Hilltop Holdings Inc. [HTH] Filings

10-Q 1 hth-20230930x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-31987

Hilltop Holdings Inc.

(Exact name of registrant as specified in its charter)


Maryland		84-1477939
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)

6565 Hillcrest Avenue
Dallas, TX		75205
(Address of principal executive offices)		(Zip Code)

(214) 855-2177

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	HTH	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ⌧		Accelerated filer ◻

Non-accelerated filer ◻		Smaller reporting company ☐
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ⌧

The number of shares of the registrant's common stock outstanding at October 20, 2023 was 65,169,821.

Table of Contents

HILLTOP HOLDINGS INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Statements of Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	87

Item 4.	Controls and Procedures	91


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	92

Item 1A.	Risk Factors	92

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	94

Item 5.	Other Information	94

Item 6.	Exhibits	94

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

HILLTOP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)


	September 30,		December 31,
	2023		2022
Assets
Cash and due from banks	$	1,513,747	$	1,579,512
Federal funds sold		3,650		650
Assets segregated for regulatory purposes		47,491		67,737
Securities purchased under agreements to resell		123,719		118,070
Securities:
Trading, at fair value		578,901		755,032
Available for sale, at fair value, net (amortized cost of $1,606,340 and $1,788,557, respectively)		1,456,238		1,658,766
Held to maturity, at amortized cost, net (fair value of $703,366 and $785,335, respectively)		825,079		875,532
Equity, at fair value		264		200
		2,860,482		3,289,530

Loans held for sale		1,058,806		982,616
Loans held for investment, net of unearned income		8,204,052		8,092,673
Allowance for credit losses		(110,822)		(95,442)
Loans held for investment, net		8,093,230		7,997,231

Broker-dealer and clearing organization receivables		1,460,352		1,038,055
Premises and equipment, net		172,097		184,950
Operating lease right-of-use assets		93,057		102,443
Mortgage servicing rights		104,951		100,825
Other assets		588,751		518,899
Goodwill		267,447		267,447
Other intangible assets, net		9,078		11,317
Total assets	$	16,396,858	$	16,259,282

Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$	3,200,247	$	3,968,862
Interest-bearing		7,902,850		7,346,887
Total deposits		11,103,097		11,315,749

Broker-dealer and clearing organization payables		1,368,064		966,470
Short-term borrowings		882,999		970,056
Securities sold, not yet purchased, at fair value		51,527		53,023
Notes payable		347,020		346,654
Operating lease liabilities		114,334		126,759
Other liabilities		422,955		417,042
Total liabilities		14,289,996		14,195,753
Commitments and contingencies (see Notes 13 and 14)
Stockholders' equity:
Hilltop stockholders' equity:
Common stock, $0.01 par value, 125,000,000 shares authorized; 65,169,821 and 64,684,625 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		652		647
Additional paid-in capital		1,052,867		1,046,331
Accumulated other comprehensive loss		(145,083)		(133,531)
Retained earnings		1,171,250		1,123,636
Deferred compensation employee stock trust, net		340		481
Employee stock trust (15,711 and 22,566 shares, at cost, at September 30, 2023 and December 31, 2022, respectively)		(446)		(640)
Total Hilltop stockholders' equity		2,079,580		2,036,924
Noncontrolling interests		27,282		26,605
Total stockholders' equity		2,106,862		2,063,529
Total liabilities and stockholders' equity	$	16,396,858	$	16,259,282

See accompanying notes.

Table of Contents

HILLTOP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Interest income:
Loans, including fees	$	142,402	$	109,165	$	404,179	$	298,301
Securities borrowed		17,683		10,938		53,265		30,252
Securities:
Taxable		27,166		19,642		79,487		52,512
Tax-exempt		2,464		2,451		8,218		7,011
Other		27,040		14,276		76,459		23,066
Total interest income		216,755		156,472		621,608		411,142

Interest expense:
Deposits		64,290		12,525		154,840		22,174
Securities loaned		16,169		9,407		47,928		25,390
Short-term borrowings		14,212		5,550		44,361		10,615
Notes payable		4,026		3,907		11,852		12,154
Other		2,408		1,597		7,005		5,276
Total interest expense		101,105		32,986		265,986		75,609

Net interest income		115,650		123,486		355,622		335,533
Provision for (reversal of) credit losses		(40)		(780)		17,127		4,671
Net interest income after provision for (reversal of) credit losses		115,690		124,266		338,495		330,862

Noninterest income:
Net gains from sale of loans and other mortgage production income		47,262		57,998		135,763		266,435
Mortgage loan origination fees		41,478		39,960		111,695		114,400
Securities commissions and fees		28,044		34,076		88,873		105,979
Investment and securities advisory fees and commissions		39,662		35,031		98,546		96,738
Other		40,403		39,910		115,117		79,124
Total noninterest income		196,849		206,975		549,994		662,676

Noninterest expense:
Employees' compensation and benefits		173,195		200,450		517,920		605,796
Occupancy and equipment, net		21,912		25,041		67,802		74,038
Professional services		12,639		10,631		35,930		36,939
Other		52,271		52,616		155,812		156,858
Total noninterest expense		260,017		288,738		777,464		873,631

Income before income taxes		52,522		42,503		111,025		119,907
Income tax expense		13,211		9,249		24,008		27,191
Net income		39,311		33,254		87,017		92,716
Less: Net income attributable to noncontrolling interest		2,269		1,186		6,042		5,138
Income attributable to Hilltop	$	37,042	$	32,068	$	80,975	$	87,578

Earnings per common share:
Basic	$	0.57	$	0.50	$	1.25	$	1.21
Diluted	$	0.57	$	0.50	$	1.25	$	1.21

Weighted average share information:
Basic		65,106		64,552		65,011		72,400
Diluted		65,108		64,669		65,014		72,557

See accompanying notes.

Table of Contents

HILLTOP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	39,311	$	33,254	$	87,017	$	92,716
Other comprehensive income (loss):
Change in fair value of cash flow hedges, net taxes of $(91), $2,188, $(87) and $5,099, respectively		(306)		21,749		(169)		58,158
Net unrealized gains (losses) on securities available-for-sale, net taxes of $(4,349), $(14,506), $(4,497) and $(34,747), respectively		(14,585)		(48,361)		(15,819)		(115,679)
Reclassification adjustment for gains (losses) included in net income, net taxes of $0, $0, $1 and $3, respectively		(2)		—		4		10
Adjustment for unrealized losses on securities transferred from available-for-sale to held-to-maturity, net taxes of $0, $0, $0 and $(17,033), respectively		—		—		—		(56,690)
Amortization of unrealized losses on securities transferred from available-for-sale to held-to-maturity, net taxes of $459, $609, $1,332 and $1,369, respectively		1,528		2,027		4,432		4,556
Comprehensive income (loss)		25,946		8,669		75,465		(16,929)
Less: comprehensive income attributable to noncontrolling interest		2,269		1,186		6,042		5,138

Comprehensive income (loss) applicable to Hilltop	$	23,677	$	7,483	$	69,423	$	(22,067)

See accompanying notes.

Table of Contents

HILLTOP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)


						Accumulated				Deferred					Total
				Additional		Other				Compensation		Employee			Hilltop				Total
	Common Stock			Paid-in		Comprehensive		Retained		Employee Stock		Stock Trust			Stockholders’		Noncontrolling		Stockholders’
	Shares	Amount		Capital		Loss		Earnings		Trust, Net		Shares	Amount		Equity		Interest		Equity
Balance, June 30, 2022	64,576	$	646	$	1,039,261	$	(95,279)	$	1,085,208	$	695	34	$	(954)	$	2,029,577	$	27,826	$	2,057,403
Net income	—		—		—		—		32,068		—	—		—		32,068		1,186		33,254
Other comprehensive loss	—		—		—		(24,585)		—		—	—		—		(24,585)		—		(24,585)
Stock-based compensation expense	—		—		4,334		—		—		—	—		—		4,334		—		4,334
Common stock issued to board members	6		—		146		—		—		—	—		—		146		—		146
Issuance of common stock related to share-based awards, net	9		—		(136)		—		—		—	—		—		(136)		—		(136)
Dividends on common stock ($0.15 per share)	—		—		—		—		(9,690)		—	—		—		(9,690)		—		(9,690)
Deferred compensation plan	—		—		—		—		—		(216)	(11)		313		97		—		97
Net cash distributed to noncontrolling interest	—		—		—		—		—		—	—		—		—		(1,940)		(1,940)
Balance, September 30, 2022	64,591	$	646	$	1,043,605	$	(119,864)	$	1,107,586	$	479	23	$	(641)	$	2,031,811	$	27,072	$	2,058,883

Balance, June 30, 2023	65,071	$	651	$	1,050,191	$	(131,718)	$	1,144,624	$	450	21	$	(599)	$	2,063,599	$	26,655	$	2,090,254
Net income	—		—		—		—		37,042		—	—		—		37,042		2,269

Hilltop Holdings Inc. [HTH] Filings
10-Q	[2023-10-23]
10-Q	[2023-07-24]
10-Q	[2023-04-24]
10-K	[2023-02-17]
10-Q	[2022-10-24]
10-Q	[2022-07-25]
10-Q	[2022-04-25]
10-K	[2022-02-15]
10-Q	[2021-10-28]
10-Q	[2021-07-26]
10-Q	[2021-04-26]
10-K	[2021-02-17]
10-Q	[2020-10-23]
10-Q	[2020-07-30]
10-Q	[2020-05-05]
10-K	[2020-02-27]
10-Q	[2019-11-18]
10-Q	[2019-07-25]
10-Q	[2019-04-25]
10-K	[2019-02-15]
10-Q	[2018-10-25]
10-Q	[2018-07-26]
10-Q	[2018-04-26]
10-K	[2018-02-15]
10-Q	[2017-10-26]
10-Q	[2017-07-27]
10-Q	[2017-04-25]
10-K	[2017-02-16]
10-Q	[2016-10-27]
10-Q	[2016-07-27]
10-Q	[2016-04-28]
10-K	[2016-02-24]
10-Q	[2015-11-05]
10-Q	[2015-07-29]
10-Q	[2015-05-06]
10-K	[2015-02-26]
10-Q	[2014-11-06]
10-Q	[2014-07-30]
10-Q	[2014-05-05]
10-K	[2014-03-03]
10-Q	[2013-11-12]
10-Q	[2013-08-05]
10-Q	[2013-05-06]
10-K	[2013-03-15]
10-Q	[2012-11-02]
10-Q	[2012-08-06]
10-Q	[2012-05-04]
10-K	[2012-03-09]