KBRA Affirms Ratings for HBT Financial, Inc.

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Bloomington, Illinois based HBT Financial, Inc. (NASDAQ: HBT). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for Heartland Bank & Trust Company, the lead subsidiary. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

HBT’s ratings are underpinned by a consistently strong earnings profile that compares favorably with similarly rated peers. Core ROA was ~1.66% in 2Q26, supported by a resilient net interest margin, low-cost funding base, modest credit costs, and disciplined expense management. Noninterest income provides additional diversification, contributing roughly 15% of total revenue, led by wealth management, interchange revenue, and deposit service charges. NIM (TE) has consistently exceeded peer averages over the past three years, reaching 4.32% in 1H26.

Asset quality remains a key rating strength. Problem asset levels have consistently tracked favorably relative to peers, with NPAs at 0.21% of loans plus OREO in 2Q26, while realized losses remained minimal, as reflected by net charge-offs of three basis points at 1H26 and a 5-year average below 10 basis points. Reserve coverage is sound, with the ACL at 1.27% of total loans, providing a solid cushion against potential credit normalization. While criticized assets may fluctuate with the broader economic cycle, overall trends remain consistent with a well-managed and relatively resilient portfolio. Overall, asset quality benefits from conservative underwriting, low problem asset formation, and limited loss content.

HBT benefits from a stable, granular core deposit base and solid liquidity, supported by its long-standing community banking franchise and strong market share across Central Illinois. Deposit costs remain meaningfully below rated peer levels at 1.20% in 2Q26, aided by a favorable funding mix that includes noninterest bearing deposits at 23% of total deposits and limited reliance on wholesale funding. This funding profile provides meaningful flexibility to support loan growth without a material increase in funding risk, while the granular deposit base should help preserve pricing discipline through a competitive rate environment. Liquidity remains robust, with available on balance sheet and contingent sources covering uninsured and uncollateralized deposits by ~3.2x.

Capital remains appropriate for HBT’s commercially oriented balance sheet and overall risk profile. CET1 and TCE ratios declined to 12.6% and 9.7%, respectively, at 2Q26 following the CNB Bank Shares, Inc. acquisition, bringing both closer to rated peer levels after historically tracking above peers. The lower ratios reflect acquisition related capital deployment rather than a shift toward a more aggressive risk posture. Given HBT’s strong earnings capacity, measured capital distribution posture, and demonstrated ability to rebuild capital following acquisitions, capital levels should gradually accrete over time.

Rating Sensitivities

While not anticipated over the intermediate term, positive rating momentum over the longer term could be supported by sustained improvement in profitability, continued strong asset quality, stable funding and liquidity, core capital levels maintained above those of peers, and continued successful diversification of the franchise. Negative rating pressure could emerge from deterioration in asset quality, sustained weakening in earnings performance, more aggressive capital management that reduces capital buffers, or execution risks associated with expansion into newer markets.

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