DALLAS–(BUSINESS WIRE)– 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.
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“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. |
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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. |
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Based on the end of period Tier 1 capital divided by total average assets during the quarter, excluding goodwill and intangible assets. |
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Net interest margin is defined as net interest income divided by average interest-earning assets. |
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.
Investor Relations Contact:
Matt Dunn
214-525-4636
mdunn@hilltop.com
Source: Hilltop Holdings Inc.