HBT Financial's Net Interest Margin Expansion Slows

The Tip Desk · October 26, 2026 · 3 min read

The Illinois regional's net interest margin rose 3 bps to 4.35% after a 12 bps gain in the second quarter, as net interest income reached $70.3 million.

HBT Financial, Inc. (HBT), the holding company for Heartland Bank and Trust Company, reported net interest income of $70.3 million for the third quarter of 2026, up 1.8% from $69.1 million in the second quarter, as loan yields and average loan balances rose.

The net interest margin expanded 3 bps to 4.35%, or 4.40% on a tax-equivalent basis, after a 12 bps (13 bps tax-equivalent) expansion in the prior quarter. The company said the latest lift came from maturing fixed-rate loans repricing higher and securities cash flows being reinvested at higher rates, slightly offset by a higher cost of funds and lower loan accretion.

Loan yield increased 5 bps to 6.43%. Funding costs rose 4 bps to 1.36%, which the company attributed primarily to higher benchmark interest rates. Net interest income also included $0.5 million more loan fees and $0.2 million more nonaccrual interest recoveries. Acquired-loan discount accretion fell $0.8 million to $1.3 million.

Adjusted net income was $31.4 million, or $0.86 a share, up 10.1% from $28.5 million, or $0.78 a share, in the second quarter. GAAP net income was $31.4 million, or $0.86 a share, versus $27.8 million, or $0.76 a share. Return on average assets was 1.85% and return on average tangible common equity was 19.27%.

Noninterest income increased 20.2% to $14.2 million from $11.8 million. The company said the increase was primarily attributable to a $1.5 million positive mortgage-servicing-rights fair-value adjustment, compared with an $0.8 million negative adjustment in the second quarter, plus a $0.4 million nonrecurring stock-repurchase excise-tax refund.

Noninterest expense rose only 0.5% to $42.7 million. Acquisition-related costs were $1.0 million, versus $0.3 million in the second quarter. Excluding those items, core expense fell $0.5 million, with a $1.1 million drop in salaries partly offset by $0.4 million higher occupancy and $0.3 million higher employee benefits. The efficiency ratio improved to 48.73%, or 48.24% on a tax-equivalent basis, from 50.67% (50.14% tax-equivalent).

Total loans outstanding were $4.78 billion at September 30, 2026, up $30.3 million from June 30, 2026, on construction and land development fundings and draws, offset by $8.8 million of seasonal grain-elevator payoffs in commercial and industrial loans and multifamily refinance payoffs. Total deposits were $5.75 billion, down $5.6 million from June 30, 2026, on lower retail balances and seasonally lower public funds, partly offset by higher business balances; $60.0 million of wealth-management reciprocal deposits were moved on-balance sheet.

The company recorded a negative provision for credit losses of $0.6 million, versus a $0.7 million positive provision in the second quarter. Net recoveries were $0.5 million, or 0.04% of average loans annualized. Nonperforming assets were $10.8 million, or 0.16% of total assets, up $0.9 million from $9.9 million (0.15%) at June 30, 2026, mostly higher one-to-four family residential nonaccruals. The allowance for credit losses was 1.26% of loans and 599% of nonperforming loans.

Common equity tier 1 capital rose to 12.94% from 12.64%. Total capital to risk-weighted assets was 16.48%. Tangible book value per share fell $0.26 to $17.34, which the company said was driven by higher net unrealized losses on available-for-sale securities as market rates rose.

The company did not repurchase shares in the third quarter, citing a blackout until the October 29, 2026 Tri-County stockholder vote. $14.0 million remained under a $30.0 million authorization through January 1, 2027. Integration planning for the pending Tri-County Financial Group acquisition is progressing, and the company anticipates closing early in the first quarter of 2027, subject to stockholder and regulatory approvals.