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Hilltop Holdings Inc. Announces Financial Results for First Quarter 2023

Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the first quarter 2023. Hilltop produced income to common stockholders of $25.8 million, or $0.40 per diluted share, for the first quarter of 2023, compared to $22.3 million, or $0.28 per diluted share, for the first quarter of 2022. Hilltop’s financial results for the first quarter of 2023 included significant decreases in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income, increases in net revenues within certain of the broker-dealer segment’s business lines, and an increase in net interest income within the banking segment.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per common share, payable on May 25, 2023, to all common stockholders of record as of the close of business on May 10, 2023. Additionally, during the first quarter of 2023, Hilltop paid $4.5 million to repurchase an aggregate of 144,403 shares of its common stock at an average price of $31.15 per share pursuant to the 2023 stock repurchase program. These shares were returned to the pool of authorized but unissued shares of common stock.

Headwinds beginning in 2022, including the impact of tight housing inventories on mortgage volumes, declining deposit balances, rapid increases in market interest rates and a declining economic forecast have had, and are expected to continue to have, an adverse impact on our operating results during 2023. The impacts of such headwinds in 2023 remain uncertain and will depend on developments outside of our control, including, among others, timing and significance of further changes in U.S. treasury yields and mortgage interest rates, exposure to increasing funding costs, inflationary pressures associated with compensation, occupancy and software costs and labor market conditions, the Russian-Ukraine conflict and its impact on supply chains, and disruptions to the economy and the U.S. banking system caused by recent bank failures.

Jeremy B. Ford, President and CEO of Hilltop, said “In the face of heightened stress within the banking landscape, Hilltop’s prudent and long-term oriented management of our balance sheet provided our customers and stockholders with confidence given our excess capital levels and robust liquidity position. We will continue to prioritize the health and soundness of our balance sheet through this economic cycle. I want to thank our management teams across Hilltop for their judicious management of liquidity, capital and expenses leading up to this quarter.

“During the first quarter of 2023, PlainsCapital Bank benefited from an increase in interest income due to the higher interest rate environment, while actively managing the rising cost of deposits to maintain current net interest margin levels. PrimeLending continues to be negatively impacted by compression in its gain-on-sale margin and a decline in mortgage loan origination volume. Finally, HilltopSecurities’ net revenue growth was driven by higher interest rates on sweep deposit balances and an increase in trading gains within its structured finance and fixed income services business lines.”

First Quarter 2023 Highlights for Hilltop:

  • The provision for credit losses was $2.3 million during the first quarter of 2023, compared to a provision for credit losses of $3.6 million in the fourth quarter of 2022 and a provision for credit losses of $0.1 million in the first quarter of 2022;
    • The provision for credit losses during the first quarter of 2023 reflected a build in the allowance related to loan portfolio changes since the prior quarter, offset by an updated economic outlook with a mild U.S. recession from fourth quarter of 2023 and recovery from the third quarter of 2024 compared to prior quarter’s U.S. recession assumption during the last three quarters of 2023.
  • For the first quarter of 2023, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $68.7 million, compared to $143.0 million in the first quarter of 2022, a 51.9% decrease;
    • Mortgage loan origination production volume was $1.7 billion during the first quarter of 2023, compared to $3.8 billion in the first quarter of 2022;
    • Net gains from mortgage loans sold to third parties decreased to 193 basis points during the first quarter of 2023, compared to 211 basis points in the fourth quarter of 2022.
  • Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the first quarter of 2023 were 0.69% and 5.12%, respectively, compared to 0.53% and 3.60%, respectively, for the first quarter of 2022;
  • Hilltop’s book value per common share increased to $31.63 at March 31, 2023, compared to $31.49 at December 31, 2022;
  • Hilltop’s total assets were $17.0 billion and $16.3 billion at March 31, 2023 and December 31, 2022, respectively;
  • Loans1, net of allowance for credit losses, were $7.7 billion and $7.6 billion at March 31, 2023 and December 31, 2022, respectively;
  • Non-performing loans were $27.4 million, or 0.30% of total loans, at March 31, 2023, compared to $30.3 million, or 0.33% of total loans, at December 31, 2022;
  • Loans held for sale increased by 5.9% from December 31, 2022 to $1.0 billion at March 31, 2023;
  • Total deposits were $11.1 billion and $11.3 billion at March 31, 2023 and December 31, 2022, respectively;
  • Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.82% and a Common Equity Tier 1 Capital Ratio of 17.99% at March 31, 2023;
  • Hilltop’s consolidated net interest margin4 increased to 3.28% for the first quarter of 2023, compared to 3.23% in the fourth quarter of 2022;
  • For the first quarter of 2023, noninterest income was $162.5 million, compared to $216.4 million in the first quarter of 2022, a 24.9% decrease;
  • For the first quarter 2023, noninterest expense was $250.5 million, compared to $286.4 million in the first quarter of 2022, a 12.5% decrease; and
  • Hilltop’s effective tax rate was 11.6% during the first quarter of 2023, compared to 19.4% during the same period in 2022.
    • The effective tax rate for the first quarter of 2023 was lower than the applicable statutory rate primarily due to the impacts of excess tax benefits on share-based payment awards, investments in tax-exempt instruments and changes in accumulated tax reserves, partially offset by nondeductible expenses.
_____________________________

1

“Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $360.6 million and $431.0 million at March 31, 2023 and December 31, 2022, respectively.

2

Capital ratios reflect Hilltop’s decision to elect the transition option as issued by the federal banking regulatory agencies in March 2020 that permits banking institutions to mitigate the estimated cumulative regulatory capital effects from CECL over a five-year transitionary period.

3

Based on the end of period Tier 1 capital divided by total average assets during the quarter, excluding goodwill and intangible assets.

4

Net interest margin is defined as net interest income divided by average interest-earning assets.

Consolidated Financial and Other Information

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(in 000's)

 

 

2023

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

Cash and due from banks

 

$

1,764,081

 

 

$

1,579,512

 

 

$

1,777,584

 

 

$

1,783,554

 

 

$

2,886,812

 

Federal funds sold

 

 

743

 

 

 

650

 

 

 

663

 

 

 

381

 

 

 

383

 

Assets segregated for regulatory purposes

 

 

36,199

 

 

 

67,737

 

 

 

109,358

 

 

 

120,816

 

 

 

128,408

 

Securities purchased under agreements to resell

 

 

144,201

 

 

 

118,070

 

 

 

145,365

 

 

 

139,929

 

 

 

256,991

 

Securities:

 

 

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

692,908

 

 

 

755,032

 

 

 

641,864

 

 

 

593,273

 

 

 

471,763

 

Available for sale, at fair value, net (1)

 

 

1,641,571

 

 

 

1,658,766

 

 

 

1,584,724

 

 

 

1,562,222

 

 

 

1,462,340

 

Held to maturity, at amortized cost, net (1)

 

 

862,280

 

 

 

875,532

 

 

 

889,452

 

 

 

920,583

 

 

 

953,107

 

Equity, at fair value

 

 

231

 

 

 

200

 

 

 

209

 

 

 

197

 

 

 

225

 

 

 

 

3,196,990

 

 

 

3,289,530

 

 

 

3,116,249

 

 

 

3,076,275

 

 

 

2,887,435

 

Loans held for sale

 

 

1,040,138

 

 

 

982,616

 

 

 

1,003,605

 

 

 

1,491,579

 

 

 

1,643,994

 

Loans held for investment, net of unearned income

 

 

8,192,846

 

 

 

8,092,673

 

 

 

7,944,246

 

 

 

7,930,619

 

 

 

7,797,903

 

Allowance for credit losses

 

 

(97,354

)

 

 

(95,442

)

 

 

(91,783

)

 

 

(95,298

)

 

 

(91,185

)

Loans held for investment, net

 

 

8,095,492

 

 

 

7,997,231

 

 

 

7,852,463

 

 

 

7,835,321

 

 

 

7,706,718

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer and clearing organization receivables

 

 

1,560,246

 

 

 

1,038,055

 

 

 

1,255,052

 

 

 

1,049,830

 

 

 

1,610,352

 

Premises and equipment, net

 

 

180,132

 

 

 

184,950

 

 

 

191,423

 

 

 

195,361

 

 

 

198,906

 

Operating lease right-of-use assets

 

 

100,122

 

 

 

102,443

 

 

 

103,099

 

 

 

106,806

 

 

 

108,180

 

Mortgage servicing assets

 

 

103,314

 

 

 

100,825

 

 

 

156,539

 

 

 

121,688

 

 

 

100,475

 

Other assets

 

 

529,438

 

 

 

518,899

 

 

 

624,235

 

 

 

513,570

 

 

 

546,622

 

Goodwill

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

Other intangible assets, net

 

 

10,544

 

 

 

11,317

 

 

 

12,209

 

 

 

13,182

 

 

 

14,233

 

Total assets

 

$

17,029,087

 

 

$

16,259,282

 

 

$

16,615,291

 

 

$

16,715,739

 

 

$

18,356,956

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

3,807,878

 

 

$

3,968,862

 

 

$

4,546,816

 

 

$

4,601,643

 

 

$

4,694,592

 

Interest-bearing

 

 

7,289,269

 

 

 

7,346,887

 

 

 

6,805,198

 

 

 

7,319,143

 

 

 

7,972,110

 

Total deposits

 

 

11,097,147

 

 

 

11,315,749

 

 

 

11,352,014

 

 

 

11,920,786

 

 

 

12,666,702

 

Broker-dealer and clearing organization payables

 

 

1,383,317

 

 

 

966,470

 

 

 

1,176,156

 

 

 

934,818

 

 

 

1,397,836

 

Short-term borrowings

 

 

1,572,794

 

 

 

970,056

 

 

 

942,309

 

 

 

822,649

 

 

 

835,054

 

Securities sold, not yet purchased, at fair value

 

 

51,497

 

 

 

53,023

 

 

 

99,515

 

 

 

135,968

 

 

 

97,629

 

Notes payable

 

 

376,410

 

 

 

346,654

 

 

 

390,354

 

 

 

389,722

 

 

 

395,479

 

Operating lease liabilities

 

 

122,878

 

 

 

126,759

 

 

 

120,635

 

 

 

124,406

 

 

 

125,919

 

Other liabilities

 

 

341,246

 

 

 

417,042

 

 

 

475,425

 

 

 

329,987

 

 

 

347,742

 

Total liabilities

 

 

14,945,289

 

 

 

14,195,753

 

 

 

14,556,408

 

 

 

14,658,336

 

 

 

15,866,361

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

650

 

 

 

647

 

 

 

646

 

 

 

646

 

 

 

794

 

Additional paid-in capital

 

 

1,044,774

 

 

 

1,046,331

 

 

 

1,043,605

 

 

 

1,039,261

 

 

 

1,275,649

 

Accumulated other comprehensive loss

 

 

(125,461

)

 

 

(133,531

)

 

 

(119,864

)

 

 

(95,279

)

 

 

(80,565

)

Retained earnings

 

 

1,136,901

 

 

 

1,123,636

 

 

 

1,107,586

 

 

 

1,085,208

 

 

 

1,267,415

 

Deferred compensation employee stock trust, net

 

 

446

 

 

 

481

 

 

 

479

 

 

 

695

 

 

 

744

 

Employee stock trust

 

 

(599

)

 

 

(640

)

 

 

(641

)

 

 

(954

)

 

 

(104

)

Total Hilltop stockholders' equity

 

 

2,056,711

 

 

 

2,036,924

 

 

 

2,031,811

 

 

 

2,029,577

 

 

 

2,463,933

 

Noncontrolling interests

 

 

27,087

 

 

 

26,605

 

 

 

27,072

 

 

 

27,826

 

 

 

26,662

 

Total stockholders' equity

 

 

2,083,798

 

 

 

2,063,529

 

 

 

2,058,883

 

 

 

2,057,403

 

 

 

2,490,595

 

Total liabilities & stockholders' equity

 

$

17,029,087

 

 

$

16,259,282

 

 

$

16,615,291

 

 

$

16,715,739

 

 

$

18,356,956

 

_____________________________

(1)

At March 31, 2023, the amortized cost of the available for sale securities portfolio was $1,758,339, while the fair value of the held to maturity securities portfolio was $785,380.

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Consolidated Income Statements

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(in 000's, except per share data)

 

 

2023

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

123,379

 

$

117,906

 

$

109,165

 

$

98,728

 

$

90,408

Securities borrowed

 

 

17,068

 

 

 

14,162

 

 

 

10,938

 

 

 

10,498

 

 

 

8,817

 

Securities:

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

25,602

 

 

 

23,293

 

 

 

19,642

 

 

 

17,288

 

 

 

15,581

 

Tax-exempt

 

 

3,188

 

 

 

3,002

 

 

 

2,451

 

 

 

2,141

 

 

 

2,419

 

Other

 

 

22,190

 

 

 

21,611

 

 

 

14,276

 

 

 

6,478

 

 

 

2,312

 

Total interest income

 

 

191,427

 

 

 

179,974

 

 

 

156,472

 

 

 

135,133

 

 

 

119,537

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

35,824

 

 

 

28,238

 

 

 

12,525

 

 

 

5,456

 

 

 

4,193

 

Securities loaned

 

 

15,346

 

 

 

13,179

 

 

 

9,407

 

 

 

8,512

 

 

 

7,472

 

Short-term borrowings

 

 

12,444

 

 

 

10,278

 

 

 

5,550

 

 

 

3,020

 

 

 

2,045

Notes payable

3,853

3,988

3,907

3,809

4,437

Other

 

 

2,255

 

 

 

849

 

 

 

1,597

 

 

 

2,280

 

 

 

1,399

 

Total interest expense

 

 

69,722

 

 

 

56,532

 

 

 

32,986

 

 

 

23,077

 

 

 

19,546

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

121,705

 

 

 

123,442

 

 

 

123,486

 

 

 

112,056

 

 

 

99,991

 

Provision for (reversal of) credit losses

 

 

2,331

 

 

 

3,638

 

 

 

(780

)

 

 

5,336

 

 

 

115

 

Net interest income after provision for (reversal of) credit losses

 

 

119,374

 

 

 

119,804

 

 

 

124,266

 

 

 

106,720

 

 

 

99,876

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Net gains from sale of loans and other mortgage production income

 

 

39,966

 

 

 

35,949

 

 

 

57,998

 

 

 

97,543

 

 

 

110,894

 

Mortgage loan origination fees

 

 

28,777

 

 

 

35,198

 

 

 

39,960

 

 

 

42,378

 

 

 

32,062

 

Securities commissions and fees

 

 

31,223

 

 

 

33,143

 

 

 

34,076

 

 

 

34,757

 

 

 

37,146

 

Investment and securities advisory fees and commissions

 

 

26,848

 

 

 

30,661

 

 

 

35,031

 

 

 

32,002

 

 

 

29,705

 

Other

 

 

35,680

 

 

 

34,833

 

 

 

39,910

 

 

 

32,593

 

 

 

6,621

 

Total noninterest income

 

 

162,494

 

 

 

169,784

 

 

 

206,975

 

 

 

239,273

 

 

 

216,428

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

 

 

167,817

 

 

 

167,892

 

 

 

200,450

 

 

 

205,327

 

 

 

200,019

 

Occupancy and equipment, net

 

 

22,865

 

 

 

23,077

 

 

 

25,041

 

 

 

24,231

 

 

 

24,766

 

Professional services

 

 

10,697

 

 

 

11,555

 

 

 

10,631

 

 

 

16,246

 

 

 

10,063

 

Other

 

 

49,091

 

 

 

50,844

 

 

 

52,616

 

 

 

52,739

 

 

 

51,502

 

Total noninterest expense

 

 

250,470

 

 

 

253,368

 

 

 

288,738

 

 

 

298,543

 

 

 

286,350

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

31,398

 

 

 

36,220

 

 

 

42,503

 

 

 

47,450

 

 

 

29,954

 

Income tax expense

 

 

3,630

 

 

 

9,642

 

 

 

9,249

 

 

 

12,127

 

 

 

5,815

 

Net income

 

 

27,768

 

 

 

26,578

 

 

 

33,254

 

 

 

35,323

 

 

 

24,139

 

Less: Net income attributable to noncontrolling interest

 

 

1,968

 

 

 

1,022

 

 

 

1,186

 

 

 

2,063

 

 

 

1,889

 

Income attributable to Hilltop

 

$

25,800

 

 

$

25,556

 

 

$

32,068

 

 

$

33,260

 

 

$

22,250

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.40

 

 

$

0.40

 

 

$

0.50

 

 

$

0.45

 

 

$

0.28

 

Diluted:

 

$

0.40

 

 

$

0.39

 

 

$

0.50

 

 

$

0.45

 

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.16

 

 

$

0.15

 

 

$

0.15

 

 

$

0.15

 

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

64,901

 

 

 

64,602

 

 

 

64,552

 

 

 

73,693

 

 

 

79,114

 

Diluted

 

 

64,954

 

 

 

64,779

 

 

 

64,669

 

 

 

73,838

 

 

 

79,356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2023

Segment Results

 

 

 

 

 

Mortgage

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

104,770

 

$

13,863

 

$

(4,208

)

 

$

(3,322

)

 

$

10,602

 

 

$

121,705

Provision for (reversal of) credit losses

 

 

1,600

 

 

 

731

 

 

 

 

 

 

 

 

 

 

 

 

2,331

 

Noninterest income

 

 

11,190

 

 

 

90,635

 

 

 

68,829

 

 

 

2,704

 

 

 

(10,864

)

 

 

162,494

 

Noninterest expense

 

 

56,127

 

 

 

90,345

 

 

 

88,753

 

 

 

15,513

 

 

 

(268

)

 

 

250,470

 

Income (loss) before taxes

 

$

58,233

 

 

$

13,422

 

 

$

(24,132

)

 

$

(16,131

)

 

$

6

 

 

$

31,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Selected Financial Data

 

2023

 

2022

 

2022

 

2022

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hilltop Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders' equity

 

 

5.12

%

 

 

4.99

%

 

 

6.26

%

 

 

5.82

%

 

 

3.60

%

Return on average assets

 

 

0.69

%

 

 

0.63

%

 

 

0.79

%

 

 

0.80

%

 

 

0.53

%

Net interest margin (1)

 

 

3.28

%

 

 

3.23

%

 

 

3.19

%

 

 

2.75

%

 

 

2.36

%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

3.28

%

 

 

3.24

%

 

 

3.20

%

 

 

2.76

%

 

 

2.37

%

Impact of purchase accounting

 

 

6 bps

 

 

7 bps

 

 

8 bps

 

 

8 bps

 

 

7 bps

Book value per common share ($)

 

 

31.63

 

 

 

31.49

 

 

 

31.46

 

 

 

31.43

 

 

 

31.02

 

Shares outstanding, end of period (000's)

 

 

65,023

 

 

 

64,685

 

 

 

64,591

 

 

 

64,576

 

 

 

79,439

 

Dividend payout ratio (3)

 

 

40.25

%

 

 

37.92

%

 

 

30.19

%

 

 

33.33

%

 

 

53.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

3.40

%

 

 

3.42

%

 

 

3.42

%

 

 

2.97

%

 

 

2.65

%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

3.41

%

 

 

3.43

%

 

 

3.43

%

 

 

2.98

%

 

 

2.65

%

Impact of purchase accounting

 

 

7 bps

 

 

8 bps

 

 

10 bps

 

 

10 bps

 

 

8 bps

Accretion of discount on loans ($000's)

 

 

1,870

 

 

 

2,173

 

 

 

2,858

 

 

 

3,011

 

 

 

2,510

 

Net recoveries (charge-offs) ($000's)

 

 

(419

)

 

 

21

 

 

 

(2,735

)

 

 

(1,223

)

 

 

(282

)

Return on average assets

 

 

1.44

%

 

 

1.31

%

 

 

1.41

%

 

 

1.09

%

 

 

0.98

%

Fee income ratio

 

 

9.6

%

 

 

9.8

%

 

 

9.9

%

 

 

11.0

%

 

 

12.2

%

Efficiency ratio

 

 

48.4

%

 

 

48.9

%

 

 

48.9

%

 

 

50.4

%

 

 

55.7

%

Employees' compensation and benefits ($000's)

 

 

32,681

 

 

 

34,526

 

 

 

35,934

 

 

 

33,554

 

 

 

33,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-Dealer Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue ($000's) (4)

 

 

104,498

 

 

 

106,919

 

 

 

114,184

 

 

 

100,229

 

 

 

72,209

 

Employees' compensation and benefits ($000's)

 

 

62,429

 

 

 

60,552

 

 

 

70,274

 

 

 

64,494

 

 

 

55,825

 

Variable compensation expense ($000's)

 

 

30,821

 

 

 

32,042

 

 

 

42,567

 

 

 

37,471

 

 

 

26,625

 

Compensation as a % of net revenue

 

 

59.7

%

 

 

56.6

%

 

 

61.5

%

 

 

64.3

%

 

 

77.3

%

Pre-tax margin (5)

 

 

12.8

%

 

 

18.5

%

 

 

15.3

%

 

 

9.1

%

 

 

(11.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage loan originations - volume ($000's):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home purchases

 

 

1,607,330

 

 

 

1,895,731

 

 

 

2,832,136

 

 

 

3,342,103

 

 

 

2,753,031

 

Refinancings

 

 

125,423

 

 

 

147,511

 

 

 

211,075

 

 

 

467,117

 

 

 

1,011,452

 

Total mortgage loan originations - volume

 

 

1,732,753

 

 

 

2,043,242

 

 

 

3,043,211

 

 

 

3,809,220

 

 

 

3,764,483

 

Mortgage loan sales - volume ($000's)

 

 

1,661,521

 

 

 

2,038,990

 

 

 

3,419,950

 

 

 

3,872,935

 

 

 

3,868,596

 

Net gains from mortgage loan sales (basis points):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans sold to third parties

 

 

193

 

 

 

211

 

 

 

227

 

 

 

260

 

 

 

321

 

Impact of loans retained by banking segment

 

 

(7

)

 

 

(19

)

 

 

(9

)

 

 

(7

)

 

 

(9

)

As reported

 

 

186

 

 

 

192

 

 

 

218

 

 

 

253

 

 

 

312

 

Mortgage servicing rights asset ($000's) (6)

 

 

103,314

 

 

 

100,825

 

 

 

156,539

 

 

 

121,688

 

 

 

100,475

 

Employees' compensation and benefits ($000's)

 

 

62,355

 

 

 

64,940

 

 

 

86,079

 

 

 

100,206

 

 

 

102,748

 

Variable compensation expense ($000's)

 

 

25,573

 

 

 

26,724

 

 

 

44,312

 

 

 

56,525

 

 

 

56,243

 

_____________________________

(1)

Net interest margin is defined as net interest income divided by average interest-earning assets.

(2)

Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Taxable equivalent adjustments are based on the applicable 21% federal income tax rate for all periods presented. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. The taxable equivalent adjustments to interest income for Hilltop (consolidated) were $0.1 million, $0.3 million, $0.4 million, $0.4 million and $0.5 million, respectively, for the periods presented and for the banking segment were $0.2 million for each of the periods presented.

(3)

Dividend payout ratio is defined as cash dividends declared per common share divided by basic earnings per common share.

(4)

Net revenue is defined as the sum of total broker-dealer net interest income and total broker-dealer noninterest income.

(5)

Pre-tax margin is defined as income before income taxes divided by net revenue.

(6)

Reported on a consolidated basis and therefore does not include mortgage servicing rights assets related to loans serviced for the banking segment, which are eliminated in consolidation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Capital Ratios

 

2023

 

2022

 

2022

 

2022

 

2022

Tier 1 capital (to average assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

10.69

%

 

 

10.26

%

 

 

10.29

%

 

 

9.67

%

 

 

9.74

%

Hilltop

 

 

11.82

%

 

 

11.47

%

 

 

11.41

%

 

 

10.53

%

 

 

12.46

%

Common equity Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

14.97

%

 

 

14.98

%

 

 

14.68

%

 

 

14.65

%

 

 

15.37

%

Hilltop

 

 

17.99

%

 

 

18.23

%

 

 

17.45

%

 

 

17.24

%

 

 

21.27

%

Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

14.97

%

 

 

14.98

%

 

 

14.68

%

 

 

14.65

%

 

 

15.37

%

Hilltop

 

 

17.99

%

 

 

18.23

%

 

 

17.45

%

 

 

17.24

%

 

 

21.27

%

Total capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

15.94

%

 

 

15.91

%

 

 

15.54

%

 

 

15.55

%

 

 

16.18

%

Hilltop

 

 

20.75

%

 

 

20.98

%

 

 

20.07

%

 

 

19.90

%

 

 

23.85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Non-Performing Assets Portfolio Data

 

2023

 

2022

 

2022

 

2022

 

2022

Loans accounted for on a non-accrual basis ($000's):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

1,973

 

 

 

4,269

 

 

 

4,735

 

 

 

4,947

 

 

 

6,153

 

Commercial and industrial

 

 

10,807

 

 

 

9,095

 

 

 

12,078

 

 

 

13,315

 

 

 

18,486

 

Construction and land development

 

 

199

 

 

 

198

 

 

 

1

 

 

 

1

 

 

 

1

 

1-4 family residential

 

 

14,387

 

 

 

15,941

 

 

 

16,968

 

 

 

16,542

 

 

 

18,723

 

Consumer

 

 

12

 

 

 

14

 

 

 

16

 

 

 

19

 

 

 

21

 

Broker-dealer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,378

 

 

 

29,517

 

 

 

33,798

 

 

 

34,824

 

 

 

43,384

 

Troubled debt restructurings included in accruing loans held for investment ($000's) (1)

 

 

 

 

 

803

 

 

 

825

 

 

 

857

 

 

 

890

 

Non-performing loans ($000's) (1)

 

 

27,378

 

 

 

30,320

 

 

 

34,623

 

 

 

35,681

 

 

 

44,274

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans as a % of total loans ($000's) (1)

 

 

0.30

%

 

 

0.33

%

 

 

0.39

%

 

 

0.38

%

 

 

0.47

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned ($000's)

 

 

3,202

 

 

 

2,325

 

 

 

1,637

 

 

 

1,516

 

 

 

2,175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other repossessed assets ($000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets ($000's) (1)

 

 

30,580

 

 

 

32,645

 

 

 

36,260

 

 

 

37,197

 

 

 

46,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a % of total assets ($000's) (1)

 

 

0.18

%

 

 

0.20

%

 

 

0.22

%

 

 

0.22

%

 

 

0.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans past due 90 days or more and still accruing ($000's) (2)

 

 

114,523

 

 

 

92,099

 

 

 

96,532

 

 

 

82,410

 

 

 

87,489

 

_____________________________

(1)

Effective January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2022-02 which eliminated the recognition and measurement guidance on troubled debt restructurings for creditors. Therefore, we no longer present troubled debt restructurings as a component of non-performing loans and assets.

(2)

Loans past due 90 days or more and still accruing were primarily comprised of loans held for sale and guaranteed by U.S. government agencies, including loans that are subject to repurchase, or have been repurchased, by PrimeLending.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

 

Average

 

Interest

 

Annualized

 

 

Average

 

Interest

 

Annualized

 

 

 

Outstanding

 

Earned

 

Yield or

 

 

Outstanding

 

Earned

 

Yield or

 

Net Interest Margin (Taxable Equivalent) Details (1)

 

Balance

 

or Paid

 

Rate

 

 

Balance

 

or Paid

 

Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

815,393

 

 

$

10,724

)

 

5.26

%

$

1,467,998

 

 

$

11,966

)

 

3.26

%

Loans held for investment, gross (2)

 

 

7,894,668

 

 

 

112,655

 

 

5.79

%

 

7,839,047

 

 

 

78,442

 

 

4.06

%

Investment securities - taxable

 

 

2,813,734

 

 

 

25,602

 

 

3.64

%

 

2,768,849

 

 

 

15,581

 

 

2.25

%

Investment securities - non-taxable (3)

 

 

412,543

 

 

 

3,286

 

 

3.19

%

 

324,084

 

 

 

2,888

 

 

3.56

%

Federal funds sold and securities purchased under agreements to resell

 

 

163,601

 

 

 

2,368

 

 

5.87

%

 

157,313

 

 

 

136

 

 

0.35

%

Interest-bearing deposits in other financial institutions

 

 

1,480,323

 

 

 

16,116

 

 

4.42

%

 

3,116,369

 

 

 

1,427

 

 

0.19

%

Securities borrowed

 

 

1,419,797

 

 

 

17,068

 

 

4.81

%

 

1,455,166

 

 

 

8,817

 

 

2.42

%

Other

 

 

63,219

 

 

 

3,706

 

 

23.77

%

 

54,602

 

 

 

750

 

 

5.57

%

Interest-earning assets, gross (3)

 

 

15,063,278

 

 

 

191,525

 

 

5.16

%

 

17,183,428

 

 

 

120,007

 

 

2.83

%

Allowance for credit losses

 

 

(97,060

)

 

 

 

 

 

 

(92,239

)

 

 

 

 

 

Interest-earning assets, net

 

 

14,966,218

 

 

 

 

 

 

 

17,091,189

 

 

 

 

 

 

Noninterest-earning assets

 

 

1,336,908

 

 

 

 

 

 

 

1,401,584

 

 

 

 

 

 

Total assets

 

$

16,303,126

 

 

 

 

 

 

$

18,492,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

7,239,556

 

 

$

35,824

 

 

2.01

%

$

8,201,824

 

 

$

4,193

 

 

0.21

%

Securities loaned

 

 

1,323,857

 

 

 

15,346

 

 

4.70

%

 

1,371,816

 

 

 

7,472

 

 

2.21

%

Notes payable and other borrowings

 

 

1,490,075

 

 

 

18,552

 

 

5.05

%

 

1,249,222

 

 

 

7,881

 

 

2.56

%

Total interest-bearing liabilities

 

 

10,053,488

 

 

 

69,722

 

 

2.81

%

 

10,822,862

 

 

 

19,546

 

 

0.73

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

3,789,757

 

 

 

 

 

 

 

4,507,661

 

 

 

 

 

 

Other liabilities

 

 

390,107

 

 

 

 

 

 

 

631,790

 

 

 

 

 

 

Total liabilities

 

 

14,233,352

 

 

 

 

 

 

 

15,962,313

 

 

 

 

 

 

Stockholders’ equity

 

 

2,043,157

 

 

 

 

 

 

 

2,504,383

 

 

 

 

 

 

Noncontrolling interest

 

 

26,617

 

 

 

 

 

 

 

26,077

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

16,303,126

 

 

 

 

 

 

$

18,492,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (3)

 

 

 

$

121,803

 

 

 

 

 

 

$

100,461

 

 

 

 

Net interest spread (3)

 

 

 

 

 

2.35

%

 

 

 

 

2.10

%

Net interest margin (3)

 

 

 

 

 

3.28

%

 

 

 

 

2.37

%

_____________________________

(1)

Information presented on a consolidated basis.

(2)

Average balance includes non-accrual loans.

(3)

Presented on a taxable-equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rate for the periods presented. The adjustment to interest income was $0.1 million and $0.5 million for the three months ended March 31, 2023 and 2022, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, April 21, 2023. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review first quarter 2023 financial results. Interested parties can access the conference call by dialing 1-833-470-1428 (United States), 1-833-950-0062 (Canada) or 1-929-526-1599 (all other locations) and then using the access code 485855. The conference call also will be webcast simultaneously on Hilltop’s Investor Relations website (http://ir.hilltop-holdings.com).

About Hilltop

Hilltop Holdings is a Dallas-based financial holding company. Its primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank. PlainsCapital Bank’s wholly owned subsidiary, PrimeLending, provides residential mortgage lending throughout the United States. Hilltop Holdings’ broker-dealer subsidiaries, Hilltop Securities Inc. and Momentum Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. At March 31, 2023, Hilltop employed approximately 4,100 people and operated approximately 355 locations in 47 states. Hilltop Holdings’ common stock is listed on the New York Stock Exchange under the symbol “HTH.” Find more information at Hilltop-Holdings.com, PlainsCapital.com, PrimeLending.com and HilltopSecurities.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as our plans, objectives, strategies, expectations, intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “building,” “continue,” “could,” “drive,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “position,” “probable,” “progressing,” “projects,” “prudent,” “seeks,” “should,” “target,” “view,” “will” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (ii) effectiveness of our data security controls in the face of cyber attacks; (iii) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (iv) changes in the interest rate environment; (v) risks associated with concentration in real estate related loans; and (vi) disruptions to the economy and the U.S. banking system caused by recent bank failures, risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments. For further discussion of such factors, see the risk factors described in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

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