HBT Financial earns $31.4 million in third quarter, supported by net interest margin
Key Facts
HBT Financial reported net income of $31.4 million, or $0.86 per diluted share, in the third quarter of 2026, compared with $27.8 million and $0.76 per share in the second quarter, and $19.8 million and $0.63 per share a year earlier. The company said in its earnings statement that net interest margin was 4.35%, up from 4.32% in the prior quarter. On a tax-equivalent basis, the margin reached 4.40%, compared with 4.38%. Core margin was therefore up 22 basis points from the third quarter of 2025, when it was 4.13%, while the tax-equivalent margin rose by the same amount from 4.18%. The results reflect improved income from lending and investments, alongside quarterly growth in net interest income.
Net interest income was $70.3 million, up 1.8% from $69.1 million in the second quarter. HBT attributed the increase to higher loan yields and average balances, as well as higher loan fees and recoveries of interest on nonaccrual loans. The company said asset yields benefited from the repricing of maturing fixed-rate loans and the reinvestment of cash flows from securities at higher yields. This was partly offset by higher funding costs and lower income from accretion on acquired loans. The increase in margin from the prior quarter, alongside growth in net interest income, shows the effect of improved asset yields despite funding-cost pressures.
Noninterest income rose 20.2% to $14.2 million during the quarter, including a $1.5 million gain from a valuation adjustment to mortgage servicing rights. Income also included a nonrecurring tax refund of $0.4 million. Noninterest expenses were $42.7 million, up 0.5% from the prior quarter and 31.2% from a year earlier. These items place growth in noninterest income alongside higher operating expenses in assessing the improvement in net income. The statement did not detail the effect of each item on net income after taxes.
Loans outstanding totaled $4.78 billion on September 30, after a quarterly increase of $30.3 million. The company said the increase came mainly from new originations and draws in its land development and construction loan portfolio. Deposits, meanwhile, stood at $5.75 billion at the end of September, down $5.6 million from the end of June. HBT attributed the decline to lower balances in existing retail accounts and a seasonal decrease in public funds balances, partly offset by growth in business accounts. Loan and deposit movements show limited lending expansion during the quarter alongside a slight decline in the deposit base.
Nonperforming assets totaled $10.8 million, or 0.16% of total assets, on September 30, compared with $9.9 million and 0.15% at the end of June. The company said most of the quarterly increase was tied to past-due one-to-four-family residential loans. Return on average assets was 1.85%, while return on average shareholders' equity was 16.17%. Return on average tangible shareholders' equity reached 19.27%. These figures combine a limited quarterly increase in nonperforming assets with the returns the company reported for the period.
On expansion, HBT Financial and Tri-County announced a merger agreement in August valued at approximately $204.6 million. The combined entity is expected to have total assets of about $8.3 billion upon completion of the deal. Chief Executive Officer Lance Carter said HBT's disciplined approach to mergers and acquisitions had enabled the company to maintain strong financial performance while expanding its asset base and the communities it serves. The company expects to complete the Tri-County merger in the first quarter of 2027, subject to approval by Tri-County shareholders and regulators and the satisfaction of customary closing conditions. Tri-County shareholders are scheduled to vote on the deal on October 29, according to the follow-up section in the merger announcement. HBT shares closed at $36.24 on October 23, according to EL7 data.