What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-07 compared with 2024-03-06 · 392 added, 363 removed, 1926 unchanged (28% of the section changed)

15 unchanged sentences

We have audited the accompanying consolidated balance sheets of HBT Financial, Inc.

and its subsidiaries (the Company) as of December 31, 2023 and 2022, 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, 2023, and the related notes to the consolidated financial statements (collectively, the financial statements).

and Subsidiaries’ (the Company) as of December 31, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 7, 2025, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

Adoption of New Accounting Standard

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for credit losses on financial instruments in 2023 due to the adoption of Accounting Standards Update No.

As discussed in Note 1 to the financial statements, the Company changed its method of accounting for credit losses on financial instruments in 2023 due to the adoption of Accounting Standards Update No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

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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.

We are a public accounting firm registered with the 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.

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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.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses—Loans

As described in Notes 1 and 4 to the financial statements, the Company’s allowance for credit losses totaled $42.0 million, which consists of a reserve on loans collectively evaluated for impairment of $39.0 million and a reserve on loans individually evaluated of $3.0 million at December 31, 2024.

The allowance for credit losses is measured on a collective loan pool basis when similar risk characteristics exist.

A loan may be evaluated on an individual basis based on disparate risk characteristics.

Management estimates the allowance for credit losses for pooled loans utilizing a discounted cash flow (DCF) method or weighted average remaining maturity (WARM) method.

The DCF method estimates a probability of default with a loss given default applied to future cash flows that are adjusted to present value.

The WARM method estimates expected losses through application of the Company’s historical losses.

The measurement of expected credit losses on collectively evaluated loans is based on relevant information about past events, current conditions and reasonable and supportable forecasts that affect the collectability of the amortized cost basis.

Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions.

The calculation also contemplates that the Company may not be able to make or obtain such forecasts for the entire life of the financial assets and employs a reversion to historical credit loss information.

The development of estimated prepayments, probability of default, loss given default, reasonable and supportable forecasts, and qualitative adjustments are inherently subjective as they require estimates that are susceptible to significant revision as more information becomes available.

We identified the judgment in developing appropriate assumptions on which to base expected losses from economic forecasts and other qualitative factors as a critical audit matter, as auditing the underlying adjustments required significant auditor judgment as amounts determined by management rely on analysis that is highly subjective and includes significant estimation uncertainty.

Our audit procedures related to the assumptions to base expected losses from economic forecasts and other qualitative factors include the following, among others:

• We obtained an understanding of the relevant controls related to the evaluation and establishment of the economic forecasts and qualitative factors, and tested such controls for design and implementation and operating effectiveness, including management's review of the allowance in support of adjustments.

• We evaluated management's rationale for significant assumptions.

• We evaluated the reasonableness of data inputs used as a basis for the adjustments related to the qualitative factors, and tested the completeness and accuracy of the data utilized by comparing to internal and external source data.

• We evaluated the directional consistency and magnitude of the resulting qualitative component of the allowance for credit losses, as compared to internal and external source data, and how the data correlated with the risk categorization and numeric framework established by management.

/s/ RSM US LLP

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CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data) December 31, 2023 December 31, 2022

(dollars in thousands, except per share data) December 31,

2024 December 31,

Cash and due from banks $ 29,552 $ 26,256

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Federally tax exempt 4,523 4,189 3,135

Debt securities:

Taxable 25,801 25,746 23,237

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Issuance of common stock upon vesting of restricted stock units, net of tax withholdings 31,944 — ( 57 ) — — — ( 57 )

Issuance of common stock in NXT acquisition 1,799,016 18 29,252 — — — 29,270

Repurchase of common stock ( 265,379 ) — — — — ( 4,783 ) ( 4,783 )

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Balance, December 31, 2022 28,752,626 293 222,783 232,004 ( 71,759 ) ( 9,689 ) 373,632

Cumulative effect of change in accounting principle (ASU 2016-13) — — — ( 6,922 ) — — ( 6,922 )

Net income — — — 65,842 — — 65,842

Other comprehensive loss — — — — ( 73,230 ) — ( 73,230 )

Other comprehensive income — — — — 14,596 — 14,596

Stock-based compensation — — 1,953 — — — 1,953

Issuance of common stock upon vesting of restricted stock units, net of tax withholdings 43,607 — ( 181 ) — — — ( 181 )

Issuance of common stock in Town and Country acquisition 3,378,600 34 71,322 — — — 71,356

Repurchase of common stock ( 479,005 ) — — — — ( 8,907 ) ( 8,907 )

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Issuance of common stock upon vesting of restricted stock units, net of tax withholdings 96,341 1 ( 332 ) — — — ( 331 )

Issuance of common stock in Town and Country acquisition 3,378,600 34 71,322 — — — 71,356

Repurchase of common stock ( 232,803 ) — — — — ( 4,423 ) ( 4,423 )

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Increase in cash surrender value of bank owned life insurance ( 668 ) ( 566 ) ( 164 )

Decrease (increase) in accrued interest receivable ( 1,915 ) ( 4,605 ) 240

Net gain on bank owned life insurance proceeds ( 247 ) — —

Increase in accrued interest receivable ( 236 ) ( 1,915 ) ( 4,605 )

Decrease (increase) in other assets 3,053 2,174 ( 8,007 )

1 unchanged sentence

Net cash provided by operating activities 89,372 65,829 72,586

See accompanying Notes to Consolidated Financial Statements

HBT FINANCIAL, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Year Ended December 31,

(dollars in thousands) 2024 2023 2022

CASH FLOWS FROM INVESTING ACTIVITIES

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Purchase of interest-bearing time deposits with banks ( 11 ) ( 509 ) —

Proceeds from sales of securities available-for-sale 185,280 — —

Proceeds from sales of debt securities 69,174 185,280 —

Proceeds from sales and redemptions of equity securities 58 — —

Proceeds from paydowns, maturities, and calls of debt securities 126,340 102,625 154,166

Purchase of securities ( 3,037 ) ( 371,682 ) ( 513,838 )

Purchase of debt securities ( 105,147 ) ( 2,640 ) ( 371,631 )

Purchase of equity securities ( 196 ) ( 397 ) ( 51 )

Purchase of loans ( 14,566 ) ( 61,009 ) —

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Proceeds from redemption of restricted stock 2,074 27,459 925

Proceeds from bank owned life insurance 831 — —

Purchases of bank premises and equipment ( 5,506 ) ( 3,134 ) ( 1,047 )

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Net cash paid for acquisition of Town and Country — ( 14,454 ) —

Net cash paid for acquisition of NXT Bancorporation, Inc.

— — ( 4,771 )

Net cash provided by (used in) investing activities 32,346 132,663 ( 335,123 )

See accompanying Notes to Consolidated Financial Statements

HBT FINANCIAL, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Year Ended December 31,

(dollars in thousands) 2023 2022 2021

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase (decrease) in deposits ( 83,075 ) 94,396 ( 150,973 )

Net increase (decrease) in repurchase agreements ( 639 ) ( 18,175 ) 11,440

Net increase (decrease) in Federal Home Loan Bank advances ( 234,195 ) 160,000 ( 12,520 )

Net decrease in repurchase agreements ( 13,473 ) ( 639 ) ( 18,175 )

Net increase (decrease) in short-term Federal Home Loan Bank advances — ( 234,195 ) 160,000

Proceeds from long-term Federal Home Loan Bank advances 907 — —

Repayment of long-term Federal Home Loan Bank advances ( 700 ) — —

Taxes paid related to the vesting of restricted stock units ( 331 ) ( 181 ) ( 57 )

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Cash dividends and dividend equivalents paid ( 24,183 ) ( 21,873 ) ( 18,584 )

Net cash provided by (used in) financing activities ( 171,399 ) ( 32,572 ) 403,407

Net cash used in financing activities ( 125,278 ) ( 171,399 ) ( 32,572 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 3,560 ) 27,093 ( 295,109 )

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Cash paid for interest $ 64,723 $ 32,853 $ 6,860

Cash paid for income taxes $ 20,512 $ 20,035 $ 20,861

Net cash paid for income taxes $ 23,876 $ 20,512 $ 20,035

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES

Transfers of loans to foreclosed assets $ 889 $ 1,143 $ 541

Sales of foreclosed assets through loan origination $ — $ — $ 252

Transfers of bank premises and equipment to bank premises held for sale $ 317 $ 35 $ —

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(“HBT Financial” or the “Company”) is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company (“Heartland Bank” or the “Bank”).

The Bank provides a comprehensive suite of financial products and services to individuals, businesses, and municipal entities throughout Illinois and Eastern Iowa.

The Bank provides a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa.

Additionally, the Company is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory agencies.

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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.

Basis of Consolidation

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Actual results could differ significantly from those estimates.

Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit losses and fair value of assets acquired and liabilities assumed in business combinations.

Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit 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.

The Company provides several types of loans to consumers, businesses, and municipal entities, primarily located in its customer service area.

Real estate and commercial loans are principal areas of concentration.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company also strives to meet the borrowing needs of the consumers in its market areas.

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.

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Interest-bearing time deposits with banks are carried at cost .

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Securities

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Losses are charged against the allowance for credit losses when management believes the uncollectibility of a security is confirmed or when either the criteria regarding intent or requirement to sell is met.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Credit Losses – Debt Securities Held-to-Maturity

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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.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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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 credit losses

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

if accrued in a prior year.

Amortization of related deferred loan fees or costs and any purchase premium or discount is also suspended at this time.

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The difference between the initial amortized cost basis and the unpaid principal balance of a loan is a non-credit discount or premium which is amortized into interest income over the life of the loan.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-Purchased Credit Deteriorated Loans

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Cash flows and collateral values may fluctuate based on general economic conditions, specific industry conditions and specific borrower circumstances.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commercial Real Estate - Owner Occupied :

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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.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Multi-family :

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The Company uses regression analysis of historical internal and peer data to determine which variables are best suited to be economic variables utilized when modeling lifetime probability of default in the discounted cash flow models and loss rates in the weighted average remaining maturity model.

The analysis also determines

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

how expected probability of default and loss rates will react to forecasted levels of the economic variables.

The analysis also determines how expected probability of default and loss rates will react to forecasted levels of the economic variables.

In addition, qualitative adjustments are made for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools.

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When management determines that foreclosure is probable, or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for anticipated selling costs as appropriate.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Although management believes the allowance for credit losses to be adequate, ultimate losses may vary from its estimates.

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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

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

could be realized if settled.

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.

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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.

Recoverability of assets to be held and used is

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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Costs to maintain and hold foreclosed assets are expensed.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Other Intangible Assets

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Fee income generated from wealth management services is recorded in the consolidated statements of income as a source of noninterest income.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employee Benefit Plans

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Advertising costs are expensed as incurred.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.

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When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in operating expenses.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Low Income Housing Tax Credits

The Company holds an ownership interest in a limited liability company, as a limited partner, that invests in affordable housing projects.

This investment is designed to generate a return primarily through the realization of federal tax credits and deductions, which may be subject to recapture by taxing authorities if compliance requirements are not met.

The Company accounts for its low income housing investments using the proportional amortization method.

The Company’s investment in the qualified affordable housing project meets the definition of a variable interest entity ("VIE") as the entity is structured such that the limited partner investors lack substantive voting rights.

The managing member has both the power to direct the activities that most significantly impact the economic performance of the entity and the obligation to absorb losses or the right to receive benefits that could be significant to the entity.

Accordingly, the Company is not the primary beneficiary and is not required to consolidate this entity.

The Company's maximum exposure to loss is limited to the carrying amount of the investment, which was $ 7.2 million as of December 31, 2024.

Derivative Financial Instruments

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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

HBT FINANCIAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

separate component of the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income (loss).

During 2019, in recording the impact of the conversion to a C Corporation, the Company recorded a deferred income tax expense of $ 3.0 million related to the unrealized gains (losses) on debt securities, and a deferred income tax benefit of $ 0.3 million related to derivatives, through the income statement in accordance with ASC 740, Income Taxes .

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 fair value changes of 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).

In conjunction with changes to the Company's applicable income tax rates, such as the impact of the conversion to a C Corporation in 2019, the Company recorded deferred income tax expense of $ 3.4 million related to the unrealized gains (losses) on debt securities, and deferred income tax benefit of $ 0.3 million related to derivatives, through the income statement in accordance with ASC 740, Income Taxes .

This difference will remain in accumulated other comprehensive income (loss) until the underlying debt securities are sold or mature or the underlying cash flow hedging relationships terminate in accordance with the portfolio approach.

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Wealth management fees:

Consists of revenue from the management and advisement of client assets and trust administration.

Consists of revenue from the management and advisement of financial client assets and non-financial client assets, such as farmland, and trust administration.

The Company’s performance obligation is generally satisfied over time, and the fees are recognized monthly.

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Payment for other deposit account related fees is primarily received immediately through a direct charge to customers’ accounts.

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.

HBT FINANCIAL, INC.

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One such change is to require credit losses be presented as an allowance rather than as a write-down on debt securities available-for-sale management does not intend to sell or believes that it is more likely than not they will be required to sell.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

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Allowance for credit losses on unfunded commitments $ — $ 2,899 $ 2,899

HBT FINANCIAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company also adopted ASC 326 using the prospective transition approach for purchase credit deteriorated (“PCD”) financial assets that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30.

2 unchanged sentences

The remaining noncredit discount will be accreted into interest income at the effective interest rate as of January 1, 2023.

On January 1, 2023, the Company also adopted 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 ASU 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 ASU 2022-02 require a public business entity to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases in the existing vintage disclosures.

This standard did not have a material impact on the Company’s consolidated results of operations or financial position.

HBT FINANCIAL, INC.

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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.

Adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

Recent Accounting Pronouncements

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815):

On January 1, 2024, the Company adopted ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force) .

ASU 2023-02 permits an election to use the proportional amortization method to account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits, regardless of the tax credit program from which the income tax credits are received, provided that certain conditions are met.

The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense.

The Company adopted ASU 2023-02 using the modified retrospective method.

The Company recorded a $ 0.1 million increase to retained earnings and decrease to deferred tax liability, as well as a $ 7.2 million increase to other assets and other liabilities, as a result of the adoption.

On January 1, 2024, the Company adopted ASU 2022-01, Derivatives and Hedging (Topic 815):

Fair Value Hedging – Portfolio Layer Method .

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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 June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

This standard did not have an impact on the Company’s consolidated results of operations or financial position.

On January 1, 2024, the Company adopted ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

1 unchanged sentence

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.

In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force) .

The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years.

ASU 2023-02 must be applied on a retrospective or modified retrospective basis.

Early adoption is permitted.

This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

This standard did not have an impact on the Company’s consolidated results of operations or financial position.

HBT FINANCIAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

On January 1, 2024, the Company adopted ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

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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.

This standard did not have an impact on the Company’s consolidated results of operations or financial position.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

7 unchanged sentences

This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

ASU 2024-03 provides more decision-useful information about a public entity's expenses by requiring additional detail on expenses reported in income statements.

Under the ASU, public entities will provide detailed disclosure in interim and annual periods of specified categories underlying certain expense captions.

The ASU requires public entities to apply the amendments prospectively, with an option to use retrospective application.

The amendments in this update are effective for years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

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.

HBT FINANCIAL, INC.

15 unchanged sentences

The acquisition of Town and Country further enhanced HBT Financial’s footprint in central Illinois, and expanded our footprint into metro-east St.

During the years ended December 31, 2023 and 2022, HBT Financial incurred the following expenses related to the acquisition of Town and Country:

Acquisition-related expenses recognized during the years ended December 31, 2023 and 2022 are summarized below.

There were no Town and Country acquisition-related expenses recognized during 2024.

(dollars in thousands) December 31, 2023 December 31, 2022

68 unchanged sentences

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 the following expenses related to the acquisition of NXT (dollars in thousands):

Salaries $ 65

Furniture and equipment 18

Data processing 355

Marketing and customer relations 12

Loan collection and servicing 11

Legal fees and other noninterest expense 955

Total NXT acquisition-related expenses $ 1,416

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):

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.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SECURITIES

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December 31, 2023

(dollars in thousands) Amortized

(dollars in thousands) Amortized Cost Gross

Allowance for Credit Losses Fair Value

Available-for-sale:

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December 31, 2023

(dollars in thousands) Amortized

(dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Allowance for Credit Losses

Held-to-maturity:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2023 and 2022, the Bank had debt securities with a carrying value of $ 419.4 million and $ 332.6 million, respectively, which were pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes required or permitted by law.

As of December 31, 2024 and 2023, the Bank had debt securities with a carrying value of $ 468.8 million and $ 419.4 million, respectively, which were pledged to secure public deposits, securities sold under agreements to repurchase, available borrowing capacity, and for other purposes required or permitted by law.

The amortized cost and fair value of debt securities by contractual maturity, as of December 31, 2024, are shown below.

11 unchanged sentences

Total $ 757,492 $ 698,049 $ 499,858 $ 445,186

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

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

December 31, 2024

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents gross unrealized losses and fair value of debt securities, aggregated by category and length of time that individual debt securities have been in a continuous unrealized loss position, as of December 31, 2022:

December 31, 2023

13 unchanged sentences

Total available-for-sale $ ( 631 ) $ 21,648 $ ( 71,631 ) $ 720,834 $ ( 72,262 ) $ 742,482

Held-to-maturity:

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

As of December 31, 2024, there were 615 debt securities in an unrealized loss position for a period of twelve months or more, and 91 debt securities in an unrealized loss position for a period of less than twelve months.

2 unchanged sentences

The changes in fair value in these portfolios are considered to be primarily driven by changes in market interest rates and other non-credit risks, such as prepayment and liquidity risks.

Municipal securities include approximately 79 % general obligation bonds as of December 31, 2023, which have a very low historical default rate due to issuers generally having taxing authority to service the debt.

The remainder of the municipal securities are also of high credit quality with ratings of A1/A+ or better.

Municipal securities include general obligation bonds which have a very low historical default rate due to issuers generally having taxing authority to service the debt and represent approximately 72 % of the total fair value of our municipal securities portfolio as of December 31, 2024.

The remainder of the municipal securities are also of high credit quality with ratings of Aa3/AA- or better.

The Company evaluates credit risk through monitoring credit ratings and reviews of available financial data.

1 unchanged sentence

The estimated allowance for credit losses for the municipal debt securities held-to-maturity was deemed insignificant.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Corporate securities include investment grade corporate and bank subordinated debt securities.

The Company evaluates credit risk through monitoring credit ratings, reviews of available issuer financial data, and sector trends.

The changes in fair value in corporate securities was considered to be primarily driven by changes in market interest rates and other non-credit risks, such as call and liquidity risks.

The changes in fair value in corporate securities were considered to be primarily driven by changes in market interest rates and other non-credit risks, such as call and liquidity risks.

As of December 31, 2024, the Company did not intend to sell the debt securities that are in an unrealized loss position, and it was more likely than not that the Company would recover the amortized cost prior to being required to sell the debt securities.

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

Accrued interest on debt securities is excluded from the estimate of credit losses and totaled $ 5.1 million and $ 6.0 million as of December 31, 2024 and 2023, respectively.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sales of debt securities were as follows during the year ended December 31:

4 unchanged sentences

Gross realized losses ( 3,697 ) ( 1,820 ) —

Subsequent to December 31, 2023, the Company recognized $ 3.4 million of net losses on the sale of $ 66.8 million of municipal securities with the proceeds used to reduce wholesale funding.

Equity Securities

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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:

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

December 31, 2024

10 unchanged sentences

Carrying value $ 3,360 $ 2,505

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

As of December 31, 2022, 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.

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

There have been no upward adjustments based on observable price changes to equity securities with no readily determinable fair value.

There were no sales of equity securities during the years ended December 31, 2023, 2022 and 2021.

Unrealized gains (losses) on equity securities were as follows during the years ended December 31, 2024 and 2023:

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The discounted cash flow method is used to estimate expected credit losses for all loan categories, except for consumer loans where the weighted average remaining maturity method is utilized.

At December 31, 2023, the economic forecast used by management anticipates a mild recession in 2024, with the unemployment rate increasing modestly and GDP growth slowing and then shrinking over the next 4 quarters considered in the forecast period.

At December 31, 2024, the economic forecast used by management anticipates a mild economic slowdown, but not a recession, over the next 4 quarters considered in the forecast period, with the unemployment rate remaining stable and GDP growth slowing slightly and then increasing.

After the forecast period, the Company reverts to long-term averages over a 4-quarter reversion period.

16 unchanged sentences

Balance, December 31, 2022 3,279 1,193 6,721 4,223 1,472 1,759 796 5,890 25,333

Provision for loan losses 88 ( 1,653 ) ( 1,707 ) ( 692 ) 209 146 ( 49 ) 2,952 ( 706 )

Adoption of ASC 326 ( 822 ) 587 501 1,969 85 797 1,567 2,299 6,983

PCD allowance established in acquisition 69 127 239 240 68 492 5 7 1,247

Provision for credit losses 2,823 352 187 ( 487 ) 1,931 2,004 ( 1,399 ) 1,254 6,665

Charge-offs ( 428 ) ( 5 ) ( 202 ) — — ( 34 ) — ( 690 ) ( 1,359 )

1 unchanged sentence

Balance, December 31, 2023 4,980 2,272 7,714 5,998 3,837 5,204 975 9,068 40,048

Adoption of ASC 326 ( 822 ) 587 501 1,969 85 797 1,567 2,299 6,983

PCD allowance established in acquisition 69 127 239 240 68 492 5 7 1,247

Provision for loan losses 2,823 352 187 ( 487 ) 1,931 2,004 ( 1,399 ) 1,254 6,665

Provision for credit losses 1,677 825 3,407 ( 1,699 ) 682 ( 1,438 ) 246 54 3,754

Charge-offs ( 1,448 ) ( 6 ) — — ( 188 ) ( 298 ) ( 62 ) ( 1,282 ) ( 3,284 )

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Gross charge-offs, further sorted by origination year, were as follows during the year ended December 31, 2023:

Gross charge-offs, further sorted by origination year, were as follows during the year ended December 31, 2024 and 2023.

Gross Charge-Offs for the Year Ended December 31, 2024

12 unchanged sentences

Total $ 421 $ 1,328 $ 138 $ 203 $ 4 $ 722 $ 468 $ — $ 3,284

Gross Charge-Offs for the Year Ended December 31, 2023

Term Loans by Origination Year Revolving

Loans Revolving

to Term Total

(dollars in thousands) 2023 2022 2021 2020 2019 Prior

Commercial and industrial $ — $ — $ — $ — $ — $ — $ 428 $ — $ 428

Commercial real estate - owner occupied — 5 — — — — — — 5

Commercial real estate - non-owner occupied — — — — 31 — 171 — 202

Construction and land development — — — — — — — — —

Multi-family — — — — — — — — —

One-to-four family residential — — — — 1 33 — — 34

Agricultural and farmland — — — — — — — — —

Municipal, consumer, and other 309 100 13 17 10 32 209 — 690

Total $ 309 $ 105 $ 13 $ 17 $ 42 $ 65 $ 808 $ — $ 1,359

HBT FINANCIAL, INC.

29 unchanged sentences

Individually evaluated for impairment 272 170 15,287 216 315 5,459 144 15,041 36,904

Acquired with deteriorated credit quality 106 3,579 11,030 850 567 4,233 595 16 20,976

Total $ 427,800 $ 295,842 $ 880,681 $ 363,983 $ 417,923 $ 491,508 $ 287,294 $ 239,386 $ 3,404,417

Allowance for loan losses:

Allowance for credit losses:

Collectively evaluated for impairment $ 4,960 $ 2,272 $ 6,693 $ 5,998 $ 3,837 $ 4,957 $ 975 $ 6,137 $ 35,829

Individually evaluated for impairment 20 — 1,021 — — 247 — 2,931 4,219

Acquired with deteriorated credit quality — 17 1 2 2 6 — 1 29

Total $ 4,980 $ 2,272 $ 7,714 $ 5,998 $ 3,837 $ 5,204 $ 975 $ 9,068 $ 40,048

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

December 31, 2024

11 unchanged sentences

Total $ 29,978 $ 632 $ 173 $ 30,783 $ 3,066

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

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pre-ASC 326 Adoption Impaired Loan Disclosures

The following table presents loans individually evaluated for impairment by category of loans:

December 31, 2023

(dollars in thousands) Unpaid

Balance Recorded

Investment Related

With an allowance recorded:

Commercial and industrial $ 268 $ 254 $ 158

Commercial real estate - owner occupied 635 610 168

Commercial real estate - non-owner occupied 14,269 14,261 2,388

Construction and land development — — —

Multi-family — — —

One-to-four family residential 569 524 44

Agricultural and farmland — — —

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 $ —

Commercial real estate - owner occupied 10,912 10,756 —

Commercial real estate - non-owner occupied 16,327 16,248 —

Construction and land development 92 82 —

Multi-family — — —

One-to-four family residential 9,181 7,875 —

Agricultural and farmland 4,440 4,033 —

Municipal, consumer, and other 4,410 4,377 —

Total $ 49,926 $ 47,935 $ —

Total loans individually evaluated for impairment:

Amortized Cost Allowance

Primary Collateral Type

(dollars in thousands) Real Estate Vehicles Other Total

Commercial and industrial $ — $ 37 $ 235 $ 272 $ 20

7 unchanged sentences

Total $ 36,569 $ 76 $ 259 $ 36,904 $ 4,219

Accrued interest on loans is excluded from the estimate of credit losses and totaled $ 19.6 million and $ 18.4 million as of December 31, 2024 and 2023, respectively.

HBT FINANCIAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans:

Year Ended December 31,

Pre-ASC 326 Adoption Impaired Loan Disclosures

The following table presents the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans for the year ended December 31, 2022:

(dollars in thousands) Average

Investment Interest

Recognized Average

Investment Interest

With an allowance recorded:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in the accretable yield for loans acquired with deteriorated credit quality were as follows:

Year Ended December 31,

Changes in the accretable yield for loans acquired with deteriorated credit quality were as follows during the year ended December 31, 2022:

(dollars in thousands) 2022

1 unchanged sentence

Reclassification from non-accretable difference 548

Disposals — ( 1,089 )

Accretion income ( 231 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents nonaccrual loans with and without a related allowance for credit losses:

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

December 31, 2024

13 unchanged sentences

Total $ 1,147 $ 6,505 $ 7,652

December 31, 2023

(dollars in thousands) Nonaccrual

Allowance for

Credit Losses Nonaccrual

Allowance for

Credit Losses Total

Commercial and industrial $ 120 $ 152 $ 272

Commercial real estate - owner occupied — 170 170

Commercial real estate - non-owner occupied 188 1,647 1,835

Construction and land development 216 — 216

Multi-family — 315 315

One-to-four family residential 14 4,790 4,804

Agricultural and farmland — 144 144

Municipal, consumer, and other — 64 64

Total $ 538 $ 7,282 $ 7,820

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit Quality Indicators

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.

In June 2024, the Company updated its risk rating categories to add a special mention category to provide another level of granularity in distinguishing risk levels of loans.

As of June 30, 2024, $ 19.5 million of the special mention loans would have been considered pass-watch and $ 10.6 million would have been considered substandard under the previous risk rating categories.

The Company assigns a risk rating to all loans and periodically performs detailed internal reviews of all loans that are part of relationships with over $ 750 thousand in total exposure to identify credit risks and to assess the overall collectability of the portfolio.

These risk ratings are also subject to review by the Company’s regulators, external loan review, and internal loan review.

During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the fair values of collateral securing the loans.

The risk rating is reviewed annually, at a minimum, and on an as needed basis depending on the specific circumstances of the loan.

Risk ratings are 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:

Risk ratings are grouped into the following major categories:

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

1 unchanged sentence

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.

No loss of principal or interest is expected, and the borrower does not pose sufficient risk to warrant a special mention, substandard, or doubtful classification.

Special Mention – a special mention loan has potential weaknesses that deserve management's close attention.

If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the assets or in the institution's credit position at some future date.

Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard – a substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.

2 unchanged sentences

Doubtful – a doubtful loan has all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

There were no loans classified as doubtful as of December 31, 2024 and December 31, 2023.

HBT FINANCIAL, INC.

3 unchanged sentences

December 31, 2024

(dollars in thousands) Pass Pass-Watch Substandard Doubtful Total

(dollars in thousands) Pass Pass-Watch Special Mention Substandard Total

Commercial and industrial $ 404,779 $ 16,429 $ 1,957 $ 5,224 $ 428,389

8 unchanged sentences

December 31, 2023

(dollars in thousands) Pass Pass-Watch Substandard Doubtful Total

(dollars in thousands) Pass Pass-Watch Substandard Total

Commercial and industrial $ 419,494 $ 7,128 $ 1,178 $ 427,800

18 unchanged sentences

Pass-Watch 475 1,310 186 1,121 — 1,775 10,613 949 16,429

Special Mention — 281 272 173 — — 1,231 — 1,957

Substandard — 1,913 1,016 721 — — 939 635 5,224

3 unchanged sentences

Pass-Watch 6,478 395 3,698 2,111 542 1,374 371 — 14,969

Special Mention 1,877 — — 150 — — 686 — 2,713

Substandard 819 700 506 3,707 1,241 511 — — 7,484

3 unchanged sentences

Pass-Watch 3,173 421 6,656 4,031 2,442 4,871 — — 21,594

Special Mention — — — — — — — — —

Substandard 23,245 9,191 — — — 2,048 — — 34,484

3 unchanged sentences

Pass-Watch — — — — — 18 697 661 1,376

Special Mention — — 8,750 12,097 — — — — 20,847

Substandard 475 — 216 — — 86 — — 777

2 unchanged sentences

Pass-Watch 2,791 — 567 — — 492 — 5 3,855

Special Mention 6,936 — — — 8,799 — — — 15,735

Substandard 92 — — — — — — — 92

3 unchanged sentences

Pass-Watch 1,126 1,271 936 242 405 2,252 134 275 6,641

Special Mention — — — 592 118 — — — 710

Substandard 281 522 861 473 382 4,824 16 389 7,748

3 unchanged sentences

Pass-Watch 100 2,671 1,424 1,403 508 861 10,633 554 18,154

Special Mention 134 87 — — — — 300 — 521

Substandard 332 51 494 9 3,183 — 319 386 4,774

Total $ 42,838 $ 38,402 $ 34,064 $ 30,126 $ 31,556 $ 8,517 $ 106,229 $ 1,643 $ 293,375

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands) Term Loans by Origination Year Revolving

Loans Revolving

to Term Total

2024 2023 2022 2021 2020 Prior

Municipal, consumer, and other

1 unchanged sentence

Pass-Watch 103 50 6 12 — 757 1 — 929

Special Mention — — — — — 4,107 — — 4,107

Substandard 21 5 33 — — 10,570 1 — 10,630

3 unchanged sentences

Pass-Watch 14,246 6,118 13,473 8,920 3,897 12,400 22,449 2,444 83,947

Special Mention 8,947 368 9,022 13,012 8,917 4,107 2,217 — 46,590

Substandard 25,265 12,382 3,126 4,910 4,806 18,039 1,275 1,410 71,213

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Modifications and Troubled Debt Restructurings

There were no loan modifications to borrowers in financial distress during the year ended December 31, 2023.

There were no new troubled debt restructurings during the years ended December 31, 2022 and 2021.

As of December 31, 2022, the Company had $ 3.0 million of troubled debt restructurings.

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

(dollars in thousands) Term Loans by Origination Year Revolving

Loans Revolving

to Term Total

2023 2022 2021 2020 2019 Prior

Commercial and industrial

Pass $ 90,931 $ 58,364 $ 19,283 $ 26,816 $ 5,269 $ 29,550 $ 187,579 $ 1,702 $ 419,494

Pass-Watch 2,025 1,340 892 144 753 471 956 547 7,128

Substandard 111 73 327 60 — — 323 284 1,178

Total $ 93,067 $ 59,777 $ 20,502 $ 27,020 $ 6,022 $ 30,021 $ 188,858 $ 2,533 $ 427,800

Commercial real estate - owner occupied

Pass $ 27,516 $ 64,229 $ 55,376 $ 53,634 $ 32,469 $ 28,876 $ 13,549 $ — $ 275,649

Pass-Watch 4,061 943 5,210 1,474 1,573 811 — — 14,072

Substandard 2,734 86 1,550 64 164 1,523 — — 6,121

Total $ 34,311 $ 65,258 $ 62,136 $ 55,172 $ 34,206 $ 31,210 $ 13,549 $ — $ 295,842

Commercial real estate - non-owner occupied

Pass $ 121,536 $ 240,323 $ 237,953 $ 88,894 $ 82,094 $ 39,228 $ 10,274 $ 1,710 $ 822,012

Pass-Watch 810 6,893 7,013 353 4,230 154 13,585 245 33,283

Substandard 13,376 124 286 — 2,410 9,190 — — 25,386

Total $ 135,722 $ 247,340 $ 245,252 $ 89,247 $ 88,734 $ 48,572 $ 23,859 $ 1,955 $ 880,681

Construction and land development

Pass $ 153,499 $ 119,005 $ 56,954 $ 5,596 $ 2,662 $ 796 $ 12,050 $ 525 $ 351,087

Pass-Watch 153 10,750 — — — — 163 1,538 12,604

Substandard — 216 — — — 76 — — 292

Total $ 153,652 $ 129,971 $ 56,954 $ 5,596 $ 2,662 $ 872 $ 12,213 $ 2,063 $ 363,983

Pass $ 83,898 $ 81,507 $ 115,402 $ 53,126 $ 34,053 $ 23,570 $ 5,904 $ 491 $ 397,951

Pass-Watch 3,111 7,197 — 8,821 51 468 — 8 19,656

Substandard — — 316 — — — — — 316

Total $ 87,009 $ 88,704 $ 115,718 $ 61,947 $ 34,104 $ 24,038 $ 5,904 $ 499 $ 417,923

One-to-four family residential

Pass $ 105,337 $ 91,636 $ 82,289 $ 64,094 $ 21,986 $ 44,241 $ 57,248 $ 5,524 $ 472,355

Pass-Watch 2,382 286 940 486 212 1,804 203 358 6,671

Substandard 1,507 1,527 623 646 1,037 4,166 64 2,912 12,482

Total $ 109,226 $ 93,449 $ 83,852 $ 65,226 $ 23,235 $ 50,211 $ 57,515 $ 8,794 $ 491,508

Agricultural and farmland

Pass $ 52,766 $ 37,600 $ 36,604 $ 33,960 $ 8,910 $ 7,756 $ 100,486 $ 2,785 $ 280,867

Pass-Watch 953 361 425 30 71 719 172 340 3,071

Substandard — — 13 3,199 — 144 — — 3,356

Total $ 53,719 $ 37,961 $ 37,042 $ 37,189 $ 8,981 $ 8,619 $ 100,658 $ 3,125 $ 287,294

Municipal, consumer, and other

Pass $ 43,575 $ 57,404 $ 27,904 $ 14,342 $ 1,016 $ 42,499 $ 35,734 $ — $ 222,474

Pass-Watch 9 6 13 — — 1,693 — — 1,721

Substandard 51 103 2 6 8 15,012 8 1 15,191

Total $ 43,635 $ 57,513 $ 27,919 $ 14,348 $ 1,024 $ 59,204 $ 35,742 $ 1 $ 239,386

Total by risk rating

Pass $ 679,058 $ 750,068 $ 631,765 $ 340,462 $ 188,459 $ 216,516 $ 422,824 $ 12,737 $ 3,241,889

Pass-Watch 13,504 27,776 14,493 11,308 6,890 6,120 15,079 3,036 98,206

Substandard 17,779 2,129 3,117 3,975 3,619 30,111 395 3,197 64,322

Total $ 710,341 $ 779,973 $ 649,375 $ 355,745 $ 198,968 $ 252,747 $ 438,298 $ 18,970 $ 3,404,417

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Modifications

The Company modified one commercial and industrial loan to a borrower experiencing financial difficulty during the year ended December 31, 2024.

The modification included an interest rate reduction and a term extension.

As of December 31, 2024, the book balance of the modified loan was $ 0.5 million, and the loan was current and performing in accordance with the modified terms.

There were no loan modifications to borrowers experiencing financial difficulty during the year ended December 31, 2023.

NOTE 5 – LOAN SERVICING

Mortgage loans serviced for others, which are not included in the accompanying consolidated balance sheets, amounted to $ 1.66 billion and $ 955.8 million as of December 31, 2023 and December 31, 2022, respectively.

Activity in mortgage servicing rights is as follows:

Mortgage loans serviced for others, which are not included in the accompanying consolidated balance sheets, amounted to $ 1.55 billion and $ 1.66 billion as of December 31, 2024 and 2023, respectively.

Activity in mortgage servicing rights was as follows:

Year Ended December 31,

20 unchanged sentences

Total depreciation expense $ 2,944 $ 3,108 $ 3,043

During 2021, six branches 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 the fair value, less estimated costs to sell.

There was no bank premises held for sale as of December 31, 2023 and $ 0.2 million of bank premises held for sale as of December 31, 2022.

HBT FINANCIAL, INC.

2 unchanged sentences

NOTE 7 – FORECLOSED ASSETS

Foreclosed assets activity is as follows:

Foreclosed assets activity was as follows:

Year Ended December 31,

4 unchanged sentences

Proceeds from sales ( 1,396 ) ( 4,093 ) ( 475 )

Sales through loan origination — — ( 252 )

Net gain on sales 112 764 118

1 unchanged sentence

Ending balance $ 367 $ 852 $ 3,030

Gains (losses) on foreclosed assets includes the following:

Gains (losses) on foreclosed assets included the following:

Year Ended December 31,

3 unchanged sentences

Gains (losses) on foreclosed assets $ 22 $ 501 $ ( 314 )

The carrying value of foreclosed one-to-four family residential real estate properties held was $ 0.1 million and $ 20 thousand as of December 31, 2023 and 2022, respectively.

As of December 31, 2024 and 2023, the carrying value of foreclosed one-to-four family residential real estate properties held was $ 0.3 million and $ 0.1 million, respectively.

As of December 31, 2024, there were 19 one-to-four family residential real estate loans in the process of foreclosure totaling $ 1.8 million.

1 unchanged sentence

NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

The Company recorded goodwill of $ 30.5 million related to the acquisition of Town and Country during the year ended December 31, 2023.

There were no additions to goodwill for the year ended December 31, 2022.

For the year ended December 31, 2021, the Company recorded goodwill of $ 5.7 million related to the acquisition of NXT.

The goodwill recorded in connection with the acquisitions of Town and Country and NXT were allocated to the Company's only reportable segment, Community Banking.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company did not record additions to goodwill for the years ended December 31, 2024 and 2022.

During the year ended December 31, 2023, the Company recorded goodwill of $ 30.5 million related to the acquisition of Town and Country.

The following table summarizes the changes in the Company's intangible assets:

10 unchanged sentences

Accumulated amortization $ 26,164 $ 192 $ 23,425 $ 92 $ 20,847 $ —

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization of intangible assets for the years subsequent to December 31, 2024 is expected to be as follows (dollars in thousands):

14 unchanged sentences

Total deposits $ 4,318,254 $ 4,401,437

Interest-bearing demand deposits included $ 51.3 million of reciprocal transaction deposits as of December 31, 2023.

Money market deposits included $ 155.1 million and $ 1.7 million of reciprocal transaction deposits as of December 31, 2023 and 2022, respectively.

Time deposits included $ 30.5 million and $ 1.6 million of reciprocal time deposits as of December 31, 2023, and 2022, respectively.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reciprocal deposits included in interest-bearing demand deposits, money market deposits, and time deposits totaled $ 229.4 million and $ 236.8 million as of December 31, 2024 and 2023, respectively.

The aggregate amounts of time deposits in denominations of $250 thousand or more amounted to $ 202.2 million and $ 130.2 million as of December 31, 2024 and 2023, respectively.

The aggregate amounts of time deposits in denominations of $100 thousand or more amounted to $ 455.2 million and $ 342.8 million as of December 31, 2024 and 2023, respectively.

The components of interest expense on deposits are as follows:

The components of interest expense on deposits were as follows:

Year Ended December 31,

6 unchanged sentences

Total interest expense on deposits $ 56,047 $ 25,135 $ 2,511

At December 31, 2023, the scheduled maturities of time and brokered time deposits are as follows (dollars in thousands):

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2024, the scheduled maturities of time deposits are as follows (dollars in thousands):

Year ended December 31,

11 unchanged sentences

Carrying value of securities underlying the agreements $ 37,628 $ 52,958

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - BORROWINGS

1 unchanged sentence

The FHLB advances outstanding as of December 31, 2024 mature between 2025 and 2029.

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, 2023 and 2022 totaled $ 1.20 billion and $ 892.1 million, respectively.

As of December 31, 2023 and 2022, loans pledged also served as collateral for credit exposure of $ 0.4 million and $ 0.3 million, respectively, associated with the Bank’s participation in the FHLB’s Mortgage Partnership Finance Program.

Borrowings from the FHLB are secured by the FHLB stock held by the Company and pledged security in the form of qualifying loans.

The loans pledged as of December 31, 2024 and 2023 totaled $ 1.91 billion and $ 1.20 billion, respectively.

As of December 31, 2024 and 2023, loans pledged also served as collateral for credit exposure of $ 0.4 million associated with the Bank’s participation in the FHLB’s Mortgage Partnership Finance Program.

As of December 31, 2024, loans pledged also served as collateral for a $ 70.0 million letter of credit for the benefit of uninsured public funds deposits.

The Bank also had available borrowings through the discount window of the Federal Reserve Bank of Chicago.

Available borrowings are based on the collateral pledged.

As of December 31, 2023, debt securities with a carrying value of $ 9.8 million were pledged, and there was no outstanding balance.

As of December 31, 2022, there was no collateral pledged and no outstanding balance.

As of December 31, 2024 and 2023, debt securities with a carrying value of $ 108.0 million and $ 9.8 million, respectively, were pledged to secure available borrowings.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - SUBORDINATED NOTES

4 unchanged sentences

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.

The transaction resulted in debt issuance costs of $ 0.8 million which is being amortized over 10 years.

As of December 31, 2024 and 2023, 100 % of the subordinated notes qualified as Tier 2 capital.

4 unchanged sentences

Subordinated notes, at carrying value $ 39,553 $ 39,474

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS

Eight subsidiary business trusts of the Company have issued floating rate capital securities (“capital securities”) which are guaranteed by the Company.

Three of these (Town and Country Statutory Trust II, Town and Country Statutory Trust III, and West Plains Investors Statutory Trust I) were acquired by the Company as part of its acquisition of Town and Country.

The Company owns all of the outstanding stock of the subsidiary business trusts.

3 unchanged sentences

In accordance with GAAP, the trusts are not consolidated in the Company’s financial statements.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The face values and carrying values of the junior subordinated debentures are summarized as follows:

13 unchanged sentences

Total $ 53,714 $ 52,849 $ 52,789

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.

Beginning in July 2023, the three-month LIBOR index was replaced by the three-month term SOFR index plus a spread adjustment.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The interest rates on the junior subordinated debentures are variable, reset quarterly, and are equal to the three-month term SOFR, as determined on the SOFR 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:

11 unchanged sentences

National Bancorp Statutory Trust I SOFR plus 3.16 7.52 8.55 December 15, 2037

Town and Country Statutory Trust II SOFR plus 3.05 8.43 N/A March 17, 2034

Town and Country Statutory Trust III SOFR plus 1.94 7.33 N/A March 22, 2037

West Plains Investors Statutory Trust I SOFR plus 1.71 7.10 N/A June 15, 2037

Town and Country Statutory Trust II SOFR plus 3.05 7.40 8.43 March 17, 2034

Town and Country Statutory Trust III SOFR plus 1.94 6.30 7.33 March 22, 2037

West Plains Investors Statutory Trust I SOFR plus 1.71 6.07 7.10 June 15, 2037

The distribution rate payable on the debentures is cumulative and payable quarterly in arrears.

4 unchanged sentences

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, 2023 and 2022, 100 % of the trust preferred securities qualified as Tier 1 capital under the final rule adopted in March 2005.

HBT FINANCIAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2024 and 2023, 100 % of the trust preferred securities qualified as Tier 1 capital under the final rule adopted in March 2005.

NOTE 14 – DERIVATIVE FINANCIAL INSTRUMENTS

5 unchanged sentences

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

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

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

December 31, 2024 December 31, 2023

2 unchanged sentences

Fair value recorded in other assets $ 7,000 $ 38 $ 17,000 $ 322

As of December 31, 2023, the interest rate swap agreements designated as cash flow hedges had contractual maturities between 2024 and 2025.

As of December 31, 2023 and 2022, counterparties had cash pledged and held on deposit by the Company of $ 0.6 million and $ 0.6 million, respectively.

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

As of December 31, 2024, the interest rate swap agreement designated as a cash flow hedge matures in April 2025.

The counterparty had cash pledged and held on deposit by the Company of $ 0.6 million as of December 31, 2023.

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

Location of gross gain (loss) reclassified

14 unchanged sentences

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:

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

December 31, 2024 December 31, 2023

10 unchanged sentences

As of December 31, 2024, the interest rate swap agreements not designated as hedging instruments had contractual maturities between 2027 and 2035.

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

Year Ended December 31, 2023

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

(dollars in thousands) 2024 2023 2022

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Risk Participation Agreements

We have entered into a risk participation agreement to share credit exposure with a counterparty related to an interest rate swap agreement associated with a loan participation.

Under the risk participation agreement, the Company sold a portion of its credit exposure, receiving an up-front fee, and will be required to make a payment to the counterparty if the loan customer defaults on its obligations.

The risk participation agreement matures in 2035 and is summarized as follows:

(dollars in thousands) December 31, 2024 December 31, 2023

Risk participation agreements sold

Notional amount $ 5,268 $ —

Fair value ( 10 ) —

NOTE 15 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

11 unchanged sentences

Balance, December 31, 2022 ( 61,998 ) ( 9,946 ) 185 ( 71,759 )

Transfer from available-for-sale to held-to-maturity 7,664 ( 7,664 ) — —

Other comprehensive income (loss) before reclassifications ( 105,459 ) — 1,183 ( 104,276 )

Other comprehensive income before reclassifications 16,949 — 161 17,110

Reclassifications 1,820 1,954 ( 468 ) 3,306

10 unchanged sentences

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

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

HBT FINANCIAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

41 unchanged sentences

Mortgage servicing rights 5,224 5,306

Other purchase accounting adjustments — 610

Intangible assets 4,899 5,584

8 unchanged sentences

The Company is generally no longer subject to federal or state income tax examinations for years prior to 2021.

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.

HBT FINANCIAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 – EARNINGS PER SHARE

The Company previously granted restricted stock units that contained non-forfeitable rights to dividend equivalents which were considered participating securities.

Prior to 2024, these restricted stock units were included in the calculation of basic earnings per share using the two-class method.

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

42 unchanged sentences

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.

Dividend equivalents on restricted stock units, which are either accrued until vested, are classified as dividends charged to retained earnings.

During the years ended December 31, 2024, 2023, and 2022, the total grant date fair value of the restricted stock units granted was $ 1.0 million, $ 1.0 million, and $ 1.3 million, respectively, based on the grant date closing prices.

The total intrinsic value of restricted stock that vested during the years ended December 31, 2023, 2022, 2021 were $ 1.1 million, $ 0.7 million, and $ 0.3 million, respectively.

The total intrinsic value of restricted stock units that vested during the years ended December 31, 2024, 2023, 2022 were $ 1.4 million, $ 1.1 million, and $ 0.7 million, respectively.

The following is a summary of restricted stock unit activity:

25 unchanged sentences

During the years ended December 31, 2024, 2023, and 2022, the total fair value of the performance restricted stock units granted was $ 0.4 million, $ 0.4 million, and $ 0.5 million, respectively, based on the grant date closing prices and an assessment of the probable outcome of the performance condition on the grant date.

The total intrinsic value of performance restricted stock units that vested during the year ended December 31, 2024 was $ 0.8 million.

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

8 unchanged sentences

Granted 19,933 19.06 17,030 22.72 23,723 19.14

Adjustment for performance condition 14,349 15.53 — — — —

Vested ( 43,046 ) 15.53 — — — —

26 unchanged sentences

Ending balance 73,440 $ 16.32 73,440 $ 16.32 73,440 $ 16.32

As of December 31, 2023, all stock appreciation rights were exercisable and have a weighted average remaining term of 5.7 years.

Additionally, a s of December 31, 2023, there was no unrecognized compensation cost for stock appreciation rights.

As of December 31, 2024, all stock appreciation rights were exercisable and had a weighted average remaining term of 4.3 years.

There was no unrecognized compensation cost for stock appreciation rights as of December 31, 2024.

As of December 31, 2024 and 2023, the liability recorded for outstanding stock appreciation rights was $ 0.5 million and $ 0.6 million, respectively.

The Company uses an option pricing model to value the stock appreciation rights, using the assumptions in the following table.

Expected volatility is derived from the historical volatility of the Company’s stock price and a selected peer group of industry-related companies.

Expected volatility is derived from the historical volatility of the Company’s stock price.

December 31, 2024 December 31, 2023

3 unchanged sentences

Expected dividend yield 3.47 % 3.22 %

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

As of December 31, 2022, the liability recorded for previously exercised stock appreciation rights was $ 0.5 million.

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

HBT FINANCIAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – REGULATORY MATTERS

NOTE 20 – 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.

6 unchanged sentences

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, 2023 and 2022, the capital conservation buffer was 2.5 % of risk-weighted assets.

As of December 31, 2023, the Company and the Bank each met all capital adequacy requirements to which they were subject.

The actual and required capital amounts and ratios of the Company (on a consolidated basis) and the Bank are as follows:

The capital conservation buffer is 2.5 % of risk-weighted assets.

As of December 31, 2024 and 2023, the Company and the Bank each met all capital adequacy requirements to which they were subject.

The actual and required capital amounts and ratios of the Company (on a consolidated basis) and the Bank were as follows:

December 31, 2024

35 unchanged sentences

Tier 1 Capital (to Average Assets) 550,808 10.96 201,063 4.00 251,329 5.00

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21 – SEGMENT INFORMATION

The Company’s operations consist of one reportable segment.

The President and Chief Executive Officer is the designated chief operating decision maker.

The chief operating decision maker uses consolidated financial information for purposes of allocating resources and assessing performance.

The chief operating decision maker uses consolidated net income to benchmark the Company against its competitors.

The benchmarking analysis coupled with monitoring of budget to actual results are used to assess performance and in establishing compensation.

Interest income from loans and investments as well as noninterest income from deposit customer activity, wealth management activities, and mortgage servicing generate the significant revenues.

Interest expense, provisions for credit losses, and noninterest expenses such as compensation, occupancy, and data processing costs constitute the significant expenses.

Significant revenues and expenses regularly provided to the chief operating decision maker are detailed in the consolidated statements of income.

NOTE 22 – FAIR VALUE OF FINANCIAL INSTRUMENTS

2 unchanged sentences

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

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

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

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company uses fair value to measure certain assets and liabilities on a recurring basis, such as investment securities, mortgage servicing rights, and derivatives.

12 unchanged sentences

however, when prices from independent sources vary, cannot be obtained or cannot be corroborated, a security is generally classified as Level 3.

The change in fair value of debt securities available-for-sale is recorded through an adjustment to the consolidated statement of comprehensive income (loss).

The change in fair value of debt securities available-for-sale is recorded through an adjustment to the consolidated statement of comprehensive income.

The change in fair value of equity securities with readily determinable fair values is recorded through an adjustment to the consolidated statement of income.

6 unchanged sentences

The change in fair value is recorded through an adjustment to the consolidated statement of income.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivative Financial Instruments

Interest rate swap agreements are carried at fair value as determined by dealer valuation models.

Derivative financial instruments are carried at fair value as determined by dealer valuation models.

Based on the inputs used, the derivative financial instruments subjected to recurring fair value adjustments are classified as Level 2.

For derivative financial instruments designated as hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statement of comprehensive income (loss).

For derivative financial instruments designated as hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statement of comprehensive income.

For derivative financial instruments not designated as hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statement of income.

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

74 unchanged sentences

Collateral-dependent loans — — 27,717 27,717

Bank premises held for sale — — 317 317

Foreclosed assets — — 367 367

5 unchanged sentences

Collateral-dependent loans — — 32,685 32,685

Bank premises held for sale — — 235 235

Foreclosed assets — — 852 852

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

December 31, 2023 Fair

Value Valuation

December 31, 2024 Fair Value Valuation

Technique Unobservable Inputs Range

1 unchanged sentence

Collateral-dependent loans $ 27,717 Appraisal of collateral Appraisal adjustments Not meaningful

Bank premises held for sale 317 Appraisal Appraisal adjustments 7 % ( 7 %)

Foreclosed assets 367 Appraisal Appraisal adjustments 7 % ( 7 %)

4 unchanged sentences

Collateral-dependent loans $ 32,685 Appraisal of collateral Appraisal adjustments Not meaningful

Bank premises held for sale 235 Appraisal Appraisal adjustments 7 % ( 7 %)

Foreclosed assets 852 Appraisal Appraisal adjustments 7 % ( 7 %)

1 unchanged sentence

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

17 unchanged sentences

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

FHLB Advances

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

Subordinated Notes

7 unchanged sentences

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:

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

(dollars in thousands) Fair Value

12 unchanged sentences

Time deposits Level 3 785,430 779,997 627,253 619,682

Brokered deposits Level 3 144,880 144,944 — —

Brokered time deposits Level 3 — — 144,880 144,944

Securities sold under agreements to repurchase Level 2 28,969 28,969 42,442 42,442

FHLB advances Level 3 13,231 13,159 12,623 12,621

Subordinated notes Level 3 39,553 38,316 39,474 36,993

36 unchanged sentences

The allowance for credit losses on unfunded commitments estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

The allowance for credit losses on unfunded commitments was $ 3.8 million as of December 31, 2023.

The allowance for credit losses on unfunded commitments was $ 3.1 million and $ 3.8 million as of December 31, 2024 and 2023, respectively.

HBT FINANCIAL, INC.

35 unchanged sentences

The plaintiff, a customer of State Bank of Lincoln, which previously merged with the Bank, alleges that the Bank breached its contract with the plaintiff by charging multiple insufficient funds fees or overdraft fees on a single customer-initiated transaction.

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

HBT FINANCIAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Definitive settlement agreements reflecting the terms of the agreement in principle were approved by the Court on December 15, 2023 in the DeBaere, et al case and on February 16, 2024 in the Miller, et al case.

1 unchanged sentence

The settlements do not include any admission of liability or wrongdoing by the Bank, and the Bank expressly denies any liability or wrongdoing with respect to any matter alleged in the Class Action and Receiver’s Action.

The Bank agreed in principle to the settlements to avoid the cost, risks and distraction of continued litigation.

The Bank agreed to the settlements to avoid the cost, risks and distraction of continued litigation.

The Company believes the settlements are in the best interests of the Company and its shareholders.

Accordingly, the Bank had in the aggregate $ 2.6 million accrued as of December 31, 2022 related to these matters.

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

3 unchanged sentences

The plaintiff, a customer of Town and Country Bank, which previously merged with the Bank, alleges that the Bank breached its contract with the plaintiff by charging overdraft fees for transactions that were authorized on a positive account balance, but when settled, settled into a negative balance.

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

A definitive settlement agreement reflecting the terms of the agreement in principle was approved by the Court on July 9, 2024.

The Bank made the one-time cash payment of $ 0.3 million during the third quarter of 2024.

The settlement does not include any admission of liability or wrongdoing by the Bank, and the Bank expressly denies any liability or wrongdoing with respect to any matter alleged in the case.

The Bank has agreed to the settlement to avoid the cost, risks, and distraction of continued litigation.

The Company believes the settlement is in the best interests of the Company and its shareholders.

An initial accrual of $ 0.2 million was recorded during the fourth quarter of 2023, reflecting management's best estimate at that time, and an additional $ 0.1 million accrual was recorded during the first quarter of 2024.

As of December 31, 2023, the Company had $ 0.2 million accrued related to this matter.

Heartland Bank and Trust Company v.

Meadows Mennonite Retirement Community Association, Inc.

This lawsuit arises out of a suit filed in the Circuit Court of Woodford County, Illinois, (the "Trial Court") by the Bank for breach of a note and commercial security agreement.

The defendant, Meadows Mennonite Retirement Community Association, Inc.

("Meadows"), a beneficiary of a trust for which Bank was trustee, filed a counterclaim for rescission of the note seeking compensatory and punitive damages, including attorneys’ fees.

In September 2024, the Appellate Court of Illinois Fourth District (the "Appellate Court") entered an order directing that summary judgment should be entered in favor of Meadows and against the Bank, rescinding the note and commercial security agreement.

The Appellate Court remanded the case to the Trial Court which will now determine Meadows' compensatory and punitive damages, including reasonable attorneys’ fees.

The Bank intends to vigorously defend the lawsuit.

However, the Company believes an unfavorable outcome is 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 $ 0.2 million in the aggregate during the fourth quarter and year ended December 31, 2023.

While the amount recorded reflects management’s best estimate as of December 31, 2023, the Company cannot yet offer an opinion on the estimated range of possible loss.

NOTE 23 - RELATED PARTY TRANSACTIONS

As of December 31, 2023 and 2022, loans to directors, executive officers, principal shareholders and their affiliated entities (“related parties”) totaled $ 1.1 million and $ 2.2 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 of related parties totaled $ 4.0 million and $ 22.0 million as of December 31, 2023 and 2022, respectively.

However, the Company believes an unfavorable outcome is reasonably possible at this time, as that term is used in assessing loss contingencies.

The Company is unable to predict when the matter will be resolved or potential costs or damages to be incurred.

HBT FINANCIAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 24 - RELATED PARTY TRANSACTIONS

As of December 31, 2024 and 2023, loans to directors, executive officers, principal shareholders and their affiliated entities (“related parties”) totaled $ 0.5 million and $ 1.1 million, respectively.

As of December 31, 2024 and 2023, deposits of related parties totaled $ 4.8 million and $ 4.0 million, respectively.

NOTE 25 - CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

14 unchanged sentences

Total liabilities and stockholders' equity $ 638,636 $ 584,688

HBT FINANCIAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Condensed Parent Company Only Statements of Income

27 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of securities — — ( 48 )

Proceeds from sales of equity securities 20 — —

Purchase of foreclosed assets from Heartland Bank — — ( 2,325 )

Proceeds from sale of foreclosed assets — 2,888 —

Net cash paid for acquisition of NXT Bancorporation, Inc.

— — ( 10,411 )

Net cash paid for acquisition of Town and Country — ( 37,523 ) —

Net cash used in investing activities ( 34,635 ) ( 2,325 ) ( 10,385 )

Net cash provided by (used in) investing activities 20 ( 34,635 ) ( 2,325 )

CASH FLOWS FROM FINANCING ACTIVITIES

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data