio, excluding loans held-for-sale, by type of loan.

			September 30, 2024												December 31, 2023
(dollars in thousands)			Balance						Percent						Balance						Percent
Commercial and industrial			$	395,598					11.7		%				$	427,800					12.6		%
Commercial real estate - owner occupied			288,838						8.6						295,842						8.7
Commercial real estate - non-owner occupied			889,188						26.4						880,681						25.9
Construction and land development			359,151						10.7						363,983						10.7
Multi-family			432,712						12.8						417,923						12.3
One-to-four family residential			472,040						14.0						491,508						14.4
Agricultural and farmland			297,102						8.8						287,294						8.4
Municipal, consumer, and other			235,201						7.0						239,386						7.0
Loans, before allowance for credit losses			3,369,830						100.0		%				3,404,417						100.0		%
Allowance for credit losses			(40,966)												(40,048)
Loans, net of allowance for credit losses			$	3,328,864											$	3,364,369

Loans, before allowance for credit losses were $3.37 billion at September 30, 2024, a decrease of $34.6 million, or 1.0%, from December 31, 2023. Notable changes include the following:

•A $12.5 million decrease in line of credit utilization, including $13.2 million drawn on two customers' lines of credit in late December 2023 that paid off in early January 2024;

•A $14.8 million increase in multi-family loans and a $8.5 million increase in commercial real estate – non-owner occupied loans primarily attributable to completed construction projects transferred from the construction and land development category, partially offset by early payoffs; and

•A $4.8 million decrease in construction loans primarily attributable to transfers of completed projects into other categories, partially offset by draws on existing construction projects and new construction loans to existing customers.

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Commercial Real Estate Portfolios

Commercial real estate – owner occupied loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The commercial real estate – owner occupied portfolio composition, segmented by the owner’s business classification, as of September 30, 2024 was as follows:

			September 30, 2024
(dollars in thousands)			Balance						Substandard Risk Rating
Health care and social assistance			$	38,975					$	330
Auto repair and dealers			34,214						—
Accommodation and food services			32,342						4,099
Retail trade			27,304						—
Manufacturing			26,149						—
Construction			18,035						1,149
Real estate, rental, and leasing			16,017						—
Grain elevators			14,046						—
Administrative and support services			12,177						—
Other services (except public administration)			11,934						—
Wholesale trade			9,528						—
Arts, entertainment, and recreation			9,123						80
Professional, scientific, and technical services			8,478						—
Agriculture, forestry, fishing, and hunting			7,290						—
Education services			6,628						1,373
Finance and insurance			5,510						—
Other			11,088						—
Total			$	288,838					$	7,031

Commercial real estate – non-owner occupied loans are primarily made based on projected cash flows from the rental or sale of the underlying collateral. The commercial real estate – non-owner occupied portfolio composition, segmented by the property type, as of September 30, 2024 was as follows:

			September 30, 2024
(dollars in thousands)			Balance						Substandard Risk Rating						Weighted Average LTV(1)
Warehouse and manufacturing			$	192,420					$	—					56		%
Retail			171,269						9,228						56
Office			157,809						4,879						57
Senior Living			103,893						12,937						56
Hotel			88,233						10,848						55
Mixed use (commercial and residential)			67,126						—						64
Medical office			34,261						—						59
Gas station			24,963						—						62
Auto repair and dealers			17,464						—						51
Restaurant and bar			13,967						—						61
Other			17,783						—						55
Total			$	889,188					$	37,892					57		%

________________

(1)     Weighted average LTV is based on the most recent appraisals available, which are generally obtained at the time of origination.

Multi-family loans totaled $432.7 million as of September 30, 2024 and are primarily made based on projected cash flows from the rental or sale of the underlying collateral. As of September 30, 2024, multi-family loans had a weighted average LTV of 58%, based on the most recent appraisals available, which are generally obtained at the time of origination.

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Management’s disciplined approach to credit risk management is exercised through portfolio diversification, robust underwriting policies, and routine loan monitoring practices in order to identify and mitigate any credit weakness as early as possible. Management continually monitors and evaluates commercial real estate concentrations by property class, industry, and relative to the Bank’s regulatory capital to remain in line with board established limits and adapt to changing industry conditions. A centralized credit underwriting group, independent of the originating lender, evaluates all exposures over $750 thousand annually, if not more frequently, through a standardized credit review process to ensure uniform application of policies and procedures as well as analyze credit performance. All loans require appropriate internal approval, with a centralized credit approval group reviewing all exposures over $500 thousand. A sampling of the loan portfolio is also reviewed by the Bank’s internal loan review function annually, in addition to an annual third-party review of the portfolio.

In response to the rapid increase in interest rates, we have prepared quarterly cash flow stress tests for our commercial real estate – non-owner occupied and multi-family loans since the fourth quarter of 2022. For commercial real estate – non-owner occupied and multi-family loans over $1 million, we evaluate the impact of current interest rates on the underlying cash flows of the properties securing these loans, based on the most recent cash flow data available. This testing is completed in addition to the various sensitivity testing completed at the initial extension of credit. Individual credits with a maturity scheduled within the next five quarters that are presenting stress under current renewal terms are identified, so that ample time is available to develop solutions to manage credit risk.

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Loan Portfolio Maturities

The following table summarizes the scheduled maturities of the loan portfolio as of September 30, 2024. Demand loans (loans having no stated repayment schedule or maturity) and overdraft loans are reported as being due in one year or less.

(dollars in thousands)						1 Year or Less						After 1 Year Through 5 Years						After 5 Years Through 15 Years						After 15 Years						Total
Commercial and industrial						$	229,644					$	138,609					$	27,345					$	—					$	395,598
Commercial real estate - owner occupied						45,603						157,538						73,139						12,558						288,838
Commercial real estate - non-owner occupied						185,394						556,746						143,969						3,079						889,188
Construction and land development						172,888						161,859						15,237						9,167						359,151
Multi-family						88,154						294,539						48,689						1,330						432,712
One-to-four family residential						53,084						194,265						99,684						125,007						472,040
Agricultural and farmland						132,235						120,370						39,721						4,776						297,102
Municipal, consumer, and other						89,041						45,975						70,470						29,715						235,201
Total						$	996,043					$	1,669,901					$	518,254					$	185,632					$	3,369,830

The following table summarizes loans maturing after one year, segregated into variable and fixed interest rates.

						Variable Interest Rates
(dollars in thousands)						Repricing 1 Year or Less						Repricing After 1 Year						Total Variable Interest Rates						Predetermined (Fixed) Interest Rates						Total
Commercial and industrial						$	30,859					$	6,565					$	37,424					$	128,530					$	165,954
Commercial real estate - owner occupied						41,677						40,511						82,188						161,047						243,235
Commercial real estate - non-owner occupied						78,462						22,659						101,121						602,673						703,794
Construction and land development						59,516						9,930						69,446						116,817						186,263
Multi-family						39,268						35,919						75,187						269,371						344,558
One-to-four family residential						85,004						59,849						144,853						274,103						418,956
Agricultural and farmland						4,055						9,843						13,898						150,969						164,867
Municipal, consumer, and other						13,942						22,623						36,565						109,595						146,160
Total						$	352,783					$	207,899					$	560,682					$	1,813,105					$	2,373,787

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Nonperforming Assets

The following table sets forth information concerning nonperforming loans and nonperforming assets as of each of the dates indicated.

(dollars in thousands)			September 30, 2024						December 31, 2023
NONPERFORMING ASSETS
Nonaccrual			$	8,200					$	7,820
Past due 90 days or more, still accruing			5						37
Total nonperforming loans			8,205						7,857
Foreclosed assets			376						852
Total nonperforming assets			$	8,581					$	8,709
Nonperforming loans that are wholly or partially guaranteed by the U.S. Government			$	2,046					$	2,641
Allowance for credit losses			$	40,966					$	40,048
Loans, before allowance for credit losses			3,369,830						3,404,417
CREDIT QUALITY RATIOS
Allowance for credit losses to loans, before allowance for credit losses			1.22		%				1.18		%
Allowance for credit losses to nonaccrual loans			499.59						512.12
Allowance for credit losses to nonperforming loans			499.28						509.71
Nonaccrual loans to loans, before allowance for credit losses			0.24						0.23
Nonperforming loans to loans, before allowance for credit losses			0.24						0.23
Nonperforming assets to total assets			0.17						0.17
Nonperforming assets to loans, before allowance for credit losses, and foreclosed assets			0.25						0.26

Total nonperforming assets were $8.6 million at September 30, 2024, remaining relatively stable from December 31, 2023. Additionally, of the $8.2 million of nonperforming loans held as of September 30, 2024, $2.0 million are either wholly or partially guaranteed by the U.S. Government.

Risk Classification of Loans

Our risk classifications of loans were as follows:

(dollars in thousands)			September 30, 2024						December 31, 2023
Pass			$	3,157,434					$	3,241,889
Pass-watch			109,743						98,206
Special mention (1)			27,632						—
Substandard			75,021						64,322
Total			$	3,369,830					$	3,404,417

_________________________________________________

(1)    In June 2024, the Company updated its risk rating categories to add the special mention category to provide another level of granularity in distinguishing risk levels of loans. As of June 30, 2024, $19.5 million of the special mention loans would have been considered pass-watch and $10.6 million would have been considered substandard under the previous risk rating categories.

Loans rated pass-watch or worse increased $49.9 million, or 30.7%, from December 31, 2023 to September 30, 2024, primarily attributable to the downgrade of one construction and land development credit, three non-owner occupied commercial real estate credits, and two farmland-secured credits to the pass-watch risk classification.

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Net Charge-offs (Recoveries)

The following table summarizes net charge-offs (recoveries) to average loans by loan category.

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Net charge-offs (recoveries)
Commercial and industrial			$	707					$	1					$	1,165					$	(30)
Commercial real estate - owner occupied			(4)						—						(8)						(11)
Commercial real estate - non-owner occupied			(329)						156						(586)						(82)
Construction and land development			—						(44)						(2)						(52)
Multi-family			—						(280)						188						(280)
One-to-four family residential			81						(32)						4						(101)
Agricultural and farmland			(2)						(2)						(10)						(4)
Municipal, consumer, and other			133						135						314						264
Total			$	586					$	(66)					$	1,065					$	(296)
Average loans
Commercial and industrial			$	395,431					$	393,231					$	402,807					$	360,233
Commercial real estate - owner occupied			282,143						291,969						291,371						290,025
Commercial real estate - non-owner occupied			885,529						895,384						885,021						867,277
Construction and land development			373,218						360,319						364,598						366,372
Multi-family			424,879						378,775						422,968						360,842
One-to-four family residential			484,247						492,094						487,949						471,483
Agricultural and farmland			290,426						264,110						284,465						247,598
Municipal, consumer, and other			243,426						220,821						235,696						219,811
Total			$	3,379,299					$	3,296,703					$	3,374,875					$	3,183,641
Charge-offs (recoveries) to average loans *
Commercial and industrial			0.71		%				—		%				0.39		%				(0.01)		%
Commercial real estate - owner occupied			(0.01)						—						—						(0.01)
Commercial real estate - non-owner occupied			(0.15)						0.07						(0.09)						(0.01)
Construction and land development			—						(0.05)						—						(0.02)
Multi-family			—						(0.29)						0.06						(0.10)
One-to-four family residential			0.07						(0.03)						—						(0.03)
Agricultural and farmland			—						—						—						—
Municipal, consumer, and other			0.22						0.24						0.18						0.16
Total			0.07		%				(0.01)		%				0.04		%				(0.01)		%

_________________________________________________

*    Annualized measure.

The net charge-offs (recoveries) to average total loans ratio has remained low for several years. While we believe our continuous credit monitoring and collection efforts have resulted in lower levels of credit losses, we also recognize that substantial federal economic stimulus following the COVID-19 pandemic and the relatively stable economic conditions after the pandemic have also contributed to reduced credit losses.

Additionally, heightened net charge-offs within the commercial and industrial segment are primarily related to equipment finance loans which were purchased as part of a pool of loans during 2023.

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Securities

The Company’s investment policy emphasizes safety of the principal, liquidity needs, expected returns, cash flow targets, and consistency with our interest rate risk management strategy. The composition and maturities of the debt securities portfolio as of September 30, 2024, are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Security yields have not been adjusted to a tax-equivalent basis.

						September 30, 2024
						Available-for-Sale												Held-to-Maturity												Total
(dollars in thousands)						Amortized Cost						Weighted Average Yield						Amortized Cost						Weighted Average Yield						Amortized Cost						Weighted Average Yield
Due in 1 year or less
U.S. Treasury						$	40,128					1.44		%				$	—					—		%				$	40,128					1.44		%
U.S. government agency						6,296						2.87						—						—						6,296						2.87
Municipal						3,974						2.40						4,891						3.00						8,865						2.73
Mortgage-backed:
Agency residential						48						3.09						—						—						48						3.09
Agency commercial						6						7.25						—						—						6						7.25
Total						$	50,452					1.70		%				$	4,891					3.00		%				$	55,343					1.81		%
Due after 1 year through 5 years
U.S. Treasury						$	79,926					1.22		%				$	—					—		%				$	79,926					1.22		%
U.S. government agency						36,429						2.41						32,238						2.20						68,667						2.31
Municipal						43,167						1.63						16,970						3.13						60,137						2.06
Mortgage-backed:
Agency residential						10,324						2.75						11,299						2.15						21,623						2.43
Agency commercial						70,230						1.80						79,896						2.27						150,126						2.05
Corporate						24,946						5.37						—						—						24,946						5.37
Total						$	265,022					2.05		%				$	140,403					2.35		%				$	405,425					2.16		%
Due after 5 years through 10 years
U.S. Treasury						$	19,638					1.62		%				$	—					—		%				$	19,638					1.62		%
U.S. government agency						16,442						3.41						56,227						2.64						72,669						2.81
Municipal						87,001						1.75						12,200						3.57						99,201						1.97
Mortgage-backed:
Agency residential						57,994						2.14						—						—						57,994						2.14
Agency commercial						22,518						1.66						172,317						1.87						194,835						1.84
Corporate						34,770						4.52						—						—						34,770						4.52
Total						$	238,363					2.34		%				$	240,744					2.13		%				$	479,107					2.24		%
Due after 10 years
Municipal						$	19,900					1.65		%				$	2,258					3.43		%				$	22,158					1.84		%
Mortgage-backed:
Agency residential						144,185						3.60						76,933						3.63						221,118						3.61
Agency commercial						38,559						2.45						39,846						1.96						78,405						2.20
Corporate						2,000						4.50						—						—						2,000						4.50
Total						$	204,644					3.21		%				$	119,037					3.07		%				$	323,681					3.15		%
Total
U.S. Treasury						$	139,692					1.34		%				$	—					—		%				$	139,692					1.34		%
U.S. government agency						59,167						2.74						88,465						2.48						147,632						2.58
Municipal						154,042						1.72						36,319						3.28						190,361						2.02
Mortgage-backed:
Agency residential						212,551						3.16						88,232						3.44						300,783						3.24
Agency commercial						131,313						1.97						292,059						1.99						423,372						1.98
Corporate						61,716						4.86						—						—						61,716						4.86
Total						$	758,481					2.43		%				$	505,075					2.42		%				$	1,263,556					2.43		%

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SOURCES OF FUNDS

Deposits

Management continues to focus on growing deposits through the Company’s relationship-driven banking philosophy and community-focused marketing programs. Additionally, the Bank continues to add and improve digital banking services to solidify deposit relationships.

The following table sets forth the distribution of average deposits, by account type:

			Three Months Ended September 30,																																				Percent Change in Average Balance
			2024																		2023
(dollars in thousands)			Average Balance						Percent of Total Deposits						Weighted Average Cost *						Average Balance						Percent of Total Deposits						Weighted Average Cost *
Noninterest-bearing			$	1,013,893					23.5		%				—		%				$	1,105,472					26.5		%				—		%				(8.3)		%
Interest-bearing demand			1,085,609						25.2						0.52						1,160,654						27.8						0.26						(6.5)
Money market			800,651						18.6						2.35						682,772						16.4						1.18						17.3
Savings			573,077						13.3						0.27						639,384						15.3						0.15						(10.4)
Time			804,379						18.7						3.81						519,683						12.4						2.50						54.8
Brokered			29,996						0.7						5.54						66,776						1.6						5.34						(55.1)
Total deposits			$	4,307,605					100.0		%				1.35		%				$	4,174,741					100.0		%				0.69		%				3.2		%
			Nine Months Ended September 30,																																				Percent Change in Average Balance
			2024																		2023
(dollars in thousands)			Average Balance						Percent of Total Deposits						Weighted Average Cost *						Average Balance						Percent of Total Deposits						Weighted Average Cost *
Noninterest-bearing			$	1,031,239					23.8		%				—		%				$	1,123,917					27.2		%				—		%				(8.2)		%
Interest-bearing demand			1,112,198						25.7						0.50						1,204,937						29.1						0.21						(7.7)
Money market			800,693						18.5						2.37						664,036						16.1						0.90						20.6
Savings			592,134						13.7						0.28						678,495						16.4						0.12						(12.7)
Time			744,349						17.2						3.72						441,760						10.7						1.82						68.5
Brokered			50,046						1.1						5.49						22,987						0.5						5.30						117.7
Total deposits			$	4,330,659					100.0		%				1.31		%				$	4,136,132					100.0		%				0.45		%				4.7		%

_________________________________________________

*Annualized measure.

The increase in average deposit balances in 2024 compared to 2023 is primarily attributable to wealth management customer reciprocal deposits brought on balance sheet in December 2023, which increased average money market deposits by $128.9 million during the three months ended September 30, 2024 and by $134.6 million during the nine months ended September 30, 2024. Additionally, the Town and Country merger added $720.4 million of deposits on February 1, 2023.

As of September 30, 2024, the Company had $30.0 million of wholesale brokered deposits outstanding which matured and were repaid in October 2024. Brokered deposits are generally considered to be deposits that have been received from a third party who is engaged in the business of placing deposits on behalf of others. A traditional deposit broker will direct deposits to the banking institution offering the highest interest rate available. Federal banking laws and regulations place restrictions on depository institutions regarding brokered deposits because of the general concern that these deposits are not relationship based and are at a greater risk of being withdrawn and placed on deposit at another institution offering a higher interest rate, thus posing liquidity risk for institutions that gather brokered deposits in significant amounts.

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The following table sets forth time deposits by remaining maturity as of September 30, 2024:

(dollars in thousands)			3 Months or Less						Over 3 through 6 Months						Over 6 through 12 Months						Over 12 Months						Total
Time and brokered time deposits:
Amounts less than $100,000			$	124,343					$	127,943					$	74,311					$	34,710					$	361,307
Amounts of $100,000 or more but less than $250,000			83,069						107,366						51,809						16,310						258,554
Amounts of $250,000 or more			56,098						95,522						55,682						6,800						214,102
Total time and brokered time deposits			$	263,510					$	330,831					$	181,802					$	57,820					$	833,963

As of September 30, 2024 and December 31, 2023, the Bank’s uninsured deposits were estimated to be $967.5 million and $867.7 million, respectively.

LIQUIDITY

Bank Liquidity

The overall objective of bank liquidity management is to ensure the availability of sufficient cash funds to meet all financial commitments and to take advantage of investment opportunities. The Bank manages liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings as they mature, and to fund new loans and investments as opportunities arise.

The Bank continuously monitors its liquidity positions to ensure that assets and liabilities are managed in a manner that will meet all of our short-term and long-term cash requirements. The Bank manages its liquidity position to meet our daily cash flow needs, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives. The Bank also monitors liquidity requirements in light of interest rate trends, changes in the economy, the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits, and regulatory capital requirements.

As part of the Bank’s liquidity management strategy, the Bank is also focused on minimizing costs of liquidity and attempts to decrease these costs by promoting noninterest-bearing and low-cost deposits. While the Bank does not control the types of deposit instruments our clients choose, those choices can be influenced with the rates and the deposit specials offered.

Our on-balance sheet sources of liquidity included cash and cash equivalents as well as unpledged securities which may be sold or pledged as collateral to meet liquidity needs. As of September 30, 2024 and December 31, 2023, our on-balance sheet sources of liquidity included the following:

(dollars in thousands)			September 30, 2024						December 31, 2023
Cash and cash equivalents			$	179,671					$	141,252
Fair value of unpledged securities			648,017						827,760
Total cash and unpledged securities			$	827,688					$	969,012

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Additional sources of liquidity include borrowings from the FHLB, the Federal Reserve discount window, and federal fund lines of credit. Interest is charged on outstanding borrowings at the prevailing market rate. As of September 30, 2024, our current borrowings and additional available borrowing capacity were as follows:

			September 30, 2024
(dollars in thousands)			Current Balance						Additional Available Capacity
FHLB			$	13,435					$	1,019,179
Federal Reserve			—						104,665
Federal funds lines of credit			—						80,000
Total			$	13,435					$	1,203,844

Further, the Bank could utilize brokered deposits as an additional source of liquidity, as needed.

As of September 30, 2024, management believed the current liquidity and available sources of liquidity are adequate to meet all of the reasonably foreseeable short-term and intermediate-term demands of the Bank. As of September 30, 2024, the Bank had no material commitments for capital expenditures.

Holding Company Liquidity

The Holding Company, or HBT Financial, Inc. on an unconsolidated basis, is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity. As of September 30, 2024, the Holding Company had cash and cash equivalents of $17.9 million.

The Holding Company’s main source of funding is dividends declared and paid to it by the Bank. Dividends paid by the Bank to the Holding Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. Management believes that such limitations will not impact the Holding Company’s ability to meet its ongoing short-term or intermediate-term cash obligations. During the three months ended September 30, 2024 and 2023, the Bank paid $8.0 million and $12.0 million in dividends to the Holding Company, respectively. During the nine months ended September 30, 2024 and 2023, the Bank paid $26.0 million and $52.0 million in dividends to the Holding Company, respectively.

The liquidity needs of the Holding Company on an unconsolidated basis consist primarily of operating expenses, interest payments on the subordinated notes and junior subordinated debentures, and shareholder distributions in the form of dividends and stock repurchases. During the three months ended September 30, 2024 and 2023, holding company operating expenses consisted of interest expense of $1.5 million and $1.4 million, respectively, and other operating expenses of $1.0 million and $1.2 million, respectively. During the nine months ended September 30, 2024 and 2023, holding company operating expenses consisted of interest expense of $4.3 million and $4.0 million, respectively, and other operating expenses of $3.1 million and $4.6 million, respectively.

Additionally, the Holding Company paid $6.0 million and $5.4 million of dividends to stockholders during the three months ended September 30, 2024 and 2023, respectively, and paid $18.1 million and $16.4 million of dividends to stockholders during the nine months ended September 30, 2024 and 2023, respectively. The Holding Company also paid $38.0 million in cash consideration in the acquisition of Town and Country during the first quarter of 2023.

As of September 30, 2024, management was not aware of any known trends, events or uncertainties that had or were reasonably likely to have a material impact on the Holding Company’s liquidity.

As of September 30, 2024, management believed the current liquidity and available sources of liquidity are adequate to meet all of the reasonably foreseeable short-term and intermediate-term demands of the Holding Company. As of September 30, 2024, the Holding Company had no material commitments for capital expenditures.

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CAPITAL RESOURCES

The overall objectives of capital management are to ensure the availability of sufficient capital to support loan, deposit and other asset and liability growth opportunities and to maintain capital to absorb unforeseen losses or write-downs that are inherent in the business risks associated with the banking industry. The Company seeks to balance the need for higher capital levels to address such unforeseen risks and the goal to achieve an adequate return on the capital invested by our stockholders.

Regulatory Capital Requirements

The Company and Bank are each subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the financial statements of the Company and the Bank.

In addition to meeting minimum capital requirements, the Company and the Bank must also maintain a “capital conservation buffer” to avoid becoming subject to restrictions on capital distributions and certain discretionary bonus payments to management. The capital conservation buffer requirement is 2.5% of risk-weighted assets.

As of September 30, 2024 and December 31, 2023, the Company and the Bank met all capital adequacy requirements to which they were subject. As of those dates, the Bank was “well capitalized” under the regulatory prompt corrective action provisions.

The following table sets forth actual capital ratios of the Company and the Bank as of the dates indicated, as well as the minimum ratios for capital adequacy purposes with the capital conservation buffer, and the minimum ratios to be well capitalized under regulatory prompt corrective action provisions.

						September 30, 2024						December 31, 2023						For Capital Adequacy Purposes With Capital Conservation Buffer (1)						To Be Well Capitalized Under Prompt Corrective Action Provisions (2)
Consolidated HBT Financial, Inc.
Total Capital (to Risk Weighted Assets)						16.54		%				15.33		%				10.50		%				N/A
Tier 1 Capital (to Risk Weighted Assets)						14.48						13.42						8.50						N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)						13.15						12.12						7.00						N/A
Tier 1 Capital (to Average Assets)						11.16						10.49						4.00						N/A
Heartland Bank and Trust Company
Total Capital (to Risk Weighted Assets)						16.13		%				14.92		%				10.50		%				10.00		%
Tier 1 Capital (to Risk Weighted Assets)						15.10						14.01						8.50						8.00
Common Equity Tier 1 Capital (to Risk Weighted Assets)						15.10						14.01						7.00						6.50
Tier 1 Capital (to Average Assets)						11.64						10.96						4.00						5.00

_________________________________________________

(1)The Tier 1 capital to average assets ratio (known as the “leverage ratio”) is not impacted by the capital conservation buffer.

(2)The prompt corrective action provisions are not applicable to bank holding companies.

N/A   Not applicable.

As of September 30, 2024, management was not aware of any known trends, events or uncertainties that had or were reasonably likely to have a material impact on the Company’s capital resources.

Cash Dividends

During 2023, the Company paid quarterly cash dividends of $0.17 per share. On January 23, 2024, the Company announced an increase of $0.02 and paid a $0.19 per share dividend during the first, second, and third quarters of 2024.

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Stock Repurchase Program

The Company did not repurchase any shares of its common stock during the three months ended September 30, 2024. The Company’s Board of Directors have authorized the repurchase of up to $15.0 million of its common stock under its stock repurchase program in effect until January 1, 2025. As of September 30, 2024, the Company had $10.6 million remaining under the current stock repurchase authorization.

OFF-BALANCE SHEET ARRANGEMENTS

As a financial services provider, the Bank routinely is a party to various financial instruments with off-balance sheet risks, such as commitments to extend credit, standby letters of credit, unused lines of credit, commitments to sell loans, and interest rate swaps. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process afforded to loans originated by the Bank. For additional information, see “Note 14 – Commitments and Contingencies” to the consolidated financial statements.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates are those that are critical to the portrayal and understanding of the Company’s financial condition and results of operations and require management to make assumptions that are difficult, subjective, or complex. These estimates involve judgments, assumptions, and uncertainties that are susceptible to change. In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, the possibility of a materially different financial condition or materially different results of operations is a reasonable likelihood. Further, changes in accounting standards could impact the Company’s critical accounting estimates. The following accounting estimate could be deemed critical:

Allowance for Credit Losses

The allowance for credit losses reflects an estimate of lifetime expected credit losses. Measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is established through a provision for credit losses which is charged to expense. Additions to the allowance for credit losses are expected to maintain the adequacy of the total allowance for credit losses. Loan losses are charged off against the allowance for credit losses when the Company determines the loan balance to be uncollectible. Cash received on previously charged off amounts is recorded as a recovery to the allowance for credit losses.

Management uses the discounted cash flow method to estimate expected credit losses for all loan categories, except for consumer loans where the weighted average remaining maturity method is utilized. The Company uses regression analysis of historical internal and peer data to determine which macroeconomic variables are most closely correlated with credit losses, such as the unemployment rate and changes in GDP. Management leverages economic projections from a reputable third party to inform its economic forecasts with a reversion to historical averages for periods beyond a reasonable and supportable forecast period.

Nonaccrual loans and loans which do not share risk characteristics with other loans in the pool are individually evaluated to determine expected credit losses.

The allowance for credit losses on unfunded commitments is estimated in the same manner as the associated loans, adjusted for anticipated funding rate.

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NON-GAAP FINANCIAL INFORMATION

This Quarterly Report on Form 10-Q contains certain financial information determined by methods other than those in accordance with GAAP. Management believes that it is a standard practice in the banking industry to present these non-GAAP financial measures, and accordingly believes that providing these measures may be useful for peer comparison purposes. These disclosures should not be viewed as substitutes for the results determined to be in accordance with GAAP; nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies. See our reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures below.

Non-GAAP Financial Measure			Definition			How the Measure Provides Useful Information to Investors
Adjusted Net Income			•Net income, with the following adjustments: -excludes acquisition expenses, including the day 2 provision for credit losses on non-PCD loans and unfunded commitments, -excludes branch closure expenses, -excludes net earnings (losses) from closed or sold operations, -excludes gains (losses) on closed branch premises, -excludes realized gains (losses) on sales of securities, -excludes mortgage servicing rights fair value adjustment, and -the income tax effect of these pre-tax adjustments.			•Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects. •We also sometimes refer to ratios that include Adjusted Net Income, such as: -Adjusted Return on Average Assets, which is Adjusted Net Income divided by average assets. -Adjusted Return on Average Equity, which is Adjusted Net Income divided by average equity. -Adjusted Earnings Per Share - Basic, which is Adjusted Net Income allocated to common shares divided by weighted average common shares outstanding. -Adjusted Earnings Per Share – Diluted, which is Adjusted Net Income allocated to common shares divided by weighted average common shares outstanding, including all dilutive potential shares.
Net Interest Income (Tax-Equivalent Basis)			•Net interest income adjusted for the tax-favored status of tax-exempt loans and securities. (1)			•We believe the tax-equivalent basis is the preferred industry measurement of net interest income. •Enhances comparability of net interest income arising from taxable and tax-exempt sources. •We also sometimes refer to Net Interest Margin (Tax-Equivalent Basis), which is Net Interest Income (Tax-Equivalent Basis) divided by average interest-earning assets.
Efficiency Ratio (Tax-Equivalent Basis)			•Noninterest expense less amortization of intangible assets divided by the sum of net interest income (tax-equivalent basis) and noninterest income. (1)			•Provides a measure of productivity in the banking industry. •Calculated to measure the cost of generating one dollar of revenue. That is, the ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue.

_________________________________________________

(1)Tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.

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Non-GAAP Financial Measure			Definition			How the Measure Provides Useful Information to Investors
Ratio of Tangible Common Equity to Tangible Assets			•Tangible Common Equity is total stockholders’ equity less goodwill and other intangible assets. •Tangible Assets is total assets less goodwill and other intangible assets.			•Generally used by investors, our management, and banking regulators to evaluate capital adequacy. •Facilitates comparison of our earnings with the earnings of other banking organization with varying amounts of goodwill or intangible assets. •We also sometimes refer to ratios that include Tangible Common Equity, such as: -Tangible Book Value Per Share, which is Tangible Common Equity divided by shares of common stock outstanding. -Return on Average Tangible Common Equity, which is net income divided by average Tangible Common Equity. -Adjusted Return on Average Tangible Common Equity, which is Adjusted Net Income divided by average Tangible Common Equity.
Core Deposits			•Total deposits, excluding: -Time deposits of $250,000 or more, and -Brokered deposits			•Provides investors with information regarding the stability of the Company’s sources of funds. •We also sometimes refer to the ratio of Core Deposits to total deposits.

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Reconciliation of Non-GAAP Financial Measure —

Adjusted Net Income and Adjusted Return on Average Assets

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Net income			$	18,180					$	19,715					$	51,508					$	47,396
Adjustments:
Acquisition expenses (1)			—						—						—						(13,691)
Gains (losses) on closed branch premises			—						—						(635)						75
Realized gains (losses) on sales of securities			—						(813)						(3,382)						(1,820)
Mortgage servicing rights fair value adjustment			(1,488)						23						(1,505)						(460)
Total adjustments			(1,488)						(790)						(5,522)						(15,896)
Tax effect of adjustments (2)			424						226						1,574						4,382
Total adjustments after tax effect			(1,064)						(564)						(3,948)						(11,514)
Adjusted net income			$	19,244					$	20,279					$	55,456					$	58,910
Average assets			$	5,006,721					$	4,964,832					$	5,012,656					$	4,902,783
Return on average assets *			1.44		%				1.58		%				1.37		%				1.29		%
Adjusted return on average assets *			1.53						1.62						1.48						1.61

_________________________________________________

*    Annualized measure.

(1)Includes recognition of an allowance for credit losses on non-PCD loans of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million in connection with the Town and Country merger during the first quarter of 2023 in accordance with ASC 326 which was adopted on January 1, 2023.

(2)Assumes a federal income tax rate of 21% and a state tax rate of 9.5%.

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Reconciliation of Non-GAAP Financial Measure —

Adjusted Earnings Per Share

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands, except per share amounts)			2024						2023						2024						2023
Numerator:
Net income			$	18,180					$	19,715					$	51,508					$	47,396
Earnings allocated to participating securities (1)			—						(10)						—						(26)
Numerator for earnings per share - basic and diluted			$	18,180					$	19,705					$	51,508					$	47,370
Adjusted net income			$	19,244					$	20,279					$	55,456					$	58,910
Earnings allocated to participating securities (1)			—						(10)						—						(33)
Numerator for adjusted earnings per share - basic and diluted			$	19,244					$	20,269					$	55,456					$	58,877
Denominator:
Weighted average common shares outstanding			31,559,366						31,829,250						31,600,442						31,598,650
Dilutive effect of outstanding restricted stock units			118,180						137,187						115,266						102,574
Weighted average common shares outstanding, including all dilutive potential shares			31,677,546						31,966,437						31,715,708						31,701,224
Earnings per share - Basic			$	0.58					$	0.62					$	1.63					$	1.50
Earnings per share - Diluted			$	0.57					$	0.62					$	1.62					$	1.49
Adjusted earnings per share - Basic			$	0.61					$	0.64					$	1.75					$	1.86
Adjusted earnings per share - Diluted			$	0.61					$	0.63					$	1.75					$	1.86

_________________________________________________

(1)The Company previously granted restricted stock units that contained non-forfeitable rights to dividend equivalents which were considered participating securities. Prior to 2024, these restricted stock units were included in the calculation of basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.

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Reconciliation of Non-GAAP Financial Measure —

Net Interest Income and Net Interest Margin (Tax-Equivalent Basis)

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Net interest income (tax-equivalent basis)
Net interest income			$	47,733					$	48,279					$	141,449					$	143,988
Tax-equivalent adjustment (1)			552						675						1,680						2,092
Net interest income (tax-equivalent basis) (1)			$	48,285					$	48,954					$	143,129					$	146,080
Net interest margin (tax-equivalent basis)
Net interest margin *			3.98		%				4.07		%				3.96		%				4.14		%
Tax-equivalent adjustment * (1)			0.05						0.06						0.05						0.06
Net interest margin (tax-equivalent basis) * (1)			4.03		%				4.13		%				4.01		%				4.20		%
Average interest-earning assets			$	4,769,471					$	4,708,331					$	4,773,478					$	4,649,993

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*    Annualized measure.

(1)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.

Reconciliation of Non-GAAP Financial Measure —

Efficiency Ratio (Tax-Equivalent Basis)

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Efficiency ratio (tax-equivalent basis)
Total noninterest expense			$	31,322					$	30,671					$	93,099					$	100,577
Less: amortization of intangible assets			710						720						2,130						1,950
Noninterest expense excluding amortization of intangible assets			$	30,612					$	29,951					$	90,969					$	98,627
Net interest income			$	47,733					$	48,279					$	141,449					$	143,988
Total noninterest income			8,705						9,490						23,941						26,841
Operating revenue			56,438						57,769						165,390						170,829
Tax-equivalent adjustment (1)			552						675						1,680						2,092
Operating revenue (tax-equivalent basis) (1)			$	56,990					$	58,444					$	167,070					$	172,921
Efficiency ratio			54.24		%				51.85		%				55.00		%				57.73		%
Efficiency ratio (tax-equivalent basis) (1)			53.71						51.25						54.45						57.04

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(1)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.

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Reconciliation of Non-GAAP Financial Measure —

Ratio of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share

(dollars in thousands, except per share data)			September 30, 2024						December 31, 2023
Tangible Common Equity
Total stockholders' equity			$	537,662					$	489,496
Less: Goodwill			59,820						59,820
Less: Intangible assets, net			18,552						20,682
Tangible common equity			$	459,290					$	408,994
Tangible Assets
Total assets			$	4,990,728					$	5,073,170
Less: Goodwill			59,820						59,820
Less: Intangible assets, net			18,552						20,682
Tangible assets			$	4,912,356					$	4,992,668
Total stockholders' equity to total assets			10.77		%				9.65		%
Tangible common equity to tangible assets			9.35						8.19
Shares of common stock outstanding			31,559,366						31,695,828
Book value per share			$	17.04					$	15.44
Tangible book value per share			14.55						12.90

Reconciliation of Non-GAAP Financial Measure —

Return on Average Tangible Common Equity, Adjusted Return on Average Stockholders’ Equity, and Adjusted Return on Average Tangible Common Equity

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2024						2023						2024						2023
Average Tangible Common Equity
Total stockholders' equity			$	523,745					$	459,601					$	506,582					$	445,576
Less: Goodwill			59,820						59,875						59,820						56,406
Less: Intangible assets, net			18,892						21,793						19,607						20,005
Average tangible common equity			$	445,033					$	377,933					$	427,155					$	369,165
Net income			$	18,180					$	19,715					$	51,508					$	47,396
Adjusted net income			19,244						20,279						55,456						58,910
Return on average stockholders' equity *			13.81		%				17.02		%				13.58		%				14.22		%
Return on average tangible common equity *			16.25						20.70						16.11						17.17
Adjusted return on average stockholders' equity *			14.62		%				17.51		%				14.62		%				17.68		%
Adjusted return on average tangible common equity *			17.20						21.29						17.34						21.34

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*    Annualized measure.

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Reconciliation of Non-GAAP Financial Measure —

Core Deposits

(dollars in thousands)			September 30, 2024						December 31, 2023
Core Deposits
Total deposits			$	4,280,700					$	4,401,437
Less: time deposits of $250,000 or more			214,102						130,183
Less: brokered deposits			29,999						144,880
Core deposits			$	4,036,599					$	4,126,374
Core deposits to total deposits			94.30		%				93.75		%

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Managing risk is an essential part of successfully managing a financial institution. Our most prominent risk exposures are interest rate risk and credit risk.

Interest Rate Risk

Our most significant form of market risk is interest rate risk inherent in the normal course of lending and deposit-taking activities. Interest rate risk is the potential reduction of net interest income as a result of changes in interest rates. Management believes that our ability to successfully respond to changes in interest rates will have a significant impact on our financial results. To that end, management actively monitors and manages our interest rate exposure.

The Company’s Asset/Liability Management Committee (“ALCO”), which is authorized by the Company’s board of directors, monitors our interest rate sensitivity and makes decisions relating to that process. The ALCO’s goal is to structure our asset/liability composition to maximize net interest income while managing interest rate risk so as to minimize the adverse impact of changes in interest rates on net interest income and capital in either a rising or declining interest rate environment. Profitability is affected by fluctuations in interest rates. A sudden and substantial change in interest rates may adversely impact our earnings because the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis.

We monitor the impact of changes in interest rates on our net interest income and economic value of equity (“EVE”) using rate shock analysis. Net interest income simulations measure the short-term earnings exposure from changes in market rates of interest in a rigorous and explicit fashion. Our current financial position is combined with assumptions regarding future business to calculate net interest income under varying hypothetical rate scenarios. EVE measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time. A decrease in EVE due to a specified rate change indicates a decline in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet.

The base and shock scenarios in the rate shock analysis assume a static balance sheet, static interest rates, no changes to product mix shift, and cash flow reinvestment at current market interest rates. We also make assumptions for our deposit betas and asset prepayments, based on historical experience.

Deposit Betas

Deposit pricing changes are primarily driven by changes in the Federal Funds rate, with the relationship between deposit rates and Federal Funds rate defined as deposit beta. We define cumulative deposit beta as the change in our quarterly cost of deposits divided by the change in the upper level of the stated Federal Funds rate range from the fourth quarter of 2021 through the second quarter of 2024, the most recent rising rate cycle. During this period, our cumulative deposit beta was 23.6%.

Asset Prepayments

We include prepayment assumptions for both our loan and securities portfolios, based on historical experience. Generally, mortgage portfolio prepayments increase in lower rate environments, while commercial and consumer portfolios have historically remained more consistent throughout rate cycles.

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The following table sets forth the estimated impact on our EVE and net interest income of immediate and parallel changes in interest rates at the specified levels.

Change in Interest Rates (basis points)						Estimated Increase (Decrease) in EVE						Increase (Decrease) in Estimated Net Interest Income
												Year 1						Year 2
September 30, 2024
+400						23.0		%				6.0		%				12.5		%
+300						19.2						4.8						9.8
+200						14.1						3.9						7.3
+100						7.8						2.5						4.4
-100						(10.0)						(4.4)						(6.4)
-200						(16.3)						(6.2)						(10.8)
-300						(8.9)						(6.7)						(13.8)
-400						(2.8)						(7.6)						(15.6)
December 31, 2023
+400						10.7		%				7.5		%				13.0		%
+300						9.7						5.8						10.3
+200						7.1						3.4						6.4
+100						4.2						1.4						3.1
-100						(6.3)						(4.4)						(6.1)
-200						(13.2)						(7.1)						(11.2)
-300						(4.5)						(9.5)						(16.0)
-400						5.4						(10.2)						(17.3)

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in EVE and net interest income requires that we make certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The EVE and net interest income table presented above assumes that the composition of our interest-rate-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and, accordingly, the data does not reflect any actions that we may undertake in response to changes in interest rates, such as changes in rates paid on certain deposit accounts based on local competitive factors, which could change the actual impact on EVE and net interest income. The table also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or the repricing characteristics of specific assets and liabilities. Accordingly, although the EVE and net interest income table provides an indication of our sensitivity to interest rate changes at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

Credit Risk

Credit risk is the risk that borrowers or counterparties will be unable or unwilling to repay their obligations in accordance with the underlying contractual terms. We manage and control credit risk in the loan portfolio by adhering to well-defined underwriting criteria and account administration standards established by management. Our loan policy documents underwriting standards, approval levels, exposure limits and other limits or standards deemed necessary and prudent. Portfolio diversification at the borrower, industry, and product levels is actively managed to mitigate concentration risk. In addition, credit risk management also includes an independent loan review process that assesses compliance with loan policy, compliance with loan documentation standards, accuracy of the risk rating and overall credit quality of the loan portfolio.

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ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and other members of the Company’s senior management. The Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, the end of the period covered by this report, the Company’s disclosure controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is: (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

We are sometimes party to legal actions that are routine and incidental to our business. Management, in consultation with legal counsel, does not expect the ultimate disposition of any or a combination of these matters to have a material adverse effect on our assets, business, cash flow, financial condition, liquidity, prospects and results of operations; however, given the nature, scope and complexity of the extensive legal and regulatory landscape applicable to our business, including laws and regulations governing consumer protection, fair lending, fair labor, privacy, information security, and anti-money laundering and anti-terrorism laws, we, like all banking organizations, are subject to heightened legal and regulatory compliance and litigation risk.

ITEM 1A.    RISK FACTORS

There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 6, 2024.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

On December 19, 2023, the Company’s board of directors approved a stock repurchase program that authorizes the Company to repurchase up to $15.0 million of its common stock. The stock repurchase program will be in effect until January 1, 2025, with the timing of purchases and number of shares repurchased dependent upon a variety of factors including price, trading volume, corporate and regulatory requirements, and market conditions. The Company is not obligated to purchase any shares under the stock repurchase program, and the stock repurchase program may be suspended or discontinued at any time without notice.

The following table sets forth information about the Company’s purchases of its common stock during the third quarter of 2024:

Period						Total Number of Shares Purchased						Average Price Paid Per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Approximate Dollar Value of Shares That May Yet be Purchased  Under the Plans or Programs (in thousands)
July 1 - 31, 2024						—						$	—					—						$	10,603
August 1 - 31, 2024						—						—						—						10,603
September 1 - 30, 2024						—						—						—						10,603
Total						—						$	—					—						$	10,603

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

None.

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ITEM 5.    OTHER INFORMATION

During the fiscal quarter ended September 30, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement.

ITEM 6.    EXHIBITS

Exhibit No.						Description
31.1						Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).
31.2						Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).
32.1 *						Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350.
32.2 *						Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350.
101.INS						Inline XBRL Instance Document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101).

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*This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			HBT FINANCIAL, INC.
October 30, 2024			By:			/s/ Peter R. Chapman
						Peter R. Chapman
						Chief Financial Officer
						(on behalf of the registrant and as principal financial officer)

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