Hilltop Holdings Inc. Announces Financial Results for First Quarter 2020

Company Release - 4/30/2020 5:15 PM ET

DALLAS--(BUSINESS WIRE)-- Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the first quarter of 2020. Hilltop produced income from continuing operations to common stockholders of $46.5 million, or $0.51 per diluted share, for the first quarter of 2020, compared to $33.4 million, or $0.36 per diluted share, for the first quarter of 2019. After income from discontinued operations related to the insurance segment, income applicable to common stockholders was $49.6 million, or $0.55 per diluted share, for the first quarter of 2020, compared to $38.8 million, or $0.41 per diluted share, for the first quarter of 2019. Hilltop’s financial results from continuing operations for the first quarter of 2020 include a significant build in the allowance for credit losses associated with the impact of economic forecast modeling implications attributable to the market disruption and economic uncertainties caused by COVID-19, while the first quarter of 2019 results included the costs associated with the significant leadership changes and other efficiency initiative-related charges which, in the aggregate, totaled $8.7 million before income taxes.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per common share, payable on May 29, 2020, to all common stockholders of record as of the close of business on May 15, 2020. Additionally, under the stock repurchase program approved by the Hilltop Board of Directors in January 2020, Hilltop paid $15.0 million to repurchase 700,901 shares at a weighted average price of $21.32 during the first quarter of 2020. These shares were returned to the pool of authorized but unissued shares of common stock.

In light of the uncertain outlook for 2020 due to the COVID-19 pandemic, and Hilltop’s commitment to maintain strong capital and liquidity to meet the needs of its customers and communities during this exceptional period of economic uncertainty, Hilltop’s Board of Directors has suspended its stock repurchase program. Hilltop’s Board of Directors has the ability to reinstate the share repurchase program at its discretion as circumstances warrant.

The COVID-19 pandemic has negatively impacted financial markets and overall economic conditions, and is expected to continue to have implications on our business and operations. The extent of the impact of COVID-19 on our operational and financial performance for the remainder of 2020 is dependent on certain developments, including, among others, the broader adverse implications of COVID-19 on our customers and clients, potential further disruption and deterioration in the financial services industry, including the mortgage servicing and commercial paper markets, and additional, or extended, federal, state and local government orders and regulations that might be imposed in response to the pandemic, all of which are uncertain.

Jeremy Ford, President and CEO of Hilltop, said, “In this unprecedented time, I am most proud of our teammates across our franchise as they have shown compassion, focus and certainly resilience during very stressful and challenging circumstances. We are focused first and foremost on the safety and well-being of our team and our clients. While most of our associates continue to work remotely, they remain committed to serving our clients. The mortgage origination team locked over $3.7 billion in new mortgages during March, a record month for our company, while our bank team will have processed and funded over 3,100 PPP loans during the month of April. Further, in our securities business we experienced near record ticket volumes in February and March as clients worked to reposition their portfolios given the volatility created from COVID-19. National Lloyds produced very strong underwriting results, with first quarter underwriting income up approximately 60% relative to the first quarter last year. Additionally, the sale of National Lloyds to Align Financial continues to progress, and we believe that it remains on track for a second quarter 2020 closing.

Hilltop generated $100 million of pre-provision net revenue, or PPNR, from continuing operations for the quarter, demonstrating the strength of our business model in a very challenging environment. The mortgage origination business generated $40 million of pre-tax income for the quarter, as mortgage origination volumes surged and market rates declined. In the securities business, we successfully traded through periods of significant market volatility and illiquidity to produce $18 million of pre-tax income in the quarter, which highlights our strong risk management and our enhanced focus on hedging and inventory management. During the quarter, PlainsCapital Bank generated $46 million of PPNR which was largely offset by the impact of higher provision expense resulting both from credit migrations and the current economic outlook reflecting the impact of COVID-19.”

First Quarter 2020 Highlights for Hilltop:

  • In January 2020, Hilltop adopted the current expected credit loss (CECL) model which, among other things:
    • Increased credit reserves by $17.3 million, with net reduction to retained earnings by $5.7 million when adopted on January 1, 2020; and
    • Reflects expected credit losses over the expected life of the assessed portfolios and takes into account forecasts of expected future macroeconomic conditions.
  • The provision for credit losses was $34.5 million during the first quarter of 2020, compared to $6.9 million in the fourth quarter of 2019;
    • This significant increase in the provision for credit losses during the first quarter 2020 was primarily associated with the increase in the expected lifetime credit losses under CECL on both individually and collectively evaluated loans within the portfolio attributable to the market disruption and related economic uncertainties caused by COVID-19.
  • Hilltop’s consolidated annualized return on average assets and return on average equity for the first quarter of 2020 were 1.47% and 9.38%, respectively, compared to 1.21% and 8.04%, respectively, for the first quarter of 2019;
  • Hilltop’s book value per common share increased to $23.71 at March 31, 2020, compared to $23.20 at December 31, 2019;
  • Hilltop’s total assets were $15.7 billion at March 31, 2020, compared to $15.2 billion at December 31, 2019;
    • Included $249.8 million at March 31, 2020 and $248.4 million at December 31, 2019 of assets classified as held for sale associated with the insurance segment.
  • Loans1, net of allowance for credit losses, remained stable at $6.7 billion compared to December 31, 2019;
  • Non-performing loans were $87.4 million, or 0.89% of total loans at March 31, 2020, compared to $36.1 million, or 0.38% of total loans, at December 31, 2019;
  • Loans held for sale increased by 15.5% from December 31, 2019 to $2.4 billion at March 31, 2020;
  • Total deposits were $9.9 billion at March 31, 2020, compared to $9.0 billion at December 31, 2019;
  • Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio2 of 13.03% and a Common Equity Tier 1 Capital Ratio of 15.96% at March 31, 2020;
    • Ratios reflect Hilltop’s decision to elect the transition option as recently 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.
  • Hilltop’s consolidated net interest margin3 increased to 3.41% for the first quarter of 2020, compared to 3.30% in the fourth quarter of 2019;
  • For the first quarter of 2020, noninterest income from continuing operations was $271.7 million, compared to $216.0 million in the first quarter of 2019, a 25.8% increase;
  • For the first quarter of 2020, noninterest expense from continuing operations was $281.9 million, compared to $278.7 million in the first quarter of 2019, a 1.1% increase; and
  • Hilltop’s effective tax rate from continuing operations was 23.1% during the first quarter of 2020, compared to 22.8% during the same period in 2019.

Discontinued Operations

In January 2020, Hilltop announced the pending sale of its insurance segment, National Lloyds Corporation, for a cash purchase price of $150.0 million, subject to post closing adjustment. The transaction is subject to customary closing conditions, including required regulatory approvals, and is expected to close during the second quarter of 2020. Insurance segment results have been presented as discontinued operations and its assets and liabilities have been classified as held for sale for all periods presented. Income from discontinued operations, net of income taxes, was $3.2 million, or $0.04 per diluted share, for the first quarter of 2020, compared to $5.4 million, or $0.05 per diluted share, for the first quarter of 2019.

____________________

Note: “Consolidated” refers to our consolidated financial position and consolidated results of operations, including discontinued operations and assets and liabilities classified as held for sale.

1 “Loans” reflect loans held for investment excluding broker-dealer loans, net of allowance for credit losses, of $505.9 million and $576.5 million at March 31, 2020 and December 31, 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

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(in 000's)

 

2020

 

2019

 

2019

 

2019

 

2019

Cash and due from banks

 

$

524,370

 

 

$

433,626

 

 

$

281,445

 

 

$

303,424

 

 

$

273,589

 

Federal funds sold

 

 

401

 

 

 

394

 

 

 

423

 

 

 

521

 

 

 

438

 

Assets segregated for regulatory purposes

 

 

178,805

 

 

 

157,436

 

 

 

83,878

 

 

 

151,271

 

 

 

156,851

 

Securities purchased under agreements to resell

 

 

23,356

 

 

 

59,031

 

 

 

49,998

 

 

 

50,660

 

 

 

65,205

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

393,581

 

 

 

689,576

 

 

 

707,268

 

 

 

601,524

 

 

 

703,295

 

Available for sale, at fair value, net

 

 

972,318

 

 

 

911,493

 

 

 

915,334

 

 

 

916,519

 

 

 

924,699

 

Held to maturity, at amortized cost, net

 

 

355,110

 

 

 

386,326

 

 

 

371,361

 

 

 

365,905

 

 

 

369,865

 

Equity, at fair value

 

 

107

 

 

 

166

 

 

 

164

 

 

 

150

 

 

 

158

 

 

 

 

1,721,116

 

 

 

1,987,561

 

 

 

1,994,127

 

 

 

1,884,098

 

 

 

1,998,017

 

Loans held for sale

 

 

2,433,407

 

 

 

2,106,361

 

 

 

1,984,231

 

 

 

1,609,477

 

 

 

1,059,280

 

Loans held for investment, net of unearned income

 

 

7,345,250

 

 

 

7,381,400

 

 

 

7,321,208

 

 

 

7,202,604

 

 

 

7,011,679

 

Allowance for credit losses

 

 

(106,739

)

 

 

(61,136

)

 

 

(55,604

)

 

 

(55,177

)

 

 

(58,809

)

Loans held for investment, net

 

 

7,238,511

 

 

 

7,320,264

 

 

 

7,265,604

 

 

 

7,147,427

 

 

 

6,952,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer and clearing organization receivables

 

 

1,838,789

 

 

 

1,780,280

 

 

 

1,731,979

 

 

 

1,707,249

 

 

 

1,651,199

 

Premises and equipment, net

 

 

215,261

 

 

 

210,375

 

 

 

203,601

 

 

 

198,266

 

 

 

199,066

 

Operating lease right-of-use assets

 

 

113,395

 

 

 

114,320

 

 

 

119,035

 

 

 

120,965

 

 

 

105,877

 

Other assets

 

 

876,615

 

 

 

460,258

 

 

 

578,422

 

 

 

547,768

 

 

 

540,353

 

Goodwill

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

Other intangible assets, net

 

 

25,019

 

 

 

26,666

 

 

 

28,432

 

 

 

30,308

 

 

 

32,271

 

Assets held for sale

 

 

249,758

 

 

 

248,429

 

 

 

248,407

 

 

 

246,989

 

 

 

246,907

 

Total assets

 

$

15,706,250

 

 

$

15,172,448

 

 

$

14,837,029

 

 

$

14,265,870

 

 

$

13,549,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

2,865,192

 

 

$

2,769,556

 

 

$

2,732,325

 

 

$

2,598,253

 

 

$

2,490,144

 

Interest-bearing

 

 

7,082,297

 

 

 

6,262,658

 

 

 

5,998,547

 

 

 

5,864,826

 

 

 

5,807,975

 

Total deposits

 

 

9,947,489

 

 

 

9,032,214

 

 

 

8,730,872

 

 

 

8,463,079

 

 

 

8,298,119

 

Broker-dealer and clearing organization payables

 

 

1,259,181

 

 

 

1,605,518

 

 

 

1,546,163

 

 

 

1,531,891

 

 

 

1,490,227

 

Short-term borrowings

 

 

1,329,948

 

 

 

1,424,010

 

 

 

1,502,755

 

 

 

1,338,893

 

 

 

914,525

 

Securities sold, not yet purchased, at fair value

 

 

22,768

 

 

 

43,817

 

 

 

59,249

 

 

 

45,447

 

 

 

69,354

 

Notes payable

 

 

244,042

 

 

 

256,269

 

 

 

217,841

 

 

 

204,423

 

 

 

197,872

 

Operating lease liabilities

 

 

124,123

 

 

 

125,619

 

 

 

128,295

 

 

 

129,858

 

 

 

115,508

 

Junior subordinated debentures

 

 

67,012

 

 

 

67,012

 

 

 

67,012

 

 

 

67,012

 

 

 

67,012

 

Other liabilities

 

 

408,224

 

 

 

348,519

 

 

 

355,629

 

 

 

284,136

 

 

 

236,551

 

Liabilities held for sale

 

 

139,730

 

 

 

140,674

 

 

 

145,786

 

 

 

149,326

 

 

 

145,071

 

Total liabilities

 

 

13,542,517

 

 

 

13,043,652

 

 

 

12,753,602

 

 

 

12,214,065

 

 

 

11,534,239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

901

 

 

 

906

 

 

 

906

 

 

 

928

 

 

 

938

 

Additional paid-in capital

 

 

1,437,301

 

 

 

1,445,233

 

 

 

1,441,604

 

 

 

1,473,599

 

 

 

1,491,585

 

Accumulated other comprehensive income (loss)

 

 

20,939

 

 

 

11,419

 

 

 

12,305

 

 

 

7,862

 

 

 

(1,062

)

Retained earnings

 

 

676,946

 

 

 

644,860

 

 

 

602,835

 

 

 

544,275

 

 

 

499,452

 

Deferred compensation employee stock trust, net

 

 

774

 

 

 

776

 

 

 

789

 

 

 

788

 

 

 

827

 

Employee stock trust

 

 

(150

)

 

 

(155

)

 

 

(170

)

 

 

(171

)

 

 

(213

)

Total Hilltop stockholders' equity

 

 

2,136,711

 

 

 

2,103,039

 

 

 

2,058,269

 

 

 

2,027,281

 

 

 

1,991,527

 

Noncontrolling interests

 

 

27,022

 

 

 

25,757

 

 

 

25,158

 

 

 

24,524

 

 

 

23,604

 

Total stockholders' equity

 

 

2,163,733

 

 

 

2,128,796

 

 

 

2,083,427

 

 

 

2,051,805

 

 

 

2,015,131

 

Total liabilities & stockholders' equity

 

$

15,706,250

 

 

$

15,172,448

 

 

$

14,837,029

 

 

$

14,265,870

 

 

$

13,549,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Consolidated Income Statements

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(in 000's, except per share data)

2020

2019

2019

2019

2019 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

111,168

 

$

115,696

 

$

119,580

 

$

114,325

 

 

$

110,870

Securities borrowed

 

 

13,327

 

 

16,196

 

 

21,010

 

 

15,517

 

 

 

16,859

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

15,695

 

 

15,174

 

 

14,885

 

 

13,778

 

 

 

14,656

Tax-exempt

 

 

1,610

 

 

1,572

 

 

1,576

 

 

1,513

 

 

 

1,498

Other

 

 

3,075

 

 

3,180

 

 

3,889

 

 

3,867

 

 

 

5,055

Total interest income

 

 

144,875

 

 

151,818

 

 

160,940

 

 

149,000

 

 

 

148,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

15,124

 

 

17,480

 

 

18,887

 

 

18,036

 

 

 

17,106

Securities loaned

 

 

11,277

 

 

13,989

 

 

17,889

 

 

13,470

 

 

 

14,738

Short-term borrowings

 

 

4,744

 

 

6,244

 

 

8,166

 

 

6,897

 

 

 

5,471

Notes payable

 

 

2,418

 

 

2,337

 

 

2,265

 

 

2,165

 

 

 

2,181

Junior subordinated debentures

 

 

850

 

 

909

 

 

955

 

 

986

 

 

 

1,001

Other

 

 

126

 

 

99

 

 

132

 

 

162

 

 

 

152

Total interest expense

 

 

34,539

 

 

41,058

 

 

48,294

 

 

41,716

 

 

 

40,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

110,336

 

 

110,760

 

 

112,646

 

 

107,284

 

 

 

108,289

Provision for (reversal of) credit losses

 

 

34,549

 

 

6,880

 

 

47

 

 

(672

)

 

 

951

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

 

 

75,787

 

 

103,880

 

 

112,599

 

 

107,956

 

 

 

107,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains from sale of loans and other mortgage production income

 

 

150,486

 

 

120,573

 

 

157,050

 

 

131,173

 

 

 

96,139

Mortgage loan origination fees

 

 

28,554

 

 

36,939

 

 

37,782

 

 

33,409

 

 

 

21,873

Securities commissions and fees

 

 

40,069

 

 

33,205

 

 

34,426

 

 

34,142

 

 

 

35,969

Investment and securities advisory fees and commissions

 

 

23,180

 

 

32,083

 

 

28,685

 

 

22,859

 

 

 

20,160

Other

 

 

29,424

 

 

40,846

 

 

48,562

 

 

55,120

 

 

 

41,822

Total noninterest income

 

 

271,713

 

 

263,646

 

 

306,505

 

 

276,703

 

 

 

215,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

 

 

196,356

 

 

212,498

 

 

232,449

 

 

212,959

 

 

 

186,696

Occupancy and equipment, net

 

 

19,522

 

 

30,617

 

 

27,002

 

 

27,938

 

 

 

27,779

Professional services

 

 

14,798

 

 

17,211

 

 

15,472

 

 

13,773

 

 

 

14,109

Other

 

 

51,225

 

 

47,542

 

 

46,263

 

 

49,418

 

 

 

50,163

Total noninterest expense

 

 

281,901

 

 

307,868

 

 

321,186

 

 

304,088

 

 

 

278,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

65,599

 

 

59,658

 

 

97,918

 

 

80,571

 

 

 

44,554

Income tax expense

 

 

15,148

 

 

13,579

 

 

21,472

 

 

18,526

 

 

 

10,137

Income from continuing operations

 

 

50,451

 

 

46,079

 

 

76,446

 

 

62,045

 

 

 

34,417

Income (loss) from discontinued operations, net of income taxes

 

 

3,151

 

 

5,623

 

 

5,261

 

 

(2,254

)

 

 

5,360

Net income

 

 

53,602

 

 

51,702

 

 

81,707

 

 

59,791

 

 

 

39,777

Less: Net income attributable to noncontrolling interest

 

 

3,966

 

 

2,426

 

 

2,289

 

 

1,980

 

 

 

991

Income attributable to Hilltop

 

$

49,636

 

$

49,276

 

$

79,418

 

$

57,811

 

 

$

38,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

0.51

 

$

0.48

 

$

0.81

 

$

0.64

 

 

$

0.36

Earnings (losses) from discontinued operations

 

 

0.04

 

 

0.06

 

 

0.06

 

 

(0.02

)

 

 

0.05

 

 

$

0.55

 

$

0.54

 

$

0.87

 

$

0.62

 

 

$

0.41

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

0.51

 

$

0.48

 

$

0.81

 

$

0.64

 

 

$

0.36

Earnings (losses) from discontinued operations

 

 

0.04

 

 

0.06

 

 

0.05

 

 

(0.02

)

 

 

0.05

 

 

$

0.55

 

$

0.54

 

$

0.86

 

$

0.62

 

 

$

0.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.09

 

$

0.08

 

$

0.08

 

$

0.08

 

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

90,509

 

 

90,606

 

 

91,745

 

 

93,399

 

 

 

93,669

Diluted

 

 

90,550

 

 

90,711

 

 

91,824

 

 

93,418

 

 

 

93,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2020

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Insurance

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

93,923

 

$

13,173

 

$

368

 

$

 

$

(1,656

)

 

$

4,528

 

 

$

110,336

Provision for credit losses

 

 

34,275

 

 

274

 

 

 

 

 

 

 

 

 

 

 

34,549

Noninterest income

 

 

8,771

 

 

86,209

 

 

178,968

 

 

 

 

2,309

 

 

 

(4,544

)

 

 

271,713

Noninterest expense

 

 

56,967

 

 

80,939

 

 

139,552

 

 

 

 

4,853

 

 

 

(410

)

 

 

281,901

Income (loss) before taxes from continuing operations

 

 

11,452

 

 

18,169

 

 

39,784

 

 

 

 

(4,200

)

 

 

394

 

 

 

65,599

Income before taxes from discontinued operations

 

 

 

 

 

 

 

 

4,014

 

 

 

 

 

 

 

4,014

 

 

$

11,452

 

$

18,169

 

$

39,784

 

$

4,014

 

$

(4,200

)

 

$

394

 

 

$

69,613

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Selected Financial Data

 

2020

 

2019

 

2019

 

2019

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hilltop Consolidated (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders' equity

 

 

9.38%

 

 

9.43%

 

 

15.55%

 

 

11.63%

 

 

8.04%

Return on average assets

 

 

1.47%

 

 

1.40%

 

 

2.26%

 

 

1.74%

 

 

1.21%

Net interest margin (2)

 

 

3.41%

 

 

3.30%

 

 

3.45%

 

 

3.49%

 

 

3.69%

Net interest margin (taxable equivalent) (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

3.42%

 

 

3.31%

 

 

3.46%

 

 

3.49%

 

 

3.70%

Impact of purchase accounting

 

 

22 bps

 

 

19 bps

 

 

26 bps

 

 

23 bps

 

 

32 bps

Book value per common share ($)

 

 

23.71

 

 

23.20

 

 

22.71

 

 

21.85

 

 

21.23

Shares outstanding, end of period (000's)

 

 

90,108

 

 

90,641

 

 

90,629

 

 

92,775

 

 

93,821

Dividend payout ratio (4)

 

 

16.41%

 

 

14.71%

 

 

9.24%

 

 

12.92%

 

 

19.32%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (2)

 

 

3.81%

 

 

3.77%

 

 

3.97%

 

 

4.06%

 

 

4.24%

Net interest margin (taxable equivalent) (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

3.82%

 

 

3.78%

 

 

3.98%

 

 

4.06%

 

 

4.25%

Impact of purchase accounting

 

 

30 bps

 

 

25 bps

 

 

35 bps

 

 

31 bps

 

 

44 bps

Accretion of discount on loans ($000's)

 

 

6,639

 

 

5,698

 

 

7,868

 

 

6,444

 

 

8,735

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

 

 

1,508

 

 

1,348

 

 

(380

)

 

2,960

 

 

1,628

Return on average assets

 

 

0.33%

 

 

1.17%

 

 

1.51%

 

 

1.43%

 

 

1.34%

Fee income ratio

 

 

8.5%

 

 

10.8%

 

 

8.3%

 

 

10.3%

 

 

10.3%

Efficiency ratio

 

 

55.5%

 

 

54.9%

 

 

50.5%

 

 

55.9%

 

 

58.8%

Employees' compensation and benefits ($000's)

 

 

32,347

 

 

31,455

 

 

31,309

 

 

33,050

 

 

32,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-Dealer Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue ($000's) (5)

 

 

99,382

 

 

113,128

 

 

121,466

 

 

116,969

 

 

104,157

Employees' compensation and benefits ($000's)

 

 

56,550

 

 

64,301

 

 

69,954

 

 

70,333

 

 

63,075

Variable compensation expense ($000's)

 

 

32,024

 

 

39,505

 

 

44,921

 

 

44,833

 

 

34,581

Compensation as a % of net revenue

 

 

56.9%

 

 

56.8%

 

 

57.6%

 

 

60.1%

 

 

60.6%

Pre-tax margin (6)

 

 

18.3%

 

 

21.4%

 

 

22.2%

 

 

18.9%

 

 

15.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home purchases

 

 

2,341,847

 

 

2,958,176

 

 

3,380,812

 

 

3,329,024

 

 

2,050,760

Refinancings

 

 

1,280,741

 

 

1,442,329

 

 

1,390,989

 

 

631,065

 

 

396,282

Total mortgage loan originations - volume

 

 

3,622,588

 

 

4,400,505

 

 

4,771,801

 

 

3,960,089

 

 

2,447,042

Mortgage loan sales - volume ($000's)

 

 

3,486,249

 

 

4,226,425

 

 

4,316,118

 

 

3,338,070

 

 

2,711,114

Net gains from mortgage loan sales (basis points):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

325

 

 

304

 

 

335

 

 

333

 

 

330

Impact of sales to banking segment

 

 

(13

)

 

(8

)

 

(1

)

 

0

 

 

0

Mortgage servicing rights asset ($000's) (7)

 

 

30,298

 

 

55,504

 

 

51,297

 

 

53,695

 

 

62,049

Employees' compensation and benefits ($000's)

 

 

100,328

 

 

109,753

 

 

123,890

 

 

106,449

 

 

79,043

Variable compensation expense ($000's)

 

 

58,280

 

 

67,224

 

 

81,287

 

 

65,516

 

 

38,929

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and LAE ratio

 

 

39.7%

 

 

43.6%

 

 

44.9%

 

 

74.6%

 

 

45.0%

Expense ratio

 

 

38.0%

 

 

40.5%

 

 

38.3%

 

 

38.4%

 

 

41.5%

Combined ratio

 

 

77.7%

 

 

84.1%

 

 

83.2%

 

 

113.0%

 

 

86.5%

Employees' compensation and benefits ($000's)

 

 

2,777

 

 

2,929

 

 

2,748

 

 

2,784

 

 

3,202

___________________
(1)

Ratios and financial data presented on a consolidated basis and includes discontinued operations and those assets and liabilities classified as held for sale.

(2)

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

(3)

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 $0.3 million, $0.1 million, $0.1 million, $0.2 million, and $0.2 million, respectively, for the periods presented and for the banking segment were $0.2 million, $0.1 million, $0.1 million, $0.2 million, and $0.2 million, respectively, for the periods presented.

(4)

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

(5)

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

(6)

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

(7)

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

 

2020

 

2019

 

2019

 

2019

 

2019

Tier 1 capital (to average assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

12.06%

 

 

11.61%

 

 

11.79%

 

 

12.53%

 

 

12.61%

Hilltop

 

 

13.03%

 

 

12.71%

 

 

12.67%

 

 

13.00%

 

 

13.22%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

13.33%

 

 

13.45%

 

 

13.25%

 

 

13.84%

 

 

13.89%

Hilltop

 

 

15.96%

 

 

16.70%

 

 

16.15%

 

 

16.32%

 

 

16.75%

Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

13.33%

 

 

13.45%

 

 

13.25%

 

 

13.84%

 

 

13.89%

Hilltop

 

 

16.38%

 

 

17.13%

 

 

16.58%

 

 

16.77%

 

 

17.22%

Total capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

14.26%

 

 

14.13%

 

 

13.87%

 

 

14.48%

 

 

14.60%

Hilltop

 

 

17.00%

 

 

17.55%