HBT Financial to Snap up NXT Bancorporation for $42.8M

The holding company of Heartland Bank and Trust Company, HBT Financial (HBT), has agreed to acquire NXT Bancorporation, which holds NXT Bank, for $42.8 million. With this acquisition, HBT increases its presence in Iowa. The acquisition is expected to close in Q4.

NXT Bank operates in Eastern Iowa using a relationship-based approach. At the end of March, it had assets of $241 million and deposits of $184 million.

Under the agreement, NXT investors will get 67.6783 HBT shares and $400 cash for each NXT share held. This represents around 75% in stock and 25% in cash. Upon closure, NXT investors will own about 6.2% of HBT’s outstanding shares.

HBT Financial Chairman and CEO Fred Drake said, “Nathan Koch has done an excellent job as President of NXT Bank. We look forward to working with him and the NXT team to make this merger a success. NXT is located in very nice communities in Eastern Iowa, and we are excited about serving the area.”

Drake added, “The community bank model fits perfectly with Heartland Bank. It should be a great combination and build on each of our strengths.”

Post the acquisition, NXT Bank is expected to be merged into Heartland Bank and NXT branches will be converted into Heartland Bank branches. (See HBT Financial stock analysis on TipRanks)

Raymond James analyst Daniel Tamayo recently reiterated a Hold rating on the stock but did not assign any price target.

Reacting to HBT’s Q1 performance, Tamayo highlighted the strong credit quality of the company and said, “Net recoveries and declining nonaccruals highlighted another strong quarter while HBT reduced reserves to 1.38% of non-PPP loans. We reduced loss forecasts to reflect our expectation for low ultimate loss content through this cycle.”

The other analyst covering the stock, Piper Sandler’s Nathan Race, also has a Hold rating on the stock along with a price target of $19 implying 5.9% upside potential.

Shares have gained about 19.6% so far this year.

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