HBT Financial, Inc. 10-Q

Table of Contents ​ ​ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ​ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ​ For the quarterly period ended September 30, 2022 OR ​ ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ​ For the transition period from to Commission file number: 001-39085 HBT Financial, Inc. (Exact name of registrant as specified in its charter) ​ Delaware 37-1117216 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) ​ ​ 401 North Hershey Rd Bloomington , Illinois 61704 ( 888 ) 897-2276 (Address of principal executive offices, including zip code) (Registrant’s telephone number, including area code) ​ Securities registered pursuant to Section 12(b) of the Act: ​ Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.01 per share HBT The Nasdaq Stock Market LLC ​ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒ ​ ​ ​ ​ Non-accelerated filer ☐ Smaller reporting company ☒ ​ ​ ​ ​ Emerging growth company ☒ ​ ​ ​ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of November 2, 2022, there were 28,752,626 shares outstanding of the registrant’s common stock, $0.01 par value. ​ ​ ​ ​ Table of Contents TABLE OF CONTENTS HBT Financial, Inc. ​ Page ​ ​ ​ PART I. FINANCIAL INFORMATION ​ 3 Item 1. Consolidated Financial Statements ​ 3 ​ Consolidated Balance Sheets ​ 3 ​ Consolidated Statements of Income ​ 4 ​ Consolidated Statements of Comprehensive Income (Loss) ​ 5 ​ Consolidated Statement of Changes in Stockholders’ Equity ​ 6 ​ Consolidated Statements of Cash Flows ​ 8 ​ Notes to Consolidated Financial Statements ​ 10 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 52 Item 3. Quantitative and Qualitative Disclosures about Market Risk ​ 86 Item 4. Controls and Procedures ​ 87 PART II. OTHER INFORMATION ​ 88 Item 1. Legal Proceedings ​ 88 Item 1A. Risk Factors ​ 88 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ​ 88 Item 3. Defaults Upon Senior Securities ​ 88 Item 4. Mine Safety Disclosures ​ 89 Item 5. Other Information ​ 89 Item 6. Exhibits ​ 89 ​ ​ ​ ​ Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in this quarterly report are forward-looking statements. Forward-looking statements may include statements relating to our plans, strategies and expectations, the economic impact of the COVID-19 pandemic and our future financial results, near-term loan growth, net interest margin, mortgage banking profits, wealth management fees, expenses, asset quality, capital levels, continued earnings, and liquidity. Forward-looking statements are generally identifiable by use of the words "believe," "may," "will," "should," "could," "expect," "estimate," "intend," "anticipate," "project," "plan" or similar expressions. Forward-looking statements are frequently based on assumptions that may or may not materialize and are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause actual results to differ materially from the results anticipated or projected and which could materially and adversely affect our operating results, financial condition or prospects include, but are not limited to: ● the strength of the local, state, national and international economies (including effects of inflationary pressures and supply chain constraints); ● the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threats thereof, or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; ● our asset quality and any loan charge-offs; ● the composition of our loan portfolio; ● environmental liability associated with our lending activities; ● 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; ● changes in and uncertainty related to benchmark interest rates used to price our loans, including the elimination of the London Interbank Offered Rate (“LIBOR”); ● 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 attract and retain skilled employees or changes in our management personnel; ● any failure or interruption of our information and communications systems; ● our ability to identify and address cybersecurity risks; ● the effects of the failure of any component of our business infrastructure provided by a third party; ● our ability to keep pace with technological changes; ● 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 effectively compete with other financial services companies and the effects of competition in the financial services industry on our business; ● 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; ● the impact of, and changes in applicable laws, regulations and accounting standards and policies; ● our prior status as an S corporation; ● possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations; ● 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; 1 Table of Contents ● damage to our reputation from any of the factors described above; ● 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, 2021, filed with the Securities and Exchange (“SEC”) Commission on March 11, 2022. 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. ​ 2 Table of Contents PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ (Unaudited) ​ ​ ​ September 30, ​ December 31, ​ ​ 2022 ​ 2021 ASSETS ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 22,169 ​ $ 23,387 Interest-bearing deposits with banks ​ ​ 56,046 ​ ​ 385,881 Cash and cash equivalents ​ ​ 78,215 ​ ​ 409,268 ​ ​ ​ ​ ​ ​ ​ Interest-bearing time deposits with banks ​ ​ — ​ ​ 490 Debt securities available-for-sale, at fair value ​ ​ 853,740 ​ ​ 942,168 Debt securities held-to-maturity (fair value of $ 481,692 in 2022 and $ 336,027 in 2021) ​ ​ 546,694 ​ ​ 336,185 Equity securities with readily determinable fair value ​ ​ 2,996 ​ ​ 3,443 Equity securities with no readily determinable fair value ​ ​ 1,977 ​ ​ 1,927 Restricted stock, at cost ​ ​ 4,050 ​ ​ 2,739 Loans held for sale ​ ​ 2,297 ​ ​ 4,942 ​ ​ ​ ​ ​ ​ ​ Loans, before allowance for loan losses ​ ​ 2,579,928 ​ ​ 2,499,689 Allowance for loan losses ​ ​ ( 25,060 ) ​ ​ ( 23,936 ) Loans, net of allowance for loan losses ​ ​ 2,554,868 ​ ​ 2,475,753 ​ ​ ​ ​ ​ ​ ​ Bank owned life insurance ​ ​ 7,515 ​ ​ 7,393 Bank premises and equipment, net ​ ​ 50,854 ​ ​ 52,483 Bank premises held for sale ​ ​ 281 ​ ​ 1,452 Foreclosed assets ​ ​ 2,637 ​ ​ 3,278 Goodwill ​ ​ 29,322 ​ ​ 29,322 Core deposit intangible assets, net ​ ​ 1,210 ​ ​ 1,943 Mortgage servicing rights, at fair value ​ ​ 10,440 ​ ​ 7,994 Investments in unconsolidated subsidiaries ​ ​ 1,165 ​ ​ 1,165 Accrued interest receivable ​ ​ 16,881 ​ ​ 14,901 Other assets ​ ​ 48,182 ​ ​ 17,408 Total assets ​ $ 4,213,324 ​ $ 4,314,254 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ Noninterest-bearing ​ $ 1,017,710 ​ $ 1,087,659 Interest-bearing ​ ​ 2,625,733 ​ ​ 2,650,526 Total deposits ​ ​ 3,643,443 ​ ​ 3,738,185 ​ ​ ​ ​ ​ ​ ​ Securities sold under agreements to repurchase ​ ​ 48,130 ​ ​ 61,256 Federal Home Loan Bank advances ​ ​ 60,000 ​ ​ — Subordinated notes ​ ​ 39,376 ​ ​ 39,316 Junior subordinated debentures issued to capital trusts ​ ​ 37,763 ​ ​ 37,714 Other liabilities ​ ​ 25,539 ​ ​ 25,902 Total liabilities ​ ​ 3,854,251 ​ ​ 3,902,373 ​ ​ ​ ​ ​ ​ ​ 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 29,308,491 at 2022 and 29,276,547 at 2021; shares outstanding of 28,752,626 at 2022 and 28,986,061 at 2021 ​ ​ 293 ​ ​ 293 Surplus ​ ​ 222,436 ​ ​ 220,891 Retained earnings ​ ​ 223,495 ​ ​ 194,132 Accumulated other comprehensive income (loss) ​ ​ ( 77,462 ) ​ ​ 1,471 Treasury stock at cost, 555,865 shares at 2022 and 290,486 at 2021 ​ ​ ( 9,689 ) ​ ​ ( 4,906 ) Total stockholders’ equity ​ ​ 359,073 ​ ​ 411,881 Total liabilities and stockholders’ equity ​ $ 4,213,324 ​ $ 4,314,254 ​ See accompanying Notes to Consolidated Financial Statements (Unaudited) ​ 3 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ ​ 2022 2021 2022 2021 ​ INTEREST AND DIVIDEND INCOME ​ (dollars in thousands, except per share data) ​ Loans, including fees: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ $ 29,855 ​ $ 25,604 ​ $ 84,504 ​ $ 76,016 ​ Federally tax exempt ​ ​ 842 ​ ​ 572 ​ ​ 2,183 ​ ​ 1,722 ​ Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ ​ 6,635 ​ ​ 4,632 ​ ​ 16,947 ​ ​ 12,323 ​ Federally tax exempt ​ ​ 1,207 ​ ​ 1,103 ​ ​ 3,385 ​ ​ 3,383 ​ Interest-bearing deposits in bank ​ ​ 458 ​ ​ 190 ​ ​ 1,037 ​ ​ 385 ​ Other interest and dividend income ​ ​ 17 ​ ​ 14 ​ ​ 50 ​ ​ 39 ​ Total interest and dividend income ​ ​ 39,014 ​ ​ 32,115 ​ ​ 108,106 ​ ​ 93,868 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ ​ 587 ​ ​ 564 ​ ​ 1,662 ​ ​ 1,821 ​ Securities sold under agreements to repurchase ​ ​ 9 ​ ​ 8 ​ ​ 26 ​ ​ 23 ​ Borrowings ​ ​ 85 ​ ​ 1 ​ ​ 87 ​ ​ 2 ​ Subordinated notes ​ ​ 470 ​ ​ 470 ​ ​ 1,409 ​ ​ 1,409 ​ Junior subordinated debentures issued to capital trusts ​ ​ 473 ​ ​ 357 ​ ​ 1,231 ​ ​ 1,069 ​ Total interest expense ​ ​ 1,624 ​ ​ 1,400 ​ ​ 4,415 ​ ​ 4,324 ​ Net interest income ​ ​ 37,390 ​ ​ 30,715 ​ ​ 103,691 ​ ​ 89,544 ​ PROVISION FOR LOAN LOSSES ​ ​ 386 ​ ​ ( 1,667 ) ​ ​ ( 53 ) ​ ​ ( 7,234 ) ​ Net interest income after provision for loan losses ​ ​ 37,004 ​ ​ 32,382 ​ ​ 103,744 ​ ​ 96,778 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NONINTEREST INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Card income ​ ​ 2,569 ​ ​ 2,509 ​ ​ 7,687 ​ ​ 7,216 ​ Wealth management fees ​ ​ 2,059 ​ ​ 2,036 ​ ​ 6,670 ​ ​ 6,013 ​ Service charges on deposit accounts ​ ​ 1,927 ​ ​ 1,677 ​ ​ 5,371 ​ ​ 4,364 ​ Mortgage servicing ​ ​ 697 ​ ​ 699 ​ ​ 2,016 ​ ​ 2,095 ​ Mortgage servicing rights fair value adjustment ​ ​ 351 ​ ​ 40 ​ ​ 2,446 ​ ​ 1,425 ​ Gains on sale of mortgage loans ​ ​ 354 ​ ​ 1,257 ​ ​ 1,267 ​ ​ 4,919 ​ Unrealized gains (losses) on equity securities ​ ​ ( 107 ) ​ ​ 28 ​ ​ ( 447 ) ​ ​ 74 ​ Gains (losses) on foreclosed assets ​ ​ ( 225 ) ​ ​ ( 14 ) ​ ​ ( 192 ) ​ ​ 126 ​ Gains (losses) on other assets ​ ​ ( 31 ) ​ ​ ( 672 ) ​ ​ 119 ​ ​ ( 719 ) ​ Income on bank owned life insurance ​ ​ 41 ​ ​ — ​ ​ 122 ​ ​ — ​ Other noninterest income ​ ​ 599 ​ ​ 832 ​ ​ 1,769 ​ ​ 2,461 ​ Total noninterest income ​ ​ 8,234 ​ ​ 8,392 ​ ​ 26,828 ​ ​ 27,974 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NONINTEREST EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries ​ ​ 12,752 ​ ​ 11,835 ​ ​ 38,489 ​ ​ 36,486 ​ Employee benefits ​ ​ 1,771 ​ ​ 1,455 ​ ​ 6,199 ​ ​ 4,549 ​ Occupancy of bank premises ​ ​ 1,979 ​ ​ 1,610 ​ ​ 5,780 ​ ​ 5,011 ​ Furniture and equipment ​ ​ 668 ​ ​ 657 ​ ​ 1,843 ​ ​ 1,883 ​ Data processing ​ ​ 1,631 ​ ​ 1,767 ​ ​ 5,274 ​ ​ 5,176 ​ Marketing and customer relations ​ ​ 880 ​ ​ 883 ​ ​ 2,936 ​ ​ 2,291 ​ Amortization of intangible assets ​ ​ 243 ​ ​ 252 ​ ​ 733 ​ ​ 799 ​ FDIC insurance ​ ​ 302 ​ ​ 279 ​ ​ 888 ​ ​ 763 ​ Loan collection and servicing ​ ​ 336 ​ ​ 400 ​ ​ 771 ​ ​ 1,098 ​ Foreclosed assets ​ ​ 97 ​ ​ 242 ​ ​ 260 ​ ​ 704 ​ Other noninterest expense ​ ​ 3,339 ​ ​ 2,787 ​ ​ 8,824 ​ ​ 8,105 ​ Total noninterest expense ​ ​ 23,998 ​ ​ 22,167 ​ ​ 71,997 ​ ​ 66,865 ​ INCOME BEFORE INCOME TAX EXPENSE ​ ​ 21,240 ​ ​ 18,607 ​ ​ 58,575 ​ ​ 57,887 ​ INCOME TAX EXPENSE ​ ​ 5,613 ​ ​ 4,892 ​ ​ 15,259 ​ ​ 15,210 ​ NET INCOME ​ $ 15,627 ​ $ 13,715 ​ $ 43,316 ​ $ 42,677 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EARNINGS PER SHARE - BASIC ​ $ 0.54 ​ $ 0.50 ​ $ 1.50 ​ $ 1.56 ​ EARNINGS PER SHARE - DILUTED ​ $ 0.54 ​ $ 0.50 ​ $ 1.49 ​ $ 1.56 ​ WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING ​ ​ 28,787,662 ​ ​ 27,340,926 ​ ​ 28,887,757 ​ ​ 27,377,809 ​ ​ See accompanying Notes to Consolidated Financial Statements (Unaudited) ​ ​ 4 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ ​ 2022 2021 2022 2021 ​ ​ ​ (dollars in thousands) ​ NET INCOME ​ $ 15,627 ​ $ 13,715 ​ $ 43,316 ​ $ 42,677 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER COMPREHENSIVE LOSS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized losses on debt securities available-for-sale ​ ​ ( 35,358 ) ​ ​ ( 5,676 ) ​ ​ ( 112,931 ) ​ ​ ( 19,950 ) ​ Reclassification adjustment for amortization of net unrealized losses on debt securities transferred to held-to-maturity ​ ​ 504 ​ ​ 195 ​ ​ 1,234 ​ ​ 426 ​ Unrealized gains (losses) on derivative instruments ​ ​ 374 ​ ​ ( 8 ) ​ ​ 1,117 ​ ​ 173 ​ Reclassification adjustment for net settlements on derivative instruments ​ ​ 14 ​ ​ 105 ​ ​ 177 ​ ​ 306 ​ Total other comprehensive loss, before tax ​ ​ ( 34,466 ) ​ ​ ( 5,384 ) ​ ​ ( 110,403 ) ​ ​ ( 19,045 ) ​ Income tax benefit ​ ​ ( 9,824 ) ​ ​ ( 1,535 ) ​ ​ ( 31,470 ) ​ ​ ( 5,429 ) ​ Total other comprehensive loss ​ ​ ( 24,642 ) ​ ​ ( 3,849 ) ​ ​ ( 78,933 ) ​ ​ ( 13,616 ) ​ TOTAL COMPREHENSIVE (LOSS) INCOME ​ $ ( 9,015 ) ​ $ 9,866 ​ $ ( 35,617 ) ​ $ 29,061 ​ ​ See accompanying Notes to Consolidated Financial Statements (Unaudited) ​ ​ 5 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ Total ​ ​ Shares ​ ​ ​ ​ ​ ​ Retained ​ Comprehensive ​ Treasury ​ Stockholders’ ​ Outstanding Amount Surplus Earnings Income (Loss) Stock Equity ​ ​ (dollars in thousands, except per share data) Balance, June 30, 2022 ​ 28,831,197 ​ $ 293 ​ $ 222,087 ​ $ 212,506 ​ $ ( 52,820 ) ​ $ ( 8,257 ) ​ $ 373,809 Net income ​ — ​ ​ — ​ ​ — ​ ​ 15,627 ​ ​ — ​ ​ — ​ ​ 15,627 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 24,642 ) ​ ​ — ​ ​ ( 24,642 ) Stock-based compensation ​ — ​ ​ — ​ ​ 349 ​ ​ — ​ ​ — ​ ​ — ​ ​ 349 Repurchase of common stock ​ ( 78,571 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,432 ) ​ ​ ( 1,432 ) Cash dividends and dividend equivalents ($ 0.16 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 4,638 ) ​ ​ — ​ ​ — ​ ​ ( 4,638 ) Balance, September 30, 2022 ​ 28,752,626 ​ $ 293 ​ $ 222,436 ​ $ 223,495 ​ $ ( 77,462 ) ​ $ ( 9,689 ) ​ $ 359,073 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, June 30, 2021 ​ 27,355,053 ​ $ 275 ​ $ 191,185 ​ $ 175,328 ​ $ 8,386 ​ $ ( 1,980 ) ​ $ 373,194 Net income ​ — ​ ​ — ​ ​ — ​ ​ 13,715 ​ ​ — ​ ​ — ​ ​ 13,715 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 3,849 ) ​ ​ — ​ ​ ( 3,849 ) Stock-based compensation ​ — ​ ​ — ​ ​ 228 ​ ​ — ​ ​ — ​ ​ — ​ ​ 228 Repurchase of common stock ​ ( 20,625 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 343 ) ​ ​ ( 343 ) Cash dividends and dividend equivalents ($ 0.15 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 4,124 ) ​ ​ — ​ ​ — ​ ​ ( 4,124 ) Balance, September 30, 2021 ​ 27,334,428 ​ $ 275 ​ $ 191,413 ​ $ 184,919 ​ $ 4,537 ​ $ ( 2,323 ) ​ $ 378,821 ​ See accompanying Notes to Consolidated Financial Statements (Unaudited) ​ 6 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ Total ​ ​ Shares ​ ​ ​ ​ ​ ​ Retained ​ Comprehensive ​ Treasury ​ Stockholders’ ​ Outstanding Amount Surplus Earnings Income (Loss) Stock Equity ​ ​ (dollars in thousands, except per share data) Balance, December 31, 2021 ​ 28,986,061 ​ $ 293 ​ $ 220,891 ​ $ 194,132 ​ $ 1,471 ​ $ ( 4,906 ) ​ $ 411,881 Net income ​ — ​ ​ — ​ ​ — ​ ​ 43,316 ​ ​ — ​ ​ — ​ ​ 43,316 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 78,933 ) ​ ​ — ​ ​ ( 78,933 ) Stock-based compensation ​ — ​ ​ — ​ ​ 1,602 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,602 Issuance of common stock upon vesting of restricted stock units, net of tax withholdings ​ 31,944 ​ ​ — ​ ​ ( 57 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 57 ) Repurchase of common stock ​ ( 265,379 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 4,783 ) ​ ​ ( 4,783 ) Cash dividends and dividend equivalents ($ 0.48 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 13,953 ) ​ ​ — ​ ​ — ​ ​ ( 13,953 ) Balance, September 30, 2022 ​ 28,752,626 ​ $ 293 ​ $ 222,436 ​ $ 223,495 ​ $ ( 77,462 ) ​ $ ( 9,689 ) ​ $ 359,073 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2020 ​ 27,457,306 ​ $ 275 ​ $ 190,875 ​ $ 154,614 ​ $ 18,153 ​ $ — ​ $ 363,917 Net income ​ — ​ ​ — ​ ​ — ​ ​ 42,677 ​ ​ — ​ ​ — ​ ​ 42,677 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 13,616 ) ​ ​ — ​ ​ ( 13,616 ) Stock-based compensation ​ — ​ ​ — ​ ​ 538 ​ ​ — ​ ​ — ​ ​ — ​ ​ 538 Issuance of common stock upon vesting of restricted stock units ​ 20,225 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Repurchase of common stock ​ ( 143,103 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,323 ) ​ ​ ( 2,323 ) Cash dividends and dividend equivalents ($ 0.45 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 12,372 ) ​ ​ — ​ ​ — ​ ​ ( 12,372 ) Balance, September 30, 2021 ​ 27,334,428 ​ $ 275 ​ $ 191,413 ​ $ 184,919 ​ $ 4,537 ​ $ ( 2,323 ) ​ $ 378,821 ​ See accompanying Notes to Consolidated Financial Statements (Unaudited) ​ ​ 7 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2022 2021 ​ ​ (dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ ​ ​ ​ Net income ​ $ 43,316 ​ $ 42,677 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Depreciation expense ​ ​ 2,296 ​ ​ 2,297 Provision for loan losses ​ ​ ( 53 ) ​ ​ ( 7,234 ) Net amortization of debt securities ​ ​ 5,337 ​ ​ 5,205 Deferred income tax (benefit) expense ​ ​ ( 245 ) ​ ​ 2,409 Stock-based compensation ​ ​ 1,602 ​ ​ 538 Net accretion of discount and deferred loan fees on loans ​ ​ ( 4,320 ) ​ ​ ( 9,529 ) Net unrealized loss (gain) on equity securities ​ ​ 447 ​ ​ ( 74 ) Net loss on disposals of bank premises and equipment ​ ​ 8 ​ ​ 33 Net gain on sales of bank premises held for sale ​ ​ ( 187 ) ​ ​ — Impairment losses on bank premises held for sale ​ ​ 61 ​ ​ 652 Net gain on sales of foreclosed assets ​ ​ ( 118 ) ​ ​ ( 321 ) Write-down of foreclosed assets ​ ​ 310 ​ ​ 195 Amortization of intangibles ​ ​ 733 ​ ​ 799 Increase in mortgage servicing rights ​ ​ ( 2,446 ) ​ ​ ( 1,425 ) Amortization of discount and issuance costs on subordinated notes and debentures ​ ​ 109 ​ ​ 109 Amortization of premium on interest-bearing time deposits with banks ​ ​ 5 ​ ​ — Amortization of premium on time deposits ​ ​ ( 164 ) ​ ​ — Mortgage loans originated for sale ​ ​ ( 50,467 ) ​ ​ ( 152,036 ) Proceeds from sale of mortgage loans ​ ​ 54,379 ​ ​ 163,086 Net gain on sale of mortgage loans ​ ​ ( 1,267 ) ​ ​ ( 4,919 ) Increase in cash surrender value of bank owned life insurance ​ ​ ( 122 ) ​ ​ — (Increase) decrease in accrued interest receivable ​ ​ ( 1,980 ) ​ ​ 879 Decrease in other assets ​ ​ 289 ​ ​ 1,639 Increase (decrease) in other liabilities ​ ​ 1,583 ​ ​ ( 18,284 ) Net cash provided by operating activities ​ ​ 49,106 ​ ​ 26,696 ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ Proceeds from maturities of interest-bearing time deposits with banks ​ ​ 485 ​ ​ — Proceeds from paydowns, maturities, and calls of debt securities ​ ​ 129,629 ​ ​ 149,659 Purchase of securities ​ ​ ( 368,794 ) ​ ​ ( 398,387 ) Net (increase) decrease in loans ​ ​ ( 74,769 ) ​ ​ 104,376 Purchase of restricted stock ​ ​ ( 1,311 ) ​ ​ ( 241 ) Purchases of bank premises and equipment ​ ​ ( 683 ) ​ ​ ( 773 ) Proceeds from sales of bank premises and equipment ​ ​ 8 ​ ​ 17 Proceeds from sales of bank premises held for sale ​ ​ 1,297 ​ ​ — Proceeds from sales of foreclosed assets ​ ​ 476 ​ ​ 1,583 Net cash used in investing activities ​ ​ ( 313,662 ) ​ ​ ( 143,766 ) ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ ​ ​ Net (decrease) increase in deposits ​ ​ ( 94,578 ) ​ ​ 289,022 Net (decrease) increase in repurchase agreements ​ ​ ( 13,126 ) ​ ​ 2,221 Net increase in Federal Home Loan Bank advances ​ ​ 60,000 ​ ​ — Taxes paid related to the vesting of restricted stock units ​ ​ ( 57 ) ​ ​ — Repurchase of common stock ​ ​ ( 4,783 ) ​ ​ ( 2,323 ) Cash dividends and dividend equivalents paid ​ ​ ( 13,953 ) ​ ​ ( 12,372 ) Net cash (used in) provided by financing activities ​ ​ ( 66,497 ) ​ ​ 276,548 ​ ​ ​ ​ ​ ​ ​ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ​ ​ ( 331,053 ) ​ ​ 159,478 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ​ ​ 409,268 ​ ​ 312,451 CASH AND CASH EQUIVALENTS AT END OF PERIOD ​ $ 78,215 ​ $ 471,929 ​ See accompanying Notes to Consolidated Financial Statements (Unaudited) 8 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2022 2021 ​ ​ (dollars in thousands) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 4,851 ​ $ 4,992 Cash paid for income taxes ​ $ 13,805 ​ $ 17,295 ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ Transfers of loans to foreclosed assets ​ $ 27 ​ $ 4,856 Sales of foreclosed assets through loan origination ​ $ — ​ $ 252 Transfers of bank premises and equipment to bank premises held for sale ​ $ — ​ $ 1,345 ​ See accompanying Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ 9 Table of Contents 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 business, commercial, wealth management and retail banking products and services to individuals, businesses, and municipal entities throughout Central and Northeastern 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 United States (“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, 2021, filed with the SEC on March 11, 2022. 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 $1.07 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. 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 loan losses and fair value of assets acquired and liabilities assumed in business combinations. 10 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ 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. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on debt securities available-for-sale and purchased financial assets with credit deterioration. ASU 2016-13 is effective for years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for years beginning after December 31, 2018, including interim periods within those years. The Company has formed an implementation team to assess the impact that ASU 2016-13 will have on the Company’s consolidated financial statements. For the majority of loans evaluated on a pooled basis, the Company anticipates using a discounted cash flow method which considers instrument level cash flows adjusted for, among other factors, prepayment speeds, probability of default, and loss given default. The Company also anticipates using regression analysis of historical internal and peer data to determine which variables are best suited to be economic variables utilized when modeling lifetime probability of default and loss given default. The ultimate impact to the Company’s financial condition and results of operations of ASU 2016-13, at both adoption and each subsequent reporting period, is highly dependent on credit quality, macroeconomic forecasts and conditions, the composition of our loan and securities portfolios, along with other management judgments. ​ 11 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . ASU 2017-04 simplifies measurement of goodwill and eliminates Step 2 from the goodwill impairment test. Under ASU 2017-04, a company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for annual or any interim goodwill impairment tests in years beginning after December 15, 2022, including interim periods within those years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. In January 2021, the FASB also issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which refined the scope for certain optional expedients and exceptions for contract modifications and hedge accounting to apply to derivative contracts and certain hedging relationships affected by the discounting transition. Entities may apply the provisions as of the beginning of the reporting period when the election is made and are available until December 31, 2022. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position. NOTE 2 – ACQUISITIONS Town and Country Financial Corporation On August 23, 2022, HBT Financial and Town and Country Financial Corporation (“Town and Country”), the holding company for Town and Country Bank, jointly announced the signing of a merger agreement pursuant to which HBT Financial will acquire Town and Country and Town and Country Bank. The acquisition will further enhance HBT Financial’s footprint in Central Illinois and expand HBT Financial’s footprint into metro-east St. Louis. Under the terms of the merger agreement, total consideration consists of approximately 3.4 million shares of HBT Financial’s common stock and $ 38.0 million in cash. Town and Country shareholders may elect to receive either (i) 1.9010 shares of HBT Financial’s common stock for each share of Town and Country, or (ii) $ 35.66 per share in cash, or (iii) a combination of cash and stock consideration, subject to adjustment and to the election and proration provisions in the merger agreement. Based upon the closing price of HBT Financial common stock of $ 18.76 on August 22, 2022, the implied per share purchase price is $ 35.66 with an aggregate transaction value of approximately $ 101.4 million. Upon closing of the transaction, shareholders of Town and Country are expected to hold approximately 10.5 % of HBT Financial’s outstanding common stock. The transaction is expected to close in the first quarter of 2023, subject to customary closing conditions, approval of Town and Country’s shareholders, and regulatory approvals. During the three months ended September 30, 2022, HBT Financial incurred $ 0.5 million in pre-tax acquisition expenses related to the planned acquisition of Town and Country, comprised of legal and professional fees included in other noninterest expense in the consolidated statements of income. ​ 12 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ NXT Bancorporation, Inc. On October 1, 2021, HBT Financial acquired 100 % of the issued and outstanding common stock of NXT Bancorporation, Inc. (“NXT”), the holding company for NXT Bank, pursuant to an Agreement and Plan of Merger dated June 7, 2021. Under the Agreement and Plan of Merger, NXT merged with and into HBT Financial, with HBT Financial as the surviving entity, on October 1, 2021. Additionally, NXT Bank was merged with and into Heartland Bank, with Heartland Bank as the surviving entity, in December 2021. At the effective time of the merger, each share of NXT was converted into the right to receive 67.6783 shares of HBT Financial common stock, cash in lieu of fractional shares, and $ 400 in cash. There were 1,799,016 shares of HBT Financial common stock issued at the effective time of the acquisition with an aggregate market value of $ 29.3 million, based on the closing stock price of $ 16.27 on October 1, 2021. 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. Goodwill of $ 5.7 million was recorded in the acquisition, which reflects expected synergies from combining the operations of HBT Financial and NXT, and is nondeductible for tax purposes. The acquisition of NXT provided an opportunity to utilize Heartland Bank’s excess liquidity at the time of acquisition to replace NXT Bank’s higher-cost funding. Additionally, Heartland Bank’s broader range of products and services, as well as a greater ability to meet larger borrowing needs, has provided an opportunity to expand NXT Bank’s customer relationships. During the three and nine months ended September 30, 2021, HBT Financial incurred $ 0.4 million and $ 0.5 million, respectively, in pre-tax acquisition expenses related to the acquisition of NXT, comprised primarily of professional fees and data processing expense. These expenses are reflected in noninterest expense on the consolidated statements of income. There were no acquisition expenses related to the acquisition of NXT during the three and nine months ended September 30, 2022. 13 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The fair value of the assets acquired and liabilities assumed from NXT on the acquisition date were as follows (dollars in thousands): ​ ​ ​ ​ ​ Fair Value Assets acquired: ​ ​ ​ Cash and cash equivalents ​ $ 5,862 Interest-bearing time deposits with banks ​ ​ 739 Debt securities ​ ​ 18,295 Equity securities with readily determinable fair value ​ ​ 43 Restricted stock ​ ​ 796 Loans ​ ​ 194,576 Bank owned life insurance ​ ​ 7,352 Bank premises and equipment ​ ​ 3,667 Core deposit intangible assets ​ ​ 199 Mortgage servicing rights ​ ​ 370 Accrued interest receivable ​ ​ 886 Other assets ​ ​ 1,340 Total assets acquired ​ ​ 234,125 ​ ​ ​ ​ Liabilities assumed: ​ ​ ​ Deposits ​ ​ 181,586 Securities sold under agreements to repurchase ​ ​ 4,080 FHLB advances ​ ​ 12,625 Other liabilities ​ ​ 1,633 Total liabilities assumed ​ ​ 199,924 Net assets acquired ​ $ 34,201 ​ ​ ​ ​ Consideration paid: ​ ​ ​ Cash ​ $ 10,633 Common stock ​ ​ 29,270 Total consideration paid ​ $ 39,903 ​ ​ ​ ​ Goodwill ​ $ 5,702 ​ The following table presents the acquired non-impaired loans as of the acquisition date (dollars in thousands): ​ ​ ​ ​ Fair Value ​ $ 194,576 Gross contractual amounts receivable ​ ​ 196,104 Estimate of contractual cash flows not expected to be collected ​ ​ 1,045 ​ There were no loans acquired with deteriorated credit quality from NXT. ​ 14 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following table provides the pro forma information for the results of operations for the three and nine months ended September 30, 2021, as if the acquisition had occurred on January 1, 2020. The pro forma results combine the historical results of NXT 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, 2020. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for loan 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 ​ ​ Three Months Ended ​ Nine Months Ended (dollars in thousands, except per share data) ​ September 30, 2021 ​ September 30, 2021 Total revenues (net interest income and noninterest income) ​ $ 41,296 ​ $ 124,460 Net income ​ ​ 14,093 ​ ​ 44,285 Earnings per share - basic ​ ​ 0.48 ​ ​ 1.52 Earnings per share - diluted ​ ​ 0.48 ​ ​ 1.51 ​ ​ 15 Table of Contents 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, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale: ​ (dollars in thousands) U.S. Treasury ​ $ 169,895 ​ $ — ​ $ ( 16,323 ) ​ $ 153,572 U.S. government agency ​ ​ 61,428 ​ ​ 1 ​ ​ ( 4,406 ) ​ ​ 57,023 Municipal ​ ​ 279,711 ​ ​ 4 ​ ​ ( 37,804 ) ​ ​ 241,911 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 223,738 ​ ​ 20 ​ ​ ( 18,851 ) ​ ​ 204,907 Agency commercial ​ ​ 154,677 ​ ​ 1 ​ ​ ( 17,302 ) ​ ​ 137,376 Corporate ​ ​ 62,695 ​ ​ 16 ​ ​ ( 3,760 ) ​ ​ 58,951 Total available-for-sale ​ ​ 952,144 ​ ​ 42 ​ ​ ( 98,446 ) ​ ​ 853,740 Held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency ​ ​ 88,418 ​ ​ — ​ ​ ( 10,342 ) ​ ​ 78,076 Municipal ​ ​ 42,844 ​ ​ 50 ​ ​ ( 1,357 ) ​ ​ 41,537 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 105,330 ​ ​ — ​ ​ ( 6,491 ) ​ ​ 98,839 Agency commercial ​ ​ 310,102 ​ ​ — ​ ​ ( 46,862 ) ​ ​ 263,240 Total held-to-maturity ​ ​ 546,694 ​ ​ 50 ​ ​ ( 65,052 ) ​ ​ 481,692 Total debt securities ​ $ 1,498,838 ​ $ 92 ​ $ ( 163,498 ) ​ $ 1,335,432 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale: ​ (dollars in thousands) U.S. Treasury ​ $ 109,002 ​ $ 328 ​ $ ( 354 ) ​ $ 108,976 U.S. government agency ​ ​ 129,269 ​ ​ 1,303 ​ ​ ( 2,467 ) ​ ​ 128,105 Municipal ​ ​ 293,837 ​ ​ 6,144 ​ ​ ( 2,904 ) ​ ​ 297,077 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 178,236 ​ ​ 2,149 ​ ​ ( 919 ) ​ ​ 179,466 Agency commercial ​ ​ 164,875 ​ ​ 1,234 ​ ​ ( 2,048 ) ​ ​ 164,061 Corporate ​ ​ 63,141 ​ ​ 1,638 ​ ​ ( 296 ) ​ ​ 64,483 Total available-for-sale ​ ​ 938,360 ​ ​ 12,796 ​ ​ ( 8,988 ) ​ ​ 942,168 Held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency ​ ​ 12,349 ​ ​ 42 ​ ​ ( 51 ) ​ ​ 12,340 Municipal ​ ​ 15,666 ​ ​ 809 ​ ​ — ​ ​ 16,475 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 20,555 ​ ​ 196 ​ ​ ( 102 ) ​ ​ 20,649 Agency commercial ​ ​ 287,615 ​ ​ 1,749 ​ ​ ( 2,801 ) ​ ​ 286,563 Total held-to-maturity ​ ​ 336,185 ​ ​ 2,796 ​ ​ ( 2,954 ) ​ ​ 336,027 Total debt securities ​ $ 1,274,545 ​ $ 15,592 ​ $ ( 11,942 ) ​ $ 1,278,195 ​ ​ 16 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ On March 31, 2022, June 30, 2021, and March 31, 2021, the Company transferred certain debt securities from the available-for-sale category to the held-to-maturity category in order to better reflect the revised intentions of the Company due to possible market value volatility, resulting from a potential rise in interest rates. The following is a summary of the amortized cost and fair value of securities transferred to the held-to-maturity category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2022 ​ June 30, 2021 ​ March 31, 2021 ​ ​ Amortized ​ ​ ​ Amortized ​ ​ ​ Amortized ​ ​ ​ Cost Fair Value Cost Fair Value Cost Fair Value ​ ​ (dollars in thousands) U.S. government agency ​ $ 78,841 ​ $ 71,048 ​ $ — ​ $ — ​ $ 7,593 ​ $ 7,323 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 8,175 ​ ​ 7,651 ​ ​ — ​ ​ — ​ ​ 8,776 ​ ​ 8,536 Agency commercial ​ ​ 27,834 ​ ​ 25,432 ​ ​ 99,271 ​ ​ 99,275 ​ ​ 118,792 ​ ​ 113,861 Total ​ $ 114,850 ​ $ 104,131 ​ $ 99,271 ​ $ 99,275 ​ $ 135,161 ​ $ 129,720 ​ The debt securities were transferred between categories at fair value, with the transfer date fair value becoming the new amortized cost for each security transferred. The unrealized gain (loss), net of tax, at the date of transfer remains a component of accumulated other comprehensive income, but will be amortized over the remaining life of the debt securities as an adjustment of yield in a manner consistent with amortization of any premium or discount. As a result, the amortization of an unrealized gain (loss) reported in accumulated other comprehensive income will offset or mitigate the effect on interest income of the amortization of the premium or discount for that held-to-maturity debt security. ​ As of September 30, 2022 and December 31, 2021, the Bank had debt securities with a carrying value of $ 413.4 million and $ 353.3 million, respectively, which were pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes required or permitted by law. ​ The Company has no direct exposure to the State of Illinois, but approximately 49 % of the municipal portfolio consists of debt securities issued by municipalities located in Illinois as of September 30, 2022. Approximately 81 % of such debt securities were general obligation issues as of September 30, 2022. The amortized cost and fair value of debt securities by contractual maturity, as of September 30, 2022, 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 ​ Amortized Cost Fair Value Amortized Cost Fair Value ​ ​ (dollars in thousands) Due in 1 year or less ​ $ 12,575 ​ $ 12,506 ​ $ 2,492 ​ $ 2,494 Due after 1 year through 5 years ​ ​ 235,438 ​ ​ 220,181 ​ ​ 25,934 ​ ​ 24,801 Due after 5 years through 10 years ​ ​ 250,903 ​ ​ 216,108 ​ ​ 79,440 ​ ​ 71,686 Due after 10 years ​ ​ 74,813 ​ ​ 62,662 ​ ​ 23,396 ​ ​ 20,632 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 223,738 ​ ​ 204,907 ​ ​ 105,330 ​ ​ 98,839 Agency commercial ​ ​ 154,677 ​ ​ 137,376 ​ ​ 310,102 ​ ​ 263,240 Total ​ $ 952,144 ​ $ 853,740 ​ $ 546,694 ​ $ 481,692 ​ ​ 17 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following tables present gross unrealized losses and fair value of debt securities, aggregated by category and length of time that individual debt securities have been in a continuous unrealized loss position, as of September 30, 2022 and December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investments in a Continuous Unrealized Loss Position ​ ​ Less than 12 Months ​ 12 Months or More ​ Total September 30, 2022 Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Available-for-sale: ​ (dollars in thousands) U.S. Treasury ​ $ ( 15,245 ) ​ $ 144,691 ​ $ ( 1,078 ) ​ $ 8,881 ​ $ ( 16,323 ) ​ $ 153,572 U.S. government agency ​ ​ ( 3,831 ) ​ ​ 51,799 ​ ​ ( 575 ) ​ ​ 3,394 ​ ​ ( 4,406 ) ​ ​ 55,193 Municipal ​ ​ ( 16,557 ) ​ ​ 157,183 ​ ​ ( 21,247 ) ​ ​ 82,613 ​ ​ ( 37,804 ) ​ ​ 239,796 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ ( 15,072 ) ​ ​ 176,467 ​ ​ ( 3,779 ) ​ ​ 24,808 ​ ​ ( 18,851 ) ​ ​ 201,275 Agency commercial ​ ​ ( 9,292 ) ​ ​ 89,378 ​ ​ ( 8,010 ) ​ ​ 45,474 ​ ​ ( 17,302 ) ​ ​ 134,852 Corporate ​ ​ ( 2,527 ) ​ ​ 53,213 ​ ​ ( 1,233 ) ​ ​ 3,730 ​ ​ ( 3,760 ) ​ ​ 56,943 Total available-for-sale ​ ​ ( 62,524 ) ​ ​ 672,731 ​ ​ ( 35,922 ) ​ ​ 168,900 ​ ​ ( 98,446 ) ​ ​ 841,631 Held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency ​ ​ ( 2,316 ) ​ ​ 20,176 ​ ​ ( 8,026 ) ​ ​ 57,900 ​ ​ ( 10,342 ) ​ ​ 78,076 Municipal ​ ​ ( 1,357 ) ​ ​ 35,066 ​ ​ — ​ ​ — ​ ​ ( 1,357 ) ​ ​ 35,066 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ ( 6,320 ) ​ ​ 97,876 ​ ​ ( 171 ) ​ ​ 963 ​ ​ ( 6,491 ) ​ ​ 98,839 Agency commercial ​ ​ ( 24,304 ) ​ ​ 150,113 ​ ​ ( 22,558 ) ​ ​ 113,127 ​ ​ ( 46,862 ) ​ ​ 263,240 Total held-to-maturity ​ ​ ( 34,297 ) ​ ​ 303,231 ​ ​ ( 30,755 ) ​ ​ 171,990 ​ ​ ( 65,052 ) ​ ​ 475,221 Total debt securities ​ $ ( 96,821 ) ​ $ 975,962 ​ $ ( 66,677 ) ​ $ 340,890 ​ $ ( 163,498 ) ​ $ 1,316,852 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investments in a Continuous Unrealized Loss Position ​ ​ Less than 12 Months ​ 12 Months or More ​ Total December 31, 2021 Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Available-for-sale: ​ (dollars in thousands) U.S. Treasury ​ $ ( 354 ) ​ $ 68,410 ​ $ — ​ $ — ​ $ ( 354 ) ​ $ 68,410 U.S. government agency ​ ​ ( 2,183 ) ​ ​ 80,219 ​ ​ ( 284 ) ​ ​ 5,578 ​ ​ ( 2,467 ) ​ ​ 85,797 Municipal ​ ​ ( 2,018 ) ​ ​ 89,424 ​ ​ ( 886 ) ​ ​ 17,327 ​ ​ ( 2,904 ) ​ ​ 106,751 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ ( 851 ) ​ ​ 91,703 ​ ​ ( 68 ) ​ ​ 4,305 ​ ​ ( 919 ) ​ ​ 96,008 Agency commercial ​ ​ ( 1,921 ) ​ ​ 113,111 ​ ​ ( 127 ) ​ ​ 6,443 ​ ​ ( 2,048 ) ​ ​ 119,554 Corporate ​ ​ ( 7 ) ​ ​ 2,737 ​ ​ ( 289 ) ​ ​ 4,671 ​ ​ ( 296 ) ​ ​ 7,408 Total available-for-sale ​ ​ ( 7,334 ) ​ ​ 445,604 ​ ​ ( 1,654 ) ​ ​ 38,324 ​ ​ ( 8,988 ) ​ ​ 483,928 Held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency ​ ​ ( 51 ) ​ ​ 4,949 ​ ​ — ​ ​ — ​ ​ ( 51 ) ​ ​ 4,949 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ ( 102 ) ​ ​ 14,932 ​ ​ — ​ ​ — ​ ​ ( 102 ) ​ ​ 14,932 Agency commercial ​ ​ ( 2,673 ) ​ ​ 174,428 ​ ​ ( 128 ) ​ ​ 2,776 ​ ​ ( 2,801 ) ​ ​ 177,204 Total held-to-maturity ​ ​ ( 2,826 ) ​ ​ 194,309 ​ ​ ( 128 ) ​ ​ 2,776 ​ ​ ( 2,954 ) ​ ​ 197,085 Total debt securities ​ $ ( 10,160 ) ​ $ 639,913 ​ $ ( 1,782 ) ​ $ 41,100 ​ $ ( 11,942 ) ​ $ 681,013 ​ ​ 18 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ As of September 30, 2022, there were 183 debt securities in an unrealized loss position for a period of twelve months or more, and 641 debt securities in an unrealized loss position for a period of less than twelve months. These unrealized losses are primarily a result of fluctuations in market interest rates. In analyzing an issuer’s financial condition, management considers whether the debt securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. Management believes that all declines in value of these debt securities are deemed to be temporary. There were no sales of debt securities during the three and nine months ended September 30, 2022 and 2021. ​ Equity Securities Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in gains (losses) on 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 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Readily ​ No Readily ​ ​ Determinable ​ Determinable September 30, 2022 Fair Value Fair Value ​ ​ (dollars in thousands) Initial cost ​ $ 3,142 ​ $ 2,142 Cumulative net unrealized losses ​ ​ ( 146 ) ​ ​ ( 165 ) Carrying value ​ $ 2,996 ​ $ 1,977 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Readily ​ No Readily ​ ​ Determinable ​ Determinable December 31, 2021 Fair Value Fair Value ​ ​ (dollars in thousands) Initial cost ​ $ 3,142 ​ $ 2,092 Cumulative net unrealized gains (losses) ​ ​ 301 ​ ​ ( 165 ) Carrying value ​ $ 3,443 ​ $ 1,927 ​ As of September 30, 2022 and December 31, 2021, the cumulative net unrealized losses on equity securities with no readily determinable fair value reflect downward adjustments based on observable price changes of an identical investment. There have been no impairments or upward adjustments based on observable price changes to equity securities with no readily determinable fair value. ​ 19 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ There were no sales of equity securities during the three and nine months ended September 30, 2022 and 2021. Unrealized gains (losses) on equity securities were as follows during the three and nine months ended September 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2022 2021 ​ 2022 2021 ​ ​ (dollars in thousands) Readily determinable fair value ​ $ ( 107 ) ​ $ 28 ​ $ ( 447 ) ​ $ 74 No readily determinable fair value ​ ​ — ​ ​ — ​ ​ — ​ ​ — Unrealized gains (losses) on equity securities ​ $ ( 107 ) ​ $ 28 ​ $ ( 447 ) ​ $ 74 ​ ​ NOTE 4 – LOANS AND THE ALLOWANCE FOR LOAN LOSSES Major categories of loans are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 December 31, 2021 ​ ​ (dollars in thousands) Commercial and industrial ​ $ 240,671 ​ $ 286,946 Agricultural and farmland ​ ​ 245,234 ​ ​ 247,796 Commercial real estate - owner occupied ​ ​ 226,524 ​ ​ 234,544 Commercial real estate - non-owner occupied ​ ​ 718,089 ​ ​ 684,023 Multi-family ​ ​ 260,630 ​ ​ 263,911 Construction and land development ​ ​ 364,290 ​ ​ 298,048 One-to-four family residential ​ ​ 328,667 ​ ​ 327,837 Municipal, consumer, and other ​ ​ 195,823 ​ ​ 156,584 Loans, before allowance for loan losses ​ ​ 2,579,928 ​ ​ 2,499,689 Allowance for loan losses ​ ​ ( 25,060 ) ​ ​ ( 23,936 ) Loans, net of allowance for loan losses ​ $ 2,554,868 ​ $ 2,475,753 ​ ​ ​ ​ ​ ​ ​ Paycheck Protection Program (PPP) loans (included above) ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 65 ​ $ 28,404 Agricultural and farmland ​ ​ — ​ ​ 913 Municipal, consumer, and other ​ ​ — ​ ​ 171 Total PPP loans ​ $ 65 ​ $ 29,488 ​ ​ 20 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following tables detail activity in the allowance for loan losses for the three and nine months ended September 30: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal, ​ ​ ​ ​ ​ Commercial ​ Agricultural ​ Real Estate ​ Real Estate ​ ​ ​ ​ Construction ​ One-to-four ​ Consumer, ​ ​ ​ ​ ​ and ​ and ​ Owner ​ Non-owner ​ ​ ​ ​ and Land ​ Family ​ and ​ ​ ​ Three Months Ended September 30, 2022 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: ​ (dollars in thousands) Balance, June 30, 2022 ​ $ 2,981 ​ $ 924 ​ $ 1,224 ​ $ 6,611 ​ $ 1,375 ​ $ 4,059 ​ $ 1,696 ​ $ 5,864 ​ $ 24,734 Provision for loan losses ​ ​ 14 ​ ​ ( 83 ) ​ ​ ( 65 ) ​ ​ 268 ​ ​ ( 52 ) ​ ​ 316 ​ ​ ( 78 ) ​ ​ 66 ​ ​ 386 Charge-offs ​ ​ ( 17 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 18 ) ​ ​ ( 187 ) ​ ​ ( 222 ) Recoveries ​ ​ 6 ​ ​ — ​ ​ 1 ​ ​ 3 ​ ​ — ​ ​ 1 ​ ​ 60 ​ ​ 91 ​ ​ 162 Balance, September 30, 2022 ​ $ 2,984 ​ $ 841 ​ $ 1,160 ​ $ 6,882 ​ $ 1,323 ​ $ 4,376 ​ $ 1,660 ​ $ 5,834 ​ $ 25,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal, ​ ​ ​ ​ ​ Commercial ​ Agricultural ​ Real Estate ​ Real Estate ​ ​ ​ ​ Construction ​ One-to-four ​ Consumer, ​ ​ ​ ​ ​ and ​ and ​ Owner ​ Non-owner ​ ​ ​ ​ and Land ​ Family ​ and ​ ​ ​ Three Months Ended September 30, 2021 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: ​ (dollars in thousands) Balance, June 30, 2021 ​ $ 2,717 ​ $ 781 ​ $ 1,946 ​ $ 9,825 ​ $ 2,009 ​ $ 3,924 ​ $ 1,520 ​ $ 3,785 ​ $ 26,507 Provision for loan losses ​ ​ 162 ​ ​ ( 26 ) ​ ​ ( 395 ) ​ ​ ( 710 ) ​ ​ ( 228 ) ​ ​ 413 ​ ​ ( 499 ) ​ ​ ( 384 ) ​ ​ ( 1,667 ) Charge-offs ​ ​ ( 135 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 48 ) ​ ​ ( 95 ) ​ ​ ( 278 ) Recoveries ​ ​ 114 ​ ​ — ​ ​ — ​ ​ 6 ​ ​ — ​ ​ 1 ​ ​ 135 ​ ​ 43 ​ ​ 299 Balance, September 30, 2021 ​ $ 2,858 ​ $ 755 ​ $ 1,551 ​ $ 9,121 ​ $ 1,781 ​ $ 4,338 ​ $ 1,108 ​ $ 3,349 ​ $ 24,861 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal, ​ ​ ​ ​ ​ Commercial ​ Agricultural ​ Real Estate ​ Real Estate ​ ​ ​ ​ Construction ​ One-to-four ​ Consumer, ​ ​ ​ ​ ​ and ​ and ​ Owner ​ Non-owner ​ ​ ​ ​ and Land ​ Family ​ and ​ ​ ​ Nine Months Ended September 30, 2022 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: ​ (dollars in thousands) Balance, December 31, 2021 ​ $ 2,440 ​ $ 845 ​ $ 1,840 ​ $ 8,145 ​ $ 1,263 ​ $ 4,914 ​ $ 1,311 ​ $ 3,178 ​ $ 23,936 Provision for loan losses ​ ​ ( 189 ) ​ ​ ( 4 ) ​ ​ ( 781 ) ​ ​ ( 1,536 ) ​ ​ 60 ​ ​ ( 539 ) ​ ​ 93 ​ ​ 2,843 ​ ​ ( 53 ) Charge-offs ​ ​ ( 22 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 67 ) ​ ​ ( 426 ) ​ ​ ( 515 ) Recoveries ​ ​ 755 ​ ​ — ​ ​ 101 ​ ​ 273 ​ ​ — ​ ​ 1 ​ ​ 323 ​ ​ 239 ​ ​ 1,692 Balance, September 30, 2022 ​ $ 2,984 ​ $ 841 ​ $ 1,160 ​ $ 6,882 ​ $ 1,323 ​ $ 4,376 ​ $ 1,660 ​ $ 5,834 ​ $ 25,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal, ​ ​ ​ ​ ​ Commercial ​ Agricultural ​ Real Estate ​ Real Estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ ​ ​ ​ and ​ and ​ Owner ​ Non-owner ​ ​ ​ ​ Construction ​ Residential ​ and ​ ​ ​ Nine Months Ended September 30, 2021 Industrial Farmland Occupied Occupied Multi-Family and Land Real Estate Other Total Allowance for loan losses: ​ (dollars in thousands) Balance, December 31, 2020 ​ $ 3,929 ​ $ 793 ​ $ 3,141 ​ $ 11,251 ​ $ 1,957 ​ $ 4,232 ​ $ 1,801 ​ $ 4,734 ​ $ 31,838 Provision for loan losses ​ ​ ( 1,062 ) ​ ​ ( 38 ) ​ ​ ( 1,590 ) ​ ​ ( 2,149 ) ​ ​ ( 176 ) ​ ​ ( 164 ) ​ ​ ( 742 ) ​ ​ ( 1,313 ) ​ ​ ( 7,234 ) Charge-offs ​ ​ ( 430 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 161 ) ​ ​ ( 284 ) ​ ​ ( 875 ) Recoveries ​ ​ 421 ​ ​ — ​ ​ — ​ ​ 19 ​ ​ — ​ ​ 270 ​ ​ 210 ​ ​ 212 ​ ​ 1,132 Balance, September 30, 2021 ​ $ 2,858 ​ $ 755 ​ $ 1,551 ​ $ 9,121 ​ $ 1,781 ​ $ 4,338 ​ $ 1,108 ​ $ 3,349 ​ $ 24,861 ​ 21 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following tables present the recorded investments in loans and the allowance for loan losses by category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal, ​ ​ ​ ​ ​ Commercial ​ Agricultural ​ Real Estate ​ Real Estate ​ ​ ​ ​ Construction ​ One-to-four ​ Consumer, ​ ​ ​ ​ ​ and ​ and ​ Owner ​ Non-owner ​ ​ ​ ​ and Land ​ Family ​ and ​ ​ ​ September 30, 2022 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Loan balances: ​ (dollars in thousands) Collectively evaluated for impairment ​ $ 237,839 ​ $ 244,236 ​ $ 210,461 ​ $ 675,121 ​ $ 260,060 ​ $ 361,305 ​ $ 315,209 ​ $ 183,181 ​ $ 2,487,412 Individually evaluated for impairment ​ ​ 2,702 ​ ​ 385 ​ ​ 11,607 ​ ​ 31,553 ​ ​ — ​ ​ 2,007 ​ ​ 8,427 ​ ​ 12,622 ​ ​ 69,303 Acquired with deteriorated credit quality ​ ​ 130 ​ ​ 613 ​ ​ 4,456 ​ ​ 11,415 ​ ​ 570 ​ ​ 978 ​ ​ 5,031 ​ ​ 20 ​ ​ 23,213 Total ​ $ 240,671 ​ $ 245,234 ​ $ 226,524 ​ $ 718,089 ​ $ 260,630 ​ $ 364,290 ​ $ 328,667 ​ $ 195,823 ​ $ 2,579,928 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collectively evaluated for impairment ​ $ 2,826 ​ $ 841 ​ $ 930 ​ $ 4,416 ​ $ 1,320 ​ $ 4,374 ​ $ 1,619 ​ $ 2,342 ​ $ 18,668 Individually evaluated for impairment ​ ​ 158 ​ ​ — ​ ​ 208 ​ ​ 2,465 ​ ​ — ​ ​ — ​ ​ 39 ​ ​ 3,492 ​ ​ 6,362 Acquired with deteriorated credit quality ​ ​ — ​ ​ — ​ ​ 22 ​ ​ 1 ​ ​ 3 ​ ​ 2 ​ ​ 2 ​ ​ — ​ ​ 30 Total ​ $ 2,984 ​ $ 841 ​ $ 1,160 ​ $ 6,882 ​ $ 1,323 ​ $ 4,376 ​ $ 1,660 ​ $ 5,834 ​ $ 25,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal, ​ ​ ​ ​ ​ Commercial ​ Agricultural ​ Real Estate ​ Real Estate ​ ​ ​ ​ Construction ​ One-to-four ​ Consumer, ​ ​ ​ ​ ​ and ​ and ​ Owner ​ Non-owner ​ ​ ​ ​ and Land ​ Family ​ and ​ ​ ​ December 31, 2021 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Loan balances: ​ (dollars in thousands) Collectively evaluated for impairment ​ $ 272,064 ​ $ 247,021 ​ $ 216,794 ​ $ 641,555 ​ $ 262,701 ​ $ 293,548 ​ $ 314,807 ​ $ 143,510 ​ $ 2,392,000 Individually evaluated for impairment ​ ​ 14,744 ​ ​ 12 ​ ​ 12,332 ​ ​ 29,575 ​ ​ — ​ ​ 2,018 ​ ​ 6,897 ​ ​ 13,041 ​ ​ 78,619 Acquired with deteriorated credit quality ​ ​ 138 ​ ​ 763 ​ ​ 5,418 ​ ​ 12,893 ​ ​ 1,210 ​ ​ 2,482 ​ ​ 6,133 ​ ​ 33 ​ ​ 29,070 Total ​ $ 286,946 ​ $ 247,796 ​ $ 234,544 ​ $ 684,023 ​ $ 263,911 ​ $ 298,048 ​ $ 327,837 ​ $ 156,584 ​ $ 2,499,689 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collectively evaluated for impairment ​ $ 2,253 ​ $ 845 ​ $ 1,480 ​ $ 5,138 ​ $ 1,259 ​ $ 4,895 ​ $ 1,099 ​ $ 1,302 ​ $ 18,271 Individually evaluated for impairment ​ ​ 187 ​ ​ — ​ ​ 327 ​ ​ 2,999 ​ ​ — ​ ​ — ​ ​ 210 ​ ​ 1,875 ​ ​ 5,598 Acquired with deteriorated credit quality ​ ​ — ​ ​ — ​ ​ 33 ​ ​ 8 ​ ​ 4 ​ ​ 19 ​ ​ 2 ​ ​ 1 ​ ​ 67 Total ​ $ 2,440 ​ $ 845 ​ $ 1,840 ​ $ 8,145 ​ $ 1,263 ​ $ 4,914 ​ $ 1,311 ​ $ 3,178 ​ $ 23,936 ​ ​ 22 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following tables present loans individually evaluated for impairment by category of loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unpaid ​ ​ ​ ​ ​ ​ ​ Principal ​ Recorded ​ Related September 30, 2022 Balance Investment Allowance With an allowance recorded: ​ (dollars in thousands) Commercial and industrial ​ $ 256 ​ $ 256 ​ $ 158 Agricultural and farmland ​ ​ — ​ ​ — ​ ​ — Commercial real estate - owner occupied ​ ​ 734 ​ ​ 734 ​ ​ 208 Commercial real estate - non-owner occupied ​ ​ 14,359 ​ ​ 14,348 ​ ​ 2,465 Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ — ​ ​ — ​ ​ — One-to-four family residential ​ ​ 350 ​ ​ 340 ​ ​ 39 Municipal, consumer, and other ​ ​ 8,223 ​ ​ 8,201 ​ ​ 3,492 Total ​ $ 23,922 ​ $ 23,879 ​ $ 6,362 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With no related allowance: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 2,460 ​ $ 2,446 ​ $ — Agricultural and farmland ​ ​ 385 ​ ​ 385 ​ ​ — Commercial real estate - owner occupied ​ ​ 11,030 ​ ​ 10,873 ​ ​ — Commercial real estate - non-owner occupied ​ ​ 17,284 ​ ​ 17,205 ​ ​ — Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ 2,107 ​ ​ 2,007 ​ ​ — One-to-four family residential ​ ​ 9,403 ​ ​ 8,087 ​ ​ — Municipal, consumer, and other ​ ​ 4,455 ​ ​ 4,421 ​ ​ — Total ​ $ 47,124 ​ $ 45,424 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans individually evaluated for impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 2,716 ​ $ 2,702 ​ $ 158 Agricultural and farmland ​ ​ 385 ​ ​ 385 ​ ​ — Commercial real estate - owner occupied ​ ​ 11,764 ​ ​ 11,607 ​ ​ 208 Commercial real estate - non-owner occupied ​ ​ 31,643 ​ ​ 31,553 ​ ​ 2,465 Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ 2,107 ​ ​ 2,007 ​ ​ — One-to-four family residential ​ ​ 9,753 ​ ​ 8,427 ​ ​ 39 Municipal, consumer, and other ​ ​ 12,678 ​ ​ 12,622 ​ ​ 3,492 Total ​ $ 71,046 ​ $ 69,303 ​ $ 6,362 ​ ​ 23 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unpaid ​ ​ ​ ​ ​ ​ ​ ​ Principal ​ Recorded ​ Related December 31, 2021 Balance Investment Allowance With an allowance recorded: ​ (dollars in thousands) Commercial and industrial ​ $ 303 ​ $ 303 ​ $ 187 Agricultural and farmland ​ ​ — ​ ​ — ​ ​ — Commercial real estate - owner occupied ​ ​ 3,013 ​ ​ 3,013 ​ ​ 327 Commercial real estate - non-owner occupied ​ ​ 14,912 ​ ​ 14,893 ​ ​ 2,999 Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ — ​ ​ — ​ ​ — One-to-four family residential ​ ​ 1,421 ​ ​ 1,314 ​ ​ 210 Municipal, consumer, and other ​ ​ 8,523 ​ ​ 8,498 ​ ​ 1,875 Total ​ $ 28,172 ​ $ 28,021 ​ $ 5,598 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With no related allowance: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 14,452 ​ $ 14,441 ​ $ — Agricultural and farmland ​ ​ 12 ​ ​ 12 ​ ​ — Commercial real estate - owner occupied ​ ​ 9,534 ​ ​ 9,319 ​ ​ — Commercial real estate - non-owner occupied ​ ​ 14,755 ​ ​ 14,682 ​ ​ — Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ 2,112 ​ ​ 2,018 ​ ​ — One-to-four family residential ​ ​ 7,129 ​ ​ 5,583 ​ ​ — Municipal, consumer, and other ​ ​ 4,603 ​ ​ 4,543 ​ ​ — Total ​ $ 52,597 ​ $ 50,598 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans individually evaluated for impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 14,755 ​ $ 14,744 ​ $ 187 Agricultural and farmland ​ ​ 12 ​ ​ 12 ​ ​ — Commercial real estate - owner occupied ​ ​ 12,547 ​ ​ 12,332 ​ ​ 327 Commercial real estate - non-owner occupied ​ ​ 29,667 ​ ​ 29,575 ​ ​ 2,999 Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ 2,112 ​ ​ 2,018 ​ ​ — One-to-four family residential ​ ​ 8,550 ​ ​ 6,897 ​ ​ 210 Municipal, consumer, and other ​ ​ 13,126 ​ ​ 13,041 ​ ​ 1,875 Total ​ $ 80,769 ​ $ 78,619 ​ $ 5,598 ​ ​ 24 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following tables present the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2022 ​ 2021 ​ Average ​ Interest ​ Average Interest ​ ​ Recorded ​ Income ​ Recorded ​ Income ​ Investment Recognized Investment Recognized With an allowance recorded: ​ (dollars in thousands) Commercial and industrial ​ $ 258 ​ $ 5 ​ $ 1,925 ​ $ 26 Agricultural and farmland ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial real estate - owner occupied ​ ​ 739 ​ ​ 11 ​ ​ 3,192 ​ ​ 45 Commercial real estate - non-owner occupied ​ ​ 14,441 ​ ​ 185 ​ ​ 15,136 ​ ​ 194 Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ — ​ ​ — ​ ​ — ​ ​ — One-to-four family residential ​ ​ 349 ​ ​ 2 ​ ​ 1,827 ​ ​ 18 Municipal, consumer, and other ​ ​ 8,254 ​ ​ 66 ​ ​ 8,641 ​ ​ 40 Total ​ $ 24,041 ​ $ 269 ​ $ 30,721 ​ $ 323 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With no related allowance: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 3,894 ​ $ 41 ​ $ 7,137 ​ $ 115 Agricultural and farmland ​ ​ 425 ​ ​ 5 ​ ​ 385 ​ ​ 6 Commercial real estate - owner occupied ​ ​ 11,651 ​ ​ 141 ​ ​ 6,551 ​ ​ 81 Commercial real estate - non-owner occupied ​ ​ 17,220 ​ ​ 369 ​ ​ 15,283 ​ ​ 101 Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ 2,010 ​ ​ 57 ​ ​ 2,439 ​ ​ 1 One-to-four family residential ​ ​ 8,119 ​ ​ 99 ​ ​ 5,713 ​ ​ 45 Municipal, consumer, and other ​ ​ 4,457 ​ ​ 44 ​ ​ 4,635 ​ ​ 21 Total ​ $ 47,776 ​ $ 756 ​ $ 42,143 ​ $ 370 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans individually evaluated for impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 4,152 ​ $ 46 ​ $ 9,062 ​ $ 141 Agricultural and farmland ​ ​ 425 ​ ​ 5 ​ ​ 385 ​ ​ 6 Commercial real estate - owner occupied ​ ​ 12,390 ​ ​ 152 ​ ​ 9,743 ​ ​ 126 Commercial real estate - non-owner occupied ​ ​ 31,661 ​ ​ 554 ​ ​ 30,419 ​ ​ 295 Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ 2,010 ​ ​ 57 ​ ​ 2,439 ​ ​ 1 One-to-four family residential ​ ​ 8,468 ​ ​ 101 ​ ​ 7,540 ​ ​ 63 Municipal, consumer, and other ​ ​ 12,711 ​ ​ 110 ​ ​ 13,276 ​ ​ 61 Total ​ $ 71,817 ​ $ 1,025 ​ $ 72,864 ​ $ 693 ​ ​ 25 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2022 ​ 2021 ​ Average ​ Interest ​ Average Interest ​ ​ Recorded ​ Income ​ Recorded ​ Income ​ Investment Recognized Investment Recognized With an allowance recorded: ​ (dollars in thousands) Commercial and industrial ​ $ 272 ​ $ 13 ​ $ 2,025 ​ $ 84 Agricultural and farmland ​ ​ — ​ ​ — ​ ​ 110 ​ ​ 4 Commercial real estate - owner occupied ​ ​ 1,297 ​ ​ 55 ​ ​ 3,060 ​ ​ 132 Commercial real estate - non-owner occupied ​ ​ 14,631 ​ ​ 556 ​ ​ 17,001 ​ ​ 599 Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ — ​ ​ — ​ ​ 741 ​ ​ 27 One-to-four family residential ​ ​ 513 ​ ​ 11 ​ ​ 2,209 ​ ​ 64 Municipal, consumer, and other ​ ​ 8,368 ​ ​ 151 ​ ​ 8,722 ​ ​ 119 Total ​ $ 25,081 ​ $ 786 ​ $ 33,868 ​ $ 1,029 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With no related allowance: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 12,793 ​ $ 397 ​ $ 5,222 ​ $ 205 Agricultural and farmland ​ ​ 305 ​ ​ 8 ​ ​ 384 ​ ​ 17 Commercial real estate - owner occupied ​ ​ 11,524 ​ ​ 388 ​ ​ 7,216 ​ ​ 273 Commercial real estate - non-owner occupied ​ ​ 16,894 ​ ​ 907 ​ ​ 8,880 ​ ​ 239 Multi-family ​ ​ — ​ ​ — ​ ​ 580 ​ ​ 10 Construction and land development ​ ​ 2,012 ​ ​ 105 ​ ​ 2,060 ​ ​ 27 One-to-four family residential ​ ​ 8,341 ​ ​ 240 ​ ​ 6,427 ​ ​ 142 Municipal, consumer, and other ​ ​ 4,493 ​ ​ 98 ​ ​ 4,695 ​ ​ 65 Total ​ $ 56,362 ​ $ 2,143 ​ $ 35,464 ​ $ 978 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans individually evaluated for impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 13,065 ​ $ 410 ​ $ 7,247 ​ $ 289 Agricultural and farmland ​ ​ 305 ​ ​ 8 ​ ​ 494 ​ ​ 21 Commercial real estate - owner occupied ​ ​ 12,821 ​ ​ 443 ​ ​ 10,276 ​ ​ 405 Commercial real estate - non-owner occupied ​ ​ 31,525 ​ ​ 1,463 ​ ​ 25,881 ​ ​ 838 Multi-family ​ ​ — ​ ​ — ​ ​ 580 ​ ​ 10 Construction and land development ​ ​ 2,012 ​ ​ 105 ​ ​ 2,801 ​ ​ 54 One-to-four family residential ​ ​ 8,854 ​ ​ 251 ​ ​ 8,636 ​ ​ 206 Municipal, consumer, and other ​ ​ 12,861 ​ ​ 249 ​ ​ 13,417 ​ ​ 184 Total ​ $ 81,443 ​ $ 2,929 ​ $ 69,332 ​ $ 2,007 ​ ​ 26 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following tables present the recorded investment in loans by category based on current payment and accrual status: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accruing Interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30 - 89 Days ​ 90+ Days ​ ​ ​ ​ Total September 30, 2022 Current Past Due Past Due Nonaccrual Loans ​ ​ (dollars in thousands) Commercial and industrial ​ $ 240,391 ​ $ 191 ​ $ — ​ $ 89 ​ $ 240,671 Agricultural and farmland ​ ​ 245,234 ​ ​ — ​ ​ — ​ ​ — ​ ​ 245,234 Commercial real estate - owner occupied ​ ​ 226,424 ​ ​ 100 ​ ​ — ​ ​ — ​ ​ 226,524 Commercial real estate - non-owner occupied ​ ​ 717,085 ​ ​ — ​ ​ — ​ ​ 1,004 ​ ​ 718,089 Multi-family ​ ​ 260,630 ​ ​ — ​ ​ — ​ ​ — ​ ​ 260,630 Construction and land development ​ ​ 362,367 ​ ​ 1,429 ​ ​ — ​ ​ 494 ​ ​ 364,290 One-to-four family residential ​ ​ 325,926 ​ ​ 1,159 ​ ​ 22 ​ ​ 1,560 ​ ​ 328,667 Municipal, consumer, and other ​ ​ 195,651 ​ ​ 113 ​ ​ — ​ ​ 59 ​ ​ 195,823 Total ​ $ 2,573,708 ​ $ 2,992 ​ $ 22 ​ $ 3,206 ​ $ 2,579,928 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accruing Interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30 - 89 Days ​ 90+ Days ​ ​ ​ ​ Total December 31, 2021 Current Past Due Past Due Nonaccrual Loans ​ ​ (dollars in thousands) Commercial and industrial ​ $ 286,563 ​ $ 9 ​ $ — ​ $ 374 ​ $ 286,946 Agricultural and farmland ​ ​ 247,772 ​ ​ 24 ​ ​ — ​ ​ — ​ ​ 247,796 Commercial real estate - owner occupied ​ ​ 234,441 ​ ​ 103 ​ ​ — ​ ​ — ​ ​ 234,544 Commercial real estate - non-owner occupied ​ ​ 683,029 ​ ​ 823 ​ ​ — ​ ​ 171 ​ ​ 684,023 Multi-family ​ ​ 263,911 ​ ​ — ​ ​ — ​ ​ — ​ ​ 263,911 Construction and land development ​ ​ 297,465 ​ ​ 64 ​ ​ — ​ ​ 519 ​ ​ 298,048 One-to-four family residential ​ ​ 325,780 ​ ​ 383 ​ ​ 32 ​ ​ 1,642 ​ ​ 327,837 Municipal, consumer, and other ​ ​ 156,297 ​ ​ 214 ​ ​ 16 ​ ​ 57 ​ ​ 156,584 Total ​ $ 2,495,258 ​ $ 1,620 ​ $ 48 ​ $ 2,763 ​ $ 2,499,689 ​ ​ 27 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following tables present total loans by category based on their assigned risk ratings determined by management: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 Pass Pass-Watch Substandard Doubtful Total ​ ​ (dollars in thousands) Commercial and industrial ​ $ 229,239 ​ $ 8,730 ​ $ 2,702 ​ $ — ​ $ 240,671 Agricultural and farmland ​ ​ 230,636 ​ ​ 13,601 ​ ​ 997 ​ ​ — ​ ​ 245,234 Commercial real estate - owner occupied ​ ​ 202,250 ​ ​ 13,465 ​ ​ 10,809 ​ ​ — ​ ​ 226,524 Commercial real estate - non-owner occupied ​ ​ 673,481 ​ ​ 10,336 ​ ​ 34,272 ​ ​ — ​ ​ 718,089 Multi-family ​ ​ 255,665 ​ ​ 4,965 ​ ​ — ​ ​ — ​ ​ 260,630 Construction and land development ​ ​ 361,954 ​ ​ 329 ​ ​ 2,007 ​ ​ — ​ ​ 364,290 One-to-four family residential ​ ​ 313,608 ​ ​ 6,074 ​ ​ 8,985 ​ ​ — ​ ​ 328,667 Municipal, consumer, and other ​ ​ 182,902 ​ ​ 298 ​ ​ 12,623 ​ ​ — ​ ​ 195,823 Total ​ $ 2,449,735 ​ $ 57,798 ​ $ 72,395 ​ $ — ​ $ 2,579,928 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 Pass Pass-Watch Substandard Doubtful Total ​ ​ (dollars in thousands) Commercial and industrial ​ $ 267,088 ​ $ 5,114 ​ $ 14,744 ​ $ — ​ $ 286,946 Agricultural and farmland ​ ​ 221,898 ​ ​ 25,213 ​ ​ 685 ​ ​ — ​ ​ 247,796 Commercial real estate - owner occupied ​ ​ 198,862 ​ ​ 24,098 ​ ​ 11,584 ​ ​ — ​ ​ 234,544 Commercial real estate - non-owner occupied ​ ​ 619,212 ​ ​ 32,372 ​ ​ 32,439 ​ ​ — ​ ​ 684,023 Multi-family ​ ​ 241,362 ​ ​ 22,549 ​ ​ — ​ ​ — ​ ​ 263,911 Construction and land development ​ ​ 268,556 ​ ​ 27,474 ​ ​ 2,018 ​ ​ — ​ ​ 298,048 One-to-four family residential ​ ​ 308,951 ​ ​ 11,221 ​ ​ 7,665 ​ ​ — ​ ​ 327,837 Municipal, consumer, and other ​ ​ 143,299 ​ ​ 244 ​ ​ 13,041 ​ ​ — ​ ​ 156,584 Total ​ $ 2,269,228 ​ $ 148,285 ​ $ 82,176 ​ $ — ​ $ 2,499,689 ​ There were no new troubled debt restructurings during the three and nine months ended September 30, 2022 or 2021. Of the troubled debt restructurings entered into during the last 12 months, there were none which had subsequent payment defaults during the three and nine months ended September 30, 2022 or 2021. For purposes of this disclosure, the Company considers “default” to mean 90 days or more past due as to interest or principal or were on nonaccrual status subsequent to restructuring. As of September 30, 2022 and December 31, 2021, the Company had $ 3.1 million and $ 3.5 million of troubled debt restructurings, respectively. Restructured loans are evaluated for impairment quarterly as part of the Company’s determination of the allowance for loan losses. There were no material commitments to lend additional funds to debtors owing loans whose terms have been modified in troubled debt restructurings. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), along with a joint statement issued by banking regulatory agencies, provided that short-term loan payment modifications made prior to December 31, 2021 to borrowers experiencing financial hardship due to the COVID-19 pandemic generally do not need to be accounted for as a troubled debt restructuring. As of September 30, 2022, the Company had no loans that were granted a payment modification due to a COVID-19 related financial hardship which had not returned to regular payments. As of December 31, 2021, the Company had $ 0.2 million of loans that were granted a payment modification due to a COVID-19 related financial hardship and had not returned to regular payments. Substantially all modifications were in the form of a three-month interest-only period or a one-month payment deferral. Some borrowers received more than one loan payment modification. 28 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ As of September 30, 2022 and December 31, 2021, the Company pledged loans totaling $ 824.9 million and $ 567.0 million, respectively, to the Federal Home Loan Bank of Chicago (“FHLB”) to secure available FHLB advance borrowing capacity. Changes in the accretable yield for loans acquired with deteriorated credit quality were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) Beginning balance ​ $ 537 ​ $ 1,350 ​ $ 413 ​ $ 1,397 Reclassification from non-accretable difference ​ ​ 283 ​ ​ 280 ​ ​ 500 ​ ​ 433 Accretion income ​ ​ ( 58 ) ​ ​ ( 86 ) ​ ​ ( 151 ) ​ ​ ( 286 ) Ending balance ​ $ 762 ​ $ 1,544 ​ $ 762 ​ $ 1,544 ​ ​ NOTE 5 – LOAN SERVICING Mortgage loans serviced for others, which are not included in the accompanying consolidated balance sheets, amounted to $ 976.1 million and $ 1.04 billion as of September 30, 2022 and December 31, 2021, respectively. Activity in mortgage servicing rights is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) Beginning balance ​ $ 10,089 ​ $ 7,319 ​ $ 7,994 ​ $ 5,934 Capitalized servicing rights ​ ​ 144 ​ ​ 241 ​ ​ 451 ​ ​ 994 Fair value adjustment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Attributable to payments and principal reductions ​ ​ ( 362 ) ​ ​ ( 451 ) ​ ​ ( 1,048 ) ​ ​ ( 1,408 ) Attributable to changes in valuation inputs and assumptions ​ ​ 569 ​ ​ 250 ​ ​ 3,043 ​ ​ 1,839 Total fair value adjustment ​ ​ 207 ​ ​ ( 201 ) ​ ​ 1,995 ​ ​ 431 Ending balance ​ $ 10,440 ​ $ 7,359 ​ $ 10,440 ​ $ 7,359 ​ ​ 29 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ ​ NOTE 6 – FORECLOSED ASSETS Foreclosed assets activity is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) Beginning balance ​ $ 2,891 ​ $ 7,757 ​ $ 3,278 ​ $ 4,168 Transfers from loans ​ ​ — ​ ​ — ​ ​ 27 ​ ​ 4,856 Proceeds from sales ​ ​ ( 29 ) ​ ​ ( 354 ) ​ ​ ( 476 ) ​ ​ ( 1,583 ) Sales through loan origination ​ ​ — ​ ​ ( 74 ) ​ ​ — ​ ​ ( 252 ) Net gain on sales ​ ​ 20 ​ ​ 108 ​ ​ 118 ​ ​ 321 Direct write-downs ​ ​ ( 245 ) ​ ​ ( 122 ) ​ ​ ( 310 ) ​ ​ ( 195 ) Ending balance ​ $ 2,637 ​ $ 7,315 ​ $ 2,637 ​ $ 7,315 ​ Gains (losses) on foreclosed assets includes the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) Direct write-downs ​ $ ( 245 ) ​ $ ( 122 ) ​ $ ( 310 ) ​ $ ( 195 ) Net gain on sales ​ ​ 20 ​ ​ 108 ​ ​ 118 ​ ​ 321 Gains (losses) on foreclosed assets ​ $ ( 225 ) ​ $ ( 14 ) ​ $ ( 192 ) ​ $ 126 ​ There were no foreclosed one-to-four family residential real estate properties held as of September 30, 2022. The carrying value of foreclosed one-to-four family residential real estate properties held as of December 31, 2021 was $ 0.2 million. As of September 30, 2022, there were 4 one-to-four family residential real estate loans in the process of foreclosure totaling $ 0.4 million. As of December 31, 2021, there were 4 one-to-four family residential real estate loans in the process of foreclosure totaling $ 0.1 million. ​ 30 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ NOTE 7 – DEPOSITS The Company’s deposits are summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 December 31, 2021 ​ ​ (dollars in thousands) Noninterest-bearing deposits ​ $ 1,017,710 ​ $ 1,087,659 Interest-bearing deposits: ​ ​ ​ ​ ​ ​ Interest-bearing demand ​ ​ 1,131,284 ​ ​ 1,105,949 Money market ​ ​ 584,202 ​ ​ 583,198 Savings ​ ​ 641,139 ​ ​ 633,171 Time ​ ​ 269,108 ​ ​ 328,208 Total interest-bearing deposits ​ ​ 2,625,733 ​ ​ 2,650,526 Total deposits ​ $ 3,643,443 ​ $ 3,738,185 ​ Money market deposits include $ 4.2 million of brokered deposits as of December 31, 2021. There were no brokered deposits as of September 30, 2022. Money market deposits also include $ 5.7 million and $ 6.9 million of reciprocal transaction deposits as of September 30, 2022 and December 31, 2021, respectively. Time deposits include $ 0.7 million and $ 0.9 million of reciprocal time deposits as of September 30, 2022, and December 31, 2021, respectively. The aggregate amounts of time deposits in denominations of $250 thousand or more amounted to $ 25.8 million and $ 59.5 million as of September 30, 2022 and December 31, 2021, respectively. The aggregate amounts of time deposits in denominations of $100 thousand or more amounted to $ 89.9 million and $ 133.1 million as of September 30, 2022 and December 31, 2021, respectively. The components of interest expense on deposits are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2022 2021 ​ 2022 2021 ​ ​ (dollars in thousands) Interest-bearing demand ​ $ 144 ​ $ 129 ​ $ 430 ​ $ 373 Money market ​ ​ 203 ​ ​ 96 ​ ​ 434 ​ ​ 279 Savings ​ ​ 53 ​ ​ 48 ​ ​ 155 ​ ​ 135 Time ​ ​ 187 ​ ​ 291 ​ ​ 643 ​ ​ 1,034 Total interest expense on deposits ​ $ 587 ​ $ 564 ​ $ 1,662 ​ $ 1,821 ​ ​ ​ 31 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES 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 are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 ​ December 31, 2021 ​ ​ Notional ​ Fair ​ Notional ​ Fair ​ Amount Value Amount Value ​ ​ (dollars in thousands) Fair value recorded in other assets ​ $ 17,000 ​ $ 614 ​ $ — ​ $ — Fair value recorded in other liabilities ​ ​ — ​ ​ — ​ ​ 17,000 ​ ​ ( 680 ) ​ As of September 30, 2022, the interest rate swap agreements designated as cash flow hedges had contractual maturities between 2024 and 2025. As of September 30, 2022, counterparties had cash pledged and held on deposit by the Company of $ 0.6 million. As of December 31, 2021, the Company had cash pledged and held on deposit at counterparties of $ 0.8 million. The effect of interest rate swap agreements designated as cash flow hedges on the consolidated statements of income are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location of gross gain (loss) reclassified ​ Amounts of gross gain (loss) from accumulated other ​ reclassified from accumulated comprehensive income (loss) to income ​ other comprehensive income ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 ​ 2022 2021 Designated as cash flow hedges: ​ (dollars in thousands) Junior subordinated debentures interest expense ​ $ ( 14 ) ​ $ ( 105 ) ​ $ ( 177 ) ​ $ ( 306 ) ​ 32 Table of Contents 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 are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 ​ December 31, 2021 ​ ​ Notional ​ Fair ​ Notional ​ Fair ​ Amount Value Amount Value ​ ​ (dollars in thousands) Fair value recorded in other assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swaps with a commercial borrower counterparty ​ $ — ​ $ — ​ $ 112,041 ​ $ 8,622 Interest rate swaps with a financial institution counterparty ​ ​ 109,468 ​ ​ 7,431 ​ ​ 3,880 ​ ​ 75 Total fair value recorded in other assets ​ $ 109,468 ​ $ 7,431 ​ $ 115,921 ​ $ 8,697 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value recorded in other liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swaps with a commercial borrower counterparty ​ $ 109,468 ​ $ ( 7,431 ) ​ $ 3,880 ​ $ ( 75 ) Interest rate swaps with a financial institution counterparty ​ ​ — ​ ​ — ​ ​ 112,041 ​ ​ ( 8,622 ) Total fair value recorded in other liabilities ​ $ 109,468 ​ $ ( 7,431 ) ​ $ 115,921 ​ $ ( 8,697 ) ​ As of September 30, 2022, the interest rate swap agreements not designated as hedging instruments had contractual maturities between 2022 and 2042. As of December 31, 2021, the carrying value of debt securities pledged and held in safekeeping at a financial institution counterparty was $ 7.5 million. The effect of interest rate contracts not designated as hedging instruments recognized in other noninterest income on the consolidated statements of income are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 ​ 2022 2021 Not designated as hedging instruments: ​ (dollars in thousands) Gross gains ​ $ 5,209 ​ $ 1,843 ​ $ 15,303 ​ $ 12,281 Gross losses ​ ​ ( 5,209 ) ​ ​ ( 1,843 ) ​ ​ ( 15,303 ) ​ ​ ( 12,281 ) Net gains (losses) ​ $ — ​ $ — ​ $ — ​ $ — ​ ​ 33 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES 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 ​ ​ ​ ​ ​ ​ ​ Available-for-Sale Held-to-Maturity Derivatives Total ​ ​ (dollars in thousands) Three Months Ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, June 30, 2022 ​ $ ( 42,061 ) ​ $ ( 10,656 ) ​ $ ( 103 ) ​ $ ( 52,820 ) Other comprehensive income (loss) before reclassifications ​ ​ ( 35,358 ) ​ ​ — ​ ​ 374 ​ ​ ( 34,984 ) Reclassifications ​ ​ — ​ ​ 504 ​ ​ 14 ​ ​ 518 Other comprehensive income (loss), before tax ​ ​ ( 35,358 ) ​ ​ 504 ​ ​ 388 ​ ​ ( 34,466 ) Income tax expense (benefit) ​ ​ ( 10,079 ) ​ ​ 144 ​ ​ 111 ​ ​ ( 9,824 ) Other comprehensive income (loss), after tax ​ ​ ( 25,279 ) ​ ​ 360 ​ ​ 277 ​ ​ ( 24,642 ) Balance, September 30, 2022 ​ $ ( 67,340 ) ​ $ ( 10,296 ) ​ $ 174 ​ $ ( 77,462 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, June 30, 2021 ​ $ 13,260 ​ $ ( 3,840 ) ​ $ ( 1,034 ) ​ $ 8,386 Other comprehensive loss before reclassifications ​ ​ ( 5,676 ) ​ ​ — ​ ​ ( 8 ) ​ ​ ( 5,684 ) Reclassifications ​ ​ — ​ ​ 195 ​ ​ 105 ​ ​ 300 Other comprehensive income (loss), before tax ​ ​ ( 5,676 ) ​ ​ 195 ​ ​ 97 ​ ​ ( 5,384 ) Income tax expense ​ ​ ( 1,618 ) ​ ​ 56 ​ ​ 27 ​ ​ ( 1,535 ) Other comprehensive income (loss), after tax ​ ​ ( 4,058 ) ​ ​ 139 ​ ​ 70 ​ ​ ( 3,849 ) Balance, September 30, 2021 ​ $ 9,202 ​ $ ( 3,701 ) ​ $ ( 964 ) ​ $ 4,537 ​ 34 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized Gains (Losses) ​ ​ ​ ​ ​ ​ ​ ​ on Debt Securities ​ ​ ​ ​ ​ ​ ​ Available-for-Sale Held-to-Maturity Derivatives Total ​ ​ (dollars in thousands) Nine Months Ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2021 ​ $ 5,736 ​ $ ( 3,514 ) ​ $ ( 751 ) ​ $ 1,471 Transfer from available-for-sale to held-to-maturity ​ ​ 7,664 ​ ​ ( 7,664 ) ​ ​ — ​ ​ — Other comprehensive income (loss) before reclassifications ​ ​ ( 112,931 ) ​ ​ — ​ ​ 1,117 ​ ​ ( 111,814 ) Reclassifications ​ ​ — ​ ​ 1,234 ​ ​ 177 ​ ​ 1,411 Other comprehensive income (loss), before tax ​ ​ ( 112,931 ) ​ ​ 1,234 ​ ​ 1,294 ​ ​ ( 110,403 ) Income tax expense (benefit) ​ ​ ( 32,191 ) ​ ​ 352 ​ ​ 369 ​ ​ ( 31,470 ) Other comprehensive income (loss), after tax ​ ​ ( 80,740 ) ​ ​ 882 ​ ​ 925 ​ ​ ( 78,933 ) Balance, September 30, 2022 ​ $ ( 67,340 ) ​ $ ( 10,296 ) ​ $ 174 ​ $ ( 77,462 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2020 ​ $ 19,578 ​ $ ( 118 ) ​ $ ( 1,307 ) ​ $ 18,153 Transfer from available-for-sale to held-to-maturity ​ ​ 3,887 ​ ​ ( 3,887 ) ​ ​ — ​ ​ — Other comprehensive income (loss) before reclassifications ​ ​ ( 19,950 ) ​ ​ — ​ ​ 173 ​ ​ ( 19,777 ) Reclassifications ​ ​ — ​ ​ 426 ​ ​ 306 ​ ​ 732 Other comprehensive income (loss), before tax ​ ​ ( 19,950 ) ​ ​ 426 ​ ​ 479 ​ ​ ( 19,045 ) Income tax expense (benefit) ​ ​ ( 5,687 ) ​ ​ 122 ​ ​ 136 ​ ​ ( 5,429 ) Other comprehensive income (loss), after tax ​ ​ ( 14,263 ) ​ ​ 304 ​ ​ 343 ​ ​ ( 13,616 ) Balance, September 30, 2021 ​ $ 9,202 ​ $ ( 3,701 ) ​ $ ( 964 ) ​ $ 4,537 ​ Reclassifications from accumulated other comprehensive income (loss) for unrealized gains (losses) on debt securities available-for-sale are included in gains (losses) on sales of securities 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. 35 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ ​ NOTE 10 – EARNINGS PER SHARE The Company has granted certain restricted stock units that contain non-forfeitable rights to dividend equivalents. Such restricted stock units are considered participating securities. As such, we have included these restricted stock units in the calculation of basic earnings per share and calculate 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, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 15,627 ​ $ 13,715 ​ $ 43,316 ​ $ 42,677 Earnings allocated to participating securities ​ ​ ( 17 ) ​ ​ ( 25 ) ​ ​ ( 51 ) ​ ​ ( 81 ) Numerator for earnings per share - basic and diluted ​ $ 15,610 ​ $ 13,690 ​ $ 43,265 ​ $ 42,596 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding ​ ​ 28,787,662 ​ ​ 27,340,926 ​ ​ 28,887,757 ​ ​ 27,377,809 Dilutive effect of outstanding restricted stock units ​ ​ 72,643 ​ ​ 13,921 ​ ​ 56,761 ​ ​ 11,412 Weighted average common shares outstanding, including all dilutive potential shares ​ ​ 28,860,305 ​ ​ 27,354,847 ​ ​ 28,944,518 ​ ​ 27,389,221 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share - Basic ​ $ 0.54 ​ $ 0.50 ​ $ 1.50 ​ $ 1.56 Earnings per share - Diluted ​ $ 0.54 ​ $ 0.50 ​ $ 1.49 ​ $ 1.56 ​ ​ ​ 36 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES 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 (vi) 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, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) Restricted stock units ​ $ 230 ​ $ 153 ​ $ 1,072 ​ $ 415 Performance restricted stock units ​ ​ 119 ​ ​ 75 ​ ​ 530 ​ ​ 123 Total awards classified as equity ​ ​ 349 ​ ​ 228 ​ ​ 1,602 ​ ​ 538 Stock appreciation rights ​ ​ 51 ​ ​ ( 87 ) ​ ​ 35 ​ ​ 43 Total stock-based compensation expense ​ $ 400 ​ $ 141 ​ $ 1,637 ​ $ 581 ​ In February 2022, all outstanding restricted stock unit and performance restricted stock unit agreements were modified to address treatment upon retirement. In the event of retirement, and if the retirement eligibility requirements are met, then 100% of unvested restricted stock units and performance restricted stock units will continue to vest in accordance with the originally established vesting schedule. The retirement modification resulted in the acceleration of $ 0.6 million of expense, although total compensation costs related to the modified agreements remained the same. ​ 37 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES 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 or paid at the same time as dividends on common stock, are classified as dividends charged to retained earnings. During the nine months ended September 30, 2022 and 2021, the total grant date fair value of the restricted stock units granted was $ 0.9 million and $ 0.8 million, respectively, based on the grant date closing prices. The total intrinsic value of restricted stock that vested during the nine months ended September 30, 2022 and 2021 was $ 0.7 million and $ 0.3 million, respectively. The following is a summary of restricted stock unit activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ Weighted ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ Average ​ ​ Restricted ​ Grant Date ​ Restricted ​ Grant Date ​ Stock Units Fair Value Stock Units Fair Value Beginning balance ​ 120,631 ​ $ 17.98 ​ 99,597 ​ $ 17.37 Granted ​ — ​ ​ — ​ — ​ ​ — Vested ​ — ​ ​ — ​ — ​ ​ — Forfeited ​ ( 1,328 ) ​ ​ 18.35 ​ — ​ ​ — Ending balance ​ 119,303 ​ $ 17.98 ​ 99,597 ​ $ 17.37 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ Weighted ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ Average ​ ​ Restricted ​ Grant Date ​ Restricted ​ Grant Date ​ Stock Units Fair Value Stock Units Fair Value Beginning balance ​ 109,244 ​ $ 17.27 ​ 71,000 ​ $ 18.98 Granted ​ 46,312 ​ ​ 19.11 ​ 50,347 ​ ​ 15.72 Vested ​ ( 34,925 ) ​ ​ 17.26 ​ ( 20,225 ) ​ ​ 18.86 Forfeited ​ ( 1,328 ) ​ ​ 18.35 ​ ( 1,525 ) ​ ​ 18.11 Ending balance ​ 119,303 ​ $ 17.98 ​ 99,597 ​ $ 17.37 ​ As of September 30, 2022, 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 1.7 years. ​ 38 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES 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, 2022 and 2021, the total fair value of the performance restricted stock units granted was $ 0.5 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 following is a summary of performance restricted stock unit activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ Weighted ​ ​ ​ Weighted ​ ​ Performance ​ Average ​ Performance ​ Average ​ ​ Restricted ​ Grant Date ​ Restricted ​ Grant Date ​ Stock Units Fair Value Stock Units Fair Value Beginning balance ​ 62,067 ​ $ 17.02 ​ 28,697 ​ $ 15.53 Granted ​ — ​ ​ — ​ — ​ ​ — Vested ​ — ​ ​ — ​ — ​ ​ — Forfeited ​ — ​ ​ — ​ — ​ ​ — Ending balance ​ 62,067 ​ $ 17.02 ​ 28,697 ​ $ 15.53 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ Weighted ​ ​ ​ Weighted ​ ​ Performance ​ Average ​ Performance ​ Average ​ ​ Restricted ​ Grant Date ​ Restricted ​ Grant Date ​ Stock Units Fair Value Stock Units Fair Value Beginning balance ​ 38,344 ​ $ 15.72 ​ — ​ $ — Granted ​ 23,723 ​ ​ 19.14 ​ 28,697 ​ ​ 15.53 Vested ​ — ​ ​ — ​ — ​ ​ — Forfeited ​ — ​ ​ — ​ — ​ ​ — Ending balance ​ 62,067 ​ $ 17.02 ​ 28,697 ​ $ 15.53 ​ As of September 30, 2022, unrecognized compensation cost related to non-vested performance restricted stock units was $ 0.5 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 1.7 years. ​ 39 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES 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 non-vested stock appreciation rights vest in four equal annual installments beginning on the first anniversary of the grant date. The following is a summary of stock appreciation rights activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2022 ​ 2021 ​ Stock Appreciation Rights Outstanding Weighted Average Grant Date Assigned Value Stock Appreciation Rights Outstanding Weighted Average Grant Date Assigned Value Beginning balance ​ 91,800 ​ $ 16.32 ​ 97,920 ​ $ 16.32 Granted ​ — ​ ​ — ​ — ​ ​ — Exercised ​ — ​ ​ — ​ — ​ ​ — Expired ​ — ​ ​ — ​ — ​ ​ — Forfeited ​ — ​ ​ — ​ — ​ ​ — Ending balance ​ 91,800 ​ $ 16.32 ​ 97,920 ​ $ 16.32 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2022 ​ 2021 ​ Stock Appreciation Rights Weighted Average Grant Date Assigned Value Stock Appreciation Rights Weighted Average Grant Date Assigned Value Beginning balance ​ 97,920 ​ $ 16.32 ​ 105,570 ​ $ 16.32 Granted ​ — ​ ​ — ​ — ​ ​ — Exercised ​ ( 6,120 ) ​ ​ 16.32 ​ ( 6,120 ) ​ ​ 16.32 Expired ​ — ​ ​ — ​ ( 1,530 ) ​ ​ 16.32 Forfeited ​ — ​ ​ — ​ — ​ ​ — Ending balance ​ 91,800 ​ $ 16.32 ​ 97,920 ​ $ 16.32 ​ A further summary of stock appreciation rights as of September 30, 2022, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Stock Appreciation Rights ​ Remaining Grant Date Assigned Values Outstanding Exercisable Contractual Term $ 16.32 ​ 91,800 ​ 85,680 ​ 6.5 years ​ As of September 30, 2022, unrecognized compensation cost related to non-vested stock appreciation rights was $ 33 thousand. ​ 40 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ As of September 30, 2022 and December 31, 2021, the liability recorded for outstanding stock appreciation rights was $ 0.5 million and $ 0.5 million, respectively. The Company used 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, 2022 December 31, 2021 ​ Risk-free interest rate ​ ​ 3.97 % ​ 1.40 % Expected volatility ​ ​ 36.17 % ​ 35.52 % Expected life (in years) ​ ​ 6.9 ​ ​ 7.7 ​ Expected dividend yield ​ ​ 3.53 % ​ 3.20 % ​ As of September 30, 2022, the liability recorded for previously exercised stock appreciation rights was $ 0.5 million, which will be paid in two remaining annual installments in 2023 and 2024. As of December 31, 2021, the liability recorded for previously exercised stock appreciation rights was $ 0.8 million. ​ NOTE 12 – REGULATORY MATTERS 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. As of September 30, 2022 and December 31, 2021, the capital conservation buffer was 2.5 % of risk-weighted assets. As of September 30, 2022, the Company and the Bank each met all capital adequacy requirements to which they were subject. ​ 41 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The actual and required capital amounts and ratios of the Company (on a consolidated basis) and the Bank are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actual ​ For Capital Adequacy Purposes ​ To Be Well Capitalized Under Prompt Corrective Action Provisions ​ September 30, 2022 Amount Ratio Amount Ratio Amount Ratio ​ ​ ​ (dollars in thousands) ​ Total Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 507,277 ​ 16.34 % $ 248,395 ​ 8.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 484,065 ​ 15.60 ​ ​ 248,216 ​ 8.00 ​ $ 310,271 ​ 10.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 442,841 ​ 14.26 % $ 186,296 ​ 6.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 459,005 ​ 14.79 ​ ​ 186,162 ​ 6.00 ​ $ 248,216 ​ 8.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Equity Tier 1 Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 406,243 ​ 13.08 % $ 139,722 ​ 4.50 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 459,005 ​ 14.79 ​ ​ 139,622 ​ 4.50 ​ $ 201,676 ​ 6.50 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Capital (to Average Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 442,841 ​ 10.44 % $ 169,611 ​ 4.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 459,005 ​ 10.83 ​ ​ 169,515 ​ 4.00 ​ $ 211,894 ​ 5.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actual ​ For Capital Adequacy Purposes ​ To Be Well Capitalized Under Prompt Corrective Action Provisions ​ December 31, 2021 Amount Ratio Amount Ratio Amount Ratio ​ ​ ​ (dollars in thousands) ​ Total Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 479,320 ​ 16.88 % $ 227,115 ​ 8.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 452,162 ​ 15.94 ​ ​ 226,950 ​ 8.00 ​ $ 283,688 ​ 10.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 416,068 ​ 14.66 % $ 170,336 ​ 6.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 428,226 ​ 15.09 ​ ​ 170,213 ​ 6.00 ​ $ 226,950 ​ 8.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Equity Tier 1 Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 379,519 ​ 13.37 % $ 127,752 ​ 4.50 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 428,226 ​ 15.09 ​ ​ 127,659 ​ 4.50 ​ $ 184,397 ​ 6.50 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Capital (to Average Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 416,068 ​ 9.84 % $ 169,171 ​ 4.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 428,226 ​ 10.13 ​ ​ 169,070 ​ 4.00 ​ $ 211,337 ​ 5.00 % ​ ​ 42 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ NOTE 13 – FAIR VALUE OF FINANCIAL INSTRUMENTS Recurring Basis The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Additional information on fair value measurements is summarized in Note 1 to the Company’s annual consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 11, 2022. There were no transfers between levels during the three and nine months ended September 30, 2022 and 2021. The Company’s policy for determining transfers between levels occurs at the end of the reporting period when circumstances in the underlying valuation criteria change and result in transfer between levels. The following tables present the balances of the assets measured at fair value on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value ​ ​ ​ (dollars in thousands) Debt securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury ​ $ 153,572 ​ $ — ​ $ — ​ $ 153,572 U.S. government agency ​ ​ — ​ ​ 57,023 ​ ​ — ​ ​ 57,023 Municipal ​ ​ — ​ ​ 241,911 ​ ​ — ​ ​ 241,911 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ — ​ ​ 204,907 ​ ​ — ​ ​ 204,907 Agency commercial ​ ​ — ​ ​ 137,376 ​ ​ — ​ ​ 137,376 Corporate ​ ​ — ​ ​ 58,951 ​ ​ — ​ ​ 58,951 Equity securities with readily determinable fair values ​ ​ 2,996 ​ ​ — ​ ​ — ​ ​ 2,996 Mortgage servicing rights ​ ​ — ​ ​ — ​ ​ 10,440 ​ ​ 10,440 Derivative financial assets ​ ​ — ​ ​ 8,045 ​ ​ — ​ ​ 8,045 Derivative financial liabilities ​ ​ — ​ ​ 7,431 ​ ​ — ​ ​ 7,431 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value ​ ​ ​ (dollars in thousands) Debt securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury ​ $ 108,976 ​ $ — ​ $ — ​ $ 108,976 U.S. government agency ​ ​ — ​ ​ 128,105 ​ ​ — ​ ​ 128,105 Municipal ​ ​ — ​ ​ 297,077 ​ ​ — ​ ​ 297,077 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ — ​ ​ 179,466 ​ ​ — ​ ​ 179,466 Agency commercial ​ ​ — ​ ​ 164,061 ​ ​ — ​ ​ 164,061 Corporate ​ ​ — ​ ​ 64,483 ​ ​ — ​ ​ 64,483 Equity securities with readily determinable fair values ​ ​ 3,443 ​ ​ — ​ ​ — ​ ​ 3,443 Mortgage servicing rights ​ ​ — ​ ​ — ​ ​ 7,994 ​ ​ 7,994 Derivative financial assets ​ ​ — ​ ​ 8,697 ​ ​ — ​ ​ 8,697 Derivative financial liabilities ​ ​ — ​ ​ 9,377 ​ ​ — ​ ​ 9,377 ​ The following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy. There were no changes to the valuation techniques from December 31, 2021 to September 30, 2022. ​ 43 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ 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 (loss). The change in fair value of equity securities with readily determinable fair values 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 (loss). 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. 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. ​ 44 Table of Contents 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, 2022 Fair Value Valuation Technique Unobservable Inputs Range (Weighted Average) Mortgage servicing rights ​ $ 10,440 ​ Discounted cash flows ​ Constant pre-payment rates (CPR) ​ 5.5 % to 59.7 % ( 8.2 %) ​ ​ ​ ​ ​ ​ ​ Discount rate ​ 9.0 % to 11.5 % ( 9.3 %) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ Fair Value ​ Valuation Technique ​ Unobservable Inputs ​ Range (Weighted Average) Mortgage servicing rights ​ $ 7,994 ​ Discounted cash flows ​ Constant pre-payment rates (CPR) ​ 7.0 % to 88.9 % ( 11.7 %) ​ ​ ​ ​ ​ ​ ​ Discount rate ​ 9.0 % to 11.0 % ( 9.0 %) ​ Nonrecurring Basis Certain assets are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as there is evidence of impairment or a change in the amount of previously recognized impairment. The following tables present the balances of the assets measured at fair value on a nonrecurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value ​ ​ ​ (dollars in thousands) Loans held for sale ​ $ — ​ $ 2,297 ​ $ — ​ $ 2,297 Collateral-dependent impaired loans ​ ​ — ​ ​ — ​ ​ 17,517 ​ ​ 17,517 Bank premises held for sale ​ ​ — ​ ​ — ​ ​ 281 ​ ​ 281 Foreclosed assets ​ ​ — ​ ​ — ​ ​ 2,637 ​ ​ 2,637 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value ​ ​ ​ (dollars in thousands) Loans held for sale ​ $ — ​ $ 4,942 ​ $ — ​ $ 4,942 Collateral-dependent impaired loans ​ ​ — ​ ​ — ​ ​ 22,423 ​ ​ 22,423 Bank premises held for sale ​ ​ — ​ ​ — ​ ​ 1,452 ​ ​ 1,452 Foreclosed assets ​ ​ — ​ ​ — ​ ​ 3,278 ​ ​ 3,278 ​ 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 indicate fair value of the held for sale loans is greater than cost. 45 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ Collateral-Dependent Impaired Loans In accordance with the provisions of the loan impairment guidance, impairment was measured for loans with respect to which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement. The fair value of collateral-dependent impaired loans is estimated based on the fair value of the underlying collateral supporting the loan. Collateral-dependent impaired loans require classification in the fair value hierarchy. Impaired loans include loans acquired with deteriorated credit quality. Collateral values are estimated using Level 3 inputs based on customized discounting criteria. 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 Level 3 inputs based on appraisals and customized discounting criteria. The carrying value of bank premises held for sale is not re-measured to fair value on a recurring basis but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs. 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 Level 3 inputs based on appraisals and customized discounting criteria. The carrying value of foreclosed assets is not re-measured to fair value on a recurring basis but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs. Collateral-Dependent Impaired Loans, Bank Premises Held for Sale, and Foreclosed Assets The estimated fair value of collateral-dependent impaired loans, bank premises held for sale, and foreclosed assets is based on the appraised fair value of the collateral, less estimated costs to sell. Collateral-dependent impaired loans, bank premises held for sale, and foreclosed assets are classified within Level 3 of the fair value hierarchy. The Company considers the appraisal or a similar evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals or a similar evaluation of the collateral underlying collateral-dependent loans and foreclosed assets are obtained at the time a loan is first considered impaired or a loan is transferred to foreclosed assets. Appraisals or a similar evaluation of bank premises held for sale are obtained when first classified as held for sale. Appraisals or similar evaluations are obtained subsequently as deemed necessary by management but at least annually on foreclosed assets and bank premises held for sale. Appraisals are reviewed for accuracy and consistency by management. Appraisals are performed by individuals selected from the list of approved appraisers maintained by management. The appraised values are reduced by estimated costs to sell. These discounts and estimates are developed by management by comparison to historical results. 46 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ The following tables present quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 Fair Value Valuation Technique Unobservable Inputs Range (Weighted Average) Collateral-dependent impaired loans ​ $ 17,517 ​ Appraisal of collateral ​ Appraisal adjustments ​ Not meaningful Bank premises held for sale ​ ​ 281 ​ Appraisal ​ Appraisal adjustments ​ 7 % ( 7 %) Foreclosed assets ​ ​ 2,637 ​ Appraisal ​ Appraisal adjustments ​ 7 % ( 7 %) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ Fair Value ​ Valuation Technique ​ Unobservable Inputs ​ Range (Weighted Average) Collateral-dependent impaired loans ​ $ 22,423 ​ Appraisal of collateral ​ Appraisal adjustments ​ Not meaningful Bank premises held for sale ​ ​ 1,452 ​ Appraisal ​ Appraisal adjustments ​ 7 % ( 7 %) Foreclosed assets ​ ​ 3,278 ​ 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. There were no changes in the methods and significant assumptions used to estimate the fair value of these 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. 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. 47 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ 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. 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. 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. 48 Table of Contents 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 financial instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ September 30, 2022 ​ December 31, 2021 ​ ​ Hierarchy ​ Carrying ​ Estimated ​ Carrying ​ Estimated ​ Level Amount Fair Value Amount Fair Value ​ ​ ​ ​ ​ (dollars in thousands) Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ Level 1 ​ $ 78,215 ​ $ 78,215 ​ $ 409,268 ​ $ 409,268 Debt securities held-to-maturity ​ Level 2 ​ ​ 546,694 ​ ​ 481,692 ​ ​ 336,185 ​ ​ 336,027 Restricted stock ​ Level 3 ​ ​ 4,050 ​ ​ 4,050 ​ ​ 2,739 ​ ​ 2,739 Loans, net ​ Level 3 ​ ​ 2,554,868 ​ ​ 2,548,050 ​ ​ 2,475,753 ​ ​ 2,494,686 Investments in unconsolidated subsidiaries ​ Level 3 ​ ​ 1,165 ​ ​ 1,165 ​ ​ 1,165 ​ ​ 1,165 Accrued interest receivable ​ Level 2 ​ ​ 16,881 ​ ​ 16,881 ​ ​ 14,901 ​ ​ 14,901 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time deposits ​ Level 3 ​ ​ 269,108 ​ ​ 260,220 ​ ​ 328,208 ​ ​ 327,779 Securities sold under agreements to repurchase ​ Level 2 ​ ​ 48,130 ​ ​ 48,130 ​ ​ 61,256 ​ ​ 61,256 Subordinated notes ​ Level 3 ​ ​ 39,376 ​ ​ 37,667 ​ ​ 39,316 ​ ​ 41,602 Junior subordinated debentures ​ Level 3 ​ ​ 37,763 ​ ​ 36,210 ​ ​ 37,714 ​ ​ 33,640 Accrued interest payable ​ Level 2 ​ ​ 607 ​ ​ 607 ​ ​ 1,043 ​ ​ 1,043 ​ 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. ​ 49 Table of Contents 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 ​ September 30, 2022 December 31, 2021 ​ ​ ​ (dollars in thousands) Commitments to extend credit ​ $ 667,788 ​ $ 609,947 Standby letters of credit ​ ​ 16,918 ​ ​ 12,960 ​ 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. ​ 50 Table of Contents 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 is a defendant in a purported class action lawsuit filed in June 2020, in the Circuit Court of Cook County, Illinois, DeBaere, et al v. Heartland Bank and Trust Company. 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. The Bank intends to vigorously defend the lawsuit. The Company does not believe a loss is probable at this time, as that term is used in assessing loss contingencies. Accordingly, consistent with the authoritative guidance in the evaluation of contingencies, an accrual related to this matter has not been recorded. However, an unfavorable outcome is reasonably possible, and the Company would not characterize the chance of any loss as “remote.” Given the early stage of this case, the Company cannot yet offer an opinion on the estimated range of any possible loss, in the event of an unfavorable opinion. Miller, et al v. State Bank of Lincoln and Heartland Bank and Trust Company The Bank is a defendant in a purported class action lawsuit filed in May 2020, in the Circuit Court of Logan County, Illinois, Miller, et al v. State Bank of Lincoln and the Bank. 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. The Bank intends to vigorously defend the lawsuit. The Company does not believe a loss is probable at this time, as that term is used in assessing loss contingencies. Accordingly, consistent with the authoritative guidance in the evaluation of contingencies, an accrual related to this matter has not been recorded. However, an unfavorable outcome is reasonably possible, and the Company would not characterize the chance of any loss as “remote.” Given the early stage of this case, the Company cannot yet offer an opinion on the estimated range of any possible loss, in the event of an unfavorable opinion. ​ ​ 51 Table of Contents 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, 2022 (unaudited), as compared with December 31, 2021, and the results of operations for the three and nine months ended September 30, 2022 and 2021 (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, 2021, filed with the SEC on March 11, 2022. Results of operations for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of results to be attained for the year ended December 31, 2022 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 business, commercial, wealth management, and retail banking products and services to businesses, families, and local governments throughout Central and Northeastern Illinois and Eastern Iowa. As of September 30, 2022, the Company had total assets of $4.2 billion, loans held for investment of $2.6 billion, and total deposits of $3.6 billion. ​ Market Area We currently operate 58 full-service branches. 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, 2022 December 31, 2021 Total loans ​ (dollars in thousands) Illinois by metropolitan and micropolitan statistical areas ​ ​ ​ ​ ​ ​ Bloomington-Normal ​ $ 495,896 ​ $ 527,161 Champaign-Urbana ​ ​ 217,792 ​ ​ 191,646 Chicago ​ ​ 1,272,588 ​ ​ 1,196,605 Lincoln ​ ​ 79,564 ​ ​ 87,153 Ottawa-Peru ​ ​ 90,418 ​ ​ 101,117 Peoria ​ ​ 124,094 ​ ​ 123,143 Total Illinois ​ ​ 2,280,352 ​ ​ 2,226,825 Iowa ​ ​ 299,576 ​ ​ 272,864 Total loans ​ $ 2,579,928 ​ $ 2,499,689 ​ ​ ​ ​ ​ ​ ​ Total deposits ​ ​ ​ ​ ​ ​ Illinois by metropolitan and micropolitan statistical areas ​ ​ ​ ​ ​ ​ Bloomington-Normal ​ $ 851,612 ​ $ 887,587 Champaign-Urbana ​ ​ 218,068 ​ ​ 203,899 Chicago ​ ​ 1,257,235 ​ ​ 1,237,486 Lincoln ​ ​ 187,056 ​ ​ 203,098 Ottawa-Peru ​ ​ 383,932 ​ ​ 407,156 Peoria ​ ​ 606,430 ​ ​ 610,155 Total Illinois ​ ​ 3,504,333 ​ ​ 3,549,381 Iowa ​ ​ 139,110 ​ ​ 188,804 Total deposits ​ $ 3,643,443 ​ $ 3,738,185 52 Table of Contents Pending Town and Country Acquisition On August 23, 2022, HBT Financial and Town and Country Financial Corporation (“Town and Country”), the holding company for Town and Country Bank, jointly announced the signing of a merger agreement pursuant to which HBT Financial will acquire Town and Country and Town and Country Bank. The acquisition will further enhance HBT Financial’s footprint in Central Illinois and expand HBT Financial’s footprint into metro-east St. Louis. The acquisition is expected to close in the first quarter of 2023, subject to Town and Country shareholder approval, regulatory approvals, and other customary closing conditions. During the three months ended September 30, 2022, HBT Financial incurred $0.5 million in pre-tax acquisition expenses related to the planned acquisition of Town and Country, comprised of legal and professional fees included in other noninterest expense in the consolidated statements of income. NXT Bancorporation, Inc. Acquisition On October 1, 2021, HBT Financial completed its acquisition of NXT Bancorporation, Inc. (“NXT”), the holding company for NXT Bank. The acquisition expanded HBT Financial’s footprint into Eastern Iowa with four locations that began operating as branches of Heartland Bank following the merger and system conversion of NXT Bank into Heartland Bank in December 2021. After considering business combination accounting adjustments, NXT added total assets of $234.1 million, total loans of $194.6 million, and total deposits of $181.6 million. Cash consideration of $10.6 million and stock consideration of approximately 1.8 million shares of HBT Financial common stock resulted in aggregate consideration of $39.9 million. Goodwill of $5.7 million was recorded in the acquisition. The acquisition of NXT provides an opportunity to utilize HBT Financial’s existing excess liquidity to replace NXT’s higher cost funding. Additionally, our broader range of products and services and greater ability to meet larger borrowing needs provides an opportunity to expand NXT customer relationships. We did not incur expenses related to the acquisition of NXT during the three and nine months ended September 30, 2022. We incurred the following pre-tax acquisition expenses related to the acquisition of NXT during the three and nine months ended September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2021 ​ Nine Months Ended September 30, 2021 ​ ​ (dollars in thousands) Furniture and equipment ​ $ 1 ​ $ 1 Data processing ​ ​ 150 ​ ​ 157 Marketing and customer relations ​ ​ 4 ​ ​ 4 Legal fees and other noninterest expense ​ ​ 225 ​ ​ 375 Total NXT acquisition-related expenses ​ $ 380 ​ $ 537 ​ ​ 53 Table of Contents Branch Rationalization Plan In April 2021, the Company made plans to close or consolidate six branches. One branch was consolidated during the second quarter of 2021, and the remaining five branches were closed during the third quarter of 2021. The Company estimated annual pre-tax cost savings, net of associated revenue impacts, related to the branch rationalization plan to be approximately $1.1 million. The Company incurred the following pre-tax branch closure expenses during the three and nine months ended September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2021 ​ Nine Months Ended September 30, 2021 ​ ​ (dollars in thousands) NONINTEREST INCOME ​ ​ ​ ​ ​ ​ Gains (losses) on other assets ​ $ (648) ​ $ (682) ​ ​ ​ ​ ​ ​ ​ NONINTEREST EXPENSE ​ ​ ​ ​ ​ ​ Salaries ​ ​ (5) ​ ​ 53 Marketing and customer relations ​ ​ 1 ​ ​ 6 Legal fees and other noninterest expense ​ ​ — ​ ​ 7 Total noninterest expense ​ ​ (4) ​ ​ 66 Total branch closure costs ​ $ 644 ​ $ 748 ​ Paycheck Protection Program Loans During 2021 and 2020, we funded a total of $290.1 million of Paycheck Protection Program (“PPP”) loans. The vast majority of those loans have received full forgiveness, and outstanding PPP loans totaled $0.1 million as of September 30, 2022. Income recognition for the fees collected at origination, net of associated origination costs, is deferred and recognized over the loan term on a level yield basis. Recognition of net deferred origination fees is accelerated upon loan forgiveness or repayment prior to contractual maturity. Net deferred origination fees on PPP loans recognized as taxable loan interest income totaled $0.1 million and $3.0 million during the three months ended September 30, 2022 and 2021, respectively, and $1.5 million and $7.6 million during the nine months ended September 30, 2022 and 2021, respectively. ​ 54 Table of Contents FACTORS AFFECTING OUR RESULTS OF OPERATIONS 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 that are most 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 and supply chain constraints), unemployment rates, real estate markets, and interest rates. COVID-19 Pandemic Although the Company has had continuous business operations since the beginning of the COVID-19 pandemic, the pandemic has caused significant economic disruption throughout the U.S. and the communities that we serve. While the economic outlook has generally improved relative to 2020 and 2021, there remains uncertainty surrounding the longer lasting impact on specific industries and potential surges in COVID-19 infections with new virus variants. As a result, the businesses we serve may be adversely impacted, and the ability of our customers to fulfill their contractual obligations to us may deteriorate. 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. 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. ​ 55 Table of Contents 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 money center 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 increased competitive pressures on loan rates and terms which may affect our financial results in the future. 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. The COVID-19 pandemic has accelerated this transition, and in-person branch traffic is not expected to return to pre-pandemic levels. We plan to continue investing in our digital banking platforms, while maintaining an appropriately sized branch network. An inability to meet evolving customer expectations, with the appropriate level of security, 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 $1.07 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. 56 Table of Contents 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, ​ ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands, except per share amounts) ​ Consolidated Statement of Income Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total interest and dividend income ​ $ 39,014 ​ $ 32,115 ​ $ 108,106 ​ $ 93,868 ​ Total interest expense ​ ​ 1,624 ​ ​ 1,400 ​ ​ 4,415 ​ ​ 4,324 ​ Net interest income ​ ​ 37,390 ​ ​ 30,715 ​ ​ 103,691 ​ ​ 89,544 ​ Provision for loan losses ​ ​ 386 ​ ​ (1,667) ​ ​ (53) ​ ​ (7,234) ​ Net interest income after provision for loan losses ​ ​ 37,004 ​ ​ 32,382 ​ ​ 103,744 ​ ​ 96,778 ​ Total noninterest income ​ ​ 8,234 ​ ​ 8,392 ​ ​ 26,828 ​ ​ 27,974 ​ Total noninterest expense ​ ​ 23,998 ​ ​ 22,167 ​ ​ 71,997 ​ ​ 66,865 ​ Income before income tax expense ​ ​ 21,240 ​ ​ 18,607 ​ ​ 58,575 ​ ​ 57,887 ​ Income tax expense ​ ​ 5,613 ​ ​ 4,892 ​ ​ 15,259 ​ ​ 15,210 ​ Net income ​ $ 15,627 ​ $ 13,715 ​ $ 43,316 ​ $ 42,677 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted net income (1) ​ $ 15,856 ​ 14,479 ​ $ 41,919 ​ $ 42,680 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income (tax-equivalent basis) (1) (2) ​ $ 38,064 ​ $ 31,223 ​ $ 105,492 ​ $ 91,058 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share and Per Share Information ​ ​ ​ ​ ​ Earnings per share - Diluted ​ $ 0.54 ​ $ 0.50 ​ $ 1.49 ​ $ 1.56 ​ Adjusted earnings per share - Diluted (1) ​ 0.55 ​ 0.53 ​ 1.45 ​ 1.56 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares of common stock outstanding ​ 28,787,662 ​ 27,340,926 ​ 28,887,757 ​ 27,377,809 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Summary Ratios ​ ​ ​ ​ ​ ​ Net interest margin * ​ 3.65 % 3.18 % 3.36 % 3.19 % Net interest margin (tax-equivalent basis) * (1) (2) ​ 3.72 ​ 3.23 ​ 3.41 ​ 3.24 ​ Yield on loans * ​ ​ 4.91 ​ ​ 4.86 ​ ​ 4.66 ​ ​ 4.69 ​ Yield on interest-earning assets * ​ ​ 3.81 ​ ​ 3.33 ​ ​ 3.50 ​ ​ 3.34 ​ Cost of interest-bearing liabilities * ​ ​ 0.23 ​ ​ 0.22 ​ ​ 0.21 ​ ​ 0.23 ​ Cost of total deposits * ​ 0.06 ​ ​ 0.07 ​ 0.06 ​ 0.07 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio ​ 52.07 % 56.04 % 54.60 % 56.22 % Efficiency ratio (tax-equivalent basis) (1) (2) ​ 51.31 ​ 55.32 ​ 53.86 ​ 55.50 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average assets * ​ 1.47 % 1.37 % 1.35 % 1.47 % Return on average stockholders' equity * ​ 16.27 ​ 14.29 ​ 14.91 ​ 15.42 ​ Return on average tangible common equity * (1) ​ 17.70 ​ 15.32 ​ 16.20 ​ 16.59 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted return on average assets * (1) ​ 1.49 % 1.45 % 1.31 % 1.47 % Adjusted return on average stockholders' equity * (1) ​ 16.51 ​ 15.08 ​ 14.43 ​ 15.43 ​ Adjusted return on average tangible common equity * (1) ​ 17.96 ​ 16.18 ​ 15.67 ​ 16.59 ​ * Annualized measure. (1) See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure 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%. ​ 57 Table of Contents Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021 For the three months ended September 30, 2022, net income was $15.6 million, increasing by $1.9 million, or 13.9%, when compared to net income for the three months ended September 30, 2021. Notable changes include the following: ● A $6.7 million increase in net interest income, primarily attributable to higher average balances of interest-earning assets following the NXT acquisition in the fourth quarter of 2021, a more favorable asset mix, and higher yields on interest-earning assets which more than offset a $2.9 million decrease in PPP loan fees recognized as loan interest income; ● A provision for loan losses of $0.4 million was recognized during the three months ended September 30, 2022, compared to a negative provision for loan losses of $1.7 million during the three months ended September 30, 2021; ● A $1.8 million increase in noninterest expense, primarily reflecting a higher base level of noninterest expense following the NXT acquisition; and ● A $0.9 million decrease in gains on sale of mortgage loans, primarily attributable to a lower level of mortgage refinancing activity due to increases in interest rates. ​ Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021 For the nine months ended September 30, 2022, net income was $43.3 million, increasing by $0.6 million, or 1.5%, when compared to net income for the nine months ended September 30, 2021. Notable changes include the following: ● A $14.1 million increase in net interest income, primarily attributable to higher average balances of interest-earning assets following the NXT acquisition in the fourth quarter of 2021, a more favorable asset mix, and higher yields on interest-earning assets which more than offset a $6.1 million decrease in PPP loan fees recognized as loan interest income; ● A negative provision for loan losses of $0.1 million was recognized during the nine months ended September 30, 2022, compared to a negative provision for loan losses of $7.2 million during the nine months ended September 30, 2021; ● A $3.7 million decrease in gains on sale of mortgage loans, primarily attributable to a lower level of mortgage refinancing activity due to increases in interest rates; and ● A $5.1 million increase in noninterest expense, primarily reflecting a higher base level of noninterest expense following the NXT acquisition. ​ 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. ​ 58 Table of Contents The following tables set forth average balances, average yields and costs, and certain other information for the three and nine months ended September 30, 2022 and 2021. 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ September 30, 2022 September 30, 2021 ​ ​ Average ​ ​ ​ Average ​ ​ ​ ​ ​ Balance ​ Interest Yield/Cost * Balance ​ Interest Yield/Cost * ​ ​ (dollars in thousands) ​ ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 2,481,920 ​ $ 30,697 4.91 % $ 2,135,476 ​ $ 26,176 4.86 % Securities ​ 1,470,092 ​ 7,842 2.12 ​ 1,180,513 ​ 5,735 1.93 ​ Deposits with banks ​ 105,030 ​ 458 1.73 ​ 513,158 ​ 190 0.15 ​ Other ​ 2,936 ​ 17 2.25 ​ 2,739 ​ 14 2.00 ​ Total interest-earning assets ​ 4,059,978 ​ $ 39,014 3.81 % 3,831,886 ​ $ 32,115 3.33 % Allowance for loan losses ​ (24,717) ​ ​ ​ ​ ​ ​ (26,470) ​ ​ ​ ​ ​ ​ Noninterest-earning assets ​ 173,461 ​ ​ ​ ​ ​ ​ 159,635 ​ ​ ​ ​ ​ ​ Total assets ​ $ 4,208,722 ​ ​ ​ ​ ​ ​ $ 3,965,051 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing demand ​ $ 1,137,072 ​ $ 144 0.05 % $ 1,020,216 ​ $ 129 0.05 % Money market ​ 577,388 ​ 203 0.14 ​ 510,183 ​ 96 0.07 ​ Savings ​ 649,752 ​ 53 0.03 ​ 608,436 ​ 48 0.03 ​ Time ​ 271,870 ​ 187 0.27 ​ 275,224 ​ 291 0.42 ​ Total interest-bearing deposits ​ 2,636,082 ​ 587 0.09 ​ 2,414,059 ​ 564 0.09 ​ Securities sold under agreements to repurchase ​ 50,427 ​ 9 0.07 ​ 49,923 ​ 8 0.06 ​ Borrowings ​ 11,967 ​ 85 2.80 ​ 326 ​ 1 0.46 ​ Subordinated notes ​ ​ 39,365 ​ ​ 470 ​ 4.73 ​ ​ 39,285 ​ ​ 470 ​ 4.74 ​ Junior subordinated debentures issued to capital trusts ​ 37,755 ​ 473 4.97 ​ 37,688 ​ 357 3.76 ​ Total interest-bearing liabilities ​ 2,775,596 ​ $ 1,624 0.23 % 2,541,281 ​ $ 1,400 0.22 % Noninterest-bearing deposits ​ 1,031,407 ​ ​ ​ ​ 1,016,384 ​ ​ Noninterest-bearing liabilities ​ 20,736 ​ ​ ​ ​ 26,523 ​ ​ Total liabilities ​ 3,827,739 ​ ​ ​ ​ 3,584,188 ​ ​ Stockholders' Equity ​ 380,983 ​ ​ ​ ​ 380,863 ​ ​ Total liabilities and stockholders’ equity ​ $ 4,208,722 ​ ​ ​ ​ $ 3,965,051 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income/Net interest margin (1) ​ ​ ​ ​ $ 37,390 ​ 3.65 % ​ ​ ​ $ 30,715 3.18 % Tax-equivalent adjustment (2) ​ ​ ​ ​ 674 ​ 0.07 ​ ​ ​ ​ 508 0.05 ​ Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (2) (3) ​ ​ ​ ​ $ 38,064 ​ 3.72 % ​ ​ $ 31,223 3.23 % Net interest rate spread (4) ​ ​ ​ ​ ​ 3.58 % ​ 3.11 % Net interest-earning assets (5) ​ $ 1,284,382 ​ ​ ​ ​ ​ $ 1,290,605 ​ ​ Ratio of interest-earning assets to interest-bearing liabilities ​ 1.46 ​ ​ ​ ​ 1.51 ​ ​ Cost of total deposits ​ ​ ​ ​ ​ 0.06 % ​ 0.07 % * 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. 59 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, 2022 September 30, 2021 ​ ​ Average ​ ​ Average ​ ​ ​ ​ Balance ​ Interest Yield/Cost * Balance ​ Interest Yield/Cost * ​ ​ (dollars in thousands) ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 2,485,501 ​ $ 86,687 4.66 % $ 2,217,463 ​ $ 77,738 4.69 % Securities ​ 1,405,245 ​ 20,332 1.93 ​ 1,102,808 ​ ​ 15,706 1.90 ​ Deposits with banks ​ 237,646 ​ 1,037 0.58 ​ 432,971 ​ ​ 385 0.12 ​ Other ​ 2,829 ​ 50 2.36 ​ 2,655 ​ ​ 39 1.95 ​ Total interest-earning assets ​ 4,131,221 ​ $ 108,106 3.50 % 3,755,897 ​ $ 93,868 3.34 % Allowance for loan losses ​ (24,467) ​ ​ ​ ​ (29,069) ​ ​ Noninterest-earning assets ​ 172,243 ​ ​ ​ ​ 157,287 ​ ​ Total assets ​ $ 4,278,997 ​ ​ ​ ​ $ 3,884,115 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ Interest-bearing demand ​ $ 1,146,635 ​ $ 430 0.05 % $ 1,012,557 ​ $ 373 0.05 % Money market ​ 585,815 ​ ​ 434 0.10 ​ 498,441 ​ ​ 279 0.07 ​ Savings ​ 653,659 ​ ​ 155 0.03 ​ 584,226 ​ ​ 135 0.03 ​ Time ​ 289,000 ​ ​ 643 0.30 ​ 286,685 ​ ​ 1,034 0.48 ​ Total interest-bearing deposits ​ 2,675,109 ​ 1,662 0.08 ​ 2,381,909 ​ 1,821 0.10 ​ Securities sold under agreements to repurchase ​ 51,503 ​ ​ 26 0.07 ​ 47,827 ​ ​ 23 0.06 ​ Borrowings ​ 4,344 ​ ​ 87 2.67 ​ 421 ​ ​ 2 0.43 ​ Subordinated notes ​ ​ 39,345 ​ ​ 1,409 ​ 4.79 ​ ​ 39,265 ​ ​ 1,409 ​ 4.80 ​ Junior subordinated debentures issued to capital trusts ​ 37,738 ​ ​ 1,231 4.36 ​ 37,671 ​ ​ 1,069 3.79 ​ Total interest-bearing liabilities ​ 2,808,039 ​ $ 4,415 0.21 % 2,507,093 ​ $ 4,324 0.23 % Noninterest-bearing deposits ​ 1,060,566 ​ ​ ​ 976,884 ​ ​ Noninterest-bearing liabilities ​ 21,883 ​ ​ ​ 30,205 ​ ​ Total liabilities ​ 3,890,488 ​ ​ ​ 3,514,182 ​ ​ Stockholders' Equity ​ 388,509 ​ ​ ​ 369,933 ​ ​ Total liabilities and stockholders’ equity ​ $ 4,278,997 ​ ​ ​ ​ 3,884,115 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income/Net interest margin (1) ​ ​ ​ ​ $ 103,691 ​ 3.36 % ​ ​ $ 89,544 3.19 % Tax-equivalent adjustment (2) ​ ​ ​ ​ 1,801 ​ 0.05 ​ ​ ​ 1,514 0.05 ​ Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (2) (3) ​ ​ ​ ​ $ 105,492 ​ 3.41 % ​ ​ $ 91,058 3.24 % Net interest rate spread (4) ​ ​ ​ ​ ​ 3.29 % ​ 3.11 % Net interest-earning assets (5) ​ $ 1,323,182 ​ ​ ​ ​ ​ $ 1,248,804 ​ ​ Ratio of interest-earning assets to interest-bearing liabilities ​ 1.47 ​ ​ ​ ​ 1.50 ​ ​ Cost of total deposits ​ ​ ​ ​ ​ 0.06 % ​ 0.07 % * 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. ​ 60 Table of Contents The following table sets forth the components of loan interest income, which includes contractual interest on loans, loan fees, and accretion of acquired loan discounts. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2022 2021 2022 2021 ​ ​ ​ ​ Yield ​ ​ Yield ​ ​ Yield ​ ​ Yield ​ ​ ​ Interest Contribution * ​ Interest Contribution * ​ Interest Contribution * ​ Interest Contribution * ​ ​ (dollars in thousands) ​ Contractual interest ​ $ 29,308 4.69 % $ 22,324 4.14 % $ 81,195 4.36 % $ 67,096 4.04 % Loan fees (excluding PPP loans) ​ 1,030 0.16 ​ 631 0.12 ​ 3,309 0.18 ​ 2,609 0.16 ​ PPP loan fees ​ ​ 106 ​ 0.02 ​ ​ 3,017 ​ 0.56 ​ ​ 1,487 ​ 0.08 ​ ​ 7,604 ​ 0.46 ​ Accretion of acquired loan discounts ​ 253 0.04 ​ 204 0.04 ​ 696 0.04 ​ 429 0.03 ​ Total loan interest income ​ $ 30,697 4.91 % $ 26,176 4.86 % $ 86,687 4.66 % $ 77,738 4.69 % * Annualized measure. The following table sets forth the components of net interest income. Total interest income consists of contractual interest on loans, contractual interest on securities, contractual interest on interest-bearing deposits in banks, loan fees, accretion of acquired loan discounts, net securities amortization, and other interest and dividend income. Total interest expense consists of contractual interest on deposits, contractual interest on other interest-bearing liabilities and other interest expense. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2022 2021 2022 ​ 2021 ​ ​ ​ ​ Net Interest ​ ​ Net Interest ​ ​ Net Interest ​ ​ Net Interest ​ ​ ​ ​ ​ Margin ​ ​ ​ Margin ​ ​ ​ ​ Margin ​ ​ ​ ​ Margin ​ ​ ​ Interest Contribution * ​ Interest Contribution * ​ Interest ​ Contribution * ​ Interest ​ Contribution * ​ ​ (dollars in thousands) ​ Interest income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contractual interest on loans ​ $ 29,308 2.86 % $ 22,324 2.31 % $ 81,195 ​ 2.63 % $ 67,096 ​ 2.39 % Contractual interest on securities ​ 9,570 0.94 ​ 7,387 0.77 ​ ​ 25,669 ​ 0.83 ​ ​ 20,911 ​ 0.75 ​ Contractual interest on deposits with banks ​ 458 0.05 ​ 190 0.02 ​ ​ 1,037 ​ 0.03 ​ ​ 385 ​ 0.01 ​ Loan fees (excluding PPP loans) ​ 1,030 0.10 ​ 631 0.07 ​ ​ 3,309 ​ 0.11 ​ ​ 2,609 ​ 0.09 ​ PPP loan fees ​ ​ 106 ​ 0.01 ​ ​ 3,017 ​ 0.31 ​ ​ 1,487 ​ 0.05 ​ ​ 7,604 ​ 0.27 ​ Accretion of acquired loan discounts ​ 253 0.02 ​ 204 0.02 ​ ​ 696 ​ 0.02 ​ ​ 429 ​ 0.02 ​ Securities amortization, net ​ (1,728) (0.17) ​ (1,652) (0.17) ​ ​ (5,337) ​ (0.17) ​ ​ (5,205) ​ (0.19) ​ Other ​ 17 — ​ 14 — ​ ​ 50 ​ — ​ ​ 39 ​ — ​ Total interest income ​ 39,014 3.81 ​ 32,115 3.33 ​ ​ 108,106 3.50 ​ 93,868 3.34 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contractual interest on deposits ​ 624 0.06 ​ 561 0.06 ​ ​ 1,817 ​ 0.06 ​ ​ 1,812 ​ 0.06 ​ Contractual interest on other interest-bearing liabilities ​ 985 0.10 ​ 694 0.08 ​ ​ 2,467 ​ 0.08 ​ ​ 2,088 ​ 0.07 ​ Other ​ 15 — ​ 145 0.01 ​ ​ 131 ​ — ​ ​ 424 ​ 0.02 ​ Total interest expense ​ 1,624 0.16 ​ 1,400 0.15 ​ ​ 4,415 0.14 ​ 4,324 0.15 ​ Net interest income ​ 37,390 3.65 ​ 30,715 3.18 ​ ​ 103,691 3.36 ​ 89,544 3.19 ​ Tax equivalent adjustment (1) ​ 674 0.07 ​ 508 0.05 ​ ​ 1,801 ​ 0.05 ​ ​ 1,514 ​ 0.05 ​ Net interest income (tax equivalent) (1) (2) ​ $ 38,064 3.72 % $ 31,223 3.23 % $ 105,492 3.41 % $ 91,058 3.24 % * 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. ​ 61 Table of Contents 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, 2022 ​ Nine Months Ended September 30, 2022 ​ vs. vs. ​ Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 ​ Increase (Decrease) Due to ​ ​ ​ Increase (Decrease) Due to ​ ​ ​ ​ Volume Rate Total Volume Rate Total ​ (dollars in thousands) Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 4,283 ​ $ 238 ​ $ 4,521 ​ $ 9,350 ​ $ (401) ​ $ 8,949 Securities ​ 1,506 ​ 601 ​ 2,107 ​ 4,372 ​ 254 ​ 4,626 Deposits with banks ​ (262) ​ 530 ​ 268 ​ (244) ​ 896 ​ 652 Other ​ 1 ​ 2 ​ 3 ​ 3 ​ 8 ​ 11 Total interest-earning assets ​ 5,528 ​ 1,371 ​ 6,899 ​ 13,481 ​ 757 ​ 14,238 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ Interest-bearing demand ​ 15 ​ — ​ 15 ​ 50 ​ 7 ​ 57 Money market ​ 14 ​ 93 ​ 107 ​ 55 ​ 100 ​ 155 Savings ​ 3 ​ 2 ​ 5 ​ 17 ​ 3 ​ 20 Time ​ (4) ​ (100) ​ (104) ​ 8 ​ (399) ​ (391) Total interest-bearing deposits ​ 28 ​ (5) ​ 23 ​ 130 ​ (289) ​ (159) Securities sold under agreements to repurchase ​ — ​ 1 ​ 1 ​ 2 ​ 1 ​ 3 Borrowings ​ 73 ​ 11 ​ 84 ​ 55 ​ 30 ​ 85 Subordinated notes ​ ​ 1 ​ ​ (1) ​ ​ — ​ ​ 3 ​ ​ (3) ​ ​ — Junior subordinated debentures issued to capital trusts ​ 1 ​ 115 ​ 116 ​ 2 ​ 160 ​ 162 Total interest-bearing liabilities ​ 103 ​ 121 ​ 224 ​ 192 ​ (101) ​ 91 Change in net interest income ​ $ 5,425 ​ $ 1,250 ​ $ 6,675 ​ $ 13,289 ​ $ 858 ​ $ 14,147 ​ Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021 Net interest income for the three months ended September 30, 2022, was $37.4 million, increasing $6.7 million, or 21.7%, from the three months ended September 30, 2021. The increase is primarily attributable to higher average balances of interest-earnings assets following the NXT acquisition and a more favorable asset mix. These balance changes, as well as higher yields on interest-earning assets driven by recent increases in benchmark interest rates, more than offset a $2.9 million decrease in PPP loan fees recognized as loan interest income. Net interest margin increased to 3.65% for the three months ended September 30, 2022 compared to 3.18% for the three months ended September 30, 2021. The increase was primarily attributable to a more favorable mix of interest-earnings assets as well as higher yields on interest-earning assets. Additionally, the contribution of PPP loan fees to net interest margin decreased to 1 basis point during the three months ended September 30, 2022 from 31 basis points during the three months ended September 30, 2021. This decrease was more than offset by an increase in contractual interest on loans, driven by recent increases in benchmark interest rates. ​ 62 Table of Contents Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021 Net interest income for the nine months ended September 30, 2022, was $103.7 million, increasing $14.1 million, or 15.8%, from the nine months ended September 30, 2021. The increase is primarily attributable to higher average balances of interest-earning assets following the NXT acquisition and a more favorable asset mix. These balances changes more than offset a $6.1 million decrease in PPP loan fees recognized as loan interest income. Net interest margin increased to 3.36% for the nine months ended September 30, 2022 compared to 3.19% for the nine months ended September 30, 2021. The contribution of PPP loans to net interest margin decreased to 5 basis points during the nine months ended September 30, 2022 from 27 basis points during the nine months ended September 30, 2021. This decrease was more than offset by an increase in contractual interest on loans, driven by recent increases in benchmark interest rates. The quarterly net interest margins were as follows: ​ ​ ​ ​ ​ ​ ​ 2022 2021 Three months ended: ​ ​ ​ ​ ​ March 31 3.08 % 3.25 % June 30 3.34 ​ 3.14 ​ September 30 3.65 ​ 3.18 ​ December 31 — ​ 3.17 ​ ​ In March 2020, the Federal Open Markets Committee (“FOMC”), in response to the economic downturn caused by the COVID-19 pandemic, lowered the target range for the federal funds rate to 0% to 0.25% and announced the FRB would substantially increase its Treasury and agency mortgage-backed securities holdings. This resulted in a historically low interest rate environment which lasted through the rest of 2020 and into 2021, putting downward pressure on our net interest margin. In 2021, the FOMC began to taper the pace of its security purchases, and, in March 2022, the FOMC raised the target range for the federal funds rate. Since March 2022, the FOMC has raised the target range for the federal funds rate several times, setting the target range for the federal funds rate to 3.75% to 4.00% at the November 2022 meeting, and indicated that the FRB will continue reducing its security holdings. Additionally, the FOMC indicated that it will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments in determining the pace of future increases in the target range. As a result of these developments, market interest rates have risen which has led to improvements in our net interest margin. In general, we believe that increases in market interest rates will lead to improved net interest margins while decreases in market interest rates will result in lower net interest margins. Additionally, these recent increases in market interest rates have increased competition for deposits. As a result, we expect deposit costs to increase during the rest of 2022 and deposits balances may decrease and be replaced by higher cost funding sources, such as FHLB advances, brokered deposits, or other wholesale funding. Although funding costs are expected to increase during the remainder of 2022, such increased funding costs should be more than offset by continued increases in interest-earning asset yields resulting from the higher market interest rates. ​ ​ 63 Table of Contents Provision for Loan Losses Provisions for loan losses are charged to operations in order to maintain the allowance for loan losses at a level we consider necessary to absorb probable incurred credit losses in the loan portfolio. In determining the level of the allowance for loan losses, management considers past and current loss experience, evaluations of collateral, current economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of nonperforming and other classified loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or as events change. We assess the allowance for loan losses on a quarterly basis and make provisions for loan losses in order to maintain the allowance. The provision for loan losses is a function of the allowance for loan loss methodology we use to determine the appropriate level of the allowance for inherent loan losses after accounting for net charge-offs (recoveries). Credit losses in our loan portfolio are highly dependent on the economic conditions in the communities that we serve. The general deterioration in economic conditions initially caused by the COVID-19 pandemic adversely affected the communities that we serve beginning in 2020. As a result, our allowance for loan losses initially increased at the onset of the COVID-19 pandemic, remained elevated during the remainder of 2020, and then gradually returned to near pre-pandemic levels during 2021 as economic conditions improved in our market areas. Potential deterioration of economic conditions, whether due to the COVID-19 pandemic or other factors, may lead to higher credit losses and adversely impact our financial condition and results of operations. Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021 The Company recorded a provision for loan losses of $0.4 million during the three months ended September 30, 2022, compared to a negative provision for loan losses of $1.7 million during the three months ended September 30, 2021. The provision during the three months ended September 30, 2022 was primarily due to a $128.1 million increase in loans, resulting in a $1.1 million increase in general reserves. Mostly offsetting this increase was a $0.7 million decrease in specific reserves on loans individually evaluated for impairment. Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021 The Company recorded a negative provision for loan losses of $0.1 million during the nine months ended September 30, 2022, compared to a negative provision for loan losses of $7.2 million during the nine months ended September 30, 2021. During the nine months ended September 30, 2022, net recoveries of $1.2 million were mostly offset by a $1.1 million increase in required reserves, which included a $0.8 million increase in specific reserves on loans individually evaluated for impairment. ​ 64 Table of Contents 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, ​ 2022 2021 $ Change 2022 2021 $ Change ​ (dollars in thousands) Card income ​ $ 2,569 ​ $ 2,509 ​ $ 60 ​ $ 7,687 ​ $ 7,216 ​ $ 471 Wealth management fees ​ 2,059 ​ 2,036 ​ 23 ​ ​ 6,670 ​ ​ 6,013 ​ ​ 657 Service charges on deposit accounts ​ 1,927 ​ 1,677 ​ 250 ​ ​ 5,371 ​ ​ 4,364 ​ ​ 1,007 Mortgage servicing ​ 697 ​ 699 ​ (2) ​ ​ 2,016 ​ ​ 2,095 ​ ​ (79) Mortgage servicing rights fair value adjustment ​ 351 ​ 40 ​ 311 ​ ​ 2,446 ​ ​ 1,425 ​ ​ 1,021 Gains on sale of mortgage loans ​ 354 ​ 1,257 ​ (903) ​ ​ 1,267 ​ ​ 4,919 ​ ​ (3,652) Unrealized gains (losses) on equity securities ​ (107) ​ 28 ​ (135) ​ ​ (447) ​ ​ 74 ​ ​ (521) Gains (losses) on foreclosed assets ​ (225) ​ (14) ​ (211) ​ ​ (192) ​ ​ 126 ​ ​ (318) Gains (losses) on other assets ​ (31) ​ (672) ​ 641 ​ ​ 119 ​ ​ (719) ​ ​ 838 Income on bank owned life insurance ​ ​ 41 ​ ​ — ​ ​ 41 ​ ​ 122 ​ ​ — ​ ​ 122 Other noninterest income ​ 599 ​ 832 ​ (233) ​ ​ 1,769 ​ ​ 2,461 ​ ​ (692) Total noninterest income ​ $ 8,234 ​ $ 8,392 ​ $ (158) ​ $ 26,828 ​ $ 27,974 ​ $ (1,146) ​ Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021 Total noninterest income for the three months ended September 30, 2022, was $8.2 million, a decrease of $0.2 million, or 1.9%, from the three months ended September 30, 2021. Notable changes in noninterest income include the following: ● A $0.9 million decrease in gains on sale of mortgage loans, primarily attributable to a lower level of mortgage refinancing activity due to recent interest rate increases; ● A $0.6 million improvement in gains (losses) on other assets, as the 2021 results include impairment losses of $0.6 million related to branches closed during the third quarter of 2021, pursuant to our branch rationalization plan; ● A $0.3 million increase in the mortgage servicing rights fair value adjustment, primarily resulting from slower mortgage prepayment speed assumptions; and ● A $0.3 million increase in service charges on deposit accounts. ​ ​ 65 Table of Contents Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021 Total noninterest income for the nine months ended September 30, 2022, was $26.8 million, a decrease of $1.1 million, or 4.1%, from the nine months ended September 30, 2021. Notable changes in noninterest income include the following: ● A $3.7 million decrease in gains on sale of mortgage loans, primarily attributable to a lower level of mortgage refinancing activity, due to recent interest rate increases; ● A $1.0 million increase in the mortgage servicing rights fair value adjustment, primarily resulting from slower mortgage prepayment speed assumptions; ● A $1.0 million increase in service charges on deposit accounts; ● A $0.8 million improvement in gains (losses) on other assets, as the 2021 results include impairment losses of $0.7 million related to branches closed during the third quarter of 2021, pursuant to our branch rationalization plan; ● A $0.7 million increase in wealth management fees, reflecting a $0.4 million increase in farm management fees, primarily due to a $0.3 million increase in farm real estate brokerage fees; ● A $0.7 million decrease in other noninterest income, primarily resulting from a $0.4 million decrease in fees collected on loans due to a lower level of mortgage refinancing activity; and ● A $0.5 million increase in card income primarily due to increased debit and credit card transaction volume. ​ 66 Table of Contents 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, ​ 2022 2021 $ Change 2022 2021 $ Change ​ (dollars in thousands) Salaries $ 12,752 $ 11,835 ​ $ 917 $ 38,489 ​ $ 36,486 ​ $ 2,003 Employee benefits ​ 1,771 ​ 1,455 ​ 316 ​ 6,199 ​ ​ 4,549 ​ ​ 1,650 Occupancy of bank premises ​ 1,979 ​ 1,610 ​ 369 ​ 5,780 ​ ​ 5,011 ​ ​ 769 Furniture and equipment ​ 668 ​ 657 ​ 11 ​ 1,843 ​ ​ 1,883 ​ ​ (40) Data processing ​ 1,631 ​ 1,767 ​ (136) ​ 5,274 ​ ​ 5,176 ​ ​ 98 Marketing and customer relations ​ 880 ​ 883 ​ (3) ​ 2,936 ​ ​ 2,291 ​ ​ 645 Amortization of intangible assets ​ 243 ​ 252 ​ (9) ​ 733 ​ ​ 799 ​ ​ (66) FDIC insurance ​ 302 ​ 279 ​ 23 ​ 888 ​ ​ 763 ​ ​ 125 Loan collection and servicing ​ 336 ​ 400 ​ (64) ​ 771 ​ ​ 1,098 ​ ​ (327) Foreclosed assets ​ 97 ​ 242 ​ (145) ​ 260 ​ ​ 704 ​ ​ (444) Other noninterest expense ​ 3,339 ​ 2,787 ​ 552 ​ 8,824 ​ ​ 8,105 ​ ​ 719 Total noninterest expense ​ $ 23,998 ​ $ 22,167 ​ $ 1,831 ​ $ 71,997 ​ $ 66,865 ​ $ 5,132 ​ Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021 Total noninterest expense for the three months ended September 30, 2022, was $24.0 million, an increase of $1.8 million, or 8.3%, from the three months ended September 30, 2021. Notable changes in noninterest expense include the following: ● Following the NXT acquisition on October 1, 2021, there was a higher base level of noninterest expense, primarily related to personnel costs and branch operations; and ● A $0.6 million increase in other noninterest expense, in part due to legal and professional fees related to the acquisition of Town and Country. ​ Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021 Total noninterest expense for the nine months ended September 30, 2022, was $72.0 million, an increase of $5.1 million, or 7.7%, from the nine months ended September 30, 2021. Notable changes in noninterest expense include the following: ● Following the NXT acquisition on October 1, 2021, there was a higher base level of noninterest expense, primarily related to personnel costs and branch operations; ● The $1.7 million increase in employee benefits expenses also included accelerated recognition of $0.6 million of stock compensation expense during February 2022 as a result of a modification to all outstanding restricted stock unit and performance restricted stock unit agreements to address treatment upon retirement. Total compensation costs related to the modified agreements remains the same, and stock compensation expense in periods subsequent to the modification are reduced as a result. The net impact of the modification was a $0.5 million increase in stock compensation expense during the nine months ended September 30, 2022; ● A $0.6 million increase in marketing expense, primarily due to variations in timing of marketing campaigns as well as a slightly higher marketing budget relative to 2021; and ● A $0.4 million decrease in foreclosed asset expense, primarily due to fewer foreclosed properties held in 2022 relative to 2021. ​ ​ 67 Table of Contents Income Taxes Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021 During the three months ended September 30, 2022 and 2021, we recorded income tax expense of $5.6 million and $4.9 million, respectively, with the effective tax rates remaining nearly unchanged at 26.4% and 26.3%, respectively. Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021 We recorded income tax expense of $15.3 million, or a 26.1% effective tax rate, during the nine months ended September 30, 2022, compared to $15.2 million, or a 26.3% effective tax rate, during the nine months ended September 30, 2021. The slight decrease in effective tax rate was primarily due to lower overall state income taxes. ​ 68 Table of Contents FINANCIAL CONDITION ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ ​ ​ ​ ​ ​ 2022 2021 $ Change % Change ​ Consolidated Balance Sheet Information ​ (dollars in thousands, except per share data) ​ Cash and cash equivalents ​ $ 78,215 ​ $ 409,268 ​ $ (331,053) ​ (80.9) % Debt securities available-for-sale, at fair value ​ 853,740 ​ 942,168 ​ (88,428) ​ (9.4) ​ Debt securities held-to-maturity ​ 546,694 ​ 336,185 ​ 210,509 ​ 62.6 ​ Loans held for sale ​ ​ 2,297 ​ ​ 4,942 ​ ​ (2,645) ​ (53.5) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans, before allowance for loan losses ​ ​ 2,579,928 ​ ​ 2,499,689 ​ ​ 80,239 ​ 3.2 ​ Less: allowance for loan losses ​ ​ 25,060 ​ ​ 23,936 ​ ​ 1,124 ​ 4.7 ​ Loans, net of allowance for loan losses ​ ​ 2,554,868 ​ ​ 2,475,753 ​ ​ 79,115 ​ 3.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Goodwill ​ ​ 29,322 ​ ​ 29,322 ​ ​ — ​ — ​ Core deposit intangible assets, net ​ ​ 1,210 ​ ​ 1,943 ​ ​ (733) ​ (37.7) ​ Other assets ​ ​ 146,978 ​ ​ 114,673 ​ ​ 32,305 ​ 28.2 ​ Total assets ​ $ 4,213,324 ​ $ 4,314,254 ​ $ (100,930) ​ (2.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total deposits ​ $ 3,643,443 ​ $ 3,738,185 ​ $ (94,742) ​ (2.5) % Securities sold under agreements to repurchase ​ ​ 48,130 ​ ​ 61,256 ​ ​ (13,126) ​ (21.4) ​ Borrowings ​ ​ 60,000 ​ ​ — ​ ​ 60,000 ​ NM ​ Subordinated notes ​ ​ 39,376 ​ ​ 39,316 ​ ​ 60 ​ 0.2 ​ Junior subordinated debentures ​ ​ 37,763 ​ ​ 37,714 ​ ​ 49 ​ 0.1 ​ Other liabilities ​ ​ 25,539 ​ ​ 25,902 ​ ​ (363) ​ (1.4) ​ Total liabilities ​ ​ 3,854,251 ​ ​ 3,902,373 ​ ​ (48,122) ​ (1.2) ​ Total stockholders' equity ​ ​ 359,073 ​ ​ 411,881 ​ ​ (52,808) ​ (12.8) ​ Total liabilities and stockholders' equity ​ $ 4,213,324 ​ $ 4,314,254 ​ $ (100,930) ​ (2.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible assets (1) ​ $ 4,182,792 ​ $ 4,282,989 ​ $ (100,197) ​ (2.3) % Tangible common equity (1) ​ 328,541 ​ 380,616 ​ (52,075) ​ (13.7) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Core deposits (1) ​ $ 3,617,614 ​ $ 3,674,435 ​ $ (56,821) ​ (1.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share and Per Share Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Book value per share ​ $ 12.49 ​ $ 14.21 ​ ​ ​ ​ ​ ​ Tangible book value per share (1) ​ ​ 11.43 ​ ​ 13.13 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares of common stock outstanding ​ ​ 28,752,626 ​ ​ 28,986,061 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance Sheet Ratios ​ ​ ​ ​ ​ Loan to deposit ratio ​ 70.81 % 66.87 % ​ ​ Core deposits to total deposits (1) ​ 99.29 ​ 98.29 ​ ​ ​ Stockholders' equity to total assets ​ 8.52 ​ 9.55 ​ ​ ​ Tangible common equity to tangible assets (1) ​ 7.85 ​ 8.89 ​ ​ ​ (1) See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures. NM Not meaningful ​ 69 Table of Contents Total assets were $4.21 billion at September 30, 2022, a decrease of $100.9 million, or 2.3%, from December 31, 2021. Notable changes in our consolidated balance sheet include the following: ● Excess liquidity, including excess cash held at December 31, 2021, was reinvested into debt securities, which increased by $122.1 million, and loans held for investment which increased $80.2 million; ● Loans increased by $80.2 million with growth in most of our geographic markets, which was partially offset by a $29.4 million decrease due to forgiveness of PPP loans; ● Total deposits decreased by $94.7 million, primarily due to lower balances maintained in retail and business accounts; ● Increases in market interest rates since December 31, 2021 drove a decrease in fair value of debt securities resulting in $112.9 million of unrealized losses in the available-for-sale portfolio and substantially contributing to a total decrease of $78.9 million in accumulated other comprehensive income (loss); and ● Borrowings, consisting of short-term FHLB advances, increased $60.0 million and were utilized to fund short-term liquidity needs. ​ Loan Portfolio The following table sets forth the composition of the loan portfolio, excluding loans held-for-sale, by type of loan. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 ​ December 31, 2021 ​ ​ Balance Percent ​ Balance Percent ​ ​ ​ (dollars in thousands) ​ Commercial and industrial ​ $ 240,671 9.4 % $ 286,946 11.5 % Agricultural and farmland ​ 245,234 9.5 ​ 247,796 9.9 ​ Commercial real estate - owner occupied ​ 226,524 8.8 ​ 234,544 9.4 ​ Commercial real estate - non-owner occupied ​ 718,089 27.8 ​ 684,023 27.4 ​ Multi-family ​ 260,630 10.1 ​ 263,911 10.5 ​ Construction and land development ​ 364,290 14.1 ​ 298,048 11.9 ​ One-to-four family residential ​ 328,667 12.7 ​ 327,837 13.1 ​ Municipal, consumer, and other ​ 195,823 7.6 ​ 156,584 6.3 ​ Loans, before allowance for loan losses ​ 2,579,928 100.0 % 2,499,689 100.0 % Allowance for loan losses ​ (25,060) ​ ​ (23,936) ​ Loans, net of allowance for loan losses ​ $ 2,554,868 ​ ​ ​ $ 2,475,753 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PPP loans (included above) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 65 ​ — % $ 28,404 ​ 1.1 % Agricultural and farmland ​ — ​ — ​ 913 ​ 0.1 ​ Municipal, consumer, and other ​ — ​ — ​ 171 ​ — ​ Total PPP loans ​ $ 65 ​ — % $ 29,488 ​ 1.2 % ​ Loans, before allowance for loan losses were $2.58 billion at September 30, 2022, an increase of $80.2 million, or 3.2%, from December 31, 2021, with growth in most of our geographic markets that was partially offset by a $29.4 million decrease due to forgiveness of PPP loans. Additionally, we saw a slower pace of prepayments, beginning in the third quarter of 2022, as a result of recent increases in interest rates. ​ 70 Table of Contents Loan Portfolio Maturities The following table summarizes the scheduled maturities of the loan portfolio. Demand loans (loans having no stated repayment schedule or maturity) and overdraft loans are reported as being due in one year or less. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ After 1 Year After 5 Years ​ ​ ​ ​ ​ 1 Year ​ Through ​ Through ​ After ​ ​ September 30, 2022 ​ or Less ​ 5 Years ​ 15 Years ​ 15 Years ​ Total ​ (dollars in thousands) Commercial and industrial ​ $ 148,942 ​ $ 74,439 ​ $ 17,290 ​ $ — ​ $ 240,671 Agricultural and farmland ​ 102,255 ​ 94,534 ​ 45,160 ​ ​ 3,285 ​ 245,234 Commercial real estate - owner occupied ​ 15,409 ​ 142,469 ​ 65,635 ​ ​ 3,011 ​ 226,524 Commercial real estate - non-owner occupied ​ 80,362 ​ 433,608 ​ 203,610 ​ ​ 509 ​ 718,089 Multi-family ​ 22,742 ​ 169,870 ​ 68,018 ​ ​ — ​ 260,630 Construction and land development ​ 179,018 ​ 169,457 ​ 15,585 ​ ​ 230 ​ 364,290 One-to-four family residential ​ 77,530 ​ 110,074 ​ 79,327 ​ ​ 61,736 ​ 328,667 Municipal, consumer, and other ​ 85,266 ​ 18,681 ​ 70,953 ​ ​ 20,923 ​ 195,823 Total ​ $ 711,524 ​ $ 1,213,132 ​ $ 565,578 ​ $ 89,694 ​ $ 2,579,928 ​ The following table summarizes loans maturing after one year, segregated into variable and fixed interest rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variable Interest Rates ​ ​ ​ ​ ​ Repricing ​ Repricing ​ Total ​ Predetermined ​ ​ ​ ​ 1 Year ​ After ​ Variable ​ (Fixed) ​ ​ September 30, 2022 ​ or Less ​ 1 Year ​ Interest Rates ​ Interest Rates ​ Total ​ (dollars in thousands) Commercial and industrial ​ $ 11,999 ​ $ 19 ​ $ 12,018 ​ $ 79,711 ​ $ 91,729 Agricultural and farmland ​ 7,602 ​ 5,917 ​ 13,519 ​ ​ 129,460 ​ 142,979 Commercial real estate - owner occupied ​ 33,033 ​ 18,964 ​ 51,997 ​ ​ 159,118 ​ 211,115 Commercial real estate - non-owner occupied ​ 69,743 ​ 14,891 ​ 84,634 ​ ​ 553,093 ​ 637,727 Multi-family ​ 25,774 ​ 431 ​ 26,205 ​ ​ 211,683 ​ 237,888 Construction and land development ​ 86,059 ​ 58 ​ 86,117 ​ ​ 99,155 ​ 185,272 One-to-four family residential ​ 63,235 ​ 23,618 ​ 86,853 ​ ​ 164,284 ​ 251,137 Municipal, consumer, and other ​ 31,375 ​ 11,845 ​ 43,220 ​ ​ 67,337 ​ 110,557 Total ​ $ 328,820 ​ $ 75,743 ​ $ 404,563 ​ $ 1,463,841 ​ $ 1,868,404 ​ Nonperforming Assets Nonperforming loans consist of all loans 90 days or more past due or on nonaccrual. Nonperforming assets consist of all nonperforming loans and foreclosed assets. 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. Management believes the Company’s lending practices and active approach to managing nonperforming assets has resulted in timely resolution of problem assets. Loans acquired with deteriorated credit quality are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. However, these loans may be considered performing, even though they may be contractually past due, as any non-payment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period loan loss provision or future period yield adjustments. The accrual of interest is discontinued on loans acquired with deteriorated credit quality if management can no longer estimate future cash flows on the loan. Therefore, interest revenue, through accretion of the difference between the carrying value of the loans and the expected cash flows, is being recognized on all loans acquired with deteriorated credit quality, except those on which management can no longer estimate future cash flows. 71 Table of Contents The following table sets forth information concerning nonperforming loans and nonperforming assets as of each of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 December 31, 2021 ​ (dollars in thousands) ​ NONPERFORMING ASSETS ​ ​ ​ ​ ​ ​ ​ Nonaccrual ​ $ 3,206 ​ $ 2,763 Past due 90 days or more, still accruing (1) ​ — ​ 16 Total nonperforming loans ​ 3,206 ​ 2,779 Foreclosed assets ​ 2,637 ​ 3,278 Total nonperforming assets ​ $ 5,843 ​ $ 6,057 ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses ​ $ 25,060 ​ $ 23,936 ​ Loans, before allowance for loan losses ​ ​ 2,579,928 ​ ​ 2,499,689 ​ ​ ​ ​ ​ ​ ​ ​ ​ CREDIT QUALITY RATIOS ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses to loans, before allowance for loan losses ​ 0.97 % 0.96 % Allowance for loan losses to nonaccrual loans ​ ​ 781.66 ​ ​ 866.30 ​ Allowance for loan losses to nonperforming loans ​ 781.66 ​ 861.32 ​ Nonaccrual loans to loans, before allowance for loan losses ​ ​ 0.12 ​ ​ 0.11 ​ Nonperforming loans to loans, before allowance for loan losses ​ 0.12 ​ 0.11 ​ Nonperforming assets to total assets ​ 0.14 ​ 0.14 ​ Nonperforming assets to loans, before allowance for loan losses, and foreclosed assets ​ 0.23 ​ 0.24 ​ (1) Excludes loans acquired with deteriorated credit quality that are past due 90 or more days totaling $22 thousand and $32 thousand as of September 30, 2022, and December 31, 2021, respectively. Total nonperforming assets were $5.8 million at September 30, 2022, decreasing slightly since December 31, 2021. Our level of nonperforming assets has remained low in recent years, representing only 0.14% of total assets at both September 30, 2022 and December 31, 2021. We believe our continuous credit monitoring and collection efforts have resulted in lower levels of nonperforming assets, while also recognizing that favorable economic conditions prior to the COVID-19 pandemic and substantial federal economic stimulus during the pandemic have also contributed to these lower levels. Troubled Debt Restructurings In general, if the Company grants a troubled debt restructuring (“TDR”) that involves either the absence of principal amortization or a material extension of an existing loan amortization period in excess of our underwriting standards, the loan will be placed on nonaccrual status. However, if a TDR is well secured by an abundance of collateral and the collectability of both interest and principal is probable, the loan may remain on accrual status. A nonaccrual TDR in full compliance with the payment requirements specified in the loan modification for at least six months may return to accrual status, if the collectability of both principal and interest is probable. All TDRs are individually evaluated for impairment. The following table presents TDRs by loan category. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 ​ December 31, 2021 ​ Accruing Nonaccrual Total Accruing Nonaccrual Total ​ (dollars in thousands) Commercial and industrial ​ $ 111 ​ $ — ​ $ 111 ​ $ 203 ​ $ — ​ $ 203 Commercial real estate - owner occupied ​ 1,532 ​ ​ — ​ ​ 1,532 ​ ​ 1,671 ​ ​ — ​ 1,671 Commercial real estate - non-owner occupied ​ 1,225 ​ ​ — ​ ​ 1,225 ​ ​ 1,278 ​ ​ — ​ 1,278 One-to-four family residential ​ 191 ​ ​ — ​ ​ 191 ​ ​ 360 ​ ​ — ​ 360 Total troubled debt restructurings ​ $ 3,059 ​ $ — ​ $ 3,059 ​ $ 3,512 ​ $ — ​ $ 3,512 ​ TDRs have remained a small portion of our loan portfolio as loan modifications to borrowers with deteriorating financial condition are generally offered only as part of an overall workout strategy to minimize losses to the Company. 72 Table of Contents Risk Classification of Loans Our policies, consistent with regulatory guidelines, provide for the classification of loans and other assets that are considered to be of lesser quality as pass-watch, substandard, doubtful, or loss. 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 classification. 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. An asset classified as doubtful 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. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted; such balances are promptly charged-off as required by applicable federal regulations. As of September 30, 2022 and December 31, 2021, our risk classifications of loans were as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 December 31, 2021 ​ (dollars in thousands) Pass ​ $ 2,449,735 ​ $ 2,269,228 Pass-watch ​ 57,798 ​ 148,285 Substandard ​ 72,395 ​ 82,176 Doubtful ​ — ​ — Total ​ $ 2,579,928 ​ $ 2,499,689 ​ Pass-watch loans decreased $90.5 million, or 61.0%, and substandard loans decreased $9.8 million, or 11.9%, from December 31, 2021 to September 30, 2022. This overall improvement was primarily driven by better economic conditions, relative to 2021, which resulted in both risk rating upgrades and paydowns. ​ 73 Table of Contents Net Charge-offs and Recoveries The following table summarizes net charge-offs (recoveries) to average loans, before allowance for loan losses, by loan category. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, Nine Months Ended September 30, ​ ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) ​ Net charge-offs (recoveries) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 11 ​ $ 21 ​ $ (733) ​ $ 9 ​ Agricultural and farmland ​ — ​ — ​ — ​ — ​ Commercial real estate - owner occupied ​ (1) ​ — ​ (101) ​ — ​ Commercial real estate - non-owner occupied ​ (3) ​ (6) ​ (273) ​ (19) ​ Multi-family ​ — ​ — ​ — ​ — ​ Construction and land development ​ (1) ​ (1) ​ (1) ​ (270) ​ One-to-four family residential ​ (42) ​ (87) ​ (256) ​ (49) ​ Municipal, consumer, and other ​ 96 ​ 52 ​ 187 ​ 72 ​ Total ​ $ 60 ​ $ (21) ​ $ (1,177) ​ $ (257) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loans, before allowance for loan losses ​ ​ ​ ​ ​ Commercial and industrial ​ $ 233,046 ​ $ 289,372 ​ $ 271,136 ​ $ 363,497 ​ Agricultural and farmland ​ 235,273 ​ 236,444 ​ 232,762 ​ 226,096 ​ Commercial real estate - owner occupied ​ 212,997 ​ 192,419 ​ 220,463 ​ 200,857 ​ Commercial real estate - non-owner occupied ​ 675,086 ​ 554,279 ​ 687,024 ​ 548,752 ​ Multi-family ​ 265,690 ​ 212,980 ​ 254,836 ​ 221,986 ​ Construction and land development ​ 348,958 ​ 214,159 ​ 329,781 ​ 213,761 ​ One-to-four family residential ​ 327,272 ​ 302,214 ​ 328,199 ​ 309,095 ​ Municipal, consumer, and other ​ 183,598 ​ 133,609 ​ 161,300 ​ 133,419 ​ Total ​ $ 2,481,920 ​ $ 2,135,476 ​ $ 2,485,501 ​ $ 2,217,463 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net charge-offs (recoveries) to average loans, before allowance for loan losses * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ ​ 0.02 % ​ 0.03 % ​ (0.36) % ​ — % Agricultural and farmland ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Commercial real estate - owner occupied ​ ​ — ​ ​ — ​ ​ (0.06) ​ ​ — ​ Commercial real estate - non-owner occupied ​ ​ — ​ ​ — ​ ​ (0.05) ​ ​ — ​ Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Construction and land development ​ ​ — ​ ​ — ​ ​ — ​ ​ (0.17) ​ One-to-four family residential ​ ​ (0.05) ​ ​ (0.11) ​ ​ (0.10) ​ ​ (0.02) ​ Municipal, consumer, and other ​ ​ 0.21 ​ ​ 0.15 ​ ​ 0.16 ​ ​ 0.07 ​ Total ​ ​ 0.01 % ​ — % ​ (0.06) % ​ (0.02) % * Annualized measure. ​ The net charge-offs (recoveries) to average total loans before allowance for loan losses ratio has remained low for several years. We believe our continuous credit monitoring and collection efforts have resulted in lower levels of loan losses, while also recognizing that favorable economic conditions prior to the COVID-19 pandemic and substantial federal economic stimulus during the pandemic have also contributed to reduced loan losses. 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, 2022, 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. 74 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 ​ ​ ​ Available-for-Sale Held-to-Maturity Total ​ ​ ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ Amortized Average Amortized Average Amortized Average ​ Cost Yield Cost Yield Cost Yield ​ ​ (dollars in thousands) ​ Due in 1 year or less ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency ​ $ 2,005 0.15 % $ — — % $ 2,005 0.15 % Municipal ​ 5,575 2.74 ​ 2,492 3.56 ​ 8,067 2.99 ​ Mortgage-backed: ​ ​ ​ ​ Agency residential ​ 134 2.09 ​ — — ​ 134 2.09 ​ Agency commercial ​ 2,994 2.24 ​ — — ​ 2,994 2.24 ​ Corporate ​ 4,995 2.58 ​ — — ​ 4,995 2.58 ​ Total ​ $ 15,703 2.26 % $ 2,492 3.56 % $ 18,195 2.44 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after 1 year through 5 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury ​ $ 119,734 ​ 1.33 % $ — ​ — % $ 119,734 ​ 1.33 % U.S. government agency ​ ​ 40,920 2.55 ​ ​ 10,000 2.18 ​ ​ 50,920 2.48 ​ Municipal ​ 57,900 2.09 ​ 15,934 3.24 ​ 73,834 2.34 ​ Mortgage-backed: ​ ​ ​ ​ ​ Agency residential ​ 13,673 2.32 ​ 8,389 1.62 ​ 22,062 2.06 ​ Agency commercial ​ 36,833 2.25 ​ 11,563 3.07 ​ 48,396 2.45 ​ Corporate ​ 16,884 4.29 ​ — — ​ 16,884 4.29 ​ Total ​ $ 285,944 2.00 % $ 45,886 2.67 % $ 331,830 2.09 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after 5 years through 10 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury ​ $ 50,161 ​ 1.49 % $ — ​ — % $ 50,161 ​ 1.49 % U.S. government agency ​ ​ 18,503 2.24 ​ ​ 59,640 2.46 ​ ​ 78,143 2.41 ​ Municipal ​ 143,423 1.74 ​ 19,800 3.35 ​ 163,223 1.94 ​ Mortgage-backed: ​ ​ ​ ​ ​ Agency residential ​ 78,677 2.10 ​ 3,964 3.51 ​ 82,641 2.17 ​ Agency commercial ​ 73,171 1.62 ​ 234,337 1.75 ​ 307,508 1.72 ​ Corporate ​ 38,816 4.00 ​ — — ​ 38,816 4.00 ​ Total ​ $ 402,751 2.00 % $ 317,741 2.00 % $ 720,492 2.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after 10 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency ​ $ — — % $ 18,778 2.71 % $ 18,778 2.71 % Municipal ​ 72,813 1.88 ​ 4,618 3.56 ​ 77,431 1.98 ​ Mortgage-backed: ​ ​ ​ ​ ​ Agency residential ​ 131,254 2.42 ​ 92,977 3.61 ​ 224,231 2.92 ​ Agency commercial ​ 41,679 2.01 ​ 64,202 1.94 ​ 105,881 1.97 ​ Corporate ​ 2,000 4.50 ​ — — ​ 2,000 4.50 ​ Total ​ $ 247,746 2.21 % $ 180,575 2.92 % $ 428,321 2.51 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury ​ $ 169,895 1.38 % $ — — % $ 169,895 1.38 % U.S. government agency ​ ​ 61,428 2.38 ​ ​ 88,418 2.48 ​ ​ 149,846 2.44 ​ Municipal ​ 279,711 1.87 ​ 42,844 3.34 ​ 322,555 2.07 ​ Mortgage-backed: ​ ​ ​ ​ ​ Agency residential ​ 223,738 2.30 ​ 105,330 3.45 ​ 329,068 2.67 ​ Agency commercial ​ 154,677 1.89 ​ 310,102 1.84 ​ 464,779 1.85 ​ Corporate ​ 62,695 3.98 ​ — — ​ 62,695 3.98 ​ Total ​ $ 952,144 2.06 % $ 546,694 2.37 % $ 1,498,838 2.17 % ​ 75 Table of Contents SOURCES OF FUNDS Deposits Management continues to focus on growing non-maturity deposits, through the Company’s relationship-driven banking philosophy and community-focused marketing programs, and to deemphasize higher cost deposit categories, such as time deposits. 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 ​ 2022 2021 Change in ​ ​ Average Percent of Weighted Average Percent of Weighted Average ​ ​ Balance Total Deposits Average Cost * Balance Total Deposits Average Cost * Balance ​ ​ (dollars in thousands) ​ ​ ​ Noninterest-bearing ​ $ 1,031,407 28.1 % — % $ 1,016,384 29.6 % — % 1.5 % Interest-bearing demand ​ 1,137,072 31.0 ​ 0.05 ​ 1,020,216 29.8 ​ 0.05 ​ 11.5 ​ Money market ​ 577,388 15.8 ​ 0.14 ​ 510,183 14.9 ​ 0.07 ​ 13.2 ​ Savings ​ 649,752 17.7 ​ 0.03 ​ 608,436 17.7 ​ 0.03 ​ 6.8 ​ Total non-maturity deposits ​ 3,395,619 92.6 ​ 0.05 ​ 3,155,219 92.0 ​ 0.03 ​ 7.6 ​ Time ​ 271,870 7.4 ​ 0.27 ​ 275,224 8.0 ​ 0.42 ​ (1.2) ​ Total deposits ​ $ 3,667,489 100.0 % 0.06 % $ 3,430,443 100.0 % 0.07 % 6.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Percent ​ ​ ​ 2022 2021 Change in ​ ​ ​ Average Percent of Weighted Average Percent of Weighted Average ​ ​ ​ Balance Total Deposits Average Cost * Balance Total Deposits Average Cost * Balance ​ ​ ​ (dollars in thousands) ​ ​ Noninterest-bearing ​ $ 1,060,566 28.4 % — % $ 976,884 29.1 % — % 8.6 % Interest-bearing demand ​ 1,146,635 30.7 ​ 0.05 ​ 1,012,557 30.2 ​ 0.05 ​ 13.2 ​ Money market ​ 585,815 15.7 ​ 0.10 ​ 498,441 14.8 ​ 0.07 ​ 17.5 ​ Savings ​ 653,659 17.5 ​ 0.03 ​ 584,226 17.4 ​ 0.03 ​ 11.9 ​ Total non-maturity deposits ​ 3,446,675 92.3 ​ 0.04 ​ 3,072,108 91.5 ​ 0.03 ​ 12.2 ​ Time ​ 289,000 7.7 ​ 0.30 ​ 286,685 8.5 ​ 0.48 ​ 0.8 ​ Total deposits ​ $ 3,735,675 100.0 % 0.06 % $ 3,358,793 100.0 % 0.07 % 11.2 % * Annualized measure. ​ Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021 The average balances of non-maturity deposits increased 7.6% from the three months ended September 30, 2021 to the three months ended September 30, 2022, with the increase primarily attributable to the NXT acquisition which added $139.4 million of non-maturity deposits on October 1, 2021. Time deposits decreased slightly due to continued run-off of higher cost time deposits which were mostly offset by the addition of $42.1 million of time deposits acquired from NXT. ​ Recent increases in market interest rates have increased competition for deposits. As a result, we expect deposit costs to increase during the rest of 2022 and deposits balances may decrease. Additionally, outgoing deposits may be replaced by higher cost funding sources, such as FHLB advances, brokered deposits, or other wholesale funding. ​ Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021 The average balances of non-maturity deposits increased 12.2% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022, with the increase primarily attributable to higher balances maintained by deposit customers following the receipt of federal economic stimulus, in the form of PPP loan proceeds by commercial customers and direct payments received by retail customers, although this trend began to reverse in the second quarter of 2022. Additionally, the NXT acquisition added $139.4 million of non-maturity deposits on October 1, 2021. Time deposits increased slightly due to the addition of $42.1 million of time deposits acquired from NXT which were mostly offset by the continued run-off of higher cost time deposits. 76 Table of Contents The following table sets forth time deposits by remaining maturity as of September 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3 Months or Over 3 through Over 6 through Over ​ ​ ​ Less 6 Months 12 Months ​ 12 Months ​ Total ​ (dollars in thousands) Time deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts less than $100,000 ​ $ 38,274 ​ $ 34,853 ​ $ 51,659 ​ $ 54,376 ​ $ 179,162 Amounts of $100,000 or more but less than $250,000 ​ 13,524 ​ 11,564 ​ 19,639 ​ 19,390 ​ 64,117 Amounts of $250,000 or more ​ 9,190 ​ 4,766 ​ 7,175 ​ 4,698 ​ 25,829 Total time deposits ​ $ 60,988 ​ $ 51,183 ​ $ 78,473 ​ $ 78,464 ​ $ 269,108 ​ As of September 30, 2022 and December 31, 2021, the Bank’s uninsured deposits, including related accrued interest, were estimated to be $772.0 million and $845.7 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 and replacing higher cost funding including time deposits and borrowed funds. 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. Additional sources of liquidity include unpledged securities, federal funds purchased, and borrowings from the FHLB. Unpledged securities may be sold or pledged as collateral for borrowings to meet liquidity needs. Interest is charged at the prevailing market rate on federal funds purchased and FHLB borrowings. Funds available through federal funds purchased and FHLB borrowings are used primarily to meet daily liquidity needs. The total remaining credit available to the Bank from the FHLB at September 30, 2022 was $330.6 million. As of September 30, 2022, 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, 2022, the Bank had no material commitments for capital expenditures. ​ 77 Table of Contents 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, 2022, the Holding Company had cash and cash equivalents of $22.7 million. The Holding Company’s main source of funding is dividends declared and paid to it by the Bank. Due to state banking laws, the Bank may not declare dividends in any calendar year in an amount that would exceed accumulated retained earnings, after giving effect to any unrecognized losses and bad debts, without the prior approval of the Illinois Department of Financial and Professional Regulation. In addition, 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 these limitations will not impact the Holding Company’s ability to meet its ongoing short-term cash obligations. During the three and nine months ended September 30, 2022, the Bank paid $6.0 million and $18.0 million in dividends to the Holding Company, respectively. During the three and nine months ended September 30, 2021, the Bank did not pay a dividend to the Holding Company. 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, 2022 and 2021, holding company operating expenses consisted of interest expense of $0.9 million and $0.8 million, respectively, and other operating expenses of $1.4 million and $1.3 million, respectively. During the nine months ended September 30, 2022 and 2021, holding company operating expenses consisted of interest expense of $2.6 million and $2.5 million, respectively, and other operating expenses of $4.0 million and $2.6 million, respectively. Additionally, the Holding Company paid $4.6 million and $4.1 million of dividends to stockholders during the three months ended September 30, 2022 and 2021, respectively, and paid $14.0 million and $12.4 million of dividends to stockholders during the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, 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, 2022, 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, 2022, the Holding Company had no material commitments for capital expenditures. 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. ​ 78 Table of Contents 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. As of September 30, 2022 and December 31, 2021, the capital conservation buffer requirement was 2.5% of risk-weighted assets. As of September 30, 2022 and December 31, 2021, 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For Capital ​ To Be Well ​ ​ ​ ​ ​ ​ ​ Adequacy Purposes ​ Capitalized Under ​ ​ September 30, ​ December 31, ​ With Capital ​ Prompt Corrective ​ 2022 2021 Conversation Buffer (1) Action Provisions (2) Total Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ 16.34 % ​ 16.88 % ​ 10.50 % ​ N/A ​ Heartland Bank and Trust Company ​ 15.60 ​ ​ 15.94 ​ ​ 10.50 ​ ​ 10.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ 14.26 % ​ 14.66 % ​ 8.50 % ​ N/A ​ Heartland Bank and Trust Company ​ 14.79 ​ ​ 15.09 ​ ​ 8.50 ​ ​ 8.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Equity Tier 1 Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ 13.08 % ​ 13.37 % ​ 7.00 % ​ N/A ​ Heartland Bank and Trust Company ​ 14.79 ​ ​ 15.09 ​ ​ 7.00 ​ ​ 6.50 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Capital (to Average Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ 10.44 % ​ 9.84 % ​ 4.00 ​ ​ N/A ​ Heartland Bank and Trust Company ​ 10.83 ​ ​ 10.13 ​ ​ 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, 2022, 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 2021, the Company paid quarterly cash dividends of $0.15 per share. On January 25, 2022, the Company announced an increase of $0.01 and paid a $0.16 per share dividend during the first, second, and third quarters of 2022. Stock Repurchase Program Under the Company’s stock repurchase program, the Company repurchased 78,571 shares of its common stock at a weighted average price of $18.22 during the three months ended September 30, 2022. The stock repurchase program has been paused until completion of the vote of Town and Country’s shareholders on the merger. Repurchases were conducted in compliance with Rule 10b-18 and in compliance with Regulation M under the Exchange Act. The Company’s Board of Directors authorized the repurchase of up to $15.0 million of its common stock under its stock repurchase program in effect until January 1, 2023. As of September 30, 2022, the Company had $10.2 million remaining under the current stock repurchase authorization. ​ 79 Table of Contents 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. Although commitments to extend credit are considered while evaluating our allowance for loan losses, as of September 30, 2022 and December 31, 2021, there were no reserves for unfunded commitments. 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 Loan losses The allowance for loan losses (“allowance”) is an estimate of loan losses inherent in the Company’s loan portfolio. The allowance represents amounts that have been established to recognize incurred credit losses in the loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance. Loan losses are charged off against the allowance 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. The allowance consists of two primary components, general reserves and specific reserves related to impaired loans. General reserves cover non-impaired loans, or loans collectively evaluated for impairment, and are based on historical losses adjusted for qualitative factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 16-quarter period. Qualitative factor adjustments primarily consider current economic metrics, such as national and regional unemployment rates, and current credit quality metrics of each portfolio segment, such as past due and risk rating percentages, relative to historical levels. These qualitative factor adjustments are inherently subjective. Specific reserves cover impaired loans, or loans individually evaluated for impairment, and are primarily measured based on the fair value of collateral. Adjustments to the fair value of collateral are made for anticipated selling costs. A specific reserve may be zero if the fair value of collateral on the measurement date is greater than the carrying balance of the impaired loan. Additionally, the present value of expected future cash flows discounted at the original contractual interest rate may also be used, when practical. While the Company uses the best information available to make evaluations, future adjustments to the allowance for loan losses may become necessary if conditions change substantially from the conditions used in previous evaluations. Determinations as to the risk classification of loans and the amount of the allowance for loan losses are subject to review by regulatory agencies, which can require that the Company establish additional loss allowances. ​ 80 Table of Contents 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, - excludes branch closure expenses, - excludes charges related to termination of certain employee benefit plans, - excludes net earnings (losses) from closed or sold operations, - excludes realized gains (losses) on sales of 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%. ​ 81 Table of Contents Non-GAAP Financial Measure Definition How the Measure Provides Useful Information to Investors 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 significant 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. ​ ​ 82 Table of Contents 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, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) ​ Net income ​ $ 15,627 ​ $ 13,715 ​ $ 43,316 ​ $ 42,677 ​ Adjustments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisition expenses ​ ​ (462) ​ ​ (380) ​ ​ (462) ​ ​ (537) ​ Branch closure expenses ​ ​ — ​ ​ (644) ​ ​ — ​ ​ (748) ​ Gains (losses) on sales of closed branch premises ​ ​ (38) ​ ​ — ​ ​ 141 ​ ​ — ​ Mortgage servicing rights fair value adjustment ​ 351 ​ 40 ​ 2,446 ​ 1,425 ​ Total adjustments ​ (149) ​ (984) ​ 2,125 ​ 140 ​ Tax effect of adjustments ​ (80) ​ 220 ​ (728) ​ (143) ​ Less adjustments after tax effect ​ (229) ​ (764) ​ 1,397 ​ (3) ​ Adjusted net income ​ $ 15,856 ​ $ 14,479 ​ $ 41,919 ​ $ 42,680 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average assets ​ $ 4,208,722 ​ $ 3,965,051 ​ $ 4,278,997 ​ $ 3,884,115 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average assets * ​ 1.47 % 1.37 % 1.35 % 1.47 % Adjusted return on average assets * ​ 1.49 ​ 1.45 ​ 1.31 ​ 1.47 ​ * Annualized measure. ​ Reconciliation of Non-GAAP Financial Measure - Adjusted Earnings Per Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands, except per share amounts) ​ Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 15,627 ​ $ 13,715 ​ $ 43,316 ​ $ 42,677 ​ Earnings allocated to participating securities (1) ​ ​ (17) ​ ​ (25) ​ ​ (51) ​ ​ (81) ​ Numerator for earnings per share - basic and diluted ​ $ 15,610 ​ $ 13,690 ​ $ 43,265 ​ $ 42,596 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted net income ​ $ 15,856 ​ $ 14,479 ​ $ 41,919 ​ $ 42,680 ​ Earnings allocated to participating securities (1) ​ ​ (17) ​ ​ (27) ​ ​ (49) ​ ​ (81) ​ Numerator for adjusted earnings per share - basic and diluted ​ $ 15,839 ​ $ 14,452 ​ $ 41,870 ​ $ 42,599 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding ​ ​ 28,787,662 ​ ​ 27,340,926 ​ ​ 28,887,757 ​ ​ 27,377,809 ​ Dilutive effect of outstanding restricted stock units ​ ​ 72,643 ​ ​ 13,921 ​ ​ 56,761 ​ ​ 11,412 ​ Weighted average common shares outstanding, including all dilutive potential shares ​ ​ 28,860,305 ​ ​ 27,354,847 ​ ​ 28,944,518 ​ ​ 27,389,221 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share - Basic ​ $ 0.54 ​ $ 0.50 ​ $ 1.50 ​ $ 1.56 ​ Earnings per share - Diluted ​ $ 0.54 ​ $ 0.50 ​ $ 1.49 ​ $ 1.56 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted earnings per share - Basic ​ $ 0.55 ​ $ 0.53 ​ $ 1.45 ​ $ 1.56 ​ Adjusted earnings per share - Diluted ​ $ 0.55 ​ $ 0.53 ​ $ 1.45 ​ $ 1.56 ​ (1) The Company has granted certain restricted stock units that contain non-forfeitable rights to dividend equivalents. Such restricted stock units are considered participating securities. As such, we have included these restricted stock units in the calculation of basic earnings per share and calculate 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. ​ 83 Table of Contents 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, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) ​ Net interest income (tax equivalent basis) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 37,390 ​ $ 30,715 ​ $ 103,691 ​ $ 89,544 ​ Tax-equivalent adjustment (1) ​ 674 ​ 508 ​ 1,801 ​ 1,514 ​ Net interest income (tax equivalent basis) (1) ​ $ 38,064 ​ $ 31,223 ​ $ 105,492 ​ $ 91,058 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin (tax equivalent basis) ​ ​ ​ ​ ​ Net interest margin * ​ 3.65 % 3.18 % 3.36 % 3.19 % Tax-equivalent adjustment * (1) ​ 0.07 ​ 0.05 ​ 0.05 ​ 0.05 ​ Net interest margin (tax equivalent basis) * (1) ​ 3.72 % 3.23 % 3.41 % 3.24 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average interest-earning assets ​ $ 4,059,978 ​ $ 3,831,886 ​ $ 4,131,221 ​ $ 3,755,897 ​ * 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, ​ 2022 2021 2022 2021 ​ ​ (dollars in thousands) ​ Efficiency ratio (tax equivalent basis) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total noninterest expense ​ $ 23,998 ​ $ 22,167 ​ $ 71,997 ​ $ 66,865 ​ Less: amortization of intangible assets ​ 243 ​ 252 ​ 733 ​ 799 ​ Adjusted noninterest expense ​ $ 23,755 ​ $ 21,915 ​ $ 71,264 ​ $ 66,066 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 37,390 ​ $ 30,715 ​ $ 103,691 ​ $ 89,544 ​ Total noninterest income ​ 8,234 ​ 8,392 ​ 26,828 ​ 27,974 ​ Operating revenue ​ 45,624 ​ 39,107 ​ 130,519 ​ 117,518 ​ Tax-equivalent adjustment (1) ​ 674 ​ 508 ​ 1,801 ​ 1,514 ​ Operating revenue (tax-equivalent basis) (1) ​ $ 46,298 ​ $ 39,615 ​ $ 132,320 ​ $ 119,032 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio ​ 52.07 % 56.04 % 54.60 % 56.22 % Efficiency ratio (tax equivalent basis) (1) ​ 51.31 ​ 55.32 ​ 53.86 ​ 55.50 ​ (1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%. ​ 84 Table of Contents Reconciliation of Non-GAAP Financial Measure - Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 December 31, 2021 ​ ​ (dollars in thousands, except per share data) ​ Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ Total stockholders' equity ​ $ 359,073 ​ $ 411,881 ​ Less: Goodwill ​ ​ 29,322 ​ ​ 29,322 ​ Less: Core deposit intangible assets, net ​ ​ 1,210 ​ ​ 1,943 ​ Tangible common equity ​ $ 328,541 ​ $ 380,616 ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible Assets ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 4,213,324 ​ $ 4,314,254 ​ Less: Goodwill ​ ​ 29,322 ​ ​ 29,322 ​ Less: Core deposit intangible assets, net ​ ​ 1,210 ​ ​ 1,943 ​ Tangible assets ​ $ 4,182,792 ​ $ 4,282,989 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stockholders' equity to total assets ​ ​ 8.52 % ​ 9.55 % Tangible common equity to tangible assets ​ ​ 7.85 ​ ​ 8.89 ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares of common stock outstanding ​ ​ 28,752,626 ​ 28,986,061 ​ ​ ​ ​ ​ ​ ​ ​ ​ Book value per share ​ $ 12.49 ​ $ 14.21 ​ Tangible book value per share ​ ​ 11.43 ​ ​ 13.13 ​ ​ 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, ​ ​ 2022 2021 2022 2021 ​ ​ ​ (dollars in thousands) ​ Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stockholders' equity ​ $ 380,983 ​ $ 380,863 ​ $ 388,509 $ 369,933 ​ Less: Goodwill ​ 29,322 ​ 23,620 ​ 29,322 23,620 ​ Less: Core deposit intangible assets, net ​ 1,356 ​ 2,152 ​ 1,597 2,414 ​ Average tangible common equity ​ $ 350,305 ​ $ 355,091 ​ $ 357,590 $ 343,899 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 15,627 ​ $ 13,715 ​ $ 43,316 $ 42,677 ​ Adjusted net income ​ 15,856 ​ 14,479 ​ 41,919 ​ 42,680 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average stockholders' equity * ​ 16.27 % 14.29 % 14.91 % ​ 15.42 % Return on average tangible common equity * ​ 17.70 ​ 15.32 ​ 16.20 ​ ​ 16.59 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted return on average stockholders' equity * ​ 16.51 % 15.08 % 14.43 % ​ 15.43 % Adjusted return on average tangible common equity * ​ 17.96 ​ 16.18 ​ 15.67 ​ ​ 16.59 ​ * Annualized measure. ​ Reconciliation of Non-GAAP Financial Measure - Core Deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 ​ December 31, 2021 ​ ​ (dollars in thousands) ​ Core Deposits ​ ​ ​ ​ ​ ​ ​ Total deposits ​ $ 3,643,443 ​ $ 3,738,185 ​ Less: time deposits of $250,000 or more ​ 25,829 ​ ​ 59,512 ​ Less: brokered deposits ​ — ​ ​ 4,238 ​ Core deposits ​ $ 3,617,614 ​ $ 3,674,435 ​ ​ ​ ​ ​ ​ ​ ​ ​ Core deposits to total deposits ​ 99.29 % ​ 98.29 % ​ 85 Table of Contents 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 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (Decrease) in ​ Estimated Increase Estimated Net Interest Income ​ ​ (Decrease) in EVE Year 1 Year 2 ​ Change in Interest Rates (basis points) Amount Percent Amount Percent Amount Percent ​ ​ ​ (dollars in thousands) ​ September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +400 ​ $ 100,521 12.7 % $ 18,090 10.8 % $ 30,453 16.9 % +300 ​ 92,248 11.7 ​ 14,152 8.4 ​ ​ 24,407 13.5 ​ +200 ​ 73,526 9.3 ​ 9,817 5.9 ​ ​ 17,334 9.6 ​ +100 ​ 44,161 5.6 ​ 5,115 3.0 ​ ​ 9,293 5.1 ​ -100 ​ (70,856) (9.0) ​ (8,801) (5.2) ​ ​ (13,809) (7.6) ​ -200 ​ ​ (168,345) (21.3) ​ (20,005) (11.9) ​ ​ (31,410) (17.4) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +400 ​ $ 92,106 19.7 % $ 23,230 18.7 % $ 38,485 31.7 % +300 ​ 76,708 16.4 ​ 17,938 14.5 ​ ​ 30,487 25.1 ​ +200 ​ 51,627 11.1 ​ 12,154 9.8 ​ ​ 21,339 17.6 ​ +100 ​ 12,453 2.7 ​ 5,818 4.7 ​ ​ 11,062 9.1 ​ -100 ​ 34,852 7.5 ​ (4,098) (3.3) ​ ​ (7,746) (6.4) ​ ​ ​ 86 Table of Contents 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. 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, 2022, 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, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ​ 87 Table of Contents 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, 2021, filed with the SEC on March 11, 2022. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities On December 14, 2021, the Company’s board of directors approved a stock repurchase program that authorizes the Company to repurchase up to $15 million of its common stock. The stock repurchase program will be in effect until January 1, 2023 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 stock repurchase program has been paused until completion of the vote of Town and Country’s shareholders on the merger. The following table sets forth information about the Company’s purchases of its common stock during the third quarter of 2022, all of which were conducted in compliance with Rule 10b-18 and Regulation M under the Exchange Act: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Approximate Dollar Value of ​ ​ Total Number ​ Average ​ Purchased as Part of ​ Shares That May Yet be Purchased ​ ​ of Shares ​ Price Paid ​ Publicly Announced ​ Under the Plans or Programs Period Purchased Per Share Plans or Programs (in thousands) July 1 - 31, 2022 ​ 24,828 ​ $ 17.71 ​ 24,828 ​ $ 11,209 August 1 - 31, 2022 ​ 39,842 ​ ​ 18.63 ​ 39,842 ​ ​ 10,467 September 1 - 30, 2022 ​ 13,901 ​ ​ 17.96 ​ 13,901 ​ ​ 10,217 Total ​ 78,571 ​ $ 18.22 ​ 78,571 ​ $ 10,217 ​ ​ ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. 88 Table of Contents ITEM 4. MINE SAFETY DISCLOSURES None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS Exhibit No. Description 2.1 * ​ Agreement and Plan of Merger between HBT Financial, Inc., HB-T&C Merger, Inc. and Town and Country Financial Corporation dated August 23, 2022 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Commission on August 23, 2022). ​ ​ ​ 10.1 § ​ Employment Agreement, effective October 1, 2022, by and among HBT Financial, Inc., Heartland Bank and Trust Company and Peter Chapman (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on August 18, 2022). ​ ​ ​ 10.2 § ​ Transition Agreement by and among HBT Financial, Inc., Heartland Bank and Trust Company and Matthew J. Doherty, dated as of August 17, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on August 18, 2022). ​ ​ ​ 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 ​ iXBRL Instance Document. ​ ​ ​ 101.SCH ​ iXBRL Taxonomy Extension Schema Document. ​ ​ ​ 101.CAL ​ iXBRL Taxonomy Extension Calculation Linkbase Document. ​ ​ ​ 101.LAB ​ iXBRL Taxonomy Extension Label Linkbase Document. ​ ​ ​ 101.PRE ​ iXBRL Taxonomy Extension Presentation Linkbase Document. ​ ​ ​ 101.DEF ​ iXBRL Taxonomy Extension Definition Linkbase Document. ​ ​ ​ 104 ​ Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101). * Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any document so furnished. ** 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. § A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 601 of Regulation S-K. ​ ​ 89 Table of Contents 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. ​ ​ ​ November 8, 2022 By: /s/ Matthew J. Doherty ​ ​ Matthew J. Doherty ​ ​ Chief Financial Officer ​ ​ (on behalf of the registrant and as principal financial officer) ​ ​ ​ ​ 90