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 Fourth Quarter and Full Year 2022 By: Hilltop Holdings Inc. via Business Wire January 26, 2023 at 16:45 PM EST Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2022. Hilltop produced income to common stockholders of $25.6 million, or $0.39 per diluted share, for the fourth quarter of 2022, compared to $62.2 million, or $0.78 per diluted share, for the fourth quarter of 2021. Income to common stockholders for the full year 2022 was $113.1 million, or $1.60 per diluted share, compared to $374.5 million, or $4.61 per diluted share, for the full year 2021. Hilltop’s financial results for the fourth quarter and full year of 2022 included significant decreases in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income, while the banking segment recorded a provision for credit losses as opposed to a reversal of credit losses in respective prior year periods. Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per common share, a 7% increase from the prior quarter, payable on February 24, 2023, to all common stockholders of record as of the close of business on February 10, 2023. Additionally, the Hilltop Board of Directors authorized, subject to regulatory approvals or non-objections, a new stock repurchase program through January 2024, under which Hilltop may repurchase, in the aggregate, up to $75.0 million of its outstanding common stock. During 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. Headwinds during 2022, including the impact of tight housing inventories on mortgage volumes, declining deposit balances, rapid increases in market interest rates and a declining economic forecast, are expected to continue to have an adverse impact on our operating results during 2023. The impacts of such headwinds in 2023 remain uncertain and will depend on developments outside of our control, including, among others, timing and significance of further changes in U.S. treasury yields and mortgage interest rates, exposure to increasing funding costs, inflationary pressures associated with compensation, occupancy and software costs and labor market conditions, the Russian-Ukraine conflict and its impact on supply chains, and the impact of the pandemic. Jeremy B. Ford, President and CEO of Hilltop, said “Although we experienced a challenging operating environment in 2022, Hilltop still generated consolidated profitability and finished the year a more resilient company. The abrupt market shifts in the mortgage and fixed income businesses had a negative impact across our company, particularly at PrimeLending and HilltopSecurities, while PlainsCapital Bank delivered across all of its key priorities, including prudent loan growth, sound credit quality and efficiency. I am proud of our teams’ accomplishments during the year, as they continued to deliver high-quality products and services for our clients, while also making tough, yet prudent, expense decisions to right-size our franchise. “Additionally, our focus on maintaining a strong balance sheet with significant capital and liquidity has positioned Hilltop for long-term success regardless of interest rate and economic volatility. Finally, I am very pleased that Hilltop returned a record amount of capital to stockholders during 2022, primarily through our successful tender offer share repurchase completed in May.” Fourth Quarter 2022 Highlights for Hilltop: The provision for credit losses was $3.6 million during the fourth quarter of 2022, compared to a reversal of credit losses of $0.8 million in the third quarter of 2022 and a reversal of credit losses of $18.6 million in the fourth quarter of 2021; The provision for credit losses during the fourth quarter of 2022 reflected a deteriorating U.S. economic outlook since the prior quarter. For the fourth 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 $71.1 million, compared to $192.0 million in the fourth quarter of 2021, a 63.0% decrease; Mortgage loan origination production volume was $2.0 billion during the fourth quarter of 2022, compared to $5.0 billion in the fourth quarter of 2021; Net gains from mortgage loans sold to third parties decreased to 211 basis points during the fourth quarter of 2022, compared to 227 basis points in the third quarter of 2022. Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the fourth quarter of 2022 were 0.63% and 4.99%, respectively, compared to 1.41% and 9.93%, respectively, for the fourth quarter of 2021; Hilltop’s book value per common share increased to $31.62 at December 31, 2022, compared to $31.46 at September 30, 2022; Hilltop’s total assets were $16.3 billion and $16.6 billion at December 31, 2022 and September 30, 2022, respectively; Loans1, net of allowance for credit losses, were $7.6 billion and $7.4 billion at December 31, 2022 and September 30, 2022; Non-performing loans were $30.3 million, or 0.33% of total loans, at December 31, 2022, compared to $34.6 million, or 0.39% of total loans, at September 30, 2022; Loans held for sale decreased by 2.1% from September 30, 2022 to $1.0 billion at December 31, 2022; Total deposits were $11.3 billion and $11.4 billion at December 31, 2022 and September 30, 2022, respectively; Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.47% and a Common Equity Tier 1 Capital Ratio of 18.22% at December 31, 2022; Hilltop’s consolidated net interest margin4 increased to 3.23% for the fourth quarter of 2022, compared to 3.19% in the third quarter of 2022; For the fourth quarter of 2022, noninterest income was $169.8 million, compared to $284.8 million in the fourth quarter of 2021, a 40.4% decrease; For the fourth quarter 2022, noninterest expense was $253.4 million, compared to $322.2 million in the fourth quarter of 2021, a 21.4% decrease; and Hilltop’s effective tax rate was 26.6% during the fourth quarter of 2022, compared to 24.2% during the same period in 2021. The effective tax rate for the fourth 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 $431.0 million and $402.0 million at December 31, 2022 and September 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 December 31, September 30, June 30, March 31, December 31, (in 000's) 2022 2022 2022 2022 2021 Cash and due from banks $ 1,579,512 $ 1,777,584 $ 1,783,554 $ 2,886,812 $ 2,823,138 Federal funds sold 650 663 381 383 385 Assets segregated for regulatory purposes 67,737 109,358 120,816 128,408 221,740 Securities purchased under agreements to resell 118,070 145,365 139,929 256,991 118,262 Securities: Trading, at fair value 755,032 641,864 593,273 471,763 647,998 Available for sale, at fair value, net 1,658,766 1,584,724 1,562,222 1,462,340 2,130,568 Held to maturity, at amortized cost, net 875,532 889,452 920,583 953,107 267,684 Equity, at fair value 200 209 197 225 250 3,289,530 3,116,249 3,076,275 2,887,435 3,046,500 Loans held for sale 982,616 1,003,605 1,491,579 1,643,994 1,878,190 Loans held for investment, net of unearned income 8,092,673 7,944,246 7,930,619 7,797,903 7,879,904 Allowance for credit losses (95,442 ) (91,783 ) (95,298 ) (91,185 ) (91,352 ) Loans held for investment, net 7,997,231 7,852,463 7,835,321 7,706,718 7,788,552 Broker-dealer and clearing organization receivables 1,038,055 1,255,052 1,049,830 1,610,352 1,672,946 Premises and equipment, net 184,950 191,423 195,361 198,906 204,438 Operating lease right-of-use assets 102,443 103,099 106,806 108,180 112,328 Mortgage servicing assets 100,825 156,539 121,688 100,475 86,990 Other assets 527,469 624,235 513,570 546,622 452,880 Goodwill 267,447 267,447 267,447 267,447 267,447 Other intangible assets, net 11,317 12,209 13,182 14,233 15,284 Total assets $ 16,267,852 $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 Deposits: Noninterest-bearing $ 3,968,862 $ 4,546,816 $ 4,601,643 $ 4,694,592 $ 4,577,183 Interest-bearing 7,346,887 6,805,198 7,319,143 7,972,110 8,240,894 Total deposits 11,315,749 11,352,014 11,920,786 12,666,702 12,818,077 Broker-dealer and clearing organization payables 966,470 1,176,156 934,818 1,397,836 1,477,300 Short-term borrowings 970,056 942,309 822,649 835,054 859,444 Securities sold, not yet purchased, at fair value 53,023 99,515 135,968 97,629 96,586 Notes payable 346,654 390,354 389,722 395,479 387,904 Operating lease liabilities 126,759 120,635 124,406 125,919 130,960 Other liabilities 417,042 475,425 329,987 347,742 369,606 Total liabilities 14,195,753 14,556,408 14,658,336 15,866,361 16,139,877 Common stock 647 646 646 794 790 Additional paid-in capital 1,046,331 1,043,605 1,039,261 1,275,649 1,274,446 Accumulated other comprehensive loss (124,961 ) (119,864 ) (95,279 ) (80,565 ) (10,219 ) Retained earnings 1,123,636 1,107,586 1,085,208 1,267,415 1,257,014 Deferred compensation employee stock trust, net 481 479 695 744 752 Employee stock trust (640 ) (641 ) (954 ) (104 ) (115 ) Total Hilltop stockholders' equity 2,045,494 2,031,811 2,029,577 2,463,933 2,522,668 Noncontrolling interests 26,605 27,072 27,826 26,662 26,535 Total stockholders' equity 2,072,099 2,058,883 2,057,403 2,490,595 2,549,203 Total liabilities & stockholders' equity $ 16,267,852 $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 Three Months Ended Year Ended Consolidated Income Statements December 31, September 30, December 31, December 31, December 31, (in 000's, except per share data) 2022 2022 2021 2022 2021 Interest income: Loans, including fees $ 117,906 $ 109,165 $ 96,104 $ 416,207 $ 404,312 Securities borrowed 14,162 10,938 8,524 44,414 61,667 Securities: Taxable 23,293 19,642 13,916 75,805 47,633 Tax-exempt 3,002 2,451 2,639 10,013 9,766 Other 21,611 14,276 1,872 44,677 6,595 Total interest income 179,974 156,472 123,055 591,116 529,973 Interest expense: Deposits 28,238 12,525 4,404 50,412 23,624 Securities loaned 13,179 9,407 6,624 38,570 50,974 Short-term borrowings 10,278 5,550 2,279 20,893 9,065 Notes payable 3,988 3,907 5,871 16,141 21,386 Junior subordinated debentures — — — — 1,558 Other 849 1,597 (417 ) 6,125 384 Total interest expense 56,532 32,986 18,761 132,141 106,991 Net interest income 123,442 123,486 104,294 458,975 422,982 Provision for (reversal of) credit losses 3,638 (780 ) (18,565 ) 8,309 (58,213 ) Net interest income after provision for (reversal of) credit losses 119,804 124,266 122,859 450,666 481,195 Noninterest income: Net gains from sale of loans and other mortgage production income 35,949 57,998 156,103 302,384 825,960 Mortgage loan origination fees 35,198 39,960 35,930 149,598 160,011 Securities commissions and fees 33,143 34,076 32,801 139,122 143,827 Investment and securities advisory fees and commissions 30,661 35,031 42,834 127,399 152,443 Other 34,833 39,910 17,178 113,957 128,034 Total noninterest income 169,784 206,975 284,846 832,460 1,410,275 Noninterest expense: Employees' compensation and benefits 167,892 200,450 229,717 773,688 1,007,235 Occupancy and equipment, net 23,077 25,041 25,741 97,115 100,602 Professional services 11,555 10,631 9,904 48,495 54,270 Other 50,844 52,616 56,832 207,701 225,291 Total noninterest expense 253,368 288,738 322,194 1,126,999 1,387,398 Income before income taxes 36,220 42,503 85,511 156,127 504,072 Income tax expense 9,642 9,249 20,715 36,833 117,976 Net income 26,578 33,254 64,796 119,294 386,096 Less: Net income attributable to noncontrolling interest 1,022 1,186 2,611 6,160 11,601 Income attributable to Hilltop $ 25,556 $ 32,068 $ 62,185 $ 113,134 $ 374,495 Earnings per common share: Basic: $ 0.40 $ 0.50 $ 0.79 $ 1.61 $ 4.64 Diluted: $ 0.39 $ 0.50 $ 0.78 $ 1.60 $ 4.61 Cash dividends declared per common share $ 0.15 $ 0.15 $ 0.12 $ 0.60 $ 0.48 Weighted average shares outstanding: Basic 64,602 64,552 78,933 70,434 80,708 Diluted 64,779 64,669 79,427 70,626 81,173 Three Months Ended December 31, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 109,335 $ 14,116 $ (4,464 ) $ (3,279 ) $ 7,734 $ 123,442 Provision for (reversal of) credit losses 3,925 (287 ) — — — 3,638 Noninterest income 11,869 92,803 71,439 1,870 (8,197 ) 169,784 Noninterest expense 59,269 87,406 92,532 14,642 (481 ) 253,368 Income (loss) before taxes $ 58,010 $ 19,800 $ (25,557 ) $ (16,051 ) $ 18 $ 36,220 Year Ended December 31, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 413,603 $ 51,597 $ (10,529 ) $ (13,135 ) $ 17,439 $ 458,975 Provision for (reversal of) credit losses 8,250 59 — — — 8,309 Noninterest income 49,307 341,943 452,915 7,525 (19,230 ) 832,460 Noninterest expense 235,190 355,713 478,904 59,030 (1,838 ) 1,126,999 Income (loss) before taxes $ 219,470 $ 37,768 $ (36,518 ) $ (64,640 ) $ 47 $ 156,127 Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, Selected Financial Data 2022 2022 2021 2022 2021 Hilltop Consolidated: Return on average stockholders' equity 4.99 % 6.26 % 9.93 % 5.11 % 15.38 % Return on average assets 0.63 % 0.79 % 1.41 % 0.69 % 2.17 % Net interest margin (1) 3.23 % 3.19 % 2.44 % 2.87 % 2.57 % Net interest margin (taxable equivalent) (2): As reported 3.24 % 3.20 % 2.45 % 2.88 % 2.58 % Impact of purchase accounting 7 bps 8 bps 12 bps 7 bps 12 bps Book value per common share ($) 31.62 31.46 31.95 31.62 31.95 Shares outstanding, end of period (000's) 64,685 64,591 78,965 64,685 78,965 Dividend payout ratio (3) 37.92 % 30.19 % 15.19 % 37.36 % 10.34 % Banking Segment: Net interest margin (1) 3.42 % 3.42 % 2.81 % 3.11 % 3.07 % Net interest margin (taxable equivalent) (2): As reported 3.43 % 3.43 % 2.82 % 3.11 % 3.08 % Impact of purchase accounting 8 bps 10 bps 15 bps 9 bps 16 bps Accretion of discount on loans ($000's) 2,173 2,858 4,716 10,552 18,789 Net recoveries (charge-offs) ($000's) 21 (2,735 ) 405 (4,219 ) 521 Return on average assets 1.31 % 1.41 % 1.44 % 1.19 % 1.55 % Fee income ratio 9.8 % 9.9 % 10.8 % 10.7 % 10.0 % Efficiency ratio 48.9 % 48.9 % 54.2 % 50.8 % 50.3 % Employees' compensation and benefits ($000's) 34,526 35,934 34,415 137,531 130,276 Broker-Dealer Segment: Net revenue ($000's) (4) 106,919 114,184 94,569 393,540 424,421 Employees' compensation and benefits ($000's) 60,552 70,274 65,301 251,145 276,176 Variable compensation expense ($000's) 32,042 42,567 35,939 138,705 161,264 Compensation as a % of net revenue 56.6 % 61.5 % 69.1 % 63.8 % 65.1 % Pre-tax margin (5) 18.5 % 15.3 % 1.8 % 9.6 % 10.3 % Mortgage Origination Segment: Mortgage loan originations - volume ($000's): Home purchases 1,895,731 2,832,136 3,559,137 10,823,002 14,429,190 Refinancings 147,511 211,075 1,430,369 1,837,154 8,239,093 Total mortgage loan originations - volume 2,043,242 3,043,211 4,989,506 12,660,156 22,668,283 Mortgage loan sales - volume ($000's) 2,038,990 3,419,950 4,988,538 13,200,471 23,059,160 Net gains from mortgage loan sales (basis points): Loans sold to third parties 211 227 362 263 375 Impact of loans retained by banking segment (19 ) (9 ) (15 ) (11 ) (13 ) As reported 192 218 347 252 362 Mortgage servicing rights asset ($000's) (6) 100,825 156,539 86,990 100,825 86,990 Employees' compensation and benefits ($000's) 64,940 86,079 121,758 353,973 568,221 Variable compensation expense ($000's) 26,724 44,312 73,208 183,804 373,929 ___________________ (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 $0.3 million, $0.4 million, $0.5 million, $1.6 million and $1.7 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. December 31, September 30, June 30, March 31, December 31, Capital Ratios 2022 2022 2022 2022 2021 Tier 1 capital (to average assets): PlainsCapital 10.26 % 10.29 % 9.67 % 9.74 % 10.20 % Hilltop 11.47 % 11.41 % 10.53 % 12.46 % 12.58 % Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 14.97 % 14.68 % 14.65 % 15.37 % 16.00 % Hilltop 18.22 % 17.45 % 17.24 % 21.27 % 21.22 % Tier 1 capital (to risk-weighted assets): PlainsCapital 14.97 % 14.68 % 14.65 % 15.37 % 16.00 % Hilltop 18.22 % 17.45 % 17.24 % 21.27 % 21.22 % Total capital (to risk-weighted assets): PlainsCapital 15.90 % 15.54 % 15.55 % 16.18 % 16.77 % Hilltop 20.97 % 20.07 % 19.90 % 23.85 % 23.75 % December 31, September 30, June 30, March 31, December 31, Non-Performing Assets Portfolio Data 2022 2022 2022 2022 2021 Loans accounted for on a non-accrual basis ($000's) (1): Commercial real estate 4,269 4,735 4,947 6,153 6,601 Commercial and industrial 9,095 12,078 13,315 18,486 22,478 Construction and land development 1 1 1 1 2 1-4 family residential 16,138 16,968 16,542 18,723 21,123 Consumer 14 16 19 21 23 Broker-dealer — — — — — 29,517 33,798 34,824 43,384 50,227 Troubled debt restructurings included in accruing loans held for investment ($000's) 803 825 857 890 922 Non-performing loans ($000's) 30,320 34,623 35,681 44,274 51,149 Non-performing loans as a % of total loans 0.33 % 0.39 % 0.38 % 0.47 % 0.52 % Other real estate owned ($000's) 2,325 1,637 1,516 2,175 2,833 Other repossessed assets ($000's) — — — — — Non-performing assets ($000's) 32,645 36,260 37,197 46,449 53,982 Non-performing assets as a % of total assets 0.20 % 0.22 % 0.22 % 0.25 % 0.29 % Loans past due 90 days or more and still accruing ($000's) (2): 92,099 96,532 82,410 87,489 60,775 ___________________ (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 as of December 31, 2021. (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 December 31, 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 $ 882,322 $ 11,634 5.27 % $ 1,852,140 $ 13,708 2.96 % Loans held for investment, gross (2) 7,774,350 106,271 5.42 % 7,695,090 82,396 4.25 % Investment securities - taxable 2,843,881 23,293 3.28 % 2,677,894 13,916 2.08 % Investment securities - non-taxable (3) 354,207 3,286 3.71 % 331,959 3,188 3.84 % Federal funds sold and securities purchased under agreements to resell 161,632 2,173 5.33 % 194,351 164 0.33 % Interest-bearing deposits in other financial institutions 1,749,902 15,751 3.57 % 2,683,656 943 0.14 % Securities borrowed 1,350,873 14,162 4.10 % 1,474,421 8,524 2.26 % Other 56,196 3,686 26.02 % 52,848 765 5.74 % Interest-earning assets, gross (3) 15,173,363 180,256 4.71 % 16,962,359 123,604 2.89 % Allowance for credit losses (92,344 ) (109,555 ) Interest-earning assets, net 15,081,019 16,852,804 Noninterest-earning assets 1,637,295 1,402,216 Total assets $ 16,718,314 $ 18,255,020 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,154,802 $ 28,238 1.57 % $ 7,901,704 $ 4,404 0.22 % Securities loaned 1,274,038 13,179 4.10 % 1,422,303 6,624 1.85 % Notes payable and other borrowings 1,355,809 15,114 4.42 % 1,233,924 7,733 2.49 % Total interest-bearing liabilities 9,784,649 56,531 2.29 % 10,557,931 18,761 0.70 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,222,143 4,509,891 Other liabilities 652,900 677,433 Total liabilities 14,659,692 15,745,255 Stockholders’ equity 2,032,287 2,484,301 Noncontrolling interest 26,335 25,464 Total liabilities and stockholders' equity $ 16,718,314 $ 18,255,020 Net interest income (3) $ 123,725 $ 104,843 Net interest spread (3) 2.42 % 2.19 % Net interest margin (3) 3.24 % 2.45 % Year Ended December 31, 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 $ 1,221,235 $ 52,315 4.28 % $ 2,293,543 $ 64,767 2.82 % Loans held for investment, gross (2) 7,840,848 363,892 4.71 % 7,645,292 339,548 4.44 % Investment securities - taxable 2,819,282 75,805 2.69 % 2,493,848 47,582 1.91 % Investment securities - non-taxable (3) 310,315 11,608 3.74 % 313,703 11,448 3.65 % Federal funds sold and securities purchased under agreements to resell 162,575 4,098 2.52 % 152,273 372 0.24 % Interest-bearing deposits in other financial institutions 2,306,960 31,705 1.37 % 2,078,666 2,942 0.14 % Securities borrowed 1,298,276 44,414 3.37 % 1,445,464 61,667 4.21 % Other 55,280 8,873 16.05 % 50,929 3,332 6.54 % Interest-earning assets, gross (3) 16,014,771 592,710 3.70 % 16,473,718 531,658 3.23 % Allowance for credit losses (92,828 ) (129,689 ) Interest-earning assets, net 15,921,943 16,344,029 Noninterest-earning assets 1,488,994 1,451,928 Total assets $ 17,410,937 $ 17,795,957 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,561,501 $ 50,412 0.67 % $ 7,722,584 $ 23,624 0.31 % Securities loaned 1,184,498 38,570 3.26 % 1,374,142 50,974 3.71 % Notes payable and other borrowings 1,293,133 43,158 3.34 % 1,216,381 32,393 2.66 % Total interest-bearing liabilities 10,039,132 132,140 1.32 % 10,313,107 106,991 1.04 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,455,779 4,157,962 Other liabilities 675,629 863,976 Total liabilities 15,170,540 15,335,045 Stockholders’ equity 2,213,756 2,435,185 Noncontrolling interest 26,641 25,727 Total liabilities and stockholders' equity $ 17,410,937 $ 17,795,957 Net interest income (3) $ 460,570 $ 424,667 Net interest spread (3) 2.38 % 2.19 % Net interest margin (3) 2.88 % 2.58 % ___________________ (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 $0.3 million and $0.5 million for the three months ended December 31, 2022 and 2021, respectively, and $1.6 million and $1.7 million for the year ended December 31, 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, January 27, 2023. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review fourth quarter and full year 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 429656. 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 December 31, 2022, Hilltop employed approximately 4,140 people and operated approximately 360 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,” “position,” “probable,” “progressing,” “projects,” “prudent,” “seeks,” “should,” “target,” “view,” “will” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate 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/20230126005878/en/Contacts Investor Relations Contact: 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 Fourth Quarter and Full Year 2022 By: Hilltop Holdings Inc. via Business Wire January 26, 2023 at 16:45 PM EST Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2022. Hilltop produced income to common stockholders of $25.6 million, or $0.39 per diluted share, for the fourth quarter of 2022, compared to $62.2 million, or $0.78 per diluted share, for the fourth quarter of 2021. Income to common stockholders for the full year 2022 was $113.1 million, or $1.60 per diluted share, compared to $374.5 million, or $4.61 per diluted share, for the full year 2021. Hilltop’s financial results for the fourth quarter and full year of 2022 included significant decreases in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income, while the banking segment recorded a provision for credit losses as opposed to a reversal of credit losses in respective prior year periods. Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per common share, a 7% increase from the prior quarter, payable on February 24, 2023, to all common stockholders of record as of the close of business on February 10, 2023. Additionally, the Hilltop Board of Directors authorized, subject to regulatory approvals or non-objections, a new stock repurchase program through January 2024, under which Hilltop may repurchase, in the aggregate, up to $75.0 million of its outstanding common stock. During 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. Headwinds during 2022, including the impact of tight housing inventories on mortgage volumes, declining deposit balances, rapid increases in market interest rates and a declining economic forecast, are expected to continue to have an adverse impact on our operating results during 2023. The impacts of such headwinds in 2023 remain uncertain and will depend on developments outside of our control, including, among others, timing and significance of further changes in U.S. treasury yields and mortgage interest rates, exposure to increasing funding costs, inflationary pressures associated with compensation, occupancy and software costs and labor market conditions, the Russian-Ukraine conflict and its impact on supply chains, and the impact of the pandemic. Jeremy B. Ford, President and CEO of Hilltop, said “Although we experienced a challenging operating environment in 2022, Hilltop still generated consolidated profitability and finished the year a more resilient company. The abrupt market shifts in the mortgage and fixed income businesses had a negative impact across our company, particularly at PrimeLending and HilltopSecurities, while PlainsCapital Bank delivered across all of its key priorities, including prudent loan growth, sound credit quality and efficiency. I am proud of our teams’ accomplishments during the year, as they continued to deliver high-quality products and services for our clients, while also making tough, yet prudent, expense decisions to right-size our franchise. “Additionally, our focus on maintaining a strong balance sheet with significant capital and liquidity has positioned Hilltop for long-term success regardless of interest rate and economic volatility. Finally, I am very pleased that Hilltop returned a record amount of capital to stockholders during 2022, primarily through our successful tender offer share repurchase completed in May.” Fourth Quarter 2022 Highlights for Hilltop: The provision for credit losses was $3.6 million during the fourth quarter of 2022, compared to a reversal of credit losses of $0.8 million in the third quarter of 2022 and a reversal of credit losses of $18.6 million in the fourth quarter of 2021; The provision for credit losses during the fourth quarter of 2022 reflected a deteriorating U.S. economic outlook since the prior quarter. For the fourth 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 $71.1 million, compared to $192.0 million in the fourth quarter of 2021, a 63.0% decrease; Mortgage loan origination production volume was $2.0 billion during the fourth quarter of 2022, compared to $5.0 billion in the fourth quarter of 2021; Net gains from mortgage loans sold to third parties decreased to 211 basis points during the fourth quarter of 2022, compared to 227 basis points in the third quarter of 2022. Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the fourth quarter of 2022 were 0.63% and 4.99%, respectively, compared to 1.41% and 9.93%, respectively, for the fourth quarter of 2021; Hilltop’s book value per common share increased to $31.62 at December 31, 2022, compared to $31.46 at September 30, 2022; Hilltop’s total assets were $16.3 billion and $16.6 billion at December 31, 2022 and September 30, 2022, respectively; Loans1, net of allowance for credit losses, were $7.6 billion and $7.4 billion at December 31, 2022 and September 30, 2022; Non-performing loans were $30.3 million, or 0.33% of total loans, at December 31, 2022, compared to $34.6 million, or 0.39% of total loans, at September 30, 2022; Loans held for sale decreased by 2.1% from September 30, 2022 to $1.0 billion at December 31, 2022; Total deposits were $11.3 billion and $11.4 billion at December 31, 2022 and September 30, 2022, respectively; Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.47% and a Common Equity Tier 1 Capital Ratio of 18.22% at December 31, 2022; Hilltop’s consolidated net interest margin4 increased to 3.23% for the fourth quarter of 2022, compared to 3.19% in the third quarter of 2022; For the fourth quarter of 2022, noninterest income was $169.8 million, compared to $284.8 million in the fourth quarter of 2021, a 40.4% decrease; For the fourth quarter 2022, noninterest expense was $253.4 million, compared to $322.2 million in the fourth quarter of 2021, a 21.4% decrease; and Hilltop’s effective tax rate was 26.6% during the fourth quarter of 2022, compared to 24.2% during the same period in 2021. The effective tax rate for the fourth 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 $431.0 million and $402.0 million at December 31, 2022 and September 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 December 31, September 30, June 30, March 31, December 31, (in 000's) 2022 2022 2022 2022 2021 Cash and due from banks $ 1,579,512 $ 1,777,584 $ 1,783,554 $ 2,886,812 $ 2,823,138 Federal funds sold 650 663 381 383 385 Assets segregated for regulatory purposes 67,737 109,358 120,816 128,408 221,740 Securities purchased under agreements to resell 118,070 145,365 139,929 256,991 118,262 Securities: Trading, at fair value 755,032 641,864 593,273 471,763 647,998 Available for sale, at fair value, net 1,658,766 1,584,724 1,562,222 1,462,340 2,130,568 Held to maturity, at amortized cost, net 875,532 889,452 920,583 953,107 267,684 Equity, at fair value 200 209 197 225 250 3,289,530 3,116,249 3,076,275 2,887,435 3,046,500 Loans held for sale 982,616 1,003,605 1,491,579 1,643,994 1,878,190 Loans held for investment, net of unearned income 8,092,673 7,944,246 7,930,619 7,797,903 7,879,904 Allowance for credit losses (95,442 ) (91,783 ) (95,298 ) (91,185 ) (91,352 ) Loans held for investment, net 7,997,231 7,852,463 7,835,321 7,706,718 7,788,552 Broker-dealer and clearing organization receivables 1,038,055 1,255,052 1,049,830 1,610,352 1,672,946 Premises and equipment, net 184,950 191,423 195,361 198,906 204,438 Operating lease right-of-use assets 102,443 103,099 106,806 108,180 112,328 Mortgage servicing assets 100,825 156,539 121,688 100,475 86,990 Other assets 527,469 624,235 513,570 546,622 452,880 Goodwill 267,447 267,447 267,447 267,447 267,447 Other intangible assets, net 11,317 12,209 13,182 14,233 15,284 Total assets $ 16,267,852 $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 Deposits: Noninterest-bearing $ 3,968,862 $ 4,546,816 $ 4,601,643 $ 4,694,592 $ 4,577,183 Interest-bearing 7,346,887 6,805,198 7,319,143 7,972,110 8,240,894 Total deposits 11,315,749 11,352,014 11,920,786 12,666,702 12,818,077 Broker-dealer and clearing organization payables 966,470 1,176,156 934,818 1,397,836 1,477,300 Short-term borrowings 970,056 942,309 822,649 835,054 859,444 Securities sold, not yet purchased, at fair value 53,023 99,515 135,968 97,629 96,586 Notes payable 346,654 390,354 389,722 395,479 387,904 Operating lease liabilities 126,759 120,635 124,406 125,919 130,960 Other liabilities 417,042 475,425 329,987 347,742 369,606 Total liabilities 14,195,753 14,556,408 14,658,336 15,866,361 16,139,877 Common stock 647 646 646 794 790 Additional paid-in capital 1,046,331 1,043,605 1,039,261 1,275,649 1,274,446 Accumulated other comprehensive loss (124,961 ) (119,864 ) (95,279 ) (80,565 ) (10,219 ) Retained earnings 1,123,636 1,107,586 1,085,208 1,267,415 1,257,014 Deferred compensation employee stock trust, net 481 479 695 744 752 Employee stock trust (640 ) (641 ) (954 ) (104 ) (115 ) Total Hilltop stockholders' equity 2,045,494 2,031,811 2,029,577 2,463,933 2,522,668 Noncontrolling interests 26,605 27,072 27,826 26,662 26,535 Total stockholders' equity 2,072,099 2,058,883 2,057,403 2,490,595 2,549,203 Total liabilities & stockholders' equity $ 16,267,852 $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 Three Months Ended Year Ended Consolidated Income Statements December 31, September 30, December 31, December 31, December 31, (in 000's, except per share data) 2022 2022 2021 2022 2021 Interest income: Loans, including fees $ 117,906 $ 109,165 $ 96,104 $ 416,207 $ 404,312 Securities borrowed 14,162 10,938 8,524 44,414 61,667 Securities: Taxable 23,293 19,642 13,916 75,805 47,633 Tax-exempt 3,002 2,451 2,639 10,013 9,766 Other 21,611 14,276 1,872 44,677 6,595 Total interest income 179,974 156,472 123,055 591,116 529,973 Interest expense: Deposits 28,238 12,525 4,404 50,412 23,624 Securities loaned 13,179 9,407 6,624 38,570 50,974 Short-term borrowings 10,278 5,550 2,279 20,893 9,065 Notes payable 3,988 3,907 5,871 16,141 21,386 Junior subordinated debentures — — — — 1,558 Other 849 1,597 (417 ) 6,125 384 Total interest expense 56,532 32,986 18,761 132,141 106,991 Net interest income 123,442 123,486 104,294 458,975 422,982 Provision for (reversal of) credit losses 3,638 (780 ) (18,565 ) 8,309 (58,213 ) Net interest income after provision for (reversal of) credit losses 119,804 124,266 122,859 450,666 481,195 Noninterest income: Net gains from sale of loans and other mortgage production income 35,949 57,998 156,103 302,384 825,960 Mortgage loan origination fees 35,198 39,960 35,930 149,598 160,011 Securities commissions and fees 33,143 34,076 32,801 139,122 143,827 Investment and securities advisory fees and commissions 30,661 35,031 42,834 127,399 152,443 Other 34,833 39,910 17,178 113,957 128,034 Total noninterest income 169,784 206,975 284,846 832,460 1,410,275 Noninterest expense: Employees' compensation and benefits 167,892 200,450 229,717 773,688 1,007,235 Occupancy and equipment, net 23,077 25,041 25,741 97,115 100,602 Professional services 11,555 10,631 9,904 48,495 54,270 Other 50,844 52,616 56,832 207,701 225,291 Total noninterest expense 253,368 288,738 322,194 1,126,999 1,387,398 Income before income taxes 36,220 42,503 85,511 156,127 504,072 Income tax expense 9,642 9,249 20,715 36,833 117,976 Net income 26,578 33,254 64,796 119,294 386,096 Less: Net income attributable to noncontrolling interest 1,022 1,186 2,611 6,160 11,601 Income attributable to Hilltop $ 25,556 $ 32,068 $ 62,185 $ 113,134 $ 374,495 Earnings per common share: Basic: $ 0.40 $ 0.50 $ 0.79 $ 1.61 $ 4.64 Diluted: $ 0.39 $ 0.50 $ 0.78 $ 1.60 $ 4.61 Cash dividends declared per common share $ 0.15 $ 0.15 $ 0.12 $ 0.60 $ 0.48 Weighted average shares outstanding: Basic 64,602 64,552 78,933 70,434 80,708 Diluted 64,779 64,669 79,427 70,626 81,173 Three Months Ended December 31, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 109,335 $ 14,116 $ (4,464 ) $ (3,279 ) $ 7,734 $ 123,442 Provision for (reversal of) credit losses 3,925 (287 ) — — — 3,638 Noninterest income 11,869 92,803 71,439 1,870 (8,197 ) 169,784 Noninterest expense 59,269 87,406 92,532 14,642 (481 ) 253,368 Income (loss) before taxes $ 58,010 $ 19,800 $ (25,557 ) $ (16,051 ) $ 18 $ 36,220 Year Ended December 31, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 413,603 $ 51,597 $ (10,529 ) $ (13,135 ) $ 17,439 $ 458,975 Provision for (reversal of) credit losses 8,250 59 — — — 8,309 Noninterest income 49,307 341,943 452,915 7,525 (19,230 ) 832,460 Noninterest expense 235,190 355,713 478,904 59,030 (1,838 ) 1,126,999 Income (loss) before taxes $ 219,470 $ 37,768 $ (36,518 ) $ (64,640 ) $ 47 $ 156,127 Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, Selected Financial Data 2022 2022 2021 2022 2021 Hilltop Consolidated: Return on average stockholders' equity 4.99 % 6.26 % 9.93 % 5.11 % 15.38 % Return on average assets 0.63 % 0.79 % 1.41 % 0.69 % 2.17 % Net interest margin (1) 3.23 % 3.19 % 2.44 % 2.87 % 2.57 % Net interest margin (taxable equivalent) (2): As reported 3.24 % 3.20 % 2.45 % 2.88 % 2.58 % Impact of purchase accounting 7 bps 8 bps 12 bps 7 bps 12 bps Book value per common share ($) 31.62 31.46 31.95 31.62 31.95 Shares outstanding, end of period (000's) 64,685 64,591 78,965 64,685 78,965 Dividend payout ratio (3) 37.92 % 30.19 % 15.19 % 37.36 % 10.34 % Banking Segment: Net interest margin (1) 3.42 % 3.42 % 2.81 % 3.11 % 3.07 % Net interest margin (taxable equivalent) (2): As reported 3.43 % 3.43 % 2.82 % 3.11 % 3.08 % Impact of purchase accounting 8 bps 10 bps 15 bps 9 bps 16 bps Accretion of discount on loans ($000's) 2,173 2,858 4,716 10,552 18,789 Net recoveries (charge-offs) ($000's) 21 (2,735 ) 405 (4,219 ) 521 Return on average assets 1.31 % 1.41 % 1.44 % 1.19 % 1.55 % Fee income ratio 9.8 % 9.9 % 10.8 % 10.7 % 10.0 % Efficiency ratio 48.9 % 48.9 % 54.2 % 50.8 % 50.3 % Employees' compensation and benefits ($000's) 34,526 35,934 34,415 137,531 130,276 Broker-Dealer Segment: Net revenue ($000's) (4) 106,919 114,184 94,569 393,540 424,421 Employees' compensation and benefits ($000's) 60,552 70,274 65,301 251,145 276,176 Variable compensation expense ($000's) 32,042 42,567 35,939 138,705 161,264 Compensation as a % of net revenue 56.6 % 61.5 % 69.1 % 63.8 % 65.1 % Pre-tax margin (5) 18.5 % 15.3 % 1.8 % 9.6 % 10.3 % Mortgage Origination Segment: Mortgage loan originations - volume ($000's): Home purchases 1,895,731 2,832,136 3,559,137 10,823,002 14,429,190 Refinancings 147,511 211,075 1,430,369 1,837,154 8,239,093 Total mortgage loan originations - volume 2,043,242 3,043,211 4,989,506 12,660,156 22,668,283 Mortgage loan sales - volume ($000's) 2,038,990 3,419,950 4,988,538 13,200,471 23,059,160 Net gains from mortgage loan sales (basis points): Loans sold to third parties 211 227 362 263 375 Impact of loans retained by banking segment (19 ) (9 ) (15 ) (11 ) (13 ) As reported 192 218 347 252 362 Mortgage servicing rights asset ($000's) (6) 100,825 156,539 86,990 100,825 86,990 Employees' compensation and benefits ($000's) 64,940 86,079 121,758 353,973 568,221 Variable compensation expense ($000's) 26,724 44,312 73,208 183,804 373,929 ___________________ (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 $0.3 million, $0.4 million, $0.5 million, $1.6 million and $1.7 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. December 31, September 30, June 30, March 31, December 31, Capital Ratios 2022 2022 2022 2022 2021 Tier 1 capital (to average assets): PlainsCapital 10.26 % 10.29 % 9.67 % 9.74 % 10.20 % Hilltop 11.47 % 11.41 % 10.53 % 12.46 % 12.58 % Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 14.97 % 14.68 % 14.65 % 15.37 % 16.00 % Hilltop 18.22 % 17.45 % 17.24 % 21.27 % 21.22 % Tier 1 capital (to risk-weighted assets): PlainsCapital 14.97 % 14.68 % 14.65 % 15.37 % 16.00 % Hilltop 18.22 % 17.45 % 17.24 % 21.27 % 21.22 % Total capital (to risk-weighted assets): PlainsCapital 15.90 % 15.54 % 15.55 % 16.18 % 16.77 % Hilltop 20.97 % 20.07 % 19.90 % 23.85 % 23.75 % December 31, September 30, June 30, March 31, December 31, Non-Performing Assets Portfolio Data 2022 2022 2022 2022 2021 Loans accounted for on a non-accrual basis ($000's) (1): Commercial real estate 4,269 4,735 4,947 6,153 6,601 Commercial and industrial 9,095 12,078 13,315 18,486 22,478 Construction and land development 1 1 1 1 2 1-4 family residential 16,138 16,968 16,542 18,723 21,123 Consumer 14 16 19 21 23 Broker-dealer — — — — — 29,517 33,798 34,824 43,384 50,227 Troubled debt restructurings included in accruing loans held for investment ($000's) 803 825 857 890 922 Non-performing loans ($000's) 30,320 34,623 35,681 44,274 51,149 Non-performing loans as a % of total loans 0.33 % 0.39 % 0.38 % 0.47 % 0.52 % Other real estate owned ($000's) 2,325 1,637 1,516 2,175 2,833 Other repossessed assets ($000's) — — — — — Non-performing assets ($000's) 32,645 36,260 37,197 46,449 53,982 Non-performing assets as a % of total assets 0.20 % 0.22 % 0.22 % 0.25 % 0.29 % Loans past due 90 days or more and still accruing ($000's) (2): 92,099 96,532 82,410 87,489 60,775 ___________________ (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 as of December 31, 2021. (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 December 31, 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 $ 882,322 $ 11,634 5.27 % $ 1,852,140 $ 13,708 2.96 % Loans held for investment, gross (2) 7,774,350 106,271 5.42 % 7,695,090 82,396 4.25 % Investment securities - taxable 2,843,881 23,293 3.28 % 2,677,894 13,916 2.08 % Investment securities - non-taxable (3) 354,207 3,286 3.71 % 331,959 3,188 3.84 % Federal funds sold and securities purchased under agreements to resell 161,632 2,173 5.33 % 194,351 164 0.33 % Interest-bearing deposits in other financial institutions 1,749,902 15,751 3.57 % 2,683,656 943 0.14 % Securities borrowed 1,350,873 14,162 4.10 % 1,474,421 8,524 2.26 % Other 56,196 3,686 26.02 % 52,848 765 5.74 % Interest-earning assets, gross (3) 15,173,363 180,256 4.71 % 16,962,359 123,604 2.89 % Allowance for credit losses (92,344 ) (109,555 ) Interest-earning assets, net 15,081,019 16,852,804 Noninterest-earning assets 1,637,295 1,402,216 Total assets $ 16,718,314 $ 18,255,020 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,154,802 $ 28,238 1.57 % $ 7,901,704 $ 4,404 0.22 % Securities loaned 1,274,038 13,179 4.10 % 1,422,303 6,624 1.85 % Notes payable and other borrowings 1,355,809 15,114 4.42 % 1,233,924 7,733 2.49 % Total interest-bearing liabilities 9,784,649 56,531 2.29 % 10,557,931 18,761 0.70 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,222,143 4,509,891 Other liabilities 652,900 677,433 Total liabilities 14,659,692 15,745,255 Stockholders’ equity 2,032,287 2,484,301 Noncontrolling interest 26,335 25,464 Total liabilities and stockholders' equity $ 16,718,314 $ 18,255,020 Net interest income (3) $ 123,725 $ 104,843 Net interest spread (3) 2.42 % 2.19 % Net interest margin (3) 3.24 % 2.45 % Year Ended December 31, 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 $ 1,221,235 $ 52,315 4.28 % $ 2,293,543 $ 64,767 2.82 % Loans held for investment, gross (2) 7,840,848 363,892 4.71 % 7,645,292 339,548 4.44 % Investment securities - taxable 2,819,282 75,805 2.69 % 2,493,848 47,582 1.91 % Investment securities - non-taxable (3) 310,315 11,608 3.74 % 313,703 11,448 3.65 % Federal funds sold and securities purchased under agreements to resell 162,575 4,098 2.52 % 152,273 372 0.24 % Interest-bearing deposits in other financial institutions 2,306,960 31,705 1.37 % 2,078,666 2,942 0.14 % Securities borrowed 1,298,276 44,414 3.37 % 1,445,464 61,667 4.21 % Other 55,280 8,873 16.05 % 50,929 3,332 6.54 % Interest-earning assets, gross (3) 16,014,771 592,710 3.70 % 16,473,718 531,658 3.23 % Allowance for credit losses (92,828 ) (129,689 ) Interest-earning assets, net 15,921,943 16,344,029 Noninterest-earning assets 1,488,994 1,451,928 Total assets $ 17,410,937 $ 17,795,957 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,561,501 $ 50,412 0.67 % $ 7,722,584 $ 23,624 0.31 % Securities loaned 1,184,498 38,570 3.26 % 1,374,142 50,974 3.71 % Notes payable and other borrowings 1,293,133 43,158 3.34 % 1,216,381 32,393 2.66 % Total interest-bearing liabilities 10,039,132 132,140 1.32 % 10,313,107 106,991 1.04 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,455,779 4,157,962 Other liabilities 675,629 863,976 Total liabilities 15,170,540 15,335,045 Stockholders’ equity 2,213,756 2,435,185 Noncontrolling interest 26,641 25,727 Total liabilities and stockholders' equity $ 17,410,937 $ 17,795,957 Net interest income (3) $ 460,570 $ 424,667 Net interest spread (3) 2.38 % 2.19 % Net interest margin (3) 2.88 % 2.58 % ___________________ (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 $0.3 million and $0.5 million for the three months ended December 31, 2022 and 2021, respectively, and $1.6 million and $1.7 million for the year ended December 31, 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, January 27, 2023. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review fourth quarter and full year 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 429656. 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 December 31, 2022, Hilltop employed approximately 4,140 people and operated approximately 360 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,” “position,” “probable,” “progressing,” “projects,” “prudent,” “seeks,” “should,” “target,” “view,” “will” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate 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/20230126005878/en/Contacts Investor Relations Contact: Erik Yohe 214-525-4634 eyohe@hilltop-holdings.com
Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2022. Hilltop produced income to common stockholders of $25.6 million, or $0.39 per diluted share, for the fourth quarter of 2022, compared to $62.2 million, or $0.78 per diluted share, for the fourth quarter of 2021. Income to common stockholders for the full year 2022 was $113.1 million, or $1.60 per diluted share, compared to $374.5 million, or $4.61 per diluted share, for the full year 2021. Hilltop’s financial results for the fourth quarter and full year of 2022 included significant decreases in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income, while the banking segment recorded a provision for credit losses as opposed to a reversal of credit losses in respective prior year periods. Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per common share, a 7% increase from the prior quarter, payable on February 24, 2023, to all common stockholders of record as of the close of business on February 10, 2023. Additionally, the Hilltop Board of Directors authorized, subject to regulatory approvals or non-objections, a new stock repurchase program through January 2024, under which Hilltop may repurchase, in the aggregate, up to $75.0 million of its outstanding common stock. During 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. Headwinds during 2022, including the impact of tight housing inventories on mortgage volumes, declining deposit balances, rapid increases in market interest rates and a declining economic forecast, are expected to continue to have an adverse impact on our operating results during 2023. The impacts of such headwinds in 2023 remain uncertain and will depend on developments outside of our control, including, among others, timing and significance of further changes in U.S. treasury yields and mortgage interest rates, exposure to increasing funding costs, inflationary pressures associated with compensation, occupancy and software costs and labor market conditions, the Russian-Ukraine conflict and its impact on supply chains, and the impact of the pandemic. Jeremy B. Ford, President and CEO of Hilltop, said “Although we experienced a challenging operating environment in 2022, Hilltop still generated consolidated profitability and finished the year a more resilient company. The abrupt market shifts in the mortgage and fixed income businesses had a negative impact across our company, particularly at PrimeLending and HilltopSecurities, while PlainsCapital Bank delivered across all of its key priorities, including prudent loan growth, sound credit quality and efficiency. I am proud of our teams’ accomplishments during the year, as they continued to deliver high-quality products and services for our clients, while also making tough, yet prudent, expense decisions to right-size our franchise. “Additionally, our focus on maintaining a strong balance sheet with significant capital and liquidity has positioned Hilltop for long-term success regardless of interest rate and economic volatility. Finally, I am very pleased that Hilltop returned a record amount of capital to stockholders during 2022, primarily through our successful tender offer share repurchase completed in May.” Fourth Quarter 2022 Highlights for Hilltop: The provision for credit losses was $3.6 million during the fourth quarter of 2022, compared to a reversal of credit losses of $0.8 million in the third quarter of 2022 and a reversal of credit losses of $18.6 million in the fourth quarter of 2021; The provision for credit losses during the fourth quarter of 2022 reflected a deteriorating U.S. economic outlook since the prior quarter. For the fourth 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 $71.1 million, compared to $192.0 million in the fourth quarter of 2021, a 63.0% decrease; Mortgage loan origination production volume was $2.0 billion during the fourth quarter of 2022, compared to $5.0 billion in the fourth quarter of 2021; Net gains from mortgage loans sold to third parties decreased to 211 basis points during the fourth quarter of 2022, compared to 227 basis points in the third quarter of 2022. Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the fourth quarter of 2022 were 0.63% and 4.99%, respectively, compared to 1.41% and 9.93%, respectively, for the fourth quarter of 2021; Hilltop’s book value per common share increased to $31.62 at December 31, 2022, compared to $31.46 at September 30, 2022; Hilltop’s total assets were $16.3 billion and $16.6 billion at December 31, 2022 and September 30, 2022, respectively; Loans1, net of allowance for credit losses, were $7.6 billion and $7.4 billion at December 31, 2022 and September 30, 2022; Non-performing loans were $30.3 million, or 0.33% of total loans, at December 31, 2022, compared to $34.6 million, or 0.39% of total loans, at September 30, 2022; Loans held for sale decreased by 2.1% from September 30, 2022 to $1.0 billion at December 31, 2022; Total deposits were $11.3 billion and $11.4 billion at December 31, 2022 and September 30, 2022, respectively; Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.47% and a Common Equity Tier 1 Capital Ratio of 18.22% at December 31, 2022; Hilltop’s consolidated net interest margin4 increased to 3.23% for the fourth quarter of 2022, compared to 3.19% in the third quarter of 2022; For the fourth quarter of 2022, noninterest income was $169.8 million, compared to $284.8 million in the fourth quarter of 2021, a 40.4% decrease; For the fourth quarter 2022, noninterest expense was $253.4 million, compared to $322.2 million in the fourth quarter of 2021, a 21.4% decrease; and Hilltop’s effective tax rate was 26.6% during the fourth quarter of 2022, compared to 24.2% during the same period in 2021. The effective tax rate for the fourth 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 $431.0 million and $402.0 million at December 31, 2022 and September 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 December 31, September 30, June 30, March 31, December 31, (in 000's) 2022 2022 2022 2022 2021 Cash and due from banks $ 1,579,512 $ 1,777,584 $ 1,783,554 $ 2,886,812 $ 2,823,138 Federal funds sold 650 663 381 383 385 Assets segregated for regulatory purposes 67,737 109,358 120,816 128,408 221,740 Securities purchased under agreements to resell 118,070 145,365 139,929 256,991 118,262 Securities: Trading, at fair value 755,032 641,864 593,273 471,763 647,998 Available for sale, at fair value, net 1,658,766 1,584,724 1,562,222 1,462,340 2,130,568 Held to maturity, at amortized cost, net 875,532 889,452 920,583 953,107 267,684 Equity, at fair value 200 209 197 225 250 3,289,530 3,116,249 3,076,275 2,887,435 3,046,500 Loans held for sale 982,616 1,003,605 1,491,579 1,643,994 1,878,190 Loans held for investment, net of unearned income 8,092,673 7,944,246 7,930,619 7,797,903 7,879,904 Allowance for credit losses (95,442 ) (91,783 ) (95,298 ) (91,185 ) (91,352 ) Loans held for investment, net 7,997,231 7,852,463 7,835,321 7,706,718 7,788,552 Broker-dealer and clearing organization receivables 1,038,055 1,255,052 1,049,830 1,610,352 1,672,946 Premises and equipment, net 184,950 191,423 195,361 198,906 204,438 Operating lease right-of-use assets 102,443 103,099 106,806 108,180 112,328 Mortgage servicing assets 100,825 156,539 121,688 100,475 86,990 Other assets 527,469 624,235 513,570 546,622 452,880 Goodwill 267,447 267,447 267,447 267,447 267,447 Other intangible assets, net 11,317 12,209 13,182 14,233 15,284 Total assets $ 16,267,852 $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 Deposits: Noninterest-bearing $ 3,968,862 $ 4,546,816 $ 4,601,643 $ 4,694,592 $ 4,577,183 Interest-bearing 7,346,887 6,805,198 7,319,143 7,972,110 8,240,894 Total deposits 11,315,749 11,352,014 11,920,786 12,666,702 12,818,077 Broker-dealer and clearing organization payables 966,470 1,176,156 934,818 1,397,836 1,477,300 Short-term borrowings 970,056 942,309 822,649 835,054 859,444 Securities sold, not yet purchased, at fair value 53,023 99,515 135,968 97,629 96,586 Notes payable 346,654 390,354 389,722 395,479 387,904 Operating lease liabilities 126,759 120,635 124,406 125,919 130,960 Other liabilities 417,042 475,425 329,987 347,742 369,606 Total liabilities 14,195,753 14,556,408 14,658,336 15,866,361 16,139,877 Common stock 647 646 646 794 790 Additional paid-in capital 1,046,331 1,043,605 1,039,261 1,275,649 1,274,446 Accumulated other comprehensive loss (124,961 ) (119,864 ) (95,279 ) (80,565 ) (10,219 ) Retained earnings 1,123,636 1,107,586 1,085,208 1,267,415 1,257,014 Deferred compensation employee stock trust, net 481 479 695 744 752 Employee stock trust (640 ) (641 ) (954 ) (104 ) (115 ) Total Hilltop stockholders' equity 2,045,494 2,031,811 2,029,577 2,463,933 2,522,668 Noncontrolling interests 26,605 27,072 27,826 26,662 26,535 Total stockholders' equity 2,072,099 2,058,883 2,057,403 2,490,595 2,549,203 Total liabilities & stockholders' equity $ 16,267,852 $ 16,615,291 $ 16,715,739 $ 18,356,956 $ 18,689,080 Three Months Ended Year Ended Consolidated Income Statements December 31, September 30, December 31, December 31, December 31, (in 000's, except per share data) 2022 2022 2021 2022 2021 Interest income: Loans, including fees $ 117,906 $ 109,165 $ 96,104 $ 416,207 $ 404,312 Securities borrowed 14,162 10,938 8,524 44,414 61,667 Securities: Taxable 23,293 19,642 13,916 75,805 47,633 Tax-exempt 3,002 2,451 2,639 10,013 9,766 Other 21,611 14,276 1,872 44,677 6,595 Total interest income 179,974 156,472 123,055 591,116 529,973 Interest expense: Deposits 28,238 12,525 4,404 50,412 23,624 Securities loaned 13,179 9,407 6,624 38,570 50,974 Short-term borrowings 10,278 5,550 2,279 20,893 9,065 Notes payable 3,988 3,907 5,871 16,141 21,386 Junior subordinated debentures — — — — 1,558 Other 849 1,597 (417 ) 6,125 384 Total interest expense 56,532 32,986 18,761 132,141 106,991 Net interest income 123,442 123,486 104,294 458,975 422,982 Provision for (reversal of) credit losses 3,638 (780 ) (18,565 ) 8,309 (58,213 ) Net interest income after provision for (reversal of) credit losses 119,804 124,266 122,859 450,666 481,195 Noninterest income: Net gains from sale of loans and other mortgage production income 35,949 57,998 156,103 302,384 825,960 Mortgage loan origination fees 35,198 39,960 35,930 149,598 160,011 Securities commissions and fees 33,143 34,076 32,801 139,122 143,827 Investment and securities advisory fees and commissions 30,661 35,031 42,834 127,399 152,443 Other 34,833 39,910 17,178 113,957 128,034 Total noninterest income 169,784 206,975 284,846 832,460 1,410,275 Noninterest expense: Employees' compensation and benefits 167,892 200,450 229,717 773,688 1,007,235 Occupancy and equipment, net 23,077 25,041 25,741 97,115 100,602 Professional services 11,555 10,631 9,904 48,495 54,270 Other 50,844 52,616 56,832 207,701 225,291 Total noninterest expense 253,368 288,738 322,194 1,126,999 1,387,398 Income before income taxes 36,220 42,503 85,511 156,127 504,072 Income tax expense 9,642 9,249 20,715 36,833 117,976 Net income 26,578 33,254 64,796 119,294 386,096 Less: Net income attributable to noncontrolling interest 1,022 1,186 2,611 6,160 11,601 Income attributable to Hilltop $ 25,556 $ 32,068 $ 62,185 $ 113,134 $ 374,495 Earnings per common share: Basic: $ 0.40 $ 0.50 $ 0.79 $ 1.61 $ 4.64 Diluted: $ 0.39 $ 0.50 $ 0.78 $ 1.60 $ 4.61 Cash dividends declared per common share $ 0.15 $ 0.15 $ 0.12 $ 0.60 $ 0.48 Weighted average shares outstanding: Basic 64,602 64,552 78,933 70,434 80,708 Diluted 64,779 64,669 79,427 70,626 81,173 Three Months Ended December 31, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 109,335 $ 14,116 $ (4,464 ) $ (3,279 ) $ 7,734 $ 123,442 Provision for (reversal of) credit losses 3,925 (287 ) — — — 3,638 Noninterest income 11,869 92,803 71,439 1,870 (8,197 ) 169,784 Noninterest expense 59,269 87,406 92,532 14,642 (481 ) 253,368 Income (loss) before taxes $ 58,010 $ 19,800 $ (25,557 ) $ (16,051 ) $ 18 $ 36,220 Year Ended December 31, 2022 Segment Results Mortgage All Other and Hilltop (in 000's) Banking Broker-Dealer Origination Corporate Eliminations Consolidated Net interest income (expense) $ 413,603 $ 51,597 $ (10,529 ) $ (13,135 ) $ 17,439 $ 458,975 Provision for (reversal of) credit losses 8,250 59 — — — 8,309 Noninterest income 49,307 341,943 452,915 7,525 (19,230 ) 832,460 Noninterest expense 235,190 355,713 478,904 59,030 (1,838 ) 1,126,999 Income (loss) before taxes $ 219,470 $ 37,768 $ (36,518 ) $ (64,640 ) $ 47 $ 156,127 Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, Selected Financial Data 2022 2022 2021 2022 2021 Hilltop Consolidated: Return on average stockholders' equity 4.99 % 6.26 % 9.93 % 5.11 % 15.38 % Return on average assets 0.63 % 0.79 % 1.41 % 0.69 % 2.17 % Net interest margin (1) 3.23 % 3.19 % 2.44 % 2.87 % 2.57 % Net interest margin (taxable equivalent) (2): As reported 3.24 % 3.20 % 2.45 % 2.88 % 2.58 % Impact of purchase accounting 7 bps 8 bps 12 bps 7 bps 12 bps Book value per common share ($) 31.62 31.46 31.95 31.62 31.95 Shares outstanding, end of period (000's) 64,685 64,591 78,965 64,685 78,965 Dividend payout ratio (3) 37.92 % 30.19 % 15.19 % 37.36 % 10.34 % Banking Segment: Net interest margin (1) 3.42 % 3.42 % 2.81 % 3.11 % 3.07 % Net interest margin (taxable equivalent) (2): As reported 3.43 % 3.43 % 2.82 % 3.11 % 3.08 % Impact of purchase accounting 8 bps 10 bps 15 bps 9 bps 16 bps Accretion of discount on loans ($000's) 2,173 2,858 4,716 10,552 18,789 Net recoveries (charge-offs) ($000's) 21 (2,735 ) 405 (4,219 ) 521 Return on average assets 1.31 % 1.41 % 1.44 % 1.19 % 1.55 % Fee income ratio 9.8 % 9.9 % 10.8 % 10.7 % 10.0 % Efficiency ratio 48.9 % 48.9 % 54.2 % 50.8 % 50.3 % Employees' compensation and benefits ($000's) 34,526 35,934 34,415 137,531 130,276 Broker-Dealer Segment: Net revenue ($000's) (4) 106,919 114,184 94,569 393,540 424,421 Employees' compensation and benefits ($000's) 60,552 70,274 65,301 251,145 276,176 Variable compensation expense ($000's) 32,042 42,567 35,939 138,705 161,264 Compensation as a % of net revenue 56.6 % 61.5 % 69.1 % 63.8 % 65.1 % Pre-tax margin (5) 18.5 % 15.3 % 1.8 % 9.6 % 10.3 % Mortgage Origination Segment: Mortgage loan originations - volume ($000's): Home purchases 1,895,731 2,832,136 3,559,137 10,823,002 14,429,190 Refinancings 147,511 211,075 1,430,369 1,837,154 8,239,093 Total mortgage loan originations - volume 2,043,242 3,043,211 4,989,506 12,660,156 22,668,283 Mortgage loan sales - volume ($000's) 2,038,990 3,419,950 4,988,538 13,200,471 23,059,160 Net gains from mortgage loan sales (basis points): Loans sold to third parties 211 227 362 263 375 Impact of loans retained by banking segment (19 ) (9 ) (15 ) (11 ) (13 ) As reported 192 218 347 252 362 Mortgage servicing rights asset ($000's) (6) 100,825 156,539 86,990 100,825 86,990 Employees' compensation and benefits ($000's) 64,940 86,079 121,758 353,973 568,221 Variable compensation expense ($000's) 26,724 44,312 73,208 183,804 373,929 ___________________ (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 $0.3 million, $0.4 million, $0.5 million, $1.6 million and $1.7 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. December 31, September 30, June 30, March 31, December 31, Capital Ratios 2022 2022 2022 2022 2021 Tier 1 capital (to average assets): PlainsCapital 10.26 % 10.29 % 9.67 % 9.74 % 10.20 % Hilltop 11.47 % 11.41 % 10.53 % 12.46 % 12.58 % Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 14.97 % 14.68 % 14.65 % 15.37 % 16.00 % Hilltop 18.22 % 17.45 % 17.24 % 21.27 % 21.22 % Tier 1 capital (to risk-weighted assets): PlainsCapital 14.97 % 14.68 % 14.65 % 15.37 % 16.00 % Hilltop 18.22 % 17.45 % 17.24 % 21.27 % 21.22 % Total capital (to risk-weighted assets): PlainsCapital 15.90 % 15.54 % 15.55 % 16.18 % 16.77 % Hilltop 20.97 % 20.07 % 19.90 % 23.85 % 23.75 % December 31, September 30, June 30, March 31, December 31, Non-Performing Assets Portfolio Data 2022 2022 2022 2022 2021 Loans accounted for on a non-accrual basis ($000's) (1): Commercial real estate 4,269 4,735 4,947 6,153 6,601 Commercial and industrial 9,095 12,078 13,315 18,486 22,478 Construction and land development 1 1 1 1 2 1-4 family residential 16,138 16,968 16,542 18,723 21,123 Consumer 14 16 19 21 23 Broker-dealer — — — — — 29,517 33,798 34,824 43,384 50,227 Troubled debt restructurings included in accruing loans held for investment ($000's) 803 825 857 890 922 Non-performing loans ($000's) 30,320 34,623 35,681 44,274 51,149 Non-performing loans as a % of total loans 0.33 % 0.39 % 0.38 % 0.47 % 0.52 % Other real estate owned ($000's) 2,325 1,637 1,516 2,175 2,833 Other repossessed assets ($000's) — — — — — Non-performing assets ($000's) 32,645 36,260 37,197 46,449 53,982 Non-performing assets as a % of total assets 0.20 % 0.22 % 0.22 % 0.25 % 0.29 % Loans past due 90 days or more and still accruing ($000's) (2): 92,099 96,532 82,410 87,489 60,775 ___________________ (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 as of December 31, 2021. (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 December 31, 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 $ 882,322 $ 11,634 5.27 % $ 1,852,140 $ 13,708 2.96 % Loans held for investment, gross (2) 7,774,350 106,271 5.42 % 7,695,090 82,396 4.25 % Investment securities - taxable 2,843,881 23,293 3.28 % 2,677,894 13,916 2.08 % Investment securities - non-taxable (3) 354,207 3,286 3.71 % 331,959 3,188 3.84 % Federal funds sold and securities purchased under agreements to resell 161,632 2,173 5.33 % 194,351 164 0.33 % Interest-bearing deposits in other financial institutions 1,749,902 15,751 3.57 % 2,683,656 943 0.14 % Securities borrowed 1,350,873 14,162 4.10 % 1,474,421 8,524 2.26 % Other 56,196 3,686 26.02 % 52,848 765 5.74 % Interest-earning assets, gross (3) 15,173,363 180,256 4.71 % 16,962,359 123,604 2.89 % Allowance for credit losses (92,344 ) (109,555 ) Interest-earning assets, net 15,081,019 16,852,804 Noninterest-earning assets 1,637,295 1,402,216 Total assets $ 16,718,314 $ 18,255,020 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,154,802 $ 28,238 1.57 % $ 7,901,704 $ 4,404 0.22 % Securities loaned 1,274,038 13,179 4.10 % 1,422,303 6,624 1.85 % Notes payable and other borrowings 1,355,809 15,114 4.42 % 1,233,924 7,733 2.49 % Total interest-bearing liabilities 9,784,649 56,531 2.29 % 10,557,931 18,761 0.70 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,222,143 4,509,891 Other liabilities 652,900 677,433 Total liabilities 14,659,692 15,745,255 Stockholders’ equity 2,032,287 2,484,301 Noncontrolling interest 26,335 25,464 Total liabilities and stockholders' equity $ 16,718,314 $ 18,255,020 Net interest income (3) $ 123,725 $ 104,843 Net interest spread (3) 2.42 % 2.19 % Net interest margin (3) 3.24 % 2.45 % Year Ended December 31, 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 $ 1,221,235 $ 52,315 4.28 % $ 2,293,543 $ 64,767 2.82 % Loans held for investment, gross (2) 7,840,848 363,892 4.71 % 7,645,292 339,548 4.44 % Investment securities - taxable 2,819,282 75,805 2.69 % 2,493,848 47,582 1.91 % Investment securities - non-taxable (3) 310,315 11,608 3.74 % 313,703 11,448 3.65 % Federal funds sold and securities purchased under agreements to resell 162,575 4,098 2.52 % 152,273 372 0.24 % Interest-bearing deposits in other financial institutions 2,306,960 31,705 1.37 % 2,078,666 2,942 0.14 % Securities borrowed 1,298,276 44,414 3.37 % 1,445,464 61,667 4.21 % Other 55,280 8,873 16.05 % 50,929 3,332 6.54 % Interest-earning assets, gross (3) 16,014,771 592,710 3.70 % 16,473,718 531,658 3.23 % Allowance for credit losses (92,828 ) (129,689 ) Interest-earning assets, net 15,921,943 16,344,029 Noninterest-earning assets 1,488,994 1,451,928 Total assets $ 17,410,937 $ 17,795,957 Liabilities and Stockholders' Equity Interest-bearing liabilities Interest-bearing deposits $ 7,561,501 $ 50,412 0.67 % $ 7,722,584 $ 23,624 0.31 % Securities loaned 1,184,498 38,570 3.26 % 1,374,142 50,974 3.71 % Notes payable and other borrowings 1,293,133 43,158 3.34 % 1,216,381 32,393 2.66 % Total interest-bearing liabilities 10,039,132 132,140 1.32 % 10,313,107 106,991 1.04 % Noninterest-bearing liabilities Noninterest-bearing deposits 4,455,779 4,157,962 Other liabilities 675,629 863,976 Total liabilities 15,170,540 15,335,045 Stockholders’ equity 2,213,756 2,435,185 Noncontrolling interest 26,641 25,727 Total liabilities and stockholders' equity $ 17,410,937 $ 17,795,957 Net interest income (3) $ 460,570 $ 424,667 Net interest spread (3) 2.38 % 2.19 % Net interest margin (3) 2.88 % 2.58 % ___________________ (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 $0.3 million and $0.5 million for the three months ended December 31, 2022 and 2021, respectively, and $1.6 million and $1.7 million for the year ended December 31, 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, January 27, 2023. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review fourth quarter and full year 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 429656. 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 December 31, 2022, Hilltop employed approximately 4,140 people and operated approximately 360 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,” “position,” “probable,” “progressing,” “projects,” “prudent,” “seeks,” “should,” “target,” “view,” “will” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate 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/20230126005878/en/