HBT Financial Inc. has signed a definitive agreement to acquire Tri-County Financial Group Inc. in a transaction valued at approximately $204.6 million, extending the Bloomington, Illinois-based bank holding company’s consolidation strategy across central and northern Illinois.

The deal, announced August 10, combines HBT, the Nasdaq-listed parent of Heartland Bank and Trust Company, with Tri-County, the OTCQX-traded parent of First State Bank in Mendota. The companies structured the acquisition as a mixture of HBT common stock and cash, giving Tri-County shareholders a choice of consideration subject to the merger agreement’s election, adjustment and proration provisions.

Tri-County shareholders may elect to receive 2.4589 HBT shares for each Tri-County share, $71.01 in cash, or a combination of stock and cash. Using HBT’s August 7 closing price of $36.35, the stock alternative implied a value of approximately $89.38 for each Tri-County share, while the blended consideration implied a purchase price of $82.89 per share. The aggregate valuation includes approximately $59.9 million of fixed cash consideration and about 3.8 million newly issued HBT shares.

The calculation is based on 2,388,748 Tri-County common shares outstanding. An additional 136,935 options, carrying a weighted-average exercise price of $41.01, are expected to be cashed out when the transaction closes. Tri-County investors would own approximately 9% of the combined company, leaving existing HBT shareholders with roughly 91%.

The companies expect to complete the merger and the associated core-system conversion in the first quarter of 2027. Closing requires approval from Tri-County shareholders, banking regulators and satisfaction of other customary conditions. Both boards unanimously approved the agreement. Shareholders holding approximately 28% of Tri-County’s outstanding common stock have entered voting agreements requiring them, among other commitments, to support the transaction.

The acquisition would add First State Bank’s $1.6 billion of assets, $1.3 billion of loans and $1.3 billion of deposits, based on June 30 figures. On a pro forma basis, HBT expects the combined institution to hold approximately $8.3 billion in assets, $6.0 billion in loans and $7.1 billion in deposits.

HBT reported $6.7 billion in assets, $4.8 billion in loans and $5.8 billion in deposits as of June 30. Heartland Bank operated 83 full-service branches across Illinois, eastern Iowa and suburban St. Louis. First State Bank would contribute another 19 locations in central and northern Illinois, including offices in communities such as Mendota, Bloomington, Champaign, Batavia, Geneva, Ottawa, Princeton, Rochelle, St. Charles and Sycamore.

The geographic overlap is strategically important. HBT said five Tri-County branches are located within two miles of an existing Heartland Bank branch. That proximity offers potential for property, staffing and operational efficiencies, although the companies did not announce specific branch closures. The combined footprint would also deepen HBT’s reach in north-central Illinois and the Chicago metropolitan area while preserving access to smaller rural markets.

HBT described the transaction as a combination of relationship-oriented community banks with similar credit cultures. First State Bank traces its history to 1940, while HBT’s banking roots date to 1920. Both institutions serve households, local businesses and agricultural customers, providing a degree of operational and customer alignment that management expects to support integration.

For HBT investors, the principal financial case rests on projected expense savings and the value of Tri-County’s deposit base. HBT estimates cost reductions equal to 34% of Tri-County’s noninterest expenses, excluding First State Mortgage Services LLC. Management expects to realize 80% of those savings during 2027 and the full amount thereafter.

On those assumptions, HBT forecasts earnings-per-share accretion of 12.0% in 2027 and 11.1% in 2028. The company estimates that tangible book value per share will decline 2.4% at closing but recover in less than one year under the crossover method, which measures when the projected tangible book value of the combined company exceeds the level HBT would have reached without the transaction.

Those projections are estimates rather than guaranteed outcomes. They depend on the timing of the closing, the pace and cost of integration, customer and employee retention, the realization of expense reductions, purchase-accounting marks and the performance of the acquired loan and securities portfolios. Delays or higher-than-expected restructuring costs could reduce near-term accretion or extend the tangible-book-value earnback period.

HBT estimates $19 million of pretax transaction expenses, with the full amount reflected in its pro forma tangible-book-value estimate at closing. The company also assumes a $16.9 million credit mark, equal to 1.31% of Tri-County’s gross loans, without double-counting the current expected credit loss provision. A separate interest-rate mark of $22.8 million, or 1.77% of gross loans, would be accreted over the remaining lives of the affected assets.

The financial model further incorporates a $12.1 million pretax loss on Tri-County’s available-for-sale securities and assumes the proceeds would be reinvested at a 5.15% yield. Other purchase-accounting assumptions include a core-deposit intangible equal to 2.5% of the applicable deposit base, amortized over 10 years using the sum-of-the-years’ digits method, a $9 million additional write-down of fixed assets and a $4 million increase in the value assigned to mortgage-servicing rights.

HBT intends to divest or discontinue First State Mortgage Services before the merger closes, aligning the acquired operations with its strategic priorities. The planned removal of that business is also relevant to the disclosed valuation multiples: HBT calculated the transaction at 11.6 times Tri-County’s last-12-month earnings excluding First State Mortgage Services, and at 7.4 times estimated 2027 earnings after fully phased-in cost savings on the same basis.

The $204.6 million valuation represents approximately 131% of Tri-County’s tangible book value and a 4.9% premium to core deposits, defined by HBT as deposits excluding brokered funding and time deposits above $100,000. The company reported a pay-to-trade ratio of 63%, calculated by dividing the transaction’s tangible-book-value multiple by HBT’s standalone trading multiple.

Tri-County’s deposit funding is a prominent part of the strategic rationale. First State Bank’s deposits carried a reported cost of 1.95% for the most recent quarter, compared with 1.20% at HBT. On a combined basis, HBT estimates a deposit cost of 1.34%. Although the acquired funding is more expensive than HBT’s existing base, the transaction would expand access to stable community deposits and reduce the need to rely on less predictable wholesale sources as the combined loan portfolio grows.

The companies’ deposit mixes differ. Tri-County reported that 14% of its deposits were noninterest-bearing, 48% were money-market and savings accounts, 26% were retail certificates of deposit and 12% were jumbo certificates. HBT’s portfolio contained a larger proportion of noninterest-bearing and transaction accounts and lower concentrations of retail and jumbo certificates. Pro forma deposits would consist of approximately 23% noninterest-bearing accounts, 9% transaction accounts, 47% money-market and savings products, 15% retail certificates and 6% jumbo certificates.

The acquired loan book also broadens HBT’s asset mix. Tri-County’s loans were approximately 32% one-to-four-family residential mortgages, 18% agricultural and farmland credits, 14% multifamily loans, 13% non-owner-occupied commercial real estate, 13% owner-occupied commercial real estate, 6% commercial and industrial credits, 3% construction and development loans, and 1% consumer and other loans.

HBT’s existing portfolio had greater exposure to non-owner-occupied commercial real estate, construction and commercial-and-industrial lending, but substantially less exposure to residential mortgages. The combined portfolio would be approximately 21% non-owner-occupied commercial real estate, 16% one-to-four-family residential, 14% multifamily, 14% agricultural and farmland, 11% owner-occupied commercial real estate, 10% commercial and industrial, 8% construction and development, and 6% consumer and other loans.

Tri-County reported a most-recent-quarter return on average assets of 1.05%, a return on average equity of 10.1%, a net interest margin of 3.79% and nonperforming loans equal to 0.46% of total loans. Its average loan yield was 6.07%, below HBT’s 6.38%; the pro forma yield was estimated at 6.30% before purchase-accounting adjustments.

HBT said its due-diligence review covered 70% of Tri-County’s total outstanding commitments and 80% of commitments after excluding one-to-four-family residential loans. That review is intended to support the company’s assertion that the two institutions have similarly conservative credit cultures, but realized losses will depend on borrower performance and economic conditions after closing.

The company expects the combined institution to remain well capitalized. At closing, HBT projects a tangible common-equity-to-tangible-assets ratio of 9.0%, a common-equity Tier 1 ratio of 11.8%, a total risk-based capital ratio of 14.8% and a Tier 1 leverage ratio of 9.5%. Those estimates include the contemplated consideration, transaction costs and purchase-accounting adjustments.

The Tri-County acquisition follows HBT’s March 2026 completion of its purchase of CNB Bank Shares Inc., the parent of CNB Bank & Trust. HBT identified the pending Tri-County transaction as the 12th merger in which it has participated since 2007. Its acquisition history includes both negotiated combinations and Federal Deposit Insurance Corp.-assisted transactions, giving management an established integration playbook but also creating a demanding sequence of conversion work.

The timing makes execution a central issue for investors. HBT is adding another $1.3 billion deposit franchise shortly after absorbing CNB’s approximately $1.5 billion of deposits. Maintaining customer relationships, consolidating systems, retaining key lenders and limiting disruption across overlapping markets will determine whether the company can realize the projected efficiencies without slowing organic growth.

Leadership continuity is built into the agreement. Tri-County Chairman Thomas K. Prescott is expected to join the boards of HBT Financial and Heartland Bank at closing, subject to HBT’s governance procedures. Tri-County President and Chief Executive Kirk L. Ross is expected to become a senior management officer at Heartland Bank. Their participation could help retain commercial relationships and local market knowledge during the transition.

HBT President and Chief Executive J. Lance Carter framed the transaction as a continuation of the company’s disciplined acquisition strategy and emphasized the banks’ shared roots in central and north-central Illinois. Tri-County’s leadership said the combination would broaden capabilities while maintaining the community relationships and personal service on which First State Bank built its franchise.

Piper Sandler & Co. served as HBT’s financial adviser, and Vedder Price P.C. acted as its legal counsel. Performance Trust Capital Partners advised Tri-County financially, while Barack Ferrazzano Kirschbaum & Nagelberg LLP served as its legal counsel.

The next formal milestones will include HBT’s filing of a Form S-4 registration statement containing a Tri-County proxy statement and an HBT prospectus. After the Securities and Exchange Commission declares the registration effective, Tri-County expects to send definitive voting materials to its shareholders. Those documents should provide additional information on the merger agreement, financial forecasts, adviser analyses, executive interests and the risks considered by the boards.

Until the required approvals are obtained and the transaction closes, HBT and Tri-County will continue operating as separate institutions. The announced value will also fluctuate with HBT’s share price because most of the consideration consists of stock issued at a fixed exchange ratio. The $204.6 million headline valuation therefore reflects market conditions on August 7 rather than a fixed amount payable at completion.

If completed on the disclosed timetable and assumptions, the merger would give HBT greater scale, a broader Illinois franchise and a larger base over which to spread technology, compliance and administrative costs. The transaction’s ultimate value, however, will rest on credit performance, funding retention and HBT’s ability to integrate a second significant community-bank acquisition within a relatively short period.