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What changed in HBT Financial, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HBT Financial, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+333 added−341 removedSource: 10-K (2026-03-06) vs 10-K (2025-03-07)

Top changes in HBT Financial, Inc.'s 2025 10-K

333 paragraphs added · 341 removed · 273 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

129 edited+34 added−39 removed56 unchanged
Biggest changeCommunity Reinvestment Act Requirements The Community Reinvestment Act of 1977 ("CRA") requires the Bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit needs of the entire community, including low- and moderate-income neighborhoods. The FDIC regularly assesses the Bank’s record of meeting the credit needs of its communities in dedicated examinations.
Biggest changeThe Bank and the Company also are subject to federal and state laws and regulations requiring notifications and disclosures regarding certain cybersecurity incidents. 16 Table of Contents Community Reinvestment Act Requirements The CRA imposes on the Bank a continuing and affirmative obligation, consistent with safe and sound operations, to help meet the credit needs of the entire community, including low- and moderate-income neighborhoods.
We focus on small and middle market businesses in the communities that we serve. Agriculture and Farmland With our roots in rural Illinois communities, we have a long history of financing agriculture production and land. We originate loans to agriculture producers for input costs, equipment, and land. Most of our agriculture loans are to family farms growing corn and soybeans.
We focus on small and middle market businesses in the communities that we serve. Agriculture and Farmland With our roots in rural Illinois communities, we have a long history of financing agriculture production and farmland. We originate loans to agriculture producers for input costs, equipment, and land. Most of our agriculture loans are to family farms growing corn and soybeans.
The Company has elected to operate as a financial holding company. To maintain its status as a financial holding company, the Company and the Bank must be well-capitalized, well-managed, and the Bank must have a least a satisfactory Community Reinvestment Act ("CRA") rating.
The Company has elected to operate as a financial holding company. To maintain its status as a financial holding company, the Company and the Bank must be well capitalized and well managed, and the Bank must have a least a satisfactory Community Reinvestment Act ("CRA") rating.
These final rules prohibit creditors from extending residential mortgage loans without regard for the consumer’s ability to repay and add restrictions and requirements to residential mortgage origination and servicing practices. In addition, these rules restrict the imposition of prepayment penalties and restrict compensation practices relating to residential mortgage loan origination.
These final rules prohibit creditors from extending residential mortgage loans without regard for the consumer’s ability to repay and add restrictions and requirements to residential mortgage origination and servicing practices. In addition, these rules restrict the imposition of prepayment penalties and compensation practices relating to residential mortgage loan origination.
The Bank must also comply with certain state consumer protection laws and requirements in the states in which it operates. 19 Table of Contents
The Bank also must comply with certain state consumer protection laws and requirements in the states in which it operates. 19 Table of Contents
The minimum capital levels for banking organizations have been expressed in terms of ratios of “capital” divided by “total assets.” The capital guidelines for U.S. banking organizations beginning in 1989 have been based upon international capital accords (known as the “Basel” accords) adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as implemented by the U.S. federal banking agencies on an interagency basis.
The minimum capital levels for banking organizations have been expressed in terms of ratios of “capital” divided by “total assets.” The capital guidelines for U.S. banking organizations beginning in 1989 have been based upon international capital accords (known as the “Basel” accords) adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as interpreted and implemented by the U.S. federal banking agencies on an interagency basis.
“Control” is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10% and 24.99% ownership. Capital Requirements Bank holding companies are required to maintain capital in accordance with Federal Reserve capital adequacy requirements.
“Control” is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company, but may be presumed to arise under certain circumstances between 10% and 24.99% ownership. Capital Requirements Bank holding companies are required to maintain capital in accordance with Federal Reserve capital adequacy requirements.
The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including the Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over providers with more than $10 billion in assets.
Consumer Financial Services The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including the Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over providers with more than $10 billion in assets.
Consequently, the Company is subject to the information, proxy solicitation, insider trading, and other restrictions and requirements of the SEC under the Exchange Act. Corporate Governance The Dodd-Frank Act addressed many investor protection, corporate governance, and executive compensation matters that will affect most U.S. publicly traded companies.
Consequently, the Company is subject to the information, proxy solicitation, insider trading, and other restrictions and requirements of the SEC under the Exchange Act. Corporate Governance/Incentive Compensation The Dodd-Frank Act addressed many investor protection, corporate governance, and executive compensation matters that will affect most U.S. publicly traded companies.
The FDIC has adopted a risk-based assessment system, whereby FDIC-insured institutions pay insurance premiums at rates based on their risk classification. For institutions like the Bank that are not considered large and highly complex banking organizations, the risk-based assessment is now based on examination ratings and financial ratios.
The FDIC has adopted a risk-based assessment system, whereby FDIC-insured institutions pay insurance premiums at rates based on their risk classification. For institutions like the Bank that are not considered large and highly complex banking organizations, the risk-based assessment is based on examination ratings and financial ratios.
The Basel III Rule The U.S. banking agencies adopted the U.S. Basel III regulatory capital reforms, and, at the same time, effected changes required by the Dodd-Frank Act, in regulations that were effective (with certain phase-ins) in 2015 (the “Basel III Rule”).
The Basel III Rule The U.S. federal banking agencies adopted the U.S. Basel III regulatory capital reforms, and, at the same time, effected changes required by the Dodd-Frank Act, in regulations that were effective in 2015 (with certain phase-ins) (the “Basel III Rule”).
The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (“Regulatory Relief Act”) eliminated questions about the applicability of certain Dodd-Frank Act reforms to community banking systems, including relieving us of any requirement to engage in mandatory stress tests, maintain a risk committee or comply with the Volcker Rule’s complicated prohibitions on proprietary trading and ownership of private funds.
The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (“Regulatory Relief Act”) eliminated questions about the applicability of certain Dodd-Frank Act reforms to community banking organizations, including relieving us of any requirement to engage in mandatory stress tests, maintain a risk committee, or comply with the Volcker Rule’s complicated prohibitions on proprietary trading and ownership of private funds.
The level and speed of deposit outflows contributing to the failures of Silicon Valley Bank, Signature Bank and First Republic Bank in the first half of 2023 was unprecedented and contributed to acute liquidity and funding strain.
The level and speed of deposit outflows contributing to the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 was unprecedented and contributed to acute liquidity and funding strain.
As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes, and by the regulations and policies of various banking agencies, including the Illinois Department of Financial and Professional Regulation (the “IDFPR”), the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the FDIC, and the Consumer Financial Protection Bureau (the “CFPB”).
As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes, and by the regulations and policies of various banking agencies, including the Illinois Department of Financial and Professional Regulation (the “IDFPR”), the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the FDIC, and federal and state consumer financial protection agencies.
One test, referred to as the Liquidity Coverage Ratio, or LCR, is designed to ensure that the banking organization has an adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario.
One test, referred to as the Liquidity Coverage Ratio, is designed to ensure that the banking organization has an adequate stock of unencumbered high quality liquid assets that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario.
Congress provided an “off-ramp” for institutions, like the Company, with total consolidated assets of less than $10 billion as part of the Regulatory Relief Act. Section 201 of the Regulatory Relief Act specifically instructed the federal banking agencies to establish a single “Community Bank Leverage Ratio” (“CBLR”) of between 8 and 10%.
In response, Congress provided an “off-ramp” for institutions, like the Company, with total consolidated assets of less than $10 billion as part of the Regulatory Relief Act. Section 201 of the Regulatory Relief Act specifically instructed the federal banking agencies to establish a single “Community Bank Leverage Ratio” (“CBLR”) of between 8% and 10%.
These restrictions have not had, and are not currently expected to have, a material impact on the operations of the Bank. The Bank may be required to seek approval from the IDFPR, the FDIC and other banking or financial services agencies before engaging in certain acquisitions or mergers under applicable state and federal law.
These restrictions have not had, and are not currently expected to have, a material impact on the operations of the Bank. The Bank may be required to obtain approval from the IDFPR, the FDIC, and other applicable banking or financial services agencies before engaging in certain acquisitions or mergers under applicable state and federal law.
They also impact the Bank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers. In addition, the Bank is required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information.
They also limit the Bank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers. In addition, the Bank is required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information.
Mortgage lenders are required to determine consumers’ ability-to-repay in one of two ways. The first alternative requires the mortgage lender to consider eight underwriting factors when making the credit decision. Alternatively, the mortgage lender can originate “qualified mortgages,” which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements.
Mortgage lenders are required to determine consumers’ ability-to-repay in one of two ways. The first method requires the mortgage lender to consider eight underwriting factors when making the credit decision. Alternatively, the mortgage lender can originate “qualified mortgages,” which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements.
The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ... as to be a proper incident thereto.” This authority permits the Company to engage in a variety of banking-related businesses, including the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development), and mortgage banking and brokerage services.
The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ... as to be a proper incident thereto.” This authority permits the Company to engage in a variety of banking-related businesses, including, among other things, the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development), and mortgage banking and brokerage services.
The Bank must also comply with stringent economic and trade sanctions administered and enforced by the Office of Foreign Assets Control.
The Bank also must comply with stringent economic and trade sanctions regimes administered and enforced by the Office of Foreign Assets Control.
SUPERVISION AND REGULATION General FDIC-insured institutions, their holding companies, and their affiliates are extensively regulated under federal and state law.
SUPERVISION AND REGULATION General FDIC-insured banking institutions, their holding companies, and their affiliates are extensively regulated under federal and state law.
The BHCA does not place territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies.
The BHCA does not place formal territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies.
In addition, federal law and regulations may affect the terms on which any person who is a director or officer of the Company or the Bank, or a principal shareholder of the Company, may obtain credit from banks with which the Bank maintains a correspondent relationship.
In addition, federal law and regulations may govern the terms on which any person who is a director or officer of the Company or the Bank, or a principal shareholder of the Company, may obtain credit from banks with which the Bank maintains a correspondent relationship.
The other test, known as the Net Stable Funding Ratio, or NSFR, is designed to promote more intermediate and long-term funding of the assets and activities of FDIC-insured institutions over a one-year horizon.
The other test, known as the Net Stable Funding Ratio, is designed to promote more intermediate- and long-term funding of the assets and activities of FDIC-insured institutions over a one-year horizon.
We believe our scale in these mid-sized markets and the relative scarcity of money center banking institutions operating in them creates a highly defensible market position whereby we can continue to maintain our funding cost advantage relative to our peers. We believe the Chicago MSA provides significant opportunities for loan growth.
We believe our scale in these mid-sized markets and the relative scarcity of money center banking institutions operating in them creates a highly defensible market position whereby we can continue to maintain our funding 5 Table of Contents cost advantage relative to our peers. We believe the Chicago MSA provides significant opportunities for loan growth.
In reaction to the global financial crisis, and particularly following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), we experienced heightened regulatory requirements and scrutiny.
In response to the global financial crisis, and particularly following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), we experienced heightened regulatory requirements and scrutiny.
Safety and Soundness Standards/Risk Management The federal banking agencies have adopted operational and managerial standards to promote the safety and soundness of FDIC-insured institutions. The standards apply to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality, and earnings.
Safety and Soundness Standards/Risk Management The federal banking agencies have adopted operational and managerial standards to promote the safety and soundness of FDIC-insured institutions. The standards apply to internal controls, information systems, internal 15 Table of Contents audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality, and earnings.
For a discussion of capital requirements, see “—The Role of Capital” above. 11 Table of Contents Dividend Payments The Company’s ability to pay dividends to its stockholders may be affected by both general corporate law considerations and the policies and capital requirements of the Federal Reserve applicable to bank holding companies.
For a discussion of capital requirements, see “—The Role of Capital” above. Dividend Payments The Company’s ability to pay dividends to its stockholders may be affected by both general corporate law considerations and the policies and capital requirements of the Federal Reserve applicable to bank holding companies.
Further, we believe our history of maintaining strong asset quality and minimal levels of problem assets even through the global financial crisis confirms the effectiveness of our strong credit underwriting. 5 Table of Contents Pursue Strategic Acquisitions Our management team has a history of successfully integrating strategic acquisitions over several decades.
Further, we believe our history of maintaining strong asset quality and minimal levels of problem assets even through the global financial crisis confirms the effectiveness of our strong credit underwriting. Pursue Strategic Acquisitions Our management team has a history of successfully integrating strategic acquisitions over several decades.
The banking agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law, or are otherwise inconsistent with laws and regulations.
The banking agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, violate applicable law, or are otherwise inconsistent with laws and regulations.
As of December 31, 2024, we had total assets of $5.0 billion, loans held for investment of $3.5 billion, and total deposits of $4.3 billion. Through our bank subsidiary, Heartland Bank and Trust Company (“Heartland Bank” or the “Bank”), we provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa.
As of December 31, 2025, we had total assets of $5.1 billion, loans held for investment of $3.5 billion, and total deposits of $4.4 billion. Through our bank subsidiary, Heartland Bank and Trust Company (“Heartland Bank” or the “Bank”), we provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa.
Because the Bank is not a member of the Federal Reserve System, it is subject to the examination, supervision, reporting, and enforcement requirements of the FDIC, as the Bank’s primary federal regulator. Deposit Insurance As an FDIC-insured institution, the Bank is required to pay deposit insurance premium assessments to the FDIC.
Because the Bank is not a member of the Federal Reserve System ( i.e. , a nonmember bank), it is subject to the examination, supervision, reporting, and enforcement requirements of the FDIC, as the Bank’s primary federal regulator. Deposit Insurance Assessments As an FDIC-insured institution, the Bank is required to pay deposit insurance premium assessments to the FDIC.
Moreover, the payment of dividends by any FDIC-insured institution is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and an FDIC-insured institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized.
Moreover, the payment of dividends by any FDIC- 14 Table of Contents insured institution is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and an FDIC-insured institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized.
Lending Products and Services We offer a broad range of lending products with a focus on regulatory commercial real estate ("CRE"), which includes non-owner occupied CRE, construction and land development (“C&D”) and multi-family; commercial and industrial ("C&I") and owner-occupied CRE; agricultural and farmland; and one-to-four family residential loans. We also provide municipal, consumer and other loans.
Lending Products and Services We offer a broad range of lending products with a focus on regulatory commercial real estate (“CRE”), which includes non-owner occupied CRE, construction and land development (“C&D”) and multi-family; commercial and industrial (“C&I”) and owner-occupied CRE; agricultural and farmland; and one-to-four family residential loans. We also provide municipal, consumer and other loans.
The federal banking agencies also have released specific risk management guidance on certain topics, including third-party relationships, in response to the proliferation of relationships between banking organizations and financial technology companies (although the guidance applies more broadly).
The federal banking agencies also have issued guidance on certain risk-management topics, including third-party relationships, in response to the proliferation of relationships between banking organizations and financial technology companies (although the guidance applies more broadly).
These laws, and the regulations of the banking agencies issued under them, affect, among other things, the scope of our business, the kinds and amounts of investments that the Company and the Bank may make, required capital levels relative to assets, the nature and amount of collateral for loans, the establishment of branches, the ability of the Company and the Bank to merge, consolidate and acquire, dealings with the Company’s and the Bank’s insiders and affiliates, and our payment of dividends.
These laws, and the regulations of the banking agencies issued under them, affect, among other things, the scope of our business, the kinds and amounts of investments that the Company and the Bank may make, required capital levels relative to assets, the nature and amount of collateral for loans, the establishment of branches, the ability of the Company and the Bank to 7 Table of Contents merge, consolidate, and acquire, transactions with the Company’s and the Bank’s insiders and affiliates, and our payment of dividends.
For example, a banking organization that is well-capitalized may: (i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities; (ii) qualify for expedited processing of other required notices or applications; and (iii) accept, roll-over, or renew brokered deposits.
For example, a well capitalized banking organization may: (i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain activities; (ii) receive expedited processing of other required notices or applications; and (iii) accept, roll-over, or renew brokered deposits.
In the event that a member financial institution fails, the right of the FHLB of Chicago to seek repayment of funds loaned to that institution will take priority (a super lien) over the rights of all other creditors.
If a member financial institution fails, the right of the FHLB of Chicago to seek repayment of funds loaned to that institution will take priority (a super lien) over the rights of all other creditors.
The acquisition of Town and Country further enhanced HBT Financial’s footprint in central Illinois and expanded our footprint into metro-east St. Louis. At the time of acquisition, Town and Country Bank operated ten full-service branch locations which began operating as branches of Heartland Bank. The core system conversion was successfully completed in April 2023.
The acquisition of Town and Country further enhanced HBT Financial’s footprint in central Illinois and expanded our footprint into metro-east St. Louis. At the time of acquisition, Town and Country Bank operated 10 full-service branch locations which began operating as branches of Heartland Bank. The core system conversion was successfully completed in April 3 Table of Contents 2023.
As a bank holding company, we are registered with, and are subject to regulation supervision and enforcement by, the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHCA”).
Supervision and Regulation of the Company General As the sole shareholder of the Bank, we are a bank holding company. As a bank holding company, we are registered with, and are subject to regulation supervision and enforcement by, the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHCA”).
In general, the safety and soundness standards prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals.
These safety and soundness standards generally prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals.
Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking, and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity, or that the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally.
Financial Holding Company Election Bank holding companies that meet certain BHCA eligibility requirements and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking, and any other activity that: (i) the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or 11 Table of Contents order is financial in nature or incidental to any such financial activity; or (ii) the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally.
These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged on loans or paid on deposits, which may impact the Company's business and operations and that of its subsidiary bank. 12 Table of Contents Federal Securities Regulation The Company’s common stock is registered with the SEC under the Securities Act of 1933, as amended (“Securities Act”), and the Securities Exchange Act of 1934, as amended (“Exchange Act”).
These means are used in varying combinations to influence overall growth and distribution of bank loans, investments, and deposits, and their use may affect interest rates charged on loans or paid on deposits, which may impact the Company's business and operations and that of its subsidiary bank. 12 Table of Contents Federal Securities Regulation The Company’s common stock is registered with the SEC under the Securities Act and the Exchange Act.
Specifically, the board of directors of the FHLB of Chicago can increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency.
Specifically, the board of directors of the FHLB of Chicago can increase the minimum investment requirements 17 Table of Contents if it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency.
We are required to file with the Federal Reserve periodic reports of our operations, and such additional information regarding us and our subsidiaries as the Federal Reserve may require. 10 Table of Contents Acquisitions, Activities and Financial Holding Company Election The primary purpose of a bank holding company is to control and manage banks.
We are required to file with the Federal Reserve periodic reports of our operations, and such additional information regarding us and our subsidiaries as the Federal Reserve may require. Acquisitions and Activities The primary purpose of a bank holding company is to control and manage banks.
Certain limitations and reporting requirements also are placed on extensions of credit by the Bank to its directors and officers, to directors and officers of the Company and its subsidiaries, to principal shareholders of the Company, and to “related interests” of such directors, officers and principal shareholders under state and/or federal law.
Certain limitations and reporting requirements also apply to extensions of credit by the Bank to its directors and officers, to directors and officers of the Company and its subsidiaries, to principal shareholders of the Company, and to “related interests” of such directors, officers, and principal shareholders under state and/or federal law.
Not only did it increase most of the required minimum capital ratios in effect prior to January 1, 2015, but, in requiring that forms of capital be of higher quality to absorb loss, it introduced the concept of Common Equity Tier 1 Capital, which consists primarily of common stock, related surplus (net of Treasury stock), retained earnings, and Common Equity Tier 1 minority interests subject to certain regulatory adjustments.
Not only did it increase most of the required minimum capital ratios in effect prior to 2015, but, by requiring that capital instruments be of higher quality to absorb loss, it introduced the concept of Common Equity Tier 1 Capital (“CET1”), which consists primarily of common stock, related surplus (net of treasury stock), retained earnings, and CET1 minority interests, subject to certain regulatory adjustments and deductions.
The purpose of the conservation buffer is to ensure that banking organizations maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress. Factoring in the conservation buffer increases the minimum ratios depicted above to 7% for Common Equity Tier 1 Capital, 8.5% for Tier 1 Capital and 10.5% for Total Capital.
The purpose of the conservation buffer is to ensure that banking organizations maintain a cushion of capital that can be used to absorb losses during periods of financial and economic stress. Factoring in the capital conservation buffer increases the minimum ratios described above to 7% for CET1, 8.5% for Tier 1 Capital, and 10.5% for Total Capital.
As described above, the Bank exceeded its capital requirements under applicable guidelines as of December 31, 2024. Notwithstanding the availability of funds for dividends, however, the FDIC and the IDFPR may prohibit the payment of dividends by the Bank if either or both determine that such payment would constitute an unsafe or unsound practice.
As described above, the Bank exceeded its capital requirements under applicable guidelines as of December 31, 2025. Notwithstanding the availability of funds for dividends, however, the FDIC and the IDFPR may prohibit the payment of dividends by the Bank if either agency determines that such payment would constitute an unsafe or unsound practice.
However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments of a type, or in an amount, that are not permissible for a national bank.
However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments that are not permissible for a national bank.
HUMAN CAPITAL RESOURCES Employees At December 31, 2024, we had 844 full-time equivalent employees. Our employees are not represented by a collective bargaining unit, and we consider our working relationship with our employees to be good. At December 31, 2024, our average tenure was 7.2 years.
HUMAN CAPITAL RESOURCES Employees At December 31, 2025, we had 826 full-time equivalent employees. Our employees are not represented by a collective bargaining unit, and we consider our working relationship with our employees to be good. At December 31, 2025, our average tenure was 7.5 years.
As of December 31, 2024, the Company had regulatory capital in excess of the Federal Reserve’s requirements and met the Basel III Rule requirements to be well-capitalized. The Company also is in compliance with the capital conservation buffer.
As of December 31, 2025, the Company had regulatory capital in excess of the Federal Reserve’s requirements and met the Basel III Rule requirements to be well capitalized. The Company and the Bank also were in compliance with the capital conservation buffer.
Prompt Corrective Action The concept of a banking organization being “well-capitalized” is part of a regulatory enforcement regime that provides the federal banking agencies with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution.
Prompt Corrective Action The concept of a banking organization being “adequately capitalized” or “well capitalized,” as defined above, is part of a regulatory enforcement regime that provides the federal banking agencies with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution.
Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries, subject to certain exceptions, from engaging as principal in any activity that is not permitted for a national bank unless the bank meets, and continues to meet, its minimum regulatory capital requirements and the FDIC determines that the activity would not pose a significant risk to the DIF.
Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries from engaging as principal in any activity that is not permitted for a national bank, unless they meet, and continue to meet, minimum regulatory capital requirements, and the FDIC determines that the activity would not pose a significant risk to the DIF.
The Basel III Rule also changed the definition of capital by establishing more stringent criteria that instruments must meet to be considered Additional Tier 1 Capital (primarily non-cumulative perpetual preferred stock that meets certain requirements) and Tier 2 Capital (primarily other types of preferred stock and subordinated debt, subject to limitations).
The Basel III Rule also changed the definition of regulatory capital by establishing more stringent criteria for instruments to qualify as Additional Tier 1 Capital (primarily non-cumulative perpetual preferred stock that meets certain requirements) and Tier 2 Capital (primarily other types of preferred stock and subordinated debt, subject to limitations).
Noncompliance with safety and soundness also may constitute grounds for other enforcement action by the federal banking agencies, including cease and desist orders and civil money penalty assessments. 15 Table of Contents During the past decade, the banking agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the FDIC-insured institutions that they supervise.
Noncompliance with safety and soundness also may constitute grounds for enforcement action by the federal banking agencies, including cease and desist orders and civil money penalty assessments. Federal banking agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of FDIC-insured institutions.
In its October 2024 semiannual update, the FDIC stated that the reserve ratio likely will reach the statutory minimum by the September 30, 2028 deadline, and no adjustments to the base assessment rates is currently projected.
In its May 2025 report, the FDIC stated that the reserve ratio likely will reach the statutory minimum by the September 30, 2028 deadline, and no adjustments to the base assessment rates is currently projected.
The BHCA generally prohibits us from acquiring direct or indirect ownership or control of 5% or more of a class of the voting shares of any company that is not a bank, and from engaging in any business other than that of banking, managing and controlling banks, or furnishing services to banks and their subsidiaries.
The BHCA generally prohibits us from acquiring direct or indirect ownership or control of 5% or more of an outstanding class of the voting shares of any nonbanking entity, and from engaging in any business other than that of banking, managing, and controlling banks, or furnishing services to banks and their subsidiaries.
These laws require the Bank to periodically disclose its privacy policies and practices relating to sharing such information, and permit consumers to opt out of their ability to share information with unaffiliated third parties under certain circumstances.
These laws require the Bank to periodically disclose its privacy policies and practices regarding the sharing of such information, and, in certain circumstances, permit consumers to opt out of the sharing of information with unaffiliated third parties.
Well-Capitalized Requirements The capital ratios described above are minimum standards for banking organizations to be considered “adequately capitalized.” Banking agencies uniformly encourage banking organizations to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements.
Well Capitalized Requirements The capital ratios described above represent minimum standards for banking organizations to be considered “adequately capitalized.” Banking agencies uniformly encourage banking organizations to maintain capital at levels above these minimums and to be “well capitalized.” To that end, federal law and regulations provide 9 Table of Contents various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements.
The Dodd-Frank Act also directed the Federal Reserve, together with the other federal banking and financial services agencies, to promulgate rules prohibiting excessive compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded. Supervision and Regulation of the Bank General The Bank is an Illinois-chartered bank.
The Dodd-Frank Act also directed the Federal Reserve, together with the other federal banking and financial services agencies, to promulgate rules prohibiting excessive incentive-based compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded.
Concentrations in Commercial Real Estate Concentration risk exists when FDIC-insured institutions deploy too many assets to any one industry or segment. A concentration in CRE is one example of regulatory concern, which has been subject to additional scrutiny by federal banking agencies as well as the SEC (for publicly-traded banking organizations) in recent years.
Concentrations in Commercial Real Estate Concentration risk exists when FDIC-insured institutions allocate a disproportionate amount of assets to any one industry or economic segment. Concentration in CRE lending is one area of regulatory focus, which has been subject to additional scrutiny by federal banking agencies as well as the SEC (for publicly-traded banking organizations) in recent years.
Depending on the capital category to which a banking organization is assigned, the banking agencies' corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institution’s asset growth and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate that the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution.
Depending on the capital category to which a banking organization is assigned, the banking agencies' corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institution’s asset growth and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate that the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution. 10 Table of Contents Community Bank Capital Simplification Community banking organizations have long raised concerns with the federal banking agencies about the regulatory burden, complexity, and costs associated with certain provisions of the Basel III Rule.
Because of the risks attendant to their business, FDIC-insured institutions, such as banks, as well as their holding companies (i.e., banking organizations) generally are required to hold more capital than other businesses, which directly affects our earnings capabilities.
The Role of Capital Regulatory capital represents the net assets of a banking organization available to absorb losses. Because of the risks attendant to their business, FDIC-insured institutions, such as banks, as well as their holding companies (i.e., banking organizations), generally are required to hold more capital than other businesses, which directly affects our earnings capabilities.
In addition, banking organizations that want to make capital distributions (including for dividends and repurchases of stock), and pay discretionary bonuses to executive officers without restriction, also must maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer.
In addition, banking organizations that want to make capital distributions (including dividends and stock repurchases), and pay discretionary bonuses to executive officers without restriction, must maintain 2.5% in the form of CET1 for a capital conservation buffer.
Although regulatory standards do not have the force of law, if an institution operates in an unsafe and unsound manner, the FDIC-insured institution’s primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance.
Although regulatory standards do not have the force of law, if an FDIC-insured institution operates in an unsafe and unsound manner, its primary federal regulator may require submission of a plan to achieve and maintain compliance.
On December 18, 2015, and again in recent years, the federal banking agencies issued statements to reinforce prudent risk-management practices related to CRE lending, having observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards.
In recent years, the federal banking agencies issued statements to reinforce prudent risk-management practices related to CRE lending, in response to observed growth in CRE markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards.
Although capital historically has been one of the key measures of the financial health of both bank holding companies and banks, its role became fundamentally more important in the wake of the global financial crisis, as the banking agencies recognized that the amount and quality of capital held by banking organizations prior to that crisis was insufficient to absorb losses during periods of severe stress.
Although capital historically has been one of the key measures of the financial health of both bank holding companies and banks, its role became fundamentally more important in the wake of the global financial crisis, as the banking agencies recognized that the amount and quality of capital held by banking organizations prior to that crisis was insufficient to absorb losses during periods of severe stress. 8 Table of Contents Capital Levels Banking organizations have been required to hold minimum levels of capital based on guidelines established by the federal banking agencies since 1983.
These security and privacy policies and procedures are in effect across all businesses and geographic locations.
These security and privacy policies and procedures are applied consistently across all businesses and geographic locations.
Our competition for loans comes principally from commercial banks, savings banks, mortgage banking companies, the U.S. Government, credit unions, leasing companies, insurance companies, real estate conduits and other companies that provide financial services to businesses and individuals.
Our competition for loans comes principally from commercial banks, savings banks, mortgage banking companies, the U.S. Government, credit unions, leasing companies, insurance companies, real estate conduits and other companies that provide financial services to businesses and individuals. Competition for loans remains strong and has resulted in competitive pressures on loan interest rates and terms.
In addition, federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger.
With respect to interstate merger and acquisitions, federal law permits state banks to merge with out-of-state banks subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law requirements that the merging bank has been in existence for a minimum period of time (not to exceed five years), prior to the merger.
We face increasing competition for deposits from online financial institutions and non-depository competitors such as the mutual fund industry, securities and brokerage firms, and insurance companies.
Our most direct competition for deposits has historically come from commercial banks and credit unions. We face increasing competition for deposits from online financial institutions and non-depository competitors such as the mutual fund industry, securities and brokerage firms, and insurance companies.
The Basel III Rule requires banking organizations to maintain minimum capital ratios as follows: • A ratio of Common Equity Tier 1 Capital equal to 4.5% of risk-weighted assets; • A ratio of Tier 1 Capital equal to 6% of risk-weighted assets; • A continuation of the minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets; and • A leverage ratio of Tier 1 Capital to total quarterly average assets equal to 4% in all circumstances.
The Basel III Rule requires banking organizations to maintain minimum capital ratios to be deemed "adequately capitalized" as follows: • A ratio of CET1 equal to 4.5% of risk-weighted assets; • A ratio of Tier 1 Capital equal to 6% of risk-weighted assets; • A ratio of Total Capital (Tier 1 plus Tier 2 Capital) equal to 8% of risk-weighted assets; and • A leverage ratio of Tier 1 Capital to total quarterly average assets equal to 4%.
In addition to approval from the Federal Reserve that may be required in certain circumstances, prior approval for acquisitions made by the Company may be required from other agencies, such as the IDFPR or other agencies that regulate the target company of an acquisition.
In addition to approval from the Federal Reserve that may be required in certain circumstances, prior approval for the establishment or acquisitions of nonbank subsidiaries by a bank holding company may be required from other agencies, such as the agencies that regulate such nonbank company.
It is possible under the Basel III Rule to be well-capitalized while remaining out of compliance with the capital conservation buffer discussed above. As of December 31, 2024: (i) the Bank was not subject to a directive from the FDIC or the IDFPR to increase its capital; and (ii) the Bank was well-capitalized, as defined by FDIC regulations.
Under the Basel III Rule, a banking organization may be considered "well capitalized," while not complying with the capital conservation buffer requirement described above. As of December 31, 2025: (i) the Bank was not subject to a directive from the FDIC or the IDFPR to increase its capital; and (ii) the Bank was well capitalized, as defined by FDIC regulations.
Higher capital levels also could be required if warranted by the particular circumstances or risk profiles of individual banking organizations. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by concentrations of credit, nontraditional activities, or securities trading activities.
In addition, the banking agencies may require higher capital levels where warranted by an organization’s specific risk profile or operating circumstances. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by credit concentrations, nontraditional activities, or securities trading activities.
For this purpose, the reserve ratio is the DIF balance divided by estimated insured deposits. In response to the global financial crisis, the Dodd-Frank Act increased the minimum reserve ratio from 1.15% to 1.35% of the estimated amount of total insured deposits.
In response to the global financial 13 Table of Contents crisis, the Dodd-Frank Act increased the minimum reserve ratio from 1.15% to 1.35% of the estimated amount of total insured deposits.
In general, a qualified mortgage is a residential mortgage loan that does not have certain high-risk features, such as negative amortization, interest-only payments, balloon payments, or a term exceeding 30 years.
In general, a qualified mortgage is a residential mortgage loan that does not have certain high-risk features, such as negative amortization, interest-only payments, balloon payments, or a term exceeding 30 years. In addition, to be a qualified mortgage, the points and fees paid by a consumer cannot exceed applicable thresholds.
The Company and the Bank are both subject to the Basel III Rule. The Basel III Rule also increased the required quantity and quality of capital.
The Basel III Rule also increased the required quantity and quality of capital.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of the Company, even if doing so would benefit our stockholders. 36 Table of Contents These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
Biggest changeThese anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of the Company, even if doing so would benefit our stockholders.
The Basel III Rule requires us to maintain a minimum Common Equity Tier 1 capital ratio of 4.5%, a minimum total Tier 1 capital ratio of 6%, a minimum total capital ratio of 8% and a minimum Tier 1 leverage ratio of 4%, 29 Table of Contents and a capital conservation buffer of greater than 2.5% of risk-weighted assets (the "Capital Conservation Buffer").
The Basel III Rule requires us to maintain a minimum Common Equity Tier 1 capital ratio of 4.5%, a minimum total Tier 1 capital ratio of 6%, a minimum total capital ratio of 8% and a minimum Tier 1 leverage ratio of 4%, and a capital conservation buffer of greater than 2.5% of risk-weighted assets (the "Capital Conservation 29 Table of Contents Buffer").
It is the 31 Table of Contents Bank’s current practice to avoid knowingly providing banking products or services to entities or individuals that directly manufacture, distribute, or dispense marijuana or hemp products, or those with a significant financial interest in such entities.
It is the Bank’s current practice to avoid knowingly providing banking products or 31 Table of Contents services to entities or individuals that directly manufacture, distribute, or dispense marijuana or hemp products, or those with a significant financial interest in such entities.
The success of our agricultural loans, and commercial loans serving the agriculture industry, may be adversely affected by many factors outside the control of the borrower, including: • adverse weather conditions, adverse impacts of climate change, restrictions on water supply or other conditions that prevent the planting of a crop or limit crop yields, or that affect crop harvesting; • loss of crops or livestock due to disease or other factors; • declines in the market prices or demand for agricultural products (both domestically and internationally), for any reason; • increases in production costs (such as the costs of labor, rent, feed, fuel and fertilizer); • adverse changes in interest rates, currency exchange rates, agricultural land values or other factors that may affect delinquency levels and credit losses on agricultural loans; • the impact of government policies and regulations (including changes in price supports, subsidies, government-sponsored crop insurance, minimum ethanol content requirements for gasoline, tariffs, trade barriers and health and environmental regulations); • access to technology and the successful implementation of production technologies; and • changes in the general economy that could affect the availability of off-farm sources of income and prices of real estate for borrowers.
The success of our agricultural loans, and commercial loans serving the agriculture industry, may be adversely affected by many factors outside the control of the borrower, including: • adverse weather conditions, adverse impacts of climate change, restrictions on water supply or other conditions that prevent the planting of a crop or limit crop yields, or that affect crop harvesting; • loss of crops or livestock due to disease or other factors; • declines in the market prices or demand for agricultural products (both domestically and internationally), for any reason; • increases in production costs (such as the costs of labor, rent, feed, fuel and fertilizer); • adverse changes in interest rates, currency exchange rates, agricultural land values or other factors that may affect delinquency levels and credit losses on agricultural loans; • the impact of government policies and regulations (including changes in price supports, tariffs, trade policy, subsidies, government-sponsored crop insurance, minimum ethanol content requirements for gasoline, trade barriers and health and environmental regulations); • access to technology and the successful implementation of production technologies; and • changes in the general economy that could affect the availability of off-farm sources of income and prices of real estate for borrowers.
In addition, if interest rates were to rise in response to elevated levels of inflation, the value of our securities and loan portfolios may be negatively impacted. Continued elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness.
In addition, if interest rates were to rise in response to elevated levels of inflation, the value of our securities and loan portfolios may be negatively impacted. Elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness.
The banking laws and regulations applicable to us govern a variety of matters, including, among other things, the types of business activities in which we and our subsidiaries can engage; permissible types, amounts and terms of loans and investments we may make; the maximum interest rate that we may charge; the amount of reserves we must hold against deposits we take; the types of deposits we may accept; maintenance of adequate capital and liquidity; changes in the control of us and the Bank; restrictions on dividends or other capital distributions; and 28 Table of Contents establishment of new offices or branches.
The banking laws and regulations applicable to us govern a variety of matters, including, among other things, the types of business activities in which we and our subsidiaries can engage; permissible types, amounts and terms of loans and investments we may make; the maximum interest rate that we may charge; the amount of reserves we must hold against deposits we take; the types of deposits we may accept; maintenance of adequate capital and liquidity; changes in the control of us and the Bank; restrictions on dividends or other capital distributions; and establishment of new offices or branches.
Additionally, an increase in interest rates may, among other things, reduce the demand for loans, increase the cost of deposit and wholesale funding, reduce our ability to originate loans and decrease prepayments on our loan and securities portfolio.
Additionally, elevated interest rates or an increase in interest rates may, among other things, reduce the demand for loans, increase the cost of deposit and wholesale funding, reduce our ability to originate loans and decrease prepayments on our loan and securities portfolio.
Voting Trust U/A/D 5/4/2016, has significant influence over us, and its interests could conflict with those of our other stockholders. As of December 31, 2024, our principal stockholder, Heartland Bancorp, Inc. Voting Trust U/A/D 5/4/2016 (the "Voting Trust”), owned approximately 54.5% of the outstanding shares of our common stock and its trustee is our Executive Chairman.
Voting Trust U/A/D 5/4/2016, has significant influence over us, and its interests could conflict with those of our other stockholders. As of December 31, 2025, our principal stockholder, Heartland Bancorp, Inc. Voting Trust U/A/D 5/4/2016 (the "Voting Trust”), owned approximately 54.8% of the outstanding shares of our common stock and its trustee is our Executive Chairman.
This focus has intensified in recent years, with regulators and prosecutors focusing on a variety of financial institution practices and requirements, including foreclosure, overdraft fees, compliance with applicable consumer protection laws, and compliance with anti-money laundering statutes, the BSA and sanctions administered by the Office of Foreign Assets Control of the Treasury.
This focus has intensified in recent years, 32 Table of Contents with regulators and prosecutors focusing on a variety of financial institution practices and requirements, including foreclosure, overdraft fees, compliance with applicable consumer protection laws, and compliance with anti-money laundering statutes, the BSA and sanctions administered by the Office of Foreign Assets Control of the Treasury.
Moreover, several large corporations, including financial institutions and retail companies, have suffered major data breaches, in some cases exposing not only confidential and proprietary corporate information, but also 26 Table of Contents sensitive financial and other personal information of their customers and employees and subjecting them to potential fraudulent activity.
Moreover, several large corporations, including financial institutions and retail companies, have suffered major data breaches, in some cases exposing not only confidential and proprietary corporate information, but also sensitive financial and other personal information of their customers and employees and subjecting them to potential fraudulent activity.
As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it. Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.
As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it. 35 Table of Contents Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.
If our reputation is negatively affected, by the intentional, inadvertent or unsubstantiated misconduct of our employees, directors, customers, third parties, or otherwise, our business and, therefore, our operating results and the value of our stock may be materially adversely affected. 39 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If our reputation is negatively affected, by the intentional, inadvertent or unsubstantiated misconduct of our employees, directors, customers, third parties, or otherwise, our business and, therefore, our operating results and the value of our stock may be materially adversely affected. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
There continues to be a rise in electronic fraudulent activity, security breaches and cyber-attacks within the financial services industry, including as a result of increasingly sophisticated methods of conducting cyber-attacks, including those employing artificial intelligence.
There continues to be a rise in electronic fraudulent activity, security breaches and cyber-attacks within the financial services industry, including as a result of 26 Table of Contents increasingly sophisticated methods of conducting cyber-attacks, including those employing artificial intelligence.
Our business is subject to increased litigation and regulatory enforcement risks due to a number of factors, including the highly regulated nature of the financial services industry and the focus of state and federal 32 Table of Contents prosecutors on banks and the financial services industry generally.
Our business is subject to increased litigation and regulatory enforcement risks due to a number of factors, including the highly regulated nature of the financial services industry and the focus of state and federal prosecutors on banks and the financial services industry generally.
Any decision to declare and pay 35 Table of Contents dividends will be dependent on a variety of factors, including our financial condition, earnings, legal requirements, our general liquidity needs, and other factors that our board deems relevant.
Any decision to declare and pay dividends will be dependent on a variety of factors, including our financial condition, earnings, legal requirements, our general liquidity needs, and other factors that our board deems relevant.
For example, we could be required to sell banking centers as a condition to receiving regulatory approvals and such a condition may not be acceptable to us or may reduce the benefit of 34 Table of Contents any acquisition.
For example, we could be required to sell banking centers as a condition to receiving regulatory approvals and such a condition may not be acceptable to us or may reduce the benefit of any acquisition.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our certificate of incorporation described above.
Any person or entity purchasing or otherwise acquiring any 36 Table of Contents interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our certificate of incorporation described above.
The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require us in the future to make substantial expenditures to modify or adapt our existing products and services as we grow and develop new products to satisfy our customers’ expectations and comply with regulatory guidance.
The widespread adoption of new technologies, including digital assets and payment systems, could require us in the future to make substantial expenditures to modify or adapt our existing products and services as we grow and develop new products to satisfy our customers’ expectations and comply with regulatory guidance.
These regulatory approvals and the factors considered in reviewing such applications are described in greater detail in "Supervision and Regulation—Acquisitions and Branching." We cannot assure you that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions.
These regulatory approvals and the factors considered in reviewing such applications are described in greater detail in "Supervision and Regulation—Acquisitions and Branching." 34 Table of Contents We cannot assure you that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions.
The loss of these revenue streams and the potential loss of lower cost deposits as a source of funds could have a material adverse effect on our business, financial condition and results of operations.
The loss of these revenue streams and the potential loss of lower cost 38 Table of Contents deposits as a source of funds could have a material adverse effect on our business, financial condition and results of operations.
In addition, even if suitable targets are identified, we expect to compete for such businesses with other potential bidders, which may have greater financial resources than we have, which may adversely affect 33 Table of Contents our ability to make acquisitions at attractive prices.
In addition, even if suitable targets are identified, we expect to compete for such businesses with other potential bidders, which may have greater financial resources than we have, which may adversely affect our ability to make acquisitions at attractive prices.
The United States has recently experienced elevated levels of inflation. Continued levels of inflation could have complex effects on our business and results of operations, some of which could be materially adverse.
Elevated levels of inflation could adversely impact our business and results of operations. The United States has recently experienced elevated levels of inflation. Elevated levels of inflation could have complex effects on our business and results of operations, some of which could be materially adverse.
These requirements may constrain our operations or require us to obtain approval from our regulators before engaging in certain activities, with no assurance that such approvals may be obtained, either in a timely manner or at all.
These requirements may constrain our operations or require us to 28 Table of Contents obtain approval from our regulators before engaging in certain activities, with no assurance that such approvals may be obtained, either in a timely manner or at all.
Given the complex factors affecting the strength of the U.S. economy, including uncertainties regarding the persistence of inflation; record-high U.S. credit card debt; the implementation of policies proposed by the new presidential administration; and geopolitical developments, such as future terrorist attacks and threats, widespread disease or pandemics, and acts of war including the Russian invasion of Ukraine and ongoing conflicts in the Middle East, there is a meaningful risk that the Federal Reserve and other central banks may maintain interest rates at elevated levels, which may negatively impact the entire national economy.
Given the complex factors affecting the strength of the U.S. economy, including uncertainties regarding the persistence of inflation; sustained elevated levels of U.S. credit card debt; the implementation of policies proposed by the current presidential administration; and geopolitical developments, such as future terrorist attacks and threats, widespread disease or pandemics, and acts of war including the Russian invasion of Ukraine, conflicts in the Middle East and recent military activity in Venezuela, there is a meaningful risk that the Federal Reserve and other central banks may maintain interest rates at elevated levels, which may negatively impact the entire national economy.
In light of the foregoing, our ability to continue to grow successfully will depend to a significant extent on our capital resources.
In light of the foregoing, our ability to continue to grow 33 Table of Contents successfully will depend to a significant extent on our capital resources.
Given the complex factors affecting the strength of the U.S. economy, including uncertainties regarding the persistence of inflation, geopolitical developments such as ongoing conflicts in the Middle East and the Russian invasion of Ukraine, and resulting disruptions in the global energy market, tight labor market conditions domestically, supply chain issues both domestically and internationally and the potential effects of a new presidential administration, including its response to the foregoing, potential imposition of new tariffs, mass deportations and changes to tax or other financial regulations, uncertainty surrounding future changes may adversely affect our operating environment and therefore our business, financial condition, results of operations and growth prospects.
Given the complex factors affecting the strength of the U.S. economy, including uncertainties regarding the persistence of inflation, geopolitical developments such as conflicts in the Middle East, the Russian invasion of Ukraine and recent military activity in Venezuela, and resulting disruptions in the global energy market, tight labor market conditions domestically, supply chain issues both domestically and internationally and the potential effects of policies from the current presidential administration, including its response to the foregoing, potential imposition of new tariffs, immigration enforcement and changes to tax or other financial regulations, uncertainty surrounding future changes may adversely affect our operating environment and therefore our business, financial condition, results of operations and growth prospects.
Economic events, including decreases in office occupancy following the COVID-19 pandemic as a result of the shift to remote and hybrid work environments, or governmental regulations outside of our control or the control of the borrower could negatively impact the future cash flow and market values of the affected properties.
Economic events, including decreases in office occupancy following the shift to remote and hybrid work environments, or governmental regulations outside of our control or the control of the borrower could negatively impact the future cash flow and market values of the affected properties.
From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our external financial statements. In addition, trends in financial and business reporting, including environmental social and governance (“ESG”) related disclosures, could require us to incur additional reporting expense.
From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our external financial statements. In addition, trends in financial and business reporting could require us to incur additional reporting expense.
In addition, we may sell securities in our available-for-sale investment securities portfolio, and any such sale could cause us to realize currently unrealized losses that resulted from increases in the prevailing interest rates.
In addition, we may sell debt securities, and any such sale could cause us to realize currently unrealized losses that resulted from increases in the prevailing interest rates.
Our future growth and success will depend on our ability to compete effectively in this highly competitive 38 Table of Contents environment.
Our future growth and success will depend on our ability to compete effectively in this highly competitive environment.
Nonetheless, shifts in Illinois law legalizing cannabis use have increased the number of direct and indirect cannabis-related businesses in Illinois, and therefore increases the likelihood that the Bank could interact with such businesses, as well as their owners and employees. Such interactions could create additional legal, regulatory, strategic, and reputational risk to the Bank and the Company.
Nonetheless, the state-level legalization of cannabis use has increased the number of direct and indirect cannabis-related businesses in Illinois, and therefore increased the likelihood that the Bank could interact with such businesses, as well as their owners and employees. Such interactions could create additional legal, regulatory, strategic, and reputational risk to the Bank and the Company.
Any decline in available funding could adversely impact our ability to continue to implement our business plan, including originating loans, investing in securities, meeting our expenses or fulfilling obligations such as repaying our borrowings and meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations. 25 Table of Contents We may need to raise additional capital in the future, and such capital may not be available when needed or at all.
Any decline in available funding could adversely impact our ability to continue to implement our business plan, including originating loans, investing in securities, meeting our expenses or fulfilling obligations such as 25 Table of Contents repaying our borrowings and meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
The decrease was expressly made in response to inflation moderating and the labor market weakening. Any future change in monetary policy by the FOMC, in an effort to stimulate the economy or otherwise, resulting in lower interest rates would likely result in lower revenue through lower net interest income over time, which could adversely affect our results of operations.
Any future change in monetary policy by the FOMC, in an effort to stimulate the economy or otherwise, resulting in lower interest rates would likely result in lower revenue through lower net interest income over time, which could adversely affect our results of operations.
The nature, timing and economic and political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain in connection with a change in presidential administration.
The nature, timing and economic and political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain.
Unfavorable or uncertain economic and market conditions can be caused by, among other factors, declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; changes in inflation or interest rates; increases in real estate and other state and local taxes; high unemployment; natural disasters; pandemics; climate change; acts of terrorism or war (including the Israeli-Palestinian conflict and the Russian invasion of Ukraine); or a combination of these or other factors. 37 Table of Contents Continued elevated levels of inflation could adversely impact our business and results of operations.
Unfavorable or uncertain economic and market conditions can be caused by, among other factors, declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; changes in inflation or interest rates; increases in real estate and other state and local taxes; high unemployment; natural disasters; pandemics; climate change; acts of terrorism or war (including conflicts in the Middle East, the Russian invasion of Ukraine and recent military activity in Venezuela); or a combination of these or other factors.
In addition to the enactment of the Dodd-Frank Act, various state and local legislative bodies have adopted or have been considering augmenting their existing framework governing consumers’ rights. These considerations could also be impacted by the recent changes in federal administration.
See "Supervision and Regulation—Supervision and Regulation of the Bank—Consumer Financial Services" for additional information. 30 Table of Contents In addition to the enactment of the Dodd-Frank Act, various state and local legislative bodies have adopted or have been considering augmenting their existing framework governing consumers’ rights. These considerations could also be impacted by changes in federal administration.
These effects from interest rate changes or from other sustained economic stress or a recession, among other matters, could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
These effects from interest rate changes, a perceived lack of independence by the FOMC from political pressure to set monetary policy, or from other sustained economic stress or a recession, among other matters, could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
It is currently expected that during 2025, and perhaps beyond, the FOMC may decrease interest rates. In September 2024, the FOMC began lowering interest rates with the target range for the federal funds rate decreasing by 100 basis points to a range of 4.25% to 4.50% by the end of 2024.
In September 2024, the FOMC began lowering interest rates with the target range for the federal funds rate decreasing by 100 basis points to a range of 4.25% to 4.50% by the end of 2024.
The FDIC has the primarily responsibility for supervising and examining the Bank’s compliance with federal consumer 30 Table of Contents financial laws and regulations, including CFPB regulations. See "Supervision and Regulation—Supervision and Regulation of the Bank—Consumer Financial Services" for additional information.
The FDIC has the primarily responsibility for supervising and examining the Bank’s compliance with federal consumer financial laws and regulations, including CFPB regulations.
It is also possible that governmental responses to the current inflation environment could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls. The duration and severity of the current inflationary period cannot be estimated with precision.
It is also possible that governmental responses to the current inflation environment could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls. Failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition.
Recruiting and compensation costs may increase as a result of changes in the marketplace, which may increase costs and adversely impact the Company. The increase in remote and hybrid-work arrangements and opportunities in regional, national and global labor markets has also increased competition for the Company to attract and retain skilled personnel.
The increase in remote and hybrid-work arrangements and opportunities in regional, national and global labor markets have also increased competition for the Company to attract and retain skilled personnel.
Competition for qualified candidates in the activities in which the Company engages and markets that the Company serves is significant, and the Company may not be able to hire candidates and retain them. Growth in the Company’s business, including through acquisitions, may increase its need for additional qualified personnel.
The Company’s success depends, in large part, on its ability to attract and retain key individuals. Competition for qualified candidates in the activities in which the Company engages and markets that the Company serves is significant, and the Company may not be able to hire candidates and retain them.
Any of these outcomes could materially and adversely affect us. Laws impacting cannabis-related businesses may have an impact on the Company’s operations and risk profile. The Controlled Substances Act makes it illegal under federal law to manufacture, distribute, or dispense marijuana.
Any of these outcomes could materially and adversely affect us. Laws impacting cannabis-related businesses may have an impact on the Company’s operations and risk profile. Executive Order 14370, "Increasing Medical Marijuana and Cannabidiol Research," directs federal agencies to work towards rescheduling marijuana from Schedule I to Schedule III under the Controlled Substances Act.
The Company is increasingly competing for personnel with financial technology providers and other less regulated entities who may not have the same limitations on compensation as the Company does. This can be particularly constraining when competing for skill sets which are in high demand, such as technology, risk and information security.
Growth in the Company’s business, including through acquisitions, may increase its need for additional qualified personnel. The Company is increasingly competing for personnel with financial technology providers and other less regulated entities who may not have the same limitations on compensation as the Company does.
While the significant increase in prevailing interest rates increased our net interest income, it also led to increased losses in our available-for-sale debt securities portfolio. Since 2022, the magnitude of our net unrealized losses on debt securities available-for-sale have partially reversed and were $59.4 million as of December 31, 2024.
While the significant increase in prevailing interest rates increased our net interest income, it also led to increased losses in our debt securities portfolio.
Starting January 1, 2020, however, the Illinois Cannabis Regulation and Tax Act began permitting adults 21 years or older to legally purchase marijuana for recreational use from licensed dispensaries.
The executive order does not change cannabis's legal status under the Controlled Substances Act, which makes it illegal under federal law to manufacture, distribute, or dispense marijuana. However, the Illinois Cannabis Regulation and Tax Act permits adults 21 years or older to legally purchase marijuana for recreational use from licensed dispensaries.
Even if the Voting Trust’s ownership of our shares falls below a majority, the Voting Trust may continue to be able to influence or effectively control our decisions. We are classified as a "controlled company" for purposes of the Nasdaq Listing Rules and, as a result, we qualify for certain exemptions from certain corporate governance requirements.
Even if the Voting Trust’s ownership of our shares falls below a majority, the Voting Trust may continue to be able to influence or effectively control our decisions. Our ability to continue to pay dividends to our stockholders is restricted by applicable laws and regulations and by the ability of our subsidiaries to pay dividends to us.
Removed
For example, as customer deposit levels have decreased over the past two years, we have observed that the sensitivity of market deposit rates to changes in prevailing interest rates has increased.
Added
Since 2022, the magnitude of these losses on debt securities have partially reversed with net unrealized losses on debt securities available-for-sale of $28.8 million and net unrecognized losses on debt securities held-to-maturity of $31.9 million as of December 31, 2025. It is possible that the FOMC will continue to decrease interest rates.
Removed
The Voting Trust could sell its interest in us to a third-party in a private transaction, which may not lead to your realization of any change of control premium on shares of our common stock and would subject us to the influence of a presently unknown third-party.
Added
During the second half of 2025, the FOMC further reduced the target range for the federal funds rate by 75 basis points to a range of 3.50% to 3.75% as of December 31, 2025. During both 2024 and 2025, decreases in the federal funds target range were expressly made in response to inflation moderating and the labor market weakening.
Removed
You may not have the same protections afforded to stockholders of companies that are subject to such requirements. As of the date of this report, the Voting Trust controls a majority of the voting power of our outstanding common stock.
Added
We may need to raise additional capital in the future, and such capital may not be available when needed or at all.
Removed
As a result, we are a "controlled company" within the meaning of the corporate governance standards of the Nasdaq Listing Rules.
Added
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
Removed
Under the Nasdaq Listing Rules, a company of which more than 50% of the outstanding voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain stock exchange corporate governance requirements, including: • the requirement that a majority of the board of directors consists of independent directors; • the requirement that nominating and corporate governance matters be decided solely by independent directors; and • the requirement that executive and officer compensation matters be decided solely by independent directors.
Added
This can be particularly constraining when competing for skill sets which are in high demand, such as technology, risk and information security. 37 Table of Contents Recruiting and compensation costs may increase as a result of changes in the marketplace, which may increase costs and adversely impact the Company.
Removed
Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements. Our ability to continue to pay dividends to our stockholders is restricted by applicable laws and regulations and by the ability of our subsidiaries to pay dividends to us.
Removed
Failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition. The Company’s success depends, in large part, on its ability to attract and retain key individuals.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAccordingly, we have long devoted significant resources to assessing, identifying and managing risks associated with cybersecurity threats, including: • internal resources who are responsible for conducting regular assessments of our information systems, existing controls, vulnerabilities and potential improvements; • continuous monitoring tools that can detect, alert on, respond to, and help mitigate cybersecurity threats in real-time; • performing due diligence with respect to our third-party service providers, including their cybersecurity practices, and requiring contractual commitments from our service providers to take certain cybersecurity measures; • third-party cybersecurity consultants, who conduct periodic penetration testing, vulnerability assessments, and other procedures which identify potential weaknesses in our systems and help validate and improve internal processes and tooling; and • periodic cybersecurity training for our workforce.
Biggest changeAccordingly, we have long devoted significant resources to assessing, identifying and managing risks associated with cybersecurity threats, including: • internal resources who are responsible for conducting regular assessments of our information systems, existing controls, vulnerabilities and potential improvements; • continuous monitoring tools that can detect, alert on, respond to, and help mitigate cybersecurity threats in real-time; • performing due diligence with respect to our third-party service providers, including their cybersecurity practices, and requiring contractual commitments from our service providers to take certain cybersecurity measures; 39 Table of Contents • third-party cybersecurity consultants, who conduct periodic penetration testing, vulnerability assessments, and other procedures which identify potential weaknesses in our systems and help validate and improve internal processes and tooling; and • periodic cybersecurity training for our workforce.
Our management team is responsible for the day-to-day management of risks we face, including our Chief Information Officer. Our current Chief Information Officer has over 20 years of technology experience, including 16 years in Banking. In addition, our board of directors is responsible for the oversight of risk management.
Our management team is responsible for the day-to-day management of risks we face, including our Chief Information Officer. Our current Chief Information Officer has over 20 years of technology experience, including 17 years in banking. In addition, our board of directors is responsible for the oversight of risk management.
To carry out those duties, our board of directors receive reports from our management team regarding cybersecurity risks, and the Company’s efforts to prevent, detect, mitigate and remediate any cybersecurity incidents. These reports are delivered at least quarterly, with additional information and trainings provided at least twice per year. 40 Table of Contents
To carry out those duties, our board of directors receive reports from our management team regarding cybersecurity risks, and the Company’s efforts to prevent, detect, mitigate and remediate any cybersecurity incidents. These reports are delivered at least quarterly, with additional information and trainings provided at least twice per year.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not applicable. 41 Table of Contents PART II.
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 40 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN Index December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 HBT Financial, Inc. $ 100.00 $ 83.45 $ 106.84 $ 115.44 $ 128.91 $ 138.91 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93 S&P 600 Small Cap Bank Index 100.00 87.95 119.38 109.98 108.10 123.92 The performance graph and table represent past performance and should not be considered to be an indication of future performance.
Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN Index December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 HBT Financial, Inc. $ 100.00 $ 128.03 $ 138.34 $ 154.48 $ 166.46 $ 203.45 Russell 2000 100.00 114.82 91.35 106.82 119.14 134.40 S&P 600 Small Cap Bank Index 100.00 135.74 125.04 122.91 140.90 147.34 The performance graph and table represent past performance and should not be considered to be an indication of future performance.
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions. Dividends During 2024, we paid quarterly cash dividends of $0.19 per share on our common stock. The quarterly cash dividend was increased to $0.21 per share on January 21, 2025.
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions. Dividends During 2025, we paid quarterly cash dividends of $0.21 per share on our common stock. The quarterly cash dividend was increased to $0.23 per share on January 27, 2026.
Unregistered Sales of Equity Securities None. 42 Table of Contents Stock Performance Graph The performance graph and table below compares the cumulative total return on the Company’s common stock from December 31, 2019 through December 31, 2024, with the cumulative total return of: (a) the Russell 2000 Index which reflects a broad equity market index and (b) the S&P 600 Small Cap Bank Index.
Unregistered Sales of Equity Securities None. 41 Table of Contents Stock Performance Graph The performance graph and table below compares the cumulative total return on the Company’s common stock from December 31, 2020 through December 31, 2025, with the cumulative total return of: (a) the Russell 2000 Index which reflects a broad equity market index and (b) the S&P 600 Small Cap Bank Index.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders of Record HBT Financial, Inc.’s common stock is listed on the Nasdaq Global Select Market under the symbol “HBT.” As of February 19, 2025, HBT Financial, Inc. had approximately 113 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders of Record HBT Financial, Inc.’s common stock is listed on the Nasdaq Global Select Market under the symbol “HBT.” As of February 18, 2026, HBT Financial, Inc. had approximately 116 shareholders of record.
There are no longer any shares subject to repurchase under the 2024 Repurchase Plan. The 2025 Repurchase Plan took effect upon the expiration of the 2024 Repurchase Plan, and there remains $15.0 million in common stock subject to repurchase thereunder.
There are no longer any shares subject to repurchase under the 2025 Repurchase Plan. The 2026 Repurchase Plan took effect upon the expiration of the 2025 Repurchase Plan, and there remains $30.0 million in common stock subject to repurchase thereunder.
The following table sets forth information about the Company’s purchases of its common stock during the fourth quarter of 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (in thousands) October 1 - 31, 2024 — $ — — $ 10,603 November 1 - 30, 2024 — — — 10,603 December 1 - 31, 2024 — — — 10,603 Total — $ — — $ 10,603 (1) __________________________________ (1) As of December 31, 2024, there was $10.6 million left under the 2024 Repurchase Plan, which expired on January 1, 2025.
The following table sets forth information about the Company’s purchases of its common stock during the fourth quarter of 2025: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (in thousands) October 1 - 31, 2025 23,879 $ 24.33 23,879 $ 10,516 November 1 - 30, 2025 — — — 10,516 December 1 - 31, 2025 — — — 10,516 Total 23,879 $ 24.33 23,879 $ 10,516 (1) __________________________________ (1) As of December 31, 2025, there was $10.5 million left under the 2025 Repurchase Plan, which expired on January 1, 2026.
On December 17, 2024, the Company’s board of directors approved a new stock repurchase program that took effect upon the expiration of the old stock repurchase program and expires on January 1, 2026 (the “2025 Repurchase Plan”). The 2025 Repurchase Plan authorizes the Company to repurchase up to $15 million of its common stock.
On December 16, 2025, the Company’s board of directors approved a new stock repurchase program that took effect upon the expiration of the old stock repurchase program and expires on January 1, 2027 (the “2026 Repurchase Plan”). The 2026 Repurchase Plan authorizes the Company to repurchase up to $30 million of its common stock.
Issuer Purchases of Equity Securities On December 19, 2023, the Company’s board of directors approved a stock repurchase program that authorized the Company to repurchase up to $15 million of its common stock which expired on January 1, 2025 (the “2024 Repurchase Plan”).
Issuer Purchases of Equity Securities On December 17, 2024, the Company’s board of directors approved a stock repurchase program that authorized the Company to repurchase up to $15 million of its common stock which expired on January 1, 2026 (the “2025 Repurchase Plan”).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

83 edited+21 added−22 removed38 unchanged
Biggest changeThe increase in effective tax rate during 2024 was primarily attributable to an additional $0.5 million of tax expense for a deferred tax asset write-down, as a result of an Illinois tax change, as well as changes in the proportion of federally tax-exempt interest income to pre-tax income. 53 Table of Contents FINANCIAL CONDITION (dollars in thousands, except per share data) December 31, 2024 December 31, 2023 $ Change % Change Cash and cash equivalents $ 137,692 $ 141,252 $ (3,560) (2.5) % Debt securities available-for-sale, at fair value 698,049 759,461 (61,412) (8.1) Debt securities held-to-maturity 499,858 521,439 (21,581) (4.1) Loans held for sale 1,586 2,318 (732) (31.6) Loans, before allowance for credit losses 3,466,146 3,404,417 61,729 1.8 Less: allowance for credit losses 42,044 40,048 1,996 5.0 Loans, net of allowance for credit losses 3,424,102 3,364,369 59,733 1.8 Goodwill 59,820 59,820 — — Intangible assets, net 17,843 20,682 (2,839) (13.7) Other assets 193,952 203,829 (9,877) (4.8) Total assets $ 5,032,902 $ 5,073,170 $ (40,268) (0.8) % Total deposits $ 4,318,254 $ 4,401,437 $ (83,183) (1.9) % Securities sold under agreements to repurchase 28,969 42,442 (13,473) (31.7) Borrowings 13,231 12,623 608 4.8 Subordinated notes 39,553 39,474 79 0.2 Junior subordinated debentures 52,849 52,789 60 0.1 Other liabilities 35,441 34,909 532 1.5 Total liabilities 4,488,297 4,583,674 (95,377) (2.1) Total stockholders' equity 544,605 489,496 55,109 11.3 Total liabilities and stockholders' equity $ 5,032,902 $ 5,073,170 $ (40,268) (0.8) % Tangible assets (1) $ 4,955,239 $ 4,992,668 $ (37,429) (0.7) % Tangible common equity (1) 466,942 408,994 57,948 14.2 Core deposits (1) $ 4,116,058 $ 4,126,374 $ (10,316) (0.3) % Share and Per Share Information Book value per share $ 17.26 $ 15.44 $ 1.82 11.8 % Tangible book value per share (1) 14.80 12.90 1.90 14.7 Shares of common stock outstanding 31,559,366 31,695,828 Balance Sheet Ratios Loan to deposit ratio 80.27 % 77.35 % Core deposits to total deposits (1) 95.32 93.75 Stockholders' equity to total assets 10.82 9.65 Tangible common equity to tangible assets (1) 9.42 8.19 _________________________________________________ (1) See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures. 54 Table of Contents Notable changes in our consolidated balance sheet include the following: • Debt securities decreased $83.0 million, largely due to the sale of $69.2 million of municipal securities with sales proceeds primarily used to reduce wholesale funding.
Biggest changeDuring 2024, we recognized an additional $0.5 million of tax expense for a deferred tax asset write-down, as a result of an Illinois tax law change. 53 Table of Contents FINANCIAL CONDITION (dollars in thousands, except per share data) December 31, 2025 December 31, 2024 $ Change % Change Cash and cash equivalents $ 122,269 $ 137,692 $ (15,423) (11.2) % Debt securities available-for-sale, at fair value 813,101 698,049 115,052 16.5 Debt securities held-to-maturity 458,746 499,858 (41,112) (8.2) Loans held for sale 1,263 1,586 (323) (20.4) Loans, before allowance for credit losses 3,456,209 3,466,146 (9,937) (0.3) Less: allowance for credit losses 41,690 42,044 (354) (0.8) Loans, net of allowance for credit losses 3,414,519 3,424,102 (9,583) (0.3) Goodwill 59,820 59,820 — — Intangible assets, net 15,117 17,843 (2,726) (15.3) Other assets 186,555 193,952 (7,397) (3.8) Total assets $ 5,071,390 $ 5,032,902 $ 38,488 0.8 % Total deposits $ 4,359,263 $ 4,318,254 $ 41,009 0.9 % Securities sold under agreements to repurchase — 28,969 (28,969) (100.0) Borrowings 12,301 13,231 (930) (7.0) Subordinated notes — 39,553 (39,553) (100.0) Junior subordinated debentures 52,909 52,849 60 0.1 Other liabilities 31,419 35,441 (4,022) (11.3) Total liabilities 4,455,892 4,488,297 (32,405) (0.7) Total stockholders' equity 615,498 544,605 70,893 13.0 Total liabilities and stockholders' equity $ 5,071,390 $ 5,032,902 $ 38,488 0.8 % Tangible assets (1) $ 4,996,453 $ 4,955,239 $ 41,214 0.8 % Tangible common equity (1) 540,561 466,942 73,619 15.8 Core deposits (1) $ 4,157,898 $ 4,116,058 $ 41,840 1.0 % Share and Per Share Information Book value per share $ 19.58 $ 17.26 $ 2.32 13.4 % Tangible book value per share (1) 17.20 14.80 2.40 16.2 Shares of common stock outstanding 31,431,924 31,559,366 Balance Sheet Ratios Loan to deposit ratio 79.28 % 80.27 % Core deposits to total deposits (1) 95.38 95.32 Stockholders' equity to total assets 12.14 10.82 Tangible common equity to tangible assets (1) 10.82 9.42 _________________________________________________ (1) See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures. 54 Table of Contents Notable changes in our consolidated balance sheet include the following: • A $73.9 million increase in debt securities, primarily attributable to a reinvestment of cash flows from loans into debt securities and a $30.5 million increase in the fair value of debt securities available-for-sale; • A $41.0 million increase in deposits was primarily attributable to a vast majority of repurchase agreement account balances being transitioned to reciprocal interest-bearing demand deposit accounts during 2025; • The $39.6 million of subordinated notes outstanding at December 31, 2024 were paid off in September 2025; and • A $9.9 million decrease in loans with increases in the multi-family and commercial real estate - non-owner occupied segments being offset by decreases in the construction and land development and commercial and industrial segments.
Non-GAAP Financial Measure Definition How the Measure Provides Useful Information to Investors Adjusted Net Income • Net income, with the following adjustments: - excludes acquisition expenses, including the day 2 provision for credit losses on non-PCD loans and unfunded commitments, - excludes branch closure expenses, - excludes gains (losses) on closed branch premises, - excludes realized gains (losses) on sales of securities, - excludes mortgage servicing rights fair value adjustment, and - the income tax effect of these pre-tax adjustments. • Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects. • We also sometimes refer to ratios that include Adjusted Net Income, such as: - Adjusted Return on Average Assets, which is Adjusted Net Income divided by average assets. - Adjusted Return on Average Equity, which is Adjusted Net Income divided by average equity. - Adjusted Earnings Per Share – Basic, which is Adjusted Net Income allocated to common shares divided by weighted average common shares outstanding. - Adjusted Earnings Per Share – Diluted, which is Adjusted Net Income allocated to common shares divided by weighted average common shares outstanding, including all dilutive potential shares. • Adjusted Return on Average Assets is a performance measure utilized in determining executive compensation.
Non-GAAP Financial Measure Definition How the Measure Provides Useful Information to Investors Adjusted Net Income • Net income, with the following adjustments: - excludes acquisition expenses, including the day 2 provision for credit losses on non-PCD loans and unfunded commitments, - excludes branch closure expenses, - losses on extinguishment of debt, - excludes gains (losses) on closed branch premises, - excludes realized gains (losses) on sales of securities, - excludes mortgage servicing rights fair value adjustment, and - the income tax effect of these pre-tax adjustments. • Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects. • We also sometimes refer to ratios that include Adjusted Net Income, such as: - Adjusted Return on Average Assets, which is Adjusted Net Income divided by average assets. - Adjusted Return on Average Equity, which is Adjusted Net Income divided by average equity. - Adjusted Earnings Per Share – Basic, which is Adjusted Net Income allocated to common shares divided by weighted average common shares outstanding. - Adjusted Earnings Per Share – Diluted, which is Adjusted Net Income allocated to common shares divided by weighted average common shares outstanding, including all dilutive potential shares. • Adjusted Return on Average Assets is a performance measure utilized in determining executive compensation.
Our use of FHLB advances and other borrowings returned to nominal levels during 2024, with loan demand funded primarily through cash flows from the debt securities portfolio. 63 Table of Contents The following table sets forth information concerning balances and interest rates on our borrowings.
Our use of FHLB advances and other borrowings returned to nominal levels during 2024 and 2025, with loan demand funded primarily through cash flows from the debt securities portfolio. 63 Table of Contents The following table sets forth information concerning balances and interest rates on our borrowings.
Pre-Provision Net Revenue • Net interest income, plus noninterest income, less noninterest expense. • Provides investors with information regarding profitability excluding provision for credit losses and income tax expense, which may fluctuate from period to period. • We also sometimes refer to measures that include Pre-Provision Net Revenue, such as: - Adjusted Pre-Provision Net Revenue which reflects the adjustments considered in Adjusted Net Income, as necessary. - Pre-Provision Net Revenue Less Charge-offs (Recoveries). - Adjusted Pre-Provision Net Revenue Less Charge-offs (Recoveries) which reflects the adjustments considered in Adjusted Net Income, as necessary. • Adjusted Pre-Provision Net Revenue Less Net Charge-Offs (Recoveries) is a performance measure utilized in determining executive compensation. 68 Table of Contents Non-GAAP Financial Measure Definition How the Measure Provides Useful Information to Investors Net Interest Income (Tax-Equivalent Basis) • Net interest income adjusted for the tax-favored status of tax-exempt loans and securities.
Pre-Provision Net Revenue • Net interest income, plus noninterest income, less noninterest expense. • Provides investors with information regarding profitability excluding provision for credit losses and income tax expense, which may fluctuate from period to period. • We also sometimes refer to measures that include Pre-Provision Net Revenue, such as: - Adjusted Pre-Provision Net Revenue which reflects the adjustments considered in Adjusted Net Income, as necessary. - Pre-Provision Net Revenue Less Charge-offs (Recoveries). - Adjusted Pre-Provision Net Revenue Less Charge-offs (Recoveries) which reflects the adjustments considered in Adjusted Net Income, as necessary. • Adjusted Pre-Provision Net Revenue Less Net Charge-Offs (Recoveries) is a performance measure utilized in determining executive compensation. 69 Table of Contents Non-GAAP Financial Measure Definition How the Measure Provides Useful Information to Investors Net Interest Income (Tax-Equivalent Basis) • Net interest income adjusted for the tax-favored status of tax-exempt loans and securities.
Detailed discussion and analysis of the financial condition and results of operation for 2023 as compared to 2022 can be found in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” OVERVIEW HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920.
Detailed discussion and analysis of the financial condition and results of operation for 2024 as compared to 2023 can be found in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” OVERVIEW HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920.
The composition and maturities of the debt securities portfolio as of December 31, 2024, are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Security yields have not been adjusted to a tax-equivalent basis.
The composition and maturities of the debt securities portfolio as of December 31, 2025, are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Security yields have not been adjusted to a tax-equivalent basis.
The allowance for credit losses on unfunded commitments is estimated in the same manner as the associated loans, adjusted for anticipated funding rate. 67 Table of Contents NON-GAAP FINANCIAL INFORMATION This Annual Report on Form 10-K contains certain financial information determined by methods other than those in accordance with GAAP.
The allowance for credit losses on unfunded commitments is estimated in the same manner as the associated loans, adjusted for anticipated funding rate. 68 Table of Contents NON-GAAP FINANCIAL INFORMATION This Annual Report on Form 10-K contains certain financial information determined by methods other than those in accordance with GAAP.
Market Area As of December 31, 2024, our branch network included 66 full-service branch locations throughout Illinois and eastern Iowa. We hold a leading deposit share in many of our central Illinois markets, which we define as a top three deposit share rank, providing the foundation for our strong deposit base.
Market Area As of December 31, 2025, our branch network included 66 full-service branch locations throughout Illinois and eastern Iowa. We hold a leading deposit share in many of our central Illinois markets, which we define as a top three deposit share rank, providing the foundation for our strong deposit base.
(2) The prompt corrective action provisions are not applicable to bank holding companies. N/A Not applicable. As of December 31, 2024, management was not aware of any known trends, events or uncertainties that had or were reasonably likely to have a material impact on the Company’s capital resources.
(2) The prompt corrective action provisions are not applicable to bank holding companies. N/A Not applicable. As of December 31, 2025, management was not aware of any known trends, events or uncertainties that had or were reasonably likely to have a material impact on the Company’s capital resources.
For purposes of this table, changes attributable to both volume and rate that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate. Year Ended December 31, 2024 vs. Year Ended December 31, 2023 Year Ended December 31, 2023 vs.
For purposes of this table, changes attributable to both volume and rate that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate. Year Ended December 31, 2025 vs. Year Ended December 31, 2024 Year Ended December 31, 2024 vs.
As of December 31, 2024, management was not aware of any known trends, events or uncertainties that had or were reasonably likely to have a material impact on the Holding Company’s liquidity.
As of December 31, 2025, management was not aware of any known trends, events or uncertainties that had or were reasonably likely to have a material impact on the Holding Company’s liquidity.
This decrease, and potential future decreases, may put downward pressure on our net interest margin, as the negative impact on floating rate loans may not be fully offset by the positive impacts of maturing fixed rate loans and securities repricing at higher rates or potential decreases in deposit costs.
Decreases in market interest rates, and potential future decreases, may put downward pressure on our net interest margin, as the negative impact on floating rate loans may not be fully offset by the positive impacts of maturing fixed rate loans and securities repricing at higher rates or potential decreases in deposit costs.
December 31, 2024 December 31, 2023 For Capital Adequacy Purposes With Capital Conservation Buffer (1) To Be Well Capitalized Under Prompt Corrective Action Provisions (2) Consolidated HBT Financial, Inc.
December 31, 2025 December 31, 2024 For Capital Adequacy Purposes With Capital Conservation Buffer (1) To Be Well Capitalized Under Prompt Corrective Action Provisions (2) Consolidated HBT Financial, Inc.
December 31, 2024 Available-for-Sale Held-to-Maturity Total (dollars in thousands) Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Due in 1 year or less U.S.
December 31, 2025 Available-for-Sale Held-to-Maturity Total (dollars in thousands) Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Due in 1 year or less U.S.
Additionally, heightened net charge-offs within the commercial and industrial segment are primarily related to equipment finance loans which were purchased as part of a pool of loans during 2023. 60 Table of Contents Securities The Company’s investment policy emphasizes safety of the principal, liquidity needs, expected returns, cash flow targets, and consistency with our interest rate risk management strategy.
Additionally, equipment finance loans, which were purchased as part of a pool of loans during 2023, continued to contribute to heightened net charge-offs within the commercial and industrial segment. 60 Table of Contents Securities The Company’s investment policy emphasizes safety of the principal, liquidity needs, expected returns, cash flow targets, and consistency with our interest rate risk management strategy.
Detailed discussion and analysis of the financial condition and results of operation for 2024 as compared to 2023 can be found below.
Detailed discussion and analysis of the financial condition and results of operation for 2025 as compared to 2024 can be found below.
The FOMC began lowering interest rates in September 2024, with the target range for the federal funds rate decreasing by 100 basis points to a range of 4.25% to 4.50% by the end of 2024.
In September 2024, the Federal Open Market Committee ("FOMC") began lowering interest rates, with the target range for the federal funds rate decreasing by 100 basis points to a range of 4.25% to 4.50% by the end of 2024.
We provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa. As of December 31, 2024, the Company had total assets of $5.0 billion, loans held for investment of $3.5 billion, and total deposits of $4.3 billion.
We provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa. As of December 31, 2025, the Company had total assets of $5.1 billion, loans held for investment of $3.5 billion, and total deposits of $4.4 billion.
As of December 31, 2024, management believed the current liquidity and available sources of liquidity are adequate to meet all of the reasonably foreseeable short-term and intermediate-term demands of the Bank . As of December 31, 2024, the Bank had no material commitments for capital expenditures.
As of December 31, 2025, management believed the current liquidity and available sources of liquidity are adequate to meet all of the reasonably foreseeable short-term and intermediate-term demands of the Holding Company . As of December 31, 2025, the Holding Company had no material commitments for capital expenditures.
Due to state banking laws, the Bank may not declare dividends in any calendar year in an amount that would exceed accumulated retained earnings, after giving effect to any unrecognized losses and bad debts, without the prior approval of the Illinois Department of Financial and Professional Regulation.
Due to state banking laws, the Bank may not declare dividends in any calendar year in an amount that would exceed accumulated retained earnings, after giving effect to any unrecognized losses and bad debts, without the prior approval of the IDFPR.
Generally, we expect increases in market interest rates will increase our net interest income and net interest margin in future periods, while decreases in market interest rates may decrease our net interest income and net interest margin in future periods; however, this depends upon the timing and extent of interest rate fluctuations and may not always be the case. 50 Table of Contents Provision for Credit Losses The following table sets forth the components of provision for credit losses for the years indicated: Year Ended December 31, (dollars in thousands) 2024 2023 2022 PROVISION FOR CREDIT LOSSES Loans $ 3,754 $ 6,665 $ (706) Unfunded lending-related commitments (723) 908 — Total provision for credit losses $ 3,031 $ 7,573 $ (706) Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 The Company recorded a provision for credit losses of $3.0 million for the year ended December 31, 2024.
Generally, we expect increases in market interest rates will increase our net interest income and net interest margin in future periods, while decreases in market interest rates may decrease our net interest income and net interest margin in future periods; however, this depends upon the timing and extent of both short-term and long-term interest rate fluctuations and may not always be the case. 50 Table of Contents Provision for Credit Losses The following table sets forth the components of provision for credit losses for the years indicated: Year Ended December 31, (dollars in thousands) 2025 2024 2023 PROVISION FOR CREDIT LOSSES Loans $ 2,104 $ 3,754 $ 6,665 Unfunded lending-related commitments 1,057 (723) 908 Total provision for credit losses $ 3,161 $ 3,031 $ 7,573 Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024 The Company recorded a provision for credit losses of $3.2 million for the year ended December 31, 2025, compared to a $3.0 million provision during the year ended December 31, 2024.
The following table sets forth actual capital ratios of the Company and the Bank as of the dates indicated, as well as the minimum ratios for capital adequacy purposes with the capital conservation buffer, and the minimum ratios to be well capitalized under regulatory prompt corrective action provisions.
As of those dates, the Bank was “well capitalized” under the regulatory prompt corrective action provisions. 66 Table of Contents The following table sets forth actual capital ratios of the Company and the Bank as of the dates indicated, as well as the minimum ratios for capital adequacy purposes with the capital conservation buffer, and the minimum ratios to be well capitalized under regulatory prompt corrective action provisions.
(2) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%. 45 Table of Contents Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 For the year ended December 31, 2024, net income was $71.8 million, increasing by $5.9 million, or 9.0%, when compared to net income for the year ended December 31, 2023.
(2) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%. 45 Table of Contents Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024 For the year ended December 31, 2025, net income was $77.0 million, increasing by $5.2 million, or 7.3%, when compared to net income for the year ended December 31, 2024.
The following accounting estimate could be deemed critical: Allowance for Credit Losses The allowance for credit losses reflects an estimate of lifetime expected credit losses. Measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts.
Further, changes in accounting standards could impact the Company’s critical accounting estimates. The following accounting estimate could be deemed critical: Allowance for Credit Losses The allowance for credit losses reflects an estimate of lifetime expected credit losses. Measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts.
Total Capital (to Risk Weighted Assets) 16.51 % 15.33 % 10.50 % N/A Tier 1 Capital (to Risk Weighted Assets) 14.50 13.42 8.50 N/A Common Equity Tier 1 Capital (to Risk Weighted Assets) 13.21 12.12 7.00 N/A Tier 1 Capital (to Average Assets) 11.51 10.49 4.00 N/A Heartland Bank and Trust Company Total Capital (to Risk Weighted Assets) 16.11 % 14.92 % 10.50 % 10.00 % Tier 1 Capital (to Risk Weighted Assets) 15.10 14.01 8.50 8.00 Common Equity Tier 1 Capital (to Risk Weighted Assets) 15.10 14.01 7.00 6.50 Tier 1 Capital (to Average Assets) 11.98 10.96 4.00 5.00 _________________________________________________ (1) The Tier 1 capital to average assets ratio (known as the “leverage ratio”) is not impacted by the capital conservation buffer.
Total Capital (to Risk Weighted Assets) 16.82 % 16.51 % 10.50 % N/A Tier 1 Capital (to Risk Weighted Assets) 15.72 14.50 8.50 N/A Common Equity Tier 1 Capital (to Risk Weighted Assets) 14.42 13.21 7.00 N/A Tier 1 Capital (to Average Assets) 12.26 11.51 4.00 N/A Heartland Bank and Trust Company Total Capital (to Risk Weighted Assets) 16.52 % 16.11 % 10.50 % 10.00 % Tier 1 Capital (to Risk Weighted Assets) 15.42 15.10 8.50 8.00 Common Equity Tier 1 Capital (to Risk Weighted Assets) 15.42 15.10 7.00 6.50 Tier 1 Capital (to Average Assets) 12.02 11.98 4.00 5.00 _________________________________________________ (1) The Tier 1 capital to average assets ratio (known as the “leverage ratio”) is not impacted by the capital conservation buffer.
As of December 31, 2024, management believed the current liquidity and available sources of liquidity are adequate to meet all of the reasonably foreseeable short-term and intermediate-term demands of the Holding Company .
As of December 31, 2025, management believed the current liquidity and available sources of liquidity are adequate to meet all of the reasonably foreseeable short-term and intermediate-term demands of the Bank .
As of or for the Years Ended December 31, (dollars in thousands) 2024 2023 2022 Balance at end of year FHLB advances $ 13,231 $ 12,623 $ 160,000 Federal Reserve discount window — — — Federal funds purchased — — — Total borrowings $ 13,231 $ 12,623 $ 160,000 Average balance during year FHLB advances $ 13,301 $ 139,554 $ 25,934 Federal Reserve discount window — 3 — Federal funds purchased 82 260 534 Total borrowings $ 13,383 $ 139,817 $ 26,468 Average interest rate during year FHLB advances 3.57 % 5.10 % 3.68 % Federal Reserve discount window — 5.25 — Federal funds purchased 5.93 5.56 2.11 Total borrowings 3.59 5.10 3.65 LIQUIDITY Bank Liquidity The overall objective of bank liquidity management is to ensure the availability of sufficient cash funds to meet all financial commitments and to take advantage of investment opportunities.
As of or for the Years Ended December 31, (dollars in thousands) 2025 2024 2023 Balance at end of year FHLB advances $ 12,301 $ 13,231 $ 12,623 Federal Reserve discount window — — — Federal funds purchased — — — Total borrowings $ 12,301 $ 13,231 $ 12,623 Average balance during year FHLB advances $ 8,769 $ 13,301 $ 139,554 Federal Reserve discount window — — 3 Federal funds purchased 11 82 260 Total borrowings $ 8,780 $ 13,383 $ 139,817 Average interest rate during year FHLB advances 2.31 % 3.57 % 5.10 % Federal Reserve discount window — — 5.25 Federal funds purchased 3.28 5.93 5.56 Total borrowings 2.31 3.59 5.10 64 Table of Contents LIQUIDITY Bank Liquidity The overall objective of bank liquidity management is to ensure the availability of sufficient cash funds to meet all financial commitments and to take advantage of investment opportunities.
Income Taxes During the years ended December 31, 2024 and 2023, we recorded income tax expense of $25.6 million, or an effective tax rate of 26.3%, and $22.7 million, or an effective tax rate of 25.7%, respectively.
Income Taxes During the years ended December 31, 2025 and 2024, we recorded income tax expense of $27.5 million, or an effective tax rate of 26.3%, and $25.6 million, or an effective tax rate of 26.3%, respectively.
While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process afforded to loans originated by the Bank. For additional information, see “Note 23 – Commitments and Contingencies” to the consolidated financial statements.
While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process afforded to loans originated by the Bank.
All loans require appropriate internal approval, with a centralized credit approval group reviewing all exposures over $500 thousand. Additionally, a robust internal review process reviews more than 45% of loan commitments on a rolling 24 month basis that is in addition to an annual third-party review of a sample of the portfolio.
All loans require appropriate internal approval, with a centralized credit approval group reviewing the vast majority of exposures over $500 thousand. Additionally, more than 45% of loan commitments are reviewed on a rolling 24 month basis between a robust internal review process and an annual third-party review of a sample of the portfolio.
There were no acquisition-related expenses during the year ended December 31, 2024. 44 Table of Contents RESULTS OF OPERATIONS Overview of Recent Financial Results Year Ended December 31, (dollars in thousands, except per share amounts) 2024 2023 2022 Total interest and dividend income $ 251,700 $ 228,999 $ 153,054 Total interest expense 62,850 37,927 7,180 Net interest income 188,850 191,072 145,874 Provision for credit losses 3,031 7,573 (706) Net interest income after provision for credit losses 185,819 183,499 146,580 Total noninterest income 35,571 36,046 34,717 Total noninterest expense 124,007 130,964 105,107 Income before income tax expense 97,383 88,581 76,190 Income tax expense 25,603 22,739 19,734 Net income $ 71,780 $ 65,842 $ 56,456 Adjusted net income (1) $ 75,002 $ 78,182 $ 55,805 Pre-provision net revenue (1) $ 100,414 $ 96,154 $ 75,484 Pre-provision net revenue less net charge-offs (recoveries) (1) 98,656 95,974 77,587 Adjusted pre-provision net revenue (1) 104,920 107,281 74,282 Adjusted pre-provision net revenue less net charge-offs (recoveries) (1) 103,162 107,101 76,385 Share and Per Share Information Earnings per share - Diluted $ 2.26 $ 2.07 $ 1.95 Adjusted earnings per share - Diluted (1) 2.37 2.46 1.93 Weighted average shares of common stock outstanding 31,590,117 31,626,308 28,853,697 Summary Ratios Net interest margin 3.96 % 4.09 % 3.54 % Net interest margin (tax-equivalent basis) (1) (2) 4.01 4.15 3.60 Yield on loans 6.36 6.04 4.91 Yield on interest-earning assets 5.28 4.90 3.72 Cost of total deposits 1.30 0.60 0.07 Cost of funds 1.41 0.86 0.19 Efficiency ratio 53.99 % 56.49 % 57.72 % Efficiency ratio (tax-equivalent basis) (1) (2) 53.46 55.81 56.93 Adjusted efficiency ratio (tax-equivalent basis) (1)(2) 52.42 51.68 57.05 Return on average assets 1.43 % 1.34 % 1.32 % Return on average stockholders' equity 13.93 14.60 14.73 Return on average tangible common equity (1) 16.45 17.63 16.02 Adjusted return on average assets (1) 1.50 % 1.59 % 1.31 % Adjusted return on average stockholders' equity (1) 14.55 17.34 14.56 Adjusted return on average tangible common equity (1) 17.19 20.94 15.83 _________________________________________________ (1) See "Non-GAAP Financial Information" for reconciliation of non-GAAP measures to their most closely comparable GAAP measures.
There were no Town and Country acquisition-related expenses recognized subsequent to the second quarter of 2023. 44 Table of Contents RESULTS OF OPERATIONS Overview of Recent Financial Results Year Ended December 31, (dollars in thousands, except per share amounts) 2025 2024 2023 Total interest and dividend income $ 255,784 $ 251,700 $ 228,999 Total interest expense 56,889 62,850 37,927 Net interest income 198,895 188,850 191,072 Provision for credit losses 3,161 3,031 7,573 Net interest income after provision for credit losses 195,734 185,819 183,499 Total noninterest income 38,190 35,571 36,046 Total noninterest expense 129,418 124,007 130,964 Income before income tax expense 104,506 97,383 88,581 Income tax expense 27,498 25,603 22,739 Net income $ 77,008 $ 71,780 $ 65,842 Adjusted net income (1) $ 79,647 $ 75,002 $ 78,182 Pre-provision net revenue (1) $ 107,667 $ 100,414 $ 96,154 Pre-provision net revenue less net charge-offs (1) 105,209 98,656 95,974 Adjusted pre-provision net revenue (1) 111,138 104,920 107,281 Adjusted pre-provision net revenue less net charge-offs (1) 108,680 103,162 107,101 Share and Per Share Information Earnings per share - diluted $ 2.44 $ 2.26 $ 2.07 Adjusted earnings per share - diluted (1) 2.52 2.37 2.46 Weighted average shares of common stock outstanding 31,502,351 31,590,117 31,626,308 Summary Ratios Net interest margin 4.13 % 3.96 % 4.09 % Net interest margin (tax-equivalent basis) (1) (2) 4.17 4.01 4.15 Yield on loans 6.34 6.36 6.04 Yield on interest-earning assets 5.31 5.28 4.90 Cost of total deposits 1.19 1.30 0.60 Cost of funds 1.28 1.41 0.86 Efficiency ratio 53.44 % 53.99 % 56.49 % Efficiency ratio (tax-equivalent basis) (1) (2) 52.95 53.46 55.81 Adjusted efficiency ratio (tax-equivalent basis) (1) (2) 51.91 52.42 51.68 Return on average assets 1.53 % 1.43 % 1.34 % Return on average stockholders' equity 13.24 13.93 14.60 Return on average tangible common equity (1) 15.24 16.45 17.63 Adjusted return on average assets (1) 1.58 % 1.50 % 1.59 % Adjusted return on average stockholders' equity (1) 13.70 14.55 17.34 Adjusted return on average tangible common equity (1) 15.77 17.19 20.94 _________________________________________________ (1) See "Non-GAAP Financial Information" for reconciliation of non-GAAP measures to their most closely comparable GAAP measures.
The 2024 provision for credit losses primarily reflects a $4.0 million increase in required reserves resulting from changes in qualitative factors; an $0.8 million increase in required reserves driven by changes within the loan portfolio; a $1.2 million decrease in specific reserves on individually evaluated loans; and a $0.6 million decrease in required reserves resulting from improvements in economic forecasts.
The 2025 provision for credit losses primarily reflects a $2.2 million increase in required reserves driven by changes within the portfolio; a $1.1 million increase in required reserves resulting from changes in qualitative factors; an $0.8 million increase in required reserves resulting from changes in economic forecasts; and a $0.9 million decrease in specific reserves.
Multi-family loans totaled $431.5 million as of December 31, 2024, and are primarily made based on projected cash flows from the rental or sale of the underlying collateral.
Multi-family loans totaled $544.9 million as of December 31, 2025, and are primarily made based on projected cash flows from the rental of the underlying collateral.
During the years ended December 31, 2024, 2023, and 2022, the Bank paid $34.0 million, $64.0 million, and $28.0 million in dividends to the Holding Company, respectively.
During the years ended December 31, 2025 and 2024, the Bank paid $72.5 million and $34.0 million in dividends to the Holding Company, respectively.
As of December 31, 2024 and December 31, 2023, our on-balance sheet sources of liquidity included the following: (dollars in thousands) December 31, 2024 December 31, 2023 Cash and cash equivalents $ 137,692 $ 141,252 Fair value of unpledged securities 705,106 827,760 Total cash and unpledged securities $ 842,798 $ 969,012 64 Table of Contents Additional sources of liquidity include borrowings from the FHLB, the Federal Reserve discount window, and federal fund lines of credit.
As of December 31, 2025 and 2024, our on-balance sheet sources of liquidity included the following: (dollars in thousands) December 31, 2025 December 31, 2024 Cash and cash equivalents $ 122,269 $ 137,692 Fair value of unpledged securities 845,524 705,106 Total cash and unpledged securities $ 967,793 $ 842,798 Additional sources of liquidity include borrowings from the FHLB, the Federal Reserve discount window, and federal fund lines of credit.
As of December 31, 2024, the Holding Company had no material commitments for capital expenditures. 65 Table of Contents CAPITAL RESOURCES The overall objectives of capital management are to ensure the availability of sufficient capital to support loan, deposit and other asset and liability growth opportunities and to maintain capital to absorb unforeseen losses or write-downs that are inherent in the business risks associated with the banking industry.
CAPITAL RESOURCES The overall objectives of capital management are to ensure the availability of sufficient capital to support loan, deposit and other asset and liability growth opportunities and to maintain capital to absorb unforeseen losses or write-downs that are inherent in the business risks associated with the banking industry.
The economic forecasts utilized in estimating the allowance for credit losses on loans and lending-related unfunded commitments include the unemployment rate and changes in gross domestic product ("GDP") as macroeconomic variables, although other economic metrics are considered on a qualitative basis. 51 Table of Contents Noninterest Income The following table sets forth the major categories of noninterest income for the years indicated: Year Ended December 31, Year Ended December 31, (dollars in thousands) 2024 2023 $ Change % Change 2023 2022 $ Change % Change Card income $ 11,051 $ 11,043 $ 8 0.1 % $ 11,043 $ 10,329 $ 714 6.9 % Wealth management fees 10,978 9,883 1,095 11.1 9,883 9,155 728 8.0 Service charges on deposit accounts 7,932 7,846 86 1.1 7,846 7,072 774 10.9 Mortgage servicing 4,437 4,678 (241) (5.2) 4,678 2,609 2,069 79.3 Mortgage servicing rights fair value adjustment (174) (1,615) 1,441 NM (1,615) 2,153 (3,768) NM Gains on sale of mortgage loans 1,611 1,526 85 5.6 1,526 1,461 65 4.4 Realized gains (losses) on sales of securities (3,697) (1,820) (1,877) NM (1,820) — (1,820) NM Unrealized gains (losses) on equity securities (59) 160 (219) NM 160 (414) 574 NM Gains (losses) on foreclosed assets 22 501 (479) (95.6) 501 (314) 815 NM Gains (losses) on other assets (635) 166 (801) NM 166 136 30 22.1 Income on bank owned life insurance 915 573 342 59.7 573 164 409 249.4 Other noninterest income 3,190 3,105 85 2.7 3,105 2,366 739 31.2 Total $ 35,571 $ 36,046 $ (475) (1.3) % $ 36,046 $ 34,717 $ 1,329 3.8 % _________________________________________________ NM Not meaningful.
The economic forecasts utilized in estimating the allowance for credit losses on loans and unfunded lending-related commitments include the unemployment rate and changes in GDP as macroeconomic variables, although other economic metrics are considered on a qualitative basis. 51 Table of Contents Noninterest Income The following table sets forth the major categories of noninterest income for the years indicated: Year Ended December 31, Year Ended December 31, (dollars in thousands) 2025 2024 $ Change % Change 2024 2023 $ Change % Change Card income $ 10,785 $ 11,051 $ (266) (2.4) % $ 11,051 $ 11,043 $ 8 0.1 % Wealth management fees 12,147 10,978 1,169 10.6 10,978 9,883 1,095 11.1 Service charges on deposit accounts 8,040 7,932 108 1.4 7,932 7,846 86 1.1 Mortgage servicing 4,113 4,437 (324) (7.3) 4,437 4,678 (241) (5.2) Mortgage servicing rights fair value adjustment (1,883) (174) (1,709) NM (174) (1,615) 1,441 NM Gains on sale of mortgage loans 1,477 1,611 (134) (8.3) 1,611 1,526 85 5.6 Realized gains (losses) on sales of securities (200) (3,697) 3,497 NM (3,697) (1,820) (1,877) NM Unrealized gains (losses) on equity securities 7 (59) 66 NM (59) 160 (219) NM Gains (losses) on foreclosed assets 4 22 (18) (81.8) 22 501 (479) (95.6) Gains (losses) on other assets (85) (635) 550 NM (635) 166 (801) NM Income on bank owned life insurance 671 915 (244) (26.7) 915 573 342 59.7 Other noninterest income 3,114 3,190 (76) (2.4) 3,190 3,105 85 2.7 Total $ 38,190 $ 35,571 $ 2,619 7.4 % $ 35,571 $ 36,046 $ (475) (1.3) % _________________________________________________ NM Not meaningful.
Individual credits with a maturity scheduled within the next five quarters that are presenting stress under current renewal terms are identified, so that ample time is available to develop solutions to manage credit risk. 57 Table of Contents Loan Portfolio Maturities The following table summarizes the scheduled maturities of the loan portfolio as of December 31, 2024.
Individual credits with a maturity scheduled within the next five quarters that are presenting stress under current renewal terms are identified, so that ample time is available to develop solutions to manage credit risk.
The yields set forth below include the effect of deferred fees and costs, discounts and premiums, as well as purchase accounting adjustments that are accreted or amortized to interest income or expense. 46 Table of Contents Year Ended December 31, 2024 December 31, 2023 December 31, 2022 (dollars in thousands) Average Balance Interest Yield/Cost Average Balance Interest Yield/Cost Average Balance Interest Yield/Cost ASSETS Loans $ 3,378,059 $ 214,863 6.36 % $ 3,231,736 $ 195,197 6.04 % $ 2,514,549 $ 123,478 4.91 % Debt securities 1,200,444 27,903 2.32 1,343,419 29,971 2.23 1,396,704 27,806 1.99 Deposits with banks 178,436 8,272 4.64 84,544 3,020 3.57 197,030 1,541 0.78 Other 12,732 662 5.20 15,326 811 5.29 9,841 229 2.33 Total interest-earning assets 4,769,671 $ 251,700 5.28 % 4,675,025 $ 228,999 4.90 % 4,118,124 $ 153,054 3.72 % Allowance for credit losses (40,694) (37,504) (24,703) Noninterest-earning assets 279,106 290,383 176,452 Total assets $ 5,008,083 $ 4,927,904 $ 4,269,873 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Interest-bearing deposits: Interest-bearing demand $ 1,106,136 $ 5,499 0.50 % $ 1,188,680 $ 3,130 0.26 % $ 1,141,402 $ 607 0.05 % Money market 797,444 18,637 2.34 669,118 7,352 1.10 582,514 813 0.14 Savings 584,769 1,621 0.28 661,424 1,033 0.16 650,385 208 0.03 Time 757,456 28,183 3.72 481,466 10,784 2.24 283,232 883 0.31 Brokered 38,286 2,107 5.50 52,724 2,836 5.38 — — — Total interest-bearing deposits 3,284,091 56,047 1.71 3,053,412 25,135 0.82 2,657,533 2,511 0.09 Securities sold under agreements to repurchase 30,984 594 1.92 35,450 255 0.72 51,554 36 0.07 Borrowings 13,383 480 3.59 139,817 7,128 5.10 26,468 967 3.65 Subordinated notes 39,514 1,879 4.75 39,434 1,879 4.76 39,355 1,879 4.77 Junior subordinated debentures issued to capital trusts 52,819 3,850 7.29 51,489 3,530 6.86 37,746 1,787 4.73 Total interest-bearing liabilities 3,420,791 $ 62,850 1.84 % 3,319,602 $ 37,927 1.14 % 2,812,656 $ 7,180 0.26 % Noninterest-bearing deposits 1,033,811 1,113,300 1,051,187 Noninterest-bearing liabilities 38,113 44,074 22,724 Total liabilities 4,492,715 4,476,976 3,886,567 Stockholders' Equity 515,368 450,928 383,306 Total liabilities and stockholders’ equity $ 5,008,083 $ 4,927,904 $ 4,269,873 Net interest income/Net interest margin (1) $ 188,850 3.96 % $ 191,072 4.09 % $ 145,874 3.54 % Tax-equivalent adjustment (2) 2,242 0.05 2,758 0.06 2,499 0.06 Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (2) (3) $ 191,092 4.01 % $ 193,830 4.15 % $ 148,373 3.60 % Net interest rate spread (4) 3.44 % 3.76 % 3.46 % Net interest-earning assets (5) $ 1,348,880 $ 1,355,423 $ 1,305,468 Ratio of interest-earning assets to interest-bearing liabilities 1.39 1.41 1.46 Cost of total deposits 1.30 % 0.60 % 0.07 % Cost of funds 1.41 0.86 0.19 _________________________________________________ (1) Net interest margin represents net interest income divided by average total interest-earning assets.
The yields set forth below include the effect of deferred fees and costs as well as purchase accounting adjustments that are accreted or amortized to interest income or expense. 46 Table of Contents Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (dollars in thousands) Average Balance Interest Yield/Cost Average Balance Interest Yield/Cost Average Balance Interest Yield/Cost ASSETS Loans $ 3,422,412 $ 216,821 6.34 % $ 3,378,059 $ 214,863 6.36 % $ 3,231,736 $ 195,197 6.04 % Debt securities 1,234,378 32,914 2.67 1,200,444 27,903 2.32 1,343,419 29,971 2.23 Deposits with banks 150,323 5,502 3.66 178,436 8,272 4.64 84,544 3,020 3.57 Other 12,554 547 4.36 12,732 662 5.20 15,326 811 5.29 Total interest-earning assets 4,819,667 $ 255,784 5.31 % 4,769,671 $ 251,700 5.28 % 4,675,025 $ 228,999 4.90 % Allowance for credit losses (41,970) (40,694) (37,504) Noninterest-earning assets 270,852 279,106 290,383 Total assets $ 5,048,549 $ 5,008,083 $ 4,927,904 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Interest-bearing deposits: Interest-bearing demand $ 1,122,357 $ 6,498 0.58 % $ 1,106,136 $ 5,499 0.50 % $ 1,188,680 $ 3,130 0.26 % Money market 830,630 18,112 2.18 797,444 18,637 2.34 669,118 7,352 1.10 Savings 567,092 1,540 0.27 584,769 1,621 0.28 661,424 1,033 0.16 Time 775,385 25,539 3.29 757,456 28,183 3.72 481,466 10,784 2.24 Brokered — — — 38,286 2,107 5.50 52,724 2,836 5.38 Total interest-bearing deposits 3,295,464 51,689 1.57 3,284,091 56,047 1.71 3,053,412 25,135 0.82 Securities sold under agreements to repurchase 2,514 22 0.89 30,984 594 1.92 35,450 255 0.72 Borrowings 8,780 203 2.31 13,383 480 3.59 139,817 7,128 5.10 Subordinated notes 27,869 1,326 4.76 39,514 1,879 4.75 39,434 1,879 4.76 Junior subordinated debentures issued to capital trusts 52,879 3,649 6.90 52,819 3,850 7.29 51,489 3,530 6.86 Total interest-bearing liabilities 3,387,506 $ 56,889 1.68 % 3,420,791 $ 62,850 1.84 % 3,319,602 $ 37,927 1.14 % Noninterest-bearing deposits 1,048,975 1,033,811 1,113,300 Noninterest-bearing liabilities 30,619 38,113 44,074 Total liabilities 4,467,100 4,492,715 4,476,976 Stockholders' Equity 581,449 515,368 450,928 Total liabilities and stockholders’ equity $ 5,048,549 $ 5,008,083 $ 4,927,904 Net interest income/Net interest margin (1) $ 198,895 4.13 % $ 188,850 3.96 % $ 191,072 4.09 % Tax-equivalent adjustment (2) 2,203 0.04 2,242 0.05 2,758 0.06 Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (2) (3) $ 201,098 4.17 % $ 191,092 4.01 % $ 193,830 4.15 % Net interest rate spread (4) 3.63 % 3.44 % 3.76 % Net interest-earning assets (5) $ 1,432,161 $ 1,348,880 $ 1,355,423 Ratio of interest-earning assets to interest-bearing liabilities 1.42 1.39 1.41 Cost of total deposits 1.19 % 1.30 % 0.60 % Cost of funds 1.28 1.41 0.86 _________________________________________________ (1) Net interest margin represents net interest income divided by average total interest-earning assets.
The following table sets forth the distribution of average deposits, by account type: Year Ended December 31, 2024 Percent Change in Average Balance 2024 vs. 2023 (dollars in thousands) Average Balance Percent of Total Deposits Weighted Average Cost Noninterest-bearing $ 1,033,811 23.9 % — % (7.1) % Interest-bearing demand 1,106,136 25.6 0.50 (6.9) Money market 797,444 18.6 2.34 19.2 Savings 584,769 13.5 0.28 (11.6) Time 757,456 17.5 3.72 57.3 Brokered 38,286 0.9 5.50 (27.4) Total deposits $ 4,317,902 100.0 % 1.30 % 3.6 % Year Ended December 31, 2023 Percent Change in Average Balance 2023 vs. 2022 (dollars in thousands) Average Balance Percent of Total Deposits Weighted Average Cost Noninterest-bearing $ 1,113,300 26.7 % — % 5.9 % Interest-bearing demand 1,188,680 28.5 0.26 4.1 Money market 669,118 16.1 1.10 14.9 Savings 661,424 15.9 0.16 1.7 Time 481,466 11.5 2.24 70.0 Brokered 52,724 1.3 5.38 100.0 Total deposits $ 4,166,712 100.0 % 0.60 % 12.3 % Year Ended December 31, 2022 (dollars in thousands) Average Balance Percent of Total Deposits Weighted Average Cost Noninterest-bearing $ 1,051,187 28.4 % — % Interest-bearing demand 1,141,402 30.8 0.05 Money market 582,514 15.7 0.14 Savings 650,385 17.5 0.03 Time 283,232 7.6 0.31 Brokered — — — Total deposits $ 3,708,720 100.0 % 0.07 % The increase in average deposit balances in 2024 compared to 2023 was primarily attributable to increases in time deposits, including the addition of $65.0 million from a State of Illinois loan matching program, and money market accounts as balances continued to shift towards higher cost deposit products.
The following table sets forth the distribution of average deposits, by account type: Year Ended December 31, 2025 Percent Change in Average Balance 2025 vs. 2024 (dollars in thousands) Average Balance Percent of Total Deposits Weighted Average Cost Noninterest-bearing $ 1,048,975 24.1 % — % 1.5 % Interest-bearing demand 1,122,357 25.8 0.58 1.5 Money market 830,630 19.1 2.18 4.2 Savings 567,092 13.1 0.27 (3.0) Time 775,385 17.9 3.29 2.4 Brokered — — — (100.0) Total deposits $ 4,344,439 100.0 % 1.19 % 0.6 % Year Ended December 31, 2024 Percent Change in Average Balance 2024 vs. 2023 (dollars in thousands) Average Balance Percent of Total Deposits Weighted Average Cost Noninterest-bearing $ 1,033,811 23.9 % — % (7.1) % Interest-bearing demand 1,106,136 25.6 0.50 (6.9) Money market 797,444 18.6 2.34 19.2 Savings 584,769 13.5 0.28 (11.6) Time 757,456 17.5 3.72 57.3 Brokered 38,286 0.9 5.50 (27.4) Total deposits $ 4,317,902 100.0 % 1.30 % 3.6 % Year Ended December 31, 2023 (dollars in thousands) Average Balance Percent of Total Deposits Weighted Average Cost Noninterest-bearing $ 1,113,300 26.7 % — % Interest-bearing demand 1,188,680 28.5 0.26 Money market 669,118 16.1 1.10 Savings 661,424 15.9 0.16 Time 481,466 11.5 2.24 Brokered 52,724 1.3 5.38 Total deposits $ 4,166,712 100.0 % 0.60 % The increase in average deposit balances in 2025 compared to 2024 was primarily attributable to increases in money market accounts and time deposits.
For commercial real estate – non-owner occupied and multi-family loans over $1 million, we evaluate the impact of current interest rates on the underlying cash flows of the properties securing these loans, based on the most recent cash flow data available. This testing is completed in addition to the various sensitivity testing completed at the initial extension of credit.
For commercial real estate – non-owner occupied and multi-family loans over $1 million, we evaluate, on a quarterly basis, the impact of current interest rates on the underlying cash flows of the properties securing these loans, based on the most recent cash flow data available.
The acquisition of Town and Country further enhanced HBT Financial’s footprint in central Illinois and expanded our footprint into metro-east St. Louis. At the time of acquisition, Town and Country Bank operated 10 full-service branch locations which began operating as branches of Heartland Bank. The core system conversion was successfully completed in April 2023.
At the time of acquisition, Town and Country Bank operated 10 full-service branch locations which began operating as branches of Heartland Bank. The core system conversion was successfully completed in April 2023.
Potential deterioration of economic conditions may lead to higher credit losses and adversely impact our financial condition and results of operations.
The provision for credit losses is highly dependent on current and forecast economic conditions. Potential deterioration of economic conditions may lead to higher credit losses and adversely impact our financial condition and results of operations.
Total acquisition-related expenses were $13.7 million, including the recognition of an allowance for credit losses on non-purchased credit deteriorated loans (“non-PCD loans”) of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million through provision for credit losses, during the year ended December 31, 2023 and were $1.1 million during the year ended December 31, 2022.
Acquisition-related expenses recognized during the year ended December 31, 2023 totaled $13.7 million, including the recognition of an allowance for credit losses on non-purchased credit deteriorated loans and an allowance for credit losses on unfunded commitments.
In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, the possibility of a materially different financial condition or materially different results of operations is a reasonable likelihood. Further, changes in accounting standards could impact the Company’s critical accounting estimates.
These estimates involve judgments, assumptions, and uncertainties that are susceptible to change. In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, the possibility of a materially different financial condition or materially different results of operations is a reasonable likelihood.
Year Ended December 31, 2024 2023 2022 (dollars in thousands) Interest Net Interest Margin Contribution Interest Net Interest Margin Contribution Interest Net Interest Margin Contribution Interest income: Contractual interest on loans $ 205,031 4.30 % $ 185,772 3.97 % $ 113,775 2.76 % Loan fees (excluding PPP loans) 4,264 0.09 4,584 0.10 4,454 0.11 PPP loan fees 1 — 2 — 1,488 0.04 Accretion of acquired loan discounts 4,450 0.09 4,136 0.09 933 0.02 Nonaccrual interest recoveries 1,117 0.02 703 0.02 2,828 0.07 Debt securities 27,903 0.59 29,971 0.64 27,806 0.67 Interest-bearing deposits in bank 8,272 0.18 3,020 0.06 1,541 0.04 Other 662 0.01 811 0.02 229 0.01 Total interest income 251,700 5.28 228,999 4.90 153,054 3.72 Interest expense: Deposits 56,047 1.18 25,135 0.54 2,511 0.07 Other interest-bearing liabilities 6,803 0.14 12,792 0.27 4,669 0.11 Total interest expense 62,850 1.32 37,927 0.81 7,180 0.18 Net interest income 188,850 3.96 191,072 4.09 145,874 3.54 Tax-equivalent adjustment (1) 2,242 0.05 2,758 0.06 2,499 0.06 Net interest income (tax-equivalent) (1) (2) $ 191,092 4.01 % $ 193,830 4.15 % $ 148,373 3.60 % _________________________________________________ (1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
Year Ended December 31, 2025 2024 2023 (dollars in thousands) Interest Net Interest Margin Contribution Interest Net Interest Margin Contribution Interest Net Interest Margin Contribution Interest income: Contractual interest on loans $ 206,163 4.28 % $ 205,031 4.30 % $ 185,772 3.97 % Loan fees 5,600 0.12 4,265 0.09 4,586 0.10 Accretion of acquired loan discounts 3,868 0.08 4,450 0.09 4,136 0.09 Nonaccrual interest recoveries 1,190 0.03 1,117 0.02 703 0.02 Debt securities 32,914 0.68 27,903 0.59 29,971 0.64 Interest-bearing deposits in bank 5,502 0.11 8,272 0.18 3,020 0.06 Other 547 0.01 662 0.01 811 0.02 Total interest income 255,784 5.31 251,700 5.28 228,999 4.90 Interest expense: Deposits 51,689 1.07 56,047 1.18 25,135 0.54 Other interest-bearing liabilities 5,200 0.11 6,803 0.14 12,792 0.27 Total interest expense 56,889 1.18 62,850 1.32 37,927 0.81 Net interest income 198,895 4.13 188,850 3.96 191,072 4.09 Tax-equivalent adjustment (1) 2,203 0.04 2,242 0.05 2,758 0.06 Net interest income (tax-equivalent) (1) (2) $ 201,098 4.17 % $ 191,092 4.01 % $ 193,830 4.15 % _________________________________________________ (1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
Reconciliation of Non-GAAP Financial Measure — Efficiency Ratio (Tax-Equivalent Basis) and Adjusted Efficiency Ratio (Tax-Equivalent Basis) Year Ended December 31, (dollars in thousands) 2024 2023 2022 Total noninterest expense $ 124,007 $ 130,964 $ 105,107 Less: amortization of intangible assets 2,839 2,670 873 Noninterest expense excluding amortization of intangible assets $ 121,168 $ 128,294 $ 104,234 Less: adjustments to noninterest expense Acquisition expenses — 7,767 1,092 Total adjustments to noninterest expense — 7,767 1,092 Adjusted noninterest expense $ 121,168 $ 120,527 $ 103,142 Net interest income $ 188,850 $ 191,072 $ 145,874 Total noninterest income 35,571 36,046 34,717 Operating revenue 224,421 227,118 180,591 Tax-equivalent adjustment (1) 2,242 2,758 2,499 Operating revenue (tax-equivalent basis) (1) 226,663 229,876 183,090 Less: adjustments to noninterest income Gains (losses) on closed branch premises (635) 75 141 Realized gains (losses) on sales of securities (3,697) (1,820) — Mortgage servicing rights fair value adjustment (174) (1,615) 2,153 Total adjustments to noninterest income (4,506) (3,360) 2,294 Adjusted operating revenue (tax-equivalent basis) (1) $ 231,169 $ 233,236 $ 180,796 Efficiency ratio 53.99 % 56.49 % 57.72 % Efficiency ratio (tax-equivalent basis) (1) 53.46 55.81 56.93 Adjusted efficiency ratio (tax-equivalent basis) (1) 52.42 51.68 57.05 _________________________________________________ (1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%. 73 Table of Contents Reconciliation of Non-GAAP Financial Measure — Ratio of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share (dollars in thousands, except per share data) December 31, 2024 December 31, 2023 Tangible Common Equity Total stockholders' equity $ 544,605 $ 489,496 Less: Goodwill 59,820 59,820 Less: Intangible assets, net 17,843 20,682 Tangible common equity $ 466,942 $ 408,994 Tangible Assets Total assets $ 5,032,902 $ 5,073,170 Less: Goodwill 59,820 59,820 Less: Intangible assets, net 17,843 20,682 Tangible assets $ 4,955,239 $ 4,992,668 Total stockholders' equity to total assets 10.82 % 9.65 % Tangible common equity to tangible assets 9.42 8.19 Shares of common stock outstanding 31,559,366 31,695,828 Book value per share $ 17.26 $ 15.44 Tangible book value per share 14.80 12.90 Reconciliation of Non-GAAP Financial Measure — Return on Average Tangible Common Equity, Adjusted Return on Average Stockholders’ Equity, and Adjusted Return on Average Tangible Common Equity Year Ended December 31, (dollars in thousands) 2024 2023 2022 Average Tangible Common Equity Total stockholders' equity $ 515,368 $ 450,928 $ 383,306 Less: Goodwill 59,820 57,266 29,322 Less: Intangible assets, net 19,247 20,272 1,480 Average tangible common equity $ 436,301 $ 373,390 $ 352,504 Net income $ 71,780 $ 65,842 $ 56,456 Adjusted net income 75,002 78,182 55,805 Return on average stockholders' equity 13.93 % 14.60 % 14.73 % Return on average tangible common equity 16.45 17.63 16.02 Adjusted return on average stockholders' equity 14.55 % 17.34 % 14.56 % Adjusted return on average tangible common equity 17.19 20.94 15.83 74 Table of Contents Reconciliation of Non-GAAP Financial Measure — Core Deposits (dollars in thousands) December 31, 2024 December 31, 2023 Core Deposits Total deposits $ 4,318,254 $ 4,401,437 Less: time deposits of $250,000 or more 202,196 130,183 Less: brokered deposits — 144,880 Core deposits $ 4,116,058 $ 4,126,374 Core deposits to total deposits 95.32 % 93.75 % 75 Table of Contents
Reconciliation of Non-GAAP Financial Measure — Efficiency Ratio (Tax-Equivalent Basis) and Adjusted Efficiency Ratio (Tax-Equivalent Basis) Year Ended December 31, (dollars in thousands) 2025 2024 2023 Total noninterest expense $ 129,418 $ 124,007 $ 130,964 Less: amortization of intangible assets 2,726 2,839 2,670 Noninterest expense excluding amortization of intangible assets $ 126,692 $ 121,168 $ 128,294 Less: adjustments to noninterest expense Acquisition expenses 999 — 7,767 Loss on extinguishment of debt 391 — — Total adjustments to noninterest expense 1,390 — 7,767 Adjusted noninterest expense $ 125,302 $ 121,168 $ 120,527 Net interest income $ 198,895 $ 188,850 $ 191,072 Total noninterest income 38,190 35,571 36,046 Operating revenue 237,085 224,421 227,118 Tax-equivalent adjustment (1) 2,203 2,242 2,758 Operating revenue (tax-equivalent basis) (1) 239,288 226,663 229,876 Less: adjustments to noninterest income Gains (losses) on closed branch premises 2 (635) 75 Realized gains (losses) on sales of securities (200) (3,697) (1,820) Mortgage servicing rights fair value adjustment (1,883) (174) (1,615) Total adjustments to noninterest income (2,081) (4,506) (3,360) Adjusted operating revenue (tax-equivalent basis) (1) $ 241,369 $ 231,169 $ 233,236 Efficiency ratio 53.44 % 53.99 % 56.49 % Efficiency ratio (tax-equivalent basis) (1) 52.95 53.46 55.81 Adjusted efficiency ratio (tax-equivalent basis) (1) 51.91 52.42 51.68 _________________________________________________ (1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%. 73 Table of Contents Reconciliation of Non-GAAP Financial Measure — Ratio of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share (dollars in thousands, except per share data) December 31, 2025 December 31, 2024 Tangible Common Equity Total stockholders' equity $ 615,498 $ 544,605 Less: Goodwill 59,820 59,820 Less: Intangible assets, net 15,117 17,843 Tangible common equity $ 540,561 $ 466,942 Tangible Assets Total assets $ 5,071,390 $ 5,032,902 Less: Goodwill 59,820 59,820 Less: Intangible assets, net 15,117 17,843 Tangible assets $ 4,996,453 $ 4,955,239 Total stockholders' equity to total assets 12.14 % 10.82 % Tangible common equity to tangible assets 10.82 9.42 Shares of common stock outstanding 31,431,924 31,559,366 Book value per share $ 19.58 $ 17.26 Tangible book value per share 17.20 14.80 Reconciliation of Non-GAAP Financial Measure — Return on Average Tangible Common Equity, Adjusted Return on Average Stockholders’ Equity, and Adjusted Return on Average Tangible Common Equity Year Ended December 31, (dollars in thousands) 2025 2024 2023 Average Tangible Common Equity Total stockholders' equity $ 581,449 $ 515,368 $ 450,928 Less: Goodwill 59,820 59,820 57,266 Less: Intangible assets, net 16,437 19,247 20,272 Average tangible common equity $ 505,192 $ 436,301 $ 373,390 Net income $ 77,008 $ 71,780 $ 65,842 Adjusted net income 79,647 75,002 78,182 Return on average stockholders' equity 13.24 % 13.93 % 14.60 % Return on average tangible common equity 15.24 16.45 17.63 Adjusted return on average stockholders' equity 13.70 % 14.55 % 17.34 % Adjusted return on average tangible common equity 15.77 17.19 20.94 _________________________________________________ 74 Table of Contents Reconciliation of Non-GAAP Financial Measure — Core Deposits (dollars in thousands) December 31, 2025 December 31, 2024 Core Deposits Total deposits $ 4,359,263 $ 4,318,254 Less: time deposits of $250,000 or more 201,365 202,196 Less: brokered deposits — — Core deposits $ 4,157,898 $ 4,116,058 Core deposits to total deposits 95.38 % 95.32 % 75 Table of Contents
Our use of FHLB advances and other borrowings was nominal during the first half of 2022, but increased during the second half of 2022 and throughout most of 2023 to fund increases in loan demand and to offset a decrease in deposits.
Our use of FHLB advances and other borrowings was elevated during 2023 to fund increases in loan demand and to offset a decrease in deposits.
Year Ended December 31, 2024 2023 2022 (dollars in thousands) Interest Yield Contribution Interest Yield Contribution Interest Yield Contribution Contractual interest $ 205,031 6.07 % $ 185,772 5.75 % $ 113,775 4.52 % Loan fees (excluding PPP loans) 4,264 0.13 4,584 0.14 4,454 0.18 PPP loan fees 1 — 2 — 1,488 0.06 Accretion of acquired loan discounts 4,450 0.13 4,136 0.13 933 0.04 Nonaccrual interest recoveries 1,117 0.03 703 0.02 2,828 0.11 Total loan interest income $ 214,863 6.36 % $ 195,197 6.04 % $ 123,478 4.91 % The following table sets forth the components of net interest income and their contributions to the net interest margin.
Year Ended December 31, 2025 2024 2023 (dollars in thousands) Interest Yield Contribution Interest Yield Contribution Interest Yield Contribution Contractual interest $ 206,163 6.03 % $ 205,031 6.07 % $ 185,772 5.75 % Loan fees 5,600 0.16 4,265 0.13 4,586 0.14 Accretion of acquired loan discounts 3,868 0.11 4,450 0.13 4,136 0.13 Nonaccrual interest recoveries 1,190 0.04 1,117 0.03 703 0.02 Total loan interest income $ 216,821 6.34 % $ 214,863 6.36 % $ 195,197 6.04 % The following table sets forth the components of net interest income and their contributions to the net interest margin.
As of December 31, 2024, our current borrowings and additional available borrowing capacity were as follows: December 31, 2024 (dollars in thousands) Current Balance Additional Available Capacity FHLB $ 13,231 $ 1,019,027 Federal Reserve — 91,860 Federal funds lines of credit — 80,000 Total $ 13,231 $ 1,190,887 Further, the Bank could utilize brokered deposits as an additional source of liquidity, as needed.
As of December 31, 2025, our current borrowings and additional available borrowing capacity were as follows: December 31, 2025 (dollars in thousands) Current Balance Additional Available Capacity FHLB $ 12,301 $ 1,058,052 Federal Reserve — 108,840 Federal funds lines of credit — 80,000 Total $ 12,301 $ 1,246,892 Furthermore, the Bank could utilize brokered deposits as an additional source of liquidity, as needed.
Holding Company Liquidity The Holding Company, or HBT Financial on an unconsolidated basis, is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity. As of December 31, 2024, the Holding Company had cash and cash equivalents of $16.2 million.
As of December 31, 2025, the Bank had no material commitments for capital expenditures. 65 Table of Contents Holding Company Liquidity HBT Financial, on an unconsolidated basis (the "Holding Company"), is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity.
Notable changes in noninterest income include the following: • Net losses of $3.7 million were realized on the sale of debt securities during the year ended December 31, 2024, compared to net losses of $1.8 million realized during the year ended December 31, 2023; • A $0.2 million negative mortgage servicing rights fair value adjustment included in the 2024 results, compared to a $1.6 million negative mortgage servicing rights fair value adjustment included in the 2023 results; • A $1.1 million increase in wealth management fees, driven by higher values of assets under management, partially offset by lower farm management fees as a result of lower commodity prices; • Impairment losses on bank premises of $0.6 million related to the closure of two branch premises were recognized during 2024, compared to a $0.1 million gain on sales of closed branch premises recognized during 2023; and • A $0.3 million increase in income on bank owned life insurance, primarily attributable to a $0.2 million gain on life insurance proceeds. 52 Table of Contents Noninterest Expense The following table sets forth the major categories of noninterest expense for the years indicated: Year Ended December 31, Year Ended December 31, (dollars in thousands) 2024 2023 $ Change % Change 2023 2022 $ Change % Change Salaries $ 65,130 $ 67,453 $ (2,323) (3.4) % $ 67,453 $ 51,767 $ 15,686 30.3 % Employee benefits 11,311 10,037 1,274 12.7 10,037 8,325 1,712 20.6 Occupancy of bank premises 10,293 9,918 375 3.8 9,918 7,673 2,245 29.3 Furniture and equipment 2,004 2,790 (786) (28.2) 2,790 2,476 314 12.7 Data processing 11,169 12,352 (1,183) (9.6) 12,352 7,441 4,911 66.0 Marketing and customer relations 4,320 5,043 (723) (14.3) 5,043 3,803 1,240 32.6 Amortization of intangible assets 2,839 2,670 169 6.3 2,670 873 1,797 205.8 FDIC insurance 2,254 2,280 (26) (1.1) 2,280 1,164 1,116 95.9 Loan collection and servicing 2,056 1,402 654 46.6 1,402 1,049 353 33.7 Foreclosed assets 109 251 (142) (56.6) 251 293 (42) (14.3) Other noninterest expense 12,522 16,768 (4,246) (25.3) 16,768 20,243 (3,475) (17.2) Total $ 124,007 $ 130,964 $ (6,957) (5.3) % $ 130,964 $ 105,107 $ 25,857 24.6 % Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 Total noninterest expense for the year ended December 31, 2024, was $124.0 million, a decrease of $7.0 million, or 5.3%, from the year ended December 31, 2023.
Notable changes in noninterest income include the following: • A $0.2 million loss on sales of securities included in the 2025 results, compared to a $3.7 million of loss on sales of securities included in the 2024 results; • A $1.9 million negative MSR fair value adjustment included in the 2025 results, compared to a $0.2 million negative MSR fair value adjustment included in the 2024 results; • A $1.2 million increase in wealth management fees, primarily driven by higher values of assets under management and an increase in farm management fees; • The absence of $0.6 million of impairment losses on bank premises related to the closure of two branch premises recognized in the 2024 results; and • A $0.2 million decrease in income on bank owned life insurance, primarily attributable to the absence of a $0.2 million gain on life insurance proceeds recognized in the 2024 results. 52 Table of Contents Noninterest Expense The following table sets forth the major categories of noninterest expense for the years indicated: Year Ended December 31, Year Ended December 31, (dollars in thousands) 2025 2024 $ Change % Change 2024 2023 $ Change % Change Salaries $ 66,342 $ 65,130 $ 1,212 1.9 % $ 65,130 $ 67,453 $ (2,323) (3.4) % Employee benefits 13,538 11,311 2,227 19.7 11,311 10,037 1,274 12.7 Occupancy of bank premises 10,713 10,293 420 4.1 10,293 9,918 375 3.8 Furniture and equipment 2,280 2,004 276 13.8 2,004 2,790 (786) (28.2) Data processing 11,766 11,169 597 5.3 11,169 12,352 (1,183) (9.6) Marketing and customer relations 4,183 4,320 (137) (3.2) 4,320 5,043 (723) (14.3) Amortization of intangible assets 2,726 2,839 (113) (4.0) 2,839 2,670 169 6.3 Loss on extinguishment of debt 391 — 391 NM — — — NM FDIC insurance 2,234 2,254 (20) (0.9) 2,254 2,280 (26) (1.1) Loan collection and servicing 1,346 2,056 (710) (34.5) 2,056 1,402 654 46.6 Foreclosed assets 169 109 60 55.0 109 251 (142) (56.6) Other noninterest expense 13,730 12,522 1,208 9.6 12,522 16,768 (4,246) (25.3) Total $ 129,418 $ 124,007 $ 5,411 4.4 % $ 124,007 $ 130,964 $ (6,957) (5.3) % Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024 Total noninterest expense for the year ended December 31, 2025, was $129.4 million, an increase of $5.4 million, or 4.4%, from the year ended December 31, 2024.
Core Deposits • Total deposits, excluding: - Time deposits of $250,000 or more, and - Brokered deposits • Provides investors with information regarding the stability of the Company’s sources of funds. • We also sometimes refer to the ratio of Core Deposits to total deposits. _________________________________________________ (1) Tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%. 69 Table of Contents Reconciliation of Non-GAAP Financial Measure — Adjusted Net Income and Adjusted Return on Average Assets Year Ended December 31, (dollars in thousands) 2024 2023 2022 Net income $ 71,780 $ 65,842 $ 56,456 Less: adjustments Acquisition expenses (1) — (13,691) (1,092) Gains (losses) on closed branch premises (635) 75 141 Realized gains (losses) on sales of securities (3,697) (1,820) — Mortgage servicing rights fair value adjustment (174) (1,615) 2,153 Total adjustments (4,506) (17,051) 1,202 Tax effect of adjustments (2) 1,284 4,711 (551) Total adjustments after tax effect (3,222) (12,340) 651 Adjusted net income $ 75,002 $ 78,182 $ 55,805 Average assets $ 5,008,083 $ 4,927,904 $ 4,269,873 Return on average assets 1.43 % 1.34 % 1.32 % Adjusted return on average assets 1.50 1.59 1.31 _________________________________________________ (1) Includes recognition of an allowance for credit losses on non-PCD loans of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million in connection with the Town and Country merger during the first quarter of 2023 in accordance with ASC 326 which was adopted on January 1, 2023.
Core Deposits • Total deposits, excluding: - Time deposits of $250,000 or more, and - Brokered deposits • Provides investors with information regarding the stability of the Company’s sources of funds. • We also sometimes refer to the ratio of Core Deposits to total deposits. _________________________________________________ (1) Tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%. 70 Table of Contents Reconciliation of Non-GAAP Financial Measure — Adjusted Net Income and Adjusted Return on Average Assets Year Ended December 31, (dollars in thousands) 2025 2024 2023 Net income $ 77,008 $ 71,780 $ 65,842 Less: adjustments Acquisition expenses (999) — (13,691) Loss on extinguishment of debt (391) — — Gains (losses) on closed branch premises 2 (635) 75 Realized gains (losses) on sales of securities (200) (3,697) (1,820) Mortgage servicing rights fair value adjustment (1,883) (174) (1,615) Total adjustments (3,471) (4,506) (17,051) Tax effect of adjustments (1) 832 1,284 4,711 Total adjustments after tax effect (2,639) (3,222) (12,340) Adjusted net income $ 79,647 $ 75,002 $ 78,182 Average assets $ 5,048,549 $ 5,008,083 $ 4,927,904 Return on average assets 1.53 % 1.43 % 1.34 % Adjusted return on average assets 1.58 1.50 1.59 _________________________________________________ (1) Assumes a federal income tax rate of 21% and a state tax rate of 9.5%, and excludes non-deductible acquisition expenses.
Year Ended December 31, (dollars in thousands) 2024 2023 2022 Net charge-offs (recoveries) Commercial and industrial $ 1,300 $ 369 $ (751) Commercial real estate - owner occupied (10) (13) (1,006) Commercial real estate - non-owner occupied (586) (66) (283) Construction and land development (3) (53) (1) Multi-family 188 (281) — One-to-four family residential (142) (152) (302) Agricultural and farmland 51 (6) — Municipal, consumer, and other 960 382 240 Total $ 1,758 $ 180 $ (2,103) Average loans Commercial and industrial $ 402,936 $ 370,255 $ 268,765 Commercial real estate - owner occupied 294,847 290,489 219,127 Commercial real estate - non-owner occupied 886,903 874,661 695,230 Construction and land development 364,138 368,111 340,831 Multi-family 423,532 372,201 258,490 One-to-four family residential 482,984 476,856 328,656 Agricultural and farmland 285,747 254,106 233,349 Municipal, consumer, and other 236,972 225,057 170,101 Total $ 3,378,059 $ 3,231,736 $ 2,514,549 Charge-offs (recoveries) to average loans Commercial and industrial 0.32 % 0.10 % (0.28) % Commercial real estate - owner occupied — — (0.46) Commercial real estate - non-owner occupied (0.07) (0.01) (0.04) Construction and land development — (0.01) — Multi-family 0.04 (0.08) — One-to-four family residential (0.03) (0.03) (0.09) Agricultural and farmland 0.02 — — Municipal, consumer, and other 0.41 0.17 0.14 Total 0.05 % 0.01 % (0.08) % The net charge-offs (recoveries) to average total loans ratio has remained low for several years.
Year Ended December 31, (dollars in thousands) 2025 2024 2023 Net charge-offs (recoveries) Commercial and industrial $ 1,850 $ 1,300 $ 369 Commercial real estate - owner occupied 88 (10) (13) Commercial real estate - non-owner occupied — (586) (66) Construction and land development (69) (3) (53) Multi-family 80 188 (281) One-to-four family residential 209 (142) (152) Agricultural and farmland (49) 51 (6) Municipal, consumer, and other 349 960 382 Total $ 2,458 $ 1,758 $ 180 Average loans Commercial and industrial $ 421,324 $ 402,936 $ 370,255 Commercial real estate - owner occupied 319,690 294,847 290,489 Commercial real estate - non-owner occupied 909,586 886,903 874,661 Construction and land development 329,211 364,138 368,111 Multi-family 465,200 423,532 372,201 One-to-four family residential 451,933 482,984 476,856 Agricultural and farmland 276,849 285,747 254,106 Municipal, consumer, and other 248,619 236,972 225,057 Total $ 3,422,412 $ 3,378,059 $ 3,231,736 Charge-offs (recoveries) to average loans Commercial and industrial 0.44 % 0.32 % 0.10 % Commercial real estate - owner occupied 0.03 — — Commercial real estate - non-owner occupied — (0.07) (0.01) Construction and land development (0.02) — (0.01) Multi-family 0.02 0.04 (0.08) One-to-four family residential 0.05 (0.03) (0.03) Agricultural and farmland (0.02) 0.02 — Municipal, consumer, and other 0.14 0.41 0.17 Total 0.07 % 0.05 % 0.01 % _________________________________________________ * Annualized measure.
During the years ended December 31, 2024, 2023, and 2022, holding company operating expenses consisted of interest expense of $5.7 million, $5.4 million, and $3.7 million, respectively, and other operating expenses of $4.1 million, $5.5 million, and $5.3 million, respectively.
During the years ended December 31, 2025 and 2024, holding company operating expenses consisted of interest expense of $5.0 million and $5.7 million, respectively, and other operating expenses of $5.4 million and $4.1 million, respectively. Additionally, the Holding Company paid $26.6 million and $24.2 million of dividends to stockholders during the years ended December 31, 2025 and 2024, respectively.
The slight decrease was primarily attributable to sales of foreclosed assets and a decrease in nonaccrual one-to-four family residential loans. Additionally, of the $7.7 million of nonperforming loans held as of December 31, 2024, $1.6 million are either wholly or partially guaranteed by the U.S. Government.
The $0.7 million increase in nonperforming assets from December 31, 2024 was primarily attributable to an increase in foreclosed assets. Of the $7.6 million of nonperforming loans held as of December 31, 2025, $2.2 million are either wholly or partially guaranteed by the U.S. Government.
Government $ 1,573 $ 2,641 Allowance for credit losses $ 42,044 $ 40,048 Loans, before allowance for credit losses 3,466,146 3,404,417 CREDIT QUALITY RATIOS Allowance for credit losses to loans, before allowance for credit losses 1.21 % 1.18 % Allowance for credit losses to nonaccrual loans 549.45 512.12 Allowance for credit losses to nonperforming loans 549.16 509.71 Nonaccrual loans to loans, before allowance for credit losses 0.22 0.23 Nonperforming loans to loans, before allowance for credit losses 0.22 0.23 Nonperforming assets to total assets 0.16 0.17 Nonperforming assets to loans, before allowance for credit losses, and foreclosed assets 0.23 0.26 Total nonperforming assets were $8.0 million at December 31, 2024, a slight decrease when compared to $8.7 million at December 31, 2023.
Government $ 2,170 $ 1,573 Allowance for credit losses $ 41,690 $ 42,044 Loans, before allowance for credit losses 3,456,209 3,466,146 CREDIT QUALITY RATIOS Allowance for credit losses to loans, before allowance for credit losses 1.21 % 1.21 % Allowance for credit losses to nonaccrual loans 551.75 549.45 Allowance for credit losses to nonperforming loans 551.75 549.16 Nonaccrual loans to loans, before allowance for credit losses 0.22 0.22 Nonperforming loans to loans, before allowance for credit losses 0.22 0.22 Nonperforming assets to total assets 0.17 0.16 Nonperforming assets to loans, before allowance for credit losses, and foreclosed assets 0.25 0.23 Total nonperforming assets were $8.7 million at December 31, 2025, an increase of 8.2%, when compared to $8.0 million at December 31, 2024.
As of December 31, 2024 and 2023, the Company and the Bank met all capital adequacy requirements to which they were subject. As of those dates, the Bank was “well capitalized” under the regulatory prompt corrective action provisions.
As of December 31, 2025 and 2024, the Company and the Bank met all capital adequacy requirements to which they were subject.
December 31, 2024 December 31, 2023 (dollars in thousands) Balance Percent Balance Percent Commercial and industrial $ 428,389 12.4 % $ 427,800 12.6 % Commercial real estate - owner occupied 322,316 9.3 295,842 8.7 Commercial real estate - non-owner occupied 899,565 25.9 880,681 25.9 Construction and land development 374,657 10.8 363,983 10.7 Multi-family 431,524 12.4 417,923 12.3 One-to-four family residential 463,968 13.4 491,508 14.4 Agricultural and farmland 293,375 8.5 287,294 8.4 Municipal, consumer, and other 252,352 7.3 239,386 7.0 Loans, before allowance for credit losses 3,466,146 100.0 % 3,404,417 100.0 % Allowance for credit losses (42,044) (40,048) Loans, net of allowance for credit losses $ 3,424,102 $ 3,364,369 Loans, before allowance for credit losses were $3.47 billion at December 31, 2024, an increase of $61.7 million, or 1.8%, from December 31, 2023.
December 31, 2025 December 31, 2024 (dollars in thousands) Balance Percent Balance Percent Commercial and industrial $ 399,760 11.6 % $ 428,389 12.4 % Commercial real estate - owner occupied 320,434 9.3 322,316 9.3 Commercial real estate - non-owner occupied 937,094 27.0 899,565 25.9 Construction and land development 280,254 8.1 374,657 10.8 Multi-family 544,941 15.8 431,524 12.4 One-to-four family residential 445,463 12.9 463,968 13.4 Agricultural and farmland 275,251 8.0 293,375 8.5 Municipal, consumer, and other 253,012 7.3 252,352 7.3 Loans, before allowance for credit losses 3,456,209 100.0 % 3,466,146 100.0 % Allowance for credit losses (41,690) (42,044) Loans, net of allowance for credit losses $ 3,414,519 $ 3,424,102 Loans, before allowance for credit losses were $3.46 billion at December 31, 2025, a decrease of $9.9 million, or 0.3%, from December 31, 2024.
The Holding Company’s main source of funding is dividends declared and paid to it by the Bank.
As of December 31, 2025, the Holding Company had cash and cash equivalents of $11.9 million. The Holding Company’s main source of funding is dividends declared and paid to it by the Bank.
However, we may also obtain advances from the FHLB, purchase federal funds, and engage in overnight borrowing from the Federal Reserve. We may also use these sources of funds as part of our asset liability management process to control our long-term interest rate risk exposure, even if it may increase our short-term cost of funds.
We may also use these sources of funds as part of our asset liability management process to control our long-term interest rate risk exposure, even if it may increase our short-term cost of funds. Our level of short-term borrowing can fluctuate on a daily basis depending on funding needs and the source of funds to satisfy the needs.
CRITICAL ACCOUNTING ESTIMATES Critical accounting estimates are those that are critical to the portrayal and understanding of the Company’s financial condition and results of operations and require management to make assumptions that are difficult, subjective, or complex. These estimates involve judgments, assumptions, and uncertainties that are susceptible to change.
For additional information, see “Note 23 – Commitments and Contingencies” to the consolidated financial statements. 67 Table of Contents CRITICAL ACCOUNTING ESTIMATES Critical accounting estimates are those that are critical to the portrayal and understanding of the Company’s financial condition and results of operations and require management to make assumptions that are difficult, subjective, or complex.
Year Ended December 31, 2022 Increase (Decrease) Due to Total Increase (Decrease) Due to Total (dollars in thousands) Volume Rate Volume Rate Interest-earning assets: Loans $ 9,054 $ 10,612 $ 19,666 $ 39,701 $ 32,018 $ 71,719 Debt securities (3,286) 1,218 (2,068) (1,092) 3,257 2,165 Deposits with banks 4,141 1,111 5,252 (1,312) 2,791 1,479 Other (136) (13) (149) 177 405 582 Total interest-earning assets 9,773 12,928 22,701 37,474 38,471 75,945 Interest-bearing liabilities: Interest-bearing deposits: Interest-bearing demand (231) 2,600 2,369 26 2,497 2,523 Money market 1,641 9,644 11,285 139 6,400 6,539 Savings (132) 720 588 4 821 825 Time 8,080 9,319 17,399 1,007 8,894 9,901 Brokered (794) 65 (729) 2,836 — 2,836 Total interest-bearing deposits 8,564 22,348 30,912 4,012 18,612 22,624 Securities sold under agreements to repurchase (36) 375 339 (15) 234 219 Borrowings (5,008) (1,640) (6,648) 5,640 521 6,161 Subordinated notes 4 (4) — 4 (4) — Junior subordinated debentures issued to capital trusts 93 227 320 781 962 1,743 Total interest-bearing liabilities 3,617 21,306 24,923 10,422 20,325 30,747 Change in net interest income $ 6,156 $ (8,378) $ (2,222) $ 27,052 $ 18,146 $ 45,198 Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 Net interest income for the year ended December 31, 2024 was $188.9 million, decreasing $2.2 million, or 1.2%, when compared to the year ended December 31, 2023.
Year Ended December 31, 2023 Increase (Decrease) Due to Total Increase (Decrease) Due to Total (dollars in thousands) Volume Rate Volume Rate Interest-earning assets: Loans $ 2,813 $ (855) $ 1,958 $ 9,054 $ 10,612 $ 19,666 Debt securities 807 4,204 5,011 (3,286) 1,218 (2,068) Deposits with banks (1,186) (1,584) (2,770) 4,141 1,111 5,252 Other (9) (106) (115) (136) (13) (149) Total interest-earning assets 2,425 1,659 4,084 9,773 12,928 22,701 Interest-bearing liabilities: Interest-bearing deposits: Interest-bearing demand 82 917 999 (231) 2,600 2,369 Money market 756 (1,281) (525) 1,641 9,644 11,285 Savings (49) (32) (81) (132) 720 588 Time 654 (3,298) (2,644) 8,080 9,319 17,399 Brokered (2,107) — (2,107) (794) 65 (729) Total interest-bearing deposits (664) (3,694) (4,358) 8,564 22,348 30,912 Securities sold under agreements to repurchase (361) (211) (572) (36) 375 339 Borrowings (136) (141) (277) (5,008) (1,640) (6,648) Subordinated notes (554) 1 (553) 4 (4) — Junior subordinated debentures issued to capital trusts 4 (205) (201) 93 227 320 Total interest-bearing liabilities (1,711) (4,250) (5,961) 3,617 21,306 24,923 Change in net interest income $ 4,136 $ 5,909 $ 10,045 $ 6,156 $ (8,378) $ (2,222) Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024 Net interest income for the year ended December 31, 2025 was $198.9 million, increasing $10.0 million, or 5.3%, when compared to the year ended December 31, 2024.
This increased our effective tax rate to 26.3% during the year ended December 31, 2024, compared to 25.7% during the year ended December 31, 2023. Net Interest Income Net interest income equals the excess of interest income on interest earning assets (including discount accretion on acquired loans plus certain loan fees) over interest expense incurred on interest-bearing liabilities.
Net Interest Income Net interest income equals the excess of interest income on interest earning assets (including discount accretion on acquired loans plus certain loan fees) over interest expense incurred on interest-bearing liabilities.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 Total noninterest income for the year ended December 31, 2024, was $35.6 million, a decrease of $0.5 million, or 1.3%, from the year ended December 31, 2023.
Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024 Total noninterest income for the year ended December 31, 2025, was $38.2 million, an increase of $2.6 million, or 7.4%, from the year ended December 31, 2024.
The commercial real estate – owner occupied portfolio composition, segmented by the owner’s business classification, as of December 31, 2024 was as follows: December 31, 2024 (dollars in thousands) Balance Substandard Risk Rating Manufacturing $ 44,718 $ 333 Health care and social assistance 38,658 319 Auto repair and dealers 33,991 — Accommodation and food services 31,217 3,993 Retail trade 27,331 — Real estate, rental, and leasing 21,430 26 Wholesale trade 20,055 — Construction 19,777 1,405 Grain elevators 19,058 — Arts, entertainment, and recreation 12,457 77 Other services (except public administration) 11,942 — Administrative and support services 11,929 — Professional, scientific, and technical services 8,312 — Agriculture, forestry, fishing, and hunting 6,634 — Education services 6,537 1,331 Finance and insurance 4,916 — Other 3,354 — Total $ 322,316 $ 7,484 Commercial real estate – non-owner occupied loans are primarily made based on projected cash flows from the rental or sale of the underlying collateral.
The commercial real estate – owner occupied portfolio composition, segmented by the owner’s business classification, as of December 31, 2025 was as follows: December 31, 2025 (dollars in thousands) Balance Substandard Risk Rating Manufacturing $ 49,620 $ 326 Auto repair and dealers 33,637 228 Health care and social assistance 33,079 1,368 Real estate, rental, and leasing 33,027 387 Retail trade 29,531 — Grain elevators 25,284 457 Accommodation and food services 21,806 327 Construction 16,064 974 Wholesale trade 13,853 — Other services (except public administration) 13,014 248 Administrative and support services 10,501 — Arts, entertainment, and recreation 9,341 1,636 Education services 6,162 1,146 Agriculture, forestry, fishing, and hunting 6,115 — Professional, scientific, and technical services 5,512 51 Finance and insurance 2,966 — Other 10,922 — Total $ 320,434 $ 7,148 Commercial real estate – non-owner occupied loans are primarily made based on projected cash flows from the rental or sale of the underlying collateral.
The commercial real estate – non-owner occupied portfolio composition, segmented by the property type, as of December 31, 2024 was as follows: December 31, 2024 (dollars in thousands) Balance Substandard Risk Rating Weighted Average LTV (1) Warehouse and manufacturing $ 189,982 $ — 56 % Retail 179,843 9,191 55 Office 159,198 4,854 56 Senior Living 107,742 12,912 56 Hotel 86,151 7,527 55 Mixed use (commercial and residential) 67,103 — 63 Medical office 33,893 — 58 Gas station 24,780 — 62 Auto repair and dealers 20,697 — 54 Restaurant and bar 12,653 — 60 Other 17,523 — 55 Total $ 899,565 $ 34,484 56 % ________________ (1) Weighted average LTV is based on the most recent appraisals available, which are generally obtained at the time of origination.
The commercial real estate – non-owner occupied portfolio composition, segmented by the property type, as of December 31, 2025 was as follows: December 31, 2025 (dollars in thousands) Balance Substandard Risk Rating Weighted Average LTV (1) Retail $ 197,992 $ 7,379 54 % Warehouse and manufacturing 179,971 — 54 Office 168,679 — 57 Senior Living 128,183 4,122 62 Hotel 81,549 2,514 53 Mixed use (commercial and residential) 69,448 — 62 Medical office 31,810 — 57 Gas station 26,684 — 58 Auto repair and dealers 21,390 — 54 Restaurant and bar 11,711 — 58 Other 19,677 — 57 Total $ 937,094 $ 14,015 56 % _________________________________________________ (1) Weighted average LTV is based on the most recent appraisals available, which are generally obtained at the time of origination.
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. 71 Table of Contents Reconciliation of Non-GAAP Financial Measure — Pre-Provision Net Revenue, Pre-Provision Net Revenue Less Charge-offs (Recoveries), Adjusted Pre-Provision Net Revenue, and Adjusted Pre-Provision Net Revenue Less Charge-offs (Recoveries) Year Ended December 31, (dollars in thousands) 2024 2023 2022 Net interest income $ 188,850 $ 191,072 $ 145,874 Noninterest income 35,571 36,046 34,717 Noninterest expense (124,007) (130,964) (105,107) Pre-provision net revenue 100,414 96,154 75,484 Less: adjustments Acquisition expenses — (7,767) (1,092) Gains (losses) on closed branch premises (635) 75 141 Realized gains (losses) on sales of securities (3,697) (1,820) — Mortgage servicing rights fair value adjustment (174) (1,615) 2,153 Total adjustments (4,506) (11,127) 1,202 Adjusted pre-provision net revenue $ 104,920 $ 107,281 $ 74,282 Pre-provision net revenue $ 100,414 $ 96,154 $ 75,484 Less: net charge-offs (recoveries) 1,758 180 (2,103) Pre-provision net revenue less net charge-offs (recoveries) $ 98,656 $ 95,974 $ 77,587 Adjusted pre-provision net revenue $ 104,920 $ 107,281 $ 74,282 Less: net charge-offs (recoveries) 1,758 180 (2,103) Adjusted pre-provision net revenue less net charge-offs (recoveries) $ 103,162 $ 107,101 $ 76,385 72 Table of Contents Reconciliation of Non-GAAP Financial Measure — Net Interest Income and Net Interest Margin (Tax-Equivalent Basis) Year Ended December 31, (dollars in thousands) 2024 2023 2022 Net interest income (tax-equivalent basis) Net interest income $ 188,850 $ 191,072 $ 145,874 Tax-equivalent adjustment (1) 2,242 2,758 2,499 Net interest income (tax-equivalent basis) (1) $ 191,092 $ 193,830 $ 148,373 Net interest margin (tax-equivalent basis) Net interest margin 3.96 % 4.09 % 3.54 % Tax-equivalent adjustment (1) 0.05 0.06 0.06 Net interest margin (tax-equivalent basis) (1) 4.01 % 4.15 % 3.60 % Average interest-earning assets $ 4,769,671 $ 4,675,025 $ 4,118,124 _________________________________________________ (1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.
Reconciliation of Non-GAAP Financial Measure — Adjusted Earnings Per Share Year Ended December 31, (dollars in thousands, except per share amounts) 2025 2024 2023 Numerator: Net income $ 77,008 $ 71,780 $ 65,842 Earnings allocated to participating securities (1) — — (36) Numerator for earnings per share - basic and diluted $ 77,008 $ 71,780 $ 65,806 Adjusted net income $ 79,647 $ 75,002 $ 78,182 Earnings allocated to participating securities (1) — — (42) Numerator for adjusted earnings per share - basic and diluted $ 79,647 $ 75,002 $ 78,140 Denominator: Weighted average common shares outstanding 31,502,351 31,590,117 31,626,308 Dilutive effect of outstanding restricted stock units 108,953 122,363 111,839 Weighted average common shares outstanding, including all dilutive potential shares 31,611,304 31,712,480 31,738,147 Earnings per share - basic $ 2.44 $ 2.27 $ 2.08 Earnings per share - diluted $ 2.44 $ 2.26 $ 2.07 Adjusted earnings per share - basic $ 2.53 $ 2.37 $ 2.47 Adjusted earnings per share - diluted $ 2.52 $ 2.37 $ 2.46 71 Table of Contents Reconciliation of Non-GAAP Financial Measure — Pre-Provision Net Revenue, Pre-Provision Net Revenue Less Charge-offs (Recoveries), Adjusted Pre-Provision Net Revenue, and Adjusted Pre-Provision Net Revenue Less Charge-offs (Recoveries) Year Ended December 31, (dollars in thousands) 2025 2024 2023 Net interest income $ 198,895 $ 188,850 $ 191,072 Noninterest income 38,190 35,571 36,046 Noninterest expense (129,418) (124,007) (130,964) Pre-provision net revenue 107,667 100,414 96,154 Less: adjustments Acquisition expenses (999) — (7,767) Loss on extinguishment of debt (391) — — Gains (losses) on closed branch premises 2 (635) 75 Realized gains (losses) on sales of securities (200) (3,697) (1,820) Mortgage servicing rights fair value adjustment (1,883) (174) (1,615) Total adjustments (3,471) (4,506) (11,127) Adjusted pre-provision net revenue $ 111,138 $ 104,920 $ 107,281 Pre-provision net revenue $ 107,667 $ 100,414 $ 96,154 Less: net charge-offs 2,458 1,758 180 Pre-provision net revenue less net charge-offs $ 105,209 $ 98,656 $ 95,974 Adjusted pre-provision net revenue $ 111,138 $ 104,920 $ 107,281 Less: net charge-offs 2,458 1,758 180 Adjusted pre-provision net revenue less net charge-offs $ 108,680 $ 103,162 $ 107,101 72 Table of Contents Reconciliation of Non-GAAP Financial Measure — Net Interest Income and Net Interest Margin (Tax-Equivalent Basis) Year Ended December 31, (dollars in thousands) 2025 2024 2023 Net interest income (tax-equivalent basis) Net interest income $ 198,895 $ 188,850 $ 191,072 Tax-equivalent adjustment (1) 2,203 2,242 2,758 Net interest income (tax-equivalent basis) (1) $ 201,098 $ 191,092 $ 193,830 Net interest margin (tax-equivalent basis) Net interest margin 4.13 % 3.96 % 4.09 % Tax-equivalent adjustment (1) 0.04 0.05 0.06 Net interest margin (tax-equivalent basis) (1) 4.17 % 4.01 % 4.15 % Average interest-earning assets $ 4,819,667 $ 4,769,671 $ 4,675,025 _________________________________________________ (1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.
The decrease is primarily attributable to an increase in funding costs which were partially offset by higher yields on interest-earning assets and higher interest-earning asset balances following the Town and Country merger. Net interest margin decreased to 3.96% for the year ended December 31, 2024, compared to 4.09% for the year ended December 31, 2023.
Net interest margin increased to 4.13% for the year ended December 31, 2025, compared to 3.96% for the year ended December 31, 2024. The increase was primarily attributable to a decrease in funding costs and higher yields on debt securities.
As of December 31, 2024, multi-family loans had a weighted average LTV of 57%, based on the most recent appraisals available, which are generally obtained at the time of origination. 56 Table of Contents Management’s disciplined approach to credit risk management is exercised through portfolio diversification, robust underwriting policies, and routine loan monitoring practices in order to identify and mitigate any credit weakness as early as possible.
Management’s disciplined approach to credit risk management is exercised through portfolio diversification, robust underwriting policies, and routine loan monitoring practices in order to identify and mitigate any credit weakness as early as possible.
Below is a summary of our loan and deposit balances by geographic region: December 31, 2024 December 31, 2023 (dollars in thousands) Loans Deposits Loans Deposits Central $ 1,676,842 $ 2,984,820 $ 1,693,794 $ 3,094,305 Chicago MSA 1,443,777 1,218,098 1,406,348 1,197,865 Illinois 3,120,619 4,202,918 3,100,142 4,292,170 Iowa 345,527 115,336 304,275 109,267 Total $ 3,466,146 $ 4,318,254 $ 3,404,417 $ 4,401,437 Town and Country Financial Corporation Acquisition On February 1, 2023, HBT Financial completed its acquisition of Town and Country, the holding company for Town and Country Bank.
Below is a summary of our loan and deposit balances by geographic region: December 31, 2025 December 31, 2024 (dollars in thousands) Loans Deposits Loans Deposits Central $ 1,569,443 $ 3,005,134 $ 1,676,842 $ 2,984,820 Chicago MSA 1,522,963 1,244,319 1,443,777 1,218,098 Illinois 3,092,406 4,249,453 3,120,619 4,202,918 Iowa 363,803 109,810 345,527 115,336 Total $ 3,456,209 $ 4,359,263 $ 3,466,146 $ 4,318,254 43 Table of Contents CNB Bank Shares, Inc.
Repurchases were conducted in compliance with Rule 10b-18 and in compliance with Regulation M under the Exchange Act. On December 17, 2024, the Company’s Board of Directors approved a new stock repurchase program which authorizes the Company to repurchase up to $15.0 million of its common stock.
Stock Repurchase Program The Company repurchased 199,507 shares of its common stock at a weighted average price of $22.47 during 2025, compared to 232,803 shares at a weighted average price of $18.89 during 2024. Repurchases were conducted in compliance with Rule 10b-18 and in compliance with Regulation M under the Exchange Act.
Notable changes include the following: • A $10.7 million increase in construction loans primarily attributable to draws on existing construction projects and new construction loans to existing customers which were mostly offset by transfers of completed projects into other categories. • An $18.9 million increase in commercial real estate – non-owner occupied loans and a $13.6 million increase in multi-family loans, primarily attributable to completed construction projects transferred from the construction and land development category, partially offset by early payoffs; and • During 2024, we purchased pools of commercial and industrial loans totaling $14.6 million.
Notable changes include the following: • A $113.4 million increase in multi-family loans and a $37.5 million increase in commercial real estate – non-owner occupied loans, primarily attributable to new originations as well as completed construction projects transferred from the construction and land development category, partially offset by early payoffs; • A $94.4 million decrease in construction and land development loans, primarily attributable to transfers of completed projects into other categories, as well as payoffs from property sales and refinancings; • A $28.6 million decrease in commercial and industrial loans, primarily attributable to reduced line of credit usage and payoffs from refinancings. 55 Table of Contents Commercial Real Estate Portfolios Commercial real estate – owner occupied loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.
Additionally, the contribution of acquired loan discount accretion to net interest margin was 9 basis points for each of the years ended December 31, 2024 and 2023. 49 Table of Contents The quarterly net interest margins were as follows: 2024 2023 2022 Three months ended: March 31 3.94 % 4.20 % 3.08 % June 30 3.95 4.16 3.34 September 30 3.98 4.07 3.65 December 31 3.96 3.93 4.10 The FOMC began raising the target range for the federal funds rate in March 2022 and continued raising interest rates until its July 2023 meeting.
Additionally, the increase in the contribution of loan fees and nonaccrual interest recoveries accounted for 4 basis points of the increase in net interest margin and were partially offset by a 1 basis point decrease in the contribution from acquired loan discount accretion. 49 Table of Contents The quarterly net interest margins were as follows: 2025 2024 2023 Three months ended: March 31 4.12 % 3.94 % 4.20 % June 30 4.14 3.95 4.16 September 30 4.13 3.98 4.07 December 31 4.12 3.96 3.93 In early 2024, our net interest margin was relatively stable, with increases in our loans and debt securities yields being mostly offset by increases in funding costs.
As of or for the Years Ended December 31, (dollars in thousands) 2024 2023 2022 Balance at end of year $ 28,969 $ 42,442 $ 43,081 Average balance during year 30,984 35,450 51,554 Average interest rate during year 1.92 % 0.72 % 0.07 % Borrowings Deposits are the Bank's primary source of funds for our lending activities and general business purposes.
As of or for the Years Ended December 31, (dollars in thousands) 2025 2024 2023 Balance at end of year $ — $ 28,969 $ 42,442 Average balance during year 2,514 30,984 35,450 Average interest rate during year 0.89 % 1.92 % 0.72 % The vast majority of repurchase agreement account balances were transitioned to reciprocal interest-bearing demand deposit accounts during the first half of 2025.
Notable changes include the following: • There were no Town and Country acquisition-related expenses during the year ended December 31, 2024, compared to $13.7 million of acquisition-related expenses incurred during the year ended December 31, 2023; • Net losses of $3.7 million were realized on the sale of debt securities during the year ended December 31, 2024, compared to net losses of $1.8 million realized during the year ended December 31, 2023; • A $2.2 million decrease in net interest income, primarily attributable to higher funding costs which were partially offset by higher asset yields and an increase in interest-earning assets; • A $0.2 million negative mortgage servicing rights fair value adjustment included in the 2024 results, compared to a $1.6 million negative mortgage servicing rights fair value adjustment included in the 2023 results; and • A $2.9 million increase in income tax expense, primarily reflecting higher pre-tax income resulting from the above items as well as an additional $0.5 million for a deferred tax expense write-down, primarily as a result of an Illinois tax change.
Notable changes include the following: • A $10.0 million increase in net interest income, primarily attributable to lower funding costs, higher yields on debt securities, and higher average loan balances; • A $0.2 million loss on sales of securities included in the 2025 results, compared to a $3.7 million of loss on sales of securities included in the 2024 results; • A $3.4 million increase in salaries and benefits expense, primarily driven by higher medical benefits expenses and annual merit increases; • A $1.9 million negative mortgage servicing rights ("MSR") fair value adjustment included in the 2025 results, compared to a $0.2 million negative MSR fair value adjustment included in the 2024 results; • A $1.2 million increase in wealth management fees, primarily driven by higher values of assets under management and an increase in farm management fees; • CNB acquisition-related expenses of $1.0 million, primarily related to professional fees and data processing expense; and • A $1.9 million increase in income tax expense, primarily due to an increase in pre-tax income as a result of the items noted above.
The new stock repurchase program took effect upon the expiration of the prior stock repurchase program and expires on January 1, 2025.
On December 16, 2025, the Company’s Board of Directors approved a new stock repurchase program which authorizes the Company to repurchase up to $30.0 million of its common stock. The new stock repurchase program took effect on January 1, 2026, the expiration of the prior stock repurchase program, and expires on January 1, 2027.
As a result of these changes, deposit costs increased during 2024 compared to 2023. 62 Table of Contents The following table sets forth time deposits by remaining maturity as of December 31, 2024: (dollars in thousands) 3 Months or Less Over 3 through 6 Months Over 6 through 12 Months Over 12 Months Total Time deposits: Amounts less than $100,000 $ 139,856 $ 96,944 $ 64,947 $ 28,486 $ 330,233 Amounts of $100,000 or more but less than $250,000 117,795 76,462 47,624 11,120 253,001 Amounts of $250,000 or more 105,284 72,534 21,295 3,083 202,196 Total time deposits $ 362,935 $ 245,940 $ 133,866 $ 42,689 $ 785,430 As of December 31, 2024 and 2023, the Bank’s uninsured deposits were estimated to be $949.4 million and $867.7 million, respectively.
As a result of these changes, total deposit costs decreased during 2025 compared to 2024. 62 Table of Contents The following table sets forth time deposits by remaining maturity as of December 31, 2025: (dollars in thousands) 3 Months or Less Over 3 through 6 Months Over 6 through 12 Months Over 12 Months Total Time deposits: Amounts less than $100,000 $ 110,265 $ 114,613 $ 58,550 $ 33,408 $ 316,836 Amounts of $100,000 or more but less than $250,000 91,367 91,236 46,499 15,184 244,286 Amounts of $250,000 or more 84,904 86,001 25,069 5,391 201,365 Total time deposits $ 286,536 $ 291,850 $ 130,118 $ 53,983 $ 762,487 As of December 31, 2025 and 2024, the Bank’s uninsured deposits were estimated to be $928.7 million and $949.4 million, respectively.
Loans rated pass-watch or worse increased $39.2 million, or 24.1%, from December 31, 2023 to December 31, 2024, primarily attributable to downgrades within the agricultural and farmland, commercial and industrial, and construction and land development segments. 59 Table of Contents Net Charge-offs (Recoveries) The following table summarizes net charge-offs (recoveries) to average loans by loan category.
Risk Classification of Loans Our risk classifications of loans were as follows: (dollars in thousands) December 31, 2025 December 31, 2024 Pass $ 3,241,912 $ 3,264,396 Pass-watch 131,766 83,947 Special mention 11,788 46,590 Substandard 70,743 71,213 Total $ 3,456,209 $ 3,466,146 Loans rated pass-watch or worse increased $12.5 million, or 6.2%, from December 31, 2024 to December 31, 2025, primarily attributable to downgrades within the multifamily and commercial real estate - non-owner occupied segments which were partially offset by pay-offs in the construction and land development segment. 59 Table of Contents Net Charge-offs (Recoveries) The following table summarizes net charge-offs (recoveries) to average loans by loan category.
On January 21, 2025, the Company’s Board of Directors increased the quarterly cash dividend by $0.02 per share to $0.21 per share. 66 Table of Contents Stock Repurchase Program The Company repurchased 232,803 shares of its common stock at a weighted average price of $18.89 during 2024, 479,005 shares at a weighted average price of $18.43 during 2023, and 265,379 shares at a weighted average price of $18.02 during 2022.
Cash Dividends The Company paid quarterly cash dividends of $0.21 per share during 2025, compared to $0.19 per share during 2024. On January 27, 2026, the Company’s Board of Directors increased the quarterly cash dividend by $0.02 per share to $0.23 per share.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed19 unchanged
Biggest changeChange in Interest Rates (basis points) Estimated Increase (Decrease) in EVE Increase (Decrease) in Estimated Net Interest Income Year 1 Year 2 December 31, 2024 +400 22.0 % 4.9 % 11.3 % +300 18.3 3.9 9.0 +200 13.4 3.2 6.7 +100 7.3 2.0 3.8 -100 (9.1) (4.2) (6.2) -200 (20.3) (5.5) (10.2) -300 (22.1) (5.7) (14.0) -400 (14.1) (5.8) (15.9) December 31, 2023 +400 10.7 % 7.5 % 13.0 % +300 9.7 5.8 10.3 +200 7.1 3.4 6.4 +100 4.2 1.4 3.1 -100 (6.3) (4.4) (6.1) -200 (13.2) (7.1) (11.2) -300 (4.5) (9.5) (16.0) -400 5.4 (10.2) (17.3) Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements.
Biggest changeChange in Interest Rates (basis points) Estimated Increase (Decrease) in EVE Increase (Decrease) in Estimated Net Interest Income Year 1 Year 2 December 31, 2025 +400 25.3 % 4.9 % 14.7 % +300 20.7 4.2 11.8 +200 14.8 3.7 9.0 +100 8.0 2.2 5.0 -100 (9.1) (4.0) (7.3) -200 (16.6) (4.1) (11.3) -300 (9.2) (5.3) (16.9) -400 0.6 (5.5) (18.0) December 31, 2024 +400 22.0 % 4.9 % 11.3 % +300 18.3 3.9 9.0 +200 13.4 3.2 6.7 +100 7.3 2.0 3.8 -100 (9.1) (4.2) (6.2) -200 (20.3) (5.5) (10.2) -300 (22.1) (5.7) (14.0) -400 (14.1) (5.8) (15.9) Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements.
During the current falling rate cycle, which began with the third quarter of 2024, our cumulative deposit beta was 13.1%. Asset Prepayments We include prepayment assumptions for both our loan and securities portfolios, based on historical experience.
Since the start of the current falling rate cycle, which began with the third quarter of 2024, our cumulative deposit beta has been 13.5%. Asset Prepayments We include prepayment assumptions for both our loan and securities portfolios, based on historical experience.

Other HBT 10-K year-over-year comparisons