HBT Financial (HBT) risk factors, FY2024 10-K

Other

1. 01Borrowers or counterparties may be unable or unwilling to repay their obligations to us in accordance with the underlying contractual terms which could lead to unexpected losses
2. 02Our business is highly dependent upon secure and uninterrupted information technology systems. A disruption or breach to these systems may have a material adverse impact on our business
3. 03Our principal stockholder, Heartland Bancorp, Inc. Voting Trust U/A/D 5/4/2016, has significant influence over us, and its interests could conflict with those of our other stockholders
4. 04We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses
5. 05The small to mid-sized businesses to which we lend may have fewer resources to weather adverse business developments, which may impair a borrower’s ability to repay a loan, and such impairment could adversely affect our results of operations and financial condition
6. 06We depend on the accuracy and completeness of information about customers and counterparties
7. 07The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, foreclosed real estate and other repossessed assets may not accurately describe the fair value of the asset
8. 08We are subject to environmental liability risk associated with lending activities
9. 09The majority of our loan portfolio consists of commercial and commercial real estate loans, which may have a higher degree of risk than some other types of loans
10. 10Real estate construction loans are based upon estimates of costs and values associated with the complete project. These estimates may be inaccurate, and we may be exposed to significant losses on loans for these projects
11. 11We provide loans and services to the agriculture industry and the health of this industry is impacted by factors outside our control and the control of our customers
12. 12Fluctuations in interest rates may reduce net interest income and otherwise negatively impact our financial condition and results of operations
13. 13The value of the financial instruments we own may decline in the future
14. 14The monetary policies and regulations of the Federal Reserve have a significant effect on the operating results of commercial banks. The effects of such policies upon our business, financial condition and results of operations cannot be predicted
15. 15Liquidity risks could affect operations and jeopardize our business, financial condition and results of operations
16. 16We may need to raise additional capital in the future, and such capital may not be available when needed or at all
17. 17We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions
18. 18Loss of customer deposits could increase our funding costs

TECHNOLOGY AND CYBERSECURITY RISKS

1. 19The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition or results of operations
2. 20We depend on information technology and telecommunications systems of third parties, and any systems failures, interruptions or data breaches involving these systems could adversely affect our operations and financial condition
3. 21Our use of third-party vendors and our other ongoing third-party business relationships is subject to increasing regulatory requirements and attention
4. 22We continually encounter technological change and may have fewer resources than many of our larger competitors to continue to invest in technological improvements

LEGAL AND REGULATORY COMPLIANCE RISKS

1. 23The banking industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a significant adverse effect on our business, financial condition, results of operations and future prospects
2. 24Legal, regulatory and policy changes may directly affect financial institutions and the global economy
3. 25Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings
4. 26We are subject to capital adequacy requirements and may be subject to more stringent capital requirements and, if we fail to meet these requirements, we will be subject to restrictions on our ability to make capital distributions and other restrictions
5. 27The Federal Reserve may require us to commit capital resources to support the Bank
6. 28Our risk management framework may not be effective in mitigating risks and/or losses to us
7. 29Future consumer legislation or regulation could harm our performance and competitive position
8. 30financial laws and regulations, including CFPB regulations. See "Supervision and Regulation—Supervision and Regulation of the Bank—Consumer Financial Services" for additional information
9. 31We are subject to numerous laws and regulations designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions
10. 32The expanding body of federal, state and local regulations and/or the licensing of loan servicing, collections or other aspects of our business and our sales of loans to third parties may increase the cost of compliance and the risks of noncompliance and subject us to litigation
11. 33Laws impacting cannabis-related businesses may have an impact on the Company’s operations and risk profile
12. 34Non-compliance with the USA PATRIOT Act, the Bank Secrecy Act, or other laws and regulations could result in fines or sanctions
13. 35Regulation in the areas of privacy and data security could increase our costs
14. 36Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities
15. 37The preparation of our consolidated financial statements requires us to make estimates and judgments, which are subject to an inherent degree of uncertainty and which may differ from actual results

RISKS RELATED TO OUR BUSINESS STRATEGY

1. 38We may not be able to continue growing our business, particularly if we cannot make acquisitions or increase loans through organic loan growth, either because of an inability to find suitable acquisition candidates, constrained capital resources or otherwise
2. 39Our strategy of pursuing growth via acquisitions exposes us to financial, execution and operational risks that could have a material adverse effect on our business, financial position, results of operations and growth prospects

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

1. 40Our principal stockholder, Heartland Bancorp, Inc. Voting Trust U/A/D 5/4/2016, has significant influence over us, and its interests could conflict with those of our other stockholders
2. 41The Voting Trust could sell its interest in us to a third-party in a private transaction, which may not lead to your realization of any change of control premium on shares of our common stock and would subject us to the influence of a presently unknown third-party
3. 42We are classified as a "controlled company" for purposes of the Nasdaq Listing Rules and, as a result, we qualify for certain exemptions from certain corporate governance requirements. You may not have the same protections afforded to stockholders of companies that are subject to such requirements
4. 43Our ability to continue to pay dividends to our stockholders is restricted by applicable laws and regulations and by the ability of our subsidiaries to pay dividends to us
5. 44Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price
6. 45Anti-takeover provisions in our charter documents and Delaware law, and the banking laws and regulations to which we are subject, might discourage or delay acquisition attempts for us that you might consider favorable
7. 46These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire
8. 47Adverse changes in local economic conditions and adverse conditions in an industry on which a local market in which we do business depends could hurt our business in a material way
9. 48Continued elevated levels of inflation could adversely impact our business and results of operations
10. 49Failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition
11. 50Climate change could have a material negative impact on the Company and our customers
12. 51Our future growth and success will depend on our ability to compete effectively in a highly competitive environment
13. 52Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our business and the value of our stock