Hilltop Holdings Inc. [HTH] Filings

10-Q 1 hth-20240630x10q.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 June 30, 2024

☐

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 August 1, 2024 was 64,954,138.

Table of Contents

HILLTOP HOLDINGS INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2024

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income	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	46

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	89

Item 4.	Controls and Procedures	94


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	95

Item 1A.	Risk Factors	95

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	95

Item 5.	Other Information	95

Item 6.	Exhibits	96

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)


	June 30,		December 31,
	2024		2023
Assets
Cash and due from banks	$	798,300	$	1,858,700
Federal funds sold		5,650		650
Assets segregated for regulatory purposes		51,046		57,395
Securities purchased under agreements to resell		111,914		80,011
Securities:
Trading, at fair value		721,384		515,991
Available for sale, at fair value, net (amortized cost of $1,545,966 and $1,621,747, respectively)		1,433,107		1,507,595
Held to maturity, at amortized cost, net (fair value of $687,194 and $731,858, respectively)		777,456		812,677
Equity, at fair value		254		321
		2,932,201		2,836,584

Loans held for sale		1,264,437		943,846
Loans held for investment, net of unearned income		8,173,520		8,079,745
Allowance for credit losses		(115,082)		(111,413)
Loans held for investment, net		8,058,438		7,968,332

Broker-dealer and clearing organization receivables		1,297,175		1,573,931
Premises and equipment, net		161,746		168,856
Operating lease right-of-use assets		93,994		88,580
Mortgage servicing rights		52,902		96,662
Other assets		517,811		517,545
Goodwill		267,447		267,447
Other intangible assets, net		7,429		8,457
Total assets	$	15,620,490	$	16,466,996

Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$	2,845,441	$	3,007,101
Interest-bearing		7,528,415		8,056,091
Total deposits		10,373,856		11,063,192

Broker-dealer and clearing organization payables		1,285,226		1,430,734
Short-term borrowings		897,613		900,038
Securities sold, not yet purchased, at fair value		75,546		34,872
Notes payable		347,402		347,145
Operating lease liabilities		113,096		109,002
Other liabilities		365,140		431,684
Total liabilities		13,457,879		14,316,667
Commitments and contingencies (see Notes 13 and 14)
Stockholders' equity:
Hilltop stockholders' equity:
Common stock, $0.01 par value, 125,000,000 shares authorized; 64,952,838 and 65,153,092 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		650		652
Additional paid-in capital		1,047,523		1,054,662
Accumulated other comprehensive loss		(119,171)		(121,505)
Retained earnings		1,205,467		1,189,222
Deferred compensation employee stock trust, net		1		228
Employee stock trust (45 and 10,290 shares, at cost, at June 30, 2024 and December 31, 2023, respectively)		(1)		(292)
Total Hilltop stockholders' equity		2,134,469		2,122,967
Noncontrolling interests		28,142		27,362
Total stockholders' equity		2,162,611		2,150,329
Total liabilities and stockholders' equity	$	15,620,490	$	16,466,996

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Interest income:
Loans, including fees	$	138,627	$	138,397	$	272,958	$	261,776
Securities borrowed		20,306		18,515		40,867		35,583
Securities:
Taxable		25,289		26,719		51,530		52,321
Tax-exempt		2,389		2,566		4,804		5,754
Other		20,532		27,229		46,598		49,419
Total interest income		207,143		213,426		416,757		404,853

Interest expense:
Deposits		68,095		54,726		137,239		90,550
Securities loaned		18,669		16,413		37,708		31,759
Short-term borrowings		10,676		17,706		22,264		30,150
Notes payable		3,604		3,973		7,194		7,826
Other		2,449		2,342		5,081		4,597
Total interest expense		103,493		95,160		209,486		164,882

Net interest income		103,650		118,266		207,271		239,971
Provision for credit losses		10,934		14,836		8,063		17,167
Net interest income after provision for credit losses		92,716		103,430		199,208		222,804

Noninterest income:
Net gains from sale of loans and other mortgage production income		58,455		48,535		98,652		88,501
Mortgage loan origination fees		34,398		41,440		60,836		70,217
Securities commissions and fees		29,510		24,355		59,883		50,288
Investment and securities advisory fees and commissions		32,992		32,037		63,218		58,885
Other		37,950		44,285		92,334		85,255
Total noninterest income		193,305		190,652		374,923		353,146

Noninterest expense:
Employees' compensation and benefits		169,998		176,908		335,828		344,725
Occupancy and equipment, net		21,297		23,025		43,209		45,890
Professional services		10,270		12,594		20,001		23,291
Other		54,899		54,450		107,449		103,541
Total noninterest expense		256,464		266,977		506,487		517,447

Income before income taxes		29,557		27,105		67,644		58,503
Income tax expense		6,658		7,167		15,223		10,797
Net income		22,899		19,938		52,421		47,706
Less: Net income attributable to noncontrolling interest		2,566		1,805		4,420		3,773
Income attributable to Hilltop	$	20,333	$	18,133	$	48,001	$	43,933

Earnings per common share:
Basic	$	0.31	$	0.28	$	0.74	$	0.68
Diluted	$	0.31	$	0.28	$	0.74	$	0.68

Weighted average share information:
Basic		65,085		65,025		65,142		64,963
Diluted		65,086		65,054		65,149		64,993

See accompanying notes.

Table of Contents

HILLTOP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	22,899	$	19,938	$	52,421	$	47,706
Other comprehensive income (loss):
Change in fair value of cash flow hedges, net taxes of $(446), $1,010, $(352) and $4, respectively		(1,583)		3,386		(1,042)		137
Net unrealized gains (losses) on securities available-for-sale, net taxes of $62, $(3,308), $539 and $(148), respectively		692		(11,097)		606		(1,234)
Reclassification adjustment for gains (losses) included in net income, net taxes of $0, $1, $34 and $1, respectively		—		6		114		6
Amortization of unrealized losses on securities transferred from available-for-sale to held-to-maturity, net taxes of $398, $435, $798 and $873, respectively		1,326		1,447		2,656		2,904
Comprehensive income		23,334		13,680		54,755		49,519
Less: comprehensive income attributable to noncontrolling interest		2,566		1,805		4,420		3,773

Comprehensive income applicable to Hilltop	$	20,768	$	11,875	$	50,335	$	45,746

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, March 31, 2023	65,023	$	650	$	1,044,774	$	(125,461)	$	1,136,901	$	446	21	$	(599)	$	2,056,711	$	27,087	$	2,083,798
Net income	—		—		—		—		18,133		—	—		—		18,133		1,805		19,938
Other comprehensive loss	—		—		—		(6,257)		—		—	—		—		(6,257)		—		(6,257)
Stock-based compensation expense	—		—		5,984		—		—		—	—		—		5,984		—		5,984
Common stock issued to board members	5		—		150		—		—		—	—		—		150		—		150
Issuance of common stock related to share-based awards, net	43		1		(717)		—		—		—	—		—		(716)		—		(716)
Dividends on common stock ($0.16 per share)	—		—		—		—

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