Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2021
DALLAS–(BUSINESS WIRE)–Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2021. Hilltop produced income from continuing operations to common stockholders of $92.9 million, or $1.15 per diluted share, for the third quarter of 2021, compared to $152.5 million, or $1.69 per diluted share, for the third quarter of 2020. Hilltop’s financial results from continuing operations for the third quarter of 2021 included a decrease 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 business and fixed income services lines, partially offset by improvements in the macroeconomic outlook and resulting beneficial impact on loan expected loss rates within the banking segment.
Including income from discontinued operations related to the former insurance business, income applicable to common stockholders was $92.9 million, or $1.15 per diluted share, for the third quarter of 2021, compared to $153.3 million, or $1.70 per diluted share, for the third quarter of 2020.
Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per common share, payable on November 30, 2021, to all common stockholders of record as of the close of business on November 15, 2021. Additionally, during the third quarter of 2021, Hilltop paid approximately $74 million to repurchase an aggregate of 2,241,761 shares of its common stock at a weighted average price of $33.06 per share pursuant to the 2021 stock repurchase program. These shares were returned to the pool of authorized but unissued shares of common stock.
Furthermore, in October 2021, the Hilltop Board of Directors authorized, subject to regulatory review, an increase to the aggregate amount of common stock that Hilltop may repurchase under the aforementioned stock repurchase program to $200.0 million, an increase of $50.0 million. As a result of share repurchases during 2021 and giving effect to such increase, Hilltop has approximately $76 million of available share repurchase capacity through expiration of the stock repurchase program in January 2022.
The COVID-19 pandemic has adversely impacted financial markets and overall economic conditions, and is expected to continue to have implications on our business and operations. The extent of the impact of the pandemic on our operational and financial performance for the remainder of 2021 and into 2022 is currently uncertain and will depend on certain developments outside of our control, including, among others, the ongoing distribution and effectiveness of vaccines, government stimulus, the ultimate impact of the pandemic on our customers and clients, and additional, or extended, federal, state and local government orders and regulations that might be imposed in response to the pandemic.
Jeremy B. Ford, President and CEO of Hilltop, said, “I am happy to announce strong operating results for all three businesses at Hilltop. We have seen continued improvement in our asset quality, which is a reflection of both the sound lending practices employed by PlainsCapital Bank and the improving economic environment. The trend of increasing deposits remained steady in the quarter, and we are working diligently to deploy that excess liquidity through relationship-based lending and prudent management of our securities portfolio. At PrimeLending and the mortgage-centric businesses at Hilltop Securities, continued strength in the housing market and solid execution from our teams resulted in strong profitability. In addition, Hilltop continued to return a portion of our excess capital to shareholders through approximately $10 million of dividends paid and $74 million of share repurchases during the third quarter.”
Third Quarter 2021 Highlights for Hilltop:
-
The reversal of credit losses was $5.8 million during the third quarter of 2021, compared to a reversal of credit losses of $28.7 million in the second quarter of 2021;
- The reversal of credit losses during the third quarter of 2021 primarily reflected improvements in both macroeconomic forecast assumptions and credit quality metrics on COVID-19 impacted industry sector exposures;
-
For the third quarter of 2021, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $241.9 million, compared to $355.6 million in the third quarter of 2020, a 32.0% decrease;
- Mortgage loan origination production volume was $5.6 billion during the third quarter of 2021, compared to $6.5 billion in the third quarter of 2020;
- Net gains from mortgage loans sold to third parties declined to 359 basis points during the third quarter of 2021, compared to 376 basis points in the second quarter of 2021.
- Hilltop’s consolidated annualized return on average assets and return on average equity for the third quarter of 2021 were 2.13% and 14.96%, respectively, compared to 3.71% and 25.94%, respectively, for the third quarter of 2020;
- Hilltop’s book value per common share increased to $31.36 at September 30, 2021, compared to $30.44 at June 30, 2021;
- Hilltop’s total assets were $18.0 billion and $17.7 billion at September 30, 2021 and June 30, 2021, respectively;
-
Loans1, net of allowance for credit losses, decreased to $6.8 billion at September 30, 2021 compared to $6.9 billion at June 30, 2021;
- Includes supporting our impacted banking clients through funding of over 4,100 loans through both rounds of the Paycheck Protection Program, or PPP, with a remaining balance of approximately $133 million as of September 30, 2021, compared to approximately $261 million as of June 30, 2021;
- Through October 22, 2021, the Small Business Administration, or SBA, had approved approximately 3,300 PPP forgiveness applications from the Bank totaling approximately $775 million, with PPP loans of approximately $12 million pending SBA review and approval.
- Non-performing loans were $62.2 million, or 0.64% of total loans, at September 30, 2021, compared to $69.0 million, or 0.66% of total loans, at June 30, 2021;
-
We further supported our impacted banking clients during 2020 through the approval of COVID-19 related loan modifications of approximately $1.0 billion, and continued such support during 2021, resulting in a portfolio of active deferrals that have not reached the end of their deferral period of approximately $17 million as of September 30, 2021, compared to approximately $76 million in active deferment as of June 30, 2021;
- While the majority of the portfolio of COVID-19 related loan modifications no longer require deferral, such loans may continue to represent elevated risk; therefore, monitoring of these loans continues;
- The extent of these loans progressing into non-performing loans during future periods is uncertain.
- Loans held for sale decreased by 26.9% from June 30, 2021 to $2.1 billion at September 30, 2021;
- Total deposits were $12.1 billion and $11.7 billion at September 30, 2021 and June 30, 2021, respectively;
- Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 12.64% and a Common Equity Tier 1 Capital Ratio of 21.28% at September 30, 2021;
- We redeemed in full all of our outstanding junior subordinated debentures of $67.0 million, which resulted in the full redemption to the holders of the associated preferred securities and common securities during the third quarter of 2021;
-
Hilltop’s consolidated net interest margin4 decreased to 2.53% for the third quarter of 2021, compared to 2.62% in the second quarter of 2021;
- Includes previously deferred interest income of $4.6 million during the third quarter of 2021 related to PPP loan-related origination fees.
- For the third quarter of 2021, noninterest income from continuing operations was $367.9 million, compared to $502.7 million in the third quarter of 2020, a 26.8% decrease;
- For the third quarter of 2021, noninterest expense from continuing operations was $355.2 million, compared to $399.3 million in the third quarter of 2020, a 11.1% decrease; and
- Hilltop’s effective tax rate from continuing operations was 22.8% during the third quarter of 2021, compared to 22.7% during the same period in 2020.
Discontinued Operations
On June 30, 2020, Hilltop completed the sale of National Lloyds Corporation, or NLC, which comprised the operations of its former insurance segment, for cash proceeds of $154.1 million. During 2020, Hilltop recognized an aggregate gain associated with this transaction of $36.8 million, net of transaction costs. Accordingly, insurance segment results and its assets and liabilities have been presented as discontinued operations. The resulting book gain from this sale transaction was not recognized for tax purposes pursuant to the rules promulgated under the Internal Revenue Code.
| Note: “Consolidated” refers to our consolidated financial position and consolidated results of operations, including discontinued operations and assets and liabilities of discontinued operations. | |||
|
1 |
“Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $645.6 million and $628.3 million at September 30, 2021 and June 30, 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 |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
||||||||||
|
(in 000’s) |
|
2021 |
|
2021 |
|
2021 |
|
2020 |
|
2020 |
||||||||||
|
Cash and due from banks |
|
$ |
2,463,111 |
|
|
$ |
1,372,818 |
|
|
$ |
1,564,489 |
|
|
$ |
1,062,560 |
|
|
$ |
1,277,865 |
|
|
Federal funds sold |
|
|
406 |
|
|
|
387 |
|
|
|
396 |
|
|
|
386 |
|
|
|
420 |
|
|
Assets segregated for regulatory purposes |
|
|
269,506 |
|
|
|
207,284 |
|
|
|
273,393 |
|
|
|
290,357 |
|
|
|
221,621 |
|
|
Securities purchased under agreements to resell |
|
|
155,908 |
|
|
|
202,638 |
|
|
|
106,342 |
|
|
|
80,319 |
|
|
|
90,103 |
|
|
Securities: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Trading, at fair value |
|
|
609,813 |
|
|
|
682,483 |
|
|
|
528,712 |
|
|
|
694,255 |
|
|
|
667,751 |
|
|
Available for sale, at fair value, net |
|
|
1,994,183 |
|
|
|
1,817,807 |
|
|
|
1,715,406 |
|
|
|
1,462,205 |
|
|
|
1,310,240 |
|
|
Held to maturity, at amortized cost, net |
|
|
277,419 |
|
|
|
288,776 |
|
|
|
300,088 |
|
|
|
311,944 |
|
|
|
323,299 |
|
|
Equity, at fair value |
|
|
221 |
|
|
|
193 |
|
|
|
189 |
|
|
|
140 |
|
|
|
117 |
|
|
|
|
|
2,881,636 |
|
|
|
2,789,259 |
|
|
|
2,544,395 |
|
|
|
2,468,544 |
|
|
|
2,301,407 |
|
|
Loans held for sale |
|
|
2,108,878 |
|
|
|
2,885,458 |
|
|
|
2,538,986 |
|
|
|
2,788,386 |
|
|
|
2,547,975 |
|
|
Loans held for investment, net of unearned income |
|
|
7,552,926 |
|
|
|
7,645,227 |
|
|
|
7,810,657 |
|
|
|
7,693,141 |
|
|
|
7,945,560 |
|
|
Allowance for credit losses |
|
|
(109,512 |
) |
|
|
(115,269 |
) |
|
|
(144,499 |
) |
|
|
(149,044 |
) |
|
|
(155,214 |
) |
|
Loans held for investment, net |
|
|
7,443,414 |
|
|
|
7,529,958 |
|
|
|
7,666,158 |
|
|
|
7,544,097 |
|
|
|
7,790,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Broker-dealer and clearing organization receivables |
|
|
1,419,652 |
|
|
|
1,403,447 |
|
|
|
1,596,817 |
|
|
|
1,404,727 |
|
|
|
1,363,478 |
|
|
Premises and equipment, net |
|
|
210,026 |
|
|
|
212,402 |
|
|
|
213,304 |
|
|
|
211,595 |
|
|
|
208,078 |
|
|
Operating lease right-of-use assets |
|
|
115,942 |
|
|
|
115,698 |
|
|
|
101,055 |
|
|
|
105,757 |
|
|
|
109,354 |
|
|
Mortgage servicing assets |
|
|
110,931 |
|
|
|
124,497 |
|
|
|
142,125 |
|
|
|
143,742 |
|
|
|
127,712 |
|
|
Other assets |
|
|
526,339 |
|
|
|
535,536 |
|
|
|
648,895 |
|
|
|
555,983 |
|
|
|
607,932 |
|
|
Goodwill |
|
|
267,447 |
|
|
|
267,447 |
|
|
|
267,447 |
|
|
|
267,447 |
|
|
|
267,447 |
|
|
Other intangible assets, net |
|
|
16,455 |
|
|
|
17,705 |
|
|
|
19,035 |
|
|
|
20,364 |
|
|
|
21,814 |
|
|
Total assets |
|
$ |
17,989,651 |
|
|
$ |
17,664,534 |
|
|
$ |
17,682,837 |
|
|
$ |
16,944,264 |
|
|
$ |
16,935,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Noninterest-bearing |
|
$ |
4,433,148 |
|
|
$ |
4,231,082 |
|
|
$ |
4,031,181 |
|
|
$ |
3,612,384 |
|
|
$ |
3,557,603 |
|
|
Interest-bearing |
|
|
7,699,014 |
|
|
|
7,502,703 |
|
|
|
7,701,598 |
|
|
|
7,629,935 |
|
|
|
7,704,312 |
|
|
Total deposits |
|
|
12,132,162 |
|
|
|
11,733,785 |
|
|
|
11,732,779 |
|
|
|
11,242,319 |
|
|
|
11,261,915 |
|
|
Broker-dealer and clearing organization payables |
|
|
1,496,923 |
|
|
|
1,439,620 |
|
|
|
1,546,227 |
|
|
|
1,368,373 |
|
|
|
1,310,835 |
|
|
Short-term borrowings |
|
|
747,040 |
|
|
|
915,919 |
|
|
|
676,652 |
|
|
|
695,798 |
|
|
|
780,109 |
|
|
Securities sold, not yet purchased, at fair value |
|
|
113,064 |
|
|
|
132,950 |
|
|
|
97,055 |
|
|
|
79,789 |
|
|
|
56,023 |
|
|
Notes payable |
|
|
395,804 |
|
|
|
396,653 |
|
|
|
401,713 |
|
|
|
381,987 |
|
|
|
396,006 |
|
|
Operating lease liabilities |
|
|
134,296 |
|
|
|
134,019 |
|
|
|
120,339 |
|
|
|
125,450 |
|
|
|
122,402 |
|
|
Junior subordinated debentures |
|
|
— |
|
|
|
67,012 |
|
|
|
67,012 |
|
|
|
67,012 |
|
|
|
67,012 |
|
|
Other liabilities |
|
|
468,020 |
|
|
|
348,200 |
|
|
|
595,045 |
|
|
|
632,889 |
|
|
|
502,517 |
|
|
Total liabilities |
|
|
15,487,309 |
|
|
|
15,168,158 |
|
|
|
15,236,822 |
|
|
|
14,593,617 |
|
|
|
14,496,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Common stock |
|
|
790 |
|
|
|
812 |
|
|
|
823 |
|
|
|
822 |
|
|
|
902 |
|
|
Additional paid-in capital |
|
|
1,270,272 |
|
|
|
1,302,439 |
|
|
|
1,319,518 |
|
|
|
1,317,929 |
|
|
|
1,443,588 |
|
|
Accumulated other comprehensive income |
|
|
367 |
|
|
|
7,093 |
|
|
|
3,486 |
|
|
|
17,763 |
|
|
|
23,790 |
|
|
Retained earnings |
|
|
1,204,307 |
|
|
|
1,159,304 |
|
|
|
1,094,727 |
|
|
|
986,792 |
|
|
|
942,461 |
|
|
Deferred compensation employee stock trust, net |
|
|
751 |
|
|
|
754 |
|
|
|
752 |
|
|
|
771 |
|
|
|
774 |
|
|
Employee stock trust |
|
|
(116 |
) |
|
|
(121 |
) |
|
|
(121 |
) |
|
|
(138 |
) |
|
|
(143 |
) |
|
Total Hilltop stockholders’ equity |
|
|
2,476,371 |
|
|
|
2,470,281 |
|
|
|
2,419,185 |
|
|
|
2,323,939 |
|
|
|
2,411,372 |
|
|
Noncontrolling interests |
|
|
25,971 |
|
|
|
26,095 |
|
|
|
26,830 |
|
|
|
26,708 |
|
|
|
27,361 |
|
|
Total stockholders’ equity |
|
|
2,502,342 |
|
|
|
2,496,376 |
|
|
|
2,446,015 |
|
|
|
2,350,647 |
|
|
|
2,438,733 |
|
|
Total liabilities & stockholders’ equity |
|
$ |
17,989,651 |
|
|
$ |
17,664,534 |
|
|
$ |
17,682,837 |
|
|
$ |
16,944,264 |
|
|
$ |
16,935,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Three Months Ended |
||||||||||||||||||
|
Consolidated Income Statements |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
||||||||||
|
(in 000’s, except per share data) |
|
2021 |
|
2021 |
|
2021 |
|
2020 |
|
2020 |
||||||||||
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Loans, including fees |
|
$ |
99,769 |
|
|
$ |
104,162 |
|
|
$ |
104,277 |
|
|
$ |
109,328 |
|
|
$ |
104,955 |
|
|
Securities borrowed |
|
|
8,585 |
|
|
|
15,586 |
|
|
|
28,972 |
|
|
|
14,445 |
|
|
|
10,705 |
|
|
Securities: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Taxable |
|
|
12,341 |
|
|
|
11,125 |
|
|
|
10,251 |
|
|
|
9,845 |
|
|
|
11,035 |
|
|
Tax-exempt |
|
|
2,687 |
|
|
|
2,338 |
|
|
|
2,102 |
|
|
|
1,862 |
|
|
|
1,687 |
|
|
Other |
|
|
1,796 |
|
|
|
1,607 |
|
|
|
1,321 |
|
|
|
1,381 |
|
|
|
1,446 |
|
|
Total interest income |
|
|
125,178 |
|
|
|
134,818 |
|
|
|
146,923 |
|
|
|
136,861 |
|
|
|
129,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Deposits |
|
|
5,303 |
|
|
|
6,176 |
|
|
|
7,741 |
|
|
|
9,269 |
|
|
|
10,700 |
|
|
Securities loaned |
|
|
6,519 |
|
|
|
12,345 |
|
|
|
25,486 |
|
|
|
12,014 |
|
|
|
8,729 |
|
|
Short-term borrowings |
|
|
2,400 |
|
|
|
2,374 |
|
|
|
2,013 |
|
|
|
2,154 |
|
|
|
2,346 |
|
|
Notes payable |
|
|
5,465 |
|
|
|
5,253 |
|
|
|
4,797 |
|
|
|
4,807 |
|
|
|
4,904 |
|
|
Junior subordinated debentures |
|
|
419 |
|
|
|
577 |
|
|
|
562 |
|
|
|
609 |
|
|
|
608 |
|
|
Other |
|
|
(18 |
) |
|
|
177 |
|
|
|
642 |
|
|
|
636 |
|
|
|
641 |
|
|
Total interest expense |
|
|
20,088 |
|
|
|
26,902 |
|
|
|
41,241 |
|
|
|
29,489 |
|
|
|
27,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net interest income |
|
|
105,090 |
|
|
|
107,916 |
|
|
|
105,682 |
|
|
|
107,372 |
|
|
|
101,900 |
|
|
Provision for (reversal of) credit losses |
|
|
(5,819 |
) |
|
|
(28,720 |
) |
|
|
(5,109 |
) |
|
|
(3,482 |
) |
|
|
(602 |
) |
|
Net interest income after provision for (reversal of) credit losses |
|
|
110,909 |
|
|
|
136,636 |
|
|
|
110,791 |
|
|
|
110,854 |
|
|
|
102,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net gains from sale of loans and other mortgage production income |
|
|
203,152 |
|
|
|
199,625 |
|
|
|
267,080 |
|
|
|
247,360 |
|
|
|
307,896 |
|
|
Mortgage loan origination fees |
|
|
38,780 |
|
|
|
42,146 |
|
|
|
43,155 |
|
|
|
50,193 |
|
|
|
47,681 |
|
|
Securities commissions and fees |
|
|
34,412 |
|
|
|
38,300 |
|
|
|
38,314 |
|
|
|
35,921 |
|
|
|
32,496 |
|
|
Investment and securities advisory fees and commissions |
|
|
49,646 |
|
|
|
32,268 |
|
|
|
27,695 |
|
|
|
42,161 |
|
|
|
36,866 |
|
|
Other |
|
|
41,955 |
|
|
|
27,560 |
|
|
|
41,341 |
|
|
|
72,296 |
|
|
|
77,772 |
|
|
Total noninterest income |
|
|
367,945 |
|
|
|
339,899 |
|
|
|
417,585 |
|
|
|
447,931 |
|
|
|
502,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Employees’ compensation and benefits |
|
|
258,679 |
|
|
|
248,486 |
|
|
|
270,353 |
|
|
|
291,489 |
|
|
|
294,907 |
|
|
Occupancy and equipment, net |
|
|
25,428 |
|
|
|
25,004 |
|
|
|
24,429 |
|
|
|
27,596 |
|
|
|
26,124 |
|
|
Professional services |
|
|
14,542 |
|
|
|
16,239 |
|
|
|
13,585 |
|
|
|
21,927 |
|
|
|
17,522 |
|
|
Other |
|
|
56,525 |
|
|
|
53,639 |
|
|
|
58,295 |
|
|
|
61,336 |
|
|
|
60,792 |
|
|
Total noninterest expense |
|
|
355,174 |
|
|
|
343,368 |
|
|
|
366,662 |
|
|
|
402,348 |
|
|
|
399,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income from continuing operations before income taxes |
|
|
123,680 |
|
|
|
133,167 |
|
|
|
161,714 |
|
|
|
156,437 |
|
|
|
205,868 |
|
|
Income tax expense |
|
|
28,257 |
|
|
|
31,234 |
|
|
|
37,770 |
|
|
|
39,295 |
|
|
|
46,820 |
|
|
Income from continuing operations |
|
|
95,423 |
|
|
|
101,933 |
|
|
|
123,944 |
|
|
|
117,142 |
|
|
|
159,048 |
|
|
Income from discontinued operations, net of income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,734 |
|
|
|
736 |
|
|
Net income |
|
|
95,423 |
|
|
|
101,933 |
|
|
|
123,944 |
|
|
|
120,876 |
|
|
|
159,784 |
|
|
Less: Net income attributable to noncontrolling interest |
|
|
2,517 |
|
|
|
2,873 |
|
|
|
3,599 |
|
|
|
4,431 |
|
|
|
6,505 |
|
|
Income attributable to Hilltop |
|
$ |
92,906 |
|
|
$ |
99,060 |
|
|
$ |
120,345 |
|
|
$ |
116,445 |
|
|
$ |
153,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Earnings from continuing operations |
|
$ |
1.16 |
|
|
$ |
1.21 |
|
|
$ |
1.46 |
|
|
$ |
1.31 |
|
|
$ |
1.69 |
|
|
Earnings from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.04 |
|
|
|
0.01 |
|
|
|
|
$ |
1.16 |
|
|
$ |
1.21 |
|
|
$ |
1.46 |
|
|
$ |
1.35 |
|
|
$ |
1.70 |
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Earnings from continuing operations |
|
$ |
1.15 |
|
|
$ |
1.21 |
|
|
$ |
1.46 |
|
|
$ |
1.30 |
|
|
$ |
1.69 |
|
|
Earnings from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.05 |
|
|
|
0.01 |
|
|
|
|
$ |
1.15 |
|
|
$ |
1.21 |
|
|
$ |
1.46 |
|
|
$ |
1.35 |
|
|
$ |
1.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash dividends declared per common share |
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic |
|
|
80,109 |
|
|
|
81,663 |
|
|
|
82,169 |
|
|
|
86,269 |
|
|
|
90,200 |
|
|
Diluted |
|
|
80,542 |
|
|
|
82,199 |
|
|
|
82,657 |
|
|
|
86,420 |
|
|
|
90,200 |
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Three Months Ended September 30, 2021 |
|||||||||||||||||||||||
|
Segment Results |
|
|
|
|
Mortgage |
|
|
|
All Other and |
Continuing |
||||||||||||||
|
(in 000’s) |
Banking |
|
Broker-Dealer |
|
Origination |
|
Corporate |
|
Eliminations |
Operations |
||||||||||||||
|
Net interest income (expense) |
$ |
99,978 |
|
$ |
10,427 |
|
$ |
(3,503 |
) | $ |
(4,341 |
) |
$ |
2,529 |
|
$ |
105,090 |
|
||||||
|
Provision for (reversal of) credit losses |
|
(5,775 |
) |
|
(44 |
) |
— |
— |
|
— |
|
|
(5,819 |
) |
||||||||||
|
Noninterest income |
|
11,727 |
|
|
116,143 |
|
242,270 |
757 |
|
(2,952 |
) |
|
367,945 |
|
||||||||||
|
Noninterest expense |
|
54,567 |
|
|
109,193 |
|
176,587 |
15,355 |
|
(528 |
) |
|
355,174 |
|
||||||||||
|
Income (loss) from continuing operations before taxes |
$ |
62,913 |
|
$ |
17,421 |
|
$ |
62,180 |
$ |
(18,939 |
) |
$ |
105 |
|
$ |
123,680 |
|
|||||||
|
|
|
|
|
|||||||||||||||||||||
|
|
Nine Months Ended September 30, 2021 |
|||||||||||||||||||||||
|
Segment Results |
|
|
|
|
Mortgage |
|
|
|
All Other and |
|
Continuing |
|||||||||||||
|
(in 000’s) |
Banking |
|
Broker-Dealer |
|
Origination |
|
Corporate |
|
Eliminations |
Operations |
||||||||||||||
|
Net interest income (expense) |
$ |
309,330 |
$ |
31,623 |
|
$ |
(16,554 |
) |
$ |
(13,720 |
) |
$ |
8,009 |
|
$ |
318,688 |
||||||||
|
Provision for (reversal of) credit losses |
(39,725 |
) |
|
77 |
|
|
— |
|
|
— |
|
— |
|
(39,648 |
) | |||||||||
|
Noninterest income |
33,293 |
|
298,229 |
|
|
794,679 |
|
|
8,140 |
|
(8,912 |
) |
|
1,125,429 |
||||||||||
|
Noninterest expense |
167,869 |
|
287,831 |
|
|
573,884 |
|
|
37,015 |
|
(1,395 |
) |
|
1,065,204 |
||||||||||
|
Income (loss) from continuing operations before taxes |
$ |
214,479 |
$ |
41,944 |
|
$ |
204,241 |
|
$ |
(42,595 |
) |
$ |
492 |
|
$ |
418,561 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Three Months Ended |
|||||||||||||
|
|
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|||||
|
Selected Financial Data |
|
2021 |
|
2021 |
|
2021 |
|
2020 |
|
2020 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Hilltop Consolidated (1): |
|
|
|
|
|
|
|
|
|
|
|||||
|
Return on average stockholders’ equity |
|
14.96 |
% |
|
16.42 |
% |
|
20.58 |
% |
|
20.56 |
% |
|
25.94 |
% |
|
Return on average assets |
|
2.13 |
% |
|
2.29 |
% |
|
2.90 |
% |
|
2.83 |
% |
|
3.71 |
% |
|
Net interest margin (2) |
|
2.53 |
% |
|
2.62 |
% |
|
2.69 |
% |
|
2.71 |
% |
|
2.56 |
% |
|
Net interest margin (taxable equivalent) (3): |
|
|
|
|
|
|
|
|
|
|
|||||
|
As reported |
|
2.54 |
% |
|
2.63 |
% |
|
2.69 |
% |
|
2.72 |
% |
|
2.57 |
% |
|
Impact of purchase accounting |
|
9 bps |
|
16 bps |
|
13 bps |
|
15 bps |
|
10 bps |
|||||
|
Without purchase accounting impact |
|
2.45 |
% |
|
2.47 |
% |
|
2.56 |
% |
|
2.57 |
% |
|
2.47 |
% |
|
Book value per common share ($) |
|
31.36 |
|
|
30.44 |
|
|
29.41 |
|
|
28.28 |
|
|
26.72 |
|
|
Shares outstanding, end of period (000’s) |
|
78,959 |
|
|
81,153 |
|
|
82,261 |
|
|
82,185 |
|
|
90,238 |
|
|
Dividend payout ratio (4) |
|
10.34 |
% |
|
9.92 |
% |
|
8.19 |
% |
|
6.67 |
% |
|
5.30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Banking Segment: |
|
|
|
|
|
|
|
|
|
|
|||||
|
Net interest margin (2) |
|
2.99 |
% |
|
3.19 |
% |
|
3.30 |
% |
|
3.37 |
% |
|
3.03 |
% |
|
Net interest margin (taxable equivalent) (3): |
|
|
|
|
|
|
|
|
|
|
|||||
|
As reported |
|
3.00 |
% |
|
3.20 |
% |
|
3.31 |
% |
|
3.38 |
% |
|
3.03 |
% |
|
Impact of purchase accounting |
|
11 bps |
|
20 bps |
|
17 bps |
|
20 bps |
|
13 bps |
|||||
|
Accretion of discount on loans ($000’s) |
|
3,221 |
|
|
6,001 |
|
|
4,851 |
|
|
5,629 |
|
|
3,346 |
|
|
Net recoveries (charge-offs) ($000’s) |
|
62 |
|
|
(510 |
) |
|
564 |
|
|
(2,688 |
) |
|
(567 |
) |
|
Return on average assets |
|
1.36 |
% |
|
1.91 |
% |
|
1.48 |
% |
|
1.37 |
% |
|
1.14 |
% |
|
Fee income ratio |
|
10.5 |
% |
|
8.9 |
% |
|
9.8 |
% |
|
10.2 |
% |
|
9.2 |
% |
|
Efficiency ratio |
|
48.8 |
% |
|
49.7 |
% |
|
48.4 |
% |
|
53.0 |
% |
|
52.7 |
% |
|
Employees’ compensation and benefits ($000’s) |
|
31,500 |
|
|
33,369 |
|
|
30,992 |
|
|
34,007 |
|
|
29,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Broker-Dealer Segment: |
|
|
|
|
|
|
|
|
|
|
|||||
|
Net revenue ($000’s) (5) |
|
126,570 |
|
|
94,145 |
|
|
109,137 |
|
|
150,070 |
|
|
149,190 |
|
|
Employees’ compensation and benefits ($000’s) (6) |
|
82,429 |
|
|
62,289 |
|
|
66,157 |
|
|
87,622 |
|
|
88,211 |
|
|
Variable compensation expense ($000’s) |
|
53,505 |
|
|
34,409 |
|
|
37,412 |
|
|
60,295 |
|
|
60,774 |
|
|
Compensation as a % of net revenue (6) |
|
65.1 |
% |
|
66.2 |
% |
|
60.6 |
% |
|
58.4 |
% |
|
59.1 |
% |
|
Pre-tax margin (7) |
|
13.8 |
% |
|
7.3 |
% |
|
16.2 |
% |
|
22.8 |
% |
|
23.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Mortgage Origination Segment: |
|
|
|
|
|
|
|
|
|
|
|||||
|
Mortgage loan originations – volume ($000’s): |
|
|
|
|
|
|
|
|
|
|
|||||
|
Home purchases |
|
3,948,420 |
|
|
4,018,922 |
|
|
2,902,710 |
|
|
3,683,564 |
|
|
4,183,560 |
|
|
Refinancings |
|
1,646,208 |
|
|
1,881,121 |
|
|
3,281,395 |
|
|
3,114,630 |
|
|
2,266,793 |
|
|
Total mortgage loan originations – volume |
|
5,594,628 |
|
|
5,900,043 |
|
|
6,184,105 |
|
|
6,798,194 |
|
|
6,450,353 |
|
|
Mortgage loan sales – volume ($000’s) |
|
6,195,559 |
|
|
5,524,226 |
|
|
6,350,837 |
|
|
6,571,234 |
|
|
6,521,773 |
|
|
Net gains from mortgage loan sales (basis points): |
|
|
|
|
|
|
|
|
|
|
|||||
|
Loans sold to third parties |
|
359 |
|
|
376 |
|
|
398 |
|
|
451 |
|
|
441 |
|
|
Impact of loans retained by banking segment |
|
(13 |
) |
|
(12 |
) |
|
(10 |
) |
|
(3 |
) |
|
(1 |
) |
|
As reported |
|
346 |
|
|
364 |
|
|
388 |
|
|
448 |
|
|
440 |
|
|
Mortgage servicing rights asset ($000’s) (8) |
|
110,931 |
|
|
124,497 |
|
|
142,125 |
|
|
143,742 |
|
|
127,712 |
|
|
Employees’ compensation and benefits ($000’s) |
|
134,814 |
|
|
145,401 |
|
|
166,248 |
|
|
163,822 |
|
|
161,738 |
|
|
Variable compensation expense ($000’s) |
|
88,153 |
|
|
97,081 |
|
|
115,486 |
|
|
116,736 |
|
|
116,275 |
|
|
(1) |
|
|
Ratios and financial data presented on a consolidated basis. For all 2020 periods presented, information includes discontinued operations. |
|
(2) |
|
|
Net interest margin is defined as net interest income divided by average interest-earning assets. |
|
(3) |
|
|
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, $0.4 million, $0.2 million, $0.3 million, and $0.3 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. |
|
(4) |
|
|
Dividend payout ratio is defined as cash dividends declared per common share divided by basic earnings per common share. |
|
(5) |
|
|
Net revenue is defined as the sum of total broker-dealer net interest income and total broker-dealer noninterest income. |
|
(6) |
|
|
Noted balances and ratios during all prior periods reflect certain reclassifications to conform to current period presentation. |
|
(7) |
|
|
Pre-tax margin is defined as income before income taxes divided by net revenue. |
|
(8) |
|
|
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. |
Contacts
Investor Relations Contact:
Erik Yohe
214-525-4634
eyohe@hilltop-holdings.com