DALLAS--(BUSINESS WIRE)--
Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”), the parent company of
PlainsCapital Corporation (“PlainsCapital”), announced financial results
for the fourth quarter and full year 2013. PlainsCapital, through its
operating subsidiaries PlainsCapital Bank (the “Bank”), PrimeLending and
First Southwest, provides banking, mortgage origination and financial
advisory services, respectively. Hilltop’s insurance subsidiary,
National Lloyds Corporation (“NLC”), provides property and casualty
insurance.
Hilltop produced income to common stockholders of $29.5 million, or
$0.34 per diluted share, for the fourth quarter of 2013, compared to
$8.6 million, or $0.13 per diluted share, for the fourth quarter of
2012. Income to common stockholders for the third quarter of 2013 was
revised to $38.2 million, or $0.43 per diluted share, an increase from
previously reported operating results due to adjustments to the
preliminary bargain purchase gain associated with the acquisition of
substantially all of the assets and assumption of substantially all of
the liabilities of First National Bank, Edinburg, Texas, from the
Federal Deposit Insurance Corporation, as receiver, on September 13,
2013 (“FNB Transaction”). Income to common stockholders for the full
year 2013 was $121.0 million, or $1.40 per diluted share. Hilltop’s
annualized return on average assets and return on average equity for the
fourth quarter of 2013 were 1.34% and 10.97%, respectively. The return
on average assets and return on average equity for the full year 2013
were 1.67% and 11.00%, respectively.
“2013 was a strong and rewarding year for Hilltop’s shareholders,
employees and customers. The bank’s operating results drove our earnings
and every business segment was profitable in 2013. Our mortgage
origination and financial advisory businesses performed well in the face
of continued challenges in their respective industries. We also were
able to effectively deploy excess capital and grow our balance sheet and
commercial banking business through the FNB Transaction. This
transaction put us in every major Texas market and improved the
composition of our balance sheet and funding profile. We enter 2014
optimistic and well-positioned, but cautious given the current headwinds
in our operating environments,” said Jeremy Ford, CEO of Hilltop.
Fourth Quarter 2013 Highlights for Hilltop:
-
Hilltop’s total assets decreased to $8.9 billion at December 31, 2013,
compared to $9.1 billion at September 30, 2013;
-
Total stockholders’ equity increased by $105.6 million from September
30, 2013 to $1.3 billion at December 31, 2013;
-
Loans held for investment, net of allowance for loan losses, increased
by 2.6% to $4.5 billion (including covered and non-covered loans1),
and loans held for sale increased by 4.0% to $1.1 billion, from
September 30, 2013 to December 31, 2013;
-
Total deposits decreased by $214.1 million from September 30, 2013 to
$6.7 billion at December 31, 2013;
-
Hilltop was well-capitalized with a Tier 1 Leverage Ratio2
of 12.81% and Total Capital Ratio of 19.13% at December 31, 2013; and
-
Hilltop continues to retain approximately $164 million of freely
usable cash at December 31, 2013, following the redemption of the
senior exchangeable notes held by its insurance company subsidiaries
for cash in the fourth quarter and a $35 million capital contribution
to the Bank in connection with the FNB Transaction in the third
quarter.
1 Loan portfolio includes “covered 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 fourth quarter 2013 excluding goodwill and intangible
assets.
For the fourth quarter of 2013, taxable equivalent net interest income
was $88.6 million compared with $71.9 million in the third quarter of
2013, a 23.2% increase. The consolidated taxable equivalent net interest
margin was 4.52% for the fourth quarter of 2013, a six basis point
increase from 4.46% in the third quarter of 2013. During the fourth
quarter, the consolidated taxable equivalent net interest margin was
impacted by accretion of discount on loans of $19.6 million,
amortization of premium on acquired securities of $1.1 million and
amortization of premium on acquired time deposits of $2.6 million.
For the fourth quarter of 2013, noninterest income was $182.5 million
compared with $215.1 million in the third quarter of 2013, a 15.2%
decrease. The decline was driven by lower mortgage origination volumes,
as well as a preliminary bargain purchase gain booked to the third
quarter of 2013 that was revised upward. Net gains from sale of loans,
other mortgage production income and mortgage loan origination fees
declined $29.3 million from the third quarter of 2013 to $98.1 million
in the fourth quarter of 2013. Mortgage loan originations totaled $2.3
billion in the fourth quarter of 2013, versus $2.9 billion in the third
quarter of 2013, due to seasonally lower volume and rising interest
rates. Net premiums earned increased to $41.5 million in the fourth
quarter of 2013 from $40.0 million in the third quarter of 2013, which
is primarily attributable to rate increases in homeowners and mobile
home products. Advisory fees and commissions from our financial advisory
segment were $22.8 million in the fourth quarter of 2013 and $22.3
million in the third quarter of 2013, as rising interest rates and
volatility in fixed income markets continue to pressure financial
advisory fees and fixed income sales. We recorded an upward revision to
the pre-tax bargain purchase gain associated with the FNB Transaction in
the third quarter to $12.6 million, from the preliminary bargain
purchase gain initially recorded of $3.3 million.
For the fourth quarter of 2013, noninterest expense was $219.8 million
compared with $216.6 million in the third quarter of 2013, a 1.5%
increase. Employees’ compensation and benefits declined $6.8 million, or
5.7%, to $112.4 million in the fourth quarter of 2013, primarily due to
lower variable compensation tied to mortgage origination volume, offset
by a full quarter of FNB compensation expense. Salaries and benefit
expenses at the mortgage origination segment specifically declined
approximately 9% between the third and fourth quarter, as the benefits
of the headcount reductions in the third quarter were realized. Loss and
loss adjustment expenses declined to $16.8 million in the fourth quarter
of 2013 from $24.6 million in the third quarter of 2013. This was driven
by seasonality and lower claims volume. Primarily due to the FNB
Transaction, occupancy and equipment expense increased by $4.7 million
from the third quarter of 2013 to $25.7 million in the fourth quarter of
2013 and other noninterest expense increased to $52.7 million in the
fourth quarter of 2013 from $40.1 million in the third quarter of 2013.
Amortization of identifiable intangibles from purchase accounting was
$2.6 million for the fourth quarter of 2013.
For the fourth quarter of 2013, the provision for loan losses was $2.2
million, compared to $10.7 million for the third quarter of 2013. The
fourth quarter of 2013 provision included provisions for loan losses
related to newly originated loans and acquired loans without credit
impairment at acquisition of $1.6 million and purchased credit impaired
(“PCI”) loans of $1.0 million. Net charge-offs on non-covered loans for
the fourth quarter of 2013 were $1.1 million, and the allowance for
non-covered loan losses was $33.2 million, or 0.95% of total non-covered
loans at December 31, 2013. Non-covered, non-performing assets at
December 31, 2013 were $28.2 million, or 0.32% of total assets, compared
to $30.5 million, or 0.34% of total assets, at September 30, 2013.
In the fourth quarter, HTH Operating Partnership LP, a wholly-owned
subsidiary of Hilltop, completed the call of its outstanding 7.5% Senior
Exchangeable Notes due 2025 (the “Notes”). There were $90.9 million in
aggregate principal amount of the Notes outstanding, including $6.9
million aggregate principal amount held by our insurance company
subsidiaries. The Notes held by third party investors with a par value
of $84.0 million were exchanged for 6.2 million shares of Hilltop common
stock. The $6.9 million aggregate principal amount of Notes held by the
insurance company subsidiaries were settled for $11.1 million in cash,
resulting in a $3.7 million gain for the insurance company subsidiaries
that was eliminated in consolidation.
|
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | |
|
| Condensed Balance Sheet | | | December 31, | | | September 30, | | | June 30, | | | March 31, |
| ($000s) |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
Cash and due from banks
| | |
713,099
| | | |
976,188
| | | |
596,351
| | | |
588,838
| |
|
Securities
| | |
1,261,989
| | | |
1,322,635
| | | |
1,106,379
| | | |
1,207,274
| |
|
Loans held for sale
| | |
1,089,039
| | | |
1,046,801
| | | |
1,412,960
| | | |
1,242,322
| |
|
Non-covered loans, net of unearned income
| | |
3,514,646
| | | |
3,310,224
| | | |
3,253,001
| | | |
3,248,367
| |
|
Allowance for loan losses
| | | (33,241 | ) | | | (33,180 | ) | | | (26,237 | ) | | | (16,637 | ) |
|
Non-covered loans, net of allowance for loan losses
| | |
3,481,405
| | | |
3,277,044
| | | |
3,226,764
| | | |
3,231,730
| |
|
Covered loans, net of allowance for loan losses
| | |
1,005,308
| | | |
1,096,590
| | | |
-
| | | |
-
| |
|
Covered other real estate owned
| | |
142,833
| | | |
119,670
| | | |
-
| | | |
-
| |
| FDIC indemnification asset
| | |
188,291
| | | |
190,041
| | | |
-
| | | |
-
| |
|
Premises and equipment, net
| | |
198,468
| | | |
187,857
| | | |
110,937
| | | |
111,894
| |
|
All other assets
| | | 822,791 |
| | | 876,766 |
| | | 949,412 |
| | | 834,852 |
|
|
Total assets
| | | 8,903,223 |
| | | 9,093,592 |
| | | 7,402,803 |
| | | 7,216,910 |
|
| | | | | | | | | | | |
|
|
Deposits
| | |
6,722,019
| | | |
6,936,162
| | | |
4,496,469
| | | |
4,758,438
| |
|
Short-term borrowings
| | |
342,087
| | | |
305,297
| | | |
1,003,804
| | | |
576,730
| |
|
Notes payable
| | |
56,327
| | | |
140,111
| | | |
139,938
| | | |
140,747
| |
|
All other liabilities
| | | 470,868 |
| | | 505,669 |
| | | 590,792 |
| | | 562,410 |
|
|
Total liabilities
| | |
7,591,301
| | | |
7,887,239
| | | |
6,231,003
| | | |
6,038,325
| |
|
Total Hilltop stockholders' equity
| | |
1,311,141
| | | |
1,205,475
| | | |
1,170,895
| | | |
1,177,809
| |
|
Noncontrolling interest
| | | 781 |
| | | 878 |
| | | 905 |
| | | 776 |
|
|
Total liabilities & stockholders' equity
| | | 8,903,223 |
| | | 9,093,592 |
| | | 7,402,803 |
| | | 7,216,910 |
|
|
|
| |
|
| |
|
| |
| | | | | | | | |
|
| | |
|
|
| Three Months Ended | | | Year Ended |
| Condensed Income Statement | | | December 31, | | | September 30, |
|
| June 30, |
|
| March 31, | | | December 31, |
| ($000s) |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
Interest income
| | |
98,601
| | | |
79,702
| | | |
76,168
| | | |
74,604
| | | |
329,075
| |
|
Interest expense
| | | 10,002 |
| | | 7,786 |
| | | 7,743 |
| | | 7,343 |
| | | 32,874 |
|
|
Net interest income
| | |
88,599
| | | |
71,916
| | | |
68,425
| | | |
67,261
| | | |
296,201
| |
|
Provision for loan losses
| | | 2,206 |
| | | 10,658 |
| | | 11,289 |
| | | 13,005 |
| | | 37,158 |
|
|
Net interest income after provision for loan losses
| | |
86,393
| | | |
61,258
| | | |
57,136
| | | |
54,256
| | | |
259,043
| |
|
Noninterest income
| | |
182,479
| | | |
215,095
| | | |
239,233
| | | |
213,278
| | | |
850,085
| |
|
Noninterest expense
| | | 219,752 |
| | | 216,592 |
| | | 260,400 |
| | | 214,991 |
| | | 911,735 |
|
|
Income before income taxes
| | |
49,120
| | | |
59,761
| | | |
35,969
| | | |
52,543
| | | |
197,393
| |
|
Income tax expense
| | | 18,090 |
| | | 20,115 |
| | | 13,309 |
| | | 19,170 |
| | | 70,684 |
|
|
Net income
| | |
31,030
| | | |
39,646
| | | |
22,660
| | | |
33,373
| | | |
126,709
| |
|
Less: Net income attributable to noncontrolling interest
| | | 160 |
| | | 339 |
| | | 568 |
| | | 300 |
| | | 1,367 |
|
|
Income attributable to Hilltop
| | |
30,870
| | | |
39,307
| | | |
22,092
| | | |
33,073
| | | |
125,342
| |
|
Dividends on preferred stock
| | | 1,342 |
| | | 1,133 |
| | | 1,149 |
| | | 703 |
| | | 4,327 |
|
|
Income applicable to Hilltop common stockholders
| | | 29,528 |
| | | 38,174 |
| | | 20,943 |
| | | 32,370 |
| | | 121,015 |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | |
|
| | |
|
|
| Three Months Ended | | | Year Ended |
| | | December 31, | | | September 30, | | | June 30, | | | March 31, | | | December 31, |
| Selected Financial Data |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
Return on average stockholders' equity
| | |
10.97
|
%
| | |
13.02
|
%
| | |
7.29
|
%
| | |
11.46
|
%
| | |
11.00
|
%
|
|
Return on average assets
| | |
1.34
|
%
| | |
2.07
|
%
| | |
1.24
|
%
| | |
1.87
|
%
| | |
1.67
|
%
|
|
Net interest margin (taxable equivalent)
| | |
4.52
|
%
| | |
4.46
|
%
| | |
4.33
|
%
| | |
4.35
|
%
| | |
4.47
|
%
|
|
Earnings per common share ($):
| | | | | | | | | | | | | | | |
|
Basic
| | |
0.34
| | | |
0.45
| | | |
0.25
| | | |
0.39
| | | |
1.43
| |
|
Diluted
| | |
0.34
| | | |
0.43
| | | |
0.24
| | | |
0.39
| | | |
1.40
| |
Weighted average shares outstanding (000s):
| | | | | | | | | | | | | | | |
|
Basic
| | |
87,027
| | | |
83,493
| | | |
83,490
| | | |
83,487
| | | |
84,382
| |
|
Diluted
| | |
87,871
| | | |
90,460
| | | |
90,294
| | | |
83,743
| | | |
90,331
| |
|
Book value per share ($)
| | |
13.27
| | | |
13.00
| | | |
12.59
| | | |
12.74
| | | |
13.27
| |
Shares outstanding (000s)
| | |
90,176
| | | |
83,959
| | | |
83,956
| | | |
83,487
| | | |
90,176
| |
|
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | |
|
| | | December 31, | | | September 30, | | | June 30, | | | March 31, |
| Capital Ratios |
|
| 2013 |
|
| 2013 |
|
| 2013 |
|
| 2013 |
| | | | | | | | | | | |
|
|
Tier 1 capital (to average quarterly assets):
| | | | | | | | | | | | |
|
Bank
| | |
9.29
|
%
| | |
11.05
|
%
| | |
9.74
|
%
| | |
9.22
|
%
|
|
Hilltop
| | |
12.81
|
%
| | |
13.96
|
%
| | |
13.66
|
%
| | |
13.39
|
%
|
|
Tier 1 capital (to risk-weighted assets):
| | | | | | | | | | | | |
|
Bank
| | |
13.38
|
%
| | |
12.76
|
%
| | |
12.77
|
%
| | |
12.21
|
%
|
|
Hilltop
| | |
18.53
|
%
| | |
16.56
|
%
| | |
18.35
|
%
| | |
18.21
|
%
|
|
Total capital (to risk-weighted assets):
| | | | | | | | | | | | |
|
Bank
| | |
14.00
|
%
| | |
13.36
|
%
| | |
13.35
|
%
| | |
12.59
|
%
|
|
Hilltop
| | |
19.13
|
%
| | |
17.14
|
%
| | |
18.90
|
%
| | |
18.58
|
%
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | | |
|
| | | Three Months Ended | | | Year Ended |
| | | December 31, 2013 | | | December 31, 2013 |
| | | Average |
|
| Interest | | | Annualized | | | Average | | | Interest | | | Annualized |
| | | Outstanding | | | Earned or | | | Yield or | | | Outstanding | | | Earned or | | | Yield or |
| Net Interest Margin Analysis ($000) | | | Balance | | | Paid | | | Rate | | | Balance | | | Paid | | | Rate |
| Assets | | | | | | | | | | | | | | | | | | |
|
Interest-earning assets
| | | | | | | | | | | | | | | | | | |
|
Loans, gross
| | |
$
|
5,313,671
| | | |
$
|
86,098
| | |
6.41
|
%
| | |
$
|
4,584,079
| | | |
$
|
284,782
| | |
6.21
|
%
|
|
Investment securities - taxable
| | | |
1,097,746
| | | | |
7,484
| | |
2.74
|
%
| | | |
993,389
| | | | |
27,078
| | |
2.75
|
%
|
|
Investment securities - non-taxable
| | | |
185,862
| | | | |
1,771
| | |
3.81
|
%
| | | |
192,933
| | | | |
7,150
| | |
3.71
|
%
|
Federal funds sold and securities purchased under agreements to
resell
| | | |
30,120
| | | | |
22
| | |
0.29
|
%
| | | |
27,996
| | | | |
113
| | |
0.40
|
%
|
Interest-bearing deposits in other financial institutions
| | | |
966,112
| | | | |
991
| | |
0.26
|
%
| | | |
727,284
| | | | |
1,848
| | |
0.25
|
%
|
|
Other
| | |
|
155,331
|
| | |
|
2,819
| | |
6.71
|
%
| | |
|
160,320
|
| | |
|
10,479
| | |
6.11
|
%
|
|
Interest-earning assets, gross
| | | |
7,748,842
| | | | |
99,185
| | |
5.05
|
%
| | | |
6,686,001
| | | | |
331,450
| | |
4.96
|
%
|
|
Allowance for loan losses
| | |
|
(34,841
|
)
| | | | | | | | |
|
(22,906
|
)
| | | | | | |
|
Interest-earning assets, net
| | | |
7,714,001
| | | | | | | | | | |
6,663,095
| | | | | | | |
|
Noninterest-earning assets
| | |
|
1,254,877
|
| | | | | | | | |
|
985,308
|
| | | | | | |
| Total assets | | |
$
|
8,968,878
|
| | | | | | | | |
$
|
7,648,403
|
| | | | | | |
| | | | | | | | | | | | | | | | | |
|
| Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | |
|
Interest-bearing liabilities
| | | | | | | | | | | | | | | | | | |
|
Interest-bearing deposits
| | |
$
|
6,477,315
| | | |
$
|
4,336
| | |
0.27
|
%
| | |
$
|
5,088,963
| | | |
$
|
14,877
| | |
0.29
|
%
|
|
Notes payable and other borrowings
| | |
|
519,685
|
| | |
|
5,666
| | |
3.73
|
%
| | |
|
709,642
|
| | |
|
17,997
| | |
2.19
|
%
|
|
Total interest-bearing liabilities
| | | |
6,997,000
| | | | |
10,002
| | |
0.56
|
%
| | | |
5,798,605
| | | | |
32,874
| | |
0.56
|
%
|
|
Noninterest-bearing liabilities
| | | | | | | | | | | | | | | | | | |
|
Noninterest-bearing deposits
| | | |
332,069
| | | | | | | | | | |
203,996
| | | | | | | |
|
Other liabilities
| | |
|
379,660
|
| | | | | | | | |
|
449,197
|
| | | | | | |
|
Total liabilities
| | | |
7,708,729
| | | | | | | | | | |
6,451,798
| | | | | | | |
|
Stockholders' equity
| | | |
1,259,605
| | | | | | | | | | |
1,195,961
| | | | | | | |
|
Noncontrolling interest
| | |
|
544
|
| | | | | | | | |
|
644
|
| | | | | | |
| Total liabilities and stockholders' equity | | |
$
|
8,968,878
|
| | | | | | | | |
$
|
7,648,403
|
| | | | | | |
| | | | | |
| | | | | | | | |
| | | |
| Net interest income | | | | | |
$
|
89,183
| | | | | | | | |
$
|
298,576
| | | |
| Net interest spread | | | | | | | | |
4.49
|
%
| | | | | | | | |
4.40
|
%
|
| Net interest margin | | | | | | | | |
4.52
|
%
| | | | | | | | |
4.47
|
%
|
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Conference Call Information
Hilltop will host a live webcast and conference call at 8:00 AM Central
(9:00 AM Eastern), Tuesday, March 4, 2014. Hilltop President and CEO
Jeremy B. Ford and other key management members will discuss 2013 year
end results. Interested parties can access the conference call by
dialing 1-888-317-6016 (domestic) or 1-412-317-6016 (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 three operating subsidiaries:
PlainsCapital Bank, PrimeLending, and First Southwest. 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 December 31, 2013, Hilltop employed approximately
4,550 people and operated approximately 400 locations in 45 states.
Hilltop Holdings common stock is listed on the New York Stock Exchange
under the symbol "HTH." Find more information at Hilltop-Holdings.com
and PlainsCapital.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 Hilltop’s actual results,
performance or achievements to be materially different from any expected
future results, performance or achievements. Forward-looking statements
speak only as of the date they are made and, except as required by law,
Hilltop does not assume any duty to update forward-looking statements.
Such forward-looking statements include, but are not limited to,
statements about the future financial and operating results, our plans,
objectives, expectations and intentions and other statements that are
not historical facts. 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; (ii) our ability to estimate loan losses; (iii) changes in
the default rate of our loans; (iv) risks associated with concentration
in real estate related loans; (v) our ability to obtain reimbursements
for losses on acquired loans under loss-share agreements with the
Federal Deposit Insurance Corporation; (vi) changes in general economic,
market and business conditions in areas or markets where we compete;
(vii) severe catastrophic events in our geographic area; (viii) changes
in the interest rate environment; (ix) cost and availability of capital;
(x) changes in state and federal laws, regulations or policies affecting
one or more of 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) our
ability to use net operating loss carry forwards to reduce future tax
payments; (xii) approval of new, or changes in, accounting policies and
practices; (xiii) changes in key management; (xiv) competition in our
banking, mortgage origination, financial advisory and insurance segments
from other banks and financial institutions, as well as insurance
companies, mortgage bankers, investment banking and financial advisory
firms, asset-based non-bank lenders and government agencies; (xv) risks
related to our proposal to acquire SWS Group, Inc.; (xvi) failure of our
insurance segment reinsurers to pay obligations under reinsurance
contracts; (xvii) our ability to use excess cash in an effective manner,
including the execution of successful acquisitions; and (xviii) our
participation in governmental programs, including the Small Business
Lending Fund. For more information, see the risk factors described in
the Annual Report on Form 10-K for the year ended December 31, 2013 and
other reports filed with the Securities and Exchange Commission.
Hilltop Holdings Inc.
Isabell Novakov, 214-252-4029
inovakov@plainscapital.com
Source: Hilltop Holdings Inc.