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ACQUISITIONS

9 Months Ended

Sep. 30, 2022

NOTE 2 – ACQUISITIONS

Town and Country Financial Corporation

On August 23, 2022, HBT Financial and Town and Country Financial Corporation (“Town and Country”), the holding company for Town and Country Bank, jointly announced the signing of a merger agreement pursuant to which HBT Financial will acquire Town and Country and Town and Country Bank. The acquisition will further enhance HBT Financial’s footprint in Central Illinois and expand HBT Financial’s footprint into metro-east St. Louis.

Under the terms of the merger agreement, total consideration consists of approximately 3.4 million shares of HBT Financial’s common stock and $38.0 million in cash. Town and Country shareholders may elect to receive either (i) 1.9010 shares of HBT Financial’s common stock for each share of Town and Country, or (ii) $35.66 per share in cash, or (iii) a combination of cash and stock consideration, subject to adjustment and to the election and proration provisions in the merger agreement. Based upon the closing price of HBT Financial common stock of $18.76 on August 22, 2022, the implied per share purchase price is $35.66 with an aggregate transaction value of approximately $101.4 million. Upon closing of the transaction, shareholders of Town and Country are expected to hold approximately 10.5% of HBT Financial’s outstanding common stock.

The transaction is expected to close in the first quarter of 2023, subject to customary closing conditions, approval of Town and Country’s shareholders, and regulatory approvals.

During the three months ended September 30, 2022, HBT Financial incurred $0.5 million in pre-tax acquisition expenses related to the planned acquisition of Town and Country, comprised of legal and professional fees included in other noninterest expense in the consolidated statements of income.

NXT Bancorporation, Inc.

On October 1, 2021, HBT Financial acquired 100% of the issued and outstanding common stock of NXT Bancorporation, Inc. (“NXT”), the holding company for NXT Bank, pursuant to an Agreement and Plan of Merger dated June 7, 2021. Under the Agreement and Plan of Merger, NXT merged with and into HBT Financial, with HBT Financial as the surviving entity, on October 1, 2021. Additionally, NXT Bank was merged with and into Heartland Bank, with Heartland Bank as the surviving entity, in December 2021.

At the effective time of the merger, each share of NXT was converted into the right to receive 67.6783 shares of HBT Financial common stock, cash in lieu of fractional shares, and $400 in cash. There were 1,799,016 shares of HBT Financial common stock issued at the effective time of the acquisition with an aggregate market value of $29.3 million, based on the closing stock price of $16.27 on October 1, 2021. This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair values on the date of acquisition. Goodwill of $5.7 million was recorded in the acquisition, which reflects expected synergies from combining the operations of HBT Financial and NXT, and is nondeductible for tax purposes.

The acquisition of NXT provided an opportunity to utilize Heartland Bank’s excess liquidity at the time of acquisition to replace NXT Bank’s higher-cost funding. Additionally, Heartland Bank’s broader range of products and services, as well as a greater ability to meet larger borrowing needs, has provided an opportunity to expand NXT Bank’s customer relationships.

During the three and nine months ended September 30, 2021, HBT Financial incurred $0.4 million and $0.5 million, respectively, in pre-tax acquisition expenses related to the acquisition of NXT, comprised primarily of professional fees and data processing expense. These expenses are reflected in noninterest expense on the consolidated statements of income. There were no acquisition expenses related to the acquisition of NXT during the three and nine months ended September 30, 2022.

The fair value of the assets acquired and liabilities assumed from NXT on the acquisition date were as follows (dollars in thousands):


	Fair Value
Assets acquired:
Cash and cash equivalents	$	5,862
Interest-bearing time deposits with banks		739
Debt securities		18,295
Equity securities with readily determinable fair value		43
Restricted stock		796
Loans		194,576
Bank owned life insurance		7,352
Bank premises and equipment		3,667
Core deposit intangible assets		199
Mortgage servicing rights		370
Accrued interest receivable		886
Other assets		1,340
Total assets acquired		234,125

Liabilities assumed:
Deposits		181,586
Securities sold under agreements to repurchase		4,080
FHLB advances		12,625
Other liabilities		1,633
Total liabilities assumed		199,924
Net assets acquired	$	34,201

Consideration paid:
Cash	$	10,633
Common stock		29,270
Total consideration paid	$	39,903

Goodwill	$	5,702

The following table presents the acquired non-impaired loans as of the acquisition date (dollars in thousands):


Fair Value	$	194,576
Gross contractual amounts receivable		196,104
Estimate of contractual cash flows not expected to be collected		1,045

There were no loans acquired with deteriorated credit quality from NXT.

The following table provides the pro forma information for the results of operations for the three and nine months ended September 30, 2021, as if the acquisition had occurred on January 1, 2020. The pro forma results combine the historical results of NXT into HBT Financial’s consolidated statements of income, including the impact of certain acquisition accounting adjustments, which include loan discount accretion, intangible assets amortization, deposit premium amortization, and borrowing premium amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2020. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for loan losses, expense efficiencies or asset dispositions. The acquisition-related expenses that have been recognized are included in net income in the following table.


	Pro Forma
	Three Months Ended		Nine Months Ended
(dollars in thousands, except per share data)	September 30, 2021		September 30, 2021
Total revenues (net interest income and noninterest income)	$	41,296	$	124,460
Net income		14,093		44,285
Earnings per share - basic		0.48		1.52
Earnings per share - diluted		0.48		1.51