Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2020
Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2020. Hilltop produced income from continuing operations to common stockholders of
Including income from discontinued operations related to the insurance business, income applicable to common stockholders was
Hilltop also announced that its Board of Directors declared a quarterly cash dividend of
Additionally, during 2020, Hilltop paid
The COVID-19 pandemic has negatively 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 COVID-19 on our operational and financial performance for 2021 is dependent on certain developments, including, among others, the broader adverse implications of COVID-19 on our customers and clients, potential further disruption and deterioration in the financial services industry, including the mortgage servicing and commercial paper markets, and additional, or extended, federal, state and local government orders and regulations that might be imposed in response to the pandemic, all of which are uncertain.
Jeremy B. Ford, President and CEO of Hilltop, said, “Hilltop’s strong fourth quarter caps off a remarkable, yet unprecedented year. 2020 was a record-breaking year for our company, as PrimeLending funded a record 84 thousand residential mortgage loans, HilltopSecurities generated record net revenue of over
“Although the pandemic caused Hilltop to change the way we work, it did not deter our team from making progress on large and complex initiatives. By leveraging shared services, the coordinated efforts of our technology, properties management and human resources groups enabled us to effectively transition to a work-from-home model for a majority of our employees since last March. Further, we completed the implementation of our new mortgage loan origination system at PrimeLending and the core operating system at HilltopSecurities, both of which are foundational for the future growth in these businesses.
“As we embark upon 2021, we believe Hilltop is well positioned with established businesses, synchronized leadership and robust capital. We also believe our dividend increase and share repurchase authorization demonstrate the strength and momentum of our franchise.”
Fourth Quarter 2020 Highlights for Hilltop:
-
For the fourth quarter of 2020, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was
$297.6 million , compared to$157.5 million in the fourth quarter of 2019, an88.9% increase;-
Mortgage loan origination production volume was
$6.8 billion during the fourth quarter of 2020, compared to$4.4 billion in the fourth quarter of 2019.
-
Mortgage loan origination production volume was
-
The reversal of credit losses was
$3.5 million during the fourth quarter of 2020, compared to$0.6 million in the third quarter of 2020;- The reversal of credit losses during the fourth quarter of 2020 primarily reflected improvements in Bank loan portfolio macroeconomic factor assumptions and qualitative factors from the prior quarter, partially offset by the identified changes in the loan portfolio composition and credit quality.
-
Hilltop’s consolidated annualized return on average assets and return on average equity for the fourth quarter of 2020 were
2.83% and20.56% , respectively, compared to1.40% and9.43% , respectively, for the fourth quarter of 2019; -
Hilltop’s book value per common share increased to
$28.28 at December 31, 2020, compared to$26.72 at September 30, 2020; -
Hilltop’s total assets were
$16.9 billion at both December 31, 2020 and September 30, 2020; -
Loans1, net of allowance for credit losses, were
$7.1 billion at December 31, 2020, compared to$7.3 billion September 30, 2020;-
Includes supporting our impacted banking clients through funding of over 2,800 loans through the Paycheck Protection Program, or PPP, with a remaining balance of approximately
$487 million as of December 31, 2020, compared to approximately$671 million as of September 30, 2020.
-
Includes supporting our impacted banking clients through funding of over 2,800 loans through the Paycheck Protection Program, or PPP, with a remaining balance of approximately
-
Non-performing loans were
$79.9 million , or0.76% of total loans, at December 31, 2020, compared to$84.0 million , or0.80% of total loans, at September 30, 2020; -
During the fourth quarter of 2020, we further supported our impacted banking clients through the approval of COVID-19 related loan modifications, resulting in active deferrals that have not reached the end of their deferral period of approximately
$240 million as of December 31, 2020;-
As of September 30, 2020 and June 30, 2020, active COVID-19 related loan modifications totaled approximately
$291 million and$968 million , respectively; -
During the third and fourth quarters of 2020, COVID-19 related loan modifications of approximately
$714 million have made at least one payment pursuant to agreed-upon contractual terms; - The extent of these loans progressing into non-performing loans during future periods is uncertain.
-
As of September 30, 2020 and June 30, 2020, active COVID-19 related loan modifications totaled approximately
-
Loans held for sale increased by
9.4% from September 30, 2020 to$2.8 billion at December 31, 2020; -
Total deposits were
$11.2 billion at December 31, 2020, compared to$11.3 billion at September 30, 2020; -
Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio2 of
12.64% and a Common Equity Tier 1 Capital Ratio of18.97% at December 31, 2020;- 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.
-
Hilltop’s consolidated net interest margin3 increased to
2.71% for the fourth quarter of 2020, compared to2.56% in the third quarter of 2020; -
For the fourth quarter of 2020, noninterest income from continuing operations was
$447.9 million , compared to$263.6 million in the fourth quarter of 2019, a69.9% increase; -
For the fourth quarter of 2020, noninterest expense from continuing operations was
$402.3 million , compared to$307.9 million in the fourth quarter of 2019, a30.7% increase; and -
Hilltop’s effective tax rate from continuing operations was
25.1% during the fourth quarter of 2020, compared to22.8% during the same period in 2019.
| ________________________________________ | |
| 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 |
2 |
Based on the end of period Tier 1 capital divided by total average assets during the quarter, excluding goodwill and intangible assets. |
3 |
Net interest margin is defined as net interest income divided by average interest-earning assets. |
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
Consolidated Financial and Other Information
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Consolidated Balance Sheets |
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December 31, |
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September 30, |
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June 30, |
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March 31, |
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December 31, |
||||||||||
(in 000's) |
|
2020 |
|
2020 |
|
2020 |
|
2020 |
|
2019 |
||||||||||
Cash and due from banks |
|
$ |
1,062,560 |
|
|
$ |
1,277,865 |
|
|
$ |
1,655,492 |
|
|
$ |
524,370 |
|
|
$ |
433,626 |
|
Federal funds sold |
|
|
386 |
|
|
|
420 |
|
|
|
385 |
|
|
|
401 |
|
|
|
394 |
|
Assets segregated for regulatory purposes |
|
|
290,357 |
|
|
|
221,621 |
|
|
|
194,626 |
|
|
|
178,805 |
|
|
|
157,436 |
|
Securities purchased under agreements to resell |
|
|
80,319 |
|
|
|
90,103 |
|
|
|
161,457 |
|
|
|
23,356 |
|
|
|
59,031 |
|
Securities: |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|||||
Trading, at fair value |
|
|
694,255 |
|
|
|
667,751 |
|
|
|
648,037 |
|
|
|
393,581 |
|
|
|
689,576 |
|
Available for sale, at fair value, net |
|
|
1,462,205 |
|
|
|
1,310,240 |
|
|
|
1,091,348 |
|
|
|
972,318 |
|
|
|
911,493 |
|
Held to maturity, at amortized cost, net |
|
|
311,944 |
|
|
|
323,299 |
|
|
|
343,198 |
|
|
|
355,110 |
|
|
|
386,326 |
|
Equity, at fair value |
|
|
140 |
|
|
|
117 |
|
|
|
122 |
|
|
|
107 |
|
|
|
166 |
|
|
|
|
2,468,544 |
|
|
|
2,301,407 |
|
|
|
2,082,705 |
|
|
|
1,721,116 |
|
|
|
1,987,561 |
|
Loans held for sale |
|
|
2,788,386 |
|
|
|
2,547,975 |
|
|
|
2,592,307 |
|
|
|
2,433,407 |
|
|
|
2,106,361 |
|
Loans held for investment, net of unearned income |
|
|
7,693,141 |
|
|
|
7,945,560 |
|
|
|
7,849,904 |
|
|
|
7,345,250 |
|
|
|
7,381,400 |
|
Allowance for credit losses |
|
|
(149,044 |
) |
|
|
(155,214 |
) |
|
|
(156,383 |
) |
|
|
(106,739 |
) |
|
|
(61,136 |
) |
Loans held for investment, net |
|
|
7,544,097 |
|
|
|
7,790,346 |
|
|
|
7,693,521 |
|
|
|
7,238,511 |
|
|
|
7,320,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Broker-dealer and clearing organization receivables |
|
|
1,404,727 |
|
|
|
1,363,478 |
|
|
|
1,222,627 |
|
|
|
1,838,789 |
|
|
|
1,780,280 |
|
Premises and equipment, net |
|
|
211,595 |
|
|
|
208,078 |
|
|
|
210,975 |
|
|
|
215,261 |
|
|
|
210,375 |
|
Operating lease right-of-use assets |
|
|
105,757 |
|
|
|
109,354 |
|
|
|
119,954 |
|
|
|
113,395 |
|
|
|
114,320 |
|
Mortgage servicing assets |
|
|
143,742 |
|
|
|
127,712 |
|
|
|
81,264 |
|
|
|
30,299 |
|
|
|
55,504 |
|
Other assets |
|
|
555,983 |
|
|
|
607,932 |
|
|
|
627,982 |
|
|
|
846,316 |
|
|
|
404,754 |
|
Goodwill |
|
|
267,447 |
|
|
|
267,447 |
|
|
|
267,447 |
|
|
|
267,447 |
|
|
|
267,447 |
|
Other intangible assets, net |
|
|
20,364 |
|
|
|
21,814 |
|
|
|
23,374 |
|
|
|
25,019 |
|
|
|
26,666 |
|
Assets of discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
249,758 |
|
|
|
248,429 |
|
Total assets |
|
$ |
16,944,264 |
|
|
$ |
16,935,552 |
|
|
$ |
16,934,116 |
|
|
$ |
15,706,250 |
|
|
$ |
15,172,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Noninterest-bearing |
|
$ |
3,612,384 |
|
|
$ |
3,557,603 |
|
|
$ |
3,467,500 |
|
|
$ |
2,865,192 |
|
|
$ |
2,769,556 |
|
Interest-bearing |
|
|
7,629,935 |
|
|
|
7,704,312 |
|
|
|
8,182,098 |
|
|
|
7,082,297 |
|
|
|
6,262,658 |
|
Total deposits |
|
|
11,242,319 |
|
|
|
11,261,915 |
|
|
|
11,649,598 |
|
|
|
9,947,489 |
|
|
|
9,032,214 |
|
Broker-dealer and clearing organization payables |
|
|
1,368,373 |
|
|
|
1,310,835 |
|
|
|
1,158,628 |
|
|
|
1,259,181 |
|
|
|
1,605,518 |
|
Short-term borrowings |
|
|
695,798 |
|
|
|
780,109 |
|
|
|
720,164 |
|
|
|
1,329,948 |
|
|
|
1,424,010 |
|
Securities sold, not yet purchased, at fair value |
|
|
79,789 |
|
|
|
56,023 |
|
|
|
55,340 |
|
|
|
22,768 |
|
|
|
43,817 |
|
Notes payable |
|
|
381,987 |
|
|
|
396,006 |
|
|
|
450,158 |
|
|
|
244,042 |
|
|
|
256,269 |
|
Operating lease liabilities |
|
|
125,450 |
|
|
|
122,402 |
|
|
|
131,411 |
|
|
|
124,123 |
|
|
|
125,619 |
|
Junior subordinated debentures |
|
|
67,012 |
|
|
|
67,012 |
|
|
|
67,012 |
|
|
|
67,012 |
|
|
|
67,012 |
|
Other liabilities |
|
|
632,889 |
|
|
|
502,517 |
|
|
|
409,672 |
|
|
|
408,224 |
|
|
|
348,519 |
|
Liabilities of discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
139,730 |
|
|
|
140,674 |
|
Total liabilities |
|
|
14,593,617 |
|
|
|
14,496,819 |
|
|
|
14,641,983 |
|
|
|
13,542,517 |
|
|
|
13,043,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock |
|
|
822 |
|
|
|
902 |
|
|
|
902 |
|
|
|
901 |
|
|
|
906 |
|
Additional paid-in capital |
|
|
1,317,929 |
|
|
|
1,443,588 |
|
|
|
1,439,686 |
|
|
|
1,437,301 |
|
|
|
1,445,233 |
|
Accumulated other comprehensive income |
|
|
17,763 |
|
|
|
23,790 |
|
|
|
23,813 |
|
|
|
20,939 |
|
|
|
11,419 |
|
Retained earnings |
|
|
986,792 |
|
|
|
942,461 |
|
|
|
797,331 |
|
|
|
676,946 |
|
|
|
644,860 |
|
Deferred compensation employee stock trust, net |
|
|
771 |
|
|
|
774 |
|
|
|
778 |
|
|
|
774 |
|
|
|
776 |
|
Employee stock trust |
|
|
(138 |
) |
|
|
(143 |
) |
|
|
(150 |
) |
|
|
(150 |
) |
|
|
(155 |
) |
Total Hilltop stockholders' equity |
|
|
2,323,939 |
|
|
|
2,411,372 |
|
|
|
2,262,360 |
|
|
|
2,136,711 |
|
|
|
2,103,039 |
|
Noncontrolling interests |
|
|
26,708 |
|
|
|
27,361 |
|
|
|
29,773 |
|
|
|
27,022 |
|
|
|
25,757 |
|
Total stockholders' equity |
|
|
2,350,647 |
|
|
|
2,438,733 |
|
|
|
2,292,133 |
|
|
|
2,163,733 |
|
|
|
2,128,796 |
|
Total liabilities & stockholders' equity |
|
$ |
16,944,264 |
|
|
$ |
16,935,552 |
|
|
$ |
16,934,116 |
|
|
$ |
15,706,250 |
|
|
$ |
15,172,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Three Months Ended |
|
Year Ended |
|||||||||||||
Consolidated Income Statements |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|||||||
(in 000's, except per share data) |
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Loans, including fees |
|
$ |
109,328 |
|
|
$ |
104,955 |
|
|
$ |
115,696 |
|
$ |
433,311 |
|
$ |
460,471 |
Securities borrowed |
|
|
14,445 |
|
|
|
10,705 |
|
|
|
16,196 |
|
|
51,360 |
|
|
69,582 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Taxable |
|
|
9,845 |
|
|
|
11,035 |
|
|
|
15,174 |
|
|
48,273 |
|
|
58,493 |
Tax-exempt |
|
|
1,862 |
|
|
|
1,687 |
|
|
|
1,572 |
|
|
6,698 |
|
|
6,159 |
Other |
|
|
1,381 |
|
|
|
1,446 |
|
|
|
3,180 |
|
|
6,853 |
|
|
15,991 |
Total interest income |
|
|
136,861 |
|
|
|
129,828 |
|
|
|
151,818 |
|
|
546,495 |
|
|
610,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Deposits |
|
|
9,269 |
|
|
|
10,700 |
|
|
|
17,480 |
|
|
47,040 |
|
|
71,509 |
Securities loaned |
|
|
12,014 |
|
|
|
8,729 |
|
|
|
13,989 |
|
|
42,816 |
|
|
60,086 |
Short-term borrowings |
|
|
2,154 |
|
|
|
2,346 |
|
|
|
6,244 |
|
|
11,611 |
|
|
26,778 |
Notes payable |
|
|
4,807 |
|
|
|
4,904 |
|
|
|
2,337 |
|
|
15,897 |
|
|
8,948 |
Junior subordinated debentures |
|
|
609 |
|
|
|
608 |
|
|
|
909 |
|
|
2,772 |
|
|
3,851 |
Other |
|
|
636 |
|
|
|
641 |
|
|
|
99 |
|
|
2,193 |
|
|
545 |
Total interest expense |
|
|
29,489 |
|
|
|
27,928 |
|
|
|
41,058 |
|
|
122,329 |
|
|
171,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Net interest income |
|
|
107,372 |
|
|
|
101,900 |
|
|
|
110,760 |
|
|
424,166 |
|
|
438,979 |
Provision for (reversal of) credit losses |
|
|
(3,482 |
) |
|
|
(602 |
) |
|
|
6,880 |
|
|
96,491 |
|
|
7,206 |
Net interest income after provision for (reversal of) credit losses |
|
|
110,854 |
|
|
|
102,502 |
|
|
|
103,880 |
|
|
327,675 |
|
|
431,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Net gains from sale of loans and other mortgage production income |
|
|
247,360 |
|
|
|
307,896 |
|
|
|
120,573 |
|
|
1,001,059 |
|
|
504,935 |
Mortgage loan origination fees |
|
|
50,193 |
|
|
|
47,681 |
|
|
|
36,939 |
|
|
171,769 |
|
|
130,003 |
Securities commissions and fees |
|
|
35,921 |
|
|
|
32,496 |
|
|
|
33,205 |
|
|
142,720 |
|
|
137,742 |
Investment and securities advisory fees and commissions |
|
|
42,161 |
|
|
| |||||||||||
