REGULATORY MATTERS

6 Months Ended

Jun. 30, 2020

NOTE 15 – REGULATORY MATTERS

The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. As allowed under the Basel III rules, the Banks and Company elected to exclude accumulated other comprehensive income, including unrealized gains and losses on debt securities, in the computation of regulatory capital.

The ability of the Company to pay dividends to its stockholders is dependent upon the ability of the Banks to pay dividends to the Company. The Banks are subject to certain statutory and regulatory restrictions on the amount it may pay in dividends. Under the Basel III regulations, a capital conservation buffer calculation will phase in over five years which limits allowable bank dividends if regulatory capital ratios fall below specific thresholds. As of June 30, 2020 and December 31, 2019, the capital conservation buffer was 2.5%.

HBT Financial, Inc. (on a consolidated basis) and the Banks are each subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the financial statements of HBT Financial, Inc. and the Banks. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, HBT Financial, Inc. (on a consolidated basis) and the Banks must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Management believes, as of June 30, 2020 and December 31, 2019, that HBT Financial, Inc. and the Banks each met all capital adequacy requirements to which they are subject.

The actual and required capital amounts and ratios of HBT Financial, Inc. (on a consolidated basis) and the Banks are as follows:


	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
June 30, 2020	Amount		Ratio		Amount		Ratio		Amount		Ratio
		(dollars in thousands)
Total Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	370,484	15.13	%	$	195,840	8.00	%		N/A	N/A
Heartland Bank		327,109	14.52			180,224	8.00		$	225,280	10.00	%
State Bank of Lincoln		35,891	18.59			15,444	8.00			19,305	10.00

Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	340,761	13.92	%	$	146,880	6.00	%		N/A	N/A
Heartland Bank		299,935	13.31			135,168	6.00		$	180,224	8.00	%
State Bank of Lincoln		33,477	17.34			11,583	6.00			15,444	8.00

Common Equity Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	304,310	12.43	%	$	110,160	4.50	%		N/A	N/A
Heartland Bank		299,935	13.31			101,376	4.50		$	146,432	6.50	%
State Bank of Lincoln		33,477	17.34			8,687	4.50			12,548	6.50

Tier 1 Capital (to Average Assets)
Consolidated HBT Financial, Inc.	$	340,761	10.00	%	$	136,357	4.00	%		N/A	N/A
Heartland Bank		299,935	9.77			122,741	4.00		$	153,426	5.00	%
State Bank of Lincoln		33,477	9.93			13,488	4.00			16,861	5.00


	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2019	Amount		Ratio		Amount		Ratio		Amount		Ratio
		(dollars in thousands)
Total Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	356,994	14.54	%	$	196,358	8.00	%		N/A	N/A
Heartland Bank		315,516	14.02			180,071	8.00		$	225,088	10.00	%
State Bank of Lincoln		35,390	17.58			16,104	8.00			20,130	10.00

Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	334,695	13.64	%	$	147,268	6.00	%		N/A	N/A
Heartland Bank		295,385	13.12			135,053	6.00		$	180,071	8.00	%
State Bank of Lincoln		33,222	16.50			12,078	6.00			16,104	8.00

Common Equity Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	298,277	12.15	%	$	110,451	4.50	%		N/A	N/A
Heartland Bank		295,385	13.12			101,290	4.50		$	146,307	6.50	%
State Bank of Lincoln		33,222	16.50			9,058	4.50			13,084	6.50

Tier 1 Capital (to Average Assets)
Consolidated HBT Financial, Inc.	$	334,695	10.38	%	$	129,027	4.00	%		N/A	N/A
Heartland Bank		295,385	10.25			115,281	4.00		$	144,102	5.00	%
State Bank of Lincoln		33,222	9.82			13,531	4.00			16,914	5.00

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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