Press Release

Hilltop Holdings Inc. Announces Financial Results for First Quarter 2021

Company Release - 4/22/2021 5:15 PM ET

DALLAS--(BUSINESS WIRE)-- Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the first quarter 2021. Hilltop produced income from continuing operations to common stockholders of $120.3 million, or $1.46 per diluted share, for the first quarter of 2021, compared to $46.5 million, or $0.51 per diluted share, for the first quarter of 2020. Hilltop’s financial results from continuing operations for the first quarter of 2021 reflected a significant increase in mortgage origination segment net gains from sale of loans and other mortgage production income, while the first quarter of 2020 results included a build in the allowance for credit losses associated with the impact of macroeconomic forecast assumptions attributable to the market disruption and economic uncertainties caused by COVID-19.

Including income from discontinued operations related to the former insurance business, income applicable to common stockholders was $120.3 million, or $1.46 per diluted share, for the first quarter of 2021, compared to $49.6 million, or $0.55 per diluted share, for the first quarter of 2020.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per common share, payable on May 28, 2021, to all common stockholders of record as of the close of business on May 14, 2021. Additionally, during the first quarter of 2021, Hilltop paid $5.0 million to repurchase an aggregate of 149,878 shares of its common stock at an average price of $33.01 per share pursuant to the 2021 stock repurchase program. These shares were returned to the pool of authorized but unissued shares of common stock.

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 2021 is dependent on certain developments, including, among others, the ongoing distribution and effectiveness of vaccines, government stimulus, the ultimate impact 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 B. Ford, President and CEO of Hilltop, said, “Hilltop’s results in the first quarter reflect the focus of our teammates across Hilltop on serving our clients and executing on our strategic initiatives. The mortgage origination segment had another exceptional quarter, generating $6.2 billion of production volume, a year-over-year increase of 71%, and $93 million of pre-tax income. The banking segment generated $65 million of pre-tax income, including a $5 million reduction in credit reserves, and delivered an efficiency ratio below 50%. The banking team also continued to support its clients through the origination of approximately $200 million of additional PPP loans, bringing the total PPP originations since the inception of the program to approximately $900 million. Additionally, the broker-dealer segment generated $18 million of pre-tax income, as its structured finance and public finance services businesses produced revenue growth versus the prior year in a very volatile interest rate market.

“Overall, we are very pleased with the strong start to 2021, as our diversified, yet integrated, business model continues to generate solid results for our shareholders. At Hilltop, we are focused on value creation over the long-term and will continue to make investments in people and technology for prudent future growth.”

First Quarter 2021 Highlights for Hilltop:

  • For the first quarter of 2021, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $310.2 million, compared to $179.0 million in the first quarter of 2020, a 73.3% increase;
    • Mortgage loan origination production volume was $6.2 billion during the first quarter of 2021, compared to $3.6 billion in the first quarter of 2020.
  • The reversal of credit losses was $5.1 million during the first quarter of 2021, compared to a reversal of credit losses of $3.5 million in the fourth quarter of 2020;
    • The reversal of credit losses during the first quarter of 2021 primarily reflected improvements in loan portfolio macroeconomic forecast assumptions from the prior quarter, partially offset by slower prepayment assumptions on certain portfolios, changes in risk rating grades and updated realizable values.
  • Hilltop’s consolidated annualized return on average assets and return on average equity for the first quarter of 2021 were 2.90% and 20.58%, respectively, compared to 1.47% and 9.38%, respectively, for the first quarter of 2020;
  • Hilltop’s book value per common share increased to $29.41 at March 31, 2021, compared to $28.28 at December 31, 2020;
  • Hilltop’s total assets were $17.7 billion at March 31, 2021, compared to $16.9 billion at December 31, 2020;
  • Loans1, net of allowance for credit losses, were $7.1 billion at both March 31, 2021 and December 31, 2020;
    • Includes supporting our impacted banking clients through funding of over 3,950 loans through both rounds of the Paycheck Protection Program, or PPP, with a remaining balance of approximately $492 million as of March 31, 2021, compared to approximately $487 million as of December 31, 2020;
    • Through April 16, 2021, the SBA had approved approximately 2,270 initial round PPP forgiveness applications from the Bank totaling approximately $420 million, with PPP loans of approximately $185 million pending SBA review and approval.
  • Non-performing loans were $79.9 million, or 0.77% of total loans, at March 31, 2021, compared to $79.9 million, or 0.76% of total loans, at December 31, 2020;
  • We further supported our impacted banking clients through the approval of COVID-19 related loan modifications of approximately $1.0 billion, resulting in a portfolio of active deferrals that have not reached the end of their deferral period of approximately $130 million as of March 31, 2021, compared to approximately $240 million in active deferment as of December 31, 2020;
    • While the majority of the portfolio of COVID-19 related loan modifications no longer require deferral, such loans may continue to represent elevated risk, and therefore management continues to monitor these loans;
    • The extent of these loans progressing into non-performing loans during future periods is uncertain.
  • Loans held for sale decreased by 8.9% from December 31, 2020 to $2.5 billion at March 31, 2021;
  • Total deposits were $11.7 billion at March 31, 2021, compared to $11.2 billion at December 31, 2020;
  • Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 13.01% and a Common Equity Tier 1 Capital Ratio of 19.63% at March 31, 2021;
  • Hilltop’s consolidated net interest margin4 decreased to 2.69% for the first quarter of 2021, compared to 2.71% in the fourth quarter of 2020;
  • For the first quarter of 2021, noninterest income from continuing operations was $417.6 million, compared to $271.7 million in the first quarter of 2020, a 53.7% increase;
  • For the first quarter of 2021, noninterest expense from continuing operations was $366.7 million, compared to $281.9 million in the first quarter of 2020, a 30.1% increase; and
  • Hilltop’s effective tax rate from continuing operations was 23.4% during the first quarter of 2021, compared to 23.1% during the same period in 2020.

Discontinued Operations

On June 30, 2020, Hilltop completed the sale of National Lloyds Corporation, or NLC, which comprised the operations of its former insurance segment, for cash proceeds of $154.1 million. During 2020, Hilltop recognized an aggregate gain associated with this transaction of $36.8 million, net of transaction costs. Accordingly, insurance segment results and its assets and liabilities have been presented as discontinued operations. The resulting book gain from this sale transaction was not recognized for tax purposes pursuant to the rules promulgated under the Internal Revenue Code.

_________________________________
Note: “Consolidated” refers to our consolidated financial position and consolidated results of operations, including discontinued operations and assets and liabilities of discontinued operations.
1 “Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $519.9 million and $436.8 million at March 31, 2021 and December 31, 2020, 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)

 

2021

 

2020

 

2020

 

2020

 

2020

Cash and due from banks

 

$

1,564,489

 

$

1,062,560

 

$

1,277,865

 

$

1,655,492

 

$

524,370

Federal funds sold

 

 

396

 

 

386

 

 

420

 

 

385

 

 

401

Assets segregated for regulatory purposes

 

 

273,393

 

 

290,357

 

 

221,621

 

 

194,626

 

 

178,805

Securities purchased under agreements to resell

 

 

106,342

 

 

80,319

 

 

90,103

 

 

161,457

 

 

23,356

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

528,712

 

 

694,255

 

 

667,751

 

 

648,037

 

 

393,581

Available for sale, at fair value, net

 

 

1,715,406

 

 

1,462,205

 

 

1,310,240

 

 

1,091,348

 

 

972,318

Held to maturity, at amortized cost, net

 

 

300,088

 

 

311,944

 

 

323,299

 

 

343,198

 

 

355,110

Equity, at fair value

 

 

189

 

 

140

 

 

117

 

 

122

 

 

107

 

 

 

2,544,395

 

 

2,468,544

 

 

2,301,407

 

 

2,082,705

 

 

1,721,116

Loans held for sale

 

 

2,538,986

 

 

2,788,386

 

 

2,547,975

 

 

2,592,307

 

 

2,433,407

Loans held for investment, net of unearned income

 

 

7,810,657

 

 

7,693,141

 

 

7,945,560

 

 

7,849,904

 

 

7,345,250

Allowance for credit losses

 

 

(144,499)

 

 

(149,044)

 

 

(155,214)

 

 

(156,383)

 

 

(106,739)

Loans held for investment, net

 

 

7,666,158

 

 

7,544,097

 

 

7,790,346

 

 

7,693,521

 

 

7,238,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer and clearing organization receivables

 

 

1,596,817

 

 

1,404,727

 

 

1,363,478

 

 

1,222,627

 

 

1,838,789

Premises and equipment, net

 

 

213,304

 

 

211,595

 

 

208,078

 

 

210,975

 

 

215,261

Operating lease right-of-use assets

 

 

101,055

 

 

105,757

 

 

109,354

 

 

119,954

 

 

113,395

Mortgage servicing assets

 

 

142,125

 

 

143,742

 

 

127,712

 

 

81,264

 

 

30,299

Other assets

 

 

648,895

 

 

555,983

 

 

607,932

 

 

627,982

 

 

846,316

Goodwill

 

 

267,447

 

 

267,447

 

 

267,447

 

 

267,447

 

 

267,447

Other intangible assets, net

 

 

19,035

 

 

20,364

 

 

21,814

 

 

23,374

 

 

25,019

Assets of discontinued operations

 

 

 

 

 

 

 

 

 

 

249,758

Total assets

 

$

17,682,837

 

$

16,944,264

 

$

16,935,552

 

$

16,934,116

 

$

15,706,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

4,031,181

 

$

3,612,384

 

$

3,557,603

 

$

3,467,500

 

$

2,865,192

Interest-bearing

 

 

7,701,598

 

 

7,629,935

 

 

7,704,312

 

 

8,182,098

 

 

7,082,297

Total deposits

 

 

11,732,779

 

 

11,242,319

 

 

11,261,915

 

 

11,649,598

 

 

9,947,489

Broker-dealer and clearing organization payables

 

 

1,546,227

 

 

1,368,373

 

 

1,310,835

 

 

1,158,628

 

 

1,259,181

Short-term borrowings

 

 

676,652

 

 

695,798

 

 

780,109

 

 

720,164

 

 

1,329,948

Securities sold, not yet purchased, at fair value

 

 

97,055

 

 

79,789

 

 

56,023

 

 

55,340

 

 

22,768

Notes payable

 

 

401,713

 

 

381,987

 

 

396,006

 

 

450,158

 

 

244,042

Operating lease liabilities

 

 

120,339

 

 

125,450

 

 

122,402

 

 

131,411

 

 

124,123

Junior subordinated debentures

 

 

67,012

 

 

67,012

 

 

67,012

 

 

67,012

 

 

67,012

Other liabilities

 

 

595,045

 

 

632,889

 

 

502,517

 

 

409,672

 

 

408,224

Liabilities of discontinued operations

 

 

 

 

 

 

 

 

 

 

139,730

Total liabilities

 

 

15,236,822

 

 

14,593,617

 

 

14,496,819

 

 

14,641,983

 

 

13,542,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

823

 

 

822

 

 

902

 

 

902

 

 

901

Additional paid-in capital

 

 

1,319,518

 

 

1,317,929

 

 

1,443,588

 

 

1,439,686

 

 

1,437,301

Accumulated other comprehensive income

 

 

3,486

 

 

17,763

 

 

23,790

 

 

23,813

 

 

20,939

Retained earnings

 

 

1,094,727

 

 

986,792

 

 

942,461

 

 

797,331

 

 

676,946

Deferred compensation employee stock trust, net

 

 

752

 

 

771

 

 

774

 

 

778

 

 

774

Employee stock trust

 

 

(121)

 

 

(138)

 

 

(143)

 

 

(150)

 

 

(150)

Total Hilltop stockholders' equity

 

 

2,419,185

 

 

2,323,939

 

 

2,411,372

 

 

2,262,360

 

 

2,136,711

Noncontrolling interests

 

 

26,830

 

 

26,708

 

 

27,361

 

 

29,773

 

 

27,022

Total stockholders' equity

 

 

2,446,015

 

 

2,350,647

 

 

2,438,733

 

 

2,292,133

 

 

2,163,733

Total liabilities & stockholders' equity

 

$

17,682,837

 

$

16,944,264

 

$

16,935,552

 

$

16,934,116

 

$

15,706,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Consolidated Income Statements

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

(in 000's, except per share data)

 

2021

 

2020

 

2020

 

2020

 

2020

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

104,277

 

$

109,328

 

$

104,955

 

$

107,860

 

$

111,168

 

Securities borrowed

 

 

28,972

 

 

14,445

 

 

10,705

 

 

12,883

 

 

13,327

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

10,251

 

 

9,845

 

 

11,035

 

 

11,698

 

 

15,695

 

Tax-exempt

 

 

2,102

 

 

1,862

 

 

1,687

 

 

1,539

 

 

1,610

 

Other

 

 

1,321

 

 

1,381

 

 

1,446

 

 

951

 

 

3,075

 

Total interest income

 

 

146,923

 

 

136,861

 

 

129,828

 

 

134,931

 

 

144,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

7,741

 

 

9,269

 

 

10,700

 

 

11,947

 

 

15,124

 

Securities loaned

 

 

25,486

 

 

12,014

 

 

8,729

 

 

10,796

 

 

11,277

 

Short-term borrowings

 

 

2,013

 

 

2,154

 

 

2,346

 

 

2,367

 

 

4,744

 

Notes payable

 

 

4,797

 

 

4,807

 

 

4,904

 

 

3,768

 

 

2,418

 

Junior subordinated debentures

 

 

562

 

 

609

 

 

608

 

 

705

 

 

850

 

Other

 

 

642

 

 

636

 

 

641

 

 

790

 

 

126

 

Total interest expense

 

 

41,241

 

 

29,489

 

 

27,928

 

 

30,373

 

 

34,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

105,682

 

 

107,372

 

 

101,900

 

 

104,558

 

 

110,336

 

Provision for (reversal of) credit losses

 

 

(5,109)

 

 

(3,482)

 

 

(602)

 

 

66,026

 

 

34,549

 

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

 

 

110,791

 

 

110,854

 

 

102,502

 

 

38,532

 

 

75,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains from sale of loans and other mortgage production income

 

 

267,080

 

 

247,360

 

 

307,896

 

 

295,317

 

 

150,486

 

Mortgage loan origination fees

 

 

43,155

 

 

50,193

 

 

47,681

 

 

45,341

 

 

28,554

 

Securities commissions and fees

 

 

38,314

 

 

35,921

 

 

32,496

 

 

34,234

 

 

40,069

 

Investment and securities advisory fees and commissions

 

 

27,695

 

 

42,161

 

 

36,866

 

 

29,120

 

 

23,180

 

Other

 

 

41,341

 

 

72,296

 

 

77,772

 

 

64,113

 

 

29,424

 

Total noninterest income

 

 

417,585

 

 

447,931

 

 

502,711

 

 

468,125

 

 

271,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

 

 

270,353

 

 

291,489

 

 

294,907

 

 

276,893

 

 

196,356

 

Occupancy and equipment, net

 

 

24,429

 

 

27,596

 

 

26,124

 

 

26,174

 

 

19,522

 

Professional services

 

 

13,585

 

 

21,927

 

 

17,522

 

 

15,737

 

 

14,798

 

Other

 

 

58,295

 

 

61,336

 

 

60,792

 

 

51,405

 

 

51,225

 

Total noninterest expense

 

 

366,662

 

 

402,348

 

 

399,345

 

 

370,209

 

 

281,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

161,714

 

 

156,437

 

 

205,868

 

 

136,448

 

 

65,599

 

Income tax expense

 

 

37,770

 

 

39,295

 

 

46,820

 

 

31,808

 

 

15,148

 

Income from continuing operations

 

 

123,944

 

 

117,142

 

 

159,048

 

 

104,640

 

 

50,451

 

Income from discontinued operations, net of income taxes

 

 

 

 

3,734

 

 

736

 

 

30,775

 

 

3,151

 

Net income

 

 

123,944

 

 

120,876

 

 

159,784

 

 

135,415

 

 

53,602

 

Less: Net income attributable to noncontrolling interest

 

 

3,599

 

 

4,431

 

 

6,505

 

 

6,939

 

 

3,966

 

Income attributable to Hilltop

 

$

120,345

 

$

116,445

 

$

153,279

 

$

128,476

 

$

49,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

1.46

 

$

1.31

 

$

1.69

 

$

1.08

 

$

0.51

 

Earnings from discontinued operations

 

 

 

 

0.04

 

 

0.01

 

 

0.34

 

 

0.04

 

 

 

$

1.46

 

$

1.35

 

$

1.70

 

$

1.42

 

$

0.55

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

1.46

 

$

1.30

 

$

1.69

 

$

1.08

 

$

0.51

 

Earnings from discontinued operations

 

 

 

 

0.05

 

 

0.01

 

 

0.34

 

 

0.04

 

 

 

$

1.46

 

$

1.35

 

$

1.70

 

$

1.42

 

$

0.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.12

 

$

0.09

 

$

0.09

 

$

0.09

 

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

82,169

 

 

86,269

 

 

90,200

 

 

90,164

 

 

90,509

 

Diluted

 

 

82,657

 

 

86,420

 

 

90,200

 

 

90,164

 

 

90,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2021

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Continuing

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Operations

Net interest income (expense)

 

$

103,884

 

$

10,514

 

$

(7,098)

 

$

(4,692)

 

$

3,074

 

$

105,682

Provision for (reversal of) credit losses

 

 

(5,175)

 

 

66

 

 

 

 

 

 

 

 

(5,109)

Noninterest income

 

 

11,324

 

 

98,623

 

 

310,444

 

 

506

 

 

(3,312)

 

 

417,585

Noninterest expense

 

 

55,788

 

 

91,404

 

 

210,334

 

 

9,588

 

 

(452)

 

 

366,662

Income (loss) from continuing operations before taxes

 

$

64,595

 

$

17,667

 

$

93,012

 

$

(13,774)

 

$

214

 

$

161,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Selected Financial Data

 

2021

 

2020

 

2020

 

2020

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hilltop Consolidated (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders' equity

 

 

20.58%

 

 

20.56%

 

 

25.94%

 

 

23.32%

 

 

9.38%

Return on average assets

 

 

2.90%

 

 

2.83%

 

 

3.71%

 

 

3.30%

 

 

1.47%

Net interest margin (2)

 

 

2.69%

 

 

2.71%

 

 

2.56%

 

 

2.80%

 

 

3.41%

Net interest margin (taxable equivalent) (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

2.69%

 

 

2.72%

 

 

2.57%

 

 

2.81%

 

 

3.42%

Impact of purchase accounting

 

 

13 bps

 

 

15 bps

 

 

10 bps

 

 

10 bps

 

 

22 bps

Book value per common share ($)

 

 

29.41

 

 

28.28

 

 

26.72

 

 

25.08

 

 

23.71

Shares outstanding, end of period (000's)

 

 

82,261

 

 

82,185

 

 

90,238

 

 

90,222

 

 

90,108

Dividend payout ratio (4)

 

 

8.19%

 

 

6.67%

 

 

5.30%

 

 

6.32%

 

 

16.41%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (2)

 

 

3.30%

 

 

3.37%

 

 

3.03%

 

 

3.11%

 

 

3.81%

Net interest margin (taxable equivalent) (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

3.31%

 

 

3.38%

 

 

3.03%

 

 

3.12%

 

 

3.82%

Impact of purchase accounting

 

 

17 bps

 

 

20 bps

 

 

13 bps

 

 

12 bps

 

 

30 bps

Accretion of discount on loans ($000's)

 

 

4,851

 

 

5,629

 

 

3,346

 

 

3,217

 

 

6,639

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

 

 

564

 

 

(2,688)

 

 

(567)

 

 

(16,382)

 

 

(1,508)

Return on average assets

 

 

1.48%

 

 

1.37%

 

 

1.14%

 

 

-0.42%

 

 

0.33%

Fee income ratio

 

 

9.8%

 

 

10.2%

 

 

9.2%

 

 

10.2%

 

 

8.5%

Efficiency ratio

 

 

48.4%

 

 

53.0%

 

 

52.7%

 

 

54.1%

 

 

55.5%

Employees' compensation and benefits ($000's)

 

 

30,992

 

 

34,007

 

 

29,808

 

 

31,583

 

 

32,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-Dealer Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue ($000's) (5)

 

 

109,137

 

 

150,070

 

 

149,190

 

 

132,624

 

 

99,382

Employees' compensation and benefits ($000's)

 

 

66,027

 

 

87,469

 

 

88,063

 

 

79,697

 

 

56,550

Variable compensation expense ($000's)

 

 

37,412

 

 

60,295

 

 

60,774

 

 

52,372

 

 

32,024

Compensation as a % of net revenue

 

 

60.5%

 

 

58.3%

 

 

59.0%

 

 

60.1%

 

 

56.9%

Pre-tax margin (6)

 

 

16.2%

 

 

22.8%

 

 

23.7%

 

 

21.0%

 

 

18.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home purchases

 

 

2,902,710

 

 

3,683,564

 

 

4,183,560

 

 

3,204,573

 

 

2,341,847

Refinancings

 

 

3,281,395

 

 

3,114,630

 

 

2,266,793

 

 

2,894,486

 

 

1,280,741

Total mortgage loan originations - volume

 

 

6,184,105

 

 

6,798,194

 

 

6,450,353

 

 

6,099,059

 

 

3,622,588

Mortgage loan sales - volume ($000's)

 

 

6,350,837

 

 

6,571,234

 

 

6,521,773

 

 

5,934,914

 

 

3,486,249

Net gains from mortgage loan sales (basis points):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

388

 

 

448

 

 

440

 

 

368

 

 

325

Impact of sales to banking segment

 

 

(10)

 

 

(3)

 

 

(1)

 

 

(1)

 

 

(13)

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

 

 

142,125

 

 

143,742

 

 

127,712

 

 

81,263

 

 

30,299

Employees' compensation and benefits ($000's)

 

 

166,248

 

 

163,822

 

 

161,738

 

 

160,824

 

 

100,328

Variable compensation expense ($000's)

 

 

115,486

 

 

116,736

 

 

116,275

 

 

113,826

 

 

58,280

________________________________

(1) Ratios and financial data presented on a consolidated basis. For all 2020 periods presented, information includes discontinued operations and as of March 31, 2020 those assets and liabilities of discontinued operations

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

 

2021

 

2020

 

2020

 

2020

 

2020

Tier 1 capital (to average assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

10.50%

 

 

10.44%

 

 

10.19%

 

 

10.37%

 

 

12.06%

Hilltop

 

 

13.01%

 

 

12.64%

 

 

13.03%

 

 

12.60%

 

 

13.03%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

14.74%

 

 

14.40%

 

 

14.64%

 

 

14.03%

 

 

13.33%

Hilltop

 

 

19.63%

 

 

18.97%

 

 

19.85%

 

 

18.46%

 

 

15.96%

Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

14.74%

 

 

14.40%

 

 

14.64%

 

 

14.03%

 

 

13.33%

Hilltop

 

 

20.22%

 

 

19.57%

 

 

20.46%

 

 

19.06%

 

 

16.38%

Total capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

15.64%

 

 

15.27%

 

 

15.49%

 

 

14.88%

 

 

14.26%

Hilltop

 

 

22.96%

 

 

22.34%

 

 

23.22%

 

 

21.82%

 

 

17.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Non-Performing Assets Portfolio Data

 

2021

 

2020

 

2020

 

2020

 

2020

Loans accounted for on a non-accrual basis ($000's) (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

10,668

 

 

11,133

 

 

14,079

 

 

13,743

 

 

23,352

Commercial and industrial

 

 

36,144

 

 

34,049

 

 

38,708

 

 

32,259

 

 

47,121

Construction and land development

 

 

501

 

 

507

 

 

528

 

 

1,404

 

 

1,402

1-4 family residential

 

 

30,937

 

 

32,263

 

 

28,707

 

 

20,552

 

 

15,237

Consumer

 

 

26

 

 

28

 

 

53

 

 

308

 

 

310

Broker-dealer

 

 

 

 

 

 

 

 

 

 

 

 

 

78,276

 

 

77,980

 

 

82,075

 

 

68,266

 

 

87,422

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

 

 

1,584

 

 

1,954

 

 

1,919

 

 

2,025

 

 

2,286

Non-performing loans ($000's)

 

 

79,860

 

 

79,934

 

 

83,994

 

 

70,291

 

 

89,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans as a % of total loans

 

 

0.77%

 

 

0.76%

 

 

0.80%

 

 

0.67%

 

 

0.92%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned ($000's)

 

 

19,899

 

 

21,289

 

 

25,387

 

 

26,602

 

 

15,429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other repossessed assets ($000's)

 

 

 

 

101

 

 

239

 

 

315

 

 

315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets ($000's)

 

 

99,759

 

 

101,324

 

 

109,620

 

 

97,208

 

 

105,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a % of total assets

 

 

0.56%

 

 

0.60%

 

 

0.65%

 

 

0.57%

 

 

0.67%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

265,230

 

 

243,630

 

 

187,105

 

 

124,682

 

 

101,300

________________________________

(1) Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications. The Bank’s COVID-19 payment deferral programs allow for a deferral of principal and/or interest payments with such deferred principal payments due and payable on the maturity date of the existing loan. During the first quarter of 2021, the Bank’s actions included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $130 million as of March 31, 2021, down from approximately $240 million as of December 31, 2020. The extent to which these measures will impact the Bank is uncertain, and any progression of loans, whether receiving COVID-19 payment deferrals or not, into non-accrual status, during future periods is uncertain and will depend on future developments that cannot be predicted.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

2020

 

 

 

Average

 

Interest

 

Annualized

 

Average

 

Interest

 

Annualized

 

 

 

Outstanding

 

Earned or

 

Yield or

 

Outstanding

 

Earned or

 

Yield or

 

Net Interest Margin (Taxable Equivalent) Details (1)

 

Balance

 

Paid

 

Rate

 

Balance

 

Paid

 

Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

2,573,085

 

$

16,233

 

2.52

%

$

1,619,644

 

$

15,631

 

3.86

%

Loans held for investment, gross (2)

 

 

7,645,883

 

 

88,044

 

4.62

%

 

7,262,282

 

 

95,538

 

5.23

%

Investment securities - taxable

 

 

2,267,709

 

 

10,233

 

1.80

%

 

1,798,897

 

 

16,606

 

3.69

%

Investment securities - non-taxable (3)

 

 

284,001

 

 

2,280

 

3.21

%

 

208,863

 

 

1,902

 

3.64

%

Federal funds sold and securities purchased under agreements to resell

 

 

93,525

 

 

 

0.00

%

 

60,943

 

 

134

 

0.89

%

Interest-bearing deposits in other financial institutions

 

 

1,565,879

 

 

582

 

0.15

%

 

461,775

 

 

1,512

 

1.32

%

Securities borrowed

 

 

1,452,704

 

 

28,972

 

7.98

%

 

1,568,737

 

 

13,327

 

3.36

%

Other

 

 

49,916

 

 

762

 

6.18

%

 

78,595

 

 

1,512

 

7.72

%

Interest-earning assets, gross (3)

 

 

15,932,702

 

 

147,106

 

3.70

%

 

13,059,736

 

 

146,162

 

4.45

%

Allowance for credit losses

 

 

(149,397)

 

 

 

 

 

 

 

(74,430)

 

 

 

 

 

 

Interest-earning assets, net

 

 

15,783,305

 

 

 

 

 

 

 

12,985,306

 

 

 

 

 

 

Noninterest-earning assets

 

 

1,559,039

 

 

 

 

 

 

 

1,633,387

 

 

 

 

 

 

Total assets

 

$

17,342,344

 

 

 

 

 

 

$

14,618,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

7,626,575

 

$

7,741

 

0.41

%

$

6,264,827

 

$

15,125

 

0.97

%

Securities loaned

 

 

1,355,945

 

 

25,486

 

7.62

%

 

1,474,988

 

 

11,277

 

3.07

%

Notes payable and other borrowings

 

 

1,130,068

 

 

8,014

 

2.85

%

 

1,368,038

 

 

8,544

 

2.50

%

Total interest-bearing liabilities

 

 

10,112,588

 

 

41,241

 

1.65

%

 

9,107,853

 

 

34,946

 

1.54

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

3,729,994

 

 

 

 

 

 

 

2,730,975

 

 

 

 

 

 

Other liabilities

 

 

1,101,972

 

 

 

 

 

 

 

633,722

 

 

 

 

 

 

Total liabilities

 

 

14,944,554

 

 

 

 

 

 

 

12,472,550

 

 

 

 

 

 

Stockholders’ equity

 

 

2,371,281

 

 

 

 

 

 

 

2,121,877

 

 

 

 

 

 

Noncontrolling interest

 

 

26,509

 

 

 

 

 

 

 

24,266

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

17,342,344

 

 

 

 

 

 

$

14,618,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (3)

 

 

 

 

$

105,865

 

 

 

 

 

 

$

111,216

 

 

 

Net interest spread (3)

 

 

 

 

 

 

 

2.05

%

 

 

 

 

 

 

2.91

%

Net interest margin (3)

 

 

 

 

 

 

 

2.69

%

 

 

 

 

 

 

3.42

%

________________________________
(1) Information presented on a consolidated basis. For the three months ended March 31, 2020, information includes discontinued operations and those assets and liabilities classified of discontinued operations.
(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 rates for the periods presented. The adjustment to interest income was $0.2 million and $0.3 million for the three months ended March 31, 2021 and 2020, 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 23, 2021. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review first quarter 2021 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 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, 2021, Hilltop employed approximately 4,980 people and operated approximately 430 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,” “could,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “probable,” “progressing,” “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 COVID-19 pandemic and the response of governmental authorities to the pandemic, which have caused and are causing significant harm to the global economy and our business; (ii) the credit risks of lending activities, including our ability to estimate credit losses, as well as the effects of, and trends in, loan delinquencies and write-offs; (iii) effectiveness of our data security controls in the face of cyber attacks; (iv) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (v) risks associated with concentration in real estate related loans; and (vi) changes in the interest rate environment and transitions away from the London Interbank Offered Rate. 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.