Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2021

Rhea-AI Summary

Hilltop Holdings Inc. (HTH) reported Q3 2021 income from continuing operations of $92.9 million ($1.15 per share), down from $152.5 million ($1.69 per share) in Q3 2020. The decline was driven by reduced gains from mortgage origination and broker-dealer segments. Despite this, there was an improvement in asset quality and a quarterly dividend of $0.12 was declared. Hilltop repurchased approximately $74 million in shares and increased its stock repurchase capacity to $200 million. The ongoing pandemic continues to pose risks to the business outlook.

Positive

• Improved asset quality, reflecting sound lending practices.
• Steady increase in deposits totaling $12.1 billion in Q3 2021.
• Dividends of $10 million and $74 million in share repurchases executed during the quarter.

Negative

• 32% decrease in mortgage origination segment net gains from sales of loans compared to Q3 2020.
• Consolidated return on average assets and return on average equity decreased to 2.13% and 14.96% from 3.71% and 25.94%, respectively.
• Ongoing uncertainties regarding COVID-19's impact on financial performance.

DALLAS--(BUSINESS WIRE)-- Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2021. Hilltop produced income from continuing operations to common stockholders of $92.9 million, or $1.15 per diluted share, for the third quarter of 2021, compared to $152.5 million, or $1.69 per diluted share, for the third quarter of 2020. Hilltop’s financial results from continuing operations for the third quarter of 2021 included a decrease in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income as well as declines in net revenues within the broker-dealer segment’s structured finance business and fixed income services lines, partially offset by improvements in the macroeconomic outlook and resulting beneficial impact on loan expected loss rates within the banking segment.

Including income from discontinued operations related to the former insurance business, income applicable to common stockholders was $92.9 million, or $1.15 per diluted share, for the third quarter of 2021, compared to $153.3 million, or $1.70 per diluted share, for the third quarter of 2020.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per common share, payable on November 30, 2021, to all common stockholders of record as of the close of business on November 15, 2021. Additionally, during the third quarter of 2021, Hilltop paid approximately $74 million to repurchase an aggregate of 2,241,761 shares of its common stock at a weighted average price of $33.06 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 October 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 $200.0 million, an increase of $50.0 million. As a result of share repurchases during 2021 and giving effect to such increase, Hilltop has approximately $76 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 and into 2022 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 happy to announce strong operating results for all three businesses at Hilltop. We have seen continued improvement in our asset quality, which is a reflection of both the sound lending practices employed by PlainsCapital Bank and the improving economic environment. The trend of increasing deposits remained steady in the quarter, and we are working diligently to deploy that excess liquidity through relationship-based lending and prudent management of our securities portfolio. At PrimeLending and the mortgage-centric businesses at Hilltop Securities, continued strength in the housing market and solid execution from our teams resulted in strong profitability. In addition, Hilltop continued to return a portion of our excess capital to shareholders through approximately $10 million of dividends paid and $74 million of share repurchases during the third quarter.”

Third Quarter 2021 Highlights for Hilltop:

• The reversal of credit losses was $5.8 million during the third quarter of 2021, compared to a reversal of credit losses of $28.7 million in the second quarter of 2021;
  • The reversal of credit losses during the third quarter of 2021 primarily reflected improvements in both macroeconomic forecast assumptions and credit quality metrics on COVID-19 impacted industry sector exposures;
• For the third 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 $241.9 million, compared to $355.6 million in the third quarter of 2020, a 32.0% decrease;
  • Mortgage loan origination production volume was $5.6 billion during the third quarter of 2021, compared to $6.5 billion in the third quarter of 2020;
  • Net gains from mortgage loans sold to third parties declined to 359 basis points during the third quarter of 2021, compared to 376 basis points in the second quarter of 2021.
• Hilltop’s consolidated annualized return on average assets and return on average equity for the third quarter of 2021 were 2.13% and 14.96%, respectively, compared to 3.71% and 25.94%, respectively, for the third quarter of 2020;
• Hilltop’s book value per common share increased to $31.36 at September 30, 2021, compared to $30.44 at June 30, 2021;
• Hilltop’s total assets were $18.0 billion and $17.7 billion at September 30, 2021 and June 30, 2021, respectively;
• Loans¹, net of allowance for credit losses, decreased to $6.8 billion at September 30, 2021 compared to $6.9 billion at June 30, 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 $133 million as of September 30, 2021, compared to approximately $261 million as of June 30, 2021;
  • Through October 22, 2021, the Small Business Administration, or SBA, had approved approximately 3,300 PPP forgiveness applications from the Bank totaling approximately $775 million, with PPP loans of approximately $12 million pending SBA review and approval.
• Non-performing loans were $62.2 million, or 0.64% of total loans, at September 30, 2021, compared to $69.0 million, or 0.66% of total loans, at June 30, 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 $17 million as of September 30, 2021, compared to approximately $76 million in active deferment as of June 30, 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 decreased by 26.9% from June 30, 2021 to $2.1 billion at September 30, 2021;
• Total deposits were $12.1 billion and $11.7 billion at September 30, 2021 and June 30, 2021, respectively;
• Hilltop maintained strong capital levels² with a Tier 1 Leverage Ratio³ of 12.64% and a Common Equity Tier 1 Capital Ratio of 21.28% at September 30, 2021;
• We redeemed in full all of our outstanding junior subordinated debentures of $67.0 million, which resulted in the full redemption to the holders of the associated preferred securities and common securities during the third quarter of 2021;
• Hilltop’s consolidated net interest margin⁴ decreased to 2.53% for the third quarter of 2021, compared to 2.62% in the second quarter of 2021;
  • Includes previously deferred interest income of $4.6 million during the third quarter of 2021 related to PPP loan-related origination fees.

• For the third quarter of 2021, noninterest income from continuing operations was $367.9 million, compared to $502.7 million in the third quarter of 2020, a 26.8% decrease;
• For the third quarter of 2021, noninterest expense from continuing operations was $355.2 million, compared to $399.3 million in the third quarter of 2020, a 11.1% decrease; and
• Hilltop’s effective tax rate from continuing operations was 22.8% during the third quarter of 2021, compared to 22.7% 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 $645.6 million and $628.3 million at September 30, 2021 and June 30, 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		September 30,				June 30,				March 31,				December 31,				September 30,
(in 000's)		2021				2021				2021				2020				2020
Cash and due from banks		$	2,463,111			$	1,372,818			$	1,564,489			$	1,062,560			$	1,277,865
Federal funds sold			406				387				396				386				420
Assets segregated for regulatory purposes			269,506				207,284				273,393				290,357				221,621
Securities purchased under agreements to resell			155,908				202,638				106,342				80,319				90,103
Securities:
Trading, at fair value			609,813				682,483				528,712				694,255				667,751
Available for sale, at fair value, net			1,994,183				1,817,807				1,715,406				1,462,205				1,310,240
Held to maturity, at amortized cost, net			277,419				288,776				300,088				311,944				323,299
Equity, at fair value			221				193				189				140				117
			2,881,636				2,789,259				2,544,395				2,468,544				2,301,407
Loans held for sale			2,108,878				2,885,458				2,538,986				2,788,386				2,547,975
Loans held for investment, net of unearned income			7,552,926				7,645,227				7,810,657				7,693,141				7,945,560
Allowance for credit losses			(109,512	)			(115,269	)			(144,499	)			(149,044	)			(155,214	)
Loans held for investment, net			7,443,414				7,529,958				7,666,158				7,544,097				7,790,346
Broker-dealer and clearing organization receivables			1,419,652				1,403,447				1,596,817				1,404,727				1,363,478
Premises and equipment, net			210,026				212,402				213,304				211,595				208,078
Operating lease right-of-use assets			115,942				115,698				101,055				105,757				109,354
Mortgage servicing assets			110,931				124,497				142,125				143,742				127,712
Other assets			526,339				535,536				648,895				555,983				607,932
Goodwill			267,447				267,447				267,447				267,447				267,447
Other intangible assets, net			16,455				17,705				19,035				20,364				21,814
Total assets		$	17,989,651			$	17,664,534			$	17,682,837			$	16,944,264			$	16,935,552
Deposits:
Noninterest-bearing		$	4,433,148			$	4,231,082			$	4,031,181			$	3,612,384			$	3,557,603
Interest-bearing			7,699,014				7,502,703				7,701,598				7,629,935				7,704,312
Total deposits			12,132,162				11,733,785				11,732,779				11,242,319				11,261,915
Broker-dealer and clearing organization payables			1,496,923				1,439,620				1,546,227				1,368,373				1,310,835
Short-term borrowings			747,040				915,919				676,652				695,798				780,109
Securities sold, not yet purchased, at fair value			113,064				132,950				97,055				79,789				56,023
Notes payable			395,804				396,653				401,713				381,987				396,006
Operating lease liabilities			134,296				134,019				120,339				125,450				122,402
Junior subordinated debentures			—				67,012				67,012				67,012				67,012
Other liabilities			468,020				348,200				595,045				632,889				502,517
Total liabilities			15,487,309				15,168,158				15,236,822				14,593,617				14,496,819
Common stock			790				812				823				822				902
Additional paid-in capital			1,270,272				1,302,439				1,319,518				1,317,929				1,443,588
Accumulated other comprehensive income			367				7,093				3,486				17,763				23,790
Retained earnings			1,204,307				1,159,304				1,094,727				986,792				942,461
Deferred compensation employee stock trust, net			751				754				752				771				774
Employee stock trust			(116	)			(121	)			(121	)			(138	)			(143	)
Total Hilltop stockholders' equity			2,476,371				2,470,281				2,419,185				2,323,939				2,411,372
Noncontrolling interests			25,971				26,095				26,830				26,708				27,361
Total stockholders' equity			2,502,342				2,496,376				2,446,015				2,350,647				2,438,733
Total liabilities & stockholders' equity		$	17,989,651			$	17,664,534			$	17,682,837			$	16,944,264			$	16,935,552

		Three Months Ended
Consolidated Income Statements		September 30,				June 30,				March 31,				December 31,				September 30,
(in 000's, except per share data)		2021				2021				2021				2020				2020
Interest income:
Loans, including fees		$	99,769			$	104,162			$	104,277			$	109,328			$	104,955
Securities borrowed			8,585				15,586				28,972				14,445				10,705
Securities:
Taxable			12,341				11,125				10,251				9,845				11,035
Tax-exempt			2,687				2,338				2,102				1,862				1,687
Other			1,796				1,607				1,321				1,381				1,446
Total interest income			125,178				134,818				146,923				136,861				129,828
Interest expense:
Deposits			5,303				6,176				7,741				9,269				10,700
Securities loaned			6,519				12,345				25,486				12,014				8,729
Short-term borrowings			2,400				2,374				2,013				2,154				2,346
Notes payable			5,465				5,253				4,797				4,807				4,904
Junior subordinated debentures			419				577				562				609				608
Other			(18	)			177				642				636				641
Total interest expense			20,088				26,902				41,241				29,489				27,928
Net interest income			105,090				107,916				105,682				107,372				101,900
Provision for (reversal of) credit losses			(5,819	)			(28,720	)			(5,109	)			(3,482	)			(602	)
Net interest income after provision for (reversal of) credit losses			110,909				136,636				110,791				110,854				102,502
Noninterest income:
Net gains from sale of loans and other mortgage production income			203,152				199,625				267,080				247,360				307,896
Mortgage loan origination fees			38,780				42,146				43,155				50,193				47,681
Securities commissions and fees			34,412				38,300				38,314				35,921				32,496
Investment and securities advisory fees and commissions			49,646				32,268				27,695				42,161				36,866
Other			41,955				27,560				41,341				72,296				77,772
Total noninterest income			367,945				339,899				417,585				447,931				502,711
Noninterest expense:
Employees' compensation and benefits			258,679				248,486				270,353				291,489				294,907
Occupancy and equipment, net			25,428				25,004				24,429				27,596				26,124
Professional services			14,542				16,239				13,585				21,927				17,522
Other			56,525				53,639				58,295				61,336				60,792
Total noninterest expense			355,174				343,368				366,662				402,348				399,345
Income from continuing operations before income taxes			123,680				133,167				161,714				156,437				205,868
Income tax expense			28,257				31,234				37,770				39,295				46,820
Income from continuing operations			95,423				101,933				123,944				117,142				159,048
Income from discontinued operations, net of income taxes			—				—				—				3,734				736
Net income			95,423				101,933				123,944				120,876				159,784
Less: Net income attributable to noncontrolling interest			2,517				2,873				3,599				4,431				6,505
Income attributable to Hilltop		$	92,906			$	99,060			$	120,345			$	116,445			$	153,279
Earnings per common share:
Basic:
Earnings from continuing operations		$	1.16			$	1.21			$	1.46			$	1.31			$	1.69
Earnings from discontinued operations			—				—				—				0.04				0.01
		$	1.16			$	1.21			$	1.46			$	1.35			$	1.70
Diluted:
Earnings from continuing operations		$	1.15			$	1.21			$	1.46			$	1.30			$	1.69
Earnings from discontinued operations			—				—				—				0.05				0.01
		$	1.15			$	1.21			$	1.46			$	1.35			$	1.70
Cash dividends declared per common share		$	0.12			$	0.12			$	0.12			$	0.09			$	0.09
Weighted average shares outstanding:
Basic			80,109				81,663				82,169				86,269				90,200
Diluted			80,542				82,199				82,657				86,420				90,200

		Three Months Ended September 30, 2021
Segment Results										Mortgage								All Other and				Continuing
(in 000's)		Banking				Broker-Dealer				Origination				Corporate				Eliminations				Operations
Net interest income (expense)		$	99,978			$	10,427			$	(3,503	)		$	(4,341	)		$	2,529			$	105,090
Provision for (reversal of) credit losses			(5,775	)			(44	)			—				—				—				(5,819	)
Noninterest income			11,727				116,143				242,270				757				(2,952	)			367,945
Noninterest expense			54,567				109,193				176,587				15,355				(528	)			355,174
Income (loss) from continuing operations before taxes		$	62,913			$	17,421			$	62,180			$	(18,939	)		$	105			$	123,680
		Nine Months Ended September 30, 2021
Segment Results										Mortgage								All Other and				Continuing
(in 000's)		Banking				Broker-Dealer				Origination				Corporate				Eliminations				Operations
Net interest income (expense)		$	309,330			$	31,623			$	(16,554	)		$	(13,720	)		$	8,009			$	318,688
Provision for (reversal of) credit losses			(39,725	)			77				—				—				—				(39,648	)
Noninterest income			33,293				298,229				794,679				8,140				(8,912	)			1,125,429
Noninterest expense			167,869				287,831				573,884				37,015				(1,395	)			1,065,204
Income (loss) from continuing operations before taxes		$	214,479			$	41,944			$	204,241			$	(42,595	)		$	492			$	418,561

		Three Months Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Selected Financial Data		2021			2021			2021			2020			2020
Hilltop Consolidated (1):
Return on average stockholders' equity		14.96	%		16.42	%		20.58	%		20.56	%		25.94	%
Return on average assets		2.13	%		2.29	%		2.90	%		2.83	%		3.71	%
Net interest margin (2)		2.53	%		2.62	%		2.69	%		2.71	%		2.56	%
Net interest margin (taxable equivalent) (3):
As reported		2.54	%		2.63	%		2.69	%		2.72	%		2.57	%
Impact of purchase accounting		9 bps			16 bps			13 bps			15 bps			10 bps
Without purchase accounting impact		2.45	%		2.47	%		2.56	%		2.57	%		2.47	%
Book value per common share ($)		31.36			30.44			29.41			28.28			26.72
Shares outstanding, end of period (000's)		78,959			81,153			82,261			82,185			90,238
Dividend payout ratio (4)		10.34	%		9.92	%		8.19	%		6.67	%		5.30	%
Banking Segment:
Net interest margin (2)		2.99	%		3.19	%		3.30	%		3.37	%		3.03	%
Net interest margin (taxable equivalent) (3):
As reported		3.00	%		3.20	%		3.31	%		3.38	%		3.03	%
Impact of purchase accounting		11 bps			20 bps			17 bps			20 bps			13 bps
Accretion of discount on loans ($000's)		3,221			6,001			4,851			5,629			3,346
Net recoveries (charge-offs) ($000's)		62			(510	)		564			(2,688	)		(567	)
Return on average assets		1.36	%		1.91	%		1.48	%		1.37	%		1.14	%
Fee income ratio		10.5	%		8.9	%		9.8	%		10.2	%		9.2	%
Efficiency ratio		48.8	%		49.7	%		48.4	%		53.0	%		52.7	%
Employees' compensation and benefits ($000's)		31,500			33,369			30,992			34,007			29,808
Broker-Dealer Segment:
Net revenue ($000's) (5)		126,570			94,145			109,137			150,070			149,190
Employees' compensation and benefits ($000's) (6)		82,429			62,289			66,157			87,622			88,211
Variable compensation expense ($000's)		53,505			34,409			37,412			60,295			60,774
Compensation as a % of net revenue (6)		65.1	%		66.2	%		60.6	%		58.4	%		59.1	%
Pre-tax margin (7)		13.8	%		7.3	%		16.2	%		22.8	%		23.7	%
Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases		3,948,420			4,018,922			2,902,710			3,683,564			4,183,560
Refinancings		1,646,208			1,881,121			3,281,395			3,114,630			2,266,793
Total mortgage loan originations - volume		5,594,628			5,900,043			6,184,105			6,798,194			6,450,353
Mortgage loan sales - volume ($000's)		6,195,559			5,524,226			6,350,837			6,571,234			6,521,773
Net gains from mortgage loan sales (basis points):
Loans sold to third parties		359			376			398			451			441
Impact of loans retained by banking segment		(13	)		(12	)		(10	)		(3	)		(1	)
As reported		346			364			388			448			440
Mortgage servicing rights asset ($000's) (8)		110,931			124,497			142,125			143,742			127,712
Employees' compensation and benefits ($000's)		134,814			145,401			166,248			163,822			161,738
Variable compensation expense ($000's)		88,153			97,081			115,486			116,736			116,275

(1)			Ratios and financial data presented on a consolidated basis. For all 2020 periods presented, information includes 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 $0.6 million, $0.4 million, $0.2 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.

		September 30,			June 30,			March 31,			December 31,			September 30,
Capital Ratios		2021			2021			2021			2020			2020
Tier 1 capital (to average assets):
PlainsCapital		10.02	%		10.22	%		10.50	%		10.44	%		10.19	%
Hilltop		12.64	%		12.87	%		13.01	%		12.64	%		13.03	%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital		15.40	%		15.00	%		14.74	%		14.40	%		14.64	%
Hilltop		21.28	%		20.22	%		19.63	%		18.97	%		19.85	%
Tier 1 capital (to risk-weighted assets):
PlainsCapital		15.40	%		15.00	%		14.74	%		14.40	%		14.64	%
Hilltop		21.28	%		20.82	%		20.22	%		19.57	%		20.46	%
Total capital (to risk-weighted assets):
PlainsCapital		16.32	%		15.95	%		15.64	%		15.27	%		15.49	%
Hilltop		24.00	%		23.48	%		22.96	%		22.34	%		23.22	%

		September 30,			June 30,			March 31,			December 31,			September 30,
Non-Performing Assets Portfolio Data		2021			2021			2021			2020			2020
Loans accounted for on a non-accrual basis ($000's) (1):
Commercial real estate			5,705			7,211			10,668			11,133			14,079
Commercial and industrial			29,808			33,033			36,144			34,049			38,708
Construction and land development			366			474			501			507			528
1-4 family residential			25,255			27,100			30,937			32,263			28,707
Consumer			24			26			26			28			53
Broker-dealer			—			—			—			—			—
			61,158			67,844			78,276			77,980			82,075
Troubled debt restructurings included in accruing loans held for investment ($000's)			1,038			1,139			1,584			1,954			1,919
Non-performing loans ($000's)			62,196			68,983			79,860			79,934			83,994
Non-performing loans as a % of total loans			0.64%			0.66%			0.77%			0.76%			0.80%
Other real estate owned ($000's)			21,605			21,078			19,899			21,289			25,387
Other repossessed assets ($000's)			—			—			—			101			239
Non-performing assets ($000's)			83,801			90,061			99,759			101,324			109,620
Non-performing assets as a % of total assets			0.47%			0.51%			0.56%			0.60%			0.65%
Loans past due 90 days or more and still accruing ($000's) (2):			175,734			245,828			265,230			243,630			187,105

(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 $17 million as of September 30, 2021, down from approximately $76 million as of June 30, 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 September 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		$	2,300,939			$	17,696		3.08	%		$	2,530,805			$	20,108		3.18	%
Loans held for investment, gross (2)			7,514,392				82,073		4.33	%			7,730,711				84,847		4.32	%
Investment securities - taxable			2,585,362				12,328		1.91	%			1,974,911				11,017		2.23	%
Investment securities - non-taxable (3)			318,408				3,252		4.09	%			243,716				2,011		3.30	%
Federal funds sold and securities purchased under agreements to resell			161,577				207		—	%			154,588				10		0.03	%
Interest-bearing deposits in other financial institutions			2,197,478				788		0.14	%			1,794,652				626		0.14	%
Securities borrowed			1,364,726				8,585		2.46	%			1,297,112				10,705		3.23	%
Other			51,350				813		6.28	%			49,701				823		6.59	%
Interest-earning assets, gross (3)			16,494,232				125,742		3.02	%			15,776,196				130,147		3.26	%
Allowance for credit losses			(115,688	)									(156,071	)
Interest-earning assets, net			16,378,544										15,620,125
Noninterest-earning assets			1,371,207										1,493,194
Total assets		$	17,749,751									$	17,113,319
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits		$	7,622,748			$	5,303		0.28	%		$	7,868,100			$	10,700		0.54	%
Securities loaned			1,306,314				6,519		1.98	%			1,193,497				8,729		2.91	%
Notes payable and other borrowings			1,231,545				8,266		2.66	%			1,259,559				8,500		2.69	%
Total interest-bearing liabilities			10,160,607				20,088		0.78	%			10,321,156				27,929		1.08	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			4,299,987										3,508,282
Other liabilities			800,225										903,571
Total liabilities			15,260,819										14,733,009
Stockholders’ equity			2,463,821										2,350,900
Noncontrolling interest			25,111										29,410
Total liabilities and stockholders' equity		$	17,749,751									$	17,113,319
Net interest income (3)						$	105,654									$	102,218
Net interest spread (3)									2.24	%									2.18	%
Net interest margin (3)									2.54	%									2.57	%

(1)			Information presented on a consolidated basis. For the three months ended September 30, 2020, information includes 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 $0.6 million and $0.3 million for the three months ended September 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, October 29, 2021. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third quarter 2021 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 343796. 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 September 30, 2021, Hilltop employed approximately 5,000 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 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; (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/20211028006171/en/

Investor Relations Contact:

Erik Yohe

214-525-4634

eyohe@hilltop-holdings.com

Source: Hilltop Holdings Inc.

FAQ

What were Hilltop Holdings' earnings for Q3 2021?

Hilltop Holdings reported earnings of $92.9 million for Q3 2021, or $1.15 per diluted share.

How did Hilltop Holdings perform in terms of mortgage origination in Q3 2021?

Hilltop saw a 32% decrease in net gains from mortgage originations at $241.9 million compared to $355.6 million in Q3 2020.

What is the current stock repurchase program for Hilltop Holdings (HTH)?

Hilltop's Board authorized an increase in the stock repurchase program to $200 million, with approximately $76 million remaining available.

What dividend did Hilltop Holdings declare in Q3 2021?

Hilltop declared a quarterly cash dividend of $0.12 per common share.

What challenges does Hilltop Holdings face due to COVID-19?

COVID-19 continues to impact financial markets, with uncertainties on its effect on Hilltop's operational and financial performance going forward.