Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2022 By: Hilltop Holdings Inc. via Business Wire October 20, 2022 at 16:45 PM EDT Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2022. Hilltop produced income to common stockholders of $32.1 million, or $0.50 per diluted share, for the third quarter of 2022, compared to $92.9 million, or $1.15 per diluted share, for the third quarter of 2021. Hilltop’s financial results for the third 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. Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on November 25, 2022, to all common stockholders of record as of the close of business on November 11, 2022. Identified headwinds during 2022, including uncertainties related to inflationary pressures on expenses, the impact of tight housing inventories on mortgage volumes, declining deposit balances, and increases in market interest rates, coupled with a declining economic forecast, rapid increases in U.S. treasury yields and mortgage interest rates, and exposure to increasing funding costs during the first nine months of 2022 have had, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2022 and into the first half of 2023. Jeremy B. Ford, President and CEO of Hilltop, said “Our third quarter financial results were once again driven by a strong performance from PlainsCapital Bank, which continued to prudently grow its core loan portfolio while realizing the benefits of the rising rate environment and resulting expansion of net interest margin. Though deposits declined in the third quarter, the bank still maintains elevated liquidity and ample core deposit funding relative to its loan portfolio. HilltopSecurities experienced improved third quarter results from both a net revenues and pre-tax margin standpoint when compared to each of the trailing three quarters. PrimeLending continues to face material housing market headwinds, including a sharp rise in mortgage interest rates, compression in gain on sale margins and continued affordability concerns for potential home buyers. We remain focused at PrimeLending, and across the Hilltop enterprise, on controlling costs during this dynamic interest rate environment. Importantly, despite the immense and sudden pressure in the mortgage sector, we remained profitable on a consolidated basis and continued to grow capital. We look forward to finishing out 2022 with strong results from our talented team, while positioning Hilltop towards the coming year.” Third Quarter 2022 Highlights for Hilltop: The reversal of credit losses was $0.8 million during the third quarter of 2022, compared to a provision for credit losses of $5.3 million in the second quarter of 2022 and a reversal of credit losses of $5.8 million in the third quarter of 2021; The reversal of credit losses during the third quarter of 2022 reflected modest improvements in the U.S. economic outlook, specific reserves and credit metrics since the prior quarter. For the third 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 $98.0 million, compared to $241.9 million in the third quarter of 2021, a 59.5% decrease; Mortgage loan origination production volume was $3.0 billion during the third quarter of 2022, compared to $5.6 billion in the third quarter of 2021; Net gains from mortgage loans sold to third parties decreased to 227 basis points during the third quarter of 2022, compared to 260 basis points in the second quarter of 2022. Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the third quarter of 2022 were 0.79% and 6.26%, respectively, compared to 2.13% and 14.96%, respectively, for the third quarter of 2021; Hilltop’s book value per common share increased to $31.46 at September 30, 2022, compared to $31.43 at June 30, 2022; Hilltop’s total assets were $16.6 billion and $16.7 billion at September 30, 2022 and June 30, 2022, respectively; Loans1, net of allowance for credit losses, were $7.4 billion at both September 30, 2022 and June 30, 2022; Non-performing loans were $34.6 million, or 0.39% of total loans, at September 30, 2022, compared to $35.7 million, or 0.38% of total loans, at June 30, 2022; Loans held for sale decreased by 32.7% from June 30, 2022 to $1.0 billion at September 30, 2022; Total deposits were $11.4 billion and $11.9 billion at September 30, 2022 and June 30, 2022, respectively; Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.41% and a Common Equity Tier 1 Capital Ratio of 17.45% at September 30, 2022; Hilltop’s consolidated net interest margin4 increased to 3.19% for the third quarter of 2022, compared to 2.75% in the second quarter of 2022; Included previously deferred interest income of $0.2 million during the third quarter of 2022 related to PPP loan-related origination fees, compared to $1.3 million in the second quarter of 2022. For the third quarter of 2022, noninterest income was $207.0 million, compared to $367.9 million in the third quarter of 2021, a 43.7% decrease; For the third quarter 2022, noninterest expense was $288.7 million, compared to $355.2 million in the third quarter of 2021, a 18.7% decrease; and Hilltop’s effective tax rate was 21.8% during the third quarter of 2022, compared to 22.8% during the same period in 2021. ___________________ 1 “Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $402.0 million and $462.4 million at September 30, 2022 and June 30, 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 September 30, June 30, March 31, December 31, September 30, (in 000's) 2022 2022 2022 2021 2021 Cash and due from banks $ 1,777,584 $ 1,783,554 $ 2,886,812 $ 2,823,138 $ 2,463,111 Federal funds sold 663 381 383 385 406 Assets segregated for regulatory purposes 109,358 120,816 128,408 221,740 269,506 Securities purchased under agreements to resell 145,365 139,929 256,991 118,262 155,908 Securities: Trading, at fair value 641,864 593,273 471,763 647,998 609,813 Available for sale, at fair value, net 1,584,724 1,562,222 1,462,340 2,130,568 1,994,183 Held to maturity, at amortized cost, net 889,452 920,583 953,107 267,684 277,419 Equity, at fair value 209 197 225 250 221 3,116,249 3,076,275 2,887,435 3,046,500 2,881,636 Loans held for sale 1,003,605 1,491,579 1,643,994 1,878,190 2,108,878 Loans held for investment, net of unearned income 7,944,246 7,930,619 7,797,903 7,879,904 7,552,926 Allowance for credit losses (91,783 ) (95,298 ) (91,185 ) (91,352 ) (109,512 ) Loans held for investment, net 7,852,463 7,835,321 7,706,718 7,788,552 7,443,414 Broker-dealer and clearing organization receivables 1,255,052 1,049,830 1,610,352 1,672,946 1,419,652 Premises and equipment, net 191,423 195,361 198,906 204,438 210,026 Operating lease right-of-use assets 103,099 106,806 108,180 112,328 115,942 Mortgage servicing assets 156,539 121,688 100,475 86,990 110,931 Other assets 624,235 513,570 546,622 452,880 526,339 Goodwill 267,447 267,447 267,447 267,447 267,447 Other intangible assets, net 12,209 13,182 14,233 15,284 16,455 Total assets $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 $ 17,989,651 Deposits: Noninterest-bearing $ 4,546,816 $ 4,601,643 $ 4,694,592 $ 4,577,183 $ 4,433,148 Interest-bearing 6,805,198 7,319,143 7,972,110 8,240,894 7,699,014 Total deposits 11,352,014 11,920,786 12,666,702 12,818,077 12,132,162 Broker-dealer and clearing organization payables 1,176,156 934,818 1,397,836 1,477,300 1,496,923 Short-term borrowings 942,309 822,649 835,054 859,444 747,040 Securities sold, not yet purchased, at fair value 99,515 135,968 97,629 96,586 113,064 Notes payable 390,354 389,722 395,479 387,904 395,804 Operating lease liabilities 120,635 124,406 125,919 130,960 134,296 Other liabilities 475,425 329,987 347,742 369,606 468,020 Total liabilities 14,556,408 14,658,336 15,866,361 16,139,877 15,487,309 Common stock 646 646 794 790 790 Additional paid-in capital 1,043,605 1,039,261 1,275,649 1,274,446 1,270,272 Accumulated other comprehensive income (loss) (119,864 ) (95,279 ) (80,565 ) (10,219 ) 367 Retained earnings 1,107,586 1,085,208 1,267,415 1,257,014 1,204,307 Deferred compensation employee stock trust, net 479 695 744 752 751 Employee stock trust (641 ) (954 ) (104 ) (115 ) (116 ) Total Hilltop stockholders' equity 2,031,811 2,029,577 2,463,933 2,522,668 2,476,371 Noncontrolling interests 27,072 27,826 26,662 26,535 25,971 Total stockholders' equity 2,058,883 2,057,403 2,490,595 2,549,203 2,502,342 Total liabilities & stockholders' equity $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 $ 17,989,651 Three Months Ended Consolidated Income Statements September 30, June 30, March 31, December 31, September 30, (in 000's, except per share data) 2022 2022 2022 2021 2021 Interest income: Loans, including fees $ 109,165 $ 98,728 $ 90,408 $ 96,104 $ 99,769 Securities borrowed 10,938 10,498 8,817 8,524 8,585 Securities: Taxable 19,642 17,288 15,581 13,916 12,341 Tax-exempt 2,451 2,141 2,419 2,639 2,687 Other 14,276 6,478 2,312 1,872 1,796 Total interest income 156,472 135,133 119,537 123,055 125,178 Interest expense: Deposits 12,525 5,456 4,193 4,404 5,303 Securities loaned 9,407 8,512 7,472 6,624 6,519 Short-term borrowings 5,550 3,020 2,045 2,279 2,400 Notes payable 3,907 3,809 4,437 5,871 5,465 Junior subordinated debentures — — — — 419 Other 1,597 2,280 1,399 (417 ) (18 ) Total interest expense 32,986 23,077 19,546 18,761 20,088 Net interest income 123,486 112,056 99,991 104,294 105,090 Provision for (reversal of) credit losses (780 ) 5,336 115 (18,565 ) (5,819 ) Net interest income after provision for (reversal of) credit losses 124,266 106,720 99,876 122,859 110,909 Noninterest income: Net gains from sale of loans and other mortgage production income 57,998 97,543 110,894 156,103 203,152 Mortgage loan origination fees 39,960 42,378 32,062 35,930 38,780 Securities commissions and fees 34,076 34,757 37,146 32,801 34,412 Investment and securities advisory fees and commissions 35,031 32,002 29,705 42,834 49,646 Other 39,910 32,593 6,621 17,178 41,955 Total noninterest income 206,975 239,273 216,428 284,846 367,945 Noninterest expense: Employees' compensation and benefits 200,450 205,327 200,019 229,717 258,679 Occupancy and equipment, net 25,041 24,231 24,766 25,741 25,428 Professional services 10,631 16,246 10,063 9,904 14,542 Other 52,616 52,739 51,502 56,832 56,525 Total noninterest expense 288,738 298,543 286,350 322,194 355,174 Income before income taxes 42,503 47,450 29,954 85,511 123,680 Income tax expense 9,249 12,127 5,815 20,715 28,257 Net income 33,254 35,323 24,139 64,796 95,423 Less: Net income attributable to noncontrolling interest 1,186 2,063 1,889 2,611 2,517 Income attributable to Hilltop $ 32,068 $ 33,260 $ 22,250 $ 62,185 $ 92,906 Earnings per common share: Basic $ 0.50 $ 0.45 $ 0.28 $ 0.79 $ 1.16 Diluted $ 0.50 $ 0.45 $ 0.28 $ 0.78 $ 1.15 Cash dividends declared per common share $ 0.15 $ 0.15 $ 0.15 $ 0.12 $ 0.12 Weighted average shares outstanding: Basic 64,552 73,693 79,114 78,933 80,109 Diluted 64,669 73,838 79,356 79,427 80,542 Three Months Ended September 30, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 110,939 $ 13,386 $ (2,939 ) $ (3,276 ) $ 5,376 $ 123,486 Provision for (reversal of) credit losses (650 ) (130 ) — — — (780 ) Noninterest income 12,200 100,798 98,200 1,809 (6,032 ) 206,975 Noninterest expense 60,160 96,843 118,345 14,034 (644 ) 288,738 Income (loss) before taxes $ 63,629 $ 17,471 $ (23,084 ) $ (15,501 ) $ (12 ) $ 42,503 Nine Months Ended September 30, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 304,269 $ 37,481 $ (6,066 ) $ (9,856 ) $ 9,705 $ 335,533 Provision for (reversal of) credit losses 4,325 346 — — — 4,671 Noninterest income 37,438 249,139 381,477 5,655 (11,033 ) 662,676 Noninterest expense 175,921 268,307 386,372 44,388 (1,357 ) 873,631 Income (loss) before taxes $ 161,461 $ 17,967 $ (10,961 ) $ (48,589 ) $ 29 $ 119,907 Three Months Ended September 30, June 30, March 31, December 31, September 30, Selected Financial Data 2022 2022 2022 2021 2021 Hilltop Consolidated: Return on average stockholders' equity 6.26% 5.82% 3.60% 9.93% 14.96% Return on average assets 0.79% 0.80% 0.53% 1.41% 2.13% Net interest margin (1) 3.19% 2.75% 2.36% 2.44% 2.53% Net interest margin (taxable equivalent) (2): As reported 3.20% 2.76% 2.37% 2.45% 2.54% Impact of purchase accounting 8 bps 8 bps 7 bps 12 bps 9 bps Book value per common share ($) 31.46 31.43 31.02 31.95 31.36 Shares outstanding, end of period (000's) 64,591 64,576 79,439 78,965 78,959 Dividend payout ratio (3) 30.19% 33.33% 53.57% 15.19% 10.34% Banking Segment: Net interest margin (1) 3.42% 2.97% 2.65% 2.81% 2.99% Net interest margin (taxable equivalent) (2): As reported 3.43% 2.98% 2.65% 2.82% 3.00% Impact of purchase accounting 10 bps 10 bps 8 bps 15 bps 11 bps Accretion of discount on loans ($000's) 2,858 3,011 2,510 4,716 3,221 Net recoveries (charge-offs) ($000's) (2,735 ) (1,223 ) (282 ) 405 62 Return on average assets 1.41% 1.09% 0.98% 1.44% 1.36% Fee income ratio 9.9% 11.0% 12.2% 10.8% 10.5% Efficiency ratio 48.9% 50.4% 55.7% 54.2% 48.8% Employees' compensation and benefits ($000's) 35,934 33,554 33,517 34,415 31,500 Broker-Dealer Segment: Net revenue ($000's) (4) 114,184 100,229 72,209 94,569 126,570 Employees' compensation and benefits ($000's) 70,274 64,494 55,825 65,301 82,429 Variable compensation expense ($000's) 42,567 37,471 26,625 35,939 53,505 Compensation as a % of net revenue 61.5% 64.3% 77.3% 69.1% 65.1% Pre-tax margin (5) 15.3% 9.1% (11.9)% 1.8% 13.8% Mortgage Origination Segment: Mortgage loan originations - volume ($000's): Home purchases 2,832,136 3,342,103 2,753,031 3,559,137 3,948,420 Refinancings 211,075 467,117 1,011,452 1,430,369 1,646,208 Total mortgage loan originations - volume 3,043,211 3,809,220 3,764,483 4,989,506 5,594,628 Mortgage loan sales - volume ($000's) 3,419,950 3,872,935 3,868,596 4,988,538 6,195,559 Net gains from mortgage loan sales (basis points): Loans sold to third parties 227 260 321 362 359 Impact of loans retained by banking segment (9 ) (7 ) (9 ) (15 ) (13 ) As reported 218 253 312 347 346 Mortgage servicing rights asset ($000's) (6) 156,539 121,688 100,475 86,990 110,931 Employees' compensation and benefits ($000's) 86,079 100,206 102,748 121,758 134,814 Variable compensation expense ($000's) 44,312 56,525 56,243 73,208 88,153 ___________________ (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, $0.4 million, $0.5 million, $0.5 million, and $0.6 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. September 30, June 30, March 31, December 31, September 30, Capital Ratios 2022 2022 2022 2021 2021 Tier 1 capital (to average assets): PlainsCapital 10.29% 9.67% 9.74% 10.20% 10.02% Hilltop 11.41% 10.53% 12.46% 12.58% 12.64% Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 14.68% 14.65% 15.37% 16.00% 15.40% Hilltop 17.45% 17.24% 21.27% 21.22% 21.28% Tier 1 capital (to risk-weighted assets): PlainsCapital 14.68% 14.65% 15.37% 16.00% 15.40% Hilltop 17.45% 17.24% 21.27% 21.22% 21.28% Total capital (to risk-weighted assets): PlainsCapital 15.54% 15.55% 16.18% 16.77% 16.32% Hilltop 20.07% 19.90% 23.85% 23.75% 24.00% September 30, June 30, March 31, December 31, September 30, Non-Performing Assets Portfolio Data 2022 2022 2022 2021 2021 Loans accounted for on a non-accrual basis ($000's) (1): Commercial real estate 4,735 4,947 6,153 6,601 5,705 Commercial and industrial 12,078 13,315 18,486 22,478 29,808 Construction and land development 1 1 1 2 366 1-4 family residential 16,968 16,542 18,723 21,123 25,255 Consumer 16 19 21 23 24 Broker-dealer — — — — — 33,798 34,824 43,384 50,227 61,158 Troubled debt restructurings included in accruing loans held for investment ($000's) 825 857 890 922 1,038 Non-performing loans ($000's) 34,623 35,681 44,274 51,149 62,196 Non-performing loans as a % of total loans 0.39% 0.38% 0.47% 0.52% 0.64% Other real estate owned ($000's) 1,637 1,516 2,175 2,833 21,605 Other repossessed assets ($000's) — — — — — Non-performing assets ($000's) 36,260 37,197 46,449 53,982 83,801 Non-performing assets as a % of total assets 0.22% 0.22% 0.25% 0.29% 0.47% Loans past due 90 days or more and still accruing ($000's) (2): 96,532 82,410 87,489 60,775 175,734 ___________________ (1) Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications through January 1, 2022. The banking segment’s COVID-19 payment deferment 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 banking segment’s actions through December 31, 2021 included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $4 million and $17 million as of December 31, 2021 and September 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 September 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 $ 1,166,265 $ 14,414 4.94 % $ 2,300,939 $ 17,696 3.08 % Loans held for investment, gross (2) 7,911,833 94,751 4.75 % 7,514,392 82,073 4.33 % Investment securities - taxable 2,883,412 19,642 2.72 % 2,585,362 12,328 1.91 % Investment securities - non-taxable (3) 312,312 2,817 3.61 % 318,408 3,252 4.09 % Federal funds sold and securities purchased under agreements to resell 137,728 1,309 3.77 % 161,577 207 — % Interest-bearing deposits in other financial institutions 1,780,220 9,542 2.13 % 2,197,478 788 0.14 % Securities borrowed 1,116,837 10,938 3.83 % 1,364,726 8,585 2.46 % Other 56,331 3,425 24.12 % 51,350 813 6.28 % Interest-earning assets, gross (3) 15,364,938 156,838 4.05 % 16,494,232 125,742 3.02 % Allowance for credit losses (95,083 ) (115,688 ) Interest-earning assets, net 15,269,855 16,378,544 Noninterest-earning assets 1,399,228 1,371,207 Total assets $ 16,669,083 $ 17,749,751 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,136,779 $ 12,525 0.70 % $ 7,622,748 $ 5,303 0.28 % Securities loaned 980,530 9,407 3.81 % 1,306,314 6,519 1.98 % Notes payable and other borrowings 1,262,985 11,054 3.47 % 1,231,545 8,266 2.66 % Total interest-bearing liabilities 9,380,294 32,986 1.40 % 10,160,607 20,088 0.78 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,543,067 4,299,987 Other liabilities 685,843 800,225 Total liabilities 14,609,204 15,260,819 Stockholders’ equity 2,032,717 2,463,821 Noncontrolling interest 27,162 25,111 Total liabilities and stockholders' equity $ 16,669,083 $ 17,749,751 Net interest income (3) $ 123,852 $ 105,654 Net interest spread (3) 2.65 % 2.24 % Net interest margin (3) 3.20 % 2.54 % ___________________ (1) Information presented on a consolidated basis. (2) Average balance includes non-accrual loans. (3) Presented on a taxable-equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rate for the periods presented. The adjustment to interest income was $0.4 million and $0.6 million for the three months ended September 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, October 21, 2022. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third 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 098668. 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 September 30, 2022, Hilltop employed approximately 4,385 people and operated approximately 370 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; and (v) 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20221020005898/en/Contacts Erik Yohe 214-525-4634 eyohe@hilltop-holdings.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2022 By: Hilltop Holdings Inc. via Business Wire October 20, 2022 at 16:45 PM EDT Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2022. Hilltop produced income to common stockholders of $32.1 million, or $0.50 per diluted share, for the third quarter of 2022, compared to $92.9 million, or $1.15 per diluted share, for the third quarter of 2021. Hilltop’s financial results for the third 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. Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on November 25, 2022, to all common stockholders of record as of the close of business on November 11, 2022. Identified headwinds during 2022, including uncertainties related to inflationary pressures on expenses, the impact of tight housing inventories on mortgage volumes, declining deposit balances, and increases in market interest rates, coupled with a declining economic forecast, rapid increases in U.S. treasury yields and mortgage interest rates, and exposure to increasing funding costs during the first nine months of 2022 have had, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2022 and into the first half of 2023. Jeremy B. Ford, President and CEO of Hilltop, said “Our third quarter financial results were once again driven by a strong performance from PlainsCapital Bank, which continued to prudently grow its core loan portfolio while realizing the benefits of the rising rate environment and resulting expansion of net interest margin. Though deposits declined in the third quarter, the bank still maintains elevated liquidity and ample core deposit funding relative to its loan portfolio. HilltopSecurities experienced improved third quarter results from both a net revenues and pre-tax margin standpoint when compared to each of the trailing three quarters. PrimeLending continues to face material housing market headwinds, including a sharp rise in mortgage interest rates, compression in gain on sale margins and continued affordability concerns for potential home buyers. We remain focused at PrimeLending, and across the Hilltop enterprise, on controlling costs during this dynamic interest rate environment. Importantly, despite the immense and sudden pressure in the mortgage sector, we remained profitable on a consolidated basis and continued to grow capital. We look forward to finishing out 2022 with strong results from our talented team, while positioning Hilltop towards the coming year.” Third Quarter 2022 Highlights for Hilltop: The reversal of credit losses was $0.8 million during the third quarter of 2022, compared to a provision for credit losses of $5.3 million in the second quarter of 2022 and a reversal of credit losses of $5.8 million in the third quarter of 2021; The reversal of credit losses during the third quarter of 2022 reflected modest improvements in the U.S. economic outlook, specific reserves and credit metrics since the prior quarter. For the third 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 $98.0 million, compared to $241.9 million in the third quarter of 2021, a 59.5% decrease; Mortgage loan origination production volume was $3.0 billion during the third quarter of 2022, compared to $5.6 billion in the third quarter of 2021; Net gains from mortgage loans sold to third parties decreased to 227 basis points during the third quarter of 2022, compared to 260 basis points in the second quarter of 2022. Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the third quarter of 2022 were 0.79% and 6.26%, respectively, compared to 2.13% and 14.96%, respectively, for the third quarter of 2021; Hilltop’s book value per common share increased to $31.46 at September 30, 2022, compared to $31.43 at June 30, 2022; Hilltop’s total assets were $16.6 billion and $16.7 billion at September 30, 2022 and June 30, 2022, respectively; Loans1, net of allowance for credit losses, were $7.4 billion at both September 30, 2022 and June 30, 2022; Non-performing loans were $34.6 million, or 0.39% of total loans, at September 30, 2022, compared to $35.7 million, or 0.38% of total loans, at June 30, 2022; Loans held for sale decreased by 32.7% from June 30, 2022 to $1.0 billion at September 30, 2022; Total deposits were $11.4 billion and $11.9 billion at September 30, 2022 and June 30, 2022, respectively; Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.41% and a Common Equity Tier 1 Capital Ratio of 17.45% at September 30, 2022; Hilltop’s consolidated net interest margin4 increased to 3.19% for the third quarter of 2022, compared to 2.75% in the second quarter of 2022; Included previously deferred interest income of $0.2 million during the third quarter of 2022 related to PPP loan-related origination fees, compared to $1.3 million in the second quarter of 2022. For the third quarter of 2022, noninterest income was $207.0 million, compared to $367.9 million in the third quarter of 2021, a 43.7% decrease; For the third quarter 2022, noninterest expense was $288.7 million, compared to $355.2 million in the third quarter of 2021, a 18.7% decrease; and Hilltop’s effective tax rate was 21.8% during the third quarter of 2022, compared to 22.8% during the same period in 2021. ___________________ 1 “Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $402.0 million and $462.4 million at September 30, 2022 and June 30, 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 September 30, June 30, March 31, December 31, September 30, (in 000's) 2022 2022 2022 2021 2021 Cash and due from banks $ 1,777,584 $ 1,783,554 $ 2,886,812 $ 2,823,138 $ 2,463,111 Federal funds sold 663 381 383 385 406 Assets segregated for regulatory purposes 109,358 120,816 128,408 221,740 269,506 Securities purchased under agreements to resell 145,365 139,929 256,991 118,262 155,908 Securities: Trading, at fair value 641,864 593,273 471,763 647,998 609,813 Available for sale, at fair value, net 1,584,724 1,562,222 1,462,340 2,130,568 1,994,183 Held to maturity, at amortized cost, net 889,452 920,583 953,107 267,684 277,419 Equity, at fair value 209 197 225 250 221 3,116,249 3,076,275 2,887,435 3,046,500 2,881,636 Loans held for sale 1,003,605 1,491,579 1,643,994 1,878,190 2,108,878 Loans held for investment, net of unearned income 7,944,246 7,930,619 7,797,903 7,879,904 7,552,926 Allowance for credit losses (91,783 ) (95,298 ) (91,185 ) (91,352 ) (109,512 ) Loans held for investment, net 7,852,463 7,835,321 7,706,718 7,788,552 7,443,414 Broker-dealer and clearing organization receivables 1,255,052 1,049,830 1,610,352 1,672,946 1,419,652 Premises and equipment, net 191,423 195,361 198,906 204,438 210,026 Operating lease right-of-use assets 103,099 106,806 108,180 112,328 115,942 Mortgage servicing assets 156,539 121,688 100,475 86,990 110,931 Other assets 624,235 513,570 546,622 452,880 526,339 Goodwill 267,447 267,447 267,447 267,447 267,447 Other intangible assets, net 12,209 13,182 14,233 15,284 16,455 Total assets $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 $ 17,989,651 Deposits: Noninterest-bearing $ 4,546,816 $ 4,601,643 $ 4,694,592 $ 4,577,183 $ 4,433,148 Interest-bearing 6,805,198 7,319,143 7,972,110 8,240,894 7,699,014 Total deposits 11,352,014 11,920,786 12,666,702 12,818,077 12,132,162 Broker-dealer and clearing organization payables 1,176,156 934,818 1,397,836 1,477,300 1,496,923 Short-term borrowings 942,309 822,649 835,054 859,444 747,040 Securities sold, not yet purchased, at fair value 99,515 135,968 97,629 96,586 113,064 Notes payable 390,354 389,722 395,479 387,904 395,804 Operating lease liabilities 120,635 124,406 125,919 130,960 134,296 Other liabilities 475,425 329,987 347,742 369,606 468,020 Total liabilities 14,556,408 14,658,336 15,866,361 16,139,877 15,487,309 Common stock 646 646 794 790 790 Additional paid-in capital 1,043,605 1,039,261 1,275,649 1,274,446 1,270,272 Accumulated other comprehensive income (loss) (119,864 ) (95,279 ) (80,565 ) (10,219 ) 367 Retained earnings 1,107,586 1,085,208 1,267,415 1,257,014 1,204,307 Deferred compensation employee stock trust, net 479 695 744 752 751 Employee stock trust (641 ) (954 ) (104 ) (115 ) (116 ) Total Hilltop stockholders' equity 2,031,811 2,029,577 2,463,933 2,522,668 2,476,371 Noncontrolling interests 27,072 27,826 26,662 26,535 25,971 Total stockholders' equity 2,058,883 2,057,403 2,490,595 2,549,203 2,502,342 Total liabilities & stockholders' equity $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 $ 17,989,651 Three Months Ended Consolidated Income Statements September 30, June 30, March 31, December 31, September 30, (in 000's, except per share data) 2022 2022 2022 2021 2021 Interest income: Loans, including fees $ 109,165 $ 98,728 $ 90,408 $ 96,104 $ 99,769 Securities borrowed 10,938 10,498 8,817 8,524 8,585 Securities: Taxable 19,642 17,288 15,581 13,916 12,341 Tax-exempt 2,451 2,141 2,419 2,639 2,687 Other 14,276 6,478 2,312 1,872 1,796 Total interest income 156,472 135,133 119,537 123,055 125,178 Interest expense: Deposits 12,525 5,456 4,193 4,404 5,303 Securities loaned 9,407 8,512 7,472 6,624 6,519 Short-term borrowings 5,550 3,020 2,045 2,279 2,400 Notes payable 3,907 3,809 4,437 5,871 5,465 Junior subordinated debentures — — — — 419 Other 1,597 2,280 1,399 (417 ) (18 ) Total interest expense 32,986 23,077 19,546 18,761 20,088 Net interest income 123,486 112,056 99,991 104,294 105,090 Provision for (reversal of) credit losses (780 ) 5,336 115 (18,565 ) (5,819 ) Net interest income after provision for (reversal of) credit losses 124,266 106,720 99,876 122,859 110,909 Noninterest income: Net gains from sale of loans and other mortgage production income 57,998 97,543 110,894 156,103 203,152 Mortgage loan origination fees 39,960 42,378 32,062 35,930 38,780 Securities commissions and fees 34,076 34,757 37,146 32,801 34,412 Investment and securities advisory fees and commissions 35,031 32,002 29,705 42,834 49,646 Other 39,910 32,593 6,621 17,178 41,955 Total noninterest income 206,975 239,273 216,428 284,846 367,945 Noninterest expense: Employees' compensation and benefits 200,450 205,327 200,019 229,717 258,679 Occupancy and equipment, net 25,041 24,231 24,766 25,741 25,428 Professional services 10,631 16,246 10,063 9,904 14,542 Other 52,616 52,739 51,502 56,832 56,525 Total noninterest expense 288,738 298,543 286,350 322,194 355,174 Income before income taxes 42,503 47,450 29,954 85,511 123,680 Income tax expense 9,249 12,127 5,815 20,715 28,257 Net income 33,254 35,323 24,139 64,796 95,423 Less: Net income attributable to noncontrolling interest 1,186 2,063 1,889 2,611 2,517 Income attributable to Hilltop $ 32,068 $ 33,260 $ 22,250 $ 62,185 $ 92,906 Earnings per common share: Basic $ 0.50 $ 0.45 $ 0.28 $ 0.79 $ 1.16 Diluted $ 0.50 $ 0.45 $ 0.28 $ 0.78 $ 1.15 Cash dividends declared per common share $ 0.15 $ 0.15 $ 0.15 $ 0.12 $ 0.12 Weighted average shares outstanding: Basic 64,552 73,693 79,114 78,933 80,109 Diluted 64,669 73,838 79,356 79,427 80,542 Three Months Ended September 30, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 110,939 $ 13,386 $ (2,939 ) $ (3,276 ) $ 5,376 $ 123,486 Provision for (reversal of) credit losses (650 ) (130 ) — — — (780 ) Noninterest income 12,200 100,798 98,200 1,809 (6,032 ) 206,975 Noninterest expense 60,160 96,843 118,345 14,034 (644 ) 288,738 Income (loss) before taxes $ 63,629 $ 17,471 $ (23,084 ) $ (15,501 ) $ (12 ) $ 42,503 Nine Months Ended September 30, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 304,269 $ 37,481 $ (6,066 ) $ (9,856 ) $ 9,705 $ 335,533 Provision for (reversal of) credit losses 4,325 346 — — — 4,671 Noninterest income 37,438 249,139 381,477 5,655 (11,033 ) 662,676 Noninterest expense 175,921 268,307 386,372 44,388 (1,357 ) 873,631 Income (loss) before taxes $ 161,461 $ 17,967 $ (10,961 ) $ (48,589 ) $ 29 $ 119,907 Three Months Ended September 30, June 30, March 31, December 31, September 30, Selected Financial Data 2022 2022 2022 2021 2021 Hilltop Consolidated: Return on average stockholders' equity 6.26% 5.82% 3.60% 9.93% 14.96% Return on average assets 0.79% 0.80% 0.53% 1.41% 2.13% Net interest margin (1) 3.19% 2.75% 2.36% 2.44% 2.53% Net interest margin (taxable equivalent) (2): As reported 3.20% 2.76% 2.37% 2.45% 2.54% Impact of purchase accounting 8 bps 8 bps 7 bps 12 bps 9 bps Book value per common share ($) 31.46 31.43 31.02 31.95 31.36 Shares outstanding, end of period (000's) 64,591 64,576 79,439 78,965 78,959 Dividend payout ratio (3) 30.19% 33.33% 53.57% 15.19% 10.34% Banking Segment: Net interest margin (1) 3.42% 2.97% 2.65% 2.81% 2.99% Net interest margin (taxable equivalent) (2): As reported 3.43% 2.98% 2.65% 2.82% 3.00% Impact of purchase accounting 10 bps 10 bps 8 bps 15 bps 11 bps Accretion of discount on loans ($000's) 2,858 3,011 2,510 4,716 3,221 Net recoveries (charge-offs) ($000's) (2,735 ) (1,223 ) (282 ) 405 62 Return on average assets 1.41% 1.09% 0.98% 1.44% 1.36% Fee income ratio 9.9% 11.0% 12.2% 10.8% 10.5% Efficiency ratio 48.9% 50.4% 55.7% 54.2% 48.8% Employees' compensation and benefits ($000's) 35,934 33,554 33,517 34,415 31,500 Broker-Dealer Segment: Net revenue ($000's) (4) 114,184 100,229 72,209 94,569 126,570 Employees' compensation and benefits ($000's) 70,274 64,494 55,825 65,301 82,429 Variable compensation expense ($000's) 42,567 37,471 26,625 35,939 53,505 Compensation as a % of net revenue 61.5% 64.3% 77.3% 69.1% 65.1% Pre-tax margin (5) 15.3% 9.1% (11.9)% 1.8% 13.8% Mortgage Origination Segment: Mortgage loan originations - volume ($000's): Home purchases 2,832,136 3,342,103 2,753,031 3,559,137 3,948,420 Refinancings 211,075 467,117 1,011,452 1,430,369 1,646,208 Total mortgage loan originations - volume 3,043,211 3,809,220 3,764,483 4,989,506 5,594,628 Mortgage loan sales - volume ($000's) 3,419,950 3,872,935 3,868,596 4,988,538 6,195,559 Net gains from mortgage loan sales (basis points): Loans sold to third parties 227 260 321 362 359 Impact of loans retained by banking segment (9 ) (7 ) (9 ) (15 ) (13 ) As reported 218 253 312 347 346 Mortgage servicing rights asset ($000's) (6) 156,539 121,688 100,475 86,990 110,931 Employees' compensation and benefits ($000's) 86,079 100,206 102,748 121,758 134,814 Variable compensation expense ($000's) 44,312 56,525 56,243 73,208 88,153 ___________________ (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, $0.4 million, $0.5 million, $0.5 million, and $0.6 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. September 30, June 30, March 31, December 31, September 30, Capital Ratios 2022 2022 2022 2021 2021 Tier 1 capital (to average assets): PlainsCapital 10.29% 9.67% 9.74% 10.20% 10.02% Hilltop 11.41% 10.53% 12.46% 12.58% 12.64% Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 14.68% 14.65% 15.37% 16.00% 15.40% Hilltop 17.45% 17.24% 21.27% 21.22% 21.28% Tier 1 capital (to risk-weighted assets): PlainsCapital 14.68% 14.65% 15.37% 16.00% 15.40% Hilltop 17.45% 17.24% 21.27% 21.22% 21.28% Total capital (to risk-weighted assets): PlainsCapital 15.54% 15.55% 16.18% 16.77% 16.32% Hilltop 20.07% 19.90% 23.85% 23.75% 24.00% September 30, June 30, March 31, December 31, September 30, Non-Performing Assets Portfolio Data 2022 2022 2022 2021 2021 Loans accounted for on a non-accrual basis ($000's) (1): Commercial real estate 4,735 4,947 6,153 6,601 5,705 Commercial and industrial 12,078 13,315 18,486 22,478 29,808 Construction and land development 1 1 1 2 366 1-4 family residential 16,968 16,542 18,723 21,123 25,255 Consumer 16 19 21 23 24 Broker-dealer — — — — — 33,798 34,824 43,384 50,227 61,158 Troubled debt restructurings included in accruing loans held for investment ($000's) 825 857 890 922 1,038 Non-performing loans ($000's) 34,623 35,681 44,274 51,149 62,196 Non-performing loans as a % of total loans 0.39% 0.38% 0.47% 0.52% 0.64% Other real estate owned ($000's) 1,637 1,516 2,175 2,833 21,605 Other repossessed assets ($000's) — — — — — Non-performing assets ($000's) 36,260 37,197 46,449 53,982 83,801 Non-performing assets as a % of total assets 0.22% 0.22% 0.25% 0.29% 0.47% Loans past due 90 days or more and still accruing ($000's) (2): 96,532 82,410 87,489 60,775 175,734 ___________________ (1) Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications through January 1, 2022. The banking segment’s COVID-19 payment deferment 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 banking segment’s actions through December 31, 2021 included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $4 million and $17 million as of December 31, 2021 and September 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 September 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 $ 1,166,265 $ 14,414 4.94 % $ 2,300,939 $ 17,696 3.08 % Loans held for investment, gross (2) 7,911,833 94,751 4.75 % 7,514,392 82,073 4.33 % Investment securities - taxable 2,883,412 19,642 2.72 % 2,585,362 12,328 1.91 % Investment securities - non-taxable (3) 312,312 2,817 3.61 % 318,408 3,252 4.09 % Federal funds sold and securities purchased under agreements to resell 137,728 1,309 3.77 % 161,577 207 — % Interest-bearing deposits in other financial institutions 1,780,220 9,542 2.13 % 2,197,478 788 0.14 % Securities borrowed 1,116,837 10,938 3.83 % 1,364,726 8,585 2.46 % Other 56,331 3,425 24.12 % 51,350 813 6.28 % Interest-earning assets, gross (3) 15,364,938 156,838 4.05 % 16,494,232 125,742 3.02 % Allowance for credit losses (95,083 ) (115,688 ) Interest-earning assets, net 15,269,855 16,378,544 Noninterest-earning assets 1,399,228 1,371,207 Total assets $ 16,669,083 $ 17,749,751 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,136,779 $ 12,525 0.70 % $ 7,622,748 $ 5,303 0.28 % Securities loaned 980,530 9,407 3.81 % 1,306,314 6,519 1.98 % Notes payable and other borrowings 1,262,985 11,054 3.47 % 1,231,545 8,266 2.66 % Total interest-bearing liabilities 9,380,294 32,986 1.40 % 10,160,607 20,088 0.78 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,543,067 4,299,987 Other liabilities 685,843 800,225 Total liabilities 14,609,204 15,260,819 Stockholders’ equity 2,032,717 2,463,821 Noncontrolling interest 27,162 25,111 Total liabilities and stockholders' equity $ 16,669,083 $ 17,749,751 Net interest income (3) $ 123,852 $ 105,654 Net interest spread (3) 2.65 % 2.24 % Net interest margin (3) 3.20 % 2.54 % ___________________ (1) Information presented on a consolidated basis. (2) Average balance includes non-accrual loans. (3) Presented on a taxable-equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rate for the periods presented. The adjustment to interest income was $0.4 million and $0.6 million for the three months ended September 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, October 21, 2022. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third 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 098668. 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 September 30, 2022, Hilltop employed approximately 4,385 people and operated approximately 370 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; and (v) 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20221020005898/en/Contacts Erik Yohe 214-525-4634 eyohe@hilltop-holdings.com
Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2022. Hilltop produced income to common stockholders of $32.1 million, or $0.50 per diluted share, for the third quarter of 2022, compared to $92.9 million, or $1.15 per diluted share, for the third quarter of 2021. Hilltop’s financial results for the third 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. Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on November 25, 2022, to all common stockholders of record as of the close of business on November 11, 2022. Identified headwinds during 2022, including uncertainties related to inflationary pressures on expenses, the impact of tight housing inventories on mortgage volumes, declining deposit balances, and increases in market interest rates, coupled with a declining economic forecast, rapid increases in U.S. treasury yields and mortgage interest rates, and exposure to increasing funding costs during the first nine months of 2022 have had, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2022 and into the first half of 2023. Jeremy B. Ford, President and CEO of Hilltop, said “Our third quarter financial results were once again driven by a strong performance from PlainsCapital Bank, which continued to prudently grow its core loan portfolio while realizing the benefits of the rising rate environment and resulting expansion of net interest margin. Though deposits declined in the third quarter, the bank still maintains elevated liquidity and ample core deposit funding relative to its loan portfolio. HilltopSecurities experienced improved third quarter results from both a net revenues and pre-tax margin standpoint when compared to each of the trailing three quarters. PrimeLending continues to face material housing market headwinds, including a sharp rise in mortgage interest rates, compression in gain on sale margins and continued affordability concerns for potential home buyers. We remain focused at PrimeLending, and across the Hilltop enterprise, on controlling costs during this dynamic interest rate environment. Importantly, despite the immense and sudden pressure in the mortgage sector, we remained profitable on a consolidated basis and continued to grow capital. We look forward to finishing out 2022 with strong results from our talented team, while positioning Hilltop towards the coming year.” Third Quarter 2022 Highlights for Hilltop: The reversal of credit losses was $0.8 million during the third quarter of 2022, compared to a provision for credit losses of $5.3 million in the second quarter of 2022 and a reversal of credit losses of $5.8 million in the third quarter of 2021; The reversal of credit losses during the third quarter of 2022 reflected modest improvements in the U.S. economic outlook, specific reserves and credit metrics since the prior quarter. For the third 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 $98.0 million, compared to $241.9 million in the third quarter of 2021, a 59.5% decrease; Mortgage loan origination production volume was $3.0 billion during the third quarter of 2022, compared to $5.6 billion in the third quarter of 2021; Net gains from mortgage loans sold to third parties decreased to 227 basis points during the third quarter of 2022, compared to 260 basis points in the second quarter of 2022. Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the third quarter of 2022 were 0.79% and 6.26%, respectively, compared to 2.13% and 14.96%, respectively, for the third quarter of 2021; Hilltop’s book value per common share increased to $31.46 at September 30, 2022, compared to $31.43 at June 30, 2022; Hilltop’s total assets were $16.6 billion and $16.7 billion at September 30, 2022 and June 30, 2022, respectively; Loans1, net of allowance for credit losses, were $7.4 billion at both September 30, 2022 and June 30, 2022; Non-performing loans were $34.6 million, or 0.39% of total loans, at September 30, 2022, compared to $35.7 million, or 0.38% of total loans, at June 30, 2022; Loans held for sale decreased by 32.7% from June 30, 2022 to $1.0 billion at September 30, 2022; Total deposits were $11.4 billion and $11.9 billion at September 30, 2022 and June 30, 2022, respectively; Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.41% and a Common Equity Tier 1 Capital Ratio of 17.45% at September 30, 2022; Hilltop’s consolidated net interest margin4 increased to 3.19% for the third quarter of 2022, compared to 2.75% in the second quarter of 2022; Included previously deferred interest income of $0.2 million during the third quarter of 2022 related to PPP loan-related origination fees, compared to $1.3 million in the second quarter of 2022. For the third quarter of 2022, noninterest income was $207.0 million, compared to $367.9 million in the third quarter of 2021, a 43.7% decrease; For the third quarter 2022, noninterest expense was $288.7 million, compared to $355.2 million in the third quarter of 2021, a 18.7% decrease; and Hilltop’s effective tax rate was 21.8% during the third quarter of 2022, compared to 22.8% during the same period in 2021. ___________________ 1 “Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $402.0 million and $462.4 million at September 30, 2022 and June 30, 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 September 30, June 30, March 31, December 31, September 30, (in 000's) 2022 2022 2022 2021 2021 Cash and due from banks $ 1,777,584 $ 1,783,554 $ 2,886,812 $ 2,823,138 $ 2,463,111 Federal funds sold 663 381 383 385 406 Assets segregated for regulatory purposes 109,358 120,816 128,408 221,740 269,506 Securities purchased under agreements to resell 145,365 139,929 256,991 118,262 155,908 Securities: Trading, at fair value 641,864 593,273 471,763 647,998 609,813 Available for sale, at fair value, net 1,584,724 1,562,222 1,462,340 2,130,568 1,994,183 Held to maturity, at amortized cost, net 889,452 920,583 953,107 267,684 277,419 Equity, at fair value 209 197 225 250 221 3,116,249 3,076,275 2,887,435 3,046,500 2,881,636 Loans held for sale 1,003,605 1,491,579 1,643,994 1,878,190 2,108,878 Loans held for investment, net of unearned income 7,944,246 7,930,619 7,797,903 7,879,904 7,552,926 Allowance for credit losses (91,783 ) (95,298 ) (91,185 ) (91,352 ) (109,512 ) Loans held for investment, net 7,852,463 7,835,321 7,706,718 7,788,552 7,443,414 Broker-dealer and clearing organization receivables 1,255,052 1,049,830 1,610,352 1,672,946 1,419,652 Premises and equipment, net 191,423 195,361 198,906 204,438 210,026 Operating lease right-of-use assets 103,099 106,806 108,180 112,328 115,942 Mortgage servicing assets 156,539 121,688 100,475 86,990 110,931 Other assets 624,235 513,570 546,622 452,880 526,339 Goodwill 267,447 267,447 267,447 267,447 267,447 Other intangible assets, net 12,209 13,182 14,233 15,284 16,455 Total assets $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 $ 17,989,651 Deposits: Noninterest-bearing $ 4,546,816 $ 4,601,643 $ 4,694,592 $ 4,577,183 $ 4,433,148 Interest-bearing 6,805,198 7,319,143 7,972,110 8,240,894 7,699,014 Total deposits 11,352,014 11,920,786 12,666,702 12,818,077 12,132,162 Broker-dealer and clearing organization payables 1,176,156 934,818 1,397,836 1,477,300 1,496,923 Short-term borrowings 942,309 822,649 835,054 859,444 747,040 Securities sold, not yet purchased, at fair value 99,515 135,968 97,629 96,586 113,064 Notes payable 390,354 389,722 395,479 387,904 395,804 Operating lease liabilities 120,635 124,406 125,919 130,960 134,296 Other liabilities 475,425 329,987 347,742 369,606 468,020 Total liabilities 14,556,408 14,658,336 15,866,361 16,139,877 15,487,309 Common stock 646 646 794 790 790 Additional paid-in capital 1,043,605 1,039,261 1,275,649 1,274,446 1,270,272 Accumulated other comprehensive income (loss) (119,864 ) (95,279 ) (80,565 ) (10,219 ) 367 Retained earnings 1,107,586 1,085,208 1,267,415 1,257,014 1,204,307 Deferred compensation employee stock trust, net 479 695 744 752 751 Employee stock trust (641 ) (954 ) (104 ) (115 ) (116 ) Total Hilltop stockholders' equity 2,031,811 2,029,577 2,463,933 2,522,668 2,476,371 Noncontrolling interests 27,072 27,826 26,662 26,535 25,971 Total stockholders' equity 2,058,883 2,057,403 2,490,595 2,549,203 2,502,342 Total liabilities & stockholders' equity $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 $ 17,989,651 Three Months Ended Consolidated Income Statements September 30, June 30, March 31, December 31, September 30, (in 000's, except per share data) 2022 2022 2022 2021 2021 Interest income: Loans, including fees $ 109,165 $ 98,728 $ 90,408 $ 96,104 $ 99,769 Securities borrowed 10,938 10,498 8,817 8,524 8,585 Securities: Taxable 19,642 17,288 15,581 13,916 12,341 Tax-exempt 2,451 2,141 2,419 2,639 2,687 Other 14,276 6,478 2,312 1,872 1,796 Total interest income 156,472 135,133 119,537 123,055 125,178 Interest expense: Deposits 12,525 5,456 4,193 4,404 5,303 Securities loaned 9,407 8,512 7,472 6,624 6,519 Short-term borrowings 5,550 3,020 2,045 2,279 2,400 Notes payable 3,907 3,809 4,437 5,871 5,465 Junior subordinated debentures — — — — 419 Other 1,597 2,280 1,399 (417 ) (18 ) Total interest expense 32,986 23,077 19,546 18,761 20,088 Net interest income 123,486 112,056 99,991 104,294 105,090 Provision for (reversal of) credit losses (780 ) 5,336 115 (18,565 ) (5,819 ) Net interest income after provision for (reversal of) credit losses 124,266 106,720 99,876 122,859 110,909 Noninterest income: Net gains from sale of loans and other mortgage production income 57,998 97,543 110,894 156,103 203,152 Mortgage loan origination fees 39,960 42,378 32,062 35,930 38,780 Securities commissions and fees 34,076 34,757 37,146 32,801 34,412 Investment and securities advisory fees and commissions 35,031 32,002 29,705 42,834 49,646 Other 39,910 32,593 6,621 17,178 41,955 Total noninterest income 206,975 239,273 216,428 284,846 367,945 Noninterest expense: Employees' compensation and benefits 200,450 205,327 200,019 229,717 258,679 Occupancy and equipment, net 25,041 24,231 24,766 25,741 25,428 Professional services 10,631 16,246 10,063 9,904 14,542 Other 52,616 52,739 51,502 56,832 56,525 Total noninterest expense 288,738 298,543 286,350 322,194 355,174 Income before income taxes 42,503 47,450 29,954 85,511 123,680 Income tax expense 9,249 12,127 5,815 20,715 28,257 Net income 33,254 35,323 24,139 64,796 95,423 Less: Net income attributable to noncontrolling interest 1,186 2,063 1,889 2,611 2,517 Income attributable to Hilltop $ 32,068 $ 33,260 $ 22,250 $ 62,185 $ 92,906 Earnings per common share: Basic $ 0.50 $ 0.45 $ 0.28 $ 0.79 $ 1.16 Diluted $ 0.50 $ 0.45 $ 0.28 $ 0.78 $ 1.15 Cash dividends declared per common share $ 0.15 $ 0.15 $ 0.15 $ 0.12 $ 0.12 Weighted average shares outstanding: Basic 64,552 73,693 79,114 78,933 80,109 Diluted 64,669 73,838 79,356 79,427 80,542 Three Months Ended September 30, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 110,939 $ 13,386 $ (2,939 ) $ (3,276 ) $ 5,376 $ 123,486 Provision for (reversal of) credit losses (650 ) (130 ) — — — (780 ) Noninterest income 12,200 100,798 98,200 1,809 (6,032 ) 206,975 Noninterest expense 60,160 96,843 118,345 14,034 (644 ) 288,738 Income (loss) before taxes $ 63,629 $ 17,471 $ (23,084 ) $ (15,501 ) $ (12 ) $ 42,503 Nine Months Ended September 30, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 304,269 $ 37,481 $ (6,066 ) $ (9,856 ) $ 9,705 $ 335,533 Provision for (reversal of) credit losses 4,325 346 — — — 4,671 Noninterest income 37,438 249,139 381,477 5,655 (11,033 ) 662,676 Noninterest expense 175,921 268,307 386,372 44,388 (1,357 ) 873,631 Income (loss) before taxes $ 161,461 $ 17,967 $ (10,961 ) $ (48,589 ) $ 29 $ 119,907 Three Months Ended September 30, June 30, March 31, December 31, September 30, Selected Financial Data 2022 2022 2022 2021 2021 Hilltop Consolidated: Return on average stockholders' equity 6.26% 5.82% 3.60% 9.93% 14.96% Return on average assets 0.79% 0.80% 0.53% 1.41% 2.13% Net interest margin (1) 3.19% 2.75% 2.36% 2.44% 2.53% Net interest margin (taxable equivalent) (2): As reported 3.20% 2.76% 2.37% 2.45% 2.54% Impact of purchase accounting 8 bps 8 bps 7 bps 12 bps 9 bps Book value per common share ($) 31.46 31.43 31.02 31.95 31.36 Shares outstanding, end of period (000's) 64,591 64,576 79,439 78,965 78,959 Dividend payout ratio (3) 30.19% 33.33% 53.57% 15.19% 10.34% Banking Segment: Net interest margin (1) 3.42% 2.97% 2.65% 2.81% 2.99% Net interest margin (taxable equivalent) (2): As reported 3.43% 2.98% 2.65% 2.82% 3.00% Impact of purchase accounting 10 bps 10 bps 8 bps 15 bps 11 bps Accretion of discount on loans ($000's) 2,858 3,011 2,510 4,716 3,221 Net recoveries (charge-offs) ($000's) (2,735 ) (1,223 ) (282 ) 405 62 Return on average assets 1.41% 1.09% 0.98% 1.44% 1.36% Fee income ratio 9.9% 11.0% 12.2% 10.8% 10.5% Efficiency ratio 48.9% 50.4% 55.7% 54.2% 48.8% Employees' compensation and benefits ($000's) 35,934 33,554 33,517 34,415 31,500 Broker-Dealer Segment: Net revenue ($000's) (4) 114,184 100,229 72,209 94,569 126,570 Employees' compensation and benefits ($000's) 70,274 64,494 55,825 65,301 82,429 Variable compensation expense ($000's) 42,567 37,471 26,625 35,939 53,505 Compensation as a % of net revenue 61.5% 64.3% 77.3% 69.1% 65.1% Pre-tax margin (5) 15.3% 9.1% (11.9)% 1.8% 13.8% Mortgage Origination Segment: Mortgage loan originations - volume ($000's): Home purchases 2,832,136 3,342,103 2,753,031 3,559,137 3,948,420 Refinancings 211,075 467,117 1,011,452 1,430,369 1,646,208 Total mortgage loan originations - volume 3,043,211 3,809,220 3,764,483 4,989,506 5,594,628 Mortgage loan sales - volume ($000's) 3,419,950 3,872,935 3,868,596 4,988,538 6,195,559 Net gains from mortgage loan sales (basis points): Loans sold to third parties 227 260 321 362 359 Impact of loans retained by banking segment (9 ) (7 ) (9 ) (15 ) (13 ) As reported 218 253 312 347 346 Mortgage servicing rights asset ($000's) (6) 156,539 121,688 100,475 86,990 110,931 Employees' compensation and benefits ($000's) 86,079 100,206 102,748 121,758 134,814 Variable compensation expense ($000's) 44,312 56,525 56,243 73,208 88,153 ___________________ (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, $0.4 million, $0.5 million, $0.5 million, and $0.6 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. September 30, June 30, March 31, December 31, September 30, Capital Ratios 2022 2022 2022 2021 2021 Tier 1 capital (to average assets): PlainsCapital 10.29% 9.67% 9.74% 10.20% 10.02% Hilltop 11.41% 10.53% 12.46% 12.58% 12.64% Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 14.68% 14.65% 15.37% 16.00% 15.40% Hilltop 17.45% 17.24% 21.27% 21.22% 21.28% Tier 1 capital (to risk-weighted assets): PlainsCapital 14.68% 14.65% 15.37% 16.00% 15.40% Hilltop 17.45% 17.24% 21.27% 21.22% 21.28% Total capital (to risk-weighted assets): PlainsCapital 15.54% 15.55% 16.18% 16.77% 16.32% Hilltop 20.07% 19.90% 23.85% 23.75% 24.00% September 30, June 30, March 31, December 31, September 30, Non-Performing Assets Portfolio Data 2022 2022 2022 2021 2021 Loans accounted for on a non-accrual basis ($000's) (1): Commercial real estate 4,735 4,947 6,153 6,601 5,705 Commercial and industrial 12,078 13,315 18,486 22,478 29,808 Construction and land development 1 1 1 2 366 1-4 family residential 16,968 16,542 18,723 21,123 25,255 Consumer 16 19 21 23 24 Broker-dealer — — — — — 33,798 34,824 43,384 50,227 61,158 Troubled debt restructurings included in accruing loans held for investment ($000's) 825 857 890 922 1,038 Non-performing loans ($000's) 34,623 35,681 44,274 51,149 62,196 Non-performing loans as a % of total loans 0.39% 0.38% 0.47% 0.52% 0.64% Other real estate owned ($000's) 1,637 1,516 2,175 2,833 21,605 Other repossessed assets ($000's) — — — — — Non-performing assets ($000's) 36,260 37,197 46,449 53,982 83,801 Non-performing assets as a % of total assets 0.22% 0.22% 0.25% 0.29% 0.47% Loans past due 90 days or more and still accruing ($000's) (2): 96,532 82,410 87,489 60,775 175,734 ___________________ (1) Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications through January 1, 2022. The banking segment’s COVID-19 payment deferment 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 banking segment’s actions through December 31, 2021 included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $4 million and $17 million as of December 31, 2021 and September 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 September 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 $ 1,166,265 $ 14,414 4.94 % $ 2,300,939 $ 17,696 3.08 % Loans held for investment, gross (2) 7,911,833 94,751 4.75 % 7,514,392 82,073 4.33 % Investment securities - taxable 2,883,412 19,642 2.72 % 2,585,362 12,328 1.91 % Investment securities - non-taxable (3) 312,312 2,817 3.61 % 318,408 3,252 4.09 % Federal funds sold and securities purchased under agreements to resell 137,728 1,309 3.77 % 161,577 207 — % Interest-bearing deposits in other financial institutions 1,780,220 9,542 2.13 % 2,197,478 788 0.14 % Securities borrowed 1,116,837 10,938 3.83 % 1,364,726 8,585 2.46 % Other 56,331 3,425 24.12 % 51,350 813 6.28 % Interest-earning assets, gross (3) 15,364,938 156,838 4.05 % 16,494,232 125,742 3.02 % Allowance for credit losses (95,083 ) (115,688 ) Interest-earning assets, net 15,269,855 16,378,544 Noninterest-earning assets 1,399,228 1,371,207 Total assets $ 16,669,083 $ 17,749,751 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,136,779 $ 12,525 0.70 % $ 7,622,748 $ 5,303 0.28 % Securities loaned 980,530 9,407 3.81 % 1,306,314 6,519 1.98 % Notes payable and other borrowings 1,262,985 11,054 3.47 % 1,231,545 8,266 2.66 % Total interest-bearing liabilities 9,380,294 32,986 1.40 % 10,160,607 20,088 0.78 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,543,067 4,299,987 Other liabilities 685,843 800,225 Total liabilities 14,609,204 15,260,819 Stockholders’ equity 2,032,717 2,463,821 Noncontrolling interest 27,162 25,111 Total liabilities and stockholders' equity $ 16,669,083 $ 17,749,751 Net interest income (3) $ 123,852 $ 105,654 Net interest spread (3) 2.65 % 2.24 % Net interest margin (3) 3.20 % 2.54 % ___________________ (1) Information presented on a consolidated basis. (2) Average balance includes non-accrual loans. (3) Presented on a taxable-equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rate for the periods presented. The adjustment to interest income was $0.4 million and $0.6 million for the three months ended September 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, October 21, 2022. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third 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 098668. 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 September 30, 2022, Hilltop employed approximately 4,385 people and operated approximately 370 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; and (v) 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20221020005898/en/