Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2023

DALLAS–(BUSINESS WIRE)– Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2023. Hilltop produced income to common stockholders of $28.7 million, or $0.44 per diluted share, for the fourth quarter of 2023, compared to $25.6 million, or $0.39 per diluted share, for the fourth quarter of 2022. Income to common stockholders for the full year 2023 was $109.6 million, or $1.69 per diluted share, compared to $113.1 million, or $1.60 per diluted share, for the full year 2022. Hilltop’s financial results for the fourth quarter and full year 2023 included decreases in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income, a decline in the net interest income within the banking segment, and increases in net revenues within certain of the broker-dealer segment’s business lines.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.17 per common share, a 6% increase from the prior quarter, payable on February 28, 2024, to all common stockholders of record as of the close of business on February 12, 2024. Additionally, the Hilltop Board of Directors authorized, subject to regulatory approvals or non-objections, a new stock repurchase program through January 2025, under which Hilltop may repurchase, in the aggregate, up to $75.0 million of its outstanding common stock. During 2023, Hilltop paid $5.1 million to repurchase an aggregate of 164,604 shares of its common stock at an average price of $30.95 per share pursuant to the 2023 stock repurchase program, which is inclusive of repurchases during the fourth quarter of 2023. These shares were returned to the pool of authorized but unissued shares of common stock.

Headwinds that began in 2022, and continued through 2023, including the impact of tight housing inventories on mortgage volumes, declining deposit balances, rapid increases in market interest rates and a volatile economic forecast have had an adverse impact on our operating results during 2023. The impacts of such headwinds during 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, “2023 presented a challenging operating environment for Hilltop. Despite the turmoil created by bank failures in the first quarter of 2023, the prudent management of operations at our lines of business and sound stewardship of our balance sheet allowed us to continue to support our clients with exceptional service and end a volatile year with strong capital and liquidity.

“At PlainsCapital Bank, we delivered profitable results in the face of steep competition for deposits and muted loan demand from borrowers. PrimeLending continued to experience a difficult mortgage market as tight inventories and elevated mortgage rates challenged affordability for consumers and production volume. HilltopSecurities offset down markets for our Public Finance and Fixed Income business lines by generating exceptional results from our Structured Finance and Wealth Management platforms. The results at the broker-dealer reflect the value in our diversified offerings at HilltopSecurities.

“As we move into 2024, we will continue to proactively manage costs in this tight operating environment and focus on our conservative, long-term strategy to further build on Hilltop’s franchise value.”

Fourth Quarter 2023 Highlights for Hilltop:

• The provision for credit losses was $1.3 million during the fourth quarter of 2023, compared to a reversal of credit losses of $40 thousand in the third quarter of 2023 and a provision for credit losses of $3.6 million in the fourth quarter of 2022;
  • The provision for credit losses during the fourth quarter of 2023 reflected a slight build in the allowance related to increases in specific reserves and net portfolio changes, partially offset by improvements to the U.S. economic outlook since the prior quarter within the banking segment.

• For the fourth quarter of 2023, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $69.2 million, compared to $71.1 million in the fourth quarter of 2022, a 2.7% decrease;
  • Mortgage loan origination production volume was $1.8 billion during the fourth quarter of 2023, compared to $2.0 billion in the fourth quarter of 2022;
  • Net gains from mortgage loans sold to third parties decreased to 189 basis points during the fourth quarter of 2023, compared to 199 basis points in the third quarter of 2023.
• Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the fourth quarter of 2023 were 0.75% and 5.46%, respectively, compared to 0.63% and 4.99%, respectively, for the fourth quarter of 2022;
• Hilltop’s book value per common share increased to $32.58 at December 31, 2023, compared to $31.91 at September 30, 2023;
• Hilltop’s total assets were $16.5 billion and $16.4 billion at December 31, 2023 and September 30, 2023, respectively;
• Loans¹, net of allowance for credit losses, were $7.6 billion and $7.7 billion at December 31, 2023 and September 30, 2023, respectively;
• Non-performing loans were $68.3 million, or 0.76% of total loans, at December 31, 2023, compared to $31.5 million, or 0.34% of total loans, at September 30, 2023;
  • Non-performing loans during the fourth quarter of 2023 increased from the prior period primarily due to the addition of a single non-owner occupied commercial real estate credit relationship within our hotel/motel portfolio industry subsector of $33.3 million.
• Loans held for sale decreased by 10.9% from September 30, 2023 to $0.9 billion at December 31, 2023;
• Total deposits were $11.1 billion at each of December 31, 2023 and September 30, 2023;
  • Total estimated uninsured deposits were $4.7 billion, or approximately 42% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $315.7 million, were $4.4 billion, or approximately 40% of total deposits, at December 31, 2023.
• Hilltop maintained strong capital levels² with a Tier 1 Leverage Ratio³ of 12.23% and a Common Equity Tier 1 Capital Ratio of 19.31% at December 31, 2023;
• Hilltop’s consolidated net interest margin⁴ decreased to 2.96% for the fourth quarter of 2023, compared to 3.02% in the third quarter of 2023;
• For the fourth quarter of 2023, noninterest income was $179.0 million, compared to $169.8 million in the fourth quarter of 2022, a 5.4% increase;
• For the fourth quarter 2023, noninterest expense was $250.8 million, compared to $253.4 million in the fourth quarter of 2022, a 1.0% decrease; and
• Hilltop’s effective tax rate was 18.7% during the fourth quarter of 2023, compared to 26.6% during the same period in 2022.
  • The effective tax rate for the fourth quarter of 2023 was lower than the applicable statutory rate primarily due to investments in tax-exempt instruments and changes in accumulated tax reserves, partially offset by the impact of nondeductible expenses, non-deductible compensation expense and other permanent adjustments.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, January 26, 2024. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review fourth quarter and full year 2023 financial results. Interested parties can access the conference call by dialing 1-888-886-7786 (North America) or 1-416-764-8658 (International) and then using the access code 16475706. 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 December 31, 2023, Hilltop employed approximately 3,900 people and operated approximately 336 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-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,” “continue,” “could,” “drive,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “position,” “probable,” “progressing,” “projects,” “prudent,” “seeks,” “should,” “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, 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.

Source: Hilltop Holdings Inc.