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ACQUISITIONS | 9 Months Ended
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Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS | ACQUISITIONS Town and Country Financial Corporation On February 1, 2023, HBT Financial acquired 100% of the issued and outstanding common stock of Town and Country Financial Corporation (“Town and Country”), the holding company for Town and Country Bank, pursuant to an Agreement and Plan of Merger dated August 23, 2022. Under the Agreement and Plan of Merger, Town and Country merged with and into HBT Financial, with HBT Financial as the surviving entity, immediately followed by the merger of Town and Country Bank with and into Heartland Bank, with Heartland Bank as the surviving entity. At the effective time of the merger, each share of Town and Country was converted into the right to receive, subject to the election and proration procedures as provided in the Merger Agreement, one of the following: (i) 1.9010 shares of HBT Financial’s common stock, or (ii) $35.66 in cash, or (iii) a combination of cash and HBT Financial common stock. Total consideration consisted of 3,378,600 shares of HBT Financial’s common stock and $38.0 million in cash. In lieu of fractional shares, holders of Town and Country common stock received cash. Based upon the closing price of HBT Financial common stock of $21.12 on February 1, 2023, the aggregate transaction value was approximately $109.4 million. 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. Fair values are subject to refinement for up to one year after the closing date of February 1, 2023. Measurement period adjustments of $0.1 million were recorded in the third quarter of 2023 as more information became available regarding Town and Country's tax assets and liabilities. Goodwill of $30.5 million was recorded in the acquisition, which reflects expected synergies from combining the operations of HBT Financial and Town and Country, and is nondeductible for tax purposes. The acquisition of Town and Country further enhanced HBT Financial’s footprint in Central Illinois, and expanded our footprint into metro-east St. Louis. During the three and nine months ended September 30, 2023 and 2022, HBT Financial incurred the following expenses related to the acquisition of Town and Country:
| Three Months Ended |  | Nine Months Ended
(dollars in thousands) | September 30, 2023 |  | September 30, 2022 |  | September 30, 2023 |  | September 30, 2022
PROVISION FOR CREDIT LOSSES | $ | — |  | $ | — |  | $ | 5,924 |  | $ | —
NONINTEREST EXPENSE |  |  |  |  |  |  |
Salaries | — |  | — |  | 3,584 |  | —
Furniture and equipment | — |  | — |  | 39 |  | —
Data processing | — |  | — |  | 2,031 |  | —
Marketing and customer relations | — |  | — |  | 24 |  | —
Loan collection and servicing | — |  | — |  | 125 |  | —
Legal fees and other noninterest expense | — |  | 462 |  | 1,964 |  | 462
Total noninterest expense | — |  | 462 |  | 7,767 |  | 462
Total acquisition-related expenses | $ | — |  | $ | 462 |  | $ | 13,691 |  | $ | 462
The fair value of the assets acquired and liabilities assumed from Town and Country on the acquisition date of February 1, 2023 were as follows (dollars in thousands):
| Fair Value
Assets acquired: |
Cash and cash equivalents | $ | 23,542
Interest-bearing time deposits with banks | 249
Debt securities | 167,869
Equity securities | 90
Restricted stock | 2,822
Loans held for sale | 1,612
Loans, before allowance for credit losses | 635,376
Allowance for credit losses | (1,247) |
Loans, net of allowance for credit losses | 634,129
Bank owned life insurance | 15,782
Bank premises and equipment | 14,828
Foreclosed assets | 271
Intangible assets | 22,282
Mortgage servicing rights | 10,469
Investments in unconsolidated subsidiaries | 449
Accrued interest receivable | 3,113
Other assets | 9,151
Total assets acquired | 906,658
Liabilities assumed: |
Deposits | 720,417
FHLB advances | 86,439
Junior subordinated debentures | 14,949
Other liabilities | 5,999
Total liabilities assumed | 827,804
Net assets acquired | $ | 78,854
Consideration paid: |
Cash | $ | 37,996
Common stock | 71,356
Total consideration paid | $ | 109,352
Goodwill | $ | 30,498
Of the loans acquired, there were $89.8 million which exhibited more-than-insignificant credit deterioration on the acquisition date. The following table provides a summary of these PCD loans at acquisition (dollars in thousands):
Unpaid principal balance | $ | 89,822
Allowance for credit losses at acquisition | (1,247) |
Non-credit discount | (2,218) |
Purchase price | $ | 86,357
Additionally, subsequent to the Town and Country acquisition, HBT Financial recognized 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 through an increase to the provision for credit losses. The following table provides the pro forma information for the results of operations for the three and nine months ended September 30, 2023 and 2022, as if the acquisition of Town and Country had occurred on January 1, 2022. The pro forma results combine the historical results of Town and Country 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, 2022. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for credit 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 |  | Pro Forma
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands, except per share data) |  | 2023 |  | 2022 |  | 2023 |  | 2022
Total revenues (net interest income and noninterest income) |  | $ | 57,459 |  | $ | 56,902 |  | $ | 174,015 |  | $ | 164,845
Net income |  | 19,497 |  | 18,207 |  | 47,697 |  | 52,617
Earnings per share - basic |  | 0.61 |  | 0.57 |  | 1.49 |  | 1.63
Earnings per share - diluted |  | 0.61 |  | 0.56 |  | 1.49 |  | 1.63

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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