Hilltop Holdings Inc. Announces Financial Results for Second Quarter 2016
Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the second quarter of 2016. Hilltop produced
income to common stockholders of $31.1 million, or $0.32 per diluted share, for the second quarter of 2016, compared to $29.6
million, or $0.30 per diluted share, for the second quarter of 2015. Hilltop’s annualized return on average assets and return on
average equity for the second quarter of 2016 were 1.05% and 7.07%, respectively, compared to 0.97% and 7.12% for the second
quarter of 2015, respectively.
Jeremy Ford, CEO of Hilltop, said, “We are pleased to report solid financial results for the second quarter of 2016, led by
exceptional performance in our mortgage-related businesses. We achieved positive operating leverage in the quarter with a 14.8%
increase in noninterest income relative to a 4.0% increase in noninterest expense.”
Mr. Ford continued, “PlainsCapital Bank maintained a strong net interest margin and improved expense efficiency, however
irregularities discovered in a single large loan resulted in an elevated loan loss provision. Outside of this isolated issue,
nonperforming loans declined during the quarter. PrimeLending delivered impressive mortgage origination growth in its purchase
volume, driven by increased market share and a decline in interest rates. Top-line revenue growth in mortgage- and
municipal-related businesses, as well as continued execution of integration initiatives, drove profitability at
HilltopSecurities.”
Mr. Ford concluded, “With seasonal spring storms beginning and ending earlier this year, National Lloyds reported a lower loss
and LAE ratio compared to the second quarter average over the previous three years. Additionally, process improvements and a
reduction in variable expenses resulted in a relatively flat expense ratio.”
Second Quarter 2016 Highlights for Hilltop:
- Hilltop’s total assets were $13.1 billion at June 30, 2016, compared to $11.7 billion at March 31,
2016;
- Hilltop’s common equity increased by $33.9 million from March 31, 2016 to $1.8 billion at June 30,
2016;
- Non-covered loans1 held for investment, net of allowance for loan losses, increased by
2.0% to $5.4 billion and covered loans1, net of allowance for loan losses, decreased by 7.0% to $322.1 million from
March 31, 2016 to June 30, 2016;
- Non-covered non-performing loans declined to $23.4 million, or 0.33% of total non-covered loans, at
June 30, 2016, compared to $27.1 million, or 0.40% of total non-covered loans, at March 31, 2016;
- Energy classified and criticized loans were $41.5 million at June 30, 2016, down from $51.3 million
at March 31, 2016;
- Loans held for sale increased by 15.3% to $1.6 billion from March 31, 2016 to June 30, 2016;
- Total deposits were $7.1 billion at June 30, 2016, compared to $7.0 billion at March 31, 2016;
- Hilltop was well-capitalized with a Tier 1 Leverage Ratio2 of 13.18% and Total Capital
Ratio of 17.69% at June 30, 2016;
- Hilltop’s net interest margin3 increased to 3.77% for the second quarter of 2016, from
3.67% in the first quarter of 2016;
- Hilltop’s taxable equivalent net interest margin4 was 3.80% for the second quarter of
2016, a ten basis point increase from 3.70% in the first quarter of 2016;
- The provision for loan losses was $28.9 million during the second quarter of 2016, compared to $3.4
million in the first quarter of 2016, and primarily driven by a non-recurring, full charge-off related to one large loan;
- During the second quarter of 2016, the Bank discovered irregularities in connection with a single
loan that is currently in default. As a result, the Bank increased its provision for loan losses and recorded a $24.5 million
charge-off, representing the entire outstanding principal balance of the loan;
- For the second quarter of 2016, noninterest income was $346.0 million, compared to $301.4 million in
the second quarter of 2015, a 14.8% increase;
- For the second quarter of 2016, noninterest expense was $367.4 million, compared to $353.3 million in
the second quarter of 2015, a 4.0% increase; and
- In connection with the SWS Merger, during the second quarter of 2016, Hilltop incurred $2.3 million
in pre-tax transaction and integration costs, consisting of $0.8 million in the broker-dealer segment and $1.5 million within
corporate.
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| 1 |
|
“Covered loans” refer to loans acquired in the FNB Transaction that are subject to
loss-share agreements with the FDIC, while all other loans are referred to as “non-covered loans.” |
| 2 |
|
Based on the end of period Tier 1 capital divided by total average assets during the
second quarter of 2016, excluding goodwill and intangible assets. |
| 3 |
|
Net interest margin is defined as net interest income divided by average
interest-earning assets. |
| 4 |
|
Taxable equivalent net interest margin is defined as taxable equivalent net interest
income divided by average interest-earning assets. Annualized taxable equivalent adjustments are based on a 35% federal income
tax rate. Refer to footnote 2 to the Selected Financial Data table for further discussion on this non-GAAP measure and the
taxable equivalent adjustments to interest income. |
|
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|
Consolidated Financial and Other Information
|
|
|
|
|
|
|
|
|
|
|
| Consolidated Balance Sheets |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| (in 000's) |
|
|
2016 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2015 |
|
|
|
2015 |
|
| Cash and due from banks |
|
$ |
583,984 |
|
|
$ |
512,103 |
|
|
$ |
652,036 |
|
|
$ |
526,692 |
|
|
$ |
583,043 |
|
| Federal funds sold |
|
|
29,677 |
|
|
|
15,406 |
|
|
|
17,409 |
|
|
|
24,861 |
|
|
|
22,814 |
|
| Securities purchased under agreements to resell |
|
|
149,474 |
|
|
|
96,646 |
|
|
|
105,660 |
|
|
|
83,889 |
|
|
|
79,153 |
|
| Assets segregated for regulatory purposes |
|
|
120,214 |
|
|
|
120,714 |
|
|
|
158,613 |
|
|
|
228,251 |
|
|
|
188,094 |
|
| Securities: |
|
|
|
|
|
|
|
|
|
|
| Trading, at fair value |
|
|
305,418 |
|
|
|
368,425 |
|
|
|
214,146 |
|
|
|
292,418 |
|
|
|
265,429 |
|
| Available for sale, at fair value |
|
|
517,784 |
|
|
|
666,328 |
|
|
|
673,706 |
|
|
|
726,132 |
|
|
|
763,463 |
|
| Held to maturity, at amortized cost |
|
|
354,443 |
|
|
|
310,478 |
|
|
|
332,022 |
|
|
|
305,316 |
|
|
|
312,960 |
|
|
|
|
1,177,645 |
|
|
|
1,345,231 |
|
|
|
1,219,874 |
|
|
|
1,323,866 |
|
|
|
1,341,852 |
|
| Loans held for sale |
|
|
1,550,475 |
|
|
|
1,344,333 |
|
|
|
1,533,678 |
|
|
|
1,354,107 |
|
|
|
1,397,617 |
|
| Non-covered loans, net of unearned income |
|
|
5,472,446 |
|
|
|
5,366,065 |
|
|
|
5,220,040 |
|
|
|
4,999,529 |
|
|
|
4,956,969 |
|
| Allowance for non-covered loan losses |
|
|
(51,013 |
) |
|
|
(48,450 |
) |
|
|
(45,415 |
) |
|
|
(42,989 |
) |
|
|
(40,484 |
) |
| Non-covered loans, net |
|
|
5,421,433 |
|
|
|
5,317,615 |
|
|
|
5,174,625 |
|
|
|
4,956,540 |
|
|
|
4,916,485 |
|
|
|
|
|
|
|
|
|
|
|
|
| Covered loans, net of allowance for covered loan losses |
|
|
322,073 |
|
|
|
346,169 |
|
|
|
378,762 |
|
|
|
420,547 |
|
|
|
493,299 |
|
| Broker-dealer and clearing organization receivables |
|
|
2,257,480 |
|
|
|
1,370,622 |
|
|
|
1,362,499 |
|
|
|
2,111,864 |
|
|
|
2,070,598 |
|
| Premises and equipment, net |
|
|
189,511 |
|
|
|
198,414 |
|
|
|
200,618 |
|
|
|
204,273 |
|
|
|
206,411 |
|
| FDIC indemnification asset |
|
|
74,460 |
|
|
|
80,522 |
|
|
|
91,648 |
|
|
|
92,902 |
|
|
|
102,381 |
|
| Covered other real estate owned |
|
|
67,634 |
|
|
|
78,890 |
|
|
|
99,090 |
|
|
|
106,024 |
|
|
|
125,510 |
|
| Other assets |
|
|
832,344 |
|
|
|
601,181 |
|
|
|
565,813 |
|
|
|
644,916 |
|
|
|
637,747 |
|
| Goodwill |
|
|
251,808 |
|
|
|
251,808 |
|
|
|
251,808 |
|
|
|
251,808 |
|
|
|
251,808 |
|
| Other intangible assets, net |
|
|
49,690 |
|
|
|
52,274 |
|
|
|
54,868 |
|
|
|
58,916 |
|
|
|
61,527 |
|
| Total assets |
|
$ |
13,077,902 |
|
|
$ |
11,731,928 |
|
|
$ |
11,867,001 |
|
|
$ |
12,389,456 |
|
|
$ |
12,478,339 |
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
|
$ |
2,280,108 |
|
|
$ |
2,233,608 |
|
|
$ |
2,235,436 |
|
|
$ |
2,173,890 |
|
|
$ |
2,135,988 |
|
| Interest bearing |
|
|
4,846,705 |
|
|
|
4,750,567 |
|
|
|
4,717,247 |
|
|
|
4,646,859 |
|
|
|
4,660,449 |
|
| Total deposits |
|
|
7,126,813 |
|
|
|
6,984,175 |
|
|
|
6,952,683 |
|
|
|
6,820,749 |
|
|
|
6,796,437 |
|
| Broker-dealer and clearing organization payables |
|
|
2,111,994 |
|
|
|
1,284,016 |
|
|
|
1,338,305 |
|
|
|
2,045,604 |
|
|
|
2,048,585 |
|
| Short-term borrowings |
|
|
1,012,862 |
|
|
|
832,921 |
|
|
|
947,373 |
|
|
|
910,490 |
|
|
|
1,100,025 |
|
| Securities sold, not yet purchased, at fair value |
|
|
178,235 |
|
|
|
165,704 |
|
|
|
130,044 |
|
|
|
156,775 |
|
|
|
135,592 |
|
| Notes payable |
|
|
319,636 |
|
|
|
232,190 |
|
|
|
238,716 |
|
|
|
243,556 |
|
|
|
245,420 |
|
| Junior subordinated debentures |
|
|
67,012 |
|
|
|
67,012 |
|
|
|
67,012 |
|
|
|
67,012 |
|
|
|
67,012 |
|
| Other liabilities |
|
|
464,904 |
|
|
|
405,899 |
|
|
|
454,743 |
|
|
|
428,442 |
|
|
|
410,004 |
|
| Total liabilities |
|
|
11,281,456 |
|
|
|
9,971,917 |
|
|
|
10,128,876 |
|
|
|
10,672,628 |
|
|
|
10,803,075 |
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock |
|
|
985 |
|
|
|
986 |
|
|
|
989 |
|
|
|
989 |
|
|
|
995 |
|
| Additional paid-in capital |
|
|
1,568,053 |
|
|
|
1,567,150 |
|
|
|
1,577,270 |
|
|
|
1,574,769 |
|
|
|
1,582,655 |
|
| Accumulated other comprehensive income (loss) |
|
|
8,782 |
|
|
|
6,878 |
|
|
|
2,629 |
|
|
|
4,592 |
|
|
|
(1,105 |
) |
| Retained earnings |
|
|
214,116 |
|
|
|
183,042 |
|
|
|
155,475 |
|
|
|
134,748 |
|
|
|
91,008 |
|
| Deferred compensation employee stock trust, net |
|
|
938 |
|
|
|
1,020 |
|
|
|
1,034 |
|
|
|
1,182 |
|
|
|
1,182 |
|
| Employee stock trust |
|
|
(347 |
) |
|
|
(428 |
) |
|
|
(443 |
) |
|
|
(590 |
) |
|
|
(590 |
) |
| Total Hilltop stockholders' equity |
|
|
1,792,527 |
|
|
|
1,758,648 |
|
|
|
1,736,954 |
|
|
|
1,715,690 |
|
|
|
1,674,145 |
|
| Noncontrolling interests |
|
|
3,919 |
|
|
|
1,363 |
|
|
|
1,171 |
|
|
|
1,138 |
|
|
|
1,119 |
|
| Total stockholders' equity |
|
|
1,796,446 |
|
|
|
1,760,011 |
|
|
|
1,738,125 |
|
|
|
1,716,828 |
|
|
|
1,675,264 |
|
| Total liabilities & stockholders' equity |
|
$ |
13,077,902 |
|
|
$ |
11,731,928 |
|
|
$ |
11,867,001 |
|
|
$ |
12,389,456 |
|
|
$ |
12,478,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
| Consolidated Income Statements |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| (in 000's, except per share data) |
|
|
2016 |
|
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
2015 |
| Interest income: |
|
|
|
|
|
|
|
|
|
|
| Loans, including fees |
|
$ |
98,468 |
|
|
$ |
91,533 |
|
$ |
94,689 |
|
$ |
111,315 |
|
$ |
96,967 |
| Securities borrowed |
|
|
6,326 |
|
|
|
7,589 |
|
|
11,242 |
|
|
10,116 |
|
|
9,675 |
| Securities: |
|
|
|
|
|
|
|
|
|
|
| Taxable |
|
|
6,834 |
|
|
|
6,367 |
|
|
7,046 |
|
|
6,262 |
|
|
6,227 |
| Tax-exempt |
|
|
1,537 |
|
|
|
1,637 |
|
|
1,647 |
|
|
1,683 |
|
|
1,557 |
| Other |
|
|
1,037 |
|
|
|
1,028 |
|
|
1,338 |
|
|
1,169 |
|
|
1,236 |
| Total interest income |
|
|
114,202 |
|
|
|
108,154 |
|
|
115,962 |
|
|
130,545 |
|
|
115,662 |
|
|
|
|
|
|
|
|
|
|
|
| Interest expense: |
|
|
|
|
|
|
|
|
|
|
| Deposits |
|
|
4,037 |
|
|
|
3,839 |
|
|
3,589 |
|
|
3,719 |
|
|
3,900 |
| Securities loaned |
|
|
4,916 |
|
|
|
5,987 |
|
|
8,388 |
|
|
7,110 |
|
|
6,889 |
| Short-term borrowings |
|
|
1,392 |
|
|
|
1,085 |
|
|
1,218 |
|
|
1,189 |
|
|
1,143 |
| Notes payable |
|
|
2,618 |
|
|
|
2,582 |
|
|
2,661 |
|
|
2,524 |
|
|
2,289 |
| Junior subordinated debentures |
|
|
655 |
|
|
|
645 |
|
|
616 |
|
|
605 |
|
|
595 |
| Other |
|
|
187 |
|
|
|
176 |
|
|
177 |
|
|
187 |
|
|
179 |
| Total interest expense |
|
|
13,805 |
|
|
|
14,314 |
|
|
16,649 |
|
|
15,334 |
|
|
14,995 |
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
|
|
100,397 |
|
|
|
93,840 |
|
|
99,313 |
|
|
115,211 |
|
|
100,667 |
| Provision for loan losses |
|
|
28,876 |
|
|
|
3,407 |
|
|
4,277 |
|
|
5,593 |
|
|
158 |
| Net interest income after provision for loan losses |
|
|
71,521 |
|
|
|
90,433 |
|
|
95,036 |
|
|
109,618 |
|
|
100,509 |
|
|
|
|
|
|
|
|
|
|
|
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| Net realized gains (losses) on securities |
|
|
(46 |
) |
|
|
46 |
|
|
— |
|
|
— |
|
|
— |
| Net gains from sale of loans and other mortgage production income |
|
|
167,012 |
|
|
|
127,297 |
|
|
114,080 |
|
|
137,303 |
|
|
147,175 |
| Mortgage loan origination fees |
|
|
25,797 |
|
|
|
18,813 |
|
|
19,514 |
|
|
22,647 |
|
|
20,958 |
| Net insurance premiums earned |
|
|
38,721 |
|
|
|
39,733 |
|
|
41,001 |
|
|
41,196 |
|
|
40,318 |
| Securities commissions and fees |
|
|
40,444 |
|
|
|
38,319 |
|
|
37,459 |
|
|
39,070 |
|
|
41,213 |
| Investment and securities advisory fees and commissions |
|
|
29,354 |
|
|
|
23,819 |
|
|
33,678 |
|
|
27,667 |
|
|
29,665 |
| Other |
|
|
44,723 |
|
|
|
29,348 |
|
|
31,195 |
|
|
28,586 |
|
|
22,071 |
| Total noninterest income |
|
|
346,005 |
|
|
|
277,375 |
|
|
276,927 |
|
|
296,469 |
|
|
301,400 |
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| Employees' compensation and benefits |
|
|
217,346 |
|
|
|
182,655 |
|
|
182,472 |
|
|
200,620 |
|
|
200,291 |
| Loss and loss adjustment expenses |
|
|
37,211 |
|
|
|
21,959 |
|
|
21,630 |
|
|
17,335 |
|
|
41,241 |
| Policy acquisition and other underwriting expenses |
|
|
11,316 |
|
|
|
11,252 |
|
|
11,928 |
|
|
11,784 |
|
|
11,740 |
| Occupancy and equipment, net |
|
|
26,937 |
|
|
|
27,791 |
|
|
30,285 |
|
|
29,341 |
|
|
30,842 |
| Other |
|
|
74,555 |
|
|
|
81,532 |
|
|
92,406 |
|
|
74,422 |
|
|
69,203 |
| Total noninterest expense |
|
|
367,365 |
|
|
|
325,189 |
|
|
338,721 |
|
|
333,502 |
|
|
353,317 |
|
|
|
|
|
|
|
|
|
|
|
| Income before income taxes |
|
|
50,161 |
|
|
|
42,619 |
|
|
33,242 |
|
|
72,585 |
|
|
48,592 |
| Income tax expense |
|
|
18,439 |
|
|
|
14,423 |
|
|
12,020 |
|
|
25,338 |
|
|
18,137 |
| Net income |
|
|
31,722 |
|
|
|
28,196 |
|
|
21,222 |
|
|
47,247 |
|
|
30,455 |
| Less: Net income attributable to noncontrolling interest |
|
|
648 |
|
|
|
629 |
|
|
495 |
|
|
353 |
|
|
405 |
| Income attributable to Hilltop |
|
|
31,074 |
|
|
|
27,567 |
|
|
20,727 |
|
|
46,894 |
|
|
30,050 |
| Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
428 |
| Income applicable to Hilltop common stockholders |
|
$ |
31,074 |
|
|
$ |
27,567 |
|
$ |
20,727 |
|
$ |
46,894 |
|
$ |
29,622 |
|
|
|
|
|
|
|
|
|
|
|
| Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
| Basic |
|
$ |
0.32 |
|
|
$ |
0.28 |
|
$ |
0.21 |
|
$ |
0.47 |
|
$ |
0.30 |
| Diluted |
|
$ |
0.32 |
|
|
$ |
0.28 |
|
$ |
0.21 |
|
$ |
0.47 |
|
$ |
0.30 |
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
98,457 |
|
|
|
98,153 |
|
|
98,412 |
|
|
98,676 |
|
|
99,486 |
| Diluted |
|
|
98,586 |
|
|
|
98,669 |
|
|
99,266 |
|
|
99,556 |
|
|
100,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016 |
| Segment Results |
|
|
|
|
|
Mortgage |
|
|
|
|
|
All Other and |
|
Hilltop |
| (in 000's) |
|
Banking |
|
Broker-Dealer |
|
Origination |
|
Insurance |
|
Corporate |
|
Eliminations |
|
Consolidated |
| Net interest income (expense) |
|
$ |
92,029 |
|
$ |
7,440 |
|
$ |
(2,299 |
) |
|
$ |
758 |
|
|
$ |
(1,846 |
) |
|
$ |
4,315 |
|
|
$ |
100,397 |
| Provision for loan losses |
|
|
28,613 |
|
|
263 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
28,876 |
| Noninterest income |
|
|
13,346 |
|
|
102,900 |
|
|
192,881 |
|
|
|
41,392 |
|
|
|
1 |
|
|
|
(4,515 |
) |
|
|
346,005 |
| Noninterest expense |
|
|
55,132 |
|
|
91,780 |
|
|
162,488 |
|
|
|
51,717 |
|
|
|
6,483 |
|
|
|
(235 |
) |
|
|
367,365 |
| Income (loss) before income taxes |
|
$ |
21,630 |
|
$ |
18,297 |
|
$ |
28,094 |
|
|
$ |
(9,567 |
) |
|
$ |
(8,328 |
) |
|
$ |
35 |
|
|
$ |
50,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| Selected Financial Data |
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilltop Consolidated:
|
|
|
|
|
|
|
|
|
|
|
| Return on average stockholders' equity |
|
7.07 |
% |
|
6.32 |
% |
|
4.70 |
% |
|
10.97 |
% |
|
7.12 |
% |
| Return on average assets |
|
1.05 |
% |
|
0.96 |
% |
|
0.68 |
% |
|
1.49 |
% |
|
0.97 |
% |
| Net interest margin (1) |
|
3.77 |
% |
|
3.67 |
% |
|
3.70 |
% |
|
4.18 |
% |
|
3.72 |
% |
| Net interest margin (taxable equivalent) (2): |
|
|
|
|
|
|
|
|
|
|
| As reported |
|
3.80 |
% |
|
3.70 |
% |
|
3.73 |
% |
|
4.20 |
% |
|
3.75 |
% |
| Impact of purchase accounting |
|
72 bps |
|
74 bps |
|
79 bps |
|
137 bps |
|
96 bps |
| Book value per common share ($) |
|
18.20 |
|
|
17.84 |
|
|
17.56 |
|
|
17.35 |
|
|
16.82 |
|
| Shares outstanding, end of period (000's) |
|
98,498 |
|
|
98,585 |
|
|
98,896 |
|
|
98,893 |
|
|
99,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking Segment:
|
|
|
|
|
|
|
|
|
|
|
| Net interest margin (1) |
|
4.85 |
% |
|
4.70 |
% |
|
4.90 |
% |
|
5.77 |
% |
|
5.00 |
% |
| Net interest margin (taxable equivalent) (2): |
|
|
|
|
|
|
|
|
|
|
| As reported |
|
4.87 |
% |
|
4.73 |
% |
|
4.92 |
% |
|
5.79 |
% |
|
5.02 |
% |
| Impact of purchase accounting |
|
104 bps |
|
103 bps |
|
119 bps |
|
210 bps |
|
145 bps |
| Accretion of discount on loans ($000's) |
|
17,344 |
|
|
16,631 |
|
|
19,503 |
|
|
36,000 |
|
|
23,632 |
|
| Non-covered net charge-offs (recoveries) ($000's) |
|
26,130 |
|
|
650 |
|
|
2,088 |
|
|
1,775 |
|
|
(532 |
) |
| Return on average assets |
|
0.66 |
% |
|
0.98 |
% |
|
1.07 |
% |
|
1.64 |
% |
|
1.41 |
% |
| Fee income ratio |
|
12.67 |
% |
|
13.08 |
% |
|
13.83 |
% |
|
11.64 |
% |
|
14.20 |
% |
| Efficiency ratio |
|
52.32 |
% |
|
64.97 |
% |
|
62.78 |
% |
|
50.56 |
% |
|
56.95 |
% |
| Employees' compensation and benefits ($000's) |
|
30,847 |
|
|
29,125 |
|
|
27,456 |
|
|
29,881 |
|
|
30,689 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broker-Dealer Segment:
|
|
|
|
|
|
|
|
|
|
|
| Employees' compensation and benefits ($000's) |
|
63,976 |
|
|
57,816 |
|
|
62,868 |
|
|
64,099 |
|
|
64,304 |
|
| Variable compensation expense ($000's) |
|
38,750 |
|
|
29,431 |
|
|
35,298 |
|
|
36,157 |
|
|
33,058 |
|
| Compensation as a % of net revenue |
|
58.0 |
% |
|
65.7 |
% |
|
63.2 |
% |
|
69.6 |
% |
|
72.8 |
% |
| Pre-tax margin |
|
16.58 |
% |
|
4.28 |
% |
|
3.70 |
% |
|
1.58 |
% |
|
-2.19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Origination Segment:
|
|
|
|
|
|
|
|
|
|
|
| Mortgage loan originations - volume ($000's): |
|
|
|
|
|
|
|
|
|
|
| Home purchases |
|
3,261,386 |
|
|
2,050,825 |
|
|
2,344,328 |
|
|
2,945,626 |
|
|
2,913,479 |
|
| Refinancings |
|
889,078 |
|
|
878,291 |
|
|
721,308 |
|
|
693,572 |
|
|
920,286 |
|
| Home purchases |
|
4,150,464 |
|
|
2,929,116 |
|
|
3,065,636 |
|
|
3,639,198 |
|
|
3,833,765 |
|
| Mortgage loan sales - volume ($000's) |
|
3,964,190 |
|
|
3,117,605 |
|
|
2,888,903 |
|
|
3,699,047 |
|
|
3,635,853 |
|
| Mortgage servicing rights asset ($000's) (3) |
|
33,491 |
|
|
39,863 |
|
|
52,285 |
|
|
47,527 |
|
|
44,985 |
|
| Employees' compensation and benefits ($000's) |
|
117,537 |
|
|
90,690 |
|
|
87,387 |
|
|
101,490 |
|
|
101,220 |
|
| Variable compensation expense ($000's) |
|
74,604 |
|
|
51,689 |
|
|
48,706 |
|
|
64,582 |
|
|
67,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Segment:
|
|
|
|
|
|
|
|
|
|
|
| Loss and LAE ratio |
|
96.1 |
% |
|
55.3 |
% |
|
52.8 |
% |
|
42.1 |
% |
|
102.3 |
% |
| Expense ratio |
|
33.9 |
% |
|
33.2 |
% |
|
34.2 |
% |
|
33.3 |
% |
|
33.5 |
% |
| Combined ratio |
|
130.0 |
% |
|
88.5 |
% |
|
87.0 |
% |
|
75.4 |
% |
|
135.8 |
% |
| Employees' compensation and benefits ($000's) |
|
2,304 |
|
|
2,178 |
|
|
2,180 |
|
|
2,182 |
|
|
2,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (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. Annualized taxable equivalent adjustments are based
on a 35% federal income tax rate. 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. For the periods presented, the taxable equivalent adjustments to
interest income for Hilltop Consolidated were $0.6 million, $0.7 million, $0.8 million, $0.8 million and $0.7 million,
respectively, and for the Banking Segment were $0.5 million, $0.4 million, $0.4 million, $0.4 million and $0.5 million,
respectively. |
| (3) |
|
Reported on a consolidated basis, and 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 |
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
2015 |
|
| Tier 1 capital (to average assets): |
|
|
|
|
|
|
|
|
|
|
| Bank |
|
12.72 |
% |
|
12.70 |
% |
|
13.22 |
% |
|
12.77 |
% |
|
12.17 |
% |
| Hilltop |
|
13.18 |
% |
|
13.35 |
% |
|
12.65 |
% |
|
12.01 |
% |
|
11.87 |
% |
| Common equity Tier 1 capital (to risk-weighted assets): |
|
|
|
|
|
|
|
|
|
|
| Bank |
|
14.71 |
% |
|
15.10 |
% |
|
16.23 |
% |
|
17.36 |
% |
|
16.46 |
% |
| Hilltop |
|
16.67 |
% |
|
17.56 |
% |
|
17.87 |
% |
|
18.36 |
% |
|
18.02 |
% |
| Tier 1 capital (to risk-weighted assets): |
|
|
|
|
|
|
|
|
|
|
| Bank |
|
14.77 |
% |
|
15.12 |
% |
|
16.25 |
% |
|
17.36 |
% |
|
16.46 |
% |
| Hilltop |
|
17.26 |
% |
|
18.17 |
% |
|
18.48 |
% |
|
18.89 |
% |
|
18.74 |
% |
| Total capital (to risk-weighted assets): |
|
|
|
|
|
|
|
|
|
|
| Bank |
|
15.51 |
% |
|
15.87 |
% |
|
16.99 |
% |
|
18.13 |
% |
|
17.17 |
% |
| Hilltop |
|
17.69 |
% |
|
18.60 |
% |
|
18.89 |
% |
|
19.29 |
% |
|
19.29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| Non-Covered Non-Performing Loans Portfolio Data |
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-covered loans accounted for on a non-accrual basis ($000's): |
|
|
|
|
|
|
|
|
|
|
| Commercial and industrial |
|
18,412 |
|
|
19,179 |
|
|
17,764 |
|
|
22,302 |
|
|
23,353 |
|
| Real estate |
|
4,777 |
|
|
7,802 |
|
|
7,160 |
|
|
7,087 |
|
|
6,612 |
|
| Construction and land development |
|
139 |
|
|
102 |
|
|
114 |
|
|
118 |
|
|
253 |
|
| Consumer |
|
61 |
|
|
1 |
|
|
7 |
|
|
14 |
|
|
21 |
|
| Broker-dealer |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
23,389 |
|
|
27,084 |
|
|
25,045 |
|
|
29,521 |
|
|
30,239 |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-covered non-performing loans as a % of total non-covered loans |
|
0.33 |
% |
|
0.40 |
% |
|
0.37 |
% |
|
0.46 |
% |
|
0.48 |
% |
|
|
|
|
|
|
|
|
|
|
|
| Non-covered other real estate owned ($000's) |
|
2,656 |
|
|
543 |
|
|
394 |
|
|
511 |
|
|
920 |
|
|
|
|
|
|
|
|
|
|
|
|
| Other repossessed assets ($000's) |
|
— |
|
|
30 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-covered non-performing assets ($000's) |
|
26,045 |
|
|
27,657 |
|
|
25,439 |
|
|
30,032 |
|
|
31,159 |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-covered non-performing assets as a percentage of total assets |
|
0.20 |
% |
|
0.24 |
% |
|
0.21 |
% |
|
0.24 |
% |
|
0.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
| Non-covered non-PCI loans past due 90 days or more and still accruing ($000's) |
|
50,032 |
|
|
51,943 |
|
|
50,776 |
|
|
37,435 |
|
|
31,073 |
|
|
|
|
|
|
|
|
|
|
|
|
| Troubled debt restructurings included in accruing non-covered loans ($000's) |
|
1,235 |
|
|
1,409 |
|
|
1,418 |
|
|
3,664 |
|
|
2,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
2016 |
|
|
2015 |
|
|
|
Average |
|
Interest |
|
Annualized |
|
Average |
|
Interest |
|
Annualized |
|
|
Outstanding |
|
Earned or |
|
Yield or |
|
Outstanding |
|
Earned or |
|
Yield or |
|
|
Balance |
|
Paid |
|
Rate |
|
Balance |
|
Paid |
|
Rate |
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Loans, gross (1) |
|
$ |
7,038,518 |
|
|
$ |
98,468 |
|
5.56 |
% |
|
$ |
6,563,094 |
|
|
$ |
96,967 |
|
5.88 |
% |
| Investment securities - taxable |
|
|
1,080,097 |
|
|
|
6,813 |
|
2.53 |
% |
|
|
1,087,238 |
|
|
|
6,210 |
|
2.29 |
% |
| Investment securities - non-taxable (2) |
|
|
291,288 |
|
|
|
2,166 |
|
2.98 |
% |
|
|
235,229 |
|
|
|
2,296 |
|
3.91 |
% |
| Federal funds sold and securities purchased under agreements to resell |
|
|
144,820 |
|
|
|
36 |
|
0.10 |
% |
|
|
93,871 |
|
|
|
15 |
|
0.06 |
% |
| Interest-bearing deposits in other financial institutions |
|
|
388,520 |
|
|
|
484 |
|
0.50 |
% |
|
|
580,610 |
|
|
|
327 |
|
0.23 |
% |
| Other |
|
|
1,760,367 |
|
|
|
6,864 |
|
1.54 |
% |
|
|
2,293,444 |
|
|
|
10,586 |
|
1.83 |
% |
| Interest-earning assets, gross |
|
|
10,703,610 |
|
|
|
114,831 |
|
4.27 |
% |
|
|
10,853,486 |
|
|
|
116,401 |
|
4.27 |
% |
| Allowance for loan losses |
|
|
(51,247 |
) |
|
|
|
|
|
|
(41,789 |
) |
|
|
|
|
| Interest-earning assets, net |
|
|
10,652,363 |
|
|
|
|
|
|
|
10,811,697 |
|
|
|
|
|
| Noninterest-earning assets |
|
|
1,523,095 |
|
|
|
|
|
|
|
1,748,109 |
|
|
|
|
|
| Total assets |
|
$ |
12,175,458 |
|
|
|
|
|
|
$ |
12,559,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing deposits |
|
$ |
4,821,695 |
|
|
$ |
4,037 |
|
0.34 |
% |
|
$ |
4,749,690 |
|
|
$ |
3,900 |
|
0.33 |
% |
| Notes payable and other borrowings |
|
|
2,722,028 |
|
|
|
9,768 |
|
1.44 |
% |
|
|
3,345,511 |
|
|
|
11,095 |
|
1.32 |
% |
| Total interest-bearing liabilities |
|
|
7,543,723 |
|
|
|
13,805 |
|
0.73 |
% |
|
|
8,095,201 |
|
|
|
14,995 |
|
0.74 |
% |
| Noninterest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest-bearing deposits |
|
|
2,203,065 |
|
|
|
|
|
|
|
2,168,728 |
|
|
|
|
|
| Other liabilities |
|
|
657,435 |
|
|
|
|
|
|
|
601,480 |
|
|
|
|
|
| Total liabilities |
|
|
10,404,223 |
|
|
|
|
|
|
|
10,865,409 |
|
|
|
|
|
| Stockholders’ equity |
|
|
1,768,717 |
|
|
|
|
|
|
|
1,693,785 |
|
|
|
|
|
| Noncontrolling interest |
|
|
2,518 |
|
|
|
|
|
|
|
612 |
|
|
|
|
|
| Total liabilities and stockholders' equity |
|
$ |
12,175,458 |
|
|
|
|
|
|
$ |
12,559,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income (2) |
|
|
|
$ |
101,026 |
|
|
|
|
|
$ |
101,406 |
|
|
| Net interest spread (2) |
|
|
|
|
|
3.53 |
% |
|
|
|
|
|
3.53 |
% |
| Net interest margin (2) |
|
|
|
|
|
3.80 |
% |
|
|
|
|
|
3.75 |
% |
|
|
|
| (1) |
|
Average balance includes non-accrual loans. |
| (2) |
|
Annualized taxable equivalent adjustments are based on a 35% federal income tax rate.
The taxable equivalent adjustments to interest income were $0.6 million and $0.7 million for the three months ended June 30,
2016 and 2015, respectively. |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
| PlainsCapital Bank - Energy Exposure |
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Select Energy Statistics
|
|
|
|
|
|
|
|
|
| Outstanding energy loan balance ($M) |
|
223.6 |
|
|
233.5 |
|
|
179.8 |
|
|
194.9 |
|
| Energy unfunded commitments ($M) |
|
88.5 |
|
|
102.9 |
|
|
108.7 |
|
|
110.0 |
|
| Energy loans as a % of total loans |
|
4.2 |
% |
|
4.5 |
% |
|
3.6 |
% |
|
4.0 |
% |
| Classified and criticized energy loans ($M): |
|
|
|
|
|
|
|
|
| Criticized energy loans |
|
12.7 |
|
|
13.0 |
|
|
3.4 |
|
|
0.0 |
|
| Performing classified energy loans |
|
22.1 |
|
|
33.4 |
|
|
25.7 |
|
|
27.0 |
|
| Non-performing classified energy loans |
|
6.7 |
|
|
4.9 |
|
|
3.6 |
|
|
2.8 |
|
|
|
41.5 |
|
|
51.3 |
|
|
32.7 |
|
|
29.8 |
|
|
|
|
|
|
|
|
|
|
| Unimpaired energy reserves ($M) |
|
9.8 |
|
|
9.2 |
|
|
7.3 |
|
|
6.5 |
|
| Energy reserves as a % of energy loans |
|
4.7 |
% |
|
4.3 |
% |
|
4.4 |
% |
|
3.4 |
% |
| Energy NCOs ($M) |
|
0.4 |
|
|
0.2 |
|
|
1.2 |
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
Energy Portfolio Breakdown
|
|
|
|
|
|
|
|
|
| Exploration and production |
|
10 |
% |
|
13 |
% |
|
19 |
% |
|
20 |
% |
| Services: |
|
|
|
|
|
|
|
|
| Field services |
|
22 |
% |
|
22 |
% |
|
21 |
% |
|
15 |
% |
| Pipeline construction |
|
15 |
% |
|
15 |
% |
|
23 |
% |
|
25 |
% |
|
|
37 |
% |
|
37 |
% |
|
44 |
% |
|
40 |
% |
| Midstream: |
|
|
|
|
|
|
|
|
| Distribution |
|
38 |
% |
|
37 |
% |
|
25 |
% |
|
25 |
% |
| Transportation |
|
9 |
% |
|
7 |
% |
|
7 |
% |
|
7 |
% |
|
|
47 |
% |
|
44 |
% |
|
32 |
% |
|
32 |
% |
| Other: |
|
|
|
|
|
|
|
|
| Wholesalers |
|
1 |
% |
|
1 |
% |
|
2 |
% |
|
2 |
% |
| Equipment rentals |
|
0 |
% |
|
0 |
% |
|
1 |
% |
|
5 |
% |
| Equipment wholesalers |
|
5 |
% |
|
5 |
% |
|
2 |
% |
|
1 |
% |
| Total |
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call Information
Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Thursday, July 28, 2016. Hilltop
President and CEO Jeremy B. Ford and other key management members will discuss results for the second quarter of 2016. 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. Through its wholly owned subsidiary, PlainsCapital Corporation, a
regional commercial banking franchise, it has two operating subsidiaries: PlainsCapital Bank and PrimeLending. Through its wholly
owned subsidiaries, Hilltop Securities Inc. and Hilltop Securities Independent Network Inc., it provides a full complement of
securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory.
Through Hilltop Holdings’ other wholly owned subsidiary, National Lloyds Corporation, it provides property and casualty insurance
through two insurance companies, National Lloyds Insurance Company and American Summit Insurance Company. At June 30, 2016, Hilltop
employed approximately 5,400 people and operated approximately 450 locations in 44 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, Nationallloydsinsurance.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 business strategy, our financial condition, our efforts to make strategic acquisitions, the
integration of the operations acquired in the SWS Merger, our revenue, our liquidity and sources of funding, market trends,
operations and business, expectations concerning mortgage loan origination volume, expected losses on covered loans and related
reimbursements from the Federal Deposit Insurance Corporation (“FDIC”), expected levels of refinancing as a percentage of total
loan origination volume, projected losses on mortgage loans originated, anticipated changes in our revenues or earnings, the
effects of government regulation applicable to our operations, the appropriateness of our allowance for loan losses and provision
for loan losses, the collectability of loans and the outcome of litigation, our other plans, objectives, strategies, expectations
and intentions and other statements that are not statements of historical fact, and may be identified by words such as
“anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “might,” “plan,” “probable,”
“projects,” “seeks,” “should,” “target,” “view” 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 from those set forth in the forward-looking statements:
(i) risks associated with merger and acquisition integration, including our ability to promptly and effectively integrate our
businesses with those acquired in the SWS Merger and achieve the anticipated synergies and cost savings in connection therewith, as
well as the diversion of management time on acquisition- and integration-related issues; (ii) our ability to estimate loan losses;
(iii) changes in the default rate of our loans; (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; (vi) severe catastrophic events in Texas and other areas of the southern United States; (vii) changes in the
interest rate environment; (viii) cost and availability of capital; (vix) effectiveness of our data security controls in the face
of cyber attacks; (x) changes in state and federal laws, regulations or policies affecting one or more of the our business
segments, including changes in regulatory fees, deposit insurance premiums, capital requirements and the Dodd-Frank Wall Street
Reform and Consumer Protection Act; (xi) approval of new, or changes in, accounting policies and practices; (xii) changes in key
management; (xiii) competition in our banking, broker-dealer, mortgage origination and insurance segments from other banks and
financial institutions, as well as investment banking and financial advisory firms, mortgage bankers, asset-based non-bank lenders,
government agencies and insurance companies; (xiv) our ability to obtain reimbursements for losses on acquired loans under
loss-share agreements with the FDIC to the extent the FDIC determines that we did not adequately manage the covered loan portfolio;
(xv) failure of our insurance segment reinsurers to pay obligations under reinsurance contracts; and (xvi) our ability to use
excess cash in an effective manner, including the execution of successful acquisitions. For further discussion of such factors, see
the risk factors described in the Hilltop Annual Report on Form 10-K for the year ended December 31, 2015 and other reports filed
with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary
statement.
Hilltop Holdings Inc.
Isabell Novakov, 214-252-4029
inovakov@plainscapital.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20160727006574/en/