DALLAS–(BUSINESS WIRE)– Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2023. Hilltop produced income to common stockholders of $37.0 million, or $0.57 per diluted share, for the third quarter of 2023, compared to $32.1 million, or $0.50 per diluted share, for the third quarter of 2022. Hilltop’s financial results for the third quarter of 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 $0.16 per common share, payable on November 28, 2023, to all common stockholders of record as of the close of business on November 13, 2023.
Headwinds that began in 2022, and continued through the first nine months of 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, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2023. The impacts of such headwinds during the remainder of 2023 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, international armed conflicts and their impact on supply chains, and disruptions to the economy and the U.S. banking system caused by high-profile bank failures during early 2023.
Jeremy B. Ford, President and CEO of Hilltop, said “Hilltop’s operating results for the third quarter reflect a general continuation in market pressures experienced in the first half of the year. While PlainsCapital Bank produced strong financial results for the quarter with a 1.20% return on average assets, the competitive environment around deposits resulted in further pressure on the bank’s net interest margin. HilltopSecurities generated robust financial results as the wealth management and structured finance businesses produced strong net revenues, which more than offset challenging market conditions for the public finance and fixed income capital markets businesses. PrimeLending’s results continued to be impacted by the housing market’s lack of inventory, consumer affordability challenges and a stubbornly compressed gain-on-sale margin.
“As we progress into the final quarter of the year, we will continue to prudently manage our balance sheet, closely monitor our expenses and serve our valued clients.”
Third Quarter 2023 Highlights for Hilltop:
- The reversal of credit losses was $40 thousand during the third quarter of 2023, compared to a provision for credit losses of $14.8 million in the second quarter of 2023 and a reversal of credit losses of $0.8 million in the third quarter of 2022;
- The slight reversal of credit losses during the third quarter of 2023 reflected improvements to the U.S. economic outlook and decreases in specific reserves within our broker dealer segment, offset by increases in specific reserves and net portfolio changes within the banking segment.
- For the third 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 $88.7 million, compared to $98.0 million in the third quarter of 2022, a 9.4% decrease;
- Mortgage loan origination production volume was $2.2 billion during the third quarter of 2023, compared to $3.0 billion in the third quarter of 2022;
- Net gains from mortgage loans sold to third parties decreased to 199 basis points during the third quarter of 2023, compared to 207 basis points in the second quarter of 2023.
- Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the third quarter of 2023 were 0.94% and 7.11%, respectively, compared to 0.79% and 6.26%, respectively, for the third quarter of 2022;
- Hilltop’s book value per common share increased to $31.91 at September 30, 2023, compared to $31.71 at June 30, 2023;
- Hilltop’s total assets were $16.4 billion and $17.1 billion at September 30, 2023 and June 30, 2023, respectively;
- Loans1, net of allowance for credit losses, were $7.7 billion and $7.9 billion at September 30, 2023 and June 30, 2023, respectively;
- Non-performing loans were $31.5 million, or 0.34% of total loans, at September 30, 2023, compared to $39.0 million, or 0.40% of total loans, at June 30, 2023;
- Loans held for sale decreased by 20.6% from June 30, 2023 to $1.1 billion at September 30, 2023;
- Total deposits were $11.1 billion and $11.2 billion at September 30, 2023 and June 30, 2023, respectively;
- Total estimated uninsured deposits were $4.4 billion, or approximately 40% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $276.3 million, were $4.2 billion, or approximately 37% of total deposits at September 30, 2023.
- Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 11.92% and a Common Equity Tier 1 Capital Ratio of 18.60% at September 30, 2023;
- Hilltop’s consolidated net interest margin4 decreased to 3.02% for the third quarter of 2023, compared to 3.03% in the second quarter of 2023;
- For the third quarter of 2023, noninterest income was $196.8 million, compared to $207.0 million in the third quarter of 2022, a 4.9% decrease;
- For the third quarter 2023, noninterest expense was $260.0 million, compared to $288.7 million in the third quarter of 2022, a 9.9% decrease; and
- Hilltop’s effective tax rate was 25.2% during the third quarter of 2023, compared to 21.8% during the same period in 2022.
- The effective tax rate for the third quarter was higher than the applicable statutory rate primarily due to the impact of non-deductible compensation expense and other permanent adjustments.
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1 “Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $357.1 million and $358.5 million at September 30, 2023 and June 30, 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. |
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3 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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4 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, October 20, 2023. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third quarter 2023 financial results. Interested parties can access the conference call by dialing 1-888-259-6580 (North America) and then using the access code 31393751. 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 September 30, 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 the U.S. banking system caused by bank failures during early 2023, 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:
Erik Yohe
214-525-4634
eyohe@hilltop.com
Source: Hilltop Holdings Inc.