$33.60
$56.10
bear $33.60
base $48.70
bull $56.10
margin of safety $25.00
market price* $35.58
HBT Financial is the holding company for Heartland Bank and Trust, a century-old community bank led by the Drake family, serving central and northeastern Illinois, the Chicago and St. Louis metropolitan areas and eastern Iowa. For a bank, the profit that belongs to common shareholders is the owner earnings figure: stock compensation is already charged against profit and there is no meaningful maintenance capital spending. On a per-share basis that was $1.34 in 2020, then $2.02, $1.95, $2.07, $2.26 and $2.44 in 2025. Adjusting out merger costs, the last three years were roughly $2.46, $2.37 and $2.52, so the recent improvement in reported figures owes a good deal to the absence of the charges taken when Town and Country Bank was bought in 2023. Years before 2019 are not used because the company was then taxed as a pass-through and paid almost no corporate income tax. What drives the business is a cheap, sticky deposit base. At the end of 2025 about a quarter of deposits ($1.05 billion of $4.36 billion) paid no interest, total deposit costs were low, the net interest margin was about 4.2% and the 2025 efficiency ratio was in the low 50s. Credit has been exceptional, with very little in charge-offs through 2023 to 2025. On March 1, 2026 the bank closed its purchase of CNB Bank Shares (CNB Bank & Trust, 18 branches, about $1.8 billion of assets, $1.3 billion of loans, $1.5 billion of deposits) for about 5.5 million shares and $34 million in cash. Assets are now about $6.7 billion, deposits $5.76 billion, equity $765 million (of which $82 million is goodwill) and diluted shares about 36.5 million. In the second quarter of 2026, the first full quarter with CNB, net income was $27.8 million ($0.76 per share) versus $19.2 million ($0.61) a year earlier, and quarterly net interest income rose from $49.7 million to $69.1 million. Operating costs rose from $31.9 million to $42.4 million. Starting level: Because the company was transformed by the CNB purchase, we measure from the new, combined bank. We built the starting point from the 2023 to 2025 median of underlying earnings (about $78 million) plus roughly $20 million a year for CNB at a normal return on its assets, giving about $100 million, or $2.75 per share. The second quarter annualizes to about $3.05 per share, but one quarter is not enough to move the level, and it likely includes temporary purchase-accounting income on the acquired loans that fades over a few years; we left that out and did not verify its size. Growth check: owner earnings per share grew 8.0% in 2025 (2.26 to 2.44), and the base case assumes 2% in year one, lower than the recent pace, so no reversal of a slowdown is required. The jump from 2.44 to 2.75 is a change in the size of the bank, not growth we credit. Bear case, $33.60 per share: CNB savings are only partly achieved, so earnings start at about $2.45 and do not grow. In years two to four the bank goes through a credit cycle of the kind Midwest community banks experienced in 2008 to 2010: provisions of about 1.5% of loans (roughly $4.6 to $4.8 billion of loans, an estimate) in each of the first two years and 0.75% in the third, plus revenue about 10% lower for three years. That takes owner earnings down to about $0.85 per share for two years and $1.59 in year four, but the bank stays profitable and capital stays well above requirements, so no share issuance is assumed. After the cycle earnings settle about 5% lower at $2.33, and a further 10% haircut after year ten stands in for later cycles. The bear value is well above tangible book value of roughly $18 per share, because even in this cycle the deposit franchise, with its non-interest-bearing deposits, keeps earning, and the business has never been unprofitable in the periods we examined. A bank has no debt to subtract here; funding is the raw material of the business, with $84 million of subordinated debt the only long-term borrowing of note. Base case, $48.70 per share: earnings start at $2.75 and grow 2% a year for ten years, below the roughly 3% a year demonstrated since 2019. Growth credited is only organic loan and deposit growth funded from retained earnings; about 15% of earnings is set aside each year to hold capital steady against that growth. A mild credit cycle (extra provisions of about 0.45% of loans in each of years five and six) is included, because the 2021 to 2025 record is unusually benign. After year ten the franchise is assumed to keep earning flat, less a 3% allowance for further cycles. Further acquisitions, which are a pattern of the company but each one a bet, are excluded.
Bull case, $56.10: CNB savings are fully realized (start at $2.95), growth of 3% a year and a very small credit cycle, then flat. Worth less than nothing is not a concern in any case. What would make this wrong: CNB integration going badly; a deeper Illinois farm or commercial real estate downturn than the 2008 to 2010 record; deposit costs rising faster than loan yields. Previous estimates used a different basis and are not comparable; what has changed in the business is the completed CNB acquisition and the first full quarter of combined results. Margin-of-safety price of $25: We are fairly sure of the earnings level, at roughly $2.45 to $3.05 per share, because it rests on five years of consistent profit, a high-quality deposit base and one clean combined quarter, but the CNB integration is only seven months old. The worst plausible outcome is an Illinois recession with farmland and commercial real estate stress alongside a failed integration; the business would survive it, with positive earnings throughout, but could earn well under half its normal profit for two years and might have to cut buybacks. If we are wrong on the CNB contribution (starting at $2.50), the base value falls to roughly $44; if the credit cycle is twice as severe as the one in the base case, it falls by another $2 or so; a cycle like the bear case remains survivable. The price assumes a three-to-five-year holding period for the price to reflect value; over that period the bank pays a $0.92 annual dividend (about 3.7% at this price), repurchases shares, and compounds retained earnings. At $25, the starting earnings yield is about 11%, the dividend is paid in cash, and a rise to around $43 within three years, still below our base value, would imply a 20% annual return including dividends. A higher price leaves too little cushion if the cycle is worse than the base case.