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Hilltop Holdings Inc. Announces Financial Results for Second Quarter 2021

·12 min read

DALLAS, July 22, 2021--(BUSINESS WIRE)--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

...

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210722005978/en/

Contacts

Investor Relations Contact:
Erik Yohe
214-525-4634
eyohe@hilltop-holdings.com

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