Press Release

Hilltop Holdings Inc. Announces Financial Results for Second Quarter 2022

Company Release - 7/21/2022 4:45 PM ET

DALLAS--(BUSINESS WIRE)-- Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the second quarter of 2022. Hilltop produced income to common stockholders of $33.3 million, or $0.45 per diluted share, for the second quarter of 2022, compared to $99.1 million, or $1.21 per diluted share, for the second quarter of 2021. Hilltop’s financial results for the second quarter of 2022 reflect a significant decrease in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income and an increase in the banking segment’s provision for credit losses due to a deteriorating U.S. economic outlook.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on August 26, 2022, to all common stockholders of record as of the close of business on August 12, 2022. Additionally, during the second quarter of 2022, Hilltop paid $442.3 million to repurchase approximately 14.87 million shares of its common stock at a price of $29.75 per share pursuant to the tender offer completed in May 2022. These shares were returned to the pool of authorized but unissued shares of common stock. As a result of share repurchases during 2022, Hilltop has no further available share repurchase capacity associated with its previously authorized stock repurchase program.

Identified headwinds during 2022, including tight housing inventories on mortgage volumes, declining deposit balances, increases in market interest rates, and uncertainties related to inflationary pressures on expenses, coupled with a declining economic forecast, rapid increases in the 10-year U.S. treasury bond yield and mortgage interest rates, and exposure to increasing funding costs during the first half of 2022 have had, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2022. The COVID-19 pandemic may also continue to adversely impact financial markets and overall economic conditions. The extent of the impact of the pandemic on our operational and financial performance for the remainder of 2022 remains uncertain.

Jeremy B. Ford, President and CEO of Hilltop, said, “Our second quarter results demonstrate again the value of the Hilltop business model, despite a challenging economic environment. PlainsCapital Bank performed well with another quarter of solid loan growth and healthy credit metrics across the loan portfolio. Additionally, the Bank realized net interest margin expansion as it prudently manages deposit costs and captures the benefits of the rising rate environment. PrimeLending and HilltopSecurities experienced a continuation of the challenging market faced in the first quarter with elevated and volatile interest rates paired with lower demand for new home purchases. Importantly, both PrimeLending and HilltopSecurities were profitable during these challenging times as a result of strong expense discipline and experienced management teams.

“We were also pleased to return meaningful capital to stockholders through a successful tender offer in May. This transaction demonstrates our conviction in the long-term strategy of Hilltop, as we bought back almost 19% of the outstanding shares while still retaining excess capital for future growth.”

Second Quarter 2022 Highlights for Hilltop:

  • The provision for credit losses was $5.3 million during the second quarter of 2022, compared to a provision for credit losses of $0.1 million in the first quarter of 2022 and a reversal of credit losses of $28.7 million in the second quarter of 2021;
    • The provision for credit losses during the second quarter of 2022 primarily reflected an increase in the expected lifetime credit losses under CECL on collectively evaluated loans within the portfolio attributable to a deteriorating U.S. economic outlook since the prior quarter, partially offset by decreases in specific reserves and positive risk rating grade migration.
  • For the second quarter of 2022, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $139.9 million, compared to $241.8 million in the second quarter of 2021, a 42.1% decrease;
    • Mortgage loan origination production volume was $3.8 billion during the second quarter of 2022, compared to $5.9 billion in the second quarter of 2021;
    • Net gains from mortgage loans sold to third parties decreased to 260 basis points during the second quarter of 2022, compared to 321 basis points in the first quarter of 2022.
  • Hilltop’s consolidated annualized return on average assets and return on average equity for the second quarter of 2022 were 0.80% and 5.82%, respectively, compared to 2.29% and 16.42%, respectively, for the second quarter of 2021;
  • Hilltop’s book value per common share increased to $31.43 at June 30, 2022, compared to $31.02 at March 31, 2022;
  • Hilltop’s total assets were $16.7 billion and $18.4 billion at June 30, 2022 and March 31, 2022, respectively;
  • Loans1, net of allowance for credit losses, increased to $7.4 billion at June 30, 2022 compared to $7.2 billion at March 31, 2022;
  • Non-performing loans were $35.7 million, or 0.38% of total loans, at June 30, 2022, compared to $44.3 million, or 0.47% of total loans, at March 31, 2022;
  • Loans held for sale decreased by 9.3% from March 31, 2022 to $1.5 billion at June 30, 2022;
  • Total deposits were $11.9 billion and $12.7 billion at June 30, 2022 and March 31, 2022, respectively;
  • Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 10.53% and a Common Equity Tier 1 Capital Ratio of 17.24% at June 30, 2022;
  • Hilltop’s consolidated net interest margin4 increased to 2.75% for the second quarter of 2022, compared to 2.36% in the first quarter of 2022;
    • Includes previously deferred interest income of $1.3 million during the second quarter of 2022 related to PPP loan-related origination fees, compared to $5.4 million in the second quarter of 2021.
  • For the second quarter of 2022, noninterest income was $239.3 million, compared to $339.9 million in the second quarter of 2021, a 29.6% decrease;
  • For the second quarter 2022, noninterest expense was $298.5 million, compared to $343.4 million in the second quarter of 2021, a 13.1% decrease; and
  • Hilltop’s effective tax rate was 25.6% during the second quarter of 2022, compared to 23.5% during the same period in 2021.
    • The effective tax rate for the second quarter of 2022 was higher than the applicable statutory rate primarily due to the impact of non-deductible compensation expense and other permanent adjustments.
________________________________________

1

“Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $462.4 million and $506.2 million at June 30, 2022 and March 31, 2022, respectively.

2

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

3

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

4

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

Consolidated Financial and Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(in 000's)

 

2022

 

2022

 

2021

 

2021

 

2021

Cash and due from banks

 

$

1,783,554

 

 

$

2,886,812

 

 

$

2,823,138

 

 

$

2,463,111

 

 

$

1,372,818

 

Federal funds sold

 

 

381

 

 

 

383

 

 

 

385

 

 

 

406

 

 

 

387

 

Assets segregated for regulatory purposes

 

 

120,816

 

 

 

128,408

 

 

 

221,740

 

 

 

269,506

 

 

 

207,284

 

Securities purchased under agreements to resell

 

 

139,929

 

 

 

256,991

 

 

 

118,262

 

 

 

155,908

 

 

 

202,638

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

593,273

 

 

 

471,763

 

 

 

647,998

 

 

 

609,813

 

 

 

682,483

 

Available for sale, at fair value, net

 

 

1,562,222

 

 

 

1,462,340

 

 

 

2,130,568

 

 

 

1,994,183

 

 

 

1,817,807

 

Held to maturity, at amortized cost, net

 

 

920,583

 

 

 

953,107

 

 

 

267,684

 

 

 

277,419

 

 

 

288,776

 

Equity, at fair value

 

 

197

 

 

 

225

 

 

 

250

 

 

 

221

 

 

 

193

 

 

 

 

3,076,275

 

 

 

2,887,435

 

 

 

3,046,500

 

 

 

2,881,636

 

 

 

2,789,259

 

Loans held for sale

 

 

1,491,579

 

 

 

1,643,994

 

 

 

1,878,190

 

 

 

2,108,878

 

 

 

2,885,458

 

Loans held for investment, net of unearned income

 

 

7,930,619

 

 

 

7,797,903

 

 

 

7,879,904

 

 

 

7,552,926

 

 

 

7,645,227

 

Allowance for credit losses

 

 

(95,298

)

 

 

(91,185

)

 

 

(91,352

)

 

 

(109,512

)

 

 

(115,269

)

Loans held for investment, net

 

 

7,835,321

 

 

 

7,706,718

 

 

 

7,788,552

 

 

 

7,443,414

 

 

 

7,529,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer and clearing organization receivables

 

 

1,049,830

 

 

 

1,610,352

 

 

 

1,672,946

 

 

 

1,419,652

 

 

 

1,403,447

 

Premises and equipment, net

 

 

195,361

 

 

 

198,906

 

 

 

204,438

 

 

 

210,026

 

 

 

212,402

 

Operating lease right-of-use assets

 

 

106,806

 

 

 

108,180

 

 

 

112,328

 

 

 

115,942

 

 

 

115,698

 

Mortgage servicing assets

 

 

121,688

 

 

 

100,475

 

 

 

86,990

 

 

 

110,931

 

 

 

124,497

 

Other assets

 

 

513,570

 

 

 

546,622

 

 

 

452,880

 

 

 

526,339

 

 

 

535,536

 

Goodwill

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

Other intangible assets, net

 

 

13,182

 

 

 

14,233

 

 

 

15,284

 

 

 

16,455

 

 

 

17,705

 

Total assets

 

$

16,715,739

 

 

$

18,356,956

 

 

$

18,689,080

 

 

$

17,989,651

 

 

$

17,664,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

4,601,643

 

 

$

4,694,592

 

 

$

4,577,183

 

 

$

4,433,148

 

 

$

4,231,082

 

Interest-bearing

 

 

7,319,143

 

 

 

7,972,110

 

 

 

8,240,894

 

 

 

7,699,014

 

 

 

7,502,703

 

Total deposits

 

 

11,920,786

 

 

 

12,666,702

 

 

 

12,818,077

 

 

 

12,132,162

 

 

 

11,733,785

 

Broker-dealer and clearing organization payables

 

 

934,818

 

 

 

1,397,836

 

 

 

1,477,300

 

 

 

1,496,923

 

 

 

1,439,620

 

Short-term borrowings

 

 

822,649

 

 

 

835,054

 

 

 

859,444

 

 

 

747,040

 

 

 

915,919

 

Securities sold, not yet purchased, at fair value

 

 

135,968

 

 

 

97,629

 

 

 

96,586

 

 

 

113,064

 

 

 

132,950

 

Notes payable

 

 

389,722

 

 

 

395,479

 

 

 

387,904

 

 

 

395,804

 

 

 

396,653

 

Operating lease liabilities

 

 

124,406

 

 

 

125,919

 

 

 

130,960

 

 

 

134,296

 

 

 

134,019

 

Junior subordinated debentures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,012

 

Other liabilities

 

 

329,987

 

 

 

347,742

 

 

 

369,606

 

 

 

468,020

 

 

 

348,200

 

Total liabilities

 

 

14,658,336

 

 

 

15,866,361

 

 

 

16,139,877

 

 

 

15,487,309

 

 

 

15,168,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

646

 

 

 

794

 

 

 

790

 

 

 

790

 

 

 

812

 

Additional paid-in capital

 

 

1,039,261

 

 

 

1,275,649

 

 

 

1,274,446

 

 

 

1,270,272

 

 

 

1,302,439

 

Accumulated other comprehensive income (loss)

 

 

(95,279

)

 

 

(80,565

)

 

 

(10,219

)

 

 

367

 

 

 

7,093

 

Retained earnings

 

 

1,085,208

 

 

 

1,267,415

 

 

 

1,257,014

 

 

 

1,204,307

 

 

 

1,159,304

 

Deferred compensation employee stock trust, net

 

 

695

 

 

 

744

 

 

 

752

 

 

 

751

 

 

 

754

 

Employee stock trust

 

 

(954

)

 

 

(104

)

 

 

(115

)

 

 

(116

)

 

 

(121

)

Total Hilltop stockholders' equity

 

 

2,029,577

 

 

 

2,463,933

 

 

 

2,522,668

 

 

 

2,476,371

 

 

 

2,470,281

 

Noncontrolling interests

 

 

27,826

 

 

 

26,662

 

 

 

26,535

 

 

 

25,971

 

 

 

26,095

 

Total stockholders' equity

 

 

2,057,403

 

 

 

2,490,595

 

 

 

2,549,203

 

 

 

2,502,342

 

 

 

2,496,376

 

Total liabilities & stockholders' equity

 

$

16,715,739

 

 

$

18,356,956

 

 

$

18,689,080

 

 

$

17,989,651

 

 

$

17,664,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Consolidated Income Statements

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

(in 000's, except per share data)

 

2022

 

2022

 

2021

 

2021

 

2021

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

98,728

 

$

90,408

 

$

96,104

 

 

$

99,769

 

 

$

104,162

 

 

Securities borrowed

 

 

10,498

 

 

8,817

 

 

8,524

 

 

 

8,585

 

 

 

15,586

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

17,288

 

 

15,581

 

 

13,916

 

 

 

12,341

 

 

 

11,125

 

 

Tax-exempt

 

 

2,141

 

 

2,419

 

 

2,639

 

 

 

2,687

 

 

 

2,338

 

 

Other

 

 

6,478

 

 

2,312

 

 

1,872

 

 

 

1,796

 

 

 

1,607

 

 

Total interest income

 

 

135,133

 

 

119,537

 

 

123,055

 

 

 

125,178

 

 

 

134,818

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

5,456

 

 

4,193

 

 

4,404

 

 

 

5,303

 

 

 

6,176

 

 

Securities loaned

 

 

8,512

 

 

7,472

 

 

6,624

 

 

 

6,519

 

 

 

12,345

 

 

Short-term borrowings

 

 

3,020

 

 

2,045

 

 

2,279

 

 

 

2,400

 

 

 

2,374

 

 

Notes payable

 

 

3,809

 

 

4,437

 

 

5,871

 

 

 

5,465

 

 

 

5,253

 

 

Junior subordinated debentures

 

 

 

 

 

 

 

 

 

419

 

 

 

577

 

 

Other

 

 

2,280

 

 

1,399

 

 

(417

)

 

 

(18

)

 

 

177

 

 

Total interest expense

 

 

23,077

 

 

19,546

 

 

18,761

 

 

 

20,088

 

 

 

26,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

112,056

 

 

99,991

 

 

104,294

 

 

 

105,090

 

 

 

107,916

 

 

Provision for (reversal of) credit losses

 

 

5,336

 

 

115

 

 

(18,565

)

 

 

(5,819

)

 

 

(28,720

)

 

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

 

 

106,720

 

 

99,876

 

 

122,859

 

 

 

110,909

 

 

 

136,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains from sale of loans and other mortgage production income

 

 

97,543

 

 

110,894

 

 

156,103

 

 

 

203,152

 

 

 

199,625

 

 

Mortgage loan origination fees

 

 

42,378

 

 

32,062

 

 

35,930

 

 

 

38,780

 

 

 

42,146

 

 

Securities commissions and fees

 

 

34,757

 

 

37,146

 

 

32,801

 

 

 

34,412

 

 

 

38,300

 

 

Investment and securities advisory fees and commissions

 

 

32,002

 

 

29,705

 

 

42,834

 

 

 

49,646

 

 

 

32,268

 

 

Other

 

 

32,593

 

 

6,621

 

 

17,178

 

 

 

41,955

 

 

 

27,560

 

 

Total noninterest income

 

 

239,273

 

 

216,428

 

 

284,846

 

 

 

367,945

 

 

 

339,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

 

 

205,327

 

 

200,019

 

 

229,717

 

 

 

258,679

 

 

 

248,486

 

 

Occupancy and equipment, net

 

 

24,231

 

 

24,766

 

 

25,741

 

 

 

25,428

 

 

 

25,004

 

 

Professional services

 

 

16,246

 

 

10,063

 

 

9,904

 

 

 

14,542

 

 

 

16,239

 

 

Other

 

 

52,739

 

 

51,502

 

 

56,832

 

 

 

56,525

 

 

 

53,639

 

 

Total noninterest expense

 

 

298,543

 

 

286,350

 

 

322,194

 

 

 

355,174

 

 

 

343,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

47,450

 

 

29,954

 

 

85,511

 

 

 

123,680

 

 

 

133,167

 

 

Income tax expense

 

 

12,127

 

 

5,815

 

 

20,715

 

 

 

28,257

 

 

 

31,234

 

 

Net income

 

 

35,323

 

 

24,139

 

 

64,796

 

 

 

95,423

 

 

 

101,933

 

 

Less: Net income attributable to noncontrolling interest

 

 

2,063

 

 

1,889

 

 

2,611

 

 

 

2,517

 

 

 

2,873

 

 

Income attributable to Hilltop

 

$

33,260

 

$

22,250

 

$

62,185

 

 

$

92,906

 

 

$

99,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.45

 

$

0.28

 

$

0.79

 

 

$

1.16

 

 

$

1.21

 

 

Diluted

 

$

0.45

 

$

0.28

 

$

0.78

 

 

$

1.15

 

 

$

1.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.15

 

$

0.15

 

$

0.12

 

 

$

0.12

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

73,693

 

 

79,114

 

 

78,933

 

 

 

80,109

 

 

 

81,663

 

 

Diluted

 

 

73,838

 

 

79,356

 

 

79,427

 

 

 

80,542

 

 

 

82,199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2022

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

101,259

 

$

12,578

 

$

(1,291

)

 

$

(3,190

)

 

$

2,700

 

 

$

112,056

Provision for (reversal of) credit losses

 

 

5,025

 

 

311

 

 

 

 

 

 

 

 

 

 

 

5,336

Noninterest income

 

 

12,467

 

 

87,651

 

 

140,082

 

 

 

2,080

 

 

 

(3,007

)

 

 

239,273

Noninterest expense

 

 

57,331

 

 

90,817

 

 

133,169

 

 

 

17,561

 

 

 

(335

)

 

 

298,543

Income (loss) before taxes

 

$

51,370

 

$

9,101

 

$

5,622

 

 

$

(18,671

)

 

$

28

 

 

$

47,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

193,329

 

$

24,096

 

$

(3,127

)

 

$

(6,580

)

 

$

4,329

 

 

$

212,047

Provision for (reversal of) credit losses

 

 

4,975

 

 

476

 

 

 

 

 

 

 

 

 

 

 

5,451

Noninterest income

 

 

25,237

 

 

148,341

 

 

283,276

 

 

 

3,846

 

 

 

(4,999

)

 

 

455,701

Noninterest expense

 

 

115,761

 

 

171,464

 

 

268,027

 

 

 

30,354

 

 

 

(713

)

 

 

584,893

Income (loss) before taxes

 

$

97,830

 

$

497

 

$

12,122

 

 

$

(33,088

)

 

$

43

 

 

$

77,404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

Selected Financial Data

 

2022

 

2022

 

2021

 

2021

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hilltop Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders' equity

 

 

5.82%

 

 

3.60%

 

 

9.93%

 

 

14.96%

 

 

16.42%

Return on average assets

 

 

0.80%

 

 

0.53%

 

 

1.41%

 

 

2.13%

 

 

2.29%

Net interest margin (1)

 

 

2.75%

 

 

2.36%

 

 

2.44%

 

 

2.53%

 

 

2.62%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

2.76%

 

 

2.37%

 

 

2.45%

 

 

2.54%

 

 

2.63%

Impact of purchase accounting

 

 

8 bps

 

 

7 bps

 

 

12 bps

 

 

9 bps

 

 

16 bps

Book value per common share ($)

 

 

31.43

 

 

31.02

 

 

31.95

 

 

31.36

 

 

30.44

Shares outstanding, end of period (000's)

 

 

64,576

 

 

79,439

 

 

78,965

 

 

78,959

 

 

81,153

Dividend payout ratio (3)

 

 

33.33%

 

 

53.57%

 

 

15.19%

 

 

10.34%

 

 

9.92%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

2.97%

 

 

2.65%

 

 

2.81%

 

 

2.99%

 

 

3.19%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

2.98%

 

 

2.65%

 

 

2.82%

 

 

3.00%

 

 

3.20%

Impact of purchase accounting

 

 

10 bps

 

 

8 bps

 

 

15 bps

 

 

11 bps

 

 

20 bps

Accretion of discount on loans ($000's)

 

 

3,011

 

 

2,510

 

 

4,716

 

 

3,221

 

 

6,001

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

 

 

(1,223)

 

 

(282)

 

 

405

 

 

62

 

 

(510)

Return on average assets

 

 

1.09%

 

 

0.98%

 

 

1.44%

 

 

1.36%

 

 

1.91%

Fee income ratio

 

 

11.0%

 

 

12.2%

 

 

10.8%

 

 

10.5%

 

 

8.9%

Efficiency ratio

 

 

50.4%

 

 

55.7%

 

 

54.2%

 

 

48.8%

 

 

49.7%

Employees' compensation and benefits ($000's)

 

 

33,554

 

 

33,517

 

 

34,415

 

 

31,500

 

 

33,369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-Dealer Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue ($000's) (4)

 

 

100,229

 

 

72,209

 

 

94,569

 

 

126,570

 

 

94,145

Employees' compensation and benefits ($000's)

 

 

64,494

 

 

55,825

 

 

65,301

 

 

82,429

 

 

62,289

Variable compensation expense ($000's)

 

 

37,471

 

 

26,625

 

 

35,939

 

 

53,505

 

 

34,409

Compensation as a % of net revenue

 

 

64.3%

 

 

77.3%

 

 

69.1%

 

 

65.1%

 

 

66.2%

Pre-tax margin (5)

 

 

9.1%

 

 

(11.9)%

 

 

1.8%

 

 

13.8%

 

 

7.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home purchases

 

 

3,342,103

 

 

2,753,031

 

 

3,559,137

 

 

3,948,420

 

 

4,018,922

Refinancings

 

 

467,117

 

 

1,011,452

 

 

1,430,369

 

 

1,646,208

 

 

1,881,121

Total mortgage loan originations - volume

 

 

3,809,220

 

 

3,764,483

 

 

4,989,506

 

 

5,594,628

 

 

5,900,043

Mortgage loan sales - volume ($000's)

 

 

3,872,935

 

 

3,868,596

 

 

4,988,538

 

 

6,195,559

 

 

5,524,226

Net gains from mortgage loan sales (basis points):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans sold to third parties

 

 

260

 

 

321

 

 

362

 

 

359

 

 

376

Impact of loans retained by banking segment

 

 

(7)

 

 

(9)

 

 

(15)

 

 

(13)

 

 

(12)

As reported

 

 

253

 

 

312

 

 

347

 

 

346

 

 

364

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

 

 

121,688

 

 

100,475

 

 

86,990

 

 

110,931

 

 

124,497

Employees' compensation and benefits ($000's)

 

 

100,206

 

 

102,748

 

 

121,758

 

 

134,814

 

 

145,401

Variable compensation expense ($000's)

 

 

56,525

 

 

56,243

 

 

73,208

 

 

88,153

 

 

97,081

____________________________________________

(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 $0.4 million, $0.5 million, $0.5 million, $0.6 million, and $0.4 million, respectively, for the periods presented and for the banking segment were $0.2 million for each of the periods presented.

(3)

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

(4)

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

(5)

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

(6)

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

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

Capital Ratios

 

2022

 

2022

 

2021

 

2021

 

2021

Tier 1 capital (to average assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

9.67

%

 

 

9.74

%

 

 

10.20

%

 

 

10.02

%

 

 

10.22

%

Hilltop

 

 

10.53

%

 

 

12.46

%

 

 

12.58

%

 

 

12.64

%

 

 

12.87

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

14.65

%

 

 

15.37

%

 

 

16.00

%

 

 

15.40

%

 

 

15.00

%

Hilltop

 

 

17.24

%

 

 

21.27

%

 

 

21.22

%

 

 

21.28

%

 

 

20.22

%

Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

14.65

%

 

 

15.37

%

 

 

16.00

%

 

 

15.40

%

 

 

15.00

%

Hilltop

 

 

17.24

%

 

 

21.27

%

 

 

21.22

%

 

 

21.28

%

 

 

20.82

%

Total capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

15.55

%

 

 

16.18

%

 

 

16.77

%

 

 

16.32

%

 

 

15.95

%

Hilltop

 

 

19.90

%

 

 

23.85

%

 

 

23.75

%

 

 

24.00

%

 

 

23.48

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

Non-Performing Assets Portfolio Data

 

2022

 

2022

 

2021

 

2021

 

2021

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

4,947

 

 

 

6,153

 

 

 

6,601

 

 

 

5,705

 

 

 

7,211

 

Commercial and industrial

 

 

13,315

 

 

 

18,486

 

 

 

22,478

 

 

 

29,808

 

 

 

33,033

 

Construction and land development

 

 

1

 

 

 

1

 

 

 

2

 

 

 

366

 

 

 

474

 

1-4 family residential

 

 

16,542

 

 

 

18,723

 

 

 

21,123

 

 

 

25,255

 

 

 

27,100

 

Consumer

 

 

19

 

 

 

21

 

 

 

23

 

 

 

24

 

 

 

26

 

Broker-dealer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34,824

 

 

 

43,384

 

 

 

50,227

 

 

 

61,158

 

 

 

67,844

 

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

 

 

857

 

 

 

890

 

 

 

922

 

 

 

1,038

 

 

 

1,139

 

Non-performing loans ($000's)

 

 

35,681

 

 

 

44,274

 

 

 

51,149

 

 

 

62,196

 

 

 

68,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans as a % of total loans

 

 

0.38

%

 

 

0.47

%

 

 

0.52

%

 

 

0.64

%

 

 

0.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned ($000's)

 

 

1,516

 

 

 

2,175

 

 

 

2,833

 

 

 

21,605

 

 

 

21,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other repossessed assets ($000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets ($000's)

 

 

37,197

 

 

 

46,449

 

 

 

53,982

 

 

 

83,801

 

 

 

90,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a % of total assets

 

 

0.22

%

 

 

0.25

%

 

 

0.29

%

 

 

0.47

%

 

 

0.51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

82,410

 

 

 

87,489

 

 

 

60,775

 

 

 

175,734

 

 

 

245,828

_____________________________________

(1)

Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications through January 1, 2022. The Bank’s COVID-19 payment deferral programs since the second quarter of 2020 allowed 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. For the periods presented, the Bank’s actions through December 31, 2021 included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $4 million, $17 million and $76 million as of December 31, 2021, September 30, 2021 and June 30, 2021, respectively.

(2)

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

 

Three Months Ended June 30,

 

 

 

2022

 

2021

 

 

 

Average

 

Interest

 

Annualized

 

Average

 

Interest

 

Annualized

 

 

 

Outstanding

 

Earned

 

Yield or

 

Outstanding

 

Earned

 

Yield or

 

Net Interest Margin (Taxable Equivalent) Details (1)

 

Balance

 

or Paid

 

Rate

 

Balance

 

or Paid

 

Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

1,375,395

 

 

$

14,302

 

4.16

%

$

2,450,897

 

 

$

17,128

 

2.80

%

Loans held for investment, gross (2)

 

 

7,838,090

 

 

 

84,426

 

4.32

%

 

7,725,906

 

 

 

87,034

 

4.48

%

Investment securities - taxable

 

 

2,779,458

 

 

 

17,288

 

2.49

%

 

2,443,486

 

 

 

11,106

 

1.82

%

Investment securities - non-taxable (3)

 

 

250,303

 

 

 

2,557

 

4.09

%

 

320,685

 

 

 

2,731

 

3.41

%

Federal funds sold and securities purchased under agreements to resell

 

 

193,851

 

 

 

481

 

1.00

%

 

159,400

 

 

 

 

0.00

%

Interest-bearing deposits in other financial institutions

 

 

2,602,154

 

 

 

4,984

 

0.77

%

 

1,861,861

 

 

 

628

 

0.14

%

Securities borrowed

 

 

1,273,368

 

 

 

10,498

 

3.26

%

 

1,490,097

 

 

 

15,586

 

4.14

%

Other

 

 

53,962

 

 

 

1,013

 

7.53

%

 

49,579

 

 

 

994

 

8.04

%

Interest-earning assets, gross (3)

 

 

16,366,581

 

 

 

135,549

 

3.32

%

 

16,501,911

 

 

 

135,207

 

3.26

%

Allowance for credit losses

 

 

(91,619

)

 

 

 

 

 

 

 

(144,105

)

 

 

 

 

 

 

Interest-earning assets, net

 

 

16,274,962

 

 

 

 

 

 

 

 

16,357,806

 

 

 

 

 

 

 

Noninterest-earning assets

 

 

1,516,266

 

 

 

 

 

 

 

 

1,475,422

 

 

 

 

 

 

 

Total assets

 

$

17,791,228

 

 

 

 

 

 

 

$

17,833,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

7,768,772

 

 

$

5,456

 

0.28

%

$

7,740,066

 

 

$

6,176

 

0.32

%

Securities loaned

 

 

1,114,923

 

 

 

8,512

 

3.06

%

 

1,411,961

 

 

 

12,345

 

3.51

%

Notes payable and other borrowings

 

 

1,303,678

 

 

 

9,109

 

2.80

%

 

1,271,609

 

 

 

8,381

 

2.64

%

Total interest-bearing liabilities

 

 

10,187,373

 

 

 

23,077

 

0.91

%

 

10,423,636

 

 

 

26,902

 

1.03

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

4,552,424

 

 

 

 

 

 

 

 

4,090,425

 

 

 

 

 

 

 

Other liabilities

 

 

731,635

 

 

 

 

 

 

 

 

872,916

 

 

 

 

 

 

 

Total liabilities

 

 

15,471,432

 

 

 

 

 

 

 

 

15,386,977

 

 

 

 

 

 

 

Stockholders’ equity

 

 

2,292,816

 

 

 

 

 

 

 

 

2,420,436

 

 

 

 

 

 

 

Noncontrolling interest

 

 

26,980

 

 

 

 

 

 

 

 

25,815

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

17,791,228

 

 

 

 

 

 

 

$

17,833,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (3)

 

 

 

 

$

112,472

 

 

 

 

 

 

$

108,305

 

 

 

Net interest spread (3)

 

 

 

 

 

 

 

2.41

%

 

 

 

 

 

 

2.23

%

Net interest margin (3)

 

 

 

 

 

 

 

2.76

%

 

 

 

 

 

 

2.63

%

_______________________________________

(1)

Information presented on a consolidated basis.

(2)

Average balance includes non-accrual loans.

(3)

Presented on a taxable-equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rates for the periods presented. The adjustment to interest income was $0.4 million and $0.4 million for the three months ended June 30, 2022 and 2021, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, July 22, 2022. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review second quarter 2022 financial results. Interested parties can access the conference call by dialing 1-844-200-6205 (United States), 1-833-950-0062 (Canada) or 1-929-526-1599 (all other locations) and then using the access code 416063. 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 June 30, 2022, Hilltop employed approximately 4,650 people and operated approximately 385 locations in 47 states. Hilltop Holdings’ common stock is listed on the New York Stock Exchange under the symbol “HTH.” Find more information at Hilltop-Holdings.com, PlainsCapital.com, PrimeLending.com and Hilltopsecurities.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as our plans, objectives, strategies, expectations, intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “building,” “continue,” “could,” “drive,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “probable,” “progressing,” “projects,” “seeks,” “should,” “target,” “view,” “well-tuned,” “will” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (ii) effectiveness of our data security controls in the face of cyber attacks; (iii) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (iv) changes in the interest rate environment; (v) the COVID-19 pandemic and the response of governmental authorities to the pandemic and disruptions in global or national supply chains, which have had, and may continue to have, an adverse impact on the global economy and our business operations and performance; (vi) transitions away from the London Interbank Offered Rate; and (vii) risks associated with concentration in real estate related loans. 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.