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Hilltop Holdings Inc. Announces Financial Results for First Quarter 2022

Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the first quarter of 2022. Hilltop produced income to common stockholders of $22.3 million, or $0.28 per diluted share, for the first quarter of 2022, compared to $120.3 million, or $1.46 per diluted share, for the first quarter of 2021. Hilltop’s financial results for the first quarter of 2022 included decreases in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income as well as declines in net revenues within the broker-dealer segment’s structured finance and fixed income services business lines.

Rising interest rates and inflationary pressures materially impacted our financial results during the first quarter of 2022. Additional headwinds during 2022 are expected to include tight housing inventories on mortgage volumes, a return to normalized credit losses and declining deposit balances. The COVID-19 pandemic may also continue to adversely impact financial markets and overall economic conditions. The extent of the impact of these expected headwinds and the pandemic on our operational and financial performance for the remainder of 2022 remains uncertain.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on May 27, 2022, to all common stockholders of record as of the close of business on May 13, 2022. During the three months ended March 31, 2022, there were no stock repurchases.

Jeremy B. Ford, President and CEO of Hilltop, said “Our results in the first quarter were driven primarily by the strength and stability of PlainsCapital Bank, which generated growth in its core loan portfolio while experiencing improvement in its asset quality. PrimeLending and HilltopSecurities, both primarily fee-based businesses, were pressured by the sharp rise in interest rates, lower housing inventories and lower trading volumes. Additionally, total noninterest expenses at Hilltop declined during the period as our team remains focused on expense management. Overall, we are adapting to the new mortgage and interest rate environments and believe we have the team and business model in place to drive improvement.”

First Quarter 2022 Highlights for Hilltop:

  • The provision for credit losses was $0.1 million during the first quarter of 2022, compared to a reversal of credit losses of $18.6 million in the fourth quarter of 2021;
    • The provision for credit losses during the first quarter of 2022 primarily reflected a slower U.S. economic outlook since the prior quarter, significantly offset by decreases in specific reserves and positive risk rating grade migration.
  • For the first 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 $143.0 million, compared to $310.2 million in the first quarter of 2021, a 53.9% decrease;
    • Mortgage loan origination production volume was $3.8 billion during the first quarter of 2022, compared to $6.2 billion in the first quarter of 2021;
    • Net gains from mortgage loans sold to third parties decreased to 321 basis points during the first quarter of 2022, compared to 362 basis points in the fourth quarter of 2021.
  • Hilltop’s consolidated annualized return on average assets and return on average equity for the first quarter of 2022 were 0.53% and 3.60%, respectively, compared to 2.90% and 20.58%, respectively, for the first quarter of 2021;
  • Hilltop’s book value per common share decreased to $31.02 at March 31, 2022, compared to $31.95 at December 31, 2021;
    • Decline in book value per common share during the first quarter of 2022 impacted by the significant increase of approximately $120 million in pre-tax net unrealized losses within our available for sale investment portfolio related to increases in market interest rates since purchase;
    • Certain agency-issued securities were transferred from the available-for-sale to held-to-maturity portfolio on March 31, 2022 with pre-tax unrealized losses of approximately $74 million as of the date of transfer.
  • Hilltop’s total assets were $18.4 billion and $18.7 billion at March 31, 2022 and December 31, 2021, respectively;
  • Loans1, net of allowance for credit losses, increased to $7.2 billion at March 31, 2022 compared to $7.1 billion at December 31, 2021;
  • Non-performing loans were $44.3 million, or 0.47% of total loans, at March 31, 2022, compared to $51.1 million, or 0.52% of total loans, at December 31, 2021;
  • Loans held for sale decreased by 12.5% from December 31, 2021 to $1.6 billion at March 31, 2022;
  • Total deposits were $12.7 billion and $12.8 billion at March 31, 2022 and December 31, 2021, respectively;
  • Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 12.46% and a Common Equity Tier 1 Capital Ratio of 21.27% at March 31, 2022;
  • Hilltop’s consolidated net interest margin4 decreased to 2.36% for the first quarter of 2022, compared to 2.44% in the fourth quarter of 2021;
    • Includes previously deferred interest income of $1.6 million during the first quarter of 2022 related to PPP loan-related origination fees, compared to $7.5 million in the first quarter of 2021.
  • For the first quarter of 2022, noninterest income was $216.4 million, compared to $417.6 million in the first quarter of 2021, a 48.2% decrease;
  • For the first quarter 2022, noninterest expense was $286.4 million, compared to $366.7 million in the first quarter of 2021, a 21.9% decrease; and
  • Hilltop’s effective tax rate was 19.4% during the first quarter of 2022, compared to 23.4% during the same period in 2021.
    • The effective tax rate for the first quarter of 2022 was lower than the applicable statutory rate primarily due to the discrete impact of restricted stock vesting during the quarter.

1

 

“Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $506.2 million and $733.0 million at March 31, 2022 and December 31, 2021, 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

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(in 000's)

 

2022

 

2021

 

2021

 

2021

 

2021

Cash and due from banks

 

$

2,886,812

 

 

$

2,823,138

 

 

$

2,463,111

 

 

$

1,372,818

 

 

$

1,564,489

 

Federal funds sold

 

 

383

 

 

 

385

 

 

 

406

 

 

 

387

 

 

 

396

 

Assets segregated for regulatory purposes

 

 

128,408

 

 

 

221,740

 

 

 

269,506

 

 

 

207,284

 

 

 

273,393

 

Securities purchased under agreements to resell

 

 

256,991

 

 

 

118,262

 

 

 

155,908

 

 

 

202,638

 

 

 

106,342

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

471,763

 

 

 

647,998

 

 

 

609,813

 

 

 

682,483

 

 

 

528,712

 

Available for sale, at fair value, net

 

 

1,462,340

 

 

 

2,130,568

 

 

 

1,994,183

 

 

 

1,817,807

 

 

 

1,715,406

 

Held to maturity, at amortized cost, net

 

 

953,107

 

 

 

267,684

 

 

 

277,419

 

 

 

288,776

 

 

 

300,088

 

Equity, at fair value

 

 

225

 

 

 

250

 

 

 

221

 

 

 

193

 

 

 

189

 

 

 

 

2,887,435

 

 

 

3,046,500

 

 

 

2,881,636

 

 

 

2,789,259

 

 

 

2,544,395

 

Loans held for sale

 

 

1,643,994

 

 

 

1,878,190

 

 

 

2,108,878

 

 

 

2,885,458

 

 

 

2,538,986

 

Loans held for investment, net of unearned income

 

 

7,797,903

 

 

 

7,879,904

 

 

 

7,552,926

 

 

 

7,645,227

 

 

 

7,810,657

 

Allowance for credit losses

 

 

(91,185

)

 

 

(91,352

)

 

 

(109,512

)

 

 

(115,269

)

 

 

(144,499

)

Loans held for investment, net

 

 

7,706,718

 

 

 

7,788,552

 

 

 

7,443,414

 

 

 

7,529,958

 

 

 

7,666,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer and clearing organization receivables

 

 

1,610,352

 

 

 

1,672,946

 

 

 

1,419,652

 

 

 

1,403,447

 

 

 

1,596,817

 

Premises and equipment, net

 

 

198,906

 

 

 

204,438

 

 

 

210,026

 

 

 

212,402

 

 

 

213,304

 

Operating lease right-of-use assets

 

 

108,180

 

 

 

112,328

 

 

 

115,942

 

 

 

115,698

 

 

 

101,055

 

Mortgage servicing assets

 

 

100,475

 

 

 

86,990

 

 

 

110,931

 

 

 

124,497

 

 

 

142,125

 

Other assets

 

 

546,622

 

 

 

452,880

 

 

 

526,339

 

 

 

535,536

 

 

 

648,895

 

Goodwill

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

 

 

267,447

 

Other intangible assets, net

 

 

14,233

 

 

 

15,284

 

 

 

16,455

 

 

 

17,705

 

 

 

19,035

 

Total assets

 

$

18,356,956

 

 

$

18,689,080

 

 

$

17,989,651

 

 

$

17,664,534

 

 

$

17,682,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

4,694,592

 

 

$

4,577,183

 

 

$

4,433,148

 

 

$

4,231,082

 

 

$

4,031,181

 

Interest-bearing

 

 

7,972,110

 

 

 

8,240,894

 

 

 

7,699,014

 

 

 

7,502,703

 

 

 

7,701,598

 

Total deposits

 

 

12,666,702

 

 

 

12,818,077

 

 

 

12,132,162

 

 

 

11,733,785

 

 

 

11,732,779

 

Broker-dealer and clearing organization payables

 

 

1,397,836

 

 

 

1,477,300

 

 

 

1,496,923

 

 

 

1,439,620

 

 

 

1,546,227

 

Short-term borrowings

 

 

835,054

 

 

 

859,444

 

 

 

747,040

 

 

 

915,919

 

 

 

676,652

 

Securities sold, not yet purchased, at fair value

 

 

97,629

 

 

 

96,586

 

 

 

113,064

 

 

 

132,950

 

 

 

97,055

 

Notes payable

 

 

395,479

 

 

 

387,904

 

 

 

395,804

 

 

 

396,653

 

 

 

401,713

 

Operating lease liabilities

 

 

125,919

 

 

 

130,960

 

 

 

134,296

 

 

 

134,019

 

 

 

120,339

 

Junior subordinated debentures

 

 

 

 

 

 

 

 

 

 

 

67,012

 

 

 

67,012

 

Other liabilities

 

 

347,742

 

 

 

369,606

 

 

 

468,020

 

 

 

348,200

 

 

 

595,045

 

Total liabilities

 

 

15,866,361

 

 

 

16,139,877

 

 

 

15,487,309

 

 

 

15,168,158

 

 

 

15,236,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

794

 

 

 

790

 

 

 

790

 

 

 

812

 

 

 

823

 

Additional paid-in capital

 

 

1,275,649

 

 

 

1,274,446

 

 

 

1,270,272

 

 

 

1,302,439

 

 

 

1,319,518

 

Accumulated other comprehensive income (loss)

 

 

(80,565

)

 

 

(10,219

)

 

 

367

 

 

 

7,093

 

 

 

3,486

 

Retained earnings

 

 

1,267,415

 

 

 

1,257,014

 

 

 

1,204,307

 

 

 

1,159,304

 

 

 

1,094,727

 

Deferred compensation employee stock trust, net

 

 

744

 

 

 

752

 

 

 

751

 

 

 

754

 

 

 

752

 

Employee stock trust

 

 

(104

)

 

 

(115

)

 

 

(116

)

 

 

(121

)

 

 

(121

)

Total Hilltop stockholders' equity

 

 

2,463,933

 

 

 

2,522,668

 

 

 

2,476,371

 

 

 

2,470,281

 

 

 

2,419,185

 

Noncontrolling interests

 

 

26,662

 

 

 

26,535

 

 

 

25,971

 

 

 

26,095

 

 

 

26,830

 

Total stockholders' equity

 

 

2,490,595

 

 

 

2,549,203

 

 

 

2,502,342

 

 

 

2,496,376

 

 

 

2,446,015

 

Total liabilities & stockholders' equity

 

$

18,356,956

 

 

$

18,689,080

 

 

$

17,989,651

 

 

$

17,664,534

 

 

$

17,682,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Consolidated Income Statements

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(in 000's, except per share data)

 

2022

 

2021

 

2021

 

2021

 

2021

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

90,408

 

$

96,104

 

 

$

99,769

 

 

$

104,162

 

 

$

104,277

 

Securities borrowed

 

 

8,817

 

 

8,524

 

 

 

8,585

 

 

 

15,586

 

 

 

28,972

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

15,581

 

 

13,916

 

 

 

12,341

 

 

 

11,125

 

 

 

10,251

 

Tax-exempt

 

 

2,419

 

 

2,639

 

 

 

2,687

 

 

 

2,338

 

 

 

2,102

 

Other

 

 

2,312

 

 

1,872

 

 

 

1,796

 

 

 

1,607

 

 

 

1,321

 

Total interest income

 

 

119,537

 

 

123,055

 

 

 

125,178

 

 

 

134,818

 

 

 

146,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

4,193

 

 

4,404

 

 

 

5,303

 

 

 

6,176

 

 

 

7,741

 

Securities loaned

 

 

7,472

 

 

6,624

 

 

 

6,519

 

 

 

12,345

 

 

 

25,486

 

Short-term borrowings

 

 

2,045

 

 

2,279

 

 

 

2,400

 

 

 

2,374

 

 

 

2,013

 

Notes payable

 

 

4,437

 

 

5,871

 

 

 

5,465

 

 

 

5,253

 

 

 

4,797

 

Junior subordinated debentures

 

 

 

 

 

 

 

419

 

 

 

577

 

 

 

562

 

Other

 

 

1,399

 

 

(417

)

 

 

(18

)

 

 

177

 

 

 

642

 

Total interest expense

 

 

19,546

 

 

18,761

 

 

 

20,088

 

 

 

26,902

 

 

 

41,241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

99,991

 

 

104,294

 

 

 

105,090

 

 

 

107,916

 

 

 

105,682

 

Provision for (reversal of) credit losses

 

 

115

 

 

(18,565

)

 

 

(5,819

)

 

 

(28,720

)

 

 

(5,109

)

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

 

 

99,876

 

 

122,859

 

 

 

110,909

 

 

 

136,636

 

 

 

110,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains from sale of loans and other mortgage production income

 

 

110,894

 

 

156,103

 

 

 

203,152

 

 

 

199,625

 

 

 

267,080

 

Mortgage loan origination fees

 

 

32,062

 

 

35,930

 

 

 

38,780

 

 

 

42,146

 

 

 

43,155

 

Securities commissions and fees

 

 

37,146

 

 

32,801

 

 

 

34,412

 

 

 

38,300

 

 

 

38,314

 

Investment and securities advisory fees and commissions

 

 

29,705

 

 

42,834

 

 

 

49,646

 

 

 

32,268

 

 

 

27,695

 

Other

 

 

6,621

 

 

17,178

 

 

 

41,955

 

 

 

27,560

 

 

 

41,341

 

Total noninterest income

 

 

216,428

 

 

284,846

 

 

 

367,945

 

 

 

339,899

 

 

 

417,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

 

 

200,019

 

 

229,717

 

 

 

258,679

 

 

 

248,486

 

 

 

270,353

 

Occupancy and equipment, net

 

 

24,766

 

 

25,741

 

 

 

25,428

 

 

 

25,004

 

 

 

24,429

 

Professional services

 

 

10,063

 

 

9,904

 

 

 

14,542

 

 

 

16,239

 

 

 

13,585

 

Other

 

 

51,502

 

 

56,832

 

 

 

56,525

 

 

 

53,639

 

 

 

58,295

 

Total noninterest expense

 

 

286,350

 

 

322,194

 

 

 

355,174

 

 

 

343,368

 

 

 

366,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

29,954

 

 

85,511

 

 

 

123,680

 

 

 

133,167

 

 

 

161,714

 

Income tax expense

 

 

5,815

 

 

20,715

 

 

 

28,257

 

 

 

31,234

 

 

 

37,770

 

Net income

 

 

24,139

 

 

64,796

 

 

 

95,423

 

 

 

101,933

 

 

 

123,944

 

Less: Net income attributable to noncontrolling interest

 

 

1,889

 

 

2,611

 

 

 

2,517

 

 

 

2,873

 

 

 

3,599

 

Income attributable to Hilltop

 

$

22,250

 

$

62,185

 

 

$

92,906

 

 

$

99,060

 

 

$

120,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

$

0.79

 

 

$

1.16

 

 

$

1.21

 

 

$

1.46

 

Diluted

 

$

0.28

 

$

0.78

 

 

$

1.15

 

 

$

1.21

 

 

$

1.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.15

 

$

0.12

 

 

$

0.12

 

 

$

0.12

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

79,114

 

 

78,933

 

 

 

80,109

 

 

 

81,663

 

 

 

82,169

 

Diluted

 

 

79,356

 

 

79,427

 

 

 

80,542

 

 

 

82,199

 

 

 

82,657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2022

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

92,070

 

 

$

11,518

 

 

$

(1,835

)

 

$

(3,389

)

 

$

1,627

 

 

$

99,991

Provision for (reversal of) credit losses

 

 

(50

)

 

 

165

 

 

 

 

 

 

 

 

 

 

 

 

115

Noninterest income

 

 

12,771

 

 

 

60,691

 

 

 

143,195

 

 

 

1,766

 

 

 

(1,995

)

 

 

216,428

Noninterest expense

 

 

58,430

 

 

 

80,647

 

 

 

134,859

 

 

 

12,793

 

 

 

(379

)

 

 

286,350

Income (loss) before taxes

 

$

46,461

 

 

$

(8,603

)

 

$

6,501

 

 

$

(14,416

)

 

$

11

 

 

$

29,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Selected Financial Data

 

2022

 

2021

 

2021

 

2021

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hilltop Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders' equity

 

 

3.60

%

 

 

9.93

%

 

 

14.96

%

 

 

16.42

%

 

 

20.58

%

Return on average assets

 

 

0.53

%

 

 

1.41

%

 

 

2.13

%

 

 

2.29

%

 

 

2.90

%

Net interest margin (1)

 

 

2.36

%

 

 

2.44

%

 

 

2.53

%

 

 

2.62

%

 

 

2.69

%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

2.37

%

 

 

2.45

%

 

 

2.54

%

 

 

2.63

%

 

 

2.69

%

Impact of purchase accounting

 

 

7 bps

 

 

12 bps

 

 

9 bps

 

 

16 bps

 

 

13 bps

Book value per common share ($)

 

 

31.02

 

 

 

31.95

 

 

 

31.36

 

 

 

30.44

 

 

 

29.41

 

Shares outstanding, end of period (000's)

 

 

79,439

 

 

 

78,965

 

 

 

78,959

 

 

 

81,153

 

 

 

82,261

 

Dividend payout ratio (3)

 

 

53.57

%

 

 

15.19

%

 

 

10.34

%

 

 

9.92

%

 

 

8.19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

2.65

%

 

 

2.81

%

 

 

2.99

%

 

 

3.19

%

 

 

3.30

%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

2.65

%

 

 

2.82

%

 

 

3.00

%

 

 

3.20

%

 

 

3.31

%

Impact of purchase accounting

 

 

8 bps

 

 

15 bps

 

 

11 bps

 

 

20 bps

 

 

17 bps

Accretion of discount on loans ($000's)

 

 

2,510

 

 

 

4,716

 

 

 

3,221

 

 

 

6,001

 

 

 

4,851

 

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

 

 

(282

)

 

 

405

 

 

 

62

 

 

 

(510

)

 

 

564

 

Return on average assets

 

 

0.98

%

 

 

1.44

%

 

 

1.36

%

 

 

1.91

%

 

 

1.48

%

Fee income ratio

 

 

12.2

%

 

 

10.8

%

 

 

10.5

%

 

 

8.9

%

 

 

9.8

%

Efficiency ratio

 

 

55.7

%

 

 

54.2

%

 

 

48.8

%

 

 

49.7

%

 

 

48.4

%

Employees' compensation and benefits ($000's)

 

 

33,517

 

 

 

34,415

 

 

 

31,500

 

 

 

33,369

 

 

 

30,992

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-Dealer Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue ($000's) (4)

 

 

72,209

 

 

 

94,569

 

 

 

126,570

 

 

 

94,145

 

 

 

109,137

 

Employees' compensation and benefits ($000's) (5)

 

 

55,825

 

 

 

65,301

 

 

 

82,429

 

 

 

62,289

 

 

 

66,157

 

Variable compensation expense ($000's)

 

 

26,625

 

 

 

35,939

 

 

 

53,505

 

 

 

34,409

 

 

 

37,412

 

Compensation as a % of net revenue (5)

 

 

77.3

%

 

 

69.1

%

 

 

65.1

%

 

 

66.2

%

 

 

60.6

%

Pre-tax margin (6)

 

 

(11.9

)%

 

 

1.8

%

 

 

13.8

%

 

 

7.3

%

 

 

16.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home purchases

 

 

2,753,031

 

 

 

3,559,137

 

 

 

3,948,420

 

 

 

4,018,922

 

 

 

2,902,710

 

Refinancings

 

 

1,011,452

 

 

 

1,430,369

 

 

 

1,646,208

 

 

 

1,881,121

 

 

 

3,281,395

 

Total mortgage loan originations - volume

 

 

3,764,483

 

 

 

4,989,506

 

 

 

5,594,628

 

 

 

5,900,043

 

 

 

6,184,105

 

Mortgage loan sales - volume ($000's)

 

 

3,868,596

 

 

 

4,988,538

 

 

 

6,195,559

 

 

 

5,524,226

 

 

 

6,350,837

 

Net gains from mortgage loan sales (basis points):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans sold to third parties

 

 

321

 

 

 

362

 

 

 

359

 

 

 

376

 

 

 

398

 

Impact of loans retained by banking segment

 

 

(9

)

 

 

(15

)

 

 

(13

)

 

 

(12

)

 

 

(10

)

As reported

 

 

312

 

 

 

347

 

 

 

346

 

 

 

364

 

 

 

388

 

Mortgage servicing rights asset ($000's) (7)

 

 

100,475

 

 

 

86,990

 

 

 

110,931

 

 

 

124,497

 

 

 

142,125

 

Employees' compensation and benefits ($000's)

 

 

102,748

 

 

 

121,758

 

 

 

134,814

 

 

 

145,401

 

 

 

166,248

 

Variable compensation expense ($000's)

 

 

56,243

 

 

 

73,208

 

 

 

88,153

 

 

 

97,081

 

 

 

115,486

 


(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 $0.5 million, $0.5 million, $0.6 million, $0.4 million, and $0.2 million, respectively, for the periods presented and for the banking segment were $0.2 million, $0.2 million, $0.2 million, $0.2 million, and $0.2 million, respectively, for 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)

Noted balances and ratios during all prior periods reflect certain reclassifications to conform to current period presentation.

(6)

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

(7)

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Capital Ratios

 

2022

 

2021

 

2021

 

2021

 

2021

Tier 1 capital (to average assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

9.74

%

 

 

10.20

%

 

 

10.02

%

 

 

10.22

%

 

 

10.50

%

Hilltop

 

 

12.46

%

 

 

12.58

%

 

 

12.64

%

 

 

12.87

%

 

 

13.01

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

15.37

%

 

 

16.00

%

 

 

15.40

%

 

 

15.00

%

 

 

14.74

%

Hilltop

 

 

21.27

%

 

 

21.22

%

 

 

21.28

%

 

 

20.22

%

 

 

19.63

%

Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

15.37

%

 

 

16.00

%

 

 

15.40

%

 

 

15.00

%

 

 

14.74

%

Hilltop

 

 

21.27

%

 

 

21.22

%

 

 

21.28

%

 

 

20.82

%

 

 

20.22

%

Total capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

16.18

%

 

 

16.77

%

 

 

16.32

%

 

 

15.95

%

 

 

15.64

%

Hilltop

 

 

23.85

%

 

 

23.75

%

 

 

24.00

%

 

 

23.48

%

 

 

22.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

Non-Performing Assets Portfolio Data

 

2022

 

2021

 

2021

 

2021

 

2021

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

6,153

 

 

 

6,601

 

 

 

5,705

 

 

 

7,211

 

 

 

10,668

 

Commercial and industrial

 

 

18,486

 

 

 

22,478

 

 

 

29,808

 

 

 

33,033

 

 

 

36,144

 

Construction and land development

 

 

1

 

 

 

2

 

 

 

366

 

 

 

474

 

 

 

501

 

1-4 family residential

 

 

18,723

 

 

 

21,123

 

 

 

25,255

 

 

 

27,100

 

 

 

30,937

 

Consumer

 

 

21

 

 

 

23

 

 

 

24

 

 

 

26

 

 

 

26

 

Broker-dealer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,384

 

 

 

50,227

 

 

 

61,158

 

 

 

67,844

 

 

 

78,276

 

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

 

 

890

 

 

 

922

 

 

 

1,038

 

 

 

1,139

 

 

 

1,584

 

Non-performing loans ($000's)

 

 

44,274

 

 

 

51,149

 

 

 

62,196

 

 

 

68,983

 

 

 

79,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans as a % of total loans

 

 

0.47

%

 

 

0.52

%

 

 

0.64

%

 

 

0.66

%

 

 

0.77

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned ($000's)

 

 

2,175

 

 

 

2,833

 

 

 

21,605

 

 

 

21,078

 

 

 

19,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other repossessed assets ($000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets ($000's)

 

 

46,449

 

 

 

53,982

 

 

 

83,801

 

 

 

90,061

 

 

 

99,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a % of total assets

 

 

0.25

%

 

 

0.29

%

 

 

0.47

%

 

 

0.51

%

 

 

0.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

87,489

 

 

 

60,775

 

 

 

175,734

 

 

 

245,828

 

 

 

265,230

 


(1)

Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications through January 1, 2022. The Bank’s COVID-19 payment deferral 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. The Bank’s actions through 2021 included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $4 million, $17 million, $76 million, and $130 million as of December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 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 March 31,

 

 

 

2022

 

 

2021

 

 

 

 

Average

 

Interest

 

Annualized

 

Average

 

Interest

 

Annualized

 

 

 

Outstanding

 

Earned

 

Yield or

 

Outstanding

 

Earned

 

Yield or

 

Net Interest Margin (Taxable Equivalent) Details (1)

 

Balance

 

or Paid

 

Rate

 

Balance

 

or Paid

 

Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

1,467,998

 

 

$

11,966

 

3.26

%

$

2,573,085

 

 

$

16,233

 

2.52

%

Loans held for investment, gross (2)

 

 

7,839,047

 

 

 

78,442

 

4.06

%

 

7,645,883

 

 

 

88,044

 

4.62

%

Investment securities - taxable

 

 

2,768,849

 

 

 

15,581

 

2.25

%

 

2,267,709

 

 

 

10,233

 

1.80

%

Investment securities - non-taxable (3)

 

 

324,084

 

 

 

2,888

 

3.56

%

 

284,001

 

 

 

2,280

 

3.21

%

Federal funds sold and securities purchased under agreements to resell

 

 

157,313

 

 

 

136

 

0.35

%

 

93,525

 

 

 

 

0.00

%

Interest-bearing deposits in other financial institutions

 

 

3,116,369

 

 

 

1,427

 

0.19

%

 

1,565,879

 

 

 

582

 

0.15

%

Securities borrowed

 

 

1,455,166

 

 

 

8,817

 

2.42

%

 

1,452,704

 

 

 

28,972

 

7.98

%

Other

 

 

54,602

 

 

 

750

 

5.57

%

 

49,916

 

 

 

762

 

6.18

%

Interest-earning assets, gross (3)

 

 

17,183,428

 

 

 

120,007

 

2.83

%

 

15,932,702

 

 

 

147,106

 

3.70

%

Allowance for credit losses

 

 

(92,239

)

 

 

 

 

 

 

 

(149,397

)

 

 

 

 

 

 

Interest-earning assets, net

 

 

17,091,189

 

 

 

 

 

 

 

 

15,783,305

 

 

 

 

 

 

 

Noninterest-earning assets

 

 

1,401,584

 

 

 

 

 

 

 

 

1,559,039

 

 

 

 

 

 

 

Total assets

 

$

18,492,773

 

 

 

 

 

 

 

$

17,342,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

8,201,824

 

 

$

4,193

 

0.21

%

$

7,626,575

 

 

$

7,741

 

0.41

%

Securities loaned

 

 

1,371,816

 

 

 

7,472

 

2.21

%

 

1,355,945

 

 

 

25,486

 

7.62

%

Notes payable and other borrowings

 

 

1,249,222

 

 

 

7,881

 

2.56

%

 

1,130,068

 

 

 

8,014

 

2.85

%

Total interest-bearing liabilities

 

 

10,822,862

 

 

 

19,546

 

0.73

%

 

10,112,588

 

 

 

41,241

 

1.65

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

4,507,661

 

 

 

 

 

 

 

 

3,729,994

 

 

 

 

 

 

 

Other liabilities

 

 

631,790

 

 

 

 

 

 

 

 

1,101,972

 

 

 

 

 

 

 

Total liabilities

 

 

15,962,313

 

 

 

 

 

 

 

 

14,944,554

 

 

 

 

 

 

 

Stockholders’ equity

 

 

2,504,383

 

 

 

 

 

 

 

 

2,371,281

 

 

 

 

 

 

 

Noncontrolling interest

 

 

26,077

 

 

 

 

 

 

 

 

26,509

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

18,492,773

 

 

 

 

 

 

 

$

17,342,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (3)

 

 

 

 

$

100,461

 

 

 

 

 

 

$

105,865

 

 

 

Net interest spread (3)

 

 

 

 

 

 

 

2.10

%

 

 

 

 

 

 

2.05

%

Net interest margin (3)

 

 

 

 

 

 

 

2.37

%

 

 

 

 

 

 

2.69

%


(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 rates for the periods presented. The adjustment to interest income was $0.5 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively.

 

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, April 22, 2022. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review first 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 352794. 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 March 31, 2022, Hilltop employed approximately 4,800 people and operated approximately 400 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,” “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; (v) the COVID-19 pandemic and the response of governmental authorities to the pandemic and disruptions in global or national supply chains, which have had, and may continue to have, an adverse impact on the global economy and our business operations and performance; (vi) transitions away from the London Interbank Offered Rate; and (vii) 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.

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