Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2022

Rhea-AI Summary

Hilltop Holdings Inc. (NYSE: HTH) reported a significant decline in financial performance for both Q4 and the full year 2022. For Q4, the company posted income of $25.6 million ($0.39 per diluted share), down from $62.2 million ($0.78 per diluted share) in the prior year. Full-year income dropped to $113.1 million ($1.60 per diluted share) versus $374.5 million ($4.61 per diluted share) in 2021. Key challenges included a 63% drop in net gains from mortgage origination, primarily due to tight housing inventory and rising interest rates. Nonetheless, the Board declared a quarterly cash dividend of $0.16 per share, a 7% increase, and authorized a $75 million stock repurchase program.

Positive

• Quarterly cash dividend increased by 7% to $0.16 per share.
• Authorized a new stock repurchase program for up to $75 million.
• Maintained strong capital levels with a Tier 1 Leverage Ratio of 11.47%.

Negative

• Income to common stockholders decreased 59% year-over-year in Q4.
• Full-year income fell 70% compared to 2021.
• 63% drop in net gains from mortgage sales and origination income.
• Provision for credit losses increased to $3.6 million in Q4 compared to a reversal in the prior year.

DALLAS--(BUSINESS WIRE)-- Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2022. Hilltop produced income to common stockholders of $25.6 million, or $0.39 per diluted share, for the fourth quarter of 2022, compared to $62.2 million, or $0.78 per diluted share, for the fourth quarter of 2021. Income to common stockholders for the full year 2022 was $113.1 million, or $1.60 per diluted share, compared to $374.5 million, or $4.61 per diluted share, for the full year 2021. Hilltop’s financial results for the fourth quarter and full year of 2022 included significant decreases in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income, while the banking segment recorded a provision for credit losses as opposed to a reversal of credit losses in respective prior year periods.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per common share, a 7% increase from the prior quarter, payable on February 24, 2023, to all common stockholders of record as of the close of business on February 10, 2023. Additionally, the Hilltop Board of Directors authorized, subject to regulatory approvals or non-objections, a new stock repurchase program through January 2024, under which Hilltop may repurchase, in the aggregate, up to $75.0 million of its outstanding common stock. During 2022, Hilltop paid $442.3 million to repurchase approximately 14.87 million shares of its common stock at a price of $29.75 per share pursuant to the tender offer completed in May 2022. These shares were returned to the pool of authorized but unissued shares of common stock.

Headwinds during 2022, including the impact of tight housing inventories on mortgage volumes, declining deposit balances, rapid increases in market interest rates and a declining economic forecast, are expected to continue to have an adverse impact on our operating results during 2023. The impacts of such headwinds in 2023 remain uncertain and will depend on developments outside of our control, including, among others, 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, the Russian-Ukraine conflict and its impact on supply chains, and the impact of the pandemic.

Jeremy B. Ford, President and CEO of Hilltop, said “Although we experienced a challenging operating environment in 2022, Hilltop still generated consolidated profitability and finished the year a more resilient company. The abrupt market shifts in the mortgage and fixed income businesses had a negative impact across our company, particularly at PrimeLending and HilltopSecurities, while PlainsCapital Bank delivered across all of its key priorities, including prudent loan growth, sound credit quality and efficiency. I am proud of our teams’ accomplishments during the year, as they continued to deliver high-quality products and services for our clients, while also making tough, yet prudent, expense decisions to right-size our franchise.

“Additionally, our focus on maintaining a strong balance sheet with significant capital and liquidity has positioned Hilltop for long-term success regardless of interest rate and economic volatility. Finally, I am very pleased that Hilltop returned a record amount of capital to stockholders during 2022, primarily through our successful tender offer share repurchase completed in May.”

Fourth Quarter 2022 Highlights for Hilltop:

• The provision for credit losses was $3.6 million during the fourth quarter of 2022, compared to a reversal of credit losses of $0.8 million in the third quarter of 2022 and a reversal of credit losses of $18.6 million in the fourth quarter of 2021;
  • The provision for credit losses during the fourth quarter of 2022 reflected a deteriorating U.S. economic outlook since the prior quarter.
• For the fourth quarter of 2022, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $71.1 million, compared to $192.0 million in the fourth quarter of 2021, a 63.0% decrease;
  • Mortgage loan origination production volume was $2.0 billion during the fourth quarter of 2022, compared to $5.0 billion in the fourth quarter of 2021;
  • Net gains from mortgage loans sold to third parties decreased to 211 basis points during the fourth quarter of 2022, compared to 227 basis points in the third quarter of 2022.
• Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the fourth quarter of 2022 were 0.63% and 4.99%, respectively, compared to 1.41% and 9.93%, respectively, for the fourth quarter of 2021;
• Hilltop’s book value per common share increased to $31.62 at December 31, 2022, compared to $31.46 at September 30, 2022;
• Hilltop’s total assets were $16.3 billion and $16.6 billion at December 31, 2022 and September 30, 2022, respectively;
• Loans¹, net of allowance for credit losses, were $7.6 billion and $7.4 billion at December 31, 2022 and September 30, 2022;
• Non-performing loans were $30.3 million, or 0.33% of total loans, at December 31, 2022, compared to $34.6 million, or 0.39% of total loans, at September 30, 2022;
• Loans held for sale decreased by 2.1% from September 30, 2022 to $1.0 billion at December 31, 2022;
• Total deposits were $11.3 billion and $11.4 billion at December 31, 2022 and September 30, 2022, respectively;
• Hilltop maintained strong capital levels² with a Tier 1 Leverage Ratio³ of 11.47% and a Common Equity Tier 1 Capital Ratio of 18.22% at December 31, 2022;
• Hilltop’s consolidated net interest margin⁴ increased to 3.23% for the fourth quarter of 2022, compared to 3.19% in the third quarter of 2022;
• For the fourth quarter of 2022, noninterest income was $169.8 million, compared to $284.8 million in the fourth quarter of 2021, a 40.4% decrease;
• For the fourth quarter 2022, noninterest expense was $253.4 million, compared to $322.2 million in the fourth quarter of 2021, a 21.4% decrease; and
• Hilltop’s effective tax rate was 26.6% during the fourth quarter of 2022, compared to 24.2% during the same period in 2021.
  • The effective tax rate for the fourth quarter of 2022 was higher than the applicable statutory rate primarily due to the impact of non-deductible compensation expense and other permanent adjustments.

___________________
1	“Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $431.0 million and $402.0 million at December 31, 2022 and September 30, 2022, 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		December 31,				September 30,				June 30,				March 31,				December 31,
(in 000's)		2022				2022				2022				2022				2021
Cash and due from banks		$	1,579,512			$	1,777,584			$	1,783,554			$	2,886,812			$	2,823,138
Federal funds sold			650				663				381				383				385
Assets segregated for regulatory purposes			67,737				109,358				120,816				128,408				221,740
Securities purchased under agreements to resell			118,070				145,365				139,929				256,991				118,262
Securities:
Trading, at fair value			755,032				641,864				593,273				471,763				647,998
Available for sale, at fair value, net			1,658,766				1,584,724				1,562,222				1,462,340				2,130,568
Held to maturity, at amortized cost, net			875,532				889,452				920,583				953,107				267,684
Equity, at fair value			200				209				197				225				250
			3,289,530				3,116,249				3,076,275				2,887,435				3,046,500
Loans held for sale			982,616				1,003,605				1,491,579				1,643,994				1,878,190
Loans held for investment, net of unearned income			8,092,673				7,944,246				7,930,619				7,797,903				7,879,904
Allowance for credit losses			(95,442	)			(91,783	)			(95,298	)			(91,185	)			(91,352	)
Loans held for investment, net			7,997,231				7,852,463				7,835,321				7,706,718				7,788,552
Broker-dealer and clearing organization receivables			1,038,055				1,255,052				1,049,830				1,610,352				1,672,946
Premises and equipment, net			184,950				191,423				195,361				198,906				204,438
Operating lease right-of-use assets			102,443				103,099				106,806				108,180				112,328
Mortgage servicing assets			100,825				156,539				121,688				100,475				86,990
Other assets			527,469				624,235				513,570				546,622				452,880
Goodwill			267,447				267,447				267,447				267,447				267,447
Other intangible assets, net			11,317				12,209				13,182				14,233				15,284
Total assets		$	16,267,852			$	16,615,291			$	16,715,739			$	18,356,956			$	18,689,080
Deposits:
Noninterest-bearing		$	3,968,862			$	4,546,816			$	4,601,643			$	4,694,592			$	4,577,183
Interest-bearing			7,346,887				6,805,198				7,319,143				7,972,110				8,240,894
Total deposits			11,315,749				11,352,014				11,920,786				12,666,702				12,818,077
Broker-dealer and clearing organization payables			966,470				1,176,156				934,818				1,397,836				1,477,300
Short-term borrowings			970,056				942,309				822,649				835,054				859,444
Securities sold, not yet purchased, at fair value			53,023				99,515				135,968				97,629				96,586
Notes payable			346,654				390,354				389,722				395,479				387,904
Operating lease liabilities			126,759				120,635				124,406				125,919				130,960
Other liabilities			417,042				475,425				329,987				347,742				369,606
Total liabilities			14,195,753				14,556,408				14,658,336				15,866,361				16,139,877
Common stock			647				646				646				794				790
Additional paid-in capital			1,046,331				1,043,605				1,039,261				1,275,649				1,274,446
Accumulated other comprehensive loss			(124,961	)			(119,864	)			(95,279	)			(80,565	)			(10,219	)
Retained earnings			1,123,636				1,107,586				1,085,208				1,267,415				1,257,014
Deferred compensation employee stock trust, net			481				479				695				744				752
Employee stock trust			(640	)			(641	)			(954	)			(104	)			(115	)
Total Hilltop stockholders' equity			2,045,494				2,031,811				2,029,577				2,463,933				2,522,668
Noncontrolling interests			26,605				27,072				27,826				26,662				26,535
Total stockholders' equity			2,072,099				2,058,883				2,057,403				2,490,595				2,549,203
Total liabilities & stockholders' equity		$	16,267,852			$	16,615,291			$	16,715,739			$	18,356,956			$	18,689,080

		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)		2022				2022				2021				2022				2021
Interest income:
Loans, including fees		$	117,906			$	109,165			$	96,104			$	416,207			$	404,312
Securities borrowed			14,162				10,938				8,524				44,414				61,667
Securities:
Taxable			23,293				19,642				13,916				75,805				47,633
Tax-exempt			3,002				2,451				2,639				10,013				9,766
Other			21,611				14,276				1,872				44,677				6,595
Total interest income			179,974				156,472				123,055				591,116				529,973
Interest expense:
Deposits			28,238				12,525				4,404				50,412				23,624
Securities loaned			13,179				9,407				6,624				38,570				50,974
Short-term borrowings			10,278				5,550				2,279				20,893				9,065
Notes payable			3,988				3,907				5,871				16,141				21,386
Junior subordinated debentures			—				—				—				—				1,558
Other			849				1,597				(417	)			6,125				384
Total interest expense			56,532				32,986				18,761				132,141				106,991
Net interest income			123,442				123,486				104,294				458,975				422,982
Provision for (reversal of) credit losses			3,638				(780	)			(18,565	)			8,309				(58,213	)
Net interest income after provision for (reversal of) credit losses			119,804				124,266				122,859				450,666				481,195
Noninterest income:
Net gains from sale of loans and other mortgage production income			35,949				57,998				156,103				302,384				825,960
Mortgage loan origination fees			35,198				39,960				35,930				149,598				160,011
Securities commissions and fees			33,143				34,076				32,801				139,122				143,827
Investment and securities advisory fees and commissions			30,661				35,031				42,834				127,399				152,443
Other			34,833				39,910				17,178				113,957				128,034
Total noninterest income			169,784				206,975				284,846				832,460				1,410,275
Noninterest expense:
Employees' compensation and benefits			167,892				200,450				229,717				773,688				1,007,235
Occupancy and equipment, net			23,077				25,041				25,741				97,115				100,602
Professional services			11,555				10,631				9,904				48,495				54,270
Other			50,844				52,616				56,832				207,701				225,291
Total noninterest expense			253,368				288,738				322,194				1,126,999				1,387,398
Income before income taxes			36,220				42,503				85,511				156,127				504,072
Income tax expense			9,642				9,249				20,715				36,833				117,976
Net income			26,578				33,254				64,796				119,294				386,096
Less: Net income attributable to noncontrolling interest			1,022				1,186				2,611				6,160				11,601
Income attributable to Hilltop		$	25,556			$	32,068			$	62,185			$	113,134			$	374,495
Earnings per common share:
Basic:		$	0.40			$	0.50			$	0.79			$	1.61			$	4.64
Diluted:		$	0.39			$	0.50			$	0.78			$	1.60			$	4.61
Cash dividends declared per common share		$	0.15			$	0.15			$	0.12			$	0.60			$	0.48
Weighted average shares outstanding:
Basic			64,602				64,552				78,933				70,434				80,708
Diluted			64,779				64,669				79,427				70,626				81,173

		Three Months Ended December 31, 2022
Segment Results									Mortgage								All Other and				Hilltop
(in 000's)		Banking			Broker-Dealer				Origination				Corporate				Eliminations				Consolidated
Net interest income (expense)		$	109,335		$	14,116			$	(4,464	)		$	(3,279	)		$	7,734			$	123,442
Provision for (reversal of) credit losses			3,925			(287	)			—				—				—				3,638
Noninterest income			11,869			92,803				71,439				1,870				(8,197	)			169,784
Noninterest expense			59,269			87,406				92,532				14,642				(481	)			253,368
Income (loss) before taxes		$	58,010		$	19,800			$	(25,557	)		$	(16,051	)		$	18			$	36,220

		Year Ended December 31, 2022
Segment Results									Mortgage								All Other and				Hilltop
(in 000's)		Banking			Broker-Dealer				Origination				Corporate				Eliminations				Consolidated
Net interest income (expense)		$	413,603		$	51,597			$	(10,529	)		$	(13,135	)		$	17,439			$	458,975
Provision for (reversal of) credit losses			8,250			59				—				—				—				8,309
Noninterest income			49,307			341,943				452,915				7,525				(19,230	)			832,460
Noninterest expense			235,190			355,713				478,904				59,030				(1,838	)			1,126,999
Income (loss) before taxes		$	219,470		$	37,768			$	(36,518	)		$	(64,640	)		$	47			$	156,127

		Three Months Ended												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
Selected Financial Data		2022				2022				2021				2022				2021
Hilltop Consolidated:
Return on average stockholders' equity			4.99	%			6.26	%			9.93	%			5.11	%			15.38	%
Return on average assets			0.63	%			0.79	%			1.41	%			0.69	%			2.17	%
Net interest margin (1)			3.23	%			3.19	%			2.44	%			2.87	%			2.57	%
Net interest margin (taxable equivalent) (2):
As reported			3.24	%			3.20	%			2.45	%			2.88	%			2.58	%
Impact of purchase accounting			7 bps				8 bps				12 bps				7 bps				12 bps
Book value per common share ($)			31.62				31.46				31.95				31.62				31.95
Shares outstanding, end of period (000's)			64,685				64,591				78,965				64,685				78,965
Dividend payout ratio (3)			37.92	%			30.19	%			15.19	%			37.36	%			10.34	%
Banking Segment:
Net interest margin (1)			3.42	%			3.42	%			2.81	%			3.11	%			3.07	%
Net interest margin (taxable equivalent) (2):
As reported			3.43	%			3.43	%			2.82	%			3.11	%			3.08	%
Impact of purchase accounting			8 bps				10 bps				15 bps				9 bps				16 bps
Accretion of discount on loans ($000's)			2,173				2,858				4,716				10,552				18,789
Net recoveries (charge-offs) ($000's)			21				(2,735	)			405				(4,219	)			521
Return on average assets			1.31	%			1.41	%			1.44	%			1.19	%			1.55	%
Fee income ratio			9.8	%			9.9	%			10.8	%			10.7	%			10.0	%
Efficiency ratio			48.9	%			48.9	%			54.2	%			50.8	%			50.3	%
Employees' compensation and benefits ($000's)			34,526				35,934				34,415				137,531				130,276
Broker-Dealer Segment:
Net revenue ($000's) (4)			106,919				114,184				94,569				393,540				424,421
Employees' compensation and benefits ($000's)			60,552				70,274				65,301				251,145				276,176
Variable compensation expense ($000's)			32,042				42,567				35,939				138,705				161,264
Compensation as a % of net revenue			56.6	%			61.5	%			69.1	%			63.8	%			65.1	%
Pre-tax margin (5)			18.5	%			15.3	%			1.8	%			9.6	%			10.3	%
Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases			1,895,731				2,832,136				3,559,137				10,823,002				14,429,190
Refinancings			147,511				211,075				1,430,369				1,837,154				8,239,093
Total mortgage loan originations - volume			2,043,242				3,043,211				4,989,506				12,660,156				22,668,283
Mortgage loan sales - volume ($000's)			2,038,990				3,419,950				4,988,538				13,200,471				23,059,160
Net gains from mortgage loan sales (basis points):
Loans sold to third parties			211				227				362				263				375
Impact of loans retained by banking segment			(19	)			(9	)			(15	)			(11	)			(13	)
As reported			192				218				347				252				362
Mortgage servicing rights asset ($000's) (6)			100,825				156,539				86,990				100,825				86,990
Employees' compensation and benefits ($000's)			64,940				86,079				121,758				353,973				568,221
Variable compensation expense ($000's)			26,724				44,312				73,208				183,804				373,929

___________________
(1)	Net interest margin is defined as net interest income divided by average interest-earning assets.
(2)	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 $0.3 million, $0.4 million, $0.5 million, $1.6 million and $1.7 million, respectively, for the periods presented and for the banking segment were $0.2 million for each of the periods presented.
(3)	Dividend payout ratio is defined as cash dividends declared per common share divided by basic earnings per common share.
(4)	Net revenue is defined as the sum of total broker-dealer net interest income and total broker-dealer noninterest income.
(5)	Pre-tax margin is defined as income before income taxes divided by net revenue.
(6)	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.

		December 31,				September 30,				June 30,				March 31,				December 31,
Capital Ratios		2022				2022				2022				2022				2021
Tier 1 capital (to average assets):
PlainsCapital			10.26	%			10.29	%			9.67	%			9.74	%			10.20	%
Hilltop			11.47	%			11.41	%			10.53	%			12.46	%			12.58	%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital			14.97	%			14.68	%			14.65	%			15.37	%			16.00	%
Hilltop			18.22	%			17.45	%			17.24	%			21.27	%			21.22	%
Tier 1 capital (to risk-weighted assets):
PlainsCapital			14.97	%			14.68	%			14.65	%			15.37	%			16.00	%
Hilltop			18.22	%			17.45	%			17.24	%			21.27	%			21.22	%
Total capital (to risk-weighted assets):
PlainsCapital			15.90	%			15.54	%			15.55	%			16.18	%			16.77	%
Hilltop			20.97	%			20.07	%			19.90	%			23.85	%			23.75	%

		December 31,				September 30,				June 30,				March 31,				December 31,
Non-Performing Assets Portfolio Data		2022				2022				2022				2022				2021
Loans accounted for on a non-accrual basis ($000's) (1):
Commercial real estate			4,269				4,735				4,947				6,153				6,601
Commercial and industrial			9,095				12,078				13,315				18,486				22,478
Construction and land development			1				1				1				1				2
1-4 family residential			16,138				16,968				16,542				18,723				21,123
Consumer			14				16				19				21				23
Broker-dealer			—				—				—				—				—
			29,517				33,798				34,824				43,384				50,227
Troubled debt restructurings included in accruing loans held for investment ($000's)			803				825				857				890				922
Non-performing loans ($000's)			30,320				34,623				35,681				44,274				51,149
Non-performing loans as a % of total loans			0.33	%			0.39	%			0.38	%			0.47	%			0.52	%
Other real estate owned ($000's)			2,325				1,637				1,516				2,175				2,833
Other repossessed assets ($000's)			—				—				—				—				—
Non-performing assets ($000's)			32,645				36,260				37,197				46,449				53,982
Non-performing assets as a % of total assets			0.20	%			0.22	%			0.22	%			0.25	%			0.29	%
Loans past due 90 days or more and still accruing ($000's) (2):			92,099				96,532				82,410				87,489				60,775

___________________
(1)	Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications through January 1, 2022. The banking segment’s COVID-19 payment deferment programs since the second quarter of 2020 allowed 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. For the periods presented, the banking segment’s actions through December 31, 2021 included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $4 million as of December 31, 2021.
(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 December 31,
		2022									2021
		Average				Interest			Annualized		Average				Interest			Annualized
		Outstanding				Earned			Yield or		Outstanding				Earned			Yield or
Net Interest Margin (Taxable Equivalent) Details (1)		Balance				or Paid			Rate		Balance				or Paid			Rate
Assets
Interest-earning assets
Loans held for sale		$	882,322			$	11,634		5.27	%	$	1,852,140			$	13,708		2.96	%
Loans held for investment, gross (2)			7,774,350				106,271		5.42	%		7,695,090				82,396		4.25	%
Investment securities - taxable			2,843,881				23,293		3.28	%		2,677,894				13,916		2.08	%
Investment securities - non-taxable (3)			354,207				3,286		3.71	%		331,959				3,188		3.84	%
Federal funds sold and securities purchased under agreements to resell			161,632				2,173		5.33	%		194,351				164		0.33	%
Interest-bearing deposits in other financial institutions			1,749,902				15,751		3.57	%		2,683,656				943		0.14	%
Securities borrowed			1,350,873				14,162		4.10	%		1,474,421				8,524		2.26	%
Other			56,196				3,686		26.02	%		52,848				765		5.74	%
Interest-earning assets, gross (3)			15,173,363				180,256		4.71	%		16,962,359				123,604		2.89	%
Allowance for credit losses			(92,344	)								(109,555	)
Interest-earning assets, net			15,081,019									16,852,804
Noninterest-earning assets			1,637,295									1,402,216
Total assets		$	16,718,314								$	18,255,020
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits		$	7,154,802			$	28,238		1.57	%	$	7,901,704			$	4,404		0.22	%
Securities loaned			1,274,038				13,179		4.10	%		1,422,303				6,624		1.85	%
Notes payable and other borrowings			1,355,809				15,114		4.42	%		1,233,924				7,733		2.49	%
Total interest-bearing liabilities			9,784,649				56,531		2.29	%		10,557,931				18,761		0.70	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			4,222,143									4,509,891
Other liabilities			652,900									677,433
Total liabilities			14,659,692									15,745,255
Stockholders’ equity			2,032,287									2,484,301
Noncontrolling interest			26,335									25,464
Total liabilities and stockholders' equity		$	16,718,314								$	18,255,020
Net interest income (3)						$	123,725								$	104,843
Net interest spread (3)									2.42	%								2.19	%
Net interest margin (3)									3.24	%								2.45	%

		Year Ended December 31,
		2022									2021
		Average				Interest			Annualized		Average				Interest			Annualized
		Outstanding				Earned			Yield or		Outstanding				Earned			Yield or
Net Interest Margin (Taxable Equivalent) Details (1)		Balance				or Paid			Rate		Balance				or Paid			Rate
Assets
Interest-earning assets
Loans held for sale		$	1,221,235			$	52,315		4.28	%	$	2,293,543			$	64,767		2.82	%
Loans held for investment, gross (2)			7,840,848				363,892		4.71	%		7,645,292				339,548		4.44	%
Investment securities - taxable			2,819,282				75,805		2.69	%		2,493,848				47,582		1.91	%
Investment securities - non-taxable (3)			310,315				11,608		3.74	%		313,703				11,448		3.65	%
Federal funds sold and securities purchased under agreements to resell			162,575				4,098		2.52	%		152,273				372		0.24	%
Interest-bearing deposits in other financial institutions			2,306,960				31,705		1.37	%		2,078,666				2,942		0.14	%
Securities borrowed			1,298,276				44,414		3.37	%		1,445,464				61,667		4.21	%
Other			55,280				8,873		16.05	%		50,929				3,332		6.54	%
Interest-earning assets, gross (3)			16,014,771				592,710		3.70	%		16,473,718				531,658		3.23	%
Allowance for credit losses			(92,828	)								(129,689	)
Interest-earning assets, net			15,921,943									16,344,029
Noninterest-earning assets			1,488,994									1,451,928
Total assets		$	17,410,937								$	17,795,957
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits		$	7,561,501			$	50,412		0.67	%	$	7,722,584			$	23,624		0.31	%
Securities loaned			1,184,498				38,570		3.26	%		1,374,142				50,974		3.71	%
Notes payable and other borrowings			1,293,133				43,158		3.34	%		1,216,381				32,393		2.66	%
Total interest-bearing liabilities			10,039,132				132,140		1.32	%		10,313,107				106,991		1.04	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			4,455,779									4,157,962
Other liabilities			675,629									863,976
Total liabilities			15,170,540									15,335,045
Stockholders’ equity			2,213,756									2,435,185
Noncontrolling interest			26,641									25,727
Total liabilities and stockholders' equity		$	17,410,937								$	17,795,957
Net interest income (3)						$	460,570								$	424,667
Net interest spread (3)									2.38	%								2.19	%
Net interest margin (3)									2.88	%								2.58	%

___________________
(1)	Information presented on a consolidated basis.
(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 rate for the periods presented. The adjustment to interest income was $0.3 million and $0.5 million for the three months ended December 31, 2022 and 2021, respectively, and $1.6 million and $1.7 million for the year ended December 31, 2022 and 2021, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, January 27, 2023. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review fourth quarter and full year 2022 financial results. Interested parties can access the conference call by dialing 1-844-200-6205 (United States), 1-833-950-0062 (Canada) or 1-929-526-1599 (all other locations) and then using the access code 429656. 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 December 31, 2022, Hilltop employed approximately 4,140 people and operated approximately 360 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,” “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; (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; and (v) risks associated with concentration in real estate related loans. 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/20230126005878/en/

Investor Relations Contact:

Erik Yohe

214-525-4634

eyohe@hilltop-holdings.com

Source: Hilltop Holdings Inc.

FAQ

What were Hilltop Holdings' earnings for the fourth quarter of 2022?

Hilltop Holdings reported earnings of $25.6 million, or $0.39 per diluted share, for Q4 2022.

How much did Hilltop Holdings earn for the full year 2022?

For the full year 2022, Hilltop Holdings posted $113.1 million in earnings, translating to $1.60 per diluted share.

What is the new cash dividend declared by Hilltop Holdings?

Hilltop Holdings declared a quarterly cash dividend of $0.16 per common share for Q4 2022.

What is the stock repurchase program amount authorized by Hilltop Holdings?

Hilltop Holdings authorized a stock repurchase program for up to $75 million of its common stock.

What were the main challenges faced by Hilltop Holdings in 2022?

Key challenges included a 63% drop in mortgage segment net gains and an increase in provision for credit losses.