DALLAS--(BUSINESS WIRE)--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.
Contacts
Investor Relations Contact:
Erik Yohe
214-525-4634
eyohe@hilltop-holdings.com
