Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2023

Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2023. Hilltop produced income to common stockholders of $37.0 million, or $0.57 per diluted share, for the third quarter of 2023, compared to $32.1 million, or $0.50 per diluted share, for the third quarter of 2022. Hilltop’s financial results for the third quarter of 2023 included decreases in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income, a decline in the net interest income within the banking segment, and increases in net revenues within certain of the broker-dealer segment’s business lines.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per common share, payable on November 28, 2023, to all common stockholders of record as of the close of business on November 13, 2023.

Headwinds that began in 2022, and continued through the first nine months of 2023, including the impact of tight housing inventories on mortgage volumes, declining deposit balances, rapid increases in market interest rates and a volatile economic forecast have had, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2023. The impacts of such headwinds during the remainder of 2023 remain uncertain and will depend on developments outside of our control, including, among others, the 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, international armed conflicts and their impact on supply chains, and disruptions to the economy and the U.S. banking system caused by high-profile bank failures during early 2023.

Jeremy B. Ford, President and CEO of Hilltop, said “Hilltop’s operating results for the third quarter reflect a general continuation in market pressures experienced in the first half of the year. While PlainsCapital Bank produced strong financial results for the quarter with a 1.20% return on average assets, the competitive environment around deposits resulted in further pressure on the bank’s net interest margin. HilltopSecurities generated robust financial results as the wealth management and structured finance businesses produced strong net revenues, which more than offset challenging market conditions for the public finance and fixed income capital markets businesses. PrimeLending’s results continued to be impacted by the housing market’s lack of inventory, consumer affordability challenges and a stubbornly compressed gain-on-sale margin.

“As we progress into the final quarter of the year, we will continue to prudently manage our balance sheet, closely monitor our expenses and serve our valued clients.”

Third Quarter 2023 Highlights for Hilltop:

  • The reversal of credit losses was $40 thousand during the third quarter of 2023, compared to a provision for credit losses of $14.8 million in the second quarter of 2023 and a reversal of credit losses of $0.8 million in the third quarter of 2022;
    • The slight reversal of credit losses during the third quarter of 2023 reflected improvements to the U.S. economic outlook and decreases in specific reserves within our broker dealer segment, offset by increases in specific reserves and net portfolio changes within the banking segment.
  • For the third quarter of 2023, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $88.7 million, compared to $98.0 million in the third quarter of 2022, a 9.4% decrease;
    • Mortgage loan origination production volume was $2.2 billion during the third quarter of 2023, compared to $3.0 billion in the third quarter of 2022;
    • Net gains from mortgage loans sold to third parties decreased to 199 basis points during the third quarter of 2023, compared to 207 basis points in the second quarter of 2023.
  • Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the third quarter of 2023 were 0.94% and 7.11%, respectively, compared to 0.79% and 6.26%, respectively, for the third quarter of 2022;
  • Hilltop’s book value per common share increased to $31.91 at September 30, 2023, compared to $31.71 at June 30, 2023;
  • Hilltop’s total assets were $16.4 billion and $17.1 billion at September 30, 2023 and June 30, 2023, respectively;
  • Loans1, net of allowance for credit losses, were $7.7 billion and $7.9 billion at September 30, 2023 and June 30, 2023, respectively;
  • Non-performing loans were $31.5 million, or 0.34% of total loans, at September 30, 2023, compared to $39.0 million, or 0.40% of total loans, at June 30, 2023;
  • Loans held for sale decreased by 20.6% from June 30, 2023 to $1.1 billion at September 30, 2023;
  • Total deposits were $11.1 billion and $11.2 billion at September 30, 2023 and June 30, 2023, respectively;
    • Total estimated uninsured deposits were $4.4 billion, or approximately 40% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $276.3 million, were $4.2 billion, or approximately 37% of total deposits at September 30, 2023.
  • Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.92% and a Common Equity Tier 1 Capital Ratio of 18.60% at September 30, 2023;
  • Hilltop’s consolidated net interest margin4 decreased to 3.02% for the third quarter of 2023, compared to 3.03% in the second quarter of 2023;
  • For the third quarter of 2023, noninterest income was $196.8 million, compared to $207.0 million in the third quarter of 2022, a 4.9% decrease;
  • For the third quarter 2023, noninterest expense was $260.0 million, compared to $288.7 million in the third quarter of 2022, a 9.9% decrease; and
  • Hilltop’s effective tax rate was 25.2% during the third quarter of 2023, compared to 21.8% during the same period in 2022.
    • The effective tax rate for the third quarter 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 $357.1 million and $358.5 million at September 30, 2023 and June 30, 2023, 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)

 

2023

 

2023

 

2023

 

2022

 

2022

Cash and due from banks

 

$

1,513,747

 

 

$

1,584,709

 

 

$

1,764,081

 

 

$

1,579,512

 

 

$

1,777,584

 

Federal funds sold

 

 

3,650

 

 

 

650

 

 

 

743

 

 

 

650

 

 

 

663

 

Assets segregated for regulatory purposes

 

 

47,491

 

 

 

50,711

 

 

 

36,199

 

 

 

67,737

 

 

 

109,358

 

Securities purchased under agreements to resell

 

 

123,719

 

 

 

143,982

 

 

 

144,201

 

 

 

118,070

 

 

 

145,365

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

578,901

 

 

 

696,649

 

 

 

692,908

 

 

 

755,032

 

 

 

641,864

 

Available for sale, at fair value, net (1)

 

 

1,456,238

 

 

 

1,526,869

 

 

 

1,641,571

 

 

 

1,658,766

 

 

 

1,584,724

 

Held to maturity, at amortized cost, net (1)

 

 

825,079

 

 

 

847,437

 

 

 

862,280

 

 

 

875,532

 

 

 

889,452

 

Equity, at fair value

 

 

264

 

 

 

258

 

 

 

231

 

 

 

200

 

 

 

209

 

 

 

 

2,860,482

 

 

 

3,071,213

 

 

 

3,196,990

 

 

 

3,289,530

 

 

 

3,116,249

 

Loans held for sale

 

 

1,058,806

 

 

 

1,333,044

 

 

 

1,040,138

 

 

 

982,616

 

 

 

1,003,605

 

Loans held for investment, net of unearned income

 

 

8,204,052

 

 

 

8,354,122

 

 

 

8,192,846

 

 

 

8,092,673

 

 

 

7,944,246

 

Allowance for credit losses

 

 

(110,822

)

 

 

(109,306

)

 

 

(97,354

)

 

 

(95,442

)

 

 

(91,783

)

Loans held for investment, net

 

 

8,093,230

 

 

 

8,244,816

 

 

 

8,095,492

 

 

 

7,997,231

 

 

 

7,852,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer and clearing organization receivables

 

 

1,460,352

 

 

 

1,474,177

 

 

 

1,560,246

 

 

 

1,038,055

 

 

 

1,255,052

 

Premises and equipment, net

 

 

172,097

 

 

 

176,574

 

 

 

180,132

 

 

 

184,950

 

 

 

191,423

 

Operating lease right-of-use assets

 

 

93,057

 

 

 

97,979

 

 

 

100,122

 

 

 

102,443

 

 

 

103,099

 

Mortgage servicing assets

 

 

104,951

 

 

 

95,101

 

 

 

103,314

 

 

 

100,825

 

 

 

156,539

 

Other assets

 

 

588,751

 

 

 

588,166

 

 

 

529,438

 

 

 

518,899

 

 

 

624,235

 

Goodwill

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

Other intangible assets, net

 

 

9,078

 

 

 

9,772

 

 

 

10,544

 

 

 

11,317

 

 

 

12,209

 

Total assets

 

$

16,396,858

 

 

$

17,138,341

 

 

$

17,029,087

 

 

$

16,259,282

 

 

$

16,615,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

3,200,247

 

 

$

3,451,438

 

 

$

3,807,878

 

 

$

3,968,862

 

 

$

4,546,816

 

Interest-bearing

 

 

7,902,850

 

 

 

7,712,739

 

 

 

7,289,269

 

 

 

7,346,887

 

 

 

6,805,198

 

Total deposits

 

 

11,103,097

 

 

 

11,164,177

 

 

 

11,097,147

 

 

 

11,315,749

 

 

 

11,352,014

 

Broker-dealer and clearing organization payables

 

 

1,368,064

 

 

 

1,306,646

 

 

 

1,383,317

 

 

 

966,470

 

 

 

1,176,156

 

Short-term borrowings

 

 

882,999

 

 

 

1,628,637

 

 

 

1,572,794

 

 

 

970,056

 

 

 

942,309

 

Securities sold, not yet purchased, at fair value

 

 

51,527

 

 

 

74,761

 

 

 

51,497

 

 

 

53,023

 

 

 

99,515

 

Notes payable

 

 

347,020

 

 

 

364,531

 

 

 

376,410

 

 

 

346,654

 

 

 

390,354

 

Operating lease liabilities

 

 

114,334

 

 

 

119,999

 

 

 

122,878

 

 

 

126,759

 

 

 

120,635

 

Other liabilities

 

 

422,955

 

 

 

389,336

 

 

 

341,246

 

 

 

417,042

 

 

 

475,425

 

Total liabilities

 

 

14,289,996

 

 

 

15,048,087

 

 

 

14,945,289

 

 

 

14,195,753

 

 

 

14,556,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

652

 

 

 

651

 

 

 

650

 

 

 

647

 

 

 

646

 

Additional paid-in capital

 

 

1,052,867

 

 

 

1,050,191

 

 

 

1,044,774

 

 

 

1,046,331

 

 

 

1,043,605

 

Accumulated other comprehensive loss

 

 

(145,083

)

 

 

(131,718

)

 

 

(125,461

)

 

 

(133,531

)

 

 

(119,864

)

Retained earnings

 

 

1,171,250

 

 

 

1,144,624

 

 

 

1,136,901

 

 

 

1,123,636

 

 

 

1,107,586

 

Deferred compensation employee stock trust, net

 

 

340

 

 

 

450

 

 

 

446

 

 

 

481

 

 

 

479

 

Employee stock trust

 

 

(446

)

 

 

(599

)

 

 

(599

)

 

 

(640

)

 

 

(641

)

Total Hilltop stockholders' equity

 

 

2,079,580

 

 

 

2,063,599

 

 

 

2,056,711

 

 

 

2,036,924

 

 

 

2,031,811

 

Noncontrolling interests

 

 

27,282

 

 

 

26,655

 

 

 

27,087

 

 

 

26,605

 

 

 

27,072

 

Total stockholders' equity

 

 

2,106,862

 

 

 

2,090,254

 

 

 

2,083,798

 

 

 

2,063,529

 

 

 

2,058,883

 

Total liabilities & stockholders' equity

 

$

16,396,858

 

 

$

17,138,341

 

 

$

17,029,087

 

 

$

16,259,282

 

 

$

16,615,291

 

_____________________________

(1) At September 30, 2023, the amortized cost of the available for sale securities portfolio was $1,606,340, while the fair value of the held to maturity securities portfolio was $703,366.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Consolidated Income Statements

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

(in 000's, except per share data)

 

2023

 

2023

 

2023

 

2022

 

2022

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

142,402

 

 

$

138,397

 

$

123,379

 

$

117,906

 

$

109,165

 

 

Securities borrowed

 

 

17,683

 

 

 

18,515

 

 

17,068

 

 

14,162

 

 

10,938

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

27,166

 

 

 

26,719

 

 

25,602

 

 

23,293

 

 

19,642

 

 

Tax-exempt

 

 

2,464

 

 

 

2,566

 

 

3,188

 

 

3,002

 

 

2,451

 

 

Other

 

 

27,040

 

 

 

27,229

 

 

22,190

 

 

21,611

 

 

14,276

 

 

Total interest income

 

 

216,755

 

 

 

213,426

 

 

191,427

 

 

179,974

 

 

156,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

64,290

 

 

 

54,726

 

 

35,824

 

 

28,238

 

 

12,525

 

 

Securities loaned

 

 

16,169

 

 

 

16,413

 

 

15,346

 

 

13,179

 

 

9,407

 

 

Short-term borrowings

 

 

14,212

 

 

 

17,706

 

 

12,444

 

 

10,278

 

 

5,550

 

 

Notes payable

 

 

4,026

 

 

 

3,973

 

 

3,853

 

 

3,988

 

 

3,907

 

 

Other

 

 

2,408

 

 

 

2,342

 

 

2,255

 

 

849

 

 

1,597

 

 

Total interest expense

 

 

101,105

 

 

 

95,160

 

 

69,722

 

 

56,532

 

 

32,986

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

115,650

 

 

 

118,266

 

 

121,705

 

 

123,442

 

 

123,486

 

 

Provision for (reversal of) credit losses

 

 

(40

)

 

 

14,836

 

 

2,331

 

 

3,638

 

 

(780

)

 

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

 

 

115,690

 

 

 

103,430

 

 

119,374

 

 

119,804

 

 

124,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains from sale of loans and other mortgage production income

 

 

47,262

 

 

 

48,535

 

 

39,966

 

 

35,949

 

 

57,998

 

 

Mortgage loan origination fees

 

 

41,478

 

 

 

41,440

 

 

28,777

 

 

35,198

 

 

39,960

 

 

Securities commissions and fees

 

 

28,044

 

 

 

29,606

 

 

31,223

 

 

33,143

 

 

34,076

 

 

Investment and securities advisory fees and commissions

 

 

39,662

 

 

 

32,037

 

 

26,848

 

 

30,661

 

 

35,031

 

 

Other

 

 

40,403

 

 

 

39,034

 

 

35,680

 

 

34,833

 

 

39,910

 

 

Total noninterest income

 

 

196,849

 

 

 

190,652

 

 

162,494

 

 

169,784

 

 

206,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

 

 

173,195

 

 

 

176,908

 

 

167,817

 

 

167,892

 

 

200,450

 

 

Occupancy and equipment, net

 

 

21,912

 

 

 

23,025

 

 

22,865

 

 

23,077

 

 

25,041

 

 

Professional services

 

 

12,639

 

 

 

12,594

 

 

10,697

 

 

11,555

 

 

10,631

 

 

Other

 

 

52,271

 

 

 

54,450

 

 

49,091

 

 

50,844

 

 

52,616

 

 

Total noninterest expense

 

 

260,017

 

 

 

266,977

 

 

250,470

 

 

253,368

 

 

288,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

52,522

 

 

 

27,105

 

 

31,398

 

 

36,220

 

 

42,503

 

 

Income tax expense

 

 

13,211

 

 

 

7,167

 

 

3,630

 

 

9,642

 

 

9,249

 

 

Net income

 

 

39,311

 

 

 

19,938

 

 

27,768

 

 

26,578

 

 

33,254

 

 

Less: Net income attributable to noncontrolling interest

 

 

2,269

 

 

 

1,805

 

 

1,968

 

 

1,022

 

 

1,186

 

 

Income attributable to Hilltop

 

$

37,042

 

 

$

18,133

 

$

25,800

 

$

25,556

 

$

32,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.57

 

 

$

0.28

 

$

0.40

 

$

0.40

 

$

0.50

 

 

Diluted

 

$

0.57

 

 

$

0.28

 

$

0.40

 

$

0.39

 

$

0.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.16

 

 

$

0.16

 

$

0.16

 

$

0.15

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

65,106

 

 

 

65,025

 

 

64,901

 

 

64,602

 

 

64,552

 

 

Diluted

 

 

65,108

 

 

 

65,054

 

 

64,954

 

 

64,779

 

 

64,669

 

 

 

 

 

 

 

Three Months Ended September 30, 2023

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

99,047

 

$

12,215

 

 

$

(5,482

)

 

$

(3,175

)

 

$

13,045

 

 

$

115,650

 

Provision for (reversal of) credit losses

 

 

675

 

 

(715

)

 

 

 

 

 

 

 

 

 

 

 

(40

)

Noninterest income

 

 

11,668

 

 

106,488

 

 

 

88,747

 

 

 

3,159

 

 

 

(13,213

)

 

 

196,849

 

Noninterest expense

 

 

56,887

 

 

97,865

 

 

 

91,505

 

 

 

13,937

 

 

 

(177

)

 

 

260,017

 

Income (loss) before taxes

 

$

53,153

 

$

21,553

 

 

$

(8,240

)

 

$

(13,953

)

 

$

9

 

 

$

52,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2023

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

304,804

 

$

39,279

 

 

$

(15,590

)

 

$

(9,976

)

 

$

37,105

 

 

$

355,622

 

Provision for (reversal of) credit losses

 

 

17,175

 

 

(48

)

 

 

 

 

 

 

 

 

 

 

 

17,127

 

Noninterest income

 

 

34,046

 

 

297,164

 

 

 

247,655

 

 

 

8,944

 

 

 

(37,815

)

 

 

549,994

 

Noninterest expense

 

 

170,450

 

 

283,063

 

 

 

278,918

 

 

 

45,750

 

 

 

(717

)

 

 

777,464

 

Income (loss) before taxes

 

$

151,225

 

$

53,428

 

 

$

(46,853

)

 

$

(46,782

)

 

$

7

 

 

$

111,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

Selected Financial Data

 

2023

 

2023

 

2023

 

2022

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hilltop Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders' equity

 

 

7.11

%

 

 

3.53

%

 

 

5.12

%

 

 

4.99

%

 

 

6.26

%

Return on average assets

 

 

0.94

%

 

 

0.47

%

 

 

0.69

%

 

 

0.63

%

 

 

0.79

%

Net interest margin (1)

 

 

3.02

%

 

 

3.03

%

 

 

3.28

%

 

 

3.23

%

 

 

3.19

%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

3.04

%

 

 

3.03

%

 

 

3.28

%

 

 

3.24

%

 

 

3.20

%

Impact of purchase accounting

 

 

7 bps

 

 

9 bps

 

 

6 bps

 

 

7 bps

 

 

8 bps

Book value per common share ($)

 

 

31.91

 

 

 

31.71

 

 

 

31.63

 

 

 

31.49

 

 

 

31.46

 

Shares outstanding, end of period (000's)

 

 

65,170

 

 

 

65,071

 

 

 

65,023

 

 

 

64,685

 

 

 

64,591

 

Dividend payout ratio (3)

 

 

28.12

%

 

 

57.37

%

 

 

40.25

%

 

 

37.92

%

 

 

30.19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

3.08

%

 

 

3.11

%

 

 

3.40

%

 

 

3.42

%

 

 

3.42

%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

3.09

%

 

 

3.11

%

 

 

3.41

%

 

 

3.43

%

 

 

3.43

%

Impact of purchase accounting

 

 

8 bps

 

 

11 bps

 

 

7 bps

 

 

8 bps

 

 

10 bps

Accretion of discount on loans ($000's)

 

 

2,226

 

 

 

3,334

 

 

 

1,870

 

 

 

2,173

 

 

 

2,858

 

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

 

 

1,556

 

 

 

(2,884

)

 

 

(419

)

 

 

21

 

 

 

(2,735

)

Return on average assets

 

 

1.20

%

 

 

0.89

%

 

 

1.44

%

 

 

1.31

%

 

 

1.41

%

Fee income ratio

 

 

10.5

%

 

 

10.0

%

 

 

9.6

%

 

 

9.8

%

 

 

9.9

%

Efficiency ratio

 

 

51.4

%

 

 

51.2

%

 

 

48.4

%

 

 

48.9

%

 

 

48.9

%

Employees' compensation and benefits ($000's)

 

 

30,641

 

 

 

30,603

 

 

 

32,681

 

 

 

34,526

 

 

 

35,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-Dealer Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue ($000's) (4)

 

 

118,703

 

 

 

113,241

 

 

 

104,498

 

 

 

106,919

 

 

 

114,184

 

Employees' compensation and benefits ($000's)

 

 

69,930

 

 

 

65,290

 

 

 

62,429

 

 

 

60,552

 

 

 

70,274

 

Variable compensation expense ($000's)

 

 

39,929

 

 

 

34,798

 

 

 

30,821

 

 

 

32,042

 

 

 

42,567

 

Compensation as a % of net revenue

 

 

58.9

%

 

 

57.7

%

 

 

59.7

%

 

 

56.6

%

 

 

61.5

%

Pre-tax margin (5)

 

 

18.2

%

 

 

16.3

%

 

 

12.8

%

 

 

18.5

%

 

 

15.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home purchases

 

 

2,091,444

 

 

 

2,301,007

 

 

 

1,607,330

 

 

 

1,895,731

 

 

 

2,832,136

 

Refinancings

 

 

152,257

 

 

 

150,643

 

 

 

125,423

 

 

 

147,511

 

 

 

211,075

 

Total mortgage loan originations - volume

 

 

2,243,701

 

 

 

2,451,650

 

 

 

1,732,753

 

 

 

2,043,242

 

 

 

3,043,211

 

Mortgage loan sales - volume ($000's)

 

 

2,395,357

 

 

 

2,115,706

 

 

 

1,661,521

 

 

 

2,038,990

 

 

 

3,419,950

 

Net gains from mortgage loan sales (basis points):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans sold to third parties

 

 

199

 

 

 

207

 

 

 

193

 

 

 

211

 

 

 

227

 

Impact of loans retained by banking segment

 

 

(1

)

 

 

(6

)

 

 

(7

)

 

 

(19

)

 

 

(9

)

As reported

 

 

198

 

 

 

201

 

 

 

186

 

 

 

192

 

 

 

218

 

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

 

 

104,951

 

 

 

95,101

 

 

 

103,314

 

 

 

100,825

 

 

 

156,539

 

Employees' compensation and benefits ($000's)

 

 

64,016

 

 

 

70,982

 

 

 

62,355

 

 

 

64,940

 

 

 

86,079

 

Variable compensation expense ($000's)

 

 

33,070

 

 

 

36,249

 

 

 

25,573

 

 

 

26,724

 

 

 

44,312

 

________________________________

(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 $0.6 million, $0.1 million, $0.1 million, $0.3 million and $0.4 million, respectively, for the periods presented and for the banking segment were $0.2 million for each of the periods presented.

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

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

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

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

 

 

 

 

 

 

 

September 30,

June 30,

March 31,

December 31,

September 30,

Capital Ratios

2023

 

2023

 

2023

 

2022

 

2022

Tier 1 capital (to average assets):

 

 

 

 

 

PlainsCapital

10.62

%

10.28

%

10.69

%

10.26

%

10.29

%

Hilltop

11.92

%

11.47

%

11.82

%

11.47

%

11.41

%

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

 

 

 

 

 

PlainsCapital

15.31

%

14.48

%

14.97

%

14.98

%

14.68

%

Hilltop

18.60

%

17.61

%

17.99

%

18.23

%

17.45

%

Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

PlainsCapital

15.31

%

14.48

%

14.97

%

14.98

%

14.68

%

Hilltop

18.60

%

17.61

%

17.99

%

18.23

%

17.45

%

Total capital (to risk-weighted assets):

 

 

 

 

 

PlainsCapital

16.45

%

15.56

%

15.94

%

15.91

%

15.54

%

Hilltop

21.54

%

20.41

%

20.75

%

20.98

%

20.07

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

Non-Performing Assets Portfolio Data

 

2023

 

2023

 

2023

 

2022

 

2022

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

7,339

 

 

 

3,552

 

 

 

1,973

 

 

 

4,269

 

 

 

4,735

 

Commercial and industrial

 

 

10,190

 

 

 

21,442

 

 

 

10,807

 

 

 

9,095

 

 

 

12,078

 

Construction and land development

 

 

760

 

 

 

593

 

 

 

199

 

 

 

198

 

 

 

1

 

1-4 family residential

 

 

13,202

 

 

 

13,360

 

 

 

14,387

 

 

 

15,941

 

 

 

16,968

 

Consumer

 

 

7

 

 

 

9

 

 

 

12

 

 

 

14

 

 

 

16

 

Broker-dealer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,498

 

 

 

38,956

 

 

 

27,378

 

 

 

29,517

 

 

 

33,798

 

Troubled debt restructurings included in accruing loans held for investment ($000's) (1)

 

 

 

 

 

 

 

 

 

 

 

803

 

 

 

825

 

Non-performing loans ($000's) (1)

 

 

31,498

 

 

 

38,956

 

 

 

27,378

 

 

 

30,320

 

 

 

34,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans as a % of total loans ($000's) (1)

 

 

0.34

%

 

 

0.40

%

 

 

0.30

%

 

 

0.33

%

 

 

0.39

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned ($000's)

 

 

5,386

 

 

 

3,481

 

 

 

3,202

 

 

 

2,325

 

 

 

1,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other repossessed assets ($000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets ($000's) (1)

 

 

36,884

 

 

 

42,437

 

 

 

30,580

 

 

 

32,645

 

 

 

36,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a % of total assets ($000's) (1)

 

 

0.22

%

 

 

0.25

%

 

 

0.18

%

 

 

0.20

%

 

 

0.22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

106,346

 

 

 

130,036

 

 

 

114,523

 

 

 

92,099

 

 

 

96,532

 

_____________________________

(1) Effective January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2022-02 which eliminated the recognition and measurement guidance on troubled debt restructurings for creditors. Therefore, we no longer present troubled debt restructurings as a component of non-performing loans and assets.

(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,

 

 

 

2023

 

2022

 

 

 

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

 

$

1,075,518

 

 

$

15,649

 

5.82

%

$

1,166,265

 

 

$

14,414

 

4.94

%

Loans held for investment, gross (2)

 

 

7,972,604

 

 

 

126,753

 

6.31

%

 

7,911,833

 

 

 

94,751

 

4.75

%

Investment securities - taxable

 

 

2,690,977

 

 

 

27,166

 

4.04

%

 

2,883,412

 

 

 

19,642

 

2.72

%

Investment securities - non-taxable (3)

 

 

315,294

 

 

 

3,069

 

3.89

%

 

312,312

 

 

 

2,817

 

3.61

%

Federal funds sold and securities purchased under agreements to resell

 

 

142,324

 

 

 

2,313

 

6.45

%

 

137,728

 

 

 

1,309

 

3.77

%

Interest-bearing deposits in other financial institutions

 

 

1,550,991

 

 

 

20,320

 

5.20

%

 

1,780,220

 

 

 

9,542

 

2.13

%

Securities borrowed

 

 

1,371,625

 

 

 

17,683

 

5.04

%

 

1,116,837

 

 

 

10,938

 

3.83

%

Other

 

 

69,827

 

 

 

4,407

 

25.04

%

 

56,331

 

 

 

3,425

 

24.12

%

Interest-earning assets, gross (3)

 

 

15,189,160

 

 

 

217,360

 

5.68

%

 

15,364,938

 

 

 

156,838

 

4.05

%

Allowance for credit losses

 

 

(110,398

)

 

 

 

 

 

 

 

(95,083

)

 

 

 

 

 

 

Interest-earning assets, net

 

 

15,078,762

 

 

 

 

 

 

 

 

15,269,855

 

 

 

 

 

 

 

Noninterest-earning assets

 

 

1,448,834

 

 

 

 

 

 

 

 

1,399,228

 

 

 

 

 

 

 

Total assets

 

$

16,527,596

 

 

 

 

 

 

 

$

16,669,083

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

7,893,384

 

 

$

64,290

 

3.23

%

$

7,136,779

 

 

$

12,525

 

0.70

%

Securities loaned

 

 

1,303,883

 

 

 

16,169

 

4.92

%

 

980,530

 

 

 

9,407

 

3.81

%

Notes payable and other borrowings

 

 

1,527,371

 

 

 

20,646

 

5.36

%

 

1,262,985

 

 

 

11,054

 

3.47

%

Total interest-bearing liabilities

 

 

10,724,638

 

 

 

101,105

 

3.74

%

 

9,380,294

 

 

 

32,986

 

1.40

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

3,347,752

 

 

 

 

 

 

 

 

4,543,067

 

 

 

 

 

 

 

Other liabilities

 

 

362,133

 

 

 

 

 

 

 

 

685,843

 

 

 

 

 

 

 

Total liabilities

 

 

14,434,523

 

 

 

 

 

 

 

 

14,609,204

 

 

 

 

 

 

 

Stockholders’ equity

 

 

2,066,564

 

 

 

 

 

 

 

 

2,032,717

 

 

 

 

 

 

 

Noncontrolling interest

 

 

26,509

 

 

 

 

 

 

 

 

27,162

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

16,527,596

 

 

 

 

 

 

 

$

16,669,083

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (3)

 

 

 

 

$

116,255

 

 

 

 

 

 

$

123,852

 

 

 

Net interest spread (3)

 

 

 

 

 

 

 

1.94

%

 

 

 

 

 

 

2.65

%

Net interest margin (3)

 

 

 

 

 

 

 

3.04

%

 

 

 

 

 

 

3.20

%

________________________________

(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 $0.6 million and $0.4 million for the three months ended September 30, 2023 and 2022, 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 20, 2023. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third quarter 2023 financial results. Interested parties can access the conference call by dialing 1-888-259-6580 (North America) and then using the access code 31393751. 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, 2023, Hilltop employed approximately 3,900 people and operated approximately 336 locations in 48 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 and any legal, reputational and financial risks following a cybersecurity incident; (iii) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (iv) changes in the interest rate environment; (v) risks associated with concentration in real estate related loans and (vi) disruptions to the economy and the U.S. banking system caused by bank failures during early 2023, risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments. 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.

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