KBRA Upgrades Ratings for HBT Financial, Inc.

KBRA upgrades the senior unsecured debt rating to BBB+ from BBB, upgrades the subordinated debt rating to BBB from BBB-, and upgrades the short-term debt rating to K2 from K3 for Bloomington, Illinois based HBT Financial, Inc. (NASDAQ: HBT) ("the company"). In addition, KBRA upgrades the deposit and senior unsecured debt ratings to A- from BBB+ and upgrades the subordinated debt rating to BBB+ from BBB for its main subsidiary, Heartland Bank & Trust Company ("the bank"). Moreover, KBRA affirms the short-term deposit and debt ratings of K2 for the bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings upgrade is driven by the company’s sustained high level of operating performance – underpinned by the stable, granular, and low-cost deposit base – and the conservative posture to regulatory capital management. The company has demonstrated the ability to generate strong earnings, irrespective of the interest rate environment; it measures well against the KBRA rated peer group in most quantitative rating categories. The durable net interest income and generally recurring noninterest income performance, complemented by the historically strong capital base, provide the company with a high level of protection should the economic cycle deteriorate.

The hallmark of the bank franchise is the enviable total deposit base, which characteristics include a historically low cost (1.18% vs. peer average of 2.12% as of 1H25), substantial granularity (average deposit accounts size of ~$20k), and lengthy relationship duration (average of ~14 years).

Consolidated regulatory capital, measured by the CET1 ratio, has mostly tracked above rated peer comparisons for an extended period. On-balance sheet asset liquidity at the bank sources remains solid with cash, short-term investments, and the AFS investment portfolio constituting 22% of total 2Q25 deposits. Contingent sources of funds and net asset liquidity offset estimated uninsured deposits of $953 million by ratio of 2.25:1. The bank is not reliant upon potentially volatile sources of funding (per bank regulatory definition), while the KBRA rated peer group reflects modest reliance. The total loan-to-total deposit ratio historically has averaged about 75%, although it has somewhat increased in recent periods.

Rating Sensitivities

With the ratings upgrade, positive ratings action is not anticipated currently. Conversely, an erosion in loan quality that precipitated substantial provision expense and caused a material erosion in profitability could trigger a ratings reassessment, especially if it resulted in or coincided with a more aggressive regulatory capital management policy.

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