Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the first quarter of 2024. Hilltop produced income to common stockholders of $27.7 million, or $0.42 per diluted share, for the first quarter of 2024, compared to $25.8 million, or $0.40 per diluted share, for the first quarter of 2023. Hilltop’s financial results for the first quarter of 2024 included a decline in net interest income, partially offset by a reversal of credit losses due to an improved economic outlook within the banking segment, an increase in net revenues within certain of the broker-dealer segment’s business lines, and a decline in other mortgage production income, partially offset by an increase in net gains from sale of loans 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 May 24, 2024, to all common stockholders of record as of the close of business on May 10, 2024. Additionally, during the first quarter of 2024, Hilltop paid $9.9 million to repurchase an aggregate of 320,042 shares of its common stock at an average price of $31.04 per share pursuant to the 2024 stock repurchase program. These shares were returned to the pool of authorized but unissued shares of common stock.
The impacts of economic headwinds that began in 2022, and 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, “Hilltop’s operating results for the first quarter of 2024 reflect a general continuation in market trends that were experienced throughout 2023. The elevated interest rate environment continues to impact our net interest margin primarily through increased borrowing costs. Additionally, a lack of housing inventory and pressured home buying affordability limited mortgage origination volumes. Despite these pressures, Hilltop’s robust liquidity position allowed for a return of high-cost deposits.
“During the quarter, PlainsCapital Bank produced an annualized return on average assets of 1.20% highlighting the steady earnings power of the franchise. HilltopSecurities delivered a pre-tax margin of 16% on net revenues of $117 million, primarily due to strong results from the structured finance and wealth management business lines. As previously mentioned, PrimeLending’s results remain challenged due to elevated mortgage rates and suboptimal housing inventory across the country. From a consolidated perspective, we will continue to protect our strong balance sheet position and aim to produce results that improve our tangible book value per share over time.”
First Quarter 2024 Highlights for Hilltop:
- The reversal of credit losses was $2.9 million during the first quarter of 2024, compared to a provision for credit losses of $1.3 million in the fourth quarter of 2023 and a provision for credit losses of $2.3 million in the first quarter of 2023;
- The reversal of credit losses during the first quarter of 2024 reflected a release in the allowance related to improvements to the U.S. economic outlook since the prior quarter, partially offset by increases in specific reserves within the banking segment.
- For the first quarter of 2024, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within the mortgage origination segment was $66.6 million, compared to $68.7 million in the first quarter of 2023, a 3.1% decrease;
- Mortgage loan origination production volume was $1.7 billion during the first quarter of 2024, compared to $1.7 billion in the first quarter of 2023;
- Net gains from mortgage loans sold to third parties increased to 221 basis points during the first quarter of 2024, compared to 189 basis points in the fourth quarter of 2023.
- Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the first quarter of 2024 were 0.74% and 5.23%, respectively, compared to 0.69% and 5.12%, respectively, for the first quarter of 2023;
- Hilltop’s book value per common share increased to $32.66 at March 31, 2024, compared to $32.58 at December 31, 2023;
- Hilltop’s total assets were $16.2 billion and $16.5 billion at March 31, 2024 and December 31, 2023, respectively;
- Loans1, net of allowance for credit losses, were $7.6 billion at each of March 31, 2024 and December 31, 2023, respectively;
- Non-accrual loans were $64.7 million, or 0.73% of total loans, at March 31, 2024, compared to $68.3 million, or 0.76% of total loans, at December 31, 2023;
- Non-accrual loans at March 31, 2024 included a single non-owner occupied commercial real estate credit relationship within our hotel/motel portfolio industry subsector that was reclassified since the prior period from loans held for investment to loans held for sale.
- Loans held for sale decreased by 10.8% from December 31, 2023 to $0.8 billion at March 31, 2024;
- Total deposits were $10.9 billion and $11.1 billion at March 31, 2024 and December 31, 2023, respectively;
- Total estimated uninsured deposits were $4.8 billion, or approximately 44% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $360.5 million, were $4.5 billion, or approximately 41% of total deposits, at March 31, 2024.
- Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 12.49% and a Common Equity Tier 1 Capital Ratio of 19.73% at March 31, 2024;
- Hilltop’s consolidated net interest margin4 decreased to 2.85% for the first quarter of 2024, compared to 2.96% in the fourth quarter of 2023;
- For the first quarter of 2024, noninterest income was $181.6 million, compared to $162.5 million in the first quarter of 2023, an 11.8% increase;
- For the first quarter of 2024, noninterest expense was $250.0 million, compared to $250.5 million in the first quarter of 2023, a 0.2% decrease; and
- Hilltop’s effective tax rate was 22.5% during the first quarter of 2024, compared to 11.6% during the same period in 2023.
- The effective tax rate for the first 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 $332.6 million and $344.1 million at March 31, 2024 and December 31, 2023, respectively. |
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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. |
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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. |
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Conference Call Information
Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, April 19, 2024. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review first quarter 2024 financial results. Interested parties can access the conference call by dialing 800-579-2543 (North America) or 785-424-1789 (International) and then using the conference ID HH1Q24. The conference call also will be webcast simultaneously on Hilltop’s Investor Relations website (http://ir.hilltop.com).