HBT Financial Q2 2025 presentation: Margin expansion and capital growth drive outperformance

Introduction & Market Context

HBT Financial, Inc. (NASDAQ:HBT) presented its second quarter 2025 results on July 21, 2025, highlighting continued strong performance across key metrics. The Illinois-based regional bank, which operates throughout Illinois and eastern Iowa, demonstrated its resilient business model amid the current interest rate environment.

The company’s stock closed at $25.31 on July 18, 2025, and was trading up 1.42% at $25.67 in premarket trading on the day of the presentation, suggesting a positive market reaction to the results.

Quarterly Performance Highlights

HBT Financial reported net income of $19.2 million, or $0.61 per diluted share, for the second quarter of 2025. On an adjusted basis, which excludes certain non-recurring items, net income was $19.8 million, or $0.63 per diluted share. The company achieved a return on average assets (ROAA) of 1.53% and return on average tangible common equity (ROATCE) of 15.55%, with adjusted figures of 1.58% and 16.02%, respectively.

As shown in the following summary of quarterly highlights, the company experienced margin expansion and continued growth in book value:

A key achievement for the quarter was the expansion of net interest margin by 2 basis points to 4.14% (3 basis points to 4.19% on a tax-equivalent basis). This improvement was primarily driven by higher debt securities yields, which increased 11 basis points to 2.60%. Meanwhile, the company’s cost of funds decreased 3 basis points to 1.29%, and total cost of deposits decreased 2 basis points to 1.19%, demonstrating effective management of funding costs in the current rate environment.

Detailed Financial Analysis

HBT Financial maintains a strong capital position, with all capital measures increasing during Q2 2025. The Common Equity Tier 1 (CET1) risk-based capital ratio reached 14.26%, while the tangible common equity to tangible assets ratio improved to 10.21%. These metrics remain well above regulatory requirements and continue to trend upward.

The following chart illustrates the company’s consistent capital strength over recent years:

The company’s deposit base remains a key competitive advantage. With total deposits of $4.3 billion, HBT Financial maintains a granular, low-cost funding source with 95.3% being core deposits. The deposit composition is well-diversified across non-interest bearing demand (24%), interest-bearing demand (26%), money market (19%), savings (13%), and time deposits (18%).

As shown in the following chart, the company’s deposit costs have consistently remained below peer averages, providing a significant funding advantage:

On the asset side, HBT Financial reported total loans of $3.35 billion, with a diversified portfolio across commercial, real estate, and agricultural segments. The loan portfolio is well-balanced with commercial real estate - non-owner occupied representing the largest segment at 27%, followed by multi-family (14%), commercial and industrial (13%), and 1-4 family residential (13%).

Credit quality metrics showed slight deterioration but remain at very low levels. Nonperforming assets represented 0.13% of total assets at June 30, 2025, up from 0.11% at the end of the previous quarter. Net charge-offs increased to 0.12% of average loans on an annualized basis, compared to 0.05% in Q1 2025. The allowance for credit losses on loans stood at 1.24% of total loans.

Strategic Initiatives & Growth Opportunities

HBT Financial continues to focus on growth opportunities in the Chicago MSA and Iowa markets, while maintaining its strong presence in Central Illinois. The company’s loan portfolio in the Chicago MSA grew 1.9% over the last 12 months, demonstrating traction in this important market.

The following chart illustrates the company’s market presence and the distribution of its branches, deposits, and loans:

Wealth management represents another growth avenue for HBT Financial. With over $2.4 billion in assets under management or administration as of June 30, 2025, this segment provides diversified revenue streams beyond traditional banking. The wealth management business includes investment management, financial planning, trust services, and agricultural services.

As shown in the following chart, wealth management revenue has demonstrated consistent growth over the years:

The company has also built a track record of successful acquisitions, most recently completing the acquisition of Town and Country Financial Corporation in 2023. This strategic approach to growth has allowed HBT Financial to expand its footprint while maintaining strong performance metrics.

Forward-Looking Statements

HBT Financial’s consistent outperformance relative to peers positions it well for continued success. The company has demonstrated superior returns across multiple metrics, including capital ratios, return on equity, cost of funds, and asset quality.

The following chart highlights the company’s historical performance compared to its peer group:

This consistent outperformance has translated into superior shareholder returns, as illustrated in the cumulative total return chart:

Looking ahead, HBT Financial remains focused on preserving strong community ties, deploying excess deposit funding into loan growth opportunities, maintaining prudent credit underwriting, and pursuing strategic acquisitions while sustaining strong profitability.

The company’s investment highlights can be summarized as follows:

With its strong, granular, low-cost deposit base, diversified loan portfolio, track record of successful acquisitions, and prudent risk management, HBT Financial appears well-positioned to continue delivering solid results for shareholders in the coming quarters.

Full presentation:

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