HBT slides 3.5% on earnings beat masked by GAAP miss
Bank authorized $30M buyback, posts strong asset quality as CNB merger looms
HBT Financial shares fell 3.5% on Monday despite the regional bank beating adjusted earnings expectations, as investors focused on weaker GAAP results and awaited the completion of a pending acquisition.
The Bloomington, Illinois-based lender reported fourth-quarter net income of $18.9 million, or $0.60 per diluted share, compared with analyst expectations that had largely focused on adjusted metrics. On an adjusted basis, HBT earned $0.64 per share, surpassing the $0.62 consensus estimate. Revenue of $60.4 million edged past the $60.2 million forecast.
The stock decline to $27.57 reflected investor scrutiny of the gap between GAAP and adjusted performance, along with broader caution around regional bank mergers. HBT's shares have traded in a 52-week range of $18.96 to $29.22, and Monday's drop erased some of the gains from Raymond James' January 7 upgrade to "Outperform."
Separately, HBT announced it had authorized a new $30 million stock repurchase program effective January 1, replacing a previous authorization that expired at year-end. The buyback program runs through January 1, 2027, though the company noted timing and actual purchases will depend on market conditions and regulatory requirements.
Asset quality remained robust in the quarter, with nonperforming assets representing just 0.17% of total assets and net charge-offs at an annualized 0.10% of average loans. These metrics compare favorably to regional bank averages and underscore the resilience of HBT's credit portfolio even as economic uncertainty persists.
"Our fourth-quarter results capped a very successful 2025, underpinned by robust balance sheet growth, excellent asset quality, and a resilient net interest margin," said J. Lance Carter, president and chief executive officer, in the earnings statement.
The bank's tangible book value per share increased $0.56 to $17.20, a 16.2% jump over the past year. Capital ratios exceeded all regulatory requirements, with total capital at 16.82% of risk-weighted assets and a common equity tier 1 ratio of 14.42%.
Loan growth continued in the quarter, with total outstanding loans reaching $3.46 billion, up $56.2 million from the third quarter. The increase was driven by new originations in construction and land development, multi-family segments, and higher commercial and industrial line usage. Deposits grew modestly to $4.36 billion, even as the bank moved $50 million of wealth management deposits off-balance sheet due to what management described as strong liquidity.
Investors are also monitoring HBT's pending acquisition of CNB Bank Shares, announced in October for approximately $170.2 million. The deal, expected to close in the first quarter of 2026, would expand HBT's presence in the Chicago and St. Louis metropolitan areas and add new markets in central Illinois. Under the terms, CNB shareholders will receive 1.0434 HBT common shares, $27.73 per share in cash, or a combination of both.
The combined entity would manage roughly $6.9 billion in assets, $4.7 billion in loans, and $5.9 billion in deposits across 84 branches in Illinois, Iowa, and Missouri. HBT has projected the merger will generate cost savings of nearly 30% of CNB's non-interest expenses and become accretive to earnings by almost 20% by 2027.
Acquisition-related expenses in the fourth quarter totaled $1 million, covering salaries, data processing, and legal fees as the company prepares for the core system conversion.
Analysts maintain a generally positive outlook on HBT, with a consensus rating equivalent to "Moderate Buy" and price targets averaging $28.50, according to MarketBeat data. The high end of analyst targets sits at $30.00, suggesting potential upside of roughly 9% from Monday's closing price.
However, the regional bank sector faces headwinds from compressed net interest margins and investor skepticism about M&A integration risks following last year's industry turbulence. HBT's net interest margin dipped 1 basis point sequentially to 4.12%, reflecting the broader pressure on bank profitability from the current interest rate environment.
Looking ahead to 2026, management expressed confidence that the company's strong liquidity, capital position, and asset quality would support another solid year of performance, while the CNB integration and core system conversion in the first quarter will require careful execution to realize the projected synergies.