HBT Financial, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA HBT FINANCIAL, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ ​ Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 49 ) 85 ​ ​ CONSOLIDATED FINANCIAL STATEMENTS ​ Consolidated Balance Sheets 86 Consolidated Statements of Income 87 Consolidated Statements of Comprehensive Income (Loss) 88 Consolidated Statements of Changes in Stockholders’ Equity 89 Consolidated Statements of Cash Flows 90 Notes to Consolidated Financial Statements 92 ​ ​ ​ 84 Table of Contents Report of Independent Registered Public Accounting Firm ​ Stockholders and the Board of Directors HBT Financial, Inc. ​ Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of HBT Financial, Inc. and its subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ RSM US LLP We have served as the Company's auditor since 2017. Chicago, Illinois March 8, 2023 ​ ​ 85 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2022 ​ 2021 ASSETS ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 18,970 ​ $ 23,387 Interest-bearing deposits with banks ​ ​ 95,189 ​ ​ 385,881 Cash and cash equivalents ​ ​ 114,159 ​ ​ 409,268 ​ ​ ​ ​ ​ ​ ​ Interest-bearing time deposits with banks ​ ​ — ​ ​ 490 Debt securities available-for-sale, at fair value ​ ​ 843,524 ​ ​ 942,168 Debt securities held-to-maturity (fair value of $ 478,801 at 2022 and $ 336,027 at 2021) ​ ​ 541,600 ​ ​ 336,185 Equity securities with readily determinable fair value ​ ​ 3,029 ​ ​ 3,443 Equity securities with no readily determinable fair value ​ ​ 1,977 ​ ​ 1,927 Restricted stock, at cost ​ ​ 7,965 ​ ​ 2,739 Loans held for sale ​ ​ 615 ​ ​ 4,942 ​ ​ ​ ​ ​ ​ ​ Loans, before allowance for loan losses ​ ​ 2,620,253 ​ ​ 2,499,689 Allowance for loan losses ​ ​ ( 25,333 ) ​ ​ ( 23,936 ) Loans, net of allowance for loan losses ​ ​ 2,594,920 ​ ​ 2,475,753 ​ ​ ​ ​ ​ ​ ​ Bank owned life insurance ​ ​ 7,557 ​ ​ 7,393 Bank premises and equipment, net ​ ​ 50,469 ​ ​ 52,483 Bank premises held for sale ​ ​ 235 ​ ​ 1,452 Foreclosed assets ​ ​ 3,030 ​ ​ 3,278 Goodwill ​ ​ 29,322 ​ ​ 29,322 Core deposit intangible assets, net ​ ​ 1,070 ​ ​ 1,943 Mortgage servicing rights, at fair value ​ ​ 10,147 ​ ​ 7,994 Investments in unconsolidated subsidiaries ​ ​ 1,165 ​ ​ 1,165 Accrued interest receivable ​ ​ 19,506 ​ ​ 14,901 Other assets ​ ​ 56,444 ​ ​ 17,408 Total assets ​ $ 4,286,734 ​ $ 4,314,254 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ Noninterest-bearing ​ $ 994,954 ​ $ 1,087,659 Interest-bearing ​ ​ 2,592,070 ​ ​ 2,650,526 Total deposits ​ ​ 3,587,024 ​ ​ 3,738,185 ​ ​ ​ ​ ​ ​ ​ Securities sold under agreements to repurchase ​ ​ 43,081 ​ ​ 61,256 Federal Home Loan Bank advances ​ ​ 160,000 ​ ​ — Subordinated notes ​ ​ 39,395 ​ ​ 39,316 Junior subordinated debentures issued to capital trusts ​ ​ 37,780 ​ ​ 37,714 Other liabilities ​ ​ 45,822 ​ ​ 25,902 Total liabilities ​ ​ 3,913,102 ​ ​ 3,902,373 ​ ​ ​ ​ ​ ​ ​ COMMITMENTS AND CONTINGENCIES (Note 23) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 222,783 ​ ​ 220,891 Retained earnings ​ ​ 232,004 ​ ​ 194,132 Accumulated other comprehensive income (loss) ​ ​ ( 71,759 ) ​ ​ 1,471 Treasury stock at cost, 555,865 shares at 2022 and 290,486 at 2021 ​ ​ ( 9,689 ) ​ ​ ( 4,906 ) Total stockholders’ equity ​ ​ 373,632 ​ ​ 411,881 Total liabilities and stockholders’ equity ​ $ 4,286,734 ​ $ 4,314,254 ​ See accompanying Notes to Consolidated Financial Statements ​ 86 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 2020 INTEREST AND DIVIDEND INCOME ​ (dollars in thousands, except per share data) Loans, including fees: ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ $ 120,343 ​ $ 103,900 ​ $ 102,893 Federally tax exempt ​ ​ 3,135 ​ ​ 2,384 ​ ​ 2,303 Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ ​ 23,368 ​ ​ 16,948 ​ ​ 13,179 Federally tax exempt ​ ​ 4,569 ​ ​ 4,400 ​ ​ 4,696 Interest-bearing deposits in bank ​ ​ 1,541 ​ ​ 527 ​ ​ 938 Other interest and dividend income ​ ​ 98 ​ ​ 64 ​ ​ 56 Total interest and dividend income ​ ​ 153,054 ​ ​ 128,223 ​ ​ 124,065 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ ​ 2,511 ​ ​ 2,472 ​ ​ 4,221 Securities sold under agreements to repurchase ​ ​ 36 ​ ​ 34 ​ ​ 48 Borrowings ​ ​ 967 ​ ​ 9 ​ ​ 2 Subordinated notes ​ ​ 1,879 ​ ​ 1,879 ​ ​ 616 Junior subordinated debentures issued to capital trusts ​ ​ 1,787 ​ ​ 1,426 ​ ​ 1,573 Total interest expense ​ ​ 7,180 ​ ​ 5,820 ​ ​ 6,460 Net interest income ​ ​ 145,874 ​ ​ 122,403 ​ ​ 117,605 PROVISION FOR LOAN LOSSES ​ ​ ( 706 ) ​ ​ ( 8,077 ) ​ ​ 10,532 Net interest income after provision for loan losses ​ ​ 146,580 ​ ​ 130,480 ​ ​ 107,073 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NONINTEREST INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ Card income ​ ​ 10,329 ​ ​ 9,734 ​ ​ 8,087 Wealth management fees ​ ​ 9,155 ​ ​ 8,384 ​ ​ 7,237 Service charges on deposit accounts ​ ​ 7,072 ​ ​ 6,080 ​ ​ 5,987 Mortgage servicing ​ ​ 2,609 ​ ​ 2,825 ​ ​ 2,978 Mortgage servicing rights fair value adjustment ​ ​ 2,153 ​ ​ 1,690 ​ ​ ( 2,584 ) Gains on sale of mortgage loans ​ ​ 1,461 ​ ​ 5,846 ​ ​ 8,835 Unrealized gains (losses) on equity securities ​ ​ ( 414 ) ​ ​ 107 ​ ​ 33 Gains (losses) on foreclosed assets ​ ​ ( 314 ) ​ ​ 310 ​ ​ 142 Gains (losses) on other assets ​ ​ 136 ​ ​ ( 723 ) ​ ​ ( 71 ) Income on bank owned life insurance ​ ​ 164 ​ ​ 41 ​ ​ — Other noninterest income ​ ​ 2,366 ​ ​ 3,034 ​ ​ 3,812 Total noninterest income ​ ​ 34,717 ​ ​ 37,328 ​ ​ 34,456 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NONINTEREST EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries ​ ​ 51,767 ​ ​ 48,972 ​ ​ 50,225 Employee benefits ​ ​ 8,325 ​ ​ 6,513 ​ ​ 7,905 Occupancy of bank premises ​ ​ 7,673 ​ ​ 6,788 ​ ​ 6,580 Furniture and equipment ​ ​ 2,476 ​ ​ 2,676 ​ ​ 2,447 Data processing ​ ​ 7,441 ​ ​ 7,329 ​ ​ 6,742 Marketing and customer relations ​ ​ 3,803 ​ ​ 3,376 ​ ​ 3,476 Amortization of intangible assets ​ ​ 873 ​ ​ 1,054 ​ ​ 1,232 FDIC insurance ​ ​ 1,164 ​ ​ 1,043 ​ ​ 707 Loan collection and servicing ​ ​ 1,049 ​ ​ 1,317 ​ ​ 1,755 Foreclosed assets ​ ​ 293 ​ ​ 908 ​ ​ 557 Other noninterest expense ​ ​ 20,243 ​ ​ 11,270 ​ ​ 10,330 Total noninterest expense ​ ​ 105,107 ​ ​ 91,246 ​ ​ 91,956 INCOME BEFORE INCOME TAX EXPENSE ​ ​ 76,190 ​ ​ 76,562 ​ ​ 49,573 INCOME TAX EXPENSE ​ ​ 19,734 ​ ​ 20,291 ​ ​ 12,728 NET INCOME ​ $ 56,456 ​ $ 56,271 ​ $ 36,845 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EARNINGS PER SHARE - BASIC ​ $ 1.95 ​ $ 2.02 ​ $ 1.34 EARNINGS PER SHARE - DILUTED ​ $ 1.95 ​ $ 2.02 ​ $ 1.34 WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING ​ ​ 28,853,697 ​ ​ 27,795,806 ​ ​ 27,457,306 ​ See accompanying Notes to Consolidated Financial Statements ​ 87 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 2020 ​ ​ (dollars in thousands) NET INCOME ​ $ 56,456 ​ $ 56,271 ​ $ 36,845 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER COMPREHENSIVE (LOSS) INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized (losses) gains on debt securities available-for-sale ​ ​ ( 105,459 ) ​ ​ ( 24,798 ) ​ ​ 15,272 Reclassification adjustment for amortization of net unrealized losses on debt securities transferred to held-to-maturity ​ ​ 1,723 ​ ​ 687 ​ ​ 18 Unrealized gains (losses) on derivative instruments ​ ​ 1,183 ​ ​ 366 ​ ​ ( 1,084 ) Reclassification adjustment for net settlements on derivative instruments ​ ​ 126 ​ ​ 412 ​ ​ 238 Total other comprehensive (loss) income, before tax ​ ​ ( 102,427 ) ​ ​ ( 23,333 ) ​ ​ 14,444 Income tax (benefit) expense ​ ​ ( 29,197 ) ​ ​ ( 6,651 ) ​ ​ 4,123 Total other comprehensive (loss) income ​ ​ ( 73,230 ) ​ ​ ( 16,682 ) ​ ​ 10,321 TOTAL COMPREHENSIVE (LOSS) INCOME ​ $ ( 16,774 ) ​ $ 39,589 ​ $ 47,166 ​ See accompanying Notes to Consolidated Financial Statements ​ 88 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 2019 ​ 27,457,306 ​ $ 275 ​ $ 190,524 ​ $ 134,287 ​ $ 7,832 ​ $ — ​ $ 332,918 Net income ​ — ​ ​ — ​ ​ — ​ ​ 36,845 ​ ​ — ​ ​ — ​ ​ 36,845 Other comprehensive income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 10,321 ​ ​ — ​ ​ 10,321 Stock-based compensation ​ — ​ ​ — ​ ​ 351 ​ ​ — ​ ​ — ​ ​ — ​ ​ 351 Cash dividends and dividend equivalents ($ 0.60 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 16,518 ) ​ ​ — ​ ​ — ​ ​ ( 16,518 ) Balance, December 31, 2020 ​ 27,457,306 ​ ​ 275 ​ ​ 190,875 ​ ​ 154,614 ​ ​ 18,153 ​ ​ — ​ ​ 363,917 Net income ​ — ​ ​ — ​ ​ — ​ ​ 56,271 ​ ​ — ​ ​ — ​ ​ 56,271 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 16,682 ) ​ ​ — ​ ​ ( 16,682 ) Stock-based compensation ​ — ​ ​ — ​ ​ 764 ​ ​ — ​ ​ — ​ ​ — ​ ​ 764 Issuance of common stock upon vesting of restricted stock units ​ 20,225 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Issuance of common stock in NXT acquisition ​ 1,799,016 ​ ​ 18 ​ ​ 29,252 ​ ​ — ​ ​ — ​ ​ — ​ ​ 29,270 Repurchase of common stock ​ ( 290,486 ) ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 4,906 ) ​ ​ ( 4,906 ) Cash dividends and dividend equivalents ($ 0.60 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 16,753 ) ​ ​ — ​ ​ — ​ ​ ( 16,753 ) Balance, December 31, 2021 ​ 28,986,061 ​ ​ 293 ​ ​ 220,891 ​ ​ 194,132 ​ ​ 1,471 ​ ​ ( 4,906 ) ​ ​ 411,881 Net income ​ — ​ ​ — ​ ​ — ​ ​ 56,456 ​ ​ — ​ ​ — ​ ​ 56,456 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 73,230 ) ​ ​ — ​ ​ ( 73,230 ) Stock-based compensation ​ — ​ ​ — ​ ​ 1,949 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,949 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 ($ 0.64 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 18,584 ) ​ ​ — ​ ​ — ​ ​ ( 18,584 ) Balance, December 31, 2022 ​ 28,752,626 ​ $ 293 ​ $ 222,783 ​ $ 232,004 ​ $ ( 71,759 ) ​ $ ( 9,689 ) ​ $ 373,632 ​ See accompanying Notes to Consolidated Financial Statements ​ 89 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ (dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 56,456 ​ $ 56,271 ​ $ 36,845 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation expense ​ ​ 3,043 ​ ​ 3,074 ​ ​ 2,941 Provision for loan losses ​ ​ ( 706 ) ​ ​ ( 8,077 ) ​ ​ 10,532 Net amortization of debt securities ​ ​ 6,959 ​ ​ 7,066 ​ ​ 5,045 Amortization of unrealized gain on dedesignated cash flow hedge ​ ​ — ​ ​ — ​ ​ ( 64 ) Deferred income tax (benefit) expense ​ ​ ( 2,919 ) ​ ​ 2,908 ​ ​ ( 339 ) Stock-based compensation ​ ​ 1,949 ​ ​ 764 ​ ​ 351 Net accretion of discount and deferred loan fees on loans ​ ​ ( 5,337 ) ​ ​ ( 12,448 ) ​ ​ ( 4,902 ) Net unrealized loss (gain) on equity securities ​ ​ 414 ​ ​ ( 107 ) ​ ​ ( 33 ) Net (gain) loss on disposals of bank premises and equipment ​ ​ ( 9 ) ​ ​ 33 ​ ​ 2 Net gain on sales of bank premises held for sale ​ ​ ( 187 ) ​ ​ — ​ ​ — Impairment losses on bank premises held for sale ​ ​ 60 ​ ​ 661 ​ ​ — Net gain on sales of foreclosed assets ​ ​ ( 118 ) ​ ​ ( 505 ) ​ ​ ( 348 ) Write-down of foreclosed assets ​ ​ 432 ​ ​ 195 ​ ​ 213 Amortization of intangibles ​ ​ 873 ​ ​ 1,054 ​ ​ 1,232 (Increase) decrease in mortgage servicing rights ​ ​ ( 2,153 ) ​ ​ ( 1,690 ) ​ ​ 2,584 Amortization of discount and issuance costs on subordinated notes and debentures ​ ​ 145 ​ ​ 144 ​ ​ 92 Amortization of premium on Federal Home Loan Bank borrowings ​ ​ — ​ ​ ( 105 ) ​ ​ — Amortization of premium on interest-bearing time deposits with banks ​ ​ 5 ​ ​ 4 ​ ​ — Amortization of premium on time deposits ​ ​ ( 188 ) ​ ​ ( 81 ) ​ ​ — Mortgage loans originated for sale ​ ​ ( 56,240 ) ​ ​ ( 179,921 ) ​ ​ ( 370,112 ) Proceeds from sale of mortgage loans ​ ​ 62,028 ​ ​ 195,538 ​ ​ 368,765 Net gain on sale of mortgage loans ​ ​ ( 1,461 ) ​ ​ ( 5,846 ) ​ ​ ( 8,835 ) Increase in cash surrender value of bank owned life insurance ​ ​ ( 164 ) ​ ​ ( 41 ) ​ ​ — (Increase) decrease in accrued interest receivable ​ ​ ( 4,605 ) ​ ​ 240 ​ ​ ( 304 ) (Increase) decrease in other assets ​ ​ ( 8,007 ) ​ ​ 1,676 ​ ​ ( 1,090 ) Increase (decrease) in other liabilities ​ ​ 22,316 ​ ​ ( 17,784 ) ​ ​ ( 11,320 ) Net cash provided by operating activities ​ ​ 72,586 ​ ​ 43,023 ​ ​ 31,255 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from maturities of interest-bearing time deposits with banks ​ ​ 485 ​ ​ 245 ​ ​ 248 Proceeds from paydowns, maturities, and calls of debt securities ​ ​ 154,166 ​ ​ 213,491 ​ ​ 222,999 Purchase of securities ​ ​ ( 371,682 ) ​ ​ ( 513,838 ) ​ ​ ( 523,559 ) Net increase in loans ​ ​ ( 113,665 ) ​ ​ ( 50,089 ) ​ ​ ( 80,278 ) Purchase of restricted stock ​ ​ ( 6,151 ) ​ ​ ( 241 ) ​ ​ ( 73 ) Proceeds from redemption of restricted stock ​ ​ 925 ​ ​ 796 ​ ​ — Purchases of bank premises and equipment ​ ​ ( 1,047 ) ​ ​ ( 1,028 ) ​ ​ ( 1,861 ) Proceeds from sales of bank premises and equipment ​ ​ 27 ​ ​ 17 ​ ​ 1 Proceeds from sales of bank premises held for sale ​ ​ 1,344 ​ ​ — ​ ​ — Proceeds from sales of foreclosed assets ​ ​ 475 ​ ​ 5,805 ​ ​ 2,079 Capital improvements to foreclosed assets ​ ​ — ​ ​ — ​ ​ ( 6 ) Net cash paid for acquisition of NXT Bancorporation, Inc. ​ ​ — ​ ​ ( 4,771 ) ​ ​ — Net cash used in investing activities ​ ​ ( 335,123 ) ​ ​ ( 349,613 ) ​ ​ ( 380,450 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (decrease) increase in deposits ​ ​ ( 150,973 ) ​ ​ 426,146 ​ ​ 353,679 Net (decrease) increase in repurchase agreements ​ ​ ( 18,175 ) ​ ​ 11,440 ​ ​ 1,303 Net increase (decrease) in Federal Home Loan Bank advances ​ ​ 160,000 ​ ​ ( 12,520 ) ​ ​ — Issuance of subordinated notes, net of issuance costs ​ ​ — ​ ​ — ​ ​ 39,211 Taxes paid related to the vesting of restricted stock units ​ ​ ( 57 ) ​ ​ — ​ ​ — Repurchase of common stock ​ ​ ( 4,783 ) ​ ​ ( 4,906 ) ​ ​ — Cash dividends and dividend equivalents paid ​ ​ ( 18,584 ) ​ ​ ( 16,753 ) ​ ​ ( 16,518 ) Net cash (used in) provided by financing activities ​ ​ ( 32,572 ) ​ ​ 403,407 ​ ​ 377,675 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ​ ​ ( 295,109 ) ​ ​ 96,817 ​ ​ 28,480 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ​ ​ 409,268 ​ ​ 312,451 ​ ​ 283,971 CASH AND CASH EQUIVALENTS AT END OF PERIOD ​ $ 114,159 ​ $ 409,268 ​ $ 312,451 ​ See accompanying Notes to Consolidated Financial Statements ​ 90 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ (dollars in thousands) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 6,860 ​ $ 5,928 ​ $ 6,441 Cash paid for income taxes ​ $ 20,035 ​ $ 20,861 ​ $ 17,451 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ Transfers of loans to foreclosed assets ​ $ 541 ​ $ 4,857 ​ $ 1,074 Sales of foreclosed assets through loan origination ​ $ — ​ $ 252 ​ $ 67 Transfers of bank premises and equipment to bank premises held for sale ​ $ — ​ $ 1,345 ​ $ — ​ See accompanying Notes to Consolidated Financial Statements ​ 91 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Significant accounting policies are summarized below. The Company qualifies as an "emerging growth company" as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act permits emerging growth companies an extended transition period for complying with new or revised accounting standards affecting public companies. The Company may remain an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the completion of our initial public offering, which is December 31, 2024, (2) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues, (3) the date on which the Company is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or (4) the date on which the Company has, during the previous three year period, issued, publicly or privately, more than $1.0 billion in non-convertible debt securities. The Company has elected to use the extended transition period until the Company is no longer an emerging growth company or until the Company chooses to affirmatively and irrevocably opt out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies. Merger of State Bank of Lincoln into Heartland Bank On October 20, 2020, Heartland Bank and State Bank of Lincoln, both wholly-owned bank subsidiaries of the Company on that date, entered into a Bank Merger Agreement providing for the merger of State Bank of Lincoln into Heartland Bank. The merger was consummated on December 31, 2020, resulting in Heartland Bank being our sole bank subsidiary, with the branch locations in Lincoln, Illinois operating as “State Bank of Lincoln, a division of Heartland Bank and Trust Company.” Basis of Consolidation The consolidated financial statements of HBT Financial include the accounts of the Company and its wholly owned bank subsidiary, Heartland Bank. The Company also has five wholly owned subsidiaries, Heartland Bancorp, Inc. Capital Trust B, Heartland Bancorp, Inc. Capital Trust C, Heartland Bancorp, Inc. Capital Trust D, FFBI Capital Trust I, and National Bancorp Statutory Trust I, which, in accordance with GAAP, are not consolidated as more fully described in Note 13. Significant intercompany transactions and accounts have been eliminated in consolidation. ​ 92 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. 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. Business and Significant Concentrations of Credit Risk The Company provides several types of loans to individuals, businesses, and municipal entities primarily located in its customer service area. Real estate and commercial loans are principal areas of concentration. The Company also strives to meet the borrowing needs of the consumers in its market areas. Extension of credit is generally limited to the primary trade areas of the Company. Primary deposit products of the Bank are noninterest-bearing and interest-bearing demand accounts, savings accounts, money market accounts, and term certificates of deposit. Cash and Cash Equivalents For purposes of reporting consolidated cash flows, cash and cash equivalents include cash on hand and amounts due from banks, all of which have an original maturity within 90 days or less. Cash flows from loans and deposits are reported net. Interest-Bearing Time Deposits with Banks Interest-bearing time deposits with banks are carried at cost. Debt Securities Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity and are carried at amortized cost. Debt securities not classified as held-to-maturity are classified as available-for-sale. Debt securities available-for-sale are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss). Realized gains and losses on debt securities available-for-sale are included in noninterest income when applicable and reported as a reclassification adjustment in other comprehensive income (loss). Gains and losses on sales of securities are determined using the specific identification method on the trade date. The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the period to maturity. Any transfers of debt securities into the held-to-maturity category from the available-for-sale category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income (loss) and in the carrying value of the held-to-maturity securities. Such amounts are amortized over the period to maturity. ​ 93 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Declines in the fair value of individual securities below their cost that are other-than-temporary result in write-downs of the individual securities to their fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves analyzing the length of time and the extent to which the fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the intent of the Company to not sell the security or whether it is more likely than not that the Company will be required to sell the security before its anticipated recovery. A decline in value due to a credit event that is considered other-than-temporary is recorded as a loss in noninterest income. Equity Securities Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in unrealized gains (losses) on equity securities on the statements of income. The Company has elected to measure its equity securities with no readily determinable fair values at their cost minus impairment, if any, plus or minus charges resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Restricted Stock Restricted stock, which consists of Federal Home Loan Bank of Chicago (“FHLB”) stock, is carried at cost and evaluated for impairment. Loans Held for Sale Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically, these quotes include a premium on sale and thus quotes typically indicate fair value of the held for sale loans is greater than cost. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Mortgage loans held for sale are generally sold with the mortgage servicing rights retained by the Company. The carrying value of mortgage loans sold is reduced by fair value allocated to the associated mortgage servicing rights. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the carrying value of the related mortgage loans sold. Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs and the allowance for loan losses, deferred loan fees or costs on originated loans, and unamortized premiums or discounts on acquired loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and recognized as an adjustment of the related loan yield using the interest method. ​ 94 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income if it was accrued during the current year and charged-off against the allowance for loan losses if accrued in a prior year. Amortization of related deferred loan fees or costs is also suspended at this time. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. 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 for loan losses 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. The general component covers non-impaired loans and is 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. This actual loss experience is adjusted for qualitative factors based on the risks present for each portfolio segment. These qualitative factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. These qualitative factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The Company reviews the loan portfolio on an ongoing basis to determine whether any loans require classification and impairment testing in accordance with applicable regulations and accounting principles. Loans determined to be impaired are individually evaluated for impairment. When a loan is classified as either substandard or doubtful and in certain other cases, such as troubled debt restructurings, the Company generally measures impairment based on the fair value of the collateral, but also may use the present value of expected future cash flows discounted at the original contractual interest rate, when practical. ​ 95 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the Company for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. In general, if the Company grants a 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 Company assigns a risk rating to all loans and periodically performs detailed internal reviews of all such loans that are part of relationships with over $ 750,000 in total exposure to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to review by the Company’s regulators, external loan review, and internal loan review. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the fair values of collateral securing the loans. The risk rating is reviewed annually, at a minimum, and on an as needed basis depending on the specific circumstances of the loan. These credit quality indicators are used to assign a risk rating to each individual loan. Risk ratings are grouped into four major categories, defined as follows: Pass : A Pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention. Pass-Watch : A Pass-Watch loan is still considered a Pass credit and 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. Substandard : A Substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as Substandard have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized as probable that the borrower will not pay principal and interest in accordance with the contractual terms. Doubtful : A Doubtful loan has all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. ​ 96 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The Company maintains a separate general valuation allowance for each portfolio segment. These portfolio segments include 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, with risk characteristics described as follows: Commercial and Industrial : Consists of loans typically granted for working capital, asset acquisition and other business purposes. These loans are underwritten primarily based on the borrower’s cash flow with most loans secondarily supported by collateral. Most commercial and industrial loans are secured by the assets being financed or other business assets, such as accounts receivable, inventory, and equipment, and are typically supported by personal guarantees of the owners. Cash flows and collateral values may fluctuate based on general economic conditions, specific industry conditions and specific borrower circumstances. Agricultural and Farmland : Consists of loans typically secured by farmland, agricultural operating assets, or a combination of both, and are generally underwritten to existing cash flows of operating agricultural businesses. Debt repayment is provided by business cash flows. The credit quality of these loans is significantly influenced by changes in prices of corn and soybeans and, to a lesser extent, weather, which has been partially mitigated by federal crop insurance programs. Commercial Real Estate - Owner Occupied : Consists of loans secured by commercial real estate that is both owned and occupied by the same or a related borrower. These loans are primarily underwritten based on the cash flow of the business occupying the property. As with commercial and industrial loans, cash flows and collateral values may fluctuate based on general economic conditions, specific industry conditions, and specific borrower circumstances. Commercial Real Estate - Non-owner Occupied : Consists of loans secured by commercial real estate for which the primary source of repayment is the sale or rental cash flows from the underlying collateral. These loans are underwritten based primarily on the historic or projected cash flow from the underlying collateral. Adverse economic developments, or an overbuilt market, typically impact commercial real estate projects. Trends in rental and vacancy rates of commercial properties may impact the credit quality of these loans. Multi-family : Consists of loans secured by five or more unit apartment buildings. Multi-family loans may be affected by demographic and population trends, unemployment or underemployment, and deteriorating market values of real estate. Construction and Land Development : Consists of loans for speculative and pre-sold construction projects for developers intending to either sell upon completion or hold for long term investment, as well as construction of projects to be owner occupied. In addition, loans in this segment generally possess a higher inherent risk of loss than other portfolio segments due to risk of non-completion, changes in budgeted costs, and changes in market forces during the term of the construction period. One-to-four Family Residential : Consists of loans secured by one-to-four family residences, including both first and junior lien mortgage loans for owner occupied and non-owner occupied properties and home equity lines of credit. The degree of risk in residential mortgage lending depends on the local economy, including the local real estate market and unemployment rates. ​ 97 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Municipal, Consumer and Other : Loans to municipalities include obligations of municipal entities and loans sponsored by municipal entities for the benefit of a private entity where that private entity, rather than the municipal entity, is responsible for repayment of the obligation. Consumer loans include loans to individuals for consumer purposes and typically consist of small balance loans. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of the consumer loans. Loans to non-depository financial institutions, as well as leases, are also included. Although management believes the allowance to be adequate, ultimate losses may vary from its estimates. At least quarterly, the Board of Directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions and other factors. If the Board of Directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company’s regulators review the adequacy of the allowance and may require additions to the allowance based on their judgment about information available at the time of their examinations. Loans Acquired with Deteriorated Credit Quality Loans acquired that have evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments receivable, are initially recorded at fair value (as determined by the present value of expected future cash flows) with no allowance for loan losses. Loans are evaluated by management at the time of purchase to determine if there is evidence of deterioration in credit quality since origination. Loans where there is evidence of deterioration of credit quality since origination may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized as interest income over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows result in a reversal of the provision for loan losses to the extent of prior charges or a reclassification of the difference from nonaccretable to accretable yield with a positive impact on interest income on a prospective basis. If the Company does not have the information necessary to reasonably estimate cash flows to be expected, it may use the cost recovery method or cash basis method of income recognition. Off-Balance Sheet Credit Related Financial Instruments In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded. Loan Servicing The Company periodically sells mortgage loans on the secondary market with servicing retained. For sales of mortgage loans, a portion of the cost of originating the loan is allocated to the servicing right based on fair value. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds, and default rates and losses. Mortgage servicing rights are carried at fair value on the consolidated balance sheets and changes in fair value are recorded in mortgage servicing rights fair value adjustment on the consolidated statements of income. 98 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Bank Owned Life Insurance Bank owned life insurance represents life insurance policies on the lives of certain current and former employees and directors for which the Company is the sole owner and beneficiary. These policies are recorded as an asset in the consolidated balance sheets at their cash surrender value ("CSV") or the current amount that could be realized if settled. The change in CSV and insurance proceeds received are included as a component of noninterest income in the consolidated statements of income. Bank Premises and Equipment Land is carried at cost. Bank premises and equipment are carried at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the individual assets using the straight-line method. Bank Premises Held for Sale Bank premises held for sale is carried at the lower of cost or fair value less estimated costs to sell. Bank premises classified as held for sale are not depreciated. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less estimated costs to sell. Lease Obligations The Company leases certain bank premises under non-cancelable operating leases in the normal course of business operations. These lease obligations result in the recognition of right-of-use assets and associated lease contract liabilities. The amount of right-of-use assets and associated lease contract liabilities recorded is based on the present value of future minimum lease payments. The discount rate used is equal to the rate implicit in the lease, when readily determinable, or the Company’s incremental borrowing rate at lease inception, on a collateralized basis over a similar term. Right-of-use assets are included in other assets and lease contract liabilities are included in other liabilities in the consolidated balance sheets and were insignificant as of December 31, 2022 and 2021. Foreclosed Assets Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated cost to sell at the date of foreclosure, establishing a new cost basis. Any write-down based on the fair value of the asset at the date of acquisition is charged to the allowance for loan losses. If the fair value of the asset less estimated cost to sell exceeds the recorded investment in the loan at the date of foreclosure, the increase in value is charged to current year operations unless there has been a prior charge-off, in which case a recovery to the allowance for loan losses is recorded. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated cost to sell. Write-downs of foreclosed assets subsequent to foreclosure are charged to current year operations as are gains and losses from sale of foreclosed assets, as well as expenses to maintain and hold foreclosed assets. 99 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Goodwill and Other Intangible Assets Goodwill represents the excess of the original cost over the fair value of assets acquired and liabilities assumed. Goodwill is not amortized but instead is subject to an annual impairment evaluation. The Company has selected December 31 as the date to perform the annual impairment test. At December 31, 2022 and 2021, the Company’s evaluations of goodwill indicated that goodwill was not impaired. Other identifiable intangible assets consist of core deposit intangible assets with definite useful lives which are being amortized using an accelerated depreciation method over 10 years . The Company will periodically review the status of core deposit intangible assets for any events or circumstances which may change the recoverability of the underlying basis. Wealth Management Assets and Fees Assets of the wealth management department of the Bank are not included in the consolidated balance sheets as such assets are not assets of the Company or the Bank. Fee income generated from wealth management services is recorded in the consolidated statements of income as a source of noninterest income. Employee Benefit Plans The Company sponsors a profit sharing plan under which the Company may contribute, at the discretion of the Board of Directors, a discretionary amount to all participating employees for the plan year. The Company may also make discretionary matching contributions in an amount up to 5 % of compensation contributed by employees. Stock Based Compensation The Company recognizes compensation cost over the requisite service period, if any, which is generally defined as the vesting period. For awards classified as equity, compensation cost is based on the fair value of the awards on the grant date. For awards classified as liabilities, compensation cost also includes subsequent remeasurements of the fair value of the awards until the award is settled. The Company’s policy is to recognize forfeitures as they occur. Transfers of Financial Assets and Participating Interests Transfers of an entire financial asset or a participating interest in an entire financial asset are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. ​ 100 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The transfer of a participating interest in an entire financial asset must also meet the definition of a participating interest. A participating interest in a financial asset has all of the following characteristics: (1) from the date of transfer, it must represent a proportionate (pro rata) ownership interest in the financial asset, (2) from the date of transfer, all cash flows received, except any cash flows allocated as any compensation for servicing or other services performed, must be divided proportionately among participating interest holders in the amount equal to their share ownership, (3) the rights of each participating interest holder must have the same priority, and (4) no party has the right to pledge or exchange the entire financial asset unless all participating interest holders agree to do so. Advertising Costs Advertising costs are expensed as incurred. Income Taxes Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. With regard to uncertain tax matters, the Company recognizes in the consolidated financial statements the impact of a tax position taken, or expected to be taken, if it is more likely than not that the position will be sustained on audit based on the technical merit of the position. Management has analyzed the tax positions taken by the Company and concluded as of December 31, 2022 and 2021, there are no material uncertain tax positions taken or expected to be taken that require recognition of a liability or disclosure in the consolidated financial statements. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in operating expenses. The Company files consolidated federal and state income tax returns. The Company generally is no longer subject to federal or state income tax examinations for years prior to 2019. Derivative Financial Instruments As part of the Company’s asset/liability management, the Company may use interest rate swaps to hedge various exposures or to modify interest rate characteristics of various balance sheet accounts. Derivatives that are used as part of the asset/liability management process are linked to specific assets or liabilities, or pools of assets or liabilities, and have high correlation between the contract and the underlying item being hedged, both at inception and throughout the hedge period. All derivatives are recognized on the consolidated balance sheet at their fair value. On the date the derivative contract is entered into, the Company may designate the derivative as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability "cash flow" hedge. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss), until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). ​ 101 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedged transactions. This process includes linking all derivatives that are designated as cash flow hedges to specific assets and liabilities on the balance sheet or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. The Company discontinues hedge accounting prospectively when (a) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item (including forecasted transactions); (b) the derivative expires or is sold, terminated, or exercised; (c) the derivative is dedesignated as a hedge instrument, because it is unlikely that a forecasted transaction will occur; or (d) management determines that designation of the derivative as a hedge instrument is no longer appropriate. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the derivative will continue to be carried on the consolidated balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive income (loss) will be recognized immediately in earnings. In all other situations in which hedge accounting is discontinued, the derivative will be carried at its fair value on the balance sheet, with subsequent changes in its fair value recognized in current-period earnings. Comprehensive Income (Loss) Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available-for-sale and interest rate swap agreements designated as cash flow hedges, are reported as a separate component of the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income (loss). Fair Value Measurements The Company categorizes its assets and liabilities measured at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. Assets and liabilities valued at fair value are categorized based on the inputs to the valuation techniques as follows: Level 1 - Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date. Level 2 - Inputs that are significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Inputs that are unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing as asset or liability. Subsequent to initial recognition, the Company may re-measure the carrying value of assets and liabilities measured on a nonrecurring basis to fair value. Adjustments to fair value usually result when certain assets are impaired. Such assets are written down from their carrying amounts to their fair value. 102 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Accounting standards allow entities the irrevocable option to elect to measure certain financial instruments and other items at fair value for the initial and subsequent measurement on an instrument-by-instrument basis. The Company adopted the policy and has not elected to measure any existing financial instruments at fair value, except for mortgage servicing rights; however, it may elect to measure newly acquired financial instruments at fair value in the future. Revenue from Contracts with Customers ASC Topic 606, Revenue from Contracts with Customers , requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve this, the Company takes the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the Company satisfies a performance obligation. The non-interest revenue streams that are considered to be in the scope of this guidance are discussed below. Card income: Consists of debit and credit card interchange fees. For debit and credit card transactions, the Company considers the merchant as the customer for interchange revenue with the performance obligation being satisfied when the cardholder purchases goods or services from the merchant. Interchange revenue is recognized as the services are provided. Payment is typically received daily. Service charges on deposit accounts: Consists of account analysis fees, monthly service fees, and other deposit account related fees. The Company’s performance obligation account analysis fees and monthly service fees are ongoing and either party may cancel at any time. These fees are generally recognized as the services are rendered on a monthly basis. Payment is typically received monthly. Other deposit account related fees are largely transaction based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for other deposit account related fees is primarily received immediately through a direct charge to customers’ accounts. Wealth management fees: Consists of revenue from the management and advisement of client assets and trust administration. The Company’s performance obligation is generally satisfied over time, and the fees are recognized monthly. Payment is typically received quarterly or annually. 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. ​ 103 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Subsequent Events In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the consolidated financial statements were issued. Other than the acquisition of Town and Country Financial Corporation, as disclosed in Note 2 – Acquisitions, and further developments in a pending legal matter, as disclosed in Note 23 – Commitments and Contingencies, there were no significant subsequent events through the issuance of these consolidated financial statements that warranted adjustment or disclosure. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 economic variables are best suited to be 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 debt securities portfolios, along with other management judgments. Management is finalizing macroeconomic conditions and forecast assumptions to be used in the model; however, upon adoption of ASU 2016-13 on January 1, 2023, we expect the initial allowance for credit losses and the reserve for unfunded commitments together to be approximately 30 % to 50 % above the existing allowance for loan loss levels. When finalized, this one-time increase will be recorded, net of tax, as an adjustment to beginning retained earnings. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions . ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value and that contractual sale restrictions cannot be recognized and measured as a separate unit of account. The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. ​ 104 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the recognition and measurement guidance for troubled debt restructurings (“TDRs”) by creditors in ASC 310-40. This Update also enhances disclosure requirements for certain loan restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity will apply refinancing and restructuring guidance to determine whether a modification or other form of restructuring results in a new loan or a continuation of an existing loan. Additionally, the amendments in this ASU require a public business entity to disclosure current-period gross write-offs by year of origination for financing receivables and net investments in leases in the existing vintage disclosures. The amendments in this update are effective for years beginning after December 15, 2022, including interim periods within those years. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method . ASU 2022-01 replaces the current last-of-layer hedge accounting method with an expanded portfolio layer method that permits multiple hedged layers of a single closed portfolio. The scope of the portfolio layer method is also expanded to include non-prepayable financial assets. ASU 2022-01 also provides additional guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to disclosure which are included in this standard may be applied on a prospective basis from the initial application date, or on a retrospective basis to each prior period presented after the date of adoption of the amendments in ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years. Early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. 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. ​ 105 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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, 2024. 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 February 1, 2023, HBT Financial acquired 100 % of the issued and outstanding common stock of Town and Country Financial Corporation (“Town and Country”), the holding company for Town and Country Bank, pursuant to an Agreement and Plan of Merger dated August 23, 2023. Under the Agreement and Plan of Merger, Town and Country merged with and into HBT Financial, with HBT Financial as the surviving entity, on February 1, 2023, immediately followed by merger of Town and Country Bank with and into Heartland Bank, with Heartland Bank as the surviving entity. At the effective time of the merger, each share of Town and Country was converted into the right to receive, subject to the election and proration procedures as provided in the Merger Agreement, one of the following: (i) 1.9010 shares of HBT Financial’s common stock for each share of Town and Country, or (ii) $ 35.66 per share in cash, or (iii) a combination of cash and HBT Financial common stock. Total consideration consisted of 3,378,600 shares of HBT Financial’s common stock and $ 38.0 million in cash. In lieu of fractional shares, holders of Town and Country common stock will receive cash. Based upon the closing price of HBT Financial common stock of $ 21.12 on February 1, 2023, the aggregate transaction value was approximately $ 109.4 million. This transaction will be accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged was recorded at estimated fair values on the date of acquisition. Fair value assessments are incomplete as of the filing date of this Form 10-K. Fair values are subject to refinement for up to one year after the closing date of February 1, 2023. This acquisition is a subsequent event and the financial results of Town and Country are not recognized in this Form 10-K. The acquisition of Town and Country further enhanced HBT Financial’s footprint in Central Illinois as well as expanding our footprint into metro-east St. Louis. During the year ended December 31, 2022, HBT Financial incurred $ 1.1 million in pre-tax acquisition expenses related to the planned acquisition of Town and Country, comprised of professional fees and data processing expense. ​ 106 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 was 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 year ended December 31, 2021, HBT Financial incurred $ 1.4 million 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 year ended December 31, 2022. ​ 107 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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. ​ ​ 108 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following table provides the pro forma information for the results of operations for the years ended December 31, 2021 and 2020, 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 ​ ​ Year Ended December 31, (dollars in thousands, except per share data) ​ 2021 ​ 2020 Total revenues (net interest income and noninterest income) ​ $ 166,677 ​ $ 161,005 Net income ​ ​ 57,883 ​ ​ 39,263 Earnings per share - basic ​ ​ 1.98 ​ ​ 1.34 Earnings per share - diluted ​ ​ 1.98 ​ ​ 1.34 ​ ​ ​ ​ 109 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 3 – SECURITIES Debt Securities The amortized cost and fair values of debt securities, with gross unrealized gains and losses, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale: ​ (dollars in thousands) U.S. Treasury ​ $ 169,860 ​ $ — ​ $ ( 15,345 ) ​ $ 154,515 U.S. government agency ​ ​ 59,291 ​ ​ — ​ ​ ( 4,134 ) ​ ​ 55,157 Municipal ​ ​ 275,972 ​ ​ 46 ​ ​ ( 32,189 ) ​ ​ 243,829 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 213,676 ​ ​ 5 ​ ​ ( 18,240 ) ​ ​ 195,441 Agency commercial ​ ​ 150,060 ​ ​ — ​ ​ ( 17,172 ) ​ ​ 132,888 Corporate ​ ​ 65,597 ​ ​ 55 ​ ​ ( 3,958 ) ​ ​ 61,694 Total available-for-sale ​ ​ 934,456 ​ ​ 106 ​ ​ ( 91,038 ) ​ ​ 843,524 Held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency ​ ​ 88,424 ​ ​ — ​ ​ ( 9,728 ) ​ ​ 78,696 Municipal ​ ​ 42,167 ​ ​ 195 ​ ​ ( 314 ) ​ ​ 42,048 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 102,728 ​ ​ — ​ ​ ( 6,470 ) ​ ​ 96,258 Agency commercial ​ ​ 308,281 ​ ​ — ​ ​ ( 46,482 ) ​ ​ 261,799 Total held-to-maturity ​ ​ 541,600 ​ ​ 195 ​ ​ ( 62,994 ) ​ ​ 478,801 Total debt securities ​ $ 1,476,056 ​ $ 301 ​ $ ( 154,032 ) ​ $ 1,322,325 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ 110 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 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 (loss), 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 (loss) 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 December 31, 2022 and 2021, the Company had securities with a carrying value of $ 332.6 million and $ 353.3 million, respectively, which were pledged to secure public and trust 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 securities issued by municipalities located in Illinois as of December 31, 2022. Approximately 81 % of such securities were general obligation issues as of December 31, 2022. The amortized cost and fair value of debt securities by contractual maturity, as of December 31, 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 ​ $ 19,501 ​ $ 19,127 ​ $ 2,288 ​ $ 2,290 Due after 1 year through 5 years ​ ​ 230,286 ​ ​ 216,799 ​ ​ 27,813 ​ ​ 26,908 Due after 5 years through 10 years ​ ​ 251,203 ​ ​ 217,722 ​ ​ 83,181 ​ ​ 76,214 Due after 10 years ​ ​ 69,730 ​ ​ 61,547 ​ ​ 17,309 ​ ​ 15,332 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ 213,676 ​ ​ 195,441 ​ ​ 102,728 ​ ​ 96,258 Agency commercial ​ ​ 150,060 ​ ​ 132,888 ​ ​ 308,281 ​ ​ 261,799 Total ​ $ 934,456 ​ $ 843,524 ​ $ 541,600 ​ $ 478,801 ​ ​ 111 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following tables present gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investments in a Continuous Unrealized Loss Position ​ ​ Less than 12 Months ​ 12 Months or More ​ Total December 31, 2022 Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Available-for-sale: ​ (dollars in thousands) U.S. Treasury ​ $ ( 8,401 ) ​ $ 92,445 ​ $ ( 6,944 ) ​ $ 62,070 ​ $ ( 15,345 ) ​ $ 154,515 U.S. government agency ​ ​ ( 2,980 ) ​ ​ 47,370 ​ ​ ( 1,154 ) ​ ​ 7,787 ​ ​ ( 4,134 ) ​ ​ 55,157 Municipal ​ ​ ( 10,906 ) ​ ​ 149,261 ​ ​ ( 21,283 ) ​ ​ 87,794 ​ ​ ( 32,189 ) ​ ​ 237,055 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ ( 8,332 ) ​ ​ 127,288 ​ ​ ( 9,908 ) ​ ​ 65,692 ​ ​ ( 18,240 ) ​ ​ 192,980 Agency commercial ​ ​ ( 4,764 ) ​ ​ 62,672 ​ ​ ( 12,408 ) ​ ​ 70,216 ​ ​ ( 17,172 ) ​ ​ 132,888 Corporate ​ ​ ( 2,594 ) ​ ​ 52,190 ​ ​ ( 1,364 ) ​ ​ 5,600 ​ ​ ( 3,958 ) ​ ​ 57,790 Total available-for-sale ​ ​ ( 37,977 ) ​ ​ 531,226 ​ ​ ( 53,061 ) ​ ​ 299,159 ​ ​ ( 91,038 ) ​ ​ 830,385 Held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency ​ ​ ( 1,754 ) ​ ​ 15,751 ​ ​ ( 7,974 ) ​ ​ 62,945 ​ ​ ( 9,728 ) ​ ​ 78,696 Municipal ​ ​ ( 314 ) ​ ​ 23,433 ​ ​ — ​ ​ — ​ ​ ( 314 ) ​ ​ 23,433 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ ( 4,039 ) ​ ​ 78,452 ​ ​ ( 2,431 ) ​ ​ 17,806 ​ ​ ( 6,470 ) ​ ​ 96,258 Agency commercial ​ ​ ( 16,716 ) ​ ​ 103,298 ​ ​ ( 29,766 ) ​ ​ 158,501 ​ ​ ( 46,482 ) ​ ​ 261,799 Total held-to-maturity ​ ​ ( 22,823 ) ​ ​ 220,934 ​ ​ ( 40,171 ) ​ ​ 239,252 ​ ​ ( 62,994 ) ​ ​ 460,186 Total debt securities ​ $ ( 60,800 ) ​ $ 752,160 ​ $ ( 93,232 ) ​ $ 538,411 ​ $ ( 154,032 ) ​ $ 1,290,571 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 112 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ As of December 31, 2022, there were 261 securities in an unrealized loss position for a period of twelve months or more, and 519 securities in an unrealized loss position for a period of less than twelve months. These unrealized losses are primarily a result of fluctuations in interest rates in the bond market. In analyzing an issuer’s financial condition, management considers whether the 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 securities are deemed to be temporary. There were no sales of debt securities during the years ended December 31, 2022, 2021, and 2020. Equity Securities Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in unrealized gains (losses) on equity securities on the consolidated statements of income. The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar securities of the same issuer. The initial cost and carrying values of equity securities, with cumulative net unrealized gains and losses, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Readily ​ No Readily ​ ​ Determinable ​ Determinable December 31, 2022 Fair Value Fair Value ​ ​ (dollars in thousands) Initial cost ​ $ 3,142 ​ $ 2,142 Cumulative net unrealized losses ​ ​ ( 113 ) ​ ​ ( 165 ) Carrying value ​ $ 3,029 ​ $ 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 December 31, 2022 and 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. ​ There were no sales of equity securities during the years ended December 31, 2022, 2021, and 2020. Unrealized gains (losses) on equity securities were as follows during the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 2020 ​ ​ (dollars in thousands) Readily determinable fair value ​ ​ ( 414 ) ​ ​ 107 ​ ​ 33 No readily determinable fair value ​ ​ — ​ ​ — ​ ​ — Unrealized gains (losses) on equity securities ​ $ ( 414 ) ​ ​ 107 ​ $ 33 ​ 113 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 4 – LOANS AND THE ALLOWANCE FOR LOAN LOSSES Major categories of loans as of December 31, 2022 and 2021 are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 ​ ​ (dollars in thousands) Commercial and industrial ​ $ 266,757 ​ $ 286,946 Agricultural and farmland ​ ​ 237,746 ​ ​ 247,796 Commercial real estate - owner occupied ​ ​ 218,503 ​ ​ 234,544 Commercial real estate - non-owner occupied ​ ​ 713,202 ​ ​ 684,023 Multi-family ​ ​ 287,865 ​ ​ 263,911 Construction and land development ​ ​ 360,824 ​ ​ 298,048 One-to-four family residential ​ ​ 338,253 ​ ​ 327,837 Municipal, consumer, and other ​ ​ 197,103 ​ ​ 156,584 Loans, before allowance for loan losses ​ ​ 2,620,253 ​ ​ 2,499,689 Allowance for loan losses ​ ​ ( 25,333 ) ​ ​ ( 23,936 ) Loans, net of allowance for loan losses ​ $ 2,594,920 ​ $ 2,475,753 ​ ​ ​ ​ ​ ​ ​ Paycheck Protection Program (PPP) loans (included above) ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 28 ​ $ 28,404 Agricultural and farmland ​ ​ — ​ ​ 913 Municipal, consumer, and other ​ ​ — ​ ​ 171 Total PPP loans ​ $ 28 ​ $ 29,488 ​ The following tables detail activity in the allowance for loan losses for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal, ​ ​ ​ ​ ​ Commercial ​ Agricultural ​ Real Estate ​ Real Estate ​ ​ ​ ​ Construction ​ One-to-four ​ Consumer, ​ ​ ​ ​ ​ and ​ and ​ Owner ​ Non-owner ​ ​ ​ ​ and Land ​ Family ​ and ​ ​ ​ ​ Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total ​ ​ (dollars in thousands) Balance, December 31, 2019 ​ $ 4,441 ​ $ 2,766 ​ $ 1,779 ​ $ 3,663 ​ $ 1,024 ​ $ 2,977 ​ $ 2,540 ​ $ 3,109 ​ $ 22,299 Provision for loan losses ​ ​ 677 ​ ​ ( 1,946 ) ​ ​ 961 ​ ​ 7,862 ​ ​ 933 ​ ​ 1,032 ​ ​ ( 894 ) ​ ​ 1,907 ​ ​ 10,532 Charge-offs ​ ​ ( 1,784 ) ​ ​ ( 27 ) ​ ​ ( 39 ) ​ ​ ( 349 ) ​ ​ — ​ ​ ( 27 ) ​ ​ ( 155 ) ​ ​ ( 587 ) ​ ​ ( 2,968 ) Recoveries ​ ​ 595 ​ ​ — ​ ​ 440 ​ ​ 75 ​ ​ — ​ ​ 250 ​ ​ 310 ​ ​ 305 ​ ​ 1,975 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 ​ ​ ( 1,474 ) ​ ​ 52 ​ ​ ( 1,280 ) ​ ​ ( 3,130 ) ​ ​ ( 694 ) ​ ​ 340 ​ ​ ( 472 ) ​ ​ ( 1,419 ) ​ ​ ( 8,077 ) Charge-offs ​ ​ ( 668 ) ​ ​ — ​ ​ ( 30 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 267 ) ​ ​ ( 449 ) ​ ​ ( 1,414 ) Recoveries ​ ​ 653 ​ ​ — ​ ​ 9 ​ ​ 24 ​ ​ — ​ ​ 342 ​ ​ 249 ​ ​ 312 ​ ​ 1,589 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 ​ ​ 88 ​ ​ ( 49 ) ​ ​ ( 1,653 ) ​ ​ ( 1,707 ) ​ ​ 209 ​ ​ ( 692 ) ​ ​ 146 ​ ​ 2,952 ​ ​ ( 706 ) Charge-offs ​ ​ ( 23 ) ​ ​ — ​ ​ ( 25 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 67 ) ​ ​ ( 569 ) ​ ​ ( 684 ) Recoveries ​ ​ 774 ​ ​ — ​ ​ 1,031 ​ ​ 283 ​ ​ — ​ ​ 1 ​ ​ 369 ​ ​ 329 ​ ​ 2,787 Balance, December 31, 2022 ​ $ 3,279 ​ $ 796 ​ $ 1,193 ​ $ 6,721 ​ $ 1,472 ​ $ 4,223 ​ $ 1,759 ​ $ 5,890 ​ $ 25,333 ​ ​ 114 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following tables present the recorded investments in loans and the allowance for loan losses by category as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 2022 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Loan balances: ​ (dollars in thousands) Collectively evaluated for impairment ​ $ 261,833 ​ $ 233,118 ​ $ 203,558 ​ $ 671,663 ​ $ 287,298 ​ $ 359,892 ​ $ 325,621 ​ $ 184,579 ​ $ 2,527,562 Individually evaluated for impairment ​ ​ 4,818 ​ ​ 4,033 ​ ​ 11,366 ​ ​ 30,509 ​ ​ — ​ ​ 82 ​ ​ 8,399 ​ ​ 12,508 ​ ​ 71,715 Acquired with deteriorated credit quality ​ ​ 106 ​ ​ 595 ​ ​ 3,579 ​ ​ 11,030 ​ ​ 567 ​ ​ 850 ​ ​ 4,233 ​ ​ 16 ​ ​ 20,976 Total ​ $ 266,757 ​ $ 237,746 ​ $ 218,503 ​ $ 713,202 ​ $ 287,865 ​ $ 360,824 ​ $ 338,253 ​ $ 197,103 ​ $ 2,620,253 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collectively evaluated for impairment ​ $ 3,121 ​ $ 796 ​ $ 1,008 ​ $ 4,332 ​ $ 1,470 ​ $ 4,221 ​ $ 1,709 ​ $ 2,327 ​ $ 18,984 Individually evaluated for impairment ​ ​ 158 ​ ​ — ​ ​ 168 ​ ​ 2,388 ​ ​ — ​ ​ — ​ ​ 44 ​ ​ 3,562 ​ ​ 6,320 Acquired with deteriorated credit quality ​ ​ — ​ ​ — ​ ​ 17 ​ ​ 1 ​ ​ 2 ​ ​ 2 ​ ​ 6 ​ ​ 1 ​ ​ 29 Total ​ $ 3,279 ​ $ 796 ​ $ 1,193 ​ $ 6,721 ​ $ 1,472 ​ $ 4,223 ​ $ 1,759 ​ $ 5,890 ​ $ 25,333 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 115 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following tables present loans individually evaluated for impairment by category of loans as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unpaid ​ ​ ​ ​ ​ ​ ​ Principal ​ Recorded ​ Related December 31, 2022 Balance Investment Allowance With an allowance recorded: ​ (dollars in thousands) Commercial and industrial ​ $ 268 ​ $ 254 ​ $ 158 Agricultural and farmland ​ ​ — ​ ​ — ​ ​ — Commercial real estate - owner occupied ​ ​ 635 ​ ​ 610 ​ ​ 168 Commercial real estate - non-owner occupied ​ ​ 14,269 ​ ​ 14,261 ​ ​ 2,388 Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ — ​ ​ — ​ ​ — One-to-four family residential ​ ​ 569 ​ ​ 524 ​ ​ 44 Municipal, consumer, and other ​ ​ 8,152 ​ ​ 8,131 ​ ​ 3,562 Total ​ $ 23,893 ​ $ 23,780 ​ $ 6,320 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With no related allowance: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 4,564 ​ $ 4,564 ​ $ — Agricultural and farmland ​ ​ 4,440 ​ ​ 4,033 ​ ​ — Commercial real estate - owner occupied ​ ​ 10,912 ​ ​ 10,756 ​ ​ — Commercial real estate - non-owner occupied ​ ​ 16,327 ​ ​ 16,248 ​ ​ — Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ 92 ​ ​ 82 ​ ​ — One-to-four family residential ​ ​ 9,181 ​ ​ 7,875 ​ ​ — Municipal, consumer, and other ​ ​ 4,410 ​ ​ 4,377 ​ ​ — Total ​ $ 49,926 ​ $ 47,935 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans individually evaluated for impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 4,832 ​ $ 4,818 ​ $ 158 Agricultural and farmland ​ ​ 4,440 ​ ​ 4,033 ​ ​ — Commercial real estate - owner occupied ​ ​ 11,547 ​ ​ 11,366 ​ ​ 168 Commercial real estate - non-owner occupied ​ ​ 30,596 ​ ​ 30,509 ​ ​ 2,388 Multi-family ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ 92 ​ ​ 82 ​ ​ — One-to-four family residential ​ ​ 9,750 ​ ​ 8,399 ​ ​ 44 Municipal, consumer, and other ​ ​ 12,562 ​ ​ 12,508 ​ ​ 3,562 Total ​ $ 73,819 ​ $ 71,715 ​ $ 6,320 ​ ​ 116 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 117 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following table presents the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans during the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 ​ 2021 ​ 2020 ​ Average ​ Interest ​ Average Interest ​ Average Interest ​ ​ Recorded ​ Income ​ Recorded ​ Income ​ Recorded ​ Income ​ Investment Recognized Investment Recognized Investment Recognized With an allowance recorded: ​ (dollars in thousands) Commercial and industrial ​ $ 204 ​ $ 18 ​ $ 1,593 ​ $ 89 ​ $ 3,031 ​ $ 169 Agricultural and farmland ​ ​ — ​ ​ — ​ ​ 83 ​ ​ 4 ​ ​ 273 ​ ​ 9 Commercial real estate - owner occupied ​ ​ 970 ​ ​ 63 ​ ​ 3,052 ​ ​ 177 ​ ​ 1,622 ​ ​ 98 Commercial real estate - non-owner occupied ​ ​ 10,943 ​ ​ 740 ​ ​ 16,494 ​ ​ 791 ​ ​ 6,345 ​ ​ 220 Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and land development ​ ​ — ​ ​ — ​ ​ 554 ​ ​ 27 ​ ​ 2,441 ​ ​ 116 One-to-four family residential ​ ​ 384 ​ ​ 16 ​ ​ 1,988 ​ ​ 77 ​ ​ 3,120 ​ ​ 110 Municipal, consumer, and other ​ ​ 6,259 ​ ​ 236 ​ ​ 8,681 ​ ​ 158 ​ ​ 10,617 ​ ​ 286 Total ​ $ 18,760 ​ $ 1,073 ​ $ 32,445 ​ $ 1,323 ​ $ 27,449 ​ $ 1,008 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With no related allowance: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 9,568 ​ $ 453 ​ $ 7,125 ​ $ 330 ​ $ 4,004 ​ $ 251 Agricultural and farmland ​ ​ 228 ​ ​ 13 ​ ​ 290 ​ ​ 17 ​ ​ 11,061 ​ ​ 561 Commercial real estate - owner occupied ​ ​ 8,619 ​ ​ 525 ​ ​ 7,771 ​ ​ 344 ​ ​ 11,056 ​ ​ 528 Commercial real estate - non-owner occupied ​ ​ 12,636 ​ ​ 1,278 ​ ​ 10,339 ​ ​ 432 ​ ​ 14,412 ​ ​ 458 Multi-family ​ ​ — ​ ​ — ​ ​ 434 ​ ​ 10 ​ ​ 447 ​ ​ 10 Construction and land development ​ ​ 1,505 ​ ​ 106 ​ ​ 2,107 ​ ​ 28 ​ ​ 892 ​ ​ 23 One-to-four family residential ​ ​ 6,238 ​ ​ 352 ​ ​ 6,248 ​ ​ 192 ​ ​ 8,022 ​ ​ 316 Municipal, consumer, and other ​ ​ 3,361 ​ ​ 148 ​ ​ 4,666 ​ ​ 86 ​ ​ 3,089 ​ ​ 115 Total ​ $ 42,155 ​ $ 2,875 ​ $ 38,980 ​ $ 1,439 ​ $ 52,983 ​ $ 2,262 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans individually evaluated for impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 9,772 ​ $ 471 ​ $ 8,718 ​ $ 419 ​ $ 7,035 ​ $ 420 Agricultural and farmland ​ ​ 228 ​ ​ 13 ​ ​ 373 ​ ​ 21 ​ ​ 11,334 ​ ​ 570 Commercial real estate - owner occupied ​ ​ 9,589 ​ ​ 588 ​ ​ 10,823 ​ ​ 521 ​ ​ 12,678 ​ ​ 626 Commercial real estate - non-owner occupied ​ ​ 23,579 ​ ​ 2,018 ​ ​ 26,833 ​ ​ 1,223 ​ ​ 20,757 ​ ​ 678 Multi-family ​ ​ — ​ ​ — ​ ​ 434 ​ ​ 10 ​ ​ 447 ​ ​ 10 Construction and land development ​ ​ 1,505 ​ ​ 106 ​ ​ 2,661 ​ ​ 55 ​ ​ 3,333 ​ ​ 139 One-to-four family residential ​ ​ 6,622 ​ ​ 368 ​ ​ 8,236 ​ ​ 269 ​ ​ 11,142 ​ ​ 426 Municipal, consumer, and other ​ ​ 9,620 ​ ​ 384 ​ ​ 13,347 ​ ​ 244 ​ ​ 13,706 ​ ​ 401 Total ​ $ 60,915 ​ $ 3,948 ​ $ 71,425 ​ $ 2,762 ​ $ 80,432 ​ $ 3,270 ​ 118 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following tables present loans by category based on current payment and accrual status as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accruing Interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30 - 89 Days ​ 90+ Days ​ ​ ​ ​ Total December 31, 2022 Current Past Due Past Due Nonaccrual Loans ​ ​ (dollars in thousands) Commercial and industrial ​ $ 266,521 ​ $ 17 ​ $ — ​ $ 219 ​ $ 266,757 Agricultural and farmland ​ ​ 237,727 ​ ​ 19 ​ ​ — ​ ​ — ​ ​ 237,746 Commercial real estate - owner occupied ​ ​ 218,242 ​ ​ 187 ​ ​ — ​ ​ 74 ​ ​ 218,503 Commercial real estate - non-owner occupied ​ ​ 713,031 ​ ​ — ​ ​ — ​ ​ 171 ​ ​ 713,202 Multi-family ​ ​ 287,854 ​ ​ 11 ​ ​ — ​ ​ — ​ ​ 287,865 Construction and land development ​ ​ 360,763 ​ ​ 61 ​ ​ — ​ ​ — ​ ​ 360,824 One-to-four family residential ​ ​ 335,576 ​ ​ 894 ​ ​ 145 ​ ​ 1,638 ​ ​ 338,253 Municipal, consumer, and other ​ ​ 196,892 ​ ​ 157 ​ ​ 1 ​ ​ 53 ​ ​ 197,103 Total ​ $ 2,616,606 ​ $ 1,346 ​ $ 146 ​ $ 2,155 ​ $ 2,620,253 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 119 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following tables present total loans by category based on their assigned risk ratings determined by management as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Pass Pass-Watch Substandard Doubtful Total ​ ​ (dollars in thousands) Commercial and industrial ​ $ 255,309 ​ $ 6,630 ​ $ 4,818 ​ $ — ​ $ 266,757 Agricultural and farmland ​ ​ 223,114 ​ ​ 10,004 ​ ​ 4,628 ​ ​ — ​ ​ 237,746 Commercial real estate - owner occupied ​ ​ 198,546 ​ ​ 10,105 ​ ​ 9,852 ​ ​ — ​ ​ 218,503 Commercial real estate - non-owner occupied ​ ​ 652,691 ​ ​ 27,282 ​ ​ 33,229 ​ ​ — ​ ​ 713,202 Multi-family ​ ​ 283,682 ​ ​ 4,183 ​ ​ — ​ ​ — ​ ​ 287,865 Construction and land development ​ ​ 358,215 ​ ​ 2,527 ​ ​ 82 ​ ​ — ​ ​ 360,824 One-to-four family residential ​ ​ 323,632 ​ ​ 5,907 ​ ​ 8,714 ​ ​ — ​ ​ 338,253 Municipal, consumer, and other ​ ​ 184,299 ​ ​ 296 ​ ​ 12,508 ​ ​ — ​ ​ 197,103 Total ​ $ 2,479,488 ​ $ 66,934 ​ $ 73,831 ​ $ — ​ $ 2,620,253 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 troubled debt restructurings during the years ended December 31, 2022 and 2021. The following table presents the financial effect of troubled debt restructurings for the year ended December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Charge-offs ​ ​ ​ ​ Recorded Investment ​ and Specific Year Ended December 31, 2020 Number Pre-Modification Post-Modification Reserves ​ ​ (dollars in thousands) Commercial real estate - owner occupied ​ 1 ​ $ 853 ​ $ 853 ​ $ — ​ During the year ended December 31, 2020, the troubled debt restructuring was the result of a payment concession. As of December 31, 2022 and 2021, there were no troubled debt restructurings which had subsequent payment defaults within 12 months of the modification. 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 December 31, 2022 and 2021, the Company had $ 3.0 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. ​ 120 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 December 31, 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. Changes in the accretable yield for loans acquired with deteriorated credit quality were as follows for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 2020 ​ ​ (dollars in thousands) Beginning balance ​ $ 413 ​ $ 1,397 ​ $ 1,662 Reclassification from non-accretable difference ​ ​ 548 ​ ​ 508 ​ ​ 288 Disposals ​ ​ — ​ ​ ( 1,089 ) ​ ​ — Accretion income ​ ​ ( 231 ) ​ ​ ( 403 ) ​ ​ ( 553 ) Ending balance ​ $ 730 ​ $ 413 ​ $ 1,397 ​ ​ NOTE 5 – LOAN SERVICING Mortgage loans serviced for others, not included in the accompanying consolidated balance sheets, amounted to $ 955.8 million and $ 1.04 billion as of December 31, 2022 and 2021, respectively. Activity in mortgage servicing rights is as follows for years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 2020 ​ ​ (dollars in thousands) Beginning balance ​ $ 7,994 ​ $ 5,934 ​ $ 8,518 Acquired ​ ​ — ​ ​ 370 ​ ​ — Capitalized servicing rights ​ ​ 530 ​ ​ 1,200 ​ ​ 1,981 Fair value adjustment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Attributable to payments and principal reductions ​ ​ ( 1,343 ) ​ ​ ( 1,788 ) ​ ​ ( 2,364 ) Attributable to changes in valuation inputs and assumptions ​ ​ 2,966 ​ ​ 2,278 ​ ​ ( 2,201 ) Total fair value adjustment ​ ​ 1,623 ​ ​ 490 ​ ​ ( 4,565 ) Ending balance ​ $ 10,147 ​ $ 7,994 ​ $ 5,934 ​ ​ 121 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 6 – BANK PREMISES AND EQUIPMENT Bank premises and equipment are stated at cost less accumulated depreciation as of December 31 as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 ​ ​ (dollars in thousands) Land, buildings, and improvements ​ $ 77,869 ​ $ 77,180 Furniture, fixtures, and equipment ​ ​ 24,512 ​ ​ 24,199 Total bank premises and equipment ​ ​ 102,381 ​ ​ 101,379 Less accumulated depreciation ​ ​ 51,912 ​ ​ 48,896 Total bank premises and equipment, net ​ $ 50,469 ​ $ 52,483 ​ Depreciation expense by category for the years ended December 31 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ (dollars in thousands) Buildings and improvements ​ $ 1,623 ​ $ 1,694 ​ $ 1,761 Furniture, fixtures, and equipment ​ ​ 1,420 ​ ​ 1,380 ​ ​ 1,180 Total depreciation expense ​ $ 3,043 ​ $ 3,074 ​ $ 2,941 ​ During 2021, six branch locations were closed or consolidated as part of a branch rationalization plan. The related bank premises were transferred to held for sale at the lower of the carrying value or fair value, less estimated costs to sell. As of December 31, 2022 and 2021, bank premises held for sale totaled $ 0.2 million and $ 1.5 million, respectively. During the years ended December 31, 2022 and 2021, there were impairment losses of $ 0.1 million and $ 0.7 million, respectively, on bank premises held for sale included in gains (losses) on other assets in the consolidated statements of income. During the year ended December 31, 2020, there were no impairment losses on bank premises held for sale. ​ NOTE 7 – FORECLOSED ASSETS Foreclosed assets activity is as follows for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ (dollars in thousands) Beginning balance ​ $ 3,278 ​ $ 4,168 ​ $ 5,099 Transfers from loans ​ ​ 541 ​ ​ 4,857 ​ ​ 1,074 Capitalized improvements ​ ​ — ​ ​ — ​ ​ 6 Proceeds from sales ​ ​ ( 475 ) ​ ​ ( 5,805 ) ​ ​ ( 2,079 ) Sales through loan origination ​ ​ — ​ ​ ( 252 ) ​ ​ ( 67 ) Net gain on sales ​ ​ 118 ​ ​ 505 ​ ​ 348 Direct write-downs ​ ​ ( 432 ) ​ ​ ( 195 ) ​ ​ ( 213 ) Ending balance ​ $ 3,030 ​ $ 3,278 ​ $ 4,168 ​ ​ 122 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Gains (losses) on foreclosed assets includes the following for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ (dollars in thousands) Direct write-downs ​ $ ( 432 ) ​ $ ( 195 ) ​ $ ( 213 ) Net gain on sales ​ ​ 118 ​ ​ 505 ​ ​ 348 Guarantee reimbursements ​ ​ — ​ ​ — ​ ​ 7 Gains (losses) on foreclosed assets ​ $ ( 314 ) ​ $ 310 ​ $ 142 ​ The carrying value of foreclosed one-to-four family residential real estate property as of December 31, 2022 and 2021, was $ 20 thousand and $ 0.2 million, respectively. As of December 31, 2022, there were 4 one-to-four family residential real estate loans in the process of foreclosure totaling approximately $ 0.2 million. As of December 31, 2021, there were 4 residential real estate loans in the process of foreclosure totaling approximately $ 0.1 million. NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS The following table summarizes the changes in the Company’s goodwill and core deposit intangible assets for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 ​ 2021 ​ 2020 ​ ​ ​ ​ Core Deposit ​ ​ ​ Core Deposit ​ ​ ​ Core Deposit ​ Goodwill Intangible Goodwill Intangible Goodwill Intangible ​ ​ (dollars in thousands) Beginning balance ​ $ 29,322 ​ $ 1,943 ​ $ 23,620 ​ $ 2,798 ​ $ 23,620 ​ $ 4,030 Additions ​ ​ — ​ ​ — ​ ​ 5,702 ​ ​ 199 ​ ​ — ​ ​ — Amortization ​ ​ — ​ ​ ( 873 ) ​ ​ — ​ ​ ( 1,054 ) ​ ​ — ​ ​ ( 1,232 ) Ending balance ​ $ 29,322 ​ $ 1,070 ​ $ 29,322 ​ $ 1,943 ​ $ 23,620 ​ $ 2,798 Accumulated amortization ​ $ — ​ $ 20,847 ​ $ — ​ $ 19,974 ​ $ — ​ $ 18,920 ​ Amortization of core deposit intangible assets for the years subsequent to December 31, 2022 is expected to be as follows (dollars in thousands): ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ $ 353 2024 ​ ​ 337 2025 ​ ​ 275 2026 ​ ​ 20 2027 ​ ​ 20 Thereafter ​ ​ 65 Total ​ $ 1,070 ​ ​ 123 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 9 – DEPOSITS The Company’s deposits are summarized below as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 ​ ​ (dollars in thousands) Noninterest-bearing deposits ​ $ 994,954 ​ $ 1,087,659 Interest-bearing deposits: ​ ​ ​ ​ ​ ​ Interest-bearing demand ​ ​ 1,139,150 ​ ​ 1,105,949 Money market ​ ​ 555,425 ​ ​ 583,198 Savings ​ ​ 634,527 ​ ​ 633,171 Time ​ ​ 262,968 ​ ​ 328,208 Total interest-bearing deposits ​ ​ 2,592,070 ​ ​ 2,650,526 Total deposits ​ $ 3,587,024 ​ $ 3,738,185 ​ There were no brokered deposits as of December 31, 2022. Money market deposits include $ 4.2 million of brokered deposits as of December 31, 2021. Money market deposits also include $ 1.7 million and $ 6.9 million of reciprocal transaction deposits as of December 31, 2022 and 2021, respectively. Time deposits include $ 1.6 million and $ 0.9 million of reciprocal time deposits as of December 31, 2022 and 2021, respectively. The aggregate amounts of time deposits in denominations of $250 thousand or more amounted to $ 27.2 million and $ 59.5 million as of December 31, 2022 and 2021, respectively. The aggregate amounts of time deposits in denominations of $100 thousand or more amounted to $ 92.6 million and $ 133.1 million as of December 31, 2022 and 2021, respectively. At December 31, 2022, the scheduled maturities of time deposits are as follows (dollars in thousands): ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ $ 191,045 2024 ​ ​ 44,573 2025 ​ ​ 14,544 2026 ​ ​ 8,822 2027 ​ ​ 3,855 Thereafter ​ ​ 129 Total ​ $ 262,968 ​ The components of interest expense on deposits for the years ended December 31 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 2020 ​ ​ (dollars in thousands) Interest-bearing demand ​ $ 607 ​ $ 518 ​ $ 647 Money market ​ ​ 813 ​ ​ 437 ​ ​ 697 Savings ​ ​ 208 ​ ​ 188 ​ ​ 196 Time ​ ​ 883 ​ ​ 1,329 ​ ​ 2,681 Total interest expense on deposits ​ $ 2,511 ​ $ 2,472 ​ $ 4,221 ​ ​ 124 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 10 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE All repurchase agreements are sweep instruments. The securities underlying the agreements as of December 31, 2022 and 2021 were under the Company’s control in safekeeping at third-party financial institutions, and included debt securities. Information pertaining to securities sold under agreements to repurchase as of December 31 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 ​ ​ ​ (dollars in thousands) ​ Balance at end of year ​ $ 43,081 ​ $ 61,256 ​ Weighted average rate as of end of year ​ ​ 0.28 % ​ 0.07 % Fair value of securities underlying the agreements ​ $ 50,771 ​ $ 64,164 ​ Carrying value of securities underlying the agreements ​ $ 55,850 ​ $ 64,262 ​ ​ ​ NOTE 11 – BORROWINGS As of December 31, 2022, Federal Home Loan Bank of Chicago (“FHLB”) borrowings totaled $ 160.0 million and consisted of short-term borrowings which had a weighted average rate of 4.29 % and mature within 30 days . There were no FHLB borrowings outstanding as of December 31, 2021. Borrowings from the FHLB are secured by FHLB stock held by the Company and pledged security in the form of qualifying loans. The loans pledged as of December 31, 2022 and 2021 totaled $ 892.1 million and $ 567.0 million, respectively. As of December 31, 2022 and 2021, loans pledged also served as collateral for credit exposure of $ 0.3 million and $ 0.4 million, respectively, associated with the Bank’s participation in the FHLB’s Mortgage Partnership Finance Program. The Bank also had available borrowings through the discount window of the Federal Reserve Bank of Chicago (“FRB”). Available borrowings are based on the collateral pledged. As of December 31, 2022 and 2021, there was no collateral pledged and there was no outstanding balance. NOTE 12 – SUBORDINATED NOTES On September 3, 2020, the Company issued $ 40.0 million of fixed-to-floating rate subordinated notes that mature on September 15, 2030. The subordinated notes, which are unsecured obligations of the Company, bear a fixed interest rate of 4.50 % for the first five years after issuance and thereafter bear interest at a floating rate equal to three-month SOFR, as determined on the Floating Interest Determination Date, plus 4.37 %. Interest is payable semi-annually during the five year fixed rate period and quarterly during the subsequent five year floating rate period. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after September 15, 2025. If the subordinated notes are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest. The transaction resulted in debt issuance costs of $ 0.8 million which will be amortized over 10 years . As of December 31, 2022 and 2021, 100 % of the subordinated notes qualified as Tier 2 capital. The face value and carrying value of the subordinated notes are summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 ​ ​ (dollars in thousands) Subordinated notes, at face value ​ $ 40,000 ​ $ 40,000 Unamortized issuance costs ​ ​ ( 605 ) ​ ​ ( 684 ) Subordinated notes, at carrying value ​ $ 39,395 ​ $ 39,316 ​ 125 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 13 – JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS Five subsidiary business trusts of the Company have issued floating rate capital securities (“capital securities”) which are guaranteed by the Company. The Company owns all of the outstanding stock of the five subsidiary business trusts. The trusts used the proceeds from the issuance of their capital securities to buy floating rate junior subordinated deferrable interest debentures (“junior subordinated debentures”) issued by the Company. These junior subordinated debentures are the only assets of the trusts and the interest payments from the junior subordinated debentures finance the distributions paid on the capital securities. The junior subordinated debentures are unsecured and rank junior and subordinate in the right of payment to all senior debt of the Company. In accordance with GAAP, the trusts are not consolidated in the Company’s financial statements. The carrying value of the junior subordinated debentures are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 ​ ​ (dollars in thousands) Heartland Bancorp, Inc. Capital Trust B ​ $ 10,310 ​ $ 10,310 Heartland Bancorp, Inc. Capital Trust C ​ ​ 10,310 ​ ​ 10,310 Heartland Bancorp, Inc. Capital Trust D ​ ​ 5,155 ​ ​ 5,155 FFBI Capital Trust I ​ ​ 7,217 ​ ​ 7,217 National Bancorp Statutory Trust I ​ ​ 5,773 ​ ​ 5,773 Total junior subordinated debentures, at face value ​ ​ 38,765 ​ ​ 38,765 National Bancorp Statutory Trust I unamortized discount ​ ​ ( 985 ) ​ ​ ( 1,051 ) Total junior subordinated debentures, at carrying value ​ $ 37,780 ​ $ 37,714 ​ The interest rates on the junior subordinated debentures are variable, reset quarterly, and are equal to the three-month LIBOR, as determined on the LIBOR Determination Date immediately preceding the Distribution Payment Date specific to each junior subordinated debenture, plus a fixed percentage. The interest rates and maturities of the junior subordinated debentures are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Rate at ​ ​ ​ ​ Variable ​ December 31, ​ December 31, ​ Maturity ​ Interest Rate 2022 2021 Date Heartland Bancorp, Inc. Capital Trust B ​ LIBOR plus 2.75 % 6.83 % 2.87 % April 6, 2034 Heartland Bancorp, Inc. Capital Trust C ​ LIBOR plus 1.53 ​ 6.30 ​ 1.73 ​ June 15, 2037 Heartland Bancorp, Inc. Capital Trust D ​ LIBOR plus 1.35 ​ 6.12 ​ 1.55 ​ September 15, 2037 FFBI Capital Trust I ​ LIBOR plus 2.80 ​ 6.88 ​ 2.92 ​ April 6, 2034 National Bancorp Statutory Trust I ​ LIBOR plus 2.90 ​ 7.67 ​ 3.10 ​ December 15, 2037 ​ ​ 126 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The distribution rate payable on the debentures is cumulative and payable quarterly in arrears. The Company has the right, subject to events in default, to defer payments of interest on the junior subordinated debentures at any time by extending the interest payment period for a period not exceeding 20 quarterly periods with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the junior subordinated debentures. The capital securities are subject to mandatory redemption upon payment of the junior subordinated debentures and carry an interest rate identical to that of the related debenture. The junior subordinated debentures maturity dates may be shortened if certain conditions are met, or at any time within 90 days following the occurrence and continuation of certain changes in either tax treatment or the capital treatment of the junior subordinated debentures or the capital securities. If the junior subordinated debentures are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest. The Company has the right to terminate each Capital Trust and cause the junior subordinated debentures to be distributed to the holders of the capital securities in liquidation of such trusts. Under current banking regulations, bank holding companies are allowed to include qualifying trust preferred securities in their Tier 1 Capital for regulatory capital purposes, subject to a 25% limitation to all core (Tier 1) capital elements, net of goodwill and other intangible assets less any associated deferred tax liability. As of December 31, 2022 and 2021, 100 % of the trust preferred securities qualified as Tier 1 capital under the final rule adopted in March 2005. NOTE 14 – 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 to 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. ​ 127 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 are 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ Notional ​ Fair ​ Notional ​ Fair ​ Amount Value Amount Value ​ ​ (dollars in thousands) Fair value recorded in other assets ​ $ 17,000 ​ $ 629 ​ $ — ​ $ — Fair value recorded in other liabilities ​ ​ — ​ ​ — ​ ​ 17,000 ​ ​ ( 680 ) ​ As of December 31, 2022, the interest rate swap agreements designated as cash flow hedges had contractual maturities between 2024 and 2025. As of December 31, 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. In 2019, the Company had an interest rate swap contract with a notional amount of $ 10.0 million designated as a cash flow hedge on variable-rate loans. Beginning April 1, 2019, this hedging relationship was no longer considered highly effective, and the Company discontinued hedge accounting. In accordance with hedge accounting guidance, the net unrealized gain associated with the discontinued hedging relationship, recorded within accumulated other comprehensive income, was reclassified into earnings through April 7, 2020, the period the hedged forecasted transactions affected earnings. For the years ended December 31, 2022, 2021, and 2020, 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 (loss) ​ ​ Year Ended December 31, ​ 2022 ​ 2021 2020 Designated as cash flow hedges: ​ (dollars in thousands) Taxable loan interest income ​ $ — ​ $ — ​ $ 64 Junior subordinated debentures interest expense ​ ​ ( 126 ) ​ ​ ( 412 ) ​ ​ ( 302 ) Total ​ $ ( 126 ) ​ $ ( 412 ) ​ $ ( 238 ) ​ ​ 128 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ ​ 106,995 ​ ​ 6,981 ​ ​ 3,880 ​ ​ 75 Total fair value recorded in other assets ​ $ 106,995 ​ $ 6,981 ​ $ 115,921 ​ $ 8,697 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value recorded in other liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swaps with a commercial borrower counterparty ​ $ 106,995 ​ $ ( 6,981 ) ​ $ 3,880 ​ $ ( 75 ) Interest rate swaps with a financial institution counterparty ​ ​ — ​ ​ — ​ ​ 112,041 ​ ​ ( 8,622 ) Total fair value recorded in other liabilities ​ $ 106,995 ​ $ ( 6,981 ) ​ $ 115,921 ​ $ ( 8,697 ) ​ As of December 31, 2022, the interest rate swap agreements not designated as hedging instruments had contractual maturities between 2023 and 2042. As of December 31, 2021, the Company had $ 7.5 million of debt securities pledged and held in safekeeping at the financial institution counterparty. 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 for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 2020 Not designated as hedging instruments: ​ (dollars in thousands) Gross gains ​ $ 16,002 ​ $ 13,773 ​ $ 24,758 Gross losses ​ ​ ( 16,002 ) ​ ​ ( 13,773 ) ​ ​ ( 24,758 ) Net gains (losses) ​ $ — ​ $ — ​ $ — ​ ​ 129 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 15 – ACCUMULATED OTHER COMPREHENSIVE INCOME The following table presents the activity and accumulated balances for components of other comprehensive income (loss) for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized Gains (Losses) ​ ​ ​ ​ ​ ​ ​ ​ on Debt Securities ​ ​ ​ ​ ​ ​ ​ Available-for-Sale Held-to-Maturity Derivatives Total ​ ​ (dollars in thousands) Balance, December 31, 2019 ​ $ 8,659 ​ $ ( 131 ) ​ $ ( 696 ) ​ $ 7,832 Other comprehensive income (loss) before reclassifications ​ ​ 15,272 ​ ​ — ​ ​ ( 1,084 ) ​ ​ 14,188 Reclassifications ​ ​ — ​ ​ 18 ​ ​ 238 ​ ​ 256 Other comprehensive income (loss), before tax ​ ​ 15,272 ​ ​ 18 ​ ​ ( 846 ) ​ ​ 14,444 Income tax expense (benefit) ​ ​ 4,353 ​ ​ 5 ​ ​ ( 235 ) ​ ​ 4,123 Other comprehensive income (loss), after tax ​ ​ 10,919 ​ ​ 13 ​ ​ ( 611 ) ​ ​ 10,321 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 (loss) income before reclassifications ​ ​ ( 24,798 ) ​ ​ — ​ ​ 366 ​ ​ ( 24,432 ) Reclassifications ​ ​ — ​ ​ 687 ​ ​ 412 ​ ​ 1,099 Other comprehensive (loss) income, before tax ​ ​ ( 24,798 ) ​ ​ 687 ​ ​ 778 ​ ​ ( 23,333 ) Income tax (benefit) expense ​ ​ ( 7,069 ) ​ ​ 196 ​ ​ 222 ​ ​ ( 6,651 ) Other comprehensive (loss) income, after tax ​ ​ ( 17,729 ) ​ ​ 491 ​ ​ 556 ​ ​ ( 16,682 ) 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 (loss) income before reclassifications ​ ​ ( 105,459 ) ​ ​ — ​ ​ 1,183 ​ ​ ( 104,276 ) Reclassifications ​ ​ — ​ ​ 1,723 ​ ​ 126 ​ ​ 1,849 Other comprehensive (loss) income, before tax ​ ​ ( 105,459 ) ​ ​ 1,723 ​ ​ 1,309 ​ ​ ( 102,427 ) Income tax (benefit) expense ​ ​ ( 30,061 ) ​ ​ 491 ​ ​ 373 ​ ​ ( 29,197 ) Other comprehensive (loss) income, after tax ​ ​ ( 75,398 ) ​ ​ 1,232 ​ ​ 936 ​ ​ ( 73,230 ) Balance, December 31, 2022 ​ $ ( 61,998 ) ​ $ ( 9,946 ) ​ $ 185 ​ $ ( 71,759 ) ​ 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 (losses) 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 14 for additional information. ​ 130 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 16 – INCOME TAXES Allocation of income tax expense between current and deferred portions for the years ended December 31 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ (dollars in thousands) Current ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ 15,194 ​ $ 11,330 ​ $ 8,358 State ​ ​ 7,459 ​ ​ 6,053 ​ ​ 4,709 Total current ​ ​ 22,653 ​ ​ 17,383 ​ ​ 13,067 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ ​ ( 2,045 ) ​ ​ 1,945 ​ ​ ( 226 ) State ​ ​ ( 874 ) ​ ​ 963 ​ ​ ( 113 ) Total deferred ​ ( 2,919 ) ​ 2,908 ​ ( 339 ) Income tax expense ​ $ 19,734 ​ $ 20,291 ​ $ 12,728 ​ Income tax expense differs from the statutory federal rate for the years ended December 31 due to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ Amount Percentage ​ Amount Percentage ​ Amount Percentage ​ ​ (dollars in thousands) ​ Federal income tax, at statutory rate ​ $ 16,000 ​ 21.0 % $ 16,078 ​ 21.0 % $ 10,410 ​ 21.0 % Increase (decrease) resulting from: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federally tax exempt interest income ​ ​ ( 1,618 ) ​ ( 2.1 ) ​ ​ ( 1,426 ) ​ ( 1.9 ) ​ ​ ( 1,470 ) ​ ( 3.0 ) ​ State taxes, net of federal benefit ​ 5,285 6.9 ​ ​ 5,430 7.1 ​ ​ 3,631 7.4 ​ Other ​ 67 0.1 ​ ​ 209 0.3 ​ ​ 157 0.3 ​ Income tax expense ​ $ 19,734 25.9 % $ 20,291 26.5 % $ 12,728 25.7 % ​ 131 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The components of the deferred tax assets and liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ (dollars in thousands) Deferred tax assets ​ ​ ​ ​ Allowance for loan losses ​ $ 7,151 $ 6,756 Compensation related ​ ​ 2,623 ​ 2,314 Deferred loan fees ​ ​ 965 ​ ​ 1,059 Nonaccrual interest ​ 480 ​ ​ 489 Foreclosed assets ​ 142 ​ ​ 43 Goodwill ​ 153 ​ ​ 316 Net unrealized losses on debt securities ​ ​ 29,874 ​ ​ 304 Other ​ 5,237 ​ ​ 853 Total deferred tax assets ​ 46,625 ​ ​ 12,134 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities ​ ​ ​ ​ ​ ​ Fixed asset depreciation ​ 3,940 ​ ​ 4,188 Mortgage servicing rights ​ 2,868 ​ ​ 2,262 Other purchase accounting adjustments ​ ​ 610 ​ ​ 776 Intangible assets ​ ​ 214 ​ ​ 374 Prepaid assets ​ 756 ​ ​ 664 Other ​ 2,756 ​ ​ 505 Total deferred tax liabilities ​ 11,144 ​ ​ 8,769 Net deferred tax asset ​ $ 35,481 ​ $ 3,365 ​ ​ ​ ​ ​ NOTE 17 – 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. ​ 132 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following table sets forth the computation of basic and diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ (dollars in thousands) Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 56,456 ​ $ 56,271 ​ $ 36,845 Earnings allocated to participating securities ​ ​ ( 66 ) ​ ​ ( 104 ) ​ ​ ( 93 ) Numerator for earnings per share - basic and diluted ​ $ 56,390 ​ $ 56,167 ​ $ 36,752 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding ​ ​ 28,853,697 ​ ​ 27,795,806 ​ ​ 27,457,306 Dilutive effect of outstanding restricted stock units ​ ​ 65,619 ​ ​ 15,487 ​ ​ — Weighted average common shares outstanding, including all dilutive potential shares ​ ​ 28,919,316 ​ ​ 27,811,293 ​ ​ 27,457,306 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share - Basic ​ $ 1.95 ​ $ 2.02 ​ $ 1.34 Earnings per share - Diluted ​ $ 1.95 ​ $ 2.02 ​ $ 1.34 ​ ​ ​ ​ NOTE 18 – DEFERRED COMPENSATION The Company maintained a supplemental executive retirement plan (SERP) for certain key executive officers. The SERP benefit payments were scheduled to be paid in equal monthly installments over 30 years . In June 2019, the Company approved the termination of the SERP, and a lump sum payment was made in June 2020 to each participant equal to the present value of any remaining installment payments. As of December 31, 2022 and 2021, there was no remaining deferred compensation liability for the SERP. During the year ended December 31, 2020, the Company recognized deferred compensation expense for the SERP of $ 1.7 million. NOTE 19 – EMPLOYEE BENEFIT PLANS Profit Sharing Plan During the years ended December 31, 2022, 2021, and 2020, the Company’s profit sharing plan contribution expense amounted to $ 1.3 million, $ 1.3 million, and $ 1.1 million, respectively. The Company’s contributions vest to employees ratably over a six-year period. Medical Insurance Benefits The Company is partially self-insured for medical claims filed by its employees. As of December 31, 2022 and 2021, the Company’s maximum aggregate liability under the plan was $ 6.4 million and $ 6.6 million, respectively. During the years ended December 31, 2022, 2021, and 2020, medical benefits expense amounted to $ 4.9 million, $ 4.2 million, and $ 4.8 million, respectively. ​ 133 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 20 – STOCK-BASED COMPENSATION PLANS The Company adopted the HBT Financial, Inc. Omnibus Incentive Plan (the “Omnibus Incentive Plan”) in 2019. The Omnibus Incentive Plan provides for grants of (i) stock options, (ii) stock appreciation rights, (iii) restricted shares, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards and (vii) other cash-based awards to eligible employees, non-employee directors and consultants of the Company. The maximum number of shares of common stock available for issuance under the Omnibus Incentive Plan is 1,820,000 shares. The following is a summary of stock-based compensation expense (benefit): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 ​ ​ (dollars in thousands) Restricted stock units ​ $ 1,334 ​ $ 579 ​ $ 351 Performance restricted stock units ​ ​ 615 ​ ​ 185 ​ ​ — Total awards classified as equity ​ ​ 1,949 ​ ​ 764 ​ ​ 351 Stock appreciation rights ​ ​ 88 ​ ​ 226 ​ ​ ( 137 ) Total stock-based compensation expense ​ $ 2,037 ​ $ 990 ​ $ 214 ​ 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. ​ 134 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 years ended December 31, 2022, 2021, and 2020, the total grant date fair value of the restricted stock units granted was $ 1.3 million, $ 0.9 million, and $ 1.4 million, respectively, based on the grant date closing prices. The total intrinsic value of restricted stock units that vested during the year ended December 31, 2022 and 2021 were $ 0.7 million and $ 0.3 million, respectively. The following is a summary of outstanding restricted stock unit activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Restricted ​ Grant Date ​ ​ Stock Units ​ Fair Value Balance, December 31, 2019 ​ — ​ $ — Granted ​ 73,700 ​ ​ 18.98 Vested ​ — ​ ​ — Forfeited ​ ( 2,700 ) ​ ​ 19.03 Balance, December 31, 2020 ​ 71,000 ​ $ 18.98 Granted ​ 59,994 ​ ​ 15.81 Vested ​ ( 20,225 ) ​ ​ 18.86 Forfeited ​ ( 1,525 ) ​ ​ 18.11 Balance, December 31, 2021 ​ 109,244 ​ $ 17.27 Granted ​ 66,995 ​ ​ 18.81 Vested ​ ( 34,925 ) ​ ​ 17.26 Forfeited ​ ( 1,328 ) ​ ​ 18.35 Balance, December 31, 2022 ​ 139,986 ​ $ 18.01 ​ As of December 31, 2022, unrecognized compensation cost related to non-vested restricted stock units was $ 1.2 million. This cost is expected to be recognized over the weighted average remaining contractual term of 2.0 years. ​ 135 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 years ended December 31, 2022 and 2021, the total fair value of the performance restricted stock units granted was $ 0.5 million and $ 0.6 million, respectively, based on the grant date closing prices and an assessment of the probable outcome of the performance condition on the grant date. Performance conditions are based on either the average annual return on average tangible common equity during the performance period or average loan balances for a specified geographic region during the performance period, with downward adjustments if certain credit quality criteria are not maintained. The following is a summary of performance restricted stock unit activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Performance ​ Average ​ ​ Restricted ​ Grant Date ​ ​ Stock Units ​ Fair Value Balance, December 31, 2019 ​ — ​ $ — Granted ​ — ​ ​ — Vested ​ — ​ ​ — Forfeited ​ — ​ ​ — Balance, December 31, 2020 ​ — ​ $ — Granted ​ 38,344 ​ ​ 15.72 Vested ​ — ​ ​ — Forfeited ​ — ​ ​ — Balance, December 31, 2021 ​ 38,344 ​ $ 15.72 Granted ​ 23,723 ​ ​ 19.14 Vested ​ — ​ ​ — Forfeited ​ — ​ ​ — Balance, December 31, 2022 ​ 62,067 ​ $ 17.02 ​ As of December 31, 2022, unrecognized compensation cost related to non-vested performance restricted stock units was $ 0.3 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 1.6 years. ​ 136 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Stock ​ Average ​ ​ Appreciation ​ Grant Date ​ ​ Rights ​ Assigned Value Balance, December 31, 2019 ​ 110,160 ​ $ 16.32 Granted ​ — ​ ​ — Exercised ​ — ​ ​ — Expired ​ — ​ ​ — Forfeited ​ ( 4,590 ) ​ ​ 16.32 Balance, December 31, 2020 ​ 105,570 ​ $ 16.32 Granted ​ — ​ ​ — Exercised ​ ( 6,120 ) ​ ​ 16.32 Expired ​ ( 1,530 ) ​ ​ 16.32 Forfeited ​ — ​ ​ — Balance, December 31, 2021 ​ 97,920 ​ $ 16.32 Granted ​ — ​ ​ — Exercised ​ ( 24,480 ) ​ ​ 16.32 Expired ​ — ​ ​ — Forfeited ​ — ​ ​ — Balance, December 31, 2022 ​ 73,440 ​ $ 16.32 ​ A further summary of outstanding stock appreciation rights as of December 31, 2022, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Stock Appreciation Rights ​ Remaining Grant Date Assigned Values Outstanding Exercisable Contractual Term $ 16.32 ​ 73,440 ​ 67,320 ​ 6.7 years ​ As of December 31, 2022, unrecognized compensation cost related to non-vested stock appreciation rights was $ 28 thousand. ​ 137 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ As of December 31, 2022 and 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 ​ Risk-free interest rate ​ ​ 3.95 % ​ 1.40 % Expected volatility ​ ​ 36.54 % ​ 35.52 % Expected life (in years) ​ ​ 6.7 ​ ​ 7.7 ​ Expected dividend yield ​ ​ 3.27 % ​ 3.20 % ​ As of December 31, 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 21 – REGULATORY CAPITAL The Company (on a consolidated basis) and the Bank are each subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the consolidated financial statements of the Company and the Bank. Additionally, the ability of the Company to pay dividends to its stockholders is dependent upon the ability of the Bank to pay dividends to the Company. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the 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 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 December 31, 2022 and 2021, the capital conservation buffer was 2.5 % of risk-weighted assets. As of December 31, 2022, the Company and the Bank meet all capital adequacy requirements to which they are subject. ​ 138 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The actual and required capital amounts and ratios of HBT Financial, Inc. (consolidated) and the Bank are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actual ​ For Capital Adequacy Purposes ​ To Be Well Capitalized Under Prompt Corrective Action Provisions ​ December 31, 2022 Amount Ratio Amount Ratio Amount Ratio ​ ​ ​ (dollars in thousands) ​ Total Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 516,556 ​ 16.27 % $ 254,052 ​ 8.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 489,316 ​ 15.43 ​ ​ 253,643 ​ 8.00 ​ $ 317,054 ​ 10.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 451,828 ​ 14.23 % $ 190,539 ​ 6.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 463,983 ​ 14.63 ​ ​ 190,233 ​ 6.00 ​ $ 253,643 ​ 8.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Equity Tier 1 Capital (to Risk Weighted Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 415,213 ​ 13.07 % $ 142,904 ​ 4.50 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 463,983 ​ 14.63 ​ ​ 142,674 ​ 4.50 ​ $ 206,085 ​ 6.50 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Capital (to Average Assets) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated HBT Financial, Inc. ​ $ 451,828 ​ 10.48 % $ 172,427 ​ 4.00 % ​ N/A ​ N/A ​ Heartland Bank and Trust Company ​ ​ 463,983 ​ 10.78 ​ ​ 172,240 ​ 4.00 ​ $ 215,300 ​ 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 % ​ ​ 139 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 22 – 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 are summarized in Note 1. There were no transfers between levels during the years ended December 31, 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 as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value ​ ​ ​ (dollars in thousands) Debt securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury ​ $ 154,515 ​ $ — ​ $ — ​ $ 154,515 U.S. government agency ​ ​ — ​ ​ 55,157 ​ ​ — ​ ​ 55,157 Municipal ​ ​ — ​ ​ 243,829 ​ ​ — ​ ​ 243,829 Mortgage-backed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency residential ​ ​ — ​ ​ 195,441 ​ ​ — ​ ​ 195,441 Agency commercial ​ ​ — ​ ​ 132,888 ​ ​ — ​ ​ 132,888 Corporate ​ ​ — ​ ​ 61,694 ​ ​ — ​ ​ 61,694 Equity securities with readily determinable fair values ​ ​ 3,029 ​ ​ — ​ ​ — ​ ​ 3,029 Mortgage servicing rights ​ ​ — ​ ​ — ​ ​ 10,147 ​ ​ 10,147 Derivative financial assets ​ ​ — ​ ​ 7,610 ​ ​ — ​ ​ 7,610 Derivative financial liabilities ​ ​ — ​ ​ 6,981 ​ ​ — ​ ​ 6,981 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 December 31, 2022. ​ 140 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 statements 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 statements 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 statements 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 statements of income. ​ 141 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following tables present additional information about the unobservable inputs used in the fair value measurement of the mortgage servicing rights (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Fair Value Valuation Technique Unobservable Inputs Range (Weighted Average) Mortgage servicing rights ​ $ 10,147 ​ Discounted cash flows ​ Constant pre-payment rates (CPR) ​ 5.3 % to 59.7 % ( 8.2 %) ​ ​ ​ ​ ​ ​ ​ Discount rate ​ 9.0 % to 11.7 % ( 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 as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value ​ ​ ​ (dollars in thousands) Loans held for sale ​ $ — ​ $ 615 ​ $ — ​ $ 615 Collateral-dependent impaired loans ​ ​ — ​ ​ — ​ ​ 17,460 ​ ​ 17,460 Bank premises held for sale ​ ​ — ​ ​ — ​ ​ 235 ​ ​ 235 Foreclosed assets ​ ​ — ​ ​ — ​ ​ 3,030 ​ ​ 3,030 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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. ​ 142 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Collateral-dependent Impaired Loans The fair value of collateral-dependent impaired loans is estimated based on the fair value of the underlying collateral supporting the loan. Collateral values are estimated using Level 3 inputs based on appraisals and other valuation estimates of the underlying collateral and 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 discounts to consider lack of marketability and estimated costs to sell. These discounts and estimates are developed by management by comparison to historical results. ​ 143 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following tables present quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Fair Value Valuation Technique Unobservable Inputs Range (Weighted Average) Collateral-dependent impaired loans ​ $ 17,460 ​ Appraisal of collateral ​ Appraisal adjustments ​ Not meaningful Bank premises held for sale ​ ​ 235 ​ Appraisal ​ Appraisal adjustments ​ 7 % ( 7 %) Foreclosed assets ​ ​ 3,030 ​ 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. 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. 144 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 debentures 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. ​ 145 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ The following table provides summary information on the carrying amounts and estimated fair values of the Company’s financial instruments as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ December 31, 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 ​ $ 114,159 ​ $ 114,159 ​ $ 409,268 ​ $ 409,268 Debt securities held-to-maturity ​ Level 2 ​ ​ 541,600 ​ ​ 478,801 ​ ​ 336,185 ​ ​ 336,027 Restricted stock ​ Level 3 ​ ​ 7,965 ​ ​ 7,965 ​ ​ 2,739 ​ ​ 2,739 Loans, net ​ Level 3 ​ ​ 2,594,920 ​ ​ 2,566,930 ​ ​ 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 ​ ​ 19,506 ​ ​ 19,506 ​ ​ 14,901 ​ ​ 14,901 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time deposits ​ Level 3 ​ ​ 262,968 ​ ​ 253,619 ​ ​ 328,208 ​ ​ 327,779 Securities sold under agreements to repurchase ​ Level 2 ​ ​ 43,081 ​ ​ 43,081 ​ ​ 61,256 ​ ​ 61,256 Subordinated notes ​ Level 3 ​ ​ 39,395 ​ ​ 37,205 ​ ​ 39,316 ​ ​ 41,602 Junior subordinated debentures ​ Level 3 ​ ​ 37,780 ​ ​ 37,030 ​ ​ 37,714 ​ ​ 33,640 Accrued interest payable ​ Level 2 ​ ​ 1,363 ​ ​ 1,363 ​ ​ 1,043 ​ ​ 1,043 ​ The Company estimated the fair value of lending related commitments as described in Note 23 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. NOTE 23 – 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 as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contractual Amount ​ December 31, 2022 December 31, 2021 ​ ​ ​ (dollars in thousands) Commitments to extend credit ​ $ 756,885 ​ $ 609,947 Standby letters of credit ​ ​ 17,785 ​ ​ 12,960 ​ ​ 146 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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. Lease Commitments The Company leases office space under operating leases. Certain leases contain renewal options for periods from three to five years at their fair rental value at the time of renewal. Future minimum lease payments under these leases are as follows (dollars in thousands): ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 $ 191 2024 ​ 123 2025 ​ 42 Total $ 356 ​ 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. PLB Investments LLC, John Kuehner, and A.S. Palmer Investments LLC v. Heartland Bank and Trust Company and PNC Bank N.A., In the United States District Court for the Northern District of Illinois, Case No. 1:20-cv-1023 (“Class Action”); Melanie E. Damian, As Receiver of Today’s Growth Consultant, Inc. (dba The Income Store) v. Heartland Bank and Trust Company and PNC Bank N.A., In the United States District Court for the Northern District of Illinois, Case No. 1:20-cv-7819 (“Receiver’s Action”) The Bank was a defendant in the purported Class Action lawsuit that was filed on February 12, 2020, in the U.S. District Court for the Northern District of Illinois. The plaintiffs in the Class Action alleged that the Bank negligently enabled and facilitated a fraudulent, Ponzi-like scheme perpetrated by Today’s Growth Consultant, Inc. (dba The Income Store) (“TGC”). Additionally, the Receiver for TGC filed the Receiver’s Action on December 30, 2020, in the U.S. District Court for the Northern District of Illinois, with similar allegations. On February 20, 2023, the Bank reached an agreement in principle to settle both the Class Action and Receiver’s Action in which the Bank would make one-time cash payments totaling $ 13.0 million, without admitting fault, to release the Bank from further liability and claims in both the Class Action and Receiver’s Action. 147 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Pursuant to the agreement in principle, the parties would settle and dismiss the Class Action and Receiver’s Action and seek the entry of bar orders from the U.S. District Court for the Northern District of Illinois (the “Court”) prohibiting any continued or future claims against the Bank and its related parties relating to the Class Action and the Receiver’s Action, whether asserted to date or not. If definitive settlement agreements, including the bar orders described in the preceding sentence, are approved by the Court and are not subject to appeal, the Bank will make one-time cash payments totaling $ 13.0 million. The agreement in principle is subject to the execution and delivery of definitive settlement agreements reflecting the terms of the agreement in principle, notice to TGC’s investor claimants and final, non-appealable approvals by the Court. While the Bank believes that the proposed settlements are consistent with the terms of similar settlements that have been approved by other courts and were not successfully appealed, it is possible that the Court may decide not to approve the definitive settlement agreements or that the Seventh Circuit Court of Appeals may decide to accept an appeal thereof. The proposed settlements do not include any admission of liability or wrongdoing by the Bank, and the Bank expressly denies any liability or wrongdoing with respect to any matter alleged in the Class Action and Receiver’s Action. The Bank has agreed in principle to the settlements to avoid the cost, risks and distraction of continued litigation. The Company believes the proposed settlements are in the best interests of the Company and its shareholders. Accordingly, the Bank recorded a $ 13.0 million accrual related to these matters as of December 31, 2022. The Bank’s insurer has agreed to reimburse $ 7.4 million of the settlement payment which was recorded as an insurance recovery receivable as of December 31, 2022. During the fourth quarter and year ended December 31, 2022, the estimated net settlement amount of $ 5.6 million was included in other noninterest expense in the consolidated statements of income. 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. The plaintiff, a customer of the Bank, alleges that the Bank breached its contract with the plaintiff by (1) charging multiple insufficient funds fees or overdraft fees on a single customer-initiated transaction, and (2) charging overdraft fees for transactions that were authorized on a positive account balance, but when settled, settled into a negative balance. Miller, et al v. State Bank of Lincoln and Heartland Bank and Trust Company The Bank is a defendant in a purported class action lawsuit filed in May 2020, in the Circuit Court of Logan County, Illinois. The plaintiff, a customer of State Bank of Lincoln, which previously merged with the Bank, alleges that the Bank breached its contract with the plaintiff by charging multiple insufficient funds fees or overdraft fees on a single customer-initiated transaction. The Bank intends to vigorously defend in both the DeBaere and Miller cases. However, the Company believes an unfavorable outcome in each case 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 has been recorded related to these matters of $ 2.6 million in the aggregate during the fourth quarter and year ended December 31, 2022. While the amount recorded reflects management’s best estimate as of December 31, 2022, the Company cannot yet offer an opinion on the estimated range of possible loss. ​ 148 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 24 – RELATED PARTY TRANSACTIONS Loans As of December 31, 2022 and 2021, loans to directors, executive officers, principal shareholders and their affiliated entities (“related parties”) amounted to $ 2.2 million and $ 2.6 million, respectively. These loans were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing for comparable loans with persons not related to us. Deposits Deposits of related parties amounted to $ 22.0 million and $ 4.0 million as of December 31, 2022 and 2021, respectively. NOTE 25 – CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS Following are the condensed parent company only financial statements of HBT Financial. ​ Condensed Parent Company Only Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 ASSETS ​ (dollars in thousands) Cash and cash equivalents ​ $ 24,278 ​ $ 25,752 Investment in subsidiaries: ​ ​ ​ ​ ​ ​ Bank ​ ​ 422,217 ​ ​ 461,339 Non-bank ​ ​ 1,165 ​ ​ 1,165 Other assets ​ ​ 5,338 ​ ​ 1,283 Total assets ​ $ 452,998 ​ $ 489,539 ​ ​ ​ ​ ​ ​ ​ LIABILITIES ​ ​ ​ ​ ​ ​ Subordinated notes ​ $ 39,395 ​ $ 39,316 Junior subordinated debentures ​ ​ 37,780 ​ ​ 37,714 Other liabilities ​ ​ 2,191 ​ ​ 628 Total liabilities ​ ​ 79,366 ​ ​ 77,658 ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS' EQUITY ​ ​ 373,632 ​ ​ 411,881 Total liabilities and stockholders' equity ​ $ 452,998 ​ $ 489,539 ​ ​ 149 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Condensed Parent Company Only Statements of Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31 ​ 2022 2021 ​ 2020 INCOME ​ (dollars in thousands) Dividends received from subsidiaries: ​ ​ ​ ​ ​ ​ ​ ​ ​ Bank ​ $ 28,000 ​ $ 20,000 ​ $ 17,600 Non-bank ​ ​ — ​ ​ — ​ ​ 36 Undistributed earnings from subsidiaries: ​ ​ ​ ​ ​ ​ ​ ​ ​ Bank ​ ​ 35,044 ​ ​ 41,227 ​ ​ 22,462 Non-bank ​ ​ — ​ ​ — ​ ​ ( 36 ) Other income ​ ​ 51 ​ ​ 454 ​ ​ 215 Total income ​ ​ 63,095 ​ ​ 61,681 ​ ​ 40,277 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EXPENSES ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ 3,666 ​ ​ 3,305 ​ ​ 2,189 Other expense ​ ​ 5,292 ​ ​ 3,741 ​ ​ 2,519 Total expenses ​ ​ 8,958 ​ ​ 7,046 ​ ​ 4,708 INCOME BEFORE INCOME TAX BENEFIT ​ ​ 54,137 ​ ​ 54,635 ​ ​ 35,569 INCOME TAX BENEFIT ​ ​ ( 2,319 ) ​ ​ ( 1,636 ) ​ ​ ( 1,276 ) NET INCOME ​ $ 56,456 ​ $ 56,271 ​ $ 36,845 ​ ​ 150 Table of Contents HBT FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Condensed Parent Company Only Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES ​ (dollars in thousands) Net income ​ $ 56,456 ​ $ 56,271 ​ $ 36,845 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Undistributed earnings of consolidated subsidiaries ​ ​ ( 35,044 ) ​ ​ ( 41,227 ) ​ ​ ( 22,426 ) Stock-based compensation ​ ​ 1,949 ​ ​ 764 ​ ​ 351 Amortization of discount and issuance costs on subordinated notes and debentures ​ ​ 145 ​ ​ 144 ​ ​ 92 Net gain on sale of foreclosed assets ​ ​ — ​ ​ ( 74 ) ​ ​ — Changes in other assets and liabilities, net ​ ​ 769 ​ ​ ( 2,231 ) ​ ​ 1,633 Net cash provided by operating activities ​ ​ 24,275 ​ ​ 13,647 ​ ​ 16,495 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital contribution to bank subsidiary ​ ​ — ​ ​ — ​ ​ — Capital contribution to non-bank subsidiary ​ ​ — ​ ​ — ​ ​ — Purchase of securities ​ ​ — ​ ​ ( 48 ) ​ ​ ( 17 ) Purchase of foreclosed assets from Heartland Bank ​ ​ ( 2,325 ) ​ ​ — ​ ​ — Proceeds from sale of foreclosed assets ​ ​ — ​ ​ 74 ​ ​ — Net cash paid for acquisition of NXT Bancorporation, Inc. ​ ​ — ​ ​ ( 10,411 ) ​ ​ — Net cash used in investing activities ​ ​ ( 2,325 ) ​ ​ ( 10,385 ) ​ ​ ( 17 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of subordinated notes, net of issuance costs ​ ​ — ​ ​ — ​ ​ 39,211 Issuance of common stock ​ ​ — ​ ​ — ​ ​ — Taxes paid related to the vesting of restricted stock units ​ ​ ( 57 ) ​ ​ — ​ ​ — Repurchase of common stock ​ ​ ( 4,783 ) ​ ​ ( 4,906 ) ​ ​ — Cash dividends and dividend equivalents paid ​ ​ ( 18,584 ) ​ ​ ( 16,753 ) ​ ​ ( 16,518 ) Net cash (used in) provided by financing activities ​ ​ ( 23,424 ) ​ ​ ( 21,659 ) ​ ​ 22,693 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET CHANGE IN CASH AND EQUIVALENTS ​ ​ ( 1,474 ) ​ ​ ( 18,397 ) ​ ​ 39,171 CASH AND CASH EQUIVALENTS ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning of year ​ ​ 25,752 ​ ​ 44,149 ​ ​ 4,978 End of year ​ $ 24,278 ​ $ 25,752 ​ $ 44,149 ​ ​ ​ 151 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES. None.