Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2019

Company Release - 1/30/2020 5:15 PM ET

DALLAS--(BUSINESS WIRE)-- Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2019. Hilltop produced income to common stockholders of $49.3 million, or $0.54 per diluted share, for the fourth quarter of 2019, compared to $28.1 million, or $0.30 per diluted share, for the fourth quarter of 2018. Income to common stockholders for the full year 2019 was $225.3 million, or $2.44 per diluted share, compared to $121.4 million, or $1.28 per diluted share, for the full year 2018.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per common share, a 12.5% increase from the prior quarter, payable on February 28, 2020, to all common stockholders of record as of the close of business on February 14, 2020. Additionally, Hilltop paid $73.4 million to repurchase 3,390,247 shares at a weighted average price of $21.64 during 2019, inclusive of privately negotiated transactions. These shares were returned to the pool of authorized but unissued shares of common stock. The Hilltop Board of Directors authorized a new stock repurchase program through January 2021, under which Hilltop may repurchase, in the aggregate, up to $75.0 million of its outstanding common stock.

Effective January 1, 2020, Hilltop adopted the current expected credit loss model, or CECL, which replaces the current process for estimating allowance for loan losses in its entirety. Our implementation efforts are substantially complete, and based upon the current loan portfolio, we estimate that the allowance for credit losses will be between $80 million and $100 million, inclusive of the estimate of change in reserve for unfunded commitments of between $6 million and $9 million, as of CECL’s adoption on January 1, 2020. The estimated increase over the current allowance for loan losses is driven by the fact that under CECL the allowance covers expected credit losses over the entire expected life of the loan portfolios and also takes into account forecasts of expected future macroeconomic conditions. This estimated increase, net of tax, will be reflected as a decrease to opening retained earnings at January 1, 2020. While not material, the impact of the adoption of CECL also affects our regulatory capital, performance and other asset quality ratios.

Jeremy Ford, CEO of Hilltop, said, “The strong results delivered in the fourth quarter capped off a fantastic year for Hilltop, and I credit the collective efforts of our teammates in the businesses and our holding company. PrimeLending rebounded from a challenging year in 2018 by generating $65 million of pre-tax income in 2019, an increase of $52 million. HilltopSecurities executed on its targeted strategies and grew net revenues by $103 million to $456 million during 2019. PlainsCapital Bank delivered $182 million of pre-tax income in 2019, an increase of $30 million from 2018, by focusing on prudent growth in loans and deposits while maintaining its moderate risk profile and reducing expenses. National Lloyds’ results reflect improved core operations and lower loss experience during 2019 as it generated $17 million of pre-tax income.

“In addition to these favorable financial results, we continued to position Hilltop for long-term success by executing on our platform for efficiency and growth initiatives. In 2019, we delivered significant productivity improvements through key technology investments and the addition of talented professionals across our organization. We enter 2020 with strong momentum and focus.”

Fourth Quarter 2019 Highlights for Hilltop:

  • Hilltop’s annualized return on average assets and return on average equity for the fourth quarter of 2019 were 1.40% and 9.43%, respectively, compared to 0.86% and 5.76%, respectively, for the fourth quarter of 2018;
  • Hilltop’s book value per common share increased to $23.20 at December 31, 2019, compared to $22.71 at September 30, 2019;
  • Hilltop’s total assets were $15.2 billion at December 31, 2019, compared to $14.8 billion at September 30, 2019;
  • Loans1, net of allowance for loan losses, remained stable at $6.7 billion compared to September 30, 2019;
  • Non-performing loans were $36.1 million, or 0.38% of total loans at December 31, 2019, compared to $35.5 million, or 0.38% of total loans, at September 30, 2019;
  • Loans held for sale increased by 6.2% from September 30, 2019 to $2.1 billion at December 31, 2019;
  • Total deposits were $9.0 billion at December 31, 2019, compared to $8.7 billion at September 30, 2019;
  • Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio2 of 12.71% and a Common Equity Tier 1 Capital Ratio of 16.69% at December 31, 2019;
  • Hilltop’s net interest margin3 decreased to 3.30% for the fourth quarter of 2019, compared to 3.45% in the third quarter of 2019;
  • The provision for loan losses was $6.9 million during the fourth quarter of 2019, compared to $47 thousand in the third quarter of 2019;
    • The provision for loan losses increased during the fourth quarter 2019 primarily as a result of adjustments to qualitative factors associated with concentrations in the commercial real estate loan portfolio, growth in the overall loan portfolio and the recast of cash flows associated with certain PCI loans
  • For the fourth quarter of 2019, noninterest income was $299.3 million, compared to $238.5 million in the fourth quarter of 2018, a 25.5% increase;
  • For the fourth quarter of 2019, noninterest expense was $336.9 million, compared to $310.8 million in the fourth quarter of 2018, a 8.4% increase; and
  • Hilltop’s effective tax rates were 22.5% and 22.4% during the fourth quarter and full year of 2019, respectively, compared to 23.2% and 21.8% during the same periods in 2018.

_____________

1

“Loans” reflect loans held for investment excluding broker-dealer loans, net of allowance for loan losses, of $576.5 million and $558.1 million at December 31, 2019 and September 30, 2019, respectively

2

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

 

3

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

Consolidated Financial and Other Information

 
Consolidated Balance Sheets

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(in 000's)

 

2019

 

 

 

2019

 

 

 

2019

 

 

 

2019

 

 

 

2018

 

Cash and due from banks

$

484,959

 

$

326,129

 

$

342,001

 

$

313,192

 

$

644,073

 

Federal funds sold

 

394

 

 

423

 

 

521

 

 

438

 

 

400

 

Assets segregated for regulatory purposes

 

157,436

 

 

83,878

 

 

151,271

 

 

156,851

 

 

133,993

 

Securities purchased under agreements to resell

 

59,031

 

 

49,998

 

 

50,660

 

 

65,205

 

 

61,611

 

Securities:
Trading, at fair value

 

689,576

 

 

707,268

 

 

601,524

 

 

703,295

 

 

745,466

 

Available for sale, at fair value

 

998,392

 

 

1,003,850

 

 

1,009,924

 

 

1,019,851

 

 

875,658

 

Held to maturity, at amortized cost

 

386,326

 

 

371,361

 

 

365,905

 

 

369,865

 

 

351,012

 

Equity, at fair value

 

20,007

 

 

19,494

 

 

19,592

 

 

19,343

 

 

19,679

 

 

2,094,301

 

 

2,101,973

 

 

1,996,945

 

 

2,112,354

 

 

1,991,815

 

Loans held for sale

 

2,106,361

 

 

1,984,231

 

 

1,609,477

 

 

1,059,280

 

 

1,393,246

 

Loans held for investment, net of unearned income

 

7,381,400

 

 

7,321,208

 

 

7,202,604

 

 

7,011,679

 

 

6,930,458

 

Allowance for loan losses

 

(61,136

)

 

(55,604

)

 

(55,177

)

 

(58,809

)

 

(59,486

)

Loans held for investment, net

 

7,320,264

 

 

7,265,604

 

 

7,147,427

 

 

6,952,870

 

 

6,870,972

 

 
Broker-dealer and clearing organization receivables

 

1,780,280

 

 

1,731,979

 

 

1,707,249

 

 

1,651,199

 

 

1,440,287

 

Premises and equipment, net

 

219,982

 

 

213,757

 

 

208,975

 

 

210,333

 

 

237,373

 

Operating lease right-of-use assets

 

117,059

 

 

121,838

 

 

123,832

 

 

108,806

 

Other assets

 

516,134

 

 

633,794

 

 

602,143

 

 

591,442

 

 

580,362

 

Goodwill

 

291,435

 

 

291,435

 

 

291,435

 

 

291,435

 

 

291,435

 

Other intangible assets, net

 

30,155

 

 

31,990

 

 

33,934

 

 

35,965

 

 

38,005

 

Total assets

$

15,177,791

 

$

14,837,029

 

$

14,265,870

 

$

13,549,370

 

$

13,683,572

 

 
Deposits:
Non-interest bearing

$

2,769,556

 

$

2,732,325

 

$

2,598,253

 

$

2,490,144

 

$

2,560,750

 

Interest bearing

 

6,262,658

 

 

5,998,547

 

 

5,864,826

 

 

5,807,975

 

 

5,975,406

 

Total deposits

 

9,032,214

 

 

8,730,872

 

 

8,463,079

 

 

8,298,119

 

 

8,536,156

 

Broker-dealer and clearing organization payables

 

1,605,518

 

 

1,546,163

 

 

1,531,891

 

 

1,490,227

 

 

1,294,925

 

Short-term borrowings

 

1,424,010

 

 

1,502,755

 

 

1,338,893

 

 

914,525

 

 

1,065,807

 

Securities sold, not yet purchased, at fair value

 

43,817

 

 

59,249

 

 

45,447

 

 

69,354

 

 

81,667

 

Notes payable

 

283,769

 

 

245,341

 

 

231,923

 

 

225,372

 

 

228,872

 

Operating lease liabilities

 

128,402

 

 

131,133

 

 

132,750

 

 

118,452

 

Junior subordinated debentures

 

67,012

 

 

67,012

 

 

67,012

 

 

67,012

 

 

67,012

 

Other liabilities

 

464,253

 

 

471,077

 

 

403,070

 

 

351,178

 

 

435,240

 

Total liabilities

 

13,048,995

 

 

12,753,602

 

 

12,214,065

 

 

11,534,239

 

 

11,709,679

 

 
Common stock

 

906

 

 

906

 

 

928

 

 

938

 

 

936

 

Additional paid-in capital

 

1,445,233

 

 

1,441,604

 

 

1,473,599

 

 

1,491,585

 

 

1,489,816

 

Accumulated other comprehensive income (loss)

 

11,419

 

 

12,305

 

 

7,862

 

 

(1,062

)

 

(8,627

)

Retained earnings

 

644,860

 

 

602,835

 

 

544,275

 

 

499,452

 

 

466,737

 

Deferred compensation employee stock trust, net

 

776

 

 

789

 

 

788

 

 

827

 

 

825

 

Employee stock trust

 

(155

)

 

(170

)

 

(171

)

 

(213

)

 

(217

)

Total Hilltop stockholders' equity

 

2,103,039

 

 

2,058,269

 

 

2,027,281

 

 

1,991,527

 

 

1,949,470

 

Noncontrolling interests

 

25,757

 

 

25,158

 

 

24,524

 

 

23,604

 

 

24,423

 

Total stockholders' equity

 

2,128,796

 

 

2,083,427

 

 

2,051,805

 

 

2,015,131

 

 

1,973,893

 

Total liabilities & stockholders' equity

$

15,177,791

 

$

14,837,029

 

$

14,265,870

 

$

13,549,370

 

$

13,683,572

 

 

Three Months Ended

 

 

Year Ended

Consolidated Income Statements

December 31,

 

September 30,

 

December 31,

 

 

December 31,

 

December 31,

(in 000's, except per share data)

 

2019

 

 

2019

 

 

2018

 

 

 

2019

 

 

2019

Interest income:
Loans, including fees

$

115,696

$

119,580

$

119,322

$

460,471

$

436,725

Securities borrowed

 

16,196

 

21,010

 

16,782

 

69,582

 

66,914

Securities:
Taxable

 

16,040

 

15,764

 

15,512

 

62,104

 

50,975

Tax-exempt

 

1,572

 

1,576

 

1,648

 

6,159

 

6,834

Other

 

3,273

 

4,026

 

4,438

 

16,513

 

17,980

Total interest income

 

152,777

 

161,956

 

157,702

 

614,829

 

579,428

 
Interest expense:
Deposits

 

17,480

 

18,887

 

14,838

 

71,509

 

46,002

Securities loaned

 

13,989

 

17,889

 

13,935

 

60,086

 

56,733

Short-term borrowings

 

6,244

 

8,166

 

7,476

 

26,778

 

25,816

Notes payable

 

2,769

 

2,715

 

2,627

 

10,754

 

10,263

Junior subordinated debentures

 

909

 

955

 

968

 

3,851

 

3,663

Other

 

99

 

132

 

143

 

545

 

627

Total interest expense

 

41,490

 

48,744

 

39,987

 

173,523

 

143,104

 
Net interest income

 

111,287

 

113,212

 

117,715

 

441,306

 

436,324

Provision for loan losses

 

6,880

 

47

 

6,926

 

7,206

 

5,088

Net interest income after provision for loan losses

 

104,407

 

113,165

 

110,789

 

434,100

 

431,236

 
Noninterest income:
Net gains from sale of loans and other mortgage production income

 

120,573

 

157,050

 

90,628

 

504,935

 

445,116

Mortgage loan origination fees

 

36,939

 

37,782

 

26,615

 

130,003

 

103,563

Securities commissions and fees

 

33,205

 

34,426

 

36,984

 

137,742

 

150,989

Investment and securities advisory fees and commissions

 

32,083

 

28,685

 

26,260

 

103,787

 

90,066

Net insurance premiums earned

 

32,961

 

32,654

 

34,146

 

132,284

 

136,751

Other

 

43,515

 

50,804

 

23,883

 

197,265

 

96,305

Total noninterest income

 

299,276

 

341,401

 

238,516

 

1,206,016

 

1,022,790

 
Noninterest expense:
Employees' compensation and benefits

 

215,427

 

235,197

 

179,881

 

856,265

 

768,688

Occupancy and equipment, net

 

30,883

 

27,202

 

30,512

 

114,327

 

115,207

Professional services

 

25,052

 

24,346

 

26,793

 

96,093

 

105,752

Loss and loss adjustment expenses

 

14,356

 

14,677

 

20,694

 

68,940

 

79,347

Other

 

51,218

 

48,687

 

52,939

 

204,182

 

224,255

Total noninterest expense

 

336,936

 

350,109

 

310,819

 

1,339,807

 

1,293,249

 
Income before income taxes

 

66,747

 

104,457

 

38,486

 

300,309

 

160,777

Income tax expense

 

15,045

 

22,750

 

8,928

 

67,332

 

35,050

Net income

 

51,702

 

81,707

 

29,558

 

232,977

 

125,727

Less: Net income attributable to noncontrolling interest

 

2,426

 

2,289

 

1,443

 

7,686

 

4,286

Income attributable to Hilltop

$

49,276

$

79,418

$

28,115

$

225,291

$

121,441

 
Earnings per common share:
Basic

$

0.54

$

0.87

$

0.30

$

2.44

$

1.28

Diluted

$

0.54

$

0.86

$

0.30

$

2.44

$

1.28

 
Cash dividends declared per common share

$

0.08

$

0.08

$

0.07

$

0.32

$

0.28

 
Weighted average shares outstanding:
Basic

 

90,606

 

91,745

 

94,092

 

92,345

 

94,969

Diluted

 

90,711

 

91,824

 

94,130

 

92,394

 

95,067

 

Three Months Ended December 31, 2019

Segment Results

 

 

 

 

Mortgage

 

 

 

 

 

All Other and

 

Hilltop

(in 000s)

Banking

 

Broker-Dealer

 

Origination

 

Insurance

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

$

95,503

$

13,324

 

$

(2,049

)

$

527

$

(1,496

)

$

5,478

 

$

111,287

Provision (recovery) for loan losses

 

6,926

 

(46

)

 

6,880

Noninterest income

 

11,534

 

99,804

 

 

157,554

 

 

35,543

 

371

 

 

(5,530

)

 

299,276

Noninterest expense

 

58,779

 

88,943

 

 

146,966

 

 

29,068

 

13,571

 

 

(391

)

 

336,936

Income (loss) before income taxes

$

41,332

$

24,231

 

$

8,539

 

$

7,002

$

(14,696

)

$

339

 

$

66,747

 

Year Ended December 31, 2019

Segment Results

 

 

 

 

Mortgage

 

 

 

 

 

All Other and

 

Hilltop

(in 000s)

Banking

 

Broker-Dealer

 

Origination

 

Insurance

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

$

379,258

$

51,308

 

$

(6,273

)

$

2,329

$

(5,541

)

$

20,225

 

$

441,306

Provision (recovery) for loan losses

 

7,280

 

(74

)

 

7,206

Noninterest income

 

41,753

 

404,411

 

 

634,992

 

 

143,082

 

2,221

 

 

(20,443

)

 

1,206,016

Noninterest expense

 

231,524

 

366,031

 

 

563,998

 

 

127,920

 

50,968

 

 

(634

)

 

1,339,807

Income (loss) before income taxes

$

182,207

$

89,762

 

$

64,721

 

$

17,491

$

(54,288

)

$

416

 

$

300,309

 
Three Months Ended Year Ended
December 31,September 30,December 31,December 31,December 31,
Selected Financial Data

2019

 

2019

 

2018

 

2019

 

2018

 

 
Hilltop Consolidated:
Return on average stockholders' equity

9.43

%

15.55

%

5.76

%

11.18

%

6.33

%

Return on average assets

1.40

%

2.26

%

0.86

%

1.66

%

0.93

%

Net interest margin (1):

3.30

%

3.45

%

3.75

%

3.48

%

3.55

%

Net interest margin (taxable equivalent) (2):
As reported

3.31

%

3.46

%

3.76

%

3.48

%

3.56

%

Impact of purchase accounting

19

bps

 

26

bps

 

43

bps

 

 

25

bps

 

34

bps

Book value per common share ($)

23.20

 

22.71

 

20.83

 

23.20

 

20.83

 

Shares outstanding, end of period (000's)

90,641

 

90,629

 

93,610

 

90,641

 

93,610

 

Dividend payout ratio (3)

14.71

%

9.24

%

23.43

%

13.12

%

21.90

%

 
Banking Segment:
Net interest margin (1):

3.77

%

3.97

%

4.50

%

4.00

%

4.23

%

Net interest margin (taxable equivalent) (2):
As reported

3.78

%

3.98

%

4.51

%

4.01

%

4.24

%

Impact of purchase accounting

25

bps

 

35

bps

 

61

bps

 

 

33

bps

 

48

bps

Accretion of discount on loans ($000's)

5,698

 

7,868

 

12,737

 

28,745

 

39,094

 

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

1,348

 

(380

)

7,592

 

5,556

 

9,288

 

Return on average assets

1.17

%

1.51

%

1.31

%

1.36

%

1.23

%

Fee income ratio

10.8

%

8.3

%

10.1

%

9.9

%

10.5

%

Efficiency ratio

54.9

%

50.5

%

56.8

%

55.0

%

61.9

%

Employees' compensation and benefits ($000's)

31,455

 

31,309

 

31,955

 

127,985

 

132,086

 

 
Broker-Dealer Segment:
Net revenue ($000's) (4)

113,128

 

121,466

 

89,750

 

455,719

 

352,592

 

Employees' compensation and benefits ($000's)

64,301

 

69,954

 

54,249

 

267,663

 

218,467

 

Variable compensation expense ($000's)

39,505

 

44,921

 

31,744

 

163,840

 

115,948

 

Compensation as a % of net revenue

56.8

%

57.6

%

60.4

%

58.7

%

62.0

%

Pre-tax margin (5)

21.4

%

22.2

%

12.1

%

19.7

%

9.2

%

 
Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases

2,958,176

 

3,380,812

 

2,586,677

 

11,718,772

 

11,798,804

 

Refinancings

1,442,329

 

1,390,989

 

384,990

 

3,860,665

 

1,893,680

 

Total mortgage loan originations - volume

4,400,505

 

4,771,801

 

2,971,667

 

15,579,437

 

13,692,484

 

Mortgage loan sales - volume ($000's)

4,226,425

 

4,316,118

 

3,008,793

 

14,591,727

 

13,735,885

 

Net gains from mortgage loan sales (basis points):
As reported

304

 

335

 

334

 

324

 

328

 

Impact of sales to banking segment

(8

)

(1

)

0

 

(3

)

0

 

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

55,504

 

51,297

 

66,102

 

55,504

 

66,102

 

Employees' compensation and benefits ($000's)

109,753

 

123,890

 

84,334

 

419,135

 

389,131

 

Variable compensation expense ($000's)

67,224

 

81,287

 

44,529

 

252,956

 

216,038

 

 
Insurance Segment:
Loss and LAE ratio

43.6

%

44.9

%

60.6

%

52.1

%

58.0

%

Expense ratio

40.5

%

38.3

%

37.9

%

39.7

%

39.0

%

Combined ratio

84.1

%

83.2

%

98.5

%

91.8

%

97.0

%

Employees' compensation and benefits ($000's)

2,929

 

2,748

 

2,670

 

11,663

 

11,474

 

_____________

(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, $0.1 million, $0.3 million, $0.6 million, and $0.9 million, respectively, for the periods presented and for the banking segment were $0.1 million, $0.1 million, $0.2 million, $0.6 million, and $0.8 million, respectively, 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 plus 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.

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

Capital Ratios

2019

 

2019

 

2019

 

2019

 

2018

Tier 1 capital (to average assets):
PlainsCapital

11.61

%

11.79

%

12.53

%

12.61

%

12.47

%

Hilltop

12.71

%

12.67

%

13.00

%

13.22

%

12.53

%

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

13.45

%

13.25

%

13.84

%

13.89

%

13.90

%

Hilltop

16.69

%

16.15

%

16.32

%

16.75

%

16.58

%

Tier 1 capital (to risk-weighted assets):
PlainsCapital

13.45

%

13.25

%

13.84

%

13.89

%

13.90

%

Hilltop

17.13

%

16.58

%

16.77

%

17.22

%

17.04

%

Total capital (to risk-weighted assets):
PlainsCapital

14.13

%

13.87

%

14.48

%

14.60

%

14.63

%

Hilltop

17.55

%

16.95

%

17.14

%

17.64

%

17.47

%

 
December 31,September 30,June 30,March 31,December 31,
Non-Performing Loans Portfolio Data

2019

 

2019

 

2019

 

2019

 

2018

 

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

7,308

 

8,727

 

5,276

 

5,332

 

5,324

 

Commercial and industrial

15,262

 

13,313

 

14,152

 

13,350

 

14,870

 

Construction and land development

1,316

 

1,358

 

1,413

 

1,473

 

3,278

 

1-4 family residential

12,204

 

12,103

 

11,136

 

10,662

 

10,437

 

Mortgage warehouse

-

 

-

 

-

 

-

 

-

 

Consumer

26

 

30

 

34

 

38

 

41

 

Broker-dealer

-

 

-

 

-

 

-

 

-

 

Covered

-

 

-

 

-

 

-

 

-

 

36,116

 

35,531

 

32,011

 

30,855

 

33,950

 

 
Non-performing loans as a % of total loans

0.38

%

0.38

%

0.36

%

0.38

%

0.41

%

 
Other real estate owned ($000's)

18,202

 

18,738

 

20,753

 

23,066

 

27,578

 

 
Other repossessed assets ($000's)

-

 

-

 

-

 

30

 

68

 

 
Non-performing assets ($000's)

54,318

 

54,269

 

52,764

 

53,951

 

61,596

 

 
Non-performing assets as a % of total assets

0.36

%

0.37

%

0.37

%

0.40

%

0.45

%

 
Non-PCI loans past due 90 days or more and still accruing ($000's)

102,707

 

81,678

 

77,425

 

77,045

 

83,131

 

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

2,173

 

2,222

 

2,256

 

1,313

 

1,339

 

Three Months Ended December 31,

2019

 

2018

Average

 

Interest

 

Annualized

 

Average

 

Interest

 

Annualized

Outstanding

 

Earned or

 

Yield or

 

Outstanding

 

Earned or

 

Yield or

Net Interest Margin (Taxable Equivalent) Details

Balance

 

Paid

 

Rate

 

Balance

 

Paid

 

Rate

Assets
Interest-earning assets
Loans held for sale

$

1,914,703

 

$

19,124

4.00

%

$

1,286,668

 

$

15,273

4.75

%

Loans held for investment, gross (1)

 

7,258,086

 

 

96,572

5.24

%

 

6,946,355

 

 

104,049

5.90

%

Investment securities - taxable

 

1,871,993

 

 

16,011

3.42

%

 

1,820,088

 

 

15,482

3.40

%

Investment securities - non-taxable (2)

 

244,378

 

 

1,763

2.89

%

 

229,533

 

 

1,861

3.24

%

Federal funds sold and securities purchased
under agreements to resell

 

68,278

 

 

228

1.32

%

 

136,492

 

 

535

1.55

%

Interest-bearing deposits in other
financial institutions

 

325,984

 

 

1,408

1.71

%

 

410,942

 

 

2,400

2.32

%

Securities borrowed

 

1,589,465

 

 

16,196

3.99

%

 

1,537,619

 

 

16,782

4.27

%

Other

 

87,188

 

 

1,654

7.55

%

 

68,646

 

 

1,514

8.77

%

Interest-earning assets, gross (2)

 

13,360,075

 

 

152,956

4.52

%

 

12,436,343

 

 

157,896

5.01

%

Allowance for loan losses

 

(56,124

)

 

(59,912

)

Interest-earning assets, net

 

13,303,951

 

 

12,376,431

 

Noninterest-earning assets

 

1,367,971

 

 

1,338,890

 

Total assets

$

14,671,922

 

$

13,715,321

 

 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits

$

6,100,621

 

$

17,480

1.14

%

$

5,800,152

 

$

14,838

1.01

%

Securities loaned

 

1,487,288

 

 

13,989

3.73

%

 

1,419,680

 

 

13,935

3.89

%

Notes payable and other borrowings

 

1,526,567

 

 

10,021

2.59

%

 

1,401,984

 

 

11,214

3.17

%

Total interest-bearing liabilities

 

9,114,476

 

 

41,490

1.80

%

 

8,621,816

 

 

39,987

1.84

%

Noninterest-bearing liabilities
Noninterest-bearing deposits

 

2,789,662

 

 

2,565,607

 

Other liabilities

 

670,701

 

 

565,897

 

Total liabilities

 

12,574,839

 

 

11,753,320

 

Stockholders' equity

 

2,072,865

 

 

1,939,010

 

Noncontrolling interest

 

24,218

 

 

22,991

 

Total liabilities and stockholders' equity

$

14,671,922

 

$

13,715,321

 

 
Net interest income (2)

$

111,466

$

117,909

Net interest spread (2)

2.72

%

3.17

%

Net interest margin (2)

3.31

%

3.76

%

Year Ended December 31,

2019

 

2018

Average

 

Interest

 

Annualized

 

Average

 

Interest

 

Annualized

Outstanding

 

Earned or

 

Yield or

 

Outstanding

 

Earned or

 

Yield or

Net Interest Margin (Taxable Equivalent) Details

Balance

 

Paid

 

Rate

 

Balance

 

Paid

 

Rate

Assets
Interest-earning assets
Loans held for sale

$

1,501,154

 

$

64,830

4.32

%

$

1,472,772

 

$

68,536

4.65

%

Loans held for investment, gross (1)

 

7,088,208

 

 

395,641

5.58

%

 

6,601,453

 

 

368,189

5.58

%

Investment securities - taxable

 

1,803,622

 

 

61,983

3.44

%

 

1,680,976

 

 

50,860

3.03

%

Investment securities - non-taxable (2)

 

233,713

 

 

6,803

2.91

%

 

247,651

 

 

7,752

3.13

%

Federal funds sold and securities purchased
under agreements to resell

 

63,598

 

 

1,236

1.94

%

 

189,183

 

 

2,831

1.50

%

Interest-bearing deposits in other
financial institutions

 

371,312

 

 

8,469

2.28

%

 

459,628

 

 

8,683

1.89

%

Securities borrowed

 

1,550,322

 

 

69,582

4.49

%

 

1,542,539

 

 

66,914

4.34

%

Other

 

75,298

 

 

6,869

9.12

%

 

74,684

 

 

6,535

8.75

%

Interest-earning assets, gross (2)

 

12,687,227

 

 

615,413

4.85

%

 

12,268,886

 

 

580,300

4.73

%

Allowance for loan losses

 

(57,690

)

 

(62,681

)

Interest-earning assets, net

 

12,629,537

 

 

12,206,205

 

Noninterest-earning assets

 

1,397,647

 

 

1,288,718

 

Total assets

$

14,027,184

 

$

13,494,923

 

 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits

$

5,916,491

 

$

71,509

1.21

%

$

5,568,473

 

$

46,002

0.83

%

Securities loaned

 

1,423,847

 

 

60,086

4.22

%

 

1,395,947

 

 

56,733

4.06

%

Notes payable and other borrowings

 

1,398,559

 

 

41,928

3.00

%

 

1,477,966

 

 

40,369

2.73

%

Total interest-bearing liabilities

 

8,738,897

 

 

173,523

1.99

%

 

8,442,386

 

 

143,104

1.70

%

Noninterest-bearing liabilities
Noninterest-bearing deposits

 

2,635,924

 

 

2,504,599

 

Other liabilities

 

614,392

 

 

617,227

 

Total liabilities

 

11,989,213

 

 

11,564,212

 

Stockholders' equity

 

2,014,535

 

 

1,919,940

 

Noncontrolling interest

 

23,436

 

 

10,771

 

Total liabilities and stockholders' equity

$

14,027,184

 

$

13,494,923

 

 
Net interest income (2)

$

441,890

$

437,196

Net interest spread (2)

2.86

%

3.03

%

Net interest margin (2)

3.48

%

3.56

%

_____________

(1)

Average balance includes non-accrual loans.

(2)

Presented on a taxable equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rates for the periods presented. The adjustment to interest income was $0.1 million and $0.3 million for the three months ended December 31, 2019 and 2018, respectively, and $0.6 million and $0.9 million for the year ended December 31, 2019 and 2018, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, January 31, 2020. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review fourth quarter and full year 2019 financial results. Interested parties can access the conference call by dialing 1-877-508-9457 (domestic) or 1-412-317-0789 (international). 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 Hilltop Securities Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. Through Hilltop Holdings’ other wholly owned subsidiary, National Lloyds Corporation, it provides property and casualty insurance through two insurance companies, National Lloyds Insurance Company and American Summit Insurance Company. At December 31, 2019, Hilltop employed approximately 4,950 people and operated approximately 440 locations in 44 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, Nationallloydsinsurance.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 the estimate of allowance for credit losses pursuant to CECL when adopted and 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,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “probable,” “projects,” “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 loan losses and increases to the allowance for loan losses as a result of the implementation of CECL; (ii) the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (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) risks associated with concentration in real estate related loans; (v) severe catastrophic events in Texas and other areas of the southern United States; and (vi) the remediation of the material weakness may not be effected in a timely manner. 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.

Investor Relations Contact:
Erik Yohe
214-525-4634
eyohe@hilltop-holdings.com

Source: Hilltop Holdings Inc.