Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2022. Hilltop produced income to common stockholders of $32.1 million, or $0.50 per diluted share, for the third quarter of 2022, compared to $92.9 million, or $1.15 per diluted share, for the third quarter of 2021. Hilltop’s financial results for the third quarter of 2022 reflect a significant decrease in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on November 25, 2022, to all common stockholders of record as of the close of business on November 11, 2022.

Identified headwinds during 2022, including uncertainties related to inflationary pressures on expenses, the impact of tight housing inventories on mortgage volumes, declining deposit balances, and increases in market interest rates, coupled with a declining economic forecast, rapid increases in U.S. treasury yields and mortgage interest rates, and exposure to increasing funding costs during the first nine months of 2022 have had, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2022 and into the first half of 2023.

Jeremy B. Ford, President and CEO of Hilltop, said “Our third quarter financial results were once again driven by a strong performance from PlainsCapital Bank, which continued to prudently grow its core loan portfolio while realizing the benefits of the rising rate environment and resulting expansion of net interest margin. Though deposits declined in the third quarter, the bank still maintains elevated liquidity and ample core deposit funding relative to its loan portfolio. HilltopSecurities experienced improved third quarter results from both a net revenues and pre-tax margin standpoint when compared to each of the trailing three quarters. PrimeLending continues to face material housing market headwinds, including a sharp rise in mortgage interest rates, compression in gain on sale margins and continued affordability concerns for potential home buyers. We remain focused at PrimeLending, and across the Hilltop enterprise, on controlling costs during this dynamic interest rate environment. Importantly, despite the immense and sudden pressure in the mortgage sector, we remained profitable on a consolidated basis and continued to grow capital. We look forward to finishing out 2022 with strong results from our talented team, while positioning Hilltop towards the coming year.”

Third Quarter 2022 Highlights for Hilltop:

  • The reversal of credit losses was $0.8 million during the third quarter of 2022, compared to a provision for credit losses of $5.3 million in the second quarter of 2022 and a reversal of credit losses of $5.8 million in the third quarter of 2021;
    • The reversal of credit losses during the third quarter of 2022 reflected modest improvements in the U.S. economic outlook, specific reserves and credit metrics since the prior quarter.
  • For the third quarter of 2022, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $98.0 million, compared to $241.9 million in the third quarter of 2021, a 59.5% decrease;
    • Mortgage loan origination production volume was $3.0 billion during the third quarter of 2022, compared to $5.6 billion in the third quarter of 2021;
    • Net gains from mortgage loans sold to third parties decreased to 227 basis points during the third quarter of 2022, compared to 260 basis points in the second quarter of 2022.
  • Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the third quarter of 2022 were 0.79% and 6.26%, respectively, compared to 2.13% and 14.96%, respectively, for the third quarter of 2021;
  • Hilltop’s book value per common share increased to $31.46 at September 30, 2022, compared to $31.43 at June 30, 2022;
  • Hilltop’s total assets were $16.6 billion and $16.7 billion at September 30, 2022 and June 30, 2022, respectively;
  • Loans1, net of allowance for credit losses, were $7.4 billion at both September 30, 2022 and June 30, 2022;
  • Non-performing loans were $34.6 million, or 0.39% of total loans, at September 30, 2022, compared to $35.7 million, or 0.38% of total loans, at June 30, 2022;
  • Loans held for sale decreased by 32.7% from June 30, 2022 to $1.0 billion at September 30, 2022;
  • Total deposits were $11.4 billion and $11.9 billion at September 30, 2022 and June 30, 2022, respectively;
  • Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.41% and a Common Equity Tier 1 Capital Ratio of 17.45% at September 30, 2022;
  • Hilltop’s consolidated net interest margin4 increased to 3.19% for the third quarter of 2022, compared to 2.75% in the second quarter of 2022;
    • Included previously deferred interest income of $0.2 million during the third quarter of 2022 related to PPP loan-related origination fees, compared to $1.3 million in the second quarter of 2022.
  • For the third quarter of 2022, noninterest income was $207.0 million, compared to $367.9 million in the third quarter of 2021, a 43.7% decrease;
  • For the third quarter 2022, noninterest expense was $288.7 million, compared to $355.2 million in the third quarter of 2021, a 18.7% decrease; and
  • Hilltop’s effective tax rate was 21.8% during the third quarter of 2022, compared to 22.8% during the same period in 2021.

___________________

1

“Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $402.0 million and $462.4 million at September 30, 2022 and June 30, 2022, respectively.

2

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

3

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

4

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

Consolidated Financial and Other Information

Consolidated Balance Sheets

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

(in 000's)

 

2022

 

2022

 

2022

 

2021

 

2021

Cash and due from banks

 

$

1,777,584

 

 

$

1,783,554

 

 

$

2,886,812

 

 

$

2,823,138

 

 

$

2,463,111

 

Federal funds sold

 

 

663

 

 

 

381

 

 

 

383

 

 

 

385

 

 

 

406

 

Assets segregated for regulatory purposes

 

 

109,358

 

 

 

120,816

 

 

 

128,408

 

 

 

221,740

 

 

 

269,506

 

Securities purchased under agreements to resell

 

 

145,365

 

 

 

139,929

 

 

 

256,991

 

 

 

118,262

 

 

 

155,908

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

641,864

 

 

 

593,273

 

 

 

471,763

 

 

 

647,998

 

 

 

609,813

 

Available for sale, at fair value, net

 

 

1,584,724

 

 

 

1,562,222

 

 

 

1,462,340

 

 

 

2,130,568

 

 

 

1,994,183

 

Held to maturity, at amortized cost, net

 

 

889,452

 

 

 

920,583

 

 

 

953,107

 

 

 

267,684

 

 

 

277,419

 

Equity, at fair value

 

 

209

 

 

 

197

 

 

 

225

 

 

 

250

 

 

 

221

 

 

 

 

3,116,249

 

 

 

3,076,275

 

 

 

2,887,435

 

 

 

3,046,500

 

 

 

2,881,636

 

Loans held for sale

 

 

1,003,605

 

 

 

1,491,579

 

 

 

1,643,994

 

 

 

1,878,190

 

 

 

2,108,878

 

Loans held for investment, net of unearned income

 

 

7,944,246

 

 

 

7,930,619

 

 

 

7,797,903

 

 

 

7,879,904

 

 

 

7,552,926

 

Allowance for credit losses

 

 

(91,783

)

 

 

(95,298

)

 

 

(91,185

)

 

 

(91,352

)

 

 

(109,512

)

Loans held for investment, net

 

 

7,852,463

 

 

 

7,835,321

 

 

 

7,706,718

 

 

 

7,788,552

 

 

 

7,443,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer and clearing organization receivables

 

 

1,255,052

 

 

 

1,049,830

 

 

 

1,610,352

 

 

 

1,672,946

 

 

 

1,419,652

 

Premises and equipment, net

 

 

191,423

 

 

 

195,361

 

 

 

198,906

 

 

 

204,438

 

 

 

210,026

 

Operating lease right-of-use assets

 

 

103,099

 

 

 

106,806

 

 

 

108,180

 

 

 

112,328

 

 

 

115,942

 

Mortgage servicing assets

 

 

156,539

 

 

 

121,688

 

 

 

100,475

 

 

 

86,990

 

 

 

110,931

 

Other assets

 

 

624,235

 

 

 

513,570

 

 

 

546,622

 

 

 

452,880

 

 

 

526,339

 

Goodwill

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

Other intangible assets, net

 

 

12,209

 

 

 

13,182

 

 

 

14,233

 

 

 

15,284

 

 

 

16,455

 

Total assets

 

$

16,615,291

 

 

$

16,715,739

 

 

$

18,356,956

 

 

$

18,689,080

 

 

$

17,989,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

4,546,816

 

 

$

4,601,643

 

 

$

4,694,592

 

 

$

4,577,183

 

 

$

4,433,148

 

Interest-bearing

 

 

6,805,198

 

 

 

7,319,143

 

 

 

7,972,110

 

 

 

8,240,894

 

 

 

7,699,014

 

Total deposits

 

 

11,352,014

 

 

 

11,920,786

 

 

 

12,666,702

 

 

 

12,818,077

 

 

 

12,132,162

 

Broker-dealer and clearing organization payables

 

 

1,176,156

 

 

 

934,818

 

 

 

1,397,836

 

 

 

1,477,300

 

 

 

1,496,923

 

Short-term borrowings

 

 

942,309

 

 

 

822,649

 

 

 

835,054

 

 

 

859,444

 

 

 

747,040

 

Securities sold, not yet purchased, at fair value

 

 

99,515

 

 

 

135,968

 

 

 

97,629

 

 

 

96,586

 

 

 

113,064

 

Notes payable

 

 

390,354

 

 

 

389,722

 

 

 

395,479

 

 

 

387,904

 

 

 

395,804

 

Operating lease liabilities

 

 

120,635

 

 

 

124,406

 

 

 

125,919

 

 

 

130,960

 

 

 

134,296

 

Other liabilities

 

 

475,425

 

 

 

329,987

 

 

 

347,742

 

 

 

369,606

 

 

 

468,020

 

Total liabilities

 

 

14,556,408

 

 

 

14,658,336

 

 

 

15,866,361

 

 

 

16,139,877

 

 

 

15,487,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

646

 

 

 

646

 

 

 

794

 

 

 

790

 

 

 

790

 

Additional paid-in capital

 

 

1,043,605

 

 

 

1,039,261

 

 

 

1,275,649

 

 

 

1,274,446

 

 

 

1,270,272

 

Accumulated other comprehensive income (loss)

 

 

(119,864

)

 

 

(95,279

)

 

 

(80,565

)

 

 

(10,219

)

 

 

367

 

Retained earnings

 

 

1,107,586

 

 

 

1,085,208

 

 

 

1,267,415

 

 

 

1,257,014

 

 

 

1,204,307

 

Deferred compensation employee stock trust, net

 

 

479

 

 

 

695

 

 

 

744

 

 

 

752

 

 

 

751

 

Employee stock trust

 

 

(641

)

 

 

(954

)

 

 

(104

)

 

 

(115

)

 

 

(116

)

Total Hilltop stockholders' equity

 

 

2,031,811

 

 

 

2,029,577

 

 

 

2,463,933

 

 

 

2,522,668

 

 

 

2,476,371

 

Noncontrolling interests

 

 

27,072

 

 

 

27,826

 

 

 

26,662

 

 

 

26,535

 

 

 

25,971

 

Total stockholders' equity

 

 

2,058,883

 

 

 

2,057,403

 

 

 

2,490,595

 

 

 

2,549,203

 

 

 

2,502,342

 

Total liabilities & stockholders' equity

 

$

16,615,291

 

 

$

16,715,739

 

 

$

18,356,956

 

 

$

18,689,080

 

 

$

17,989,651

 

 

 

Three Months Ended

Consolidated Income Statements

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

(in 000's, except per share data)

 

2022

 

2022

 

2022

 

2021

 

2021

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

109,165

 

 

$

98,728

 

$

90,408

 

$

96,104

 

 

$

99,769

 

Securities borrowed

 

 

10,938

 

 

 

10,498

 

 

8,817

 

 

8,524

 

 

 

8,585

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

19,642

 

 

 

17,288

 

 

15,581

 

 

13,916

 

 

 

12,341

 

Tax-exempt

 

 

2,451

 

 

 

2,141

 

 

2,419

 

 

2,639

 

 

 

2,687

 

Other

 

 

14,276

 

 

 

6,478

 

 

2,312

 

 

1,872

 

 

 

1,796

 

Total interest income

 

 

156,472

 

 

 

135,133

 

 

119,537

 

 

123,055

 

 

 

125,178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

12,525

 

 

 

5,456

 

 

4,193

 

 

4,404

 

 

 

5,303

 

Securities loaned

 

 

9,407

 

 

 

8,512

 

 

7,472

 

 

6,624

 

 

 

6,519

 

Short-term borrowings

 

 

5,550

 

 

 

3,020

 

 

2,045

 

 

2,279

 

 

 

2,400

 

Notes payable

 

 

3,907

 

 

 

3,809

 

 

4,437

 

 

5,871

 

 

 

5,465

 

Junior subordinated debentures

 

 

 

 

 

 

 

 

 

 

 

 

419

 

Other

 

 

1,597

 

 

 

2,280

 

 

1,399

 

 

(417

)

 

 

(18

)

Total interest expense

 

 

32,986

 

 

 

23,077

 

 

19,546

 

 

18,761

 

 

 

20,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

123,486

 

 

 

112,056

 

 

99,991

 

 

104,294

 

 

 

105,090

 

Provision for (reversal of) credit losses

 

 

(780

)

 

 

5,336

 

 

115

 

 

(18,565

)

 

 

(5,819

)

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

 

 

124,266

 

 

 

106,720

 

 

99,876

 

 

122,859

 

 

 

110,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains from sale of loans and other mortgage production income

 

 

57,998

 

 

 

97,543

 

 

110,894

 

 

156,103

 

 

 

203,152

 

Mortgage loan origination fees

 

 

39,960

 

 

 

42,378

 

 

32,062

 

 

35,930

 

 

 

38,780

 

Securities commissions and fees

 

 

34,076

 

 

 

34,757

 

 

37,146

 

 

32,801

 

 

 

34,412

 

Investment and securities advisory fees and commissions

 

 

35,031

 

 

 

32,002

 

 

29,705

 

 

42,834

 

 

 

49,646

 

Other

 

 

39,910

 

 

 

32,593

 

 

6,621

 

 

17,178

 

 

 

41,955

 

Total noninterest income

 

 

206,975

 

 

 

239,273

 

 

216,428

 

 

284,846

 

 

 

367,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

 

 

200,450

 

 

 

205,327

 

 

200,019

 

 

229,717

 

 

 

258,679

 

Occupancy and equipment, net

 

 

25,041

 

 

 

24,231

 

 

24,766

 

 

25,741

 

 

 

25,428

 

Professional services

 

 

10,631

 

 

 

16,246

 

 

10,063

 

 

9,904

 

 

 

14,542

 

Other

 

 

52,616

 

 

 

52,739

 

 

51,502

 

 

56,832

 

 

 

56,525

 

Total noninterest expense

 

 

288,738

 

 

 

298,543

 

 

286,350

 

 

322,194

 

 

 

355,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

42,503

 

 

 

47,450

 

 

29,954

 

 

85,511

 

 

 

123,680

 

Income tax expense

 

 

9,249

 

 

 

12,127

 

 

5,815

 

 

20,715

 

 

 

28,257

 

Net income

 

 

33,254

 

 

 

35,323

 

 

24,139

 

 

64,796

 

 

 

95,423

 

Less: Net income attributable to noncontrolling interest

 

 

1,186

 

 

 

2,063

 

 

1,889

 

 

2,611

 

 

 

2,517

 

Income attributable to Hilltop

 

$

32,068

 

 

$

33,260

 

$

22,250

 

$

62,185

 

 

$

92,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.50

 

 

$

0.45

 

$

0.28

 

$

0.79

 

 

$

1.16

 

Diluted

 

$

0.50

 

 

$

0.45

 

$

0.28

 

$

0.78

 

 

$

1.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.15

 

 

$

0.15

 

$

0.15

 

$

0.12

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

64,552

 

 

 

73,693

 

 

79,114

 

 

78,933

 

 

 

80,109

 

Diluted

 

 

64,669

 

 

 

73,838

 

 

79,356

 

 

79,427

 

 

 

80,542

 

 

 

Three Months Ended September 30, 2022

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

110,939

 

 

$

13,386

 

 

$

(2,939

)

 

$

(3,276

)

 

$

5,376

 

 

$

123,486

 

Provision for (reversal of) credit losses

 

 

(650

)

 

 

(130

)

 

 

 

 

 

 

 

 

 

 

 

(780

)

Noninterest income

 

 

12,200

 

 

 

100,798

 

 

 

98,200

 

 

 

1,809

 

 

 

(6,032

)

 

 

206,975

 

Noninterest expense

 

 

60,160

 

 

 

96,843

 

 

 

118,345

 

 

 

14,034

 

 

 

(644

)

 

 

288,738

 

Income (loss) before taxes

 

$

63,629

 

 

$

17,471

 

 

$

(23,084

)

 

$

(15,501

)

 

$

(12

)

 

$

42,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2022

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

304,269

 

 

$

37,481

 

 

$

(6,066

)

 

$

(9,856

)

 

$

9,705

 

 

$

335,533

 

Provision for (reversal of) credit losses

 

 

4,325

 

 

 

346

 

 

 

 

 

 

 

 

 

 

 

 

4,671

 

Noninterest income

 

 

37,438

 

 

 

249,139

 

 

 

381,477

 

 

 

5,655

 

 

 

(11,033

)

 

 

662,676

 

Noninterest expense

 

 

175,921

 

 

 

268,307

 

 

 

386,372

 

 

 

44,388

 

 

 

(1,357

)

 

 

873,631

 

Income (loss) before taxes

 

$

161,461

 

 

$

17,967

 

 

$

(10,961

)

 

$

(48,589

)

 

$

29

 

 

$

119,907

 

 

 

Three Months Ended

 

 

September 30,

June 30,

March 31,

December 31,

September 30,

Selected Financial Data

 

2022

2022

2022

2021

2021

 

 

 

 

 

 

 

 

 

 

 

 

Hilltop Consolidated:

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders' equity

 

6.26%

 

5.82%

 

3.60%

 

9.93%

 

14.96%

 

Return on average assets

 

0.79%

 

0.80%

 

0.53%

 

1.41%

 

2.13%

 

Net interest margin (1)

 

3.19%

 

2.75%

 

2.36%

 

2.44%

 

2.53%

 

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

As reported

 

3.20%

 

2.76%

 

2.37%

 

2.45%

 

2.54%

 

Impact of purchase accounting

 

8 bps

 

8 bps

 

7 bps

 

12 bps

 

9 bps

 

Book value per common share ($)

 

31.46

 

31.43

 

31.02

 

31.95

 

31.36

 

Shares outstanding, end of period (000's)

 

64,591

 

64,576

 

79,439

 

78,965

 

78,959

 

Dividend payout ratio (3)

 

30.19%

 

33.33%

 

53.57%

 

15.19%

 

10.34%

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Segment:

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

3.42%

 

2.97%

 

2.65%

 

2.81%

 

2.99%

 

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

As reported

 

3.43%

 

2.98%

 

2.65%

 

2.82%

 

3.00%

 

Impact of purchase accounting

 

10 bps

 

10 bps

 

8 bps

 

15 bps

 

11 bps

 

Accretion of discount on loans ($000's)

 

2,858

 

3,011

 

2,510

 

4,716

 

3,221

 

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

 

(2,735

)

(1,223

)

(282

)

405

 

62

 

Return on average assets

 

1.41%

 

1.09%

 

0.98%

 

1.44%

 

1.36%

 

Fee income ratio

 

9.9%

 

11.0%

 

12.2%

 

10.8%

 

10.5%

 

Efficiency ratio

 

48.9%

 

50.4%

 

55.7%

 

54.2%

 

48.8%

 

Employees' compensation and benefits ($000's)

 

35,934

 

33,554

 

33,517

 

34,415

 

31,500

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-Dealer Segment:

 

 

 

 

 

 

 

 

 

 

 

Net revenue ($000's) (4)

 

114,184

 

100,229

 

72,209

 

94,569

 

126,570

 

Employees' compensation and benefits ($000's)

 

70,274

 

64,494

 

55,825

 

65,301

 

82,429

 

Variable compensation expense ($000's)

 

42,567

 

37,471

 

26,625

 

35,939

 

53,505

 

Compensation as a % of net revenue

 

61.5%

 

64.3%

 

77.3%

 

69.1%

 

65.1%

 

Pre-tax margin (5)

 

15.3%

 

9.1%

 

(11.9)%

 

1.8%

 

13.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Segment:

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Home purchases

 

2,832,136

 

3,342,103

 

2,753,031

 

3,559,137

 

3,948,420

 

Refinancings

 

211,075

 

467,117

 

1,011,452

 

1,430,369

 

1,646,208

 

Total mortgage loan originations - volume

 

3,043,211

 

3,809,220

 

3,764,483

 

4,989,506

 

5,594,628

 

Mortgage loan sales - volume ($000's)

 

3,419,950

 

3,872,935

 

3,868,596

 

4,988,538

 

6,195,559

 

Net gains from mortgage loan sales (basis points):

 

 

 

 

 

 

 

 

 

 

 

Loans sold to third parties

 

227

 

260

 

321

 

362

 

359

 

Impact of loans retained by banking segment

(9

)

(7

)

(9

)

(15

)

(13

)

As reported

 

218

 

253

 

312

 

347

 

346

 

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

 

156,539

 

121,688

 

100,475

 

86,990

 

110,931

 

Employees' compensation and benefits ($000's)

 

86,079

 

100,206

 

102,748

 

121,758

 

134,814

 

Variable compensation expense ($000's)

 

44,312

 

56,525

 

56,243

 

73,208

 

88,153

  ___________________

(1)

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

(2)

Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Taxable equivalent adjustments are based on the applicable 21% federal income tax rate for all periods presented. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. The taxable equivalent adjustments to interest income for Hilltop (consolidated) were $0.4 million, $0.4 million, $0.5 million, $0.5 million, and $0.6 million, respectively, for the periods presented and for the banking segment were $0.2 million for each of the periods presented.

(3)

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

(4)

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

(5)

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

(6)

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

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

Capital Ratios

 

2022

 

2022

 

2022

 

2021

 

2021

Tier 1 capital (to average assets):

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

10.29%

 

9.67%

 

9.74%

 

10.20%

 

10.02%

Hilltop

 

11.41%

 

10.53%

 

12.46%

 

12.58%

 

12.64%

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

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

14.68%

 

14.65%

 

15.37%

 

16.00%

 

15.40%

Hilltop

 

17.45%

 

17.24%

 

21.27%

 

21.22%

 

21.28%

Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

14.68%

 

14.65%

 

15.37%

 

16.00%

 

15.40%

Hilltop

 

17.45%

 

17.24%

 

21.27%

 

21.22%

 

21.28%

Total capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

15.54%

 

15.55%

 

16.18%

 

16.77%

 

16.32%

Hilltop

 

20.07%

 

19.90%

 

23.85%

 

23.75%

 

24.00%

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

Non-Performing Assets Portfolio Data

 

2022

 

2022

 

2022

 

2021

 

2021

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

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

4,735

 

4,947

 

6,153

 

6,601

 

5,705

Commercial and industrial

 

12,078

 

13,315

 

18,486

 

22,478

 

29,808

Construction and land development

 

1

 

1

 

1

 

2

 

366

1-4 family residential

 

16,968

 

16,542

 

18,723

 

21,123

 

25,255

Consumer

 

16

 

19

 

21

 

23

 

24

Broker-dealer

 

 

 

 

 

 

 

33,798

 

34,824

 

43,384

 

50,227

 

61,158

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

 

825

 

857

 

890

 

922

 

1,038

Non-performing loans ($000's)

 

34,623

 

35,681

 

44,274

 

51,149

 

62,196

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans as a % of total loans

 

0.39%

 

0.38%

 

0.47%

 

0.52%

 

0.64%

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned ($000's)

 

1,637

 

1,516

 

2,175

 

2,833

 

21,605

 

 

 

 

 

 

 

 

 

 

 

Other repossessed assets ($000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets ($000's)

 

36,260

 

37,197

 

46,449

 

53,982

 

83,801

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a % of total assets

 

0.22%

 

0.22%

 

0.25%

 

0.29%

 

0.47%

 

 

 

 

 

 

 

 

 

 

 

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

 

96,532

 

82,410

 

87,489

 

60,775

 

175,734

___________________

(1)

Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications through January 1, 2022. The banking segment’s COVID-19 payment deferment programs since the second quarter of 2020 allowed for a deferral of principal and/or interest payments with such deferred principal payments due and payable on the maturity date of the existing loan. For the periods presented, the banking segment’s actions through December 31, 2021 included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $4 million and $17 million as of December 31, 2021 and September 30, 2021, respectively.

(2)

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

 

 

Three Months Ended September 30,

 

 

 

2022

 

2021

 

 

 

Average

 

Interest

 

Annualized

 

Average

 

Interest

 

Annualized

 

 

 

Outstanding

 

Earned

 

Yield or

 

Outstanding

 

Earned

 

Yield or

 

Net Interest Margin (Taxable Equivalent) Details (1)

 

Balance

 

or Paid

 

Rate

 

Balance

 

or Paid

 

Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

1,166,265

 

 

$

14,414

 

4.94

%

$

2,300,939

 

 

$

17,696

 

3.08

%

Loans held for investment, gross (2)

 

 

7,911,833

 

 

 

94,751

 

4.75

%

 

7,514,392

 

 

 

82,073

 

4.33

%

Investment securities - taxable

 

 

2,883,412

 

 

 

19,642

 

2.72

%

 

2,585,362

 

 

 

12,328

 

1.91

%

Investment securities - non-taxable (3)

 

 

312,312

 

 

 

2,817

 

3.61

%

 

318,408

 

 

 

3,252

 

4.09

%

Federal funds sold and securities purchased under agreements to resell

 

 

137,728

 

 

 

1,309

 

3.77

%

 

161,577

 

 

 

207

 

%

Interest-bearing deposits in other financial institutions

 

 

1,780,220

 

 

 

9,542

 

2.13

%

 

2,197,478

 

 

 

788

 

0.14

%

Securities borrowed

 

 

1,116,837

 

 

 

10,938

 

3.83

%

 

1,364,726

 

 

 

8,585

 

2.46

%

Other

 

 

56,331

 

 

 

3,425

 

24.12

%

 

51,350

 

 

 

813

 

6.28

%

Interest-earning assets, gross (3)

 

 

15,364,938

 

 

 

156,838

 

4.05

%

 

16,494,232

 

 

 

125,742

 

3.02

%

Allowance for credit losses

 

 

(95,083

)

 

 

 

 

 

 

 

(115,688

)

 

 

 

 

 

 

Interest-earning assets, net

 

 

15,269,855

 

 

 

 

 

 

 

 

16,378,544

 

 

 

 

 

 

 

Noninterest-earning assets

 

 

1,399,228

 

 

 

 

 

 

 

 

1,371,207

 

 

 

 

 

 

 

Total assets

 

$

16,669,083

 

 

 

 

 

 

 

$

17,749,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

7,136,779

 

 

$

12,525

 

0.70

%

$

7,622,748

 

 

$

5,303

 

0.28

%

Securities loaned

 

 

980,530

 

 

 

9,407

 

3.81

%

 

1,306,314

 

 

 

6,519

 

1.98

%

Notes payable and other borrowings

 

 

1,262,985

 

 

 

11,054

 

3.47

%

 

1,231,545

 

 

 

8,266

 

2.66

%

Total interest-bearing liabilities

 

 

9,380,294

 

 

 

32,986

 

1.40

%

 

10,160,607

 

 

 

20,088

 

0.78

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

4,543,067

 

 

 

 

 

 

 

 

4,299,987

 

 

 

 

 

 

 

Other liabilities

 

 

685,843

 

 

 

 

 

 

 

 

800,225

 

 

 

 

 

 

 

Total liabilities

 

 

14,609,204

 

 

 

 

 

 

 

 

15,260,819

 

 

 

 

 

 

 

Stockholders’ equity

 

 

2,032,717

 

 

 

 

 

 

 

 

2,463,821

 

 

 

 

 

 

 

Noncontrolling interest

 

 

27,162

 

 

 

 

 

 

 

 

25,111

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

16,669,083

 

 

 

 

 

 

 

$

17,749,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (3)

 

 

 

 

$

123,852

 

 

 

 

 

 

$

105,654

 

 

 

Net interest spread (3)

 

 

 

 

 

 

 

2.65

%

 

 

 

 

 

 

2.24

%

Net interest margin (3)

 

 

 

 

 

 

 

3.20

%

 

 

 

 

 

 

2.54

%

___________________

(1)

Information presented on a consolidated basis.

(2)

Average balance includes non-accrual loans.

(3)

Presented on a taxable-equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rate for the periods presented. The adjustment to interest income was $0.4 million and $0.6 million for the three months ended September 30, 2022 and 2021, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, October 21, 2022. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third quarter 2022 financial results. Interested parties can access the conference call by dialing 1-844-200-6205 (United States), 1-833-950-0062 (Canada) or 1-929-526-1599 (all other locations) and then using the access code 098668. The conference call also will be webcast simultaneously on Hilltop’s Investor Relations website (http://ir.hilltop-holdings.com).

About Hilltop

Hilltop Holdings is a Dallas-based financial holding company. Its primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank. PlainsCapital Bank’s wholly owned subsidiary, PrimeLending, provides residential mortgage lending throughout the United States. Hilltop Holdings’ broker-dealer subsidiaries, Hilltop Securities Inc. and Momentum Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. At September 30, 2022, Hilltop employed approximately 4,385 people and operated approximately 370 locations in 47 states. Hilltop Holdings’ common stock is listed on the New York Stock Exchange under the symbol “HTH.” Find more information at Hilltop-Holdings.com, PlainsCapital.com, PrimeLending.com and HilltopSecurities.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as our plans, objectives, strategies, expectations, intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “building,” “continue,” “could,” “drive,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “probable,” “progressing,” “projects,” “seeks,” “should,” “target,” “view,” “well-tuned,” “will” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (ii) effectiveness of our data security controls in the face of cyber attacks; (iii) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (iv) changes in the interest rate environment; and (v) risks associated with concentration in real estate related loans. For further discussion of such factors, see the risk factors described in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

Erik Yohe 214-525-4634 eyohe@hilltop-holdings.com

Hilltop (NYSE:HTH)
Historical Stock Chart
Von Jan 2023 bis Feb 2023 Click Here for more Hilltop Charts.
Hilltop (NYSE:HTH)
Historical Stock Chart
Von Feb 2022 bis Feb 2023 Click Here for more Hilltop Charts.