Hilltop Holdings Inc. Announces Financial Results for Second Quarter 2021
07/22/2021 - 05:15 PM
Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the second quarter of 2021. Hilltop produced income from continuing operations to common stockholders of $99.1 million , or $1.21 per diluted share, for the second quarter of 2021, compared to $97.7 million , or $1.08 per diluted share, for the second quarter of 2020. Hilltop’s financial results from continuing operations for the second quarter of 2021 benefited from the significant improvement in the macroeconomic outlook and resulting impact on loan expected loss rates within the banking segment. However, Hilltop also realized a decrease in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income.
Including income from discontinued operations related to the former insurance business, income applicable to common stockholders was $99.1 million , or $1.21 per diluted share, for the second quarter of 2021, compared to $128.5 million , or $1.42 per diluted share, for the second quarter of 2020.
Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per common share, payable on August 31, 2021, to all common stockholders of record as of the close of business on August 13, 2021. Additionally, during the second quarter of 2021, Hilltop paid $44.5 million to repurchase an aggregate of 1,240,843 shares of its common stock at an average price of $35.85 per share pursuant to the 2021 stock repurchase program. These shares were returned to the pool of authorized but unissued shares of common stock.
Furthermore, in July 2021, the Hilltop Board of Directors authorized, subject to regulatory review, an increase to the aggregate amount of common stock that Hilltop may repurchase under the aforementioned stock repurchase program to $150.0 million , an increase of $75.0 million . As a result of share repurchases during 2021, Hilltop has approximately $100 million of available share repurchase capacity through expiration of the stock repurchase program in January 2022.
The COVID-19 pandemic has adversely 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 the pandemic on our operational and financial performance for the remainder of 2021 is currently uncertain and will depend on certain developments outside of our control, including, among others, the ongoing distribution and effectiveness of vaccines, government stimulus, the ultimate impact of the pandemic on our customers and clients, and additional, or extended, federal, state and local government orders and regulations that might be imposed in response to the pandemic.
Jeremy B. Ford, President and CEO of Hilltop, said, “I am very pleased with the results from the second quarter and first half of 2021. Hilltop’s performance this year highlights the versatility of our franchise and the value of our diversified operating model. During the second quarter, credit trends at the bank continued to improve and we believe we are well situated for growth with robust liquidity and capital levels. The mortgage team has proven nimble across the country as the market has evolved over the past year and a half, and we also believe we are well positioned to grow our purchase-focused customer base. Although HilltopSecurities realized mixed results primarily due to market volatility, the broker-dealer remains healthy with a diverse revenue base. In addition to our strong operating performance, Hilltop distributed approximately $10 million of dividends and repurchased approximately $45 million of shares in the open market.”
Second Quarter 2021 Highlights for Hilltop:
The reversal of credit losses was $28.7 million during the second quarter of 2021, compared to a reversal of credit losses of $5.1 million in the first quarter of 2021;
The significant reversal of credit losses during the second quarter of 2021 primarily reflected improvements in the macroeconomic forecast assumptions and positive risk rating grade migration, including a high concentration of credits within the restaurant and commercial real estate industry sectors;
For the second quarter of 2021, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $241.8 million , compared to $340.7 million in the second quarter of 2020, a 29.0% decrease;
Mortgage loan origination production volume was $5.9 billion during the second quarter of 2021, compared to $6.1 billion in the second quarter of 2020;
Net gains from mortgage loans sold to third parties declined to 376 basis points during the second quarter of 2021, compared to 398 basis points in the first quarter of 2021.
Hilltop’s consolidated annualized return on average assets and return on average equity for the second quarter of 2021 were 2.29% and 16.42% , respectively, compared to 3.30% and 23.32% , respectively, for the second quarter of 2020;
Hilltop’s book value per common share increased to $30.44 at June 30, 2021, compared to $29.41 at March 31, 2021;
Hilltop’s total assets were $17.7 billion at both June 30, 2021 and March 31, 2021;
Loans1 , net of allowance for credit losses, decreased to $6.9 billion at June 30, 2021 compared to $7.1 billion at March 31, 2021;
Includes supporting our impacted banking clients through funding of over 4,100 loans through both rounds of the Paycheck Protection Program, or PPP, with a remaining balance of approximately $261 million as of June 30, 2021, compared to approximately $492 million as of March 31, 2021;
Through July 16, 2021, the Small Business Administration, or SBA, had approved approximately 2,600 initial round PPP forgiveness applications from the Bank totaling approximately $643 million , with initial round PPP loans of approximately $9 million pending SBA review and approval;
Submissions to SBA of second round PPP forgiveness applications by the Bank in early stages.
Non-performing loans were $69.0 million , or 0.66% of total loans, at June 30, 2021, compared to $79.9 million , or 0.77% of total loans, at March 31, 2021;
We further supported our impacted banking clients during 2020 through the approval of COVID-19 related loan modifications of approximately $1.0 billion , and continued such support during 2021, resulting in a portfolio of active deferrals that have not reached the end of their deferral period of approximately $76 million as of June 30, 2021, compared to approximately $130 million in active deferment as of March 31, 2021;
While the majority of the portfolio of COVID-19 related loan modifications no longer require deferral, such loans may continue to represent elevated risk; therefore, monitoring of these loans continues;
The extent of these loans progressing into non-performing loans during future periods is uncertain.
Loans held for sale increased by 13.6% from March 31, 2021 to $2.9 billion at June 30, 2021;
Total deposits were $11.7 billion at both June 30, 2021 and March 31, 2021;
Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 12.87% and a Common Equity Tier 1 Capital Ratio of 20.22% at June 30, 2021;
Hilltop’s consolidated net interest margin4 decreased to 2.62% for the second quarter of 2021, compared to 2.69% in the first quarter of 2021;
Includes previously deferred interest income of $5.4 million during the second quarter of 2021 related to PPP loan-related origination fees.
For the second quarter of 2021, noninterest income from continuing operations was $339.9 million , compared to $468.1 million in the second quarter of 2020, a 27.4% decrease;
Includes $6.5 million of pre-tax gains associated with observable transactions related to two merchant bank equity investments.
For the second quarter of 2021, noninterest expense from continuing operations was $343.4 million , compared to $370.2 million in the second quarter of 2020, a 7.3% decrease; and
Hilltop’s effective tax rate from continuing operations was 23.5% during the second quarter of 2021, compared to 23.3% during the same period in 2020.
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 $154.1 million . During 2020, Hilltop recognized an aggregate gain associated with this transaction of $36.8 million , net of transaction costs. Accordingly, insurance segment results and its assets and liabilities have been presented as discontinued operations. The resulting book gain from this sale transaction was not recognized for tax purposes pursuant to the rules promulgated under the Internal Revenue Code.
___________________
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 $628.3 million and $519.9 million at June 30, 2021 and March 31, 2021, respectively.
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.
3
Based on the end of period Tier 1 capital divided by total average assets during the quarter, excluding goodwill and intangible assets.
4
Net interest margin is defined as net interest income divided by average interest-earning assets.
Consolidated Financial and Other Information
Consolidated Balance Sheets
June 30,
March 31,
December 31,
September 30,
June 30,
(in 000's)
2021
2021
2020
2020
2020
Cash and due from banks
$
1,372,818
$
1,564,489
$
1,062,560
$
1,277,865
$
1,655,492
Federal funds sold
387
396
386
420
385
Assets segregated for regulatory purposes
207,284
273,393
290,357
221,621
194,626
Securities purchased under agreements to resell
202,638
106,342
80,319
90,103
161,457
Securities:
Trading, at fair value
682,483
528,712
694,255
667,751
648,037
Available for sale, at fair value, net
1,817,807
1,715,406
1,462,205
1,310,240
1,091,348
Held to maturity, at amortized cost, net
288,776
300,088
311,944
323,299
343,198
Equity, at fair value
193
189
140
117
122
2,789,259
2,544,395
2,468,544
2,301,407
2,082,705
Loans held for sale
2,885,458
2,538,986
2,788,386
2,547,975
2,592,307
Loans held for investment, net of unearned income
7,645,227
7,810,657
7,693,141
7,945,560
7,849,904
Allowance for credit losses
(115,269
)
(144,499
)
(149,044
)
(155,214
)
(156,383
)
Loans held for investment, net
7,529,958
7,666,158
7,544,097
7,790,346
7,693,521
Broker-dealer and clearing organization receivables
1,403,447
1,596,817
1,404,727
1,363,478
1,222,627
Premises and equipment, net
212,402
213,304
211,595
208,078
210,975
Operating lease right-of-use assets
115,698
101,055
105,757
109,354
119,954
Mortgage servicing assets
124,497
142,125
143,742
127,712
81,264
Other assets
535,536
648,895
555,983
607,932
627,982
Goodwill
267,447
267,447
267,447
267,447
267,447
Other intangible assets, net
17,705
19,035
20,364
21,814
23,374
Total assets
$
17,664,534
$
17,682,837
$
16,944,264
$
16,935,552
$
16,934,116
Deposits:
Noninterest-bearing
$
4,231,082
$
4,031,181
$
3,612,384
$
3,557,603
$
3,467,500
Interest-bearing
7,502,703
7,701,598
7,629,935
7,704,312
8,182,098
Total deposits
11,733,785
11,732,779
11,242,319
11,261,915
11,649,598
Broker-dealer and clearing organization payables
1,439,620
1,546,227
1,368,373
1,310,835
1,158,628
Short-term borrowings
915,919
676,652
695,798
780,109
720,164
Securities sold, not yet purchased, at fair value
132,950
97,055
79,789
56,023
55,340
Notes payable
396,653
401,713
381,987
396,006
450,158
Operating lease liabilities
134,019
120,339
125,450
122,402
131,411
Junior subordinated debentures
67,012
67,012
67,012
67,012
67,012
Other liabilities
348,200
595,045
632,889
502,517
409,672
Total liabilities
15,168,158
15,236,822
14,593,617
14,496,819
14,641,983
Common stock
812
823
822
902
902
Additional paid-in capital
1,302,439
1,319,518
1,317,929
1,443,588
1,439,686
Accumulated other comprehensive income
7,093
3,486
17,763
23,790
23,813
Retained earnings
1,159,304
1,094,727
986,792
942,461
797,331
Deferred compensation employee stock trust, net
754
752
771
774
778
Employee stock trust
(121
)
(121
)
(138
)
(143
)
(150
)
Total Hilltop stockholders' equity
2,470,281
2,419,185
2,323,939
2,411,372
2,262,360
Noncontrolling interests
26,095
26,830
26,708
27,361
29,773
Total stockholders' equity
2,496,376
2,446,015
2,350,647
2,438,733
2,292,133
Total liabilities & stockholders' equity
$
17,664,534
$
17,682,837
$
16,944,264
$
16,935,552
$
16,934,116
Three Months Ended
Consolidated Income Statements
June 30,
March 31,
December 31,
September 30,
June 30,
(in 000's, except per share data)
2021
2021
2020
2020
2020
Interest income:
Loans, including fees
$
104,162
$
104,277
$
109,328
$
104,955
$
107,860
Securities borrowed
15,586
28,972
14,445
10,705
12,883
Securities:
Taxable
11,125
10,251
9,845
11,035
11,698
Tax-exempt
2,338
2,102
1,862
1,687
1,539
Other
1,607
1,321
1,381
1,446
951
Total interest income
134,818
146,923
136,861
129,828
134,931
Interest expense:
Deposits
6,176
7,741
9,269
10,700
11,947
Securities loaned
12,345
25,486
12,014
8,729
10,796
Short-term borrowings
2,374
2,013
2,154
2,346
2,367
Notes payable
5,253
4,797
4,807
4,904
3,768
Junior subordinated debentures
577
562
609
608
705
Other
177
642
636
641
790
Total interest expense
26,902
41,241
29,489
27,928
30,373
Net interest income
107,916
105,682
107,372
101,900
104,558
Provision for (reversal of) credit losses
(28,720
)
(5,109
)
(3,482
)
(602
)
66,026
Net interest income after provision for (reversal of) credit losses
136,636
110,791
110,854
102,502
38,532
Noninterest income:
Net gains from sale of loans and other mortgage production income
199,625
267,080
247,360
307,896
295,317
Mortgage loan origination fees
42,146
43,155
50,193
47,681
45,341
Securities commissions and fees
38,300
38,314
35,921
32,496
34,234
Investment and securities advisory fees and commissions
32,268
27,695
42,161
36,866
29,120
Other
27,560
41,341
72,296
77,772
64,113
Total noninterest income
339,899
417,585
447,931
502,711
468,125
Noninterest expense:
Employees' compensation and benefits
248,486
270,353
291,489
294,907
276,893
Occupancy and equipment, net
25,004
24,429
27,596
26,124
26,174
Professional services
16,239
13,585
21,927
17,522
15,737
Other
53,639
58,295
61,336
60,792
51,405
Total noninterest expense
343,368
366,662
402,348
399,345
370,209
Income from continuing operations before income taxes
133,167
161,714
156,437
205,868
136,448
Income tax expense
31,234
37,770
39,295
46,820
31,808
Income from continuing operations
101,933
123,944
117,142
159,048
104,640
Income from discontinued operations, net of income taxes
—
—
3,734
736
30,775
Net income
101,933
123,944
120,876
159,784
135,415
Less: Net income attributable to noncontrolling interest
2,873
3,599
4,431
6,505
6,939
Income attributable to Hilltop
$
99,060
$
120,345
$
116,445
$
153,279
$
128,476
Earnings per common share:
Basic:
Earnings from continuing operations
$
1.21
$
1.46
$
1.31
$
1.69
$
1.08
Earnings from discontinued operations
—
—
0.04
0.01
0.34
$
1.21
$
1.46
$
1.35
$
1.70
$
1.42
Diluted:
Earnings from continuing operations
$
1.21
$
1.46
$
1.30
$
1.69
$
1.08
Earnings from discontinued operations
—
—
0.05
0.01
0.34
$
1.21
$
1.46
$
1.35
$
1.70
$
1.42
Cash dividends declared per common share
$
0.12
$
0.12
$
0.09
$
0.09
$
0.09
Weighted average shares outstanding:
Basic
81,663
82,169
86,269
90,200
90,164
Diluted
82,199
82,657
86,420
90,200
90,164
Three Months Ended June 30, 2021
Segment Results
Mortgage
All Other and
Continuing
(in 000's)
Banking
Broker-Dealer
Origination
Corporate
Eliminations
Operations
Net interest income (expense)
$
105,468
$
10,682
$
(5,953
)
$
(4,687
)
$
2,406
$
107,916
Provision for (reversal of) credit losses
(28,775
)
55
—
—
—
(28,720
)
Noninterest income
10,242
83,463
241,965
6,877
(2,648
)
339,899
Noninterest expense
57,514
87,234
186,963
12,072
(415
)
343,368
Income (loss) from continuing operations before taxes
$
86,971
$
6,856
$
49,049
$
(9,882
)
$
173
$
133,167
Six Months Ended June 30, 2021
Segment Results
Mortgage
All Other and
Continuing
(in 000's)
Banking
Broker-Dealer
Origination
Corporate
Eliminations
Operations
Net interest income (expense)
$
209,352
$
21,196
$
(13,051
)
$
(9,379
)
$
5,480
$
213,598
Provision for (reversal of) credit losses
(33,950
)
121
—
—
—
(33,829
)
Noninterest income
21,566
182,086
552,409
7,383
(5,960
)
757,484
Noninterest expense
113,302
178,638
397,297
21,660
(867
)
710,030
Income (loss) from continuing operations before taxes
$
151,566
$
24,523
$
142,061
$
(23,656
)
$
387
$
294,881
Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
Selected Financial Data
2021
2021
2020
2020
2020
Hilltop Consolidated (1) :
Return on average stockholders' equity
16.42
%
20.58
%
20.56
%
25.94
%
23.32
%
Return on average assets
2.29
%
2.90
%
2.83
%
3.71
%
3.30
%
Net interest margin (2)
2.62
%
2.69
%
2.71
%
2.56
%
2.80
%
Net interest margin (taxable equivalent) (3) :
As reported
2.63
%
2.69
%
2.72
%
2.57
%
2.81
%
Impact of purchase accounting
16 bps
13 bps
15 bps
10 bps
10 bps
Without purchase accounting impact
2.47
%
2.56
%
2.57
%
2.47
%
2.71
%
Book value per common share ($)
30.44
29.41
28.28
26.72
25.08
Shares outstanding, end of period (000's)
81,153
82,261
82,185
90,238
90,222
Dividend payout ratio (4)
9.92
%
8.19
%
6.67
%
5.30
%
6.32
%
Banking Segment:
Net interest margin (2)
3.19
%
3.30
%
3.37
%
3.03
%
3.11
%
Net interest margin (taxable equivalent) (3) :
As reported
3.20
%
3.31
%
3.38
%
3.03
%
3.12
%
Impact of purchase accounting
20 bps
17 bps
20 bps
13 bps
12 bps
Accretion of discount on loans ($000 's)
6,001
4,851
5,629
3,346
3,217
Net recoveries (charge-offs) ($000 's)
(510
)
564
(2,688
)
(567
)
(16,382
)
Return on average assets
1.91
%
1.48
%
1.37
%
1.14
%
(0.42
)%
Fee income ratio
8.9
%
9.8
%
10.2
%
9.2
%
10.2
%
Efficiency ratio
49.7
%
48.4
%
53.0
%
52.7
%
54.1
%
Employees' compensation and benefits ($000 's)
33,369
30,992
34,007
29,808
31,583
Broker-Dealer Segment:
Net revenue ($000 's) (5)
94,145
109,137
150,070
149,190
132,624
Employees' compensation and benefits ($000 's) (6)
62,289
66,157
87,622
88,211
79,847
Variable compensation expense ($000 's)
34,409
37,412
60,295
60,774
52,372
Compensation as a % of net revenue (6)
66.2
%
60.6
%
58.4
%
59.1
%
60.2
%
Pre-tax margin (7)
7.3
%
16.2
%
22.8
%
23.7
%
21.0
%
Mortgage Origination Segment:
Mortgage loan originations - volume ($000 's):
Home purchases
4,018,922
2,902,710
3,683,564
4,183,560
3,204,573
Refinancings
1,881,121
3,281,395
3,114,630
2,266,793
2,894,486
Total mortgage loan originations - volume
5,900,043
6,184,105
6,798,194
6,450,353
6,099,059
Mortgage loan sales - volume ($000 's)
5,524,226
6,350,837
6,571,234
6,521,773
5,934,914
Net gains from mortgage loan sales (basis points):
Loans sold to third parties
376
398
451
441
369
Impact of loans retained by banking segment
(12
)
(10
)
(3
)
(1
)
(1
)
As reported
364
388
448
440
368
Mortgage servicing rights asset ($000 's) (8)
124,497
142,125
143,742
127,712
81,263
Employees' compensation and benefits ($000 's)
145,401
166,248
163,822
161,738
160,824
Variable compensation expense ($000 's)
97,081
115,486
116,736
116,275
113,826
____________________
(1)
Ratios and financial data presented on a consolidated basis. For all 2020 periods presented, information includes discontinued operations and as of June 30, 2020 those assets and liabilities of discontinued operations.
(2)
Net interest margin is defined as net interest income divided by average interest-earning assets.
(3)
Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Taxable equivalent adjustments are based on the applicable 21% federal income tax rate for all periods presented. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. The taxable equivalent adjustments to interest income for Hilltop (consolidated) were $0.4 million , $0.2 million , $0.3 million , $0.3 million , and $0.3 million , respectively, for the periods presented and for the banking segment were $0.2 million , $0.2 million , $0.2 million , $0.2 million , and $0.2 million , respectively, for the periods presented.
(4)
Dividend payout ratio is defined as cash dividends declared per common share divided by basic earnings per common share.
(5)
Net revenue is defined as the sum of total broker-dealer net interest income and total broker-dealer noninterest income.
(6)
Noted balances and ratios during all prior periods reflect certain reclassifications to conform to current period presentation.
(7)
Pre-tax margin is defined as income before income taxes divided by net revenue.
(8)
Reported on a consolidated basis and therefore does not include mortgage servicing rights assets related to loans serviced for the banking segment, which are eliminated in consolidation.
June 30,
March 31,
December 31,
September 30,
June 30,
Capital Ratios
2021
2021
2020
2020
2020
Tier 1 capital (to average assets):
PlainsCapital
10.22%
10.50%
10.44%
10.19%
10.37%
Hilltop
12.87%
13.01%
12.64%
13.03%
12.60%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital
15.00%
14.74%
14.40%
14.64%
14.03%
Hilltop
20.22%
19.63%
18.97%
19.85%
18.46%
Tier 1 capital (to risk-weighted assets):
PlainsCapital
15.00%
14.74%
14.40%
14.64%
14.03%
Hilltop
20.82%
20.22%
19.57%
20.46%
19.06%
Total capital (to risk-weighted assets):
PlainsCapital
15.95%
15.64%
15.27%
15.49%
14.88%
Hilltop
23.48%
22.96%
22.34%
23.22%
21.82%
June 30,
March 31,
December 31,
September 30,
June 30,
Non-Performing Assets Portfolio Data
2021
2021
2020
2020
2020
Loans accounted for on a non-accrual basis ($000 's) (1) :
Commercial real estate
7,211
10,668
11,133
14,079
13,743
Commercial and industrial
33,033
36,144
34,049
38,708
32,259
Construction and land development
474
501
507
528
1,404
1-4 family residential
27,100
30,937
32,263
28,707
20,552
Consumer
26
26
28
53
308
Broker-dealer
—
—
—
—
—
67,844
78,276
77,980
82,075
68,266
Troubled debt restructurings included in accruing loans held for investment ($000 's)
1,139
1,584
1,954
1,919
2,025
Non-performing loans ($000 's)
68,983
79,860
79,934
83,994
70,291
Non-performing loans as a % of total loans
0.66%
0.77%
0.76%
0.80%
0.67%
Other real estate owned ($000 's)
21,078
19,899
21,289
25,387
26,602
Other repossessed assets ($000 's)
—
—
101
239
315
Non-performing assets ($000 's)
90,061
99,759
101,324
109,620
97,208
Non-performing assets as a % of total assets
0.51%
0.56%
0.60%
0.65%
0.57%
Loans past due 90 days or more and still accruing ($000 's) (2) :
245,828
265,230
243,630
187,105
124,682
____________________
(1)
Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications. The Bank’s COVID-19 payment deferral programs allow for a deferral of principal and/or interest payments with such deferred principal payments due and payable on the maturity date of the existing loan. Since the second quarter of 2020, the Bank’s actions included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $76 million as of June 30, 2021, down from approximately $130 million as of March 31, 2021. The extent to which these measures will impact the Bank is uncertain, and any progression of loans, whether receiving COVID-19 payment deferrals or not, into non-accrual status, during future periods is uncertain and will depend on future developments that cannot be predicted.
(2)
Loans past due 90 days or more and still accruing were primarily comprised of loans held for sale and guaranteed by U.S. government agencies, including loans that are subject to repurchase, or have been repurchased, by PrimeLending.
Three Months Ended June 30,
2021
2020
Average
Interest
Annualized
Average
Interest
Annualized
Outstanding
Earned or
Yield or
Outstanding
Earned or
Yield or
Net Interest Margin (Taxable Equivalent) Details (1)
Balance
Paid
Rate
Balance
Paid
Rate
Assets
Interest-earning assets
Loans held for sale
$
2,450,897
$
17,128
2.80
%
$
2,308,368
$
20,036
3.47
%
Loans held for investment, gross (2)
7,725,906
87,034
4.48
%
7,744,395
87,823
4.50
%
Investment securities - taxable
2,443,486
11,106
1.82
%
1,681,336
12,489
2.97
%
Investment securities - non-taxable (3)
320,685
2,731
3.41
%
215,645
1,822
3.38
%
Federal funds sold and securities purchased under agreements to resell
159,400
—
0.00
%
61,956
(7
)
(0.04
)%
Interest-bearing deposits in other financial institutions
1,861,861
628
0.14
%
1,569,277
541
0.14
%
Securities borrowed
1,490,097
15,586
4.14
%
1,375,849
12,883
3.70
%
Other
49,579
994
8.04
%
59,917
439
2.95
%
Interest-earning assets, gross (3)
16,501,911
135,207
3.26
%
15,016,743
136,026
3.60
%
Allowance for credit losses
(144,105
)
(102,216
)
Interest-earning assets, net
16,357,806
14,914,527
Noninterest-earning assets
1,475,422
1,603,791
Total assets
$
17,833,228
$
16,518,318
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits
$
7,740,066
$
6,176
0.32
%
$
7,925,031
$
11,946
0.61
%
Securities loaned
1,411,961
12,345
3.51
%
1,280,958
10,797
3.39
%
Notes payable and other borrowings
1,271,609
8,381
2.64
%
1,110,516
7,998
2.88
%
Total interest-bearing liabilities
10,423,636
26,902
1.03
%
10,316,505
30,741
1.20
%
Noninterest-bearing liabilities
Noninterest-bearing deposits
4,090,425
3,303,165
Other liabilities
872,916
658,416
Total liabilities
15,386,977
14,278,086
Stockholders’ equity
2,420,436
2,215,538
Noncontrolling interest
25,815
24,694
Total liabilities and stockholders' equity
$
17,833,228
$
16,518,318
Net interest income (3)
$
108,305
$
105,285
Net interest spread (3)
2.23
%
2.40
%
Net interest margin (3)
2.63
%
2.81
%
____________________
(1)
Information presented on a consolidated basis. For the three months ended June 30, 2020, information includes discontinued operations and those assets and liabilities classified as discontinued operations.
(2)
Average balance includes non-accrual loans.
(3)
Presented on a taxable-equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rates for the periods presented. The adjustment to interest income was $0.4 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively.
Conference Call Information
Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, July 23, 2021. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review second quarter 2021 financial results. Interested parties can access the conference call by dialing 1-877-508-9457 (domestic) or 1-412-317-0789 (international). The conference call also will be webcast simultaneously on Hilltop’s Investor Relations website (http://ir.hilltop-holdings.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, 2021, Hilltop employed approximately 5,025 people and operated approximately 410 locations in 47 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,” “could,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “probable,” “progressing,” “projects,” “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 COVID-19 pandemic and the response of governmental authorities to the pandemic, which have had and may continue to have an adverse impact on the global economy and our business operations and performance; (ii) the credit risks of lending activities, including our ability to estimate credit losses, as well as the effects of, and trends in, loan delinquencies and write-offs; (iii) effectiveness of our data security controls in the face of cyber attacks; (iv) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (v) risks associated with concentration in real estate related loans; and (vi) changes in the interest rate environment and transitions away from the London Interbank Offered Rate. 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.
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