- Net Income: $30 million or 46¢ per diluted share.
- Return on Average Assets: 0.8%.
- Return on Average Equity: 5.5%.
- Pre-Tax Income (Plains Capital Bank): $48 million on $12.8 billion of average assets.
- Average Loans Decline: $40 million due to loan payoffs and lower pull-through rate.
- Net Interest Margin (Bank): 3.05%, a five basis point compression from the previous quarter.
- Pre-Tax Loss (Prime Lending): $8.7 million.
- Origination Volume Decline: $72 million.
- Gain on Sale Margin Decline: Four basis points to 224 basis points.
- Valuation Adjustment (MSR Asset): $4.2 million.
- Pre-Tax Income (Hilltop Securities): $17 million on net revenues of $124 million.
- Common Equity Tier One Capital Ratio: 20.5%.
- Tangible Book Value Per Share: Increased by 94¢ to $29.29.
- Dividends Returned to Shareholders: $11 million.
- Allowance for Credit Losses: Declined by $4 million to $111 million.
- Net Interest Income: $105 million, a decrease of $11 million or 9% year-over-year.
- Average Total Deposits: Approximately $10.5 billion, a decline of $759 million or 7% year-over-year.
- Non-Interest Income: $200 million for the third quarter.
- Non-Interest Expenses: Increased by $4 million to $264 million.
- Average HFI Loans: $8 billion, a period-ending decline of $194 million.
- Non-Performing Assets: Declined by $15 million to $94 million.
- Net Charge-Offs: $2.9 million or 15 basis points of the overall loan portfolio.
Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hilltop Holdings Inc (HTH, Financial) reported a net income of approximately $30 million for the third quarter, indicating strong financial performance.
- The company experienced a quarter-over-quarter improvement in net interest income due to growth in average earning assets.
- PlainsCapital Bank, a subsidiary of Hilltop Holdings Inc (HTH), generated $48 million of pre-tax income, showcasing robust performance in its banking operations.
- Hilltop Securities, another subsidiary, reported a year-over-year increase in net revenues, driven by strong performance in structured finance and wealth management.
- The company maintains robust capital levels with a common equity tier one capital ratio of 20.5%, reflecting a strong financial position.
Negative Points
- Hilltop Holdings Inc (HTH) experienced a decline in average loans at PlainsCapital Bank due to elevated levels of loan payoffs and heightened competition.
- The company reported a pre-tax loss of $8.7 million in its PrimeLending segment, driven by a reduction in origination volume and a decline in gain on sale margin.
- Net interest margin at the bank experienced a five basis point compression, primarily due to increased costs of interest-bearing deposits.
- The mortgage segment faced ongoing challenges due to higher interest rates, limited housing supply, and overcapacity in mortgage originators.
- Hilltop Holdings Inc (HTH) anticipates continued modest pressure on net interest margin due to expected rate cuts and competitive deposit pricing.
Q & A Highlights
Q: Does the structured finance business have more opportunities due to down payment assistance programs?
A: Jeremy Ford, President and CEO, explained that while the business has benefited from these programs, their continuation depends on state budgetary decisions, making them somewhat episodic.
Q: Can fixed income fees continue to trend higher given recent rate volatility?
A: Jeremy Ford noted that lower rates and a sloping yield curve are beneficial, and while pleased with recent results, the business can be volatile depending on market rates.
Q: Are fixed mortgage expenses expected to increase as trends improve and hiring occurs?
A: Jeremy Ford stated that expenses are expected to remain stable, with potential slow increases as they focus on hiring quality loan originators while maintaining back-office efficiency.
Q: What are the expectations for loan yields and deposit costs moving forward?
A: Jeremy Ford indicated that loan yields might decline as rates drop, with deposit costs expected to peak and then decrease modestly in line with Federal Reserve rate reductions.
Q: What is the outlook for loan growth, particularly in retaining mortgage loans?
A: Jeremy Ford mentioned plans to retain hybrid arm products from prime lending to bolster earning assets, with guidance suggesting $0 to $60 million balance sheeted per period.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
