Hilltop Holdings Inc. Announces Financial Results for Second Quarter 2021

Rhea-AI Summary

Hilltop Holdings reported a net income of $99.1 million, or $1.21 per diluted share, for Q2 2021, up from $97.7 million, or $1.08 per diluted share in Q2 2020. The increase was driven by improved macroeconomic conditions and a $28.7 million reversal of credit losses. However, mortgage origination income decreased 29% year-over-year, totaling $241.8 million. The Board declared a quarterly dividend of $0.12 per share. Share repurchases totaled $44.5 million during the quarter. Hilltop maintains strong capital levels amidst ongoing economic uncertainty due to COVID-19.

Positive

• Net income increased to $99.1 million from $97.7 million year-over-year.
• Reversal of credit losses of $28.7 million compared to $5.1 million in Q1 2021.
• Quarterly cash dividend declared at $0.12 per share.
• Strong capital levels maintained with a Tier 1 Leverage Ratio of 12.87%.

Negative

• Mortgage origination segment net gains declined by 29% year-over-year.
• Total noninterest income decreased by 27.4% from $468.1 million to $339.9 million.

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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FAQ

What were Hilltop Holdings' earnings for Q2 2021?

Hilltop Holdings reported earnings of $99.1 million, or $1.21 per diluted share, for Q2 2021.

How much did Hilltop Holdings repurchase in shares during Q2 2021?

Hilltop Holdings repurchased $44.5 million worth of shares during Q2 2021.

What is the dividend declared by Hilltop Holdings for Q2 2021?

The Board declared a quarterly cash dividend of $0.12 per share.

How did Hilltop Holdings' mortgage origination segment perform in Q2 2021?

The mortgage origination segment experienced a 29% decrease in net gains year-over-year.