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Hilltop Holdings Inc. Announces Financial Results for Second Quarter 2024

Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the second quarter of 2024. Hilltop produced income to common stockholders of $20.3 million, or $0.31 per diluted share, for the second quarter of 2024, compared to $18.1 million, or $0.28 per diluted share, for the second quarter of 2023. Hilltop’s financial results for the second quarter of 2024 included a decline in net interest income and a build in the allowance for credit losses due to an increase in the provision for credit losses within the banking segment, a decrease in net revenues within all of the broker-dealer segment’s business lines except public finance services, and a decline in noninterest expense within the mortgage origination segment.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.17 per common share payable on August 30, 2024, to all common stockholders of record as of the close of business on August 16, 2024. Additionally, during the second quarter of 2024, Hilltop paid $9.9 million to repurchase an aggregate of 320,000 shares of its common stock at an average price of $30.98 per share pursuant to the 2024 stock repurchase program. As a result of share repurchases during 2024, Hilltop has approximately $55 million of available share repurchase capacity through the expiration of the 2024 stock repurchase program in January 2025.

The impacts of economic headwinds that began in 2022, and have continued into 2024, 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, and international armed conflicts and their impact on supply chains.

Jeremy B. Ford, President and CEO of Hilltop, said, “Despite the continuation of a challenging environment for our operating businesses, Hilltop generated $29.6 million of pre-tax income as all three business segments delivered profitable pre-tax results during the second quarter of 2024. The onerous interest rate environment presented by an elevated federal-funds rate and inverted yield curve continued to negatively impact a number of business units throughout Hilltop. In spite of this, we have been focused on controlling funding and operating costs that have resulted in a modest expansion in net interest margin and pre-provision net revenue compared to the first quarter of 2024. As we enter the second half of 2024, we will work hard at prudently managing costs and positioning our balance sheet for long-term success.”

Second Quarter 2024 Highlights for Hilltop:

  • The provision for credit losses was $10.9 million during the second quarter of 2024, compared to a reversal of credit losses of $2.9 million in the first quarter of 2024 and a provision for credit losses of $14.8 million in the second quarter of 2023;
    • The provision for credit losses during the second quarter of 2024 reflected a build in the allowance related to specific reserves and loan portfolio changes within the banking segment since the prior quarter, slightly offset by an improved U.S. economic outlook.
  • For the second quarter of 2024, net gains from sale of loans and other mortgage production income and mortgage loan origination fees was $92.9 million, compared to $90.0 million in the second quarter of 2023, a 3.2% increase;
    • Mortgage loan origination production volume was $2.4 billion during the second quarter of 2024, compared to $2.5 billion in the second quarter of 2023;
    • Net gains from mortgage loans sold to third parties increased to 233 basis points during the second quarter of 2024, compared to 221 basis points in the first quarter of 2024.
  • Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the second quarter of 2024 were 0.59% and 3.84%, respectively, compared to 0.47% and 3.53%, respectively, for the second quarter of 2023;
  • Hilltop’s book value per common share increased to $32.86 at June 30, 2024, compared to $32.66 at March 31, 2024;
  • Hilltop’s total assets were $15.6 billion and $16.2 billion at June 30, 2024 and March 31, 2024, respectively;
  • Loans1, net of allowance for credit losses, were $7.7 billion and $7.6 billion at June 30, 2024 and March 31, 2024, respectively;
  • Non-accrual loans were $105.7 million, or 1.12% of total loans, at June 30, 2024, compared to $64.7 million, or 0.73% of total loans, at March 31, 2024;
    • Non-accrual loans at June 30, 2024 increased primarily due to the addition of two commercial and industrial credit relationships within our auto note financing industry subsector, partially offset by the sale of a single non-owner occupied commercial real estate credit relationship within our hotel/motel portfolio industry subsector that was classified in loans held for sale.
  • Loans held for sale increased by 50.1% from March 31, 2024 to $1.3 billion at June 30, 2024;
  • Total deposits were $10.4 billion and $10.9 billion at June 30, 2024 and March 31, 2024, respectively;
    • Total estimated uninsured deposits were $4.8 billion, or approximately 46% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $325.4 million, were $4.5 billion, or approximately 43% of total deposits, at June 30, 2024.
  • Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 12.87% and a Common Equity Tier 1 Capital Ratio of 19.45% at June 30, 2024;
  • Hilltop’s consolidated net interest margin4 increased to 2.90% for the second quarter of 2024, compared to 2.85% in the first quarter of 2024;
  • For the second quarter of 2024, noninterest income was $193.3 million, compared to $190.7 million in the second quarter of 2023, a 1.4% increase;
  • For second quarter of 2024, noninterest expense was $256.5 million, compared to $267.0 million in the second quarter of 2023, a 3.9% decrease; and
  • Hilltop’s effective tax rate was 22.5% during the second quarter of 2024, compared to 26.4% during the same period in 2023.
    • The effective tax rate for the second quarter of 2024 was higher than the applicable statutory rate primarily due to the impact of nondeductible expenses, nondeductible compensation expense and other permanent adjustments, partially offset by the discrete impact of restricted stock vesting during the quarter and investments in tax-exempt instruments.

1

“Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $348.3 million and $332.6 million at June 30, 2024 and March 31, 2024, 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 through December 31, 2024.

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

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(in 000's)

 

2024

 

2024

 

2023

 

2023

 

2023

Cash and due from banks

 

$

798,300

 

$

1,710,066

 

$

1,858,700

 

$

1,513,747

 

$

1,584,709

Federal funds sold

 

 

5,650

 

 

650

 

 

650

 

 

3,650

 

 

650

Assets segregated for regulatory purposes

 

 

51,046

 

 

70,717

 

 

57,395

 

 

47,491

 

 

50,711

Securities purchased under agreements to resell

 

 

111,914

 

 

91,608

 

 

80,011

 

 

123,719

 

 

143,982

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

721,384

 

 

657,700

 

 

515,991

 

 

578,901

 

 

696,649

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

 

 

1,433,107

 

 

1,480,555

 

 

1,507,595

 

 

1,456,238

 

 

1,526,869

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

 

 

777,456

 

 

790,550

 

 

812,677

 

 

825,079

 

 

847,437

Equity, at fair value

 

 

254

 

 

315

 

 

321

 

 

264

 

 

258

 

 

 

2,932,201

 

 

2,929,120

 

 

2,836,584

 

 

2,860,482

 

 

3,071,213

Loans held for sale

 

 

1,264,437

 

 

842,324

 

 

943,846

 

 

1,058,806

 

 

1,333,044

Loans held for investment, net of unearned income

 

 

8,173,520

 

 

8,062,693

 

 

8,079,745

 

 

8,204,052

 

 

8,354,122

Allowance for credit losses

 

 

(115,082)

 

 

(104,231)

 

 

(111,413)

 

 

(110,822)

 

 

(109,306)

Loans held for investment, net

 

 

8,058,438

 

 

7,958,462

 

 

7,968,332

 

 

8,093,230

 

 

8,244,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer and clearing organization receivables

 

 

1,297,175

 

 

1,473,561

 

 

1,573,931

 

 

1,460,352

 

 

1,474,177

Premises and equipment, net

 

 

161,746

 

 

165,557

 

 

168,856

 

 

172,097

 

 

176,574

Operating lease right-of-use assets

 

 

93,994

 

 

95,343

 

 

88,580

 

 

93,057

 

 

97,979

Mortgage servicing assets

 

 

52,902

 

 

95,591

 

 

96,662

 

 

104,951

 

 

95,101

Other assets

 

 

517,811

 

 

501,244

 

 

517,545

 

 

588,751

 

 

588,166

Goodwill

 

 

267,447

 

 

267,447

 

 

267,447

 

 

267,447

 

 

267,447

Other intangible assets, net

 

 

7,429

 

 

7,943

 

 

8,457

 

 

9,078

 

 

9,772

Total assets

 

$

15,620,490

 

$

16,209,633

 

$

16,466,996

 

$

16,396,858

 

$

17,138,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

2,845,441

 

$

3,028,543

 

$

3,007,101

 

$

3,200,247

 

$

3,451,438

Interest-bearing

 

 

7,528,415

 

 

7,855,553

 

 

8,056,091

 

 

7,902,850

 

 

7,712,739

Total deposits

 

 

10,373,856

 

 

10,884,096

 

 

11,063,192

 

 

11,103,097

 

 

11,164,177

Broker-dealer and clearing organization payables

 

 

1,285,226

 

 

1,436,462

 

 

1,430,734

 

 

1,368,064

 

 

1,306,646

Short-term borrowings

 

 

897,613

 

 

892,574

 

 

900,038

 

 

882,999

 

 

1,628,637

Securities sold, not yet purchased, at fair value

 

 

75,546

 

 

60,562

 

 

34,872

 

 

51,527

 

 

74,761

Notes payable

 

 

347,402

 

 

347,273

 

 

347,145

 

 

347,020

 

 

364,531

Operating lease liabilities

 

 

113,096

 

 

114,518

 

 

109,002

 

 

114,334

 

 

119,999

Other liabilities

 

 

365,140

 

 

314,718

 

 

431,684

 

 

422,955

 

 

389,336

Total liabilities

 

 

13,457,879

 

 

14,050,203

 

 

14,316,667

 

 

14,289,996

 

 

15,048,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

650

 

 

653

 

 

652

 

 

652

 

 

651

Additional paid-in capital

 

 

1,047,523

 

 

1,049,831

 

 

1,054,662

 

 

1,052,867

 

 

1,050,191

Accumulated other comprehensive loss

 

 

(119,171)

 

 

(119,606)

 

 

(121,505)

 

 

(145,083)

 

 

(131,718)

Retained earnings

 

 

1,205,467

 

 

1,201,013

 

 

1,189,222

 

 

1,171,250

 

 

1,144,624

Deferred compensation employee stock trust, net

 

 

1

 

 

115

 

 

228

 

 

340

 

 

450

Employee stock trust

 

 

(1)

 

 

(142)

 

 

(292)

 

 

(446)

 

 

(599)

Total Hilltop stockholders' equity

 

 

2,134,469

 

 

2,131,864

 

 

2,122,967

 

 

2,079,580

 

 

2,063,599

Noncontrolling interests

 

 

28,142

 

 

27,566

 

 

27,362

 

 

27,282

 

 

26,655

Total stockholders' equity

 

 

2,162,611

 

 

2,159,430

 

 

2,150,329

 

 

2,106,862

 

 

2,090,254

Total liabilities & stockholders' equity

 

$

15,620,490

 

$

16,209,633

 

$

16,466,996

 

$

16,396,858

 

$

17,138,341

(1)

At June 30, 2024, the amortized cost of the available for sale securities portfolio was $1,545,966, while the fair value of the held to maturity securities portfolio was $687,194.

 

 

 

Three Months Ended

 

Consolidated Income Statements

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

(in 000's, except per share data)

 

2024

 

2024

 

2023

 

2023

 

2023

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

138,627

 

$

134,331

 

$

138,096

 

$

142,402

 

$

138,397

 

Securities borrowed

 

 

20,306

 

 

20,561

 

 

18,659

 

 

17,683

 

 

18,515

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

25,289

 

 

26,241

 

 

28,763

 

 

27,166

 

 

26,719

 

Tax-exempt

 

 

2,389

 

 

2,415

 

 

2,545

 

 

2,464

 

 

2,566

 

Other

 

 

20,532

 

 

26,066

 

 

28,704

 

 

27,040

 

 

27,229

 

Total interest income

 

 

207,143

 

 

209,614

 

 

216,767

 

 

216,755

 

 

213,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

68,095

 

 

69,144

 

 

68,339

 

 

64,290

 

 

54,726

 

Securities loaned

 

 

18,669

 

 

19,039

 

 

17,247

 

 

16,169

 

 

16,413

 

Short-term borrowings

 

 

10,676

 

 

11,588

 

 

13,495

 

 

14,212

 

 

17,706

 

Notes payable

 

 

3,604

 

 

3,590

 

 

3,596

 

 

4,026

 

 

3,973

 

Other

 

 

2,449

 

 

2,632

 

 

2,864

 

 

2,408

 

 

2,342

 

Total interest expense

 

 

103,493

 

 

105,993

 

 

105,541

 

 

101,105

 

 

95,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

103,650

 

 

103,621

 

 

111,226

 

 

115,650

 

 

118,266

 

Provision for (reversal of) credit losses

 

 

10,934

 

 

(2,871)

 

 

1,265

 

 

(40)

 

 

14,836

 

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

 

 

92,716

 

 

106,492

 

 

109,961

 

 

115,690

 

 

103,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains from sale of loans and other mortgage production income

 

 

58,455

 

 

40,197

 

 

36,387

 

 

47,262

 

 

48,535

 

Mortgage loan origination fees

 

 

34,398

 

 

26,438

 

 

32,844

 

 

41,478

 

 

41,440

 

Securities commissions and fees and other

 

 

67,460

 

 

84,757

 

 

73,967

 

 

68,447

 

 

68,640

 

Investment and securities advisory fees and commissions

 

 

32,992

 

 

30,226

 

 

35,780

 

 

39,662

 

 

32,037

 

Total noninterest income

 

 

193,305

 

 

181,618

 

 

178,978

 

 

196,849

 

 

190,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

 

 

169,998

 

 

165,830

 

 

160,390

 

 

173,195

 

 

176,908

 

Occupancy and equipment, net

 

 

21,297

 

 

21,912

 

 

21,524

 

 

21,912

 

 

23,025

 

Professional services

 

 

10,270

 

 

9,731

 

 

13,170

 

 

12,639

 

 

12,594

 

Other

 

 

54,899

 

 

52,550

 

 

55,761

 

 

52,271

 

 

54,450

 

Total noninterest expense

 

 

256,464

 

 

250,023

 

 

250,845

 

 

260,017

 

 

266,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

29,557

 

 

38,087

 

 

38,094

 

 

52,522

 

 

27,105

 

Income tax expense

 

 

6,658

 

 

8,565

 

 

7,132

 

 

13,211

 

 

7,167

 

Net income

 

 

22,899

 

 

29,522

 

 

30,962

 

 

39,311

 

 

19,938

 

Less: Net income attributable to noncontrolling interest

 

 

2,566

 

 

1,854

 

 

2,291

 

 

2,269

 

 

1,805

 

Income attributable to Hilltop

 

$

20,333

 

$

27,668

 

$

28,671

 

$

37,042

 

$

18,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.31

 

$

0.42

 

$

0.44

 

$

0.57

 

$

0.28

 

Diluted

 

$

0.31

 

$

0.42

 

$

0.44

 

$

0.57

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.17

 

$

0.17

 

$

0.16

 

$

0.16

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

65,085

 

 

65,200

 

 

65,136

 

 

65,106

 

 

65,025

 

Diluted

 

 

65,086

 

 

65,214

 

 

65,138

 

 

65,108

 

 

65,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2024

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

92,458

 

$

12,218

 

$

(4,571)

 

$

(3,153)

 

$

6,698

 

$

103,650

Provision for (reversal of) credit losses

 

 

10,950

 

 

(16)

 

 

 

 

 

 

 

 

10,934

Noninterest income

 

 

9,255

 

 

92,053

 

 

92,867

 

 

6,001

 

 

(6,871)

 

 

193,305

Noninterest expense

 

 

57,950

 

 

97,062

 

 

86,946

 

 

14,716

 

 

(210)

 

 

256,464

Income (loss) before taxes

 

$

32,813

 

$

7,225

 

$

1,350

 

$

(11,868)

 

$

37

 

$

29,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2024

Segment Results

 

 

 

 

 

 

 

Mortgage

 

 

 

 

All Other and

 

Hilltop

(in 000's)

 

Banking

 

Broker-Dealer

 

Origination

 

Corporate

 

Eliminations

 

Consolidated

Net interest income (expense)

 

$

184,064

 

$

24,486

 

$

(8,823)

 

$

(6,255)

 

$

13,799

 

$

207,271

Provision for (reversal of) credit losses

 

 

8,097

 

 

(34)

 

 

 

 

 

 

 

 

8,063

Noninterest income

 

 

21,158

 

 

196,631

 

 

159,567

 

 

11,785

 

 

(14,218)

 

 

374,923

Noninterest expense

 

 

113,970

 

 

195,008

 

 

165,843

 

 

32,101

 

 

(435)

 

 

506,487

Income (loss) before taxes

 

$

83,155

 

$

26,143

 

$

(15,099)

 

$

(26,571)

 

$

16

 

$

67,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

Selected Financial Data

 

2024

 

2024

 

2023

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hilltop Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders' equity

 

 

3.84%

 

 

5.23%

 

 

5.46%

 

 

7.11%

 

 

3.53%

Return on average assets

 

 

0.59%

 

 

0.74%

 

 

0.75%

 

 

0.94%

 

 

0.47%

Net interest margin (1)

 

 

2.90%

 

 

2.85%

 

 

2.96%

 

 

3.02%

 

 

3.03%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

2.92%

 

 

2.87%

 

 

2.98%

 

 

3.04%

 

 

3.03%

Impact of purchase accounting

 

 

6 bps

 

 

4 bps

 

 

4 bps

 

 

7 bps

 

 

9 bps

Book value per common share ($)

 

 

32.86

 

 

32.66

 

 

32.58

 

 

31.91

 

 

31.71

Shares outstanding, end of period (000's)

 

 

64,953

 

 

65,267

 

 

65,153

 

 

65,170

 

 

65,071

Dividend payout ratio (3)

 

 

54.42%

 

 

40.06%

 

 

36.35%

 

 

28.12%

 

 

57.37%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

3.10%

 

 

3.00%

 

 

2.94%

 

 

3.08%

 

 

3.11%

Net interest margin (taxable equivalent) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

 

3.10%

 

 

3.00%

 

 

2.95%

 

 

3.09%

 

 

3.11%

Impact of purchase accounting

 

 

7 bps

 

 

5 bps

 

 

5 bps

 

 

8 bps

 

 

11 bps

Accretion of discount on loans ($000's)

 

 

1,945

 

 

1,299

 

 

1,202

 

 

2,226

 

 

3,334

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

 

 

(83)

 

 

(4,311)

 

 

(674)

 

 

1,556

 

 

(2,884)

Return on average assets

 

 

0.81%

 

 

1.20%

 

 

1.12%

 

 

1.20%

 

 

0.89%

Fee income ratio

 

 

9.1%

 

 

11.5%

 

 

11.2%

 

 

10.5%

 

 

10.0%

Efficiency ratio

 

 

57.0%

 

 

54.1%

 

 

53.2%

 

 

51.4%

 

 

51.2%

Employees' compensation and benefits ($000's)

 

 

33,352

 

 

32,389

 

 

29,420

 

 

30,641

 

 

30,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-Dealer Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue ($000's) (4)

 

 

104,271

 

 

116,847

 

 

119,989

 

 

118,703

 

 

113,241

Employees' compensation and benefits ($000's)

 

 

66,181

 

 

69,457

 

 

68,746

 

 

69,930

 

 

65,290

Variable compensation expense ($000's)

 

 

32,734

 

 

35,274

 

 

39,435

 

 

39,929

 

 

34,798

Compensation as a % of net revenue

 

 

63.5%

 

 

59.4%

 

 

57.3%

 

 

58.9%

 

 

57.7%

Pre-tax margin (5)

 

 

6.9%

 

 

16.2%

 

 

16.8%

 

 

18.2%

 

 

16.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home purchases

 

 

2,205,157

 

 

1,548,941

 

 

1,698,009

 

 

2,091,444

 

 

2,301,007

Refinancings

 

 

174,141

 

 

127,545

 

 

117,018

 

 

152,257

 

 

150,643

Total mortgage loan originations - volume

 

 

2,379,298

 

 

1,676,486

 

 

1,815,027

 

 

2,243,701

 

 

2,451,650

Mortgage loan sales - volume ($000's)

 

 

1,838,841

 

 

1,749,857

 

 

1,874,001

 

 

2,395,357

 

 

2,115,706

Net gains from mortgage loan sales (basis points):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans sold to third parties

 

 

233

 

 

221

 

 

189

 

 

199

 

 

207

Impact of loans retained by banking segment

 

 

(5)

 

 

(5)

 

 

0

 

 

(1)

 

 

(6)

As reported

 

 

228

 

 

216

 

 

189

 

 

198

 

 

201

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

 

 

52,902

 

 

95,591

 

 

96,662

 

 

104,951

 

 

95,101

Employees' compensation and benefits ($000's)

 

 

61,624

 

 

52,694

 

 

53,766

 

 

64,016

 

 

70,982

Variable compensation expense ($000's)

 

 

34,886

 

 

22,188

 

 

24,085

 

 

33,070

 

 

36,249

(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, $0.6 million, $0.6 million, $0.6 million and $0.1 million, respectively, for the periods presented and for the banking seg ment were $0.1 million, $0.1 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)

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

Capital Ratios

 

2024

 

2024

 

2023

 

2023

 

2023

Tier 1 capital (to average assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

11.36%

 

 

11.00%

 

 

10.55%

 

 

10.62%

 

 

10.28%

Hilltop

 

 

12.87%

 

 

12.49%

 

 

12.23%

 

 

11.92%

 

 

11.47%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

15.58%

 

 

15.87%

 

 

15.44%

 

 

15.31%

 

 

14.48%

Hilltop

 

 

19.45%

 

 

19.73%

 

 

19.32%

 

 

18.60%

 

 

17.61%

Tier 1 capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

15.58%

 

 

15.87%

 

 

15.44%

 

 

15.31%

 

 

14.48%

Hilltop

 

 

19.45%

 

 

19.73%

 

 

19.32%

 

 

18.60%

 

 

17.61%

Total capital (to risk-weighted assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital

 

 

16.77%

 

 

17.06%

 

 

16.58%

 

 

16.45%

 

 

15.56%

Hilltop

 

 

22.57%

 

 

22.79%

 

 

22.34%

 

 

21.54%

 

 

20.41%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

Non-Performing Assets Portfolio Data

 

2024

 

2024

 

2023

 

2023

 

2023

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-owner occupied

 

$

6,894

 

$

34,661

 

$

36,440

 

$

2,375

 

$

2,456

Owner occupied

 

 

6,437

 

 

4,846

 

 

5,098

 

 

4,964

 

 

1,096

Commercial and industrial

 

 

80,755

 

 

12,165

 

 

9,502

 

 

10,190

 

 

21,442

Construction and land development

 

 

485

 

 

698

 

 

3,480

 

 

760

 

 

593

1-4 family residential

 

 

11,092

 

 

12,363

 

 

13,801

 

 

13,202

 

 

13,360

Consumer

 

 

1

 

 

3

 

 

6

 

 

7

 

 

9

Broker-dealer

 

 

 

 

 

 

 

 

 

 

Non-accrual loans ($000's)

 

$

105,664

 

$

64,736

 

$

68,327

 

$

31,498

 

$

38,956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans as a % of total loans

 

 

1.12%

 

 

0.73%

 

 

0.76%

 

 

0.34%

 

 

0.40%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned ($000's)

 

 

2,973

 

 

5,254

 

 

5,095

 

 

5,386

 

 

3,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other repossessed assets ($000's)

 

 

464

 

 

472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets ($000's)

 

 

109,101

 

 

70,462

 

 

73,422

 

 

36,884

 

 

42,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a % of total assets

 

 

0.70%

 

 

0.43%

 

 

0.45%

 

 

0.22%

 

 

0.25%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans past due 90 days or more and still accruing ($000's) (1)

 

 

122,451

 

 

112,799

 

 

115,090

 

 

106,346

 

 

130,036

(1)

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 June 30,

 

 

 

2024

 

2023

 

 

 

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

 

$

934,445

 

$

13,494

 

5.78

%

$

1,043,526

 

$

14,125

 

5.41

%

Loans held for investment, gross (2)

 

 

7,892,879

 

 

125,133

 

6.36

%

 

8,033,095

 

 

124,272

 

6.21

%

Investment securities - taxable

 

 

2,612,049

 

 

25,284

 

3.87

%

 

2,776,375

 

 

26,719

 

3.85

%

Investment securities - non-taxable (3)

 

 

321,928

 

 

2,965

 

3.68

%

 

412,609

 

 

2,410

 

2.34

%

Federal funds sold and securities purchased under agreements to resell

 

 

105,520

 

 

1,944

 

7.39

%

 

123,219

 

 

2,190

 

7.13

%

Interest-bearing deposits in other financial institutions

 

 

1,057,783

 

 

13,572

 

5.15

%

 

1,711,945

 

 

21,273

 

4.98

%

Securities borrowed

 

 

1,358,425

 

 

20,306

 

5.91

%

 

1,477,502

 

 

18,515

 

4.96

%

Other

 

 

39,758

 

 

5,016

 

50.60

%

 

82,608

 

 

3,766

 

18.29

%

Interest-earning assets, gross (3)

 

 

14,322,787

 

 

207,714

 

5.82

%

 

15,660,879

 

 

213,270

 

5.46

%

Allowance for credit losses

 

 

(104,551)

 

 

 

 

 

 

 

(97,387)

 

 

 

 

 

 

Interest-earning assets, net

 

 

14,218,236

 

 

 

 

 

 

 

15,563,492

 

 

 

 

 

 

Noninterest-earning assets

 

 

1,332,959

 

 

 

 

 

 

 

1,355,997

 

 

 

 

 

 

Total assets

 

$

15,551,195

 

 

 

 

 

 

$

16,919,489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

7,617,862

 

$

68,095

 

3.59

%

$

7,736,582

 

$

54,726

 

2.84

%

Securities loaned

 

 

1,338,825

 

 

18,669

 

5.59

%

 

1,373,435

 

 

16,413

 

4.79

%

Notes payable and other borrowings

 

 

1,253,394

 

 

16,729

 

5.35

%

 

1,861,063

 

 

24,021

 

5.18

%

Total interest-bearing liabilities

 

 

10,210,081

 

 

103,493

 

4.07

%

 

10,971,080

 

 

95,160

 

3.48

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

2,814,179

 

 

 

 

 

 

 

3,540,643

 

 

 

 

 

 

Other liabilities

 

 

377,516

 

 

 

 

 

 

 

320,706

 

 

 

 

 

 

Total liabilities

 

 

13,401,776

 

 

 

 

 

 

 

14,832,429

 

 

 

 

 

 

Stockholders’ equity

 

 

2,122,144

 

 

 

 

 

 

 

2,060,677

 

 

 

 

 

 

Noncontrolling interest

 

 

27,275

 

 

 

 

 

 

 

26,383

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

15,551,195

 

 

 

 

 

 

$

16,919,489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (3)

 

 

 

 

$

104,221

 

 

 

 

 

 

$

118,110

 

 

 

Net interest spread (3)

 

 

 

 

 

 

 

1.75

%

 

 

 

 

 

 

1.98

%

Net interest margin (3)

 

 

 

 

 

 

 

2.92

%

 

 

 

 

 

 

3.03

%

(1)

Information presented on a consolidated basis (dollars in thousands).

(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 $0.1 million for the three months ended June 30, 2024 and 2023, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, July 26, 2024. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review second quarter 2024 financial results. Interested parties can access the conference call by dialing 800-245-3047 (North America) or 203-518-9765 (International) and then using the conference ID HH2Q24. The conference call also will be webcast simultaneously on Hilltop’s Investor Relations website (http://ir.hilltop.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 June 30, 2024, Hilltop employed approximately 3,780 people and operated approximately 320 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.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 “aim,” “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,” “steady,” “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 financial services industry, and (vii) risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments. For further discussion of such factors, see the risk factors described in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

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