Core Viewpoint - Hilltop Holdings Inc. reported better-than-expected fourth-quarter 2024 earnings, with a significant increase in net income and non-interest income, despite challenges in net interest income and loan balances [1][2][4]. Financial Performance - Fourth-quarter 2024 earnings per share were 55 cents, exceeding the Zacks Consensus Estimate of 28 cents, and rose 25% year-over-year [1][2]. - Net income attributable to common stockholders was $35.5 million, up 23.9% year-over-year, surpassing the estimate of $17 million [2]. - Total revenues for the fourth quarter were $301.1 million, a 3.7% increase year-over-year, exceeding the Zacks Consensus Estimate of $284.4 million [4]. Revenue and Income Breakdown - In 2024, total revenues were $1.19 billion, slightly down year-over-year but above the Zacks Consensus Estimate of $1.17 billion [4]. - Net interest income (NII) declined 5.2% year-over-year to $105.5 million, below the estimate of $107 million [4][5]. - Non-interest income increased by 9.3% year-over-year to $195.6 million, driven by growth in various components except mortgage loan origination fees [5]. Asset and Deposit Trends - As of December 31, 2024, net loans held for investment were $7.8 billion, showing a slight sequential decline [6]. - Total deposits increased by 2.5% from the previous quarter to $11.1 billion, surpassing the estimate of $10.5 billion [6]. Credit Quality and Provisions - The company recorded a reversal of provision for credit losses of $5.9 million in the fourth quarter, compared to a provision of $1.3 million in the prior-year quarter [7]. - Non-performing assets as a percentage of total assets increased to 0.56%, up 11 basis points from the year-ago quarter [7]. Profitability and Capital Ratios - Return on average assets improved to 0.92%, up from 0.75% in the prior-year quarter [8]. - Return on average stockholders' equity rose to 6.50%, compared to 5.46% in the previous year [8]. - The common equity tier 1 capital ratio increased to 21.23%, up from 19.32% year-over-year [8].

Core Insights - Hilltop Holdings (HTH) reported revenue of $301.07 million for Q4 2024, a year-over-year increase of 3.8% and an EPS of $0.55 compared to $0.44 a year ago, exceeding the Zacks Consensus Estimate of $284.4 million by 5.86% and delivering an EPS surprise of 96.43% against a consensus estimate of $0.28 [1] Financial Performance Metrics - Average Outstanding Balance of interest-earning assets was $15.37 billion, exceeding the average estimate of $15.13 billion [4] - Net Interest Margin was reported at 2.7%, slightly below the average estimate of 2.8% [4] - Efficiency Ratio stood at 57.8%, significantly better than the estimated 88.9% [4] - Non-accrual loans amounted to $88.15 million, slightly above the estimate of $85.92 million [4] - Non-performing assets were reported at $91.10 million, compared to the average estimate of $93.48 million [4] - Net Interest Income (FTE) was $106.21 million, surpassing the average estimate of $105.33 million [4] - Total Noninterest Income reached $195.59 million, exceeding the average estimate of $179.65 million [4] - Investment and securities advisory fees and commissions were $37.51 million, close to the estimate of $37.52 million [4] - Mortgage loan origination fees were $30.11 million, below the estimate of $31.69 million [4] - Noninterest income from other sources was $49.07 million, exceeding the average estimate of $39.23 million [4] - Net gains from the sale of loans and other mortgage production income were $43.55 million, slightly above the estimate of $43.30 million [4] Stock Performance - Hilltop Holdings shares returned +3.5% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3]

Core Viewpoint - Hilltop Holdings reported quarterly earnings of $0.55 per share, significantly exceeding the Zacks Consensus Estimate of $0.28 per share, marking a 96.43% earnings surprise [1][2] Financial Performance - The company achieved revenues of $301.07 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 5.86% and showing an increase from $290.2 million year-over-year [2] - Over the last four quarters, Hilltop Holdings has consistently surpassed consensus EPS estimates [2] Stock Performance - Hilltop Holdings shares have increased approximately 3.5% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.27 on revenues of $283.12 million, while for the current fiscal year, the estimate is $1.48 on revenues of $1.22 billion [7] - The estimate revisions trend for Hilltop Holdings is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Banks - Southeast industry, to which Hilltop Holdings belongs, is currently ranked in the top 10% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

Financial Performance - Hilltop reported Q4 2024 income to common stockholders of $35.5 million, or $0.55 per diluted share, up from $28.7 million, or $0.44 per diluted share in Q4 2023[1]. - For the full year 2024, income to common stockholders was $113.2 million, or $1.74 per diluted share, compared to $109.6 million, or $1.69 per diluted share in 2023[1]. - Net income attributable to Hilltop for Q4 2024 was $35.52 million, up from $29.69 million in Q3 2024, representing a 19.0% increase[12]. - Basic earnings per share for Q4 2024 was $0.55, up from $0.46 in Q3 2024[12]. - Net interest income for the year ended December 31, 2024, was $420.250 million, down from $469.548 million in 2023[20]. Income and Revenue - Noninterest income for Q4 2024 was $195.6 million, a 9.3% increase from $179.0 million in Q4 2023[10]. - Total interest income for Q4 2024 was $208.59 million, a decrease of 1.1% from $211.04 million in Q3 2024[12]. - Noninterest income totaled $195.59 million in Q4 2024, slightly down from $200.44 million in Q3 2024[12]. - The adjustment to interest income for Q4 2024 was $0.7 million, compared to $0.6 million for Q4 2023[1]. - For the year ended December 31, 2024, the adjustment to interest income was $2.5 million, down from $2.7 million in 2023[1]. Asset and Deposit Growth - Total assets increased to $16.3 billion at December 31, 2024, compared to $15.9 billion at September 30, 2024[11]. - Total deposits rose to $11.1 billion at December 31, 2024, up from $10.8 billion at September 30, 2024[11]. - Total assets increased to $16.324 billion as of December 31, 2024, compared to $16.271 billion at the end of the previous year[19]. Loan Performance - The reversal of credit losses in Q4 2024 was $5.9 million, compared to a reversal of $1.3 million in Q3 2024 and a provision for credit losses of $1.3 million in Q4 2023[10]. - Mortgage loan origination production volume increased to $2.3 billion in Q4 2024, up from $1.8 billion in Q4 2023, representing a 27.8% increase[10]. - Total mortgage loan originations volume for Q4 2024 was $2.25 billion, a decrease from $2.31 billion in Q3 2024[13]. - Non-accrual loans amounted to $88.149 million, representing 1.00% of total loans as of December 31, 2024, compared to 1.02% in the previous quarter[18]. - Non-performing assets totaled $91.095 million, accounting for 0.56% of total assets as of December 31, 2024[18]. Capital and Ratios - The Tier 1 capital ratio for Hilltop was 12.57% as of December 31, 2024, down from 12.95% in the previous quarter[17]. - The total capital ratio for Hilltop was 24.40% as of December 31, 2024, up from 23.68% in the previous quarter[17]. - Return on average stockholders' equity improved to 6.50% in Q4 2024 from 5.51% in Q3 2024[13]. - The net interest spread for the year ended December 31, 2024, was 1.68%, compared to 2.03% in the previous year[20]. Operational Efficiency - Hilltop's consolidated net interest margin decreased to 2.72% in Q4 2024, down from 2.84% in Q3 2024[10]. - The efficiency ratio for the banking segment was 57.8% in Q4 2024, compared to 55.2% in Q3 2024, indicating increased operational costs[13]. - Net interest income after provision for credit losses was $111.34 million for Q4 2024, compared to $106.31 million in Q3 2024, reflecting a 4.8% increase[12]. Dividends and Stock Repurchase - The Board of Directors declared a quarterly cash dividend of $0.18 per common share, a 6% increase from the prior quarter[2]. - Cash dividends declared per common share remained stable at $0.17 for both Q4 2024 and Q3 2024[12]. - Hilltop authorized a new stock repurchase program of up to $100 million through January 2026[2]. Company Overview and Future Outlook - Hilltop Holdings will host a live webcast and conference call on January 31, 2025, to review Q4 and full year 2024 financial results[22]. - As of December 31, 2024, Hilltop employed approximately 3,650 people and operated 280 locations across 48 states[23]. - Hilltop Holdings' common stock is listed on the New York Stock Exchange under the symbol "HTH"[23]. - The company provides business and consumer banking services through PlainsCapital Bank and residential mortgage lending via PrimeLending[23]. - Hilltop's broker-dealer subsidiaries offer a full range of securities brokerage and investment banking services[23]. Risks and Security - The company faces various risks including credit risks, changes in interest rates, and competition in its banking and mortgage segments[24]. - Hilltop's forward-looking statements are subject to known and unknown risks that may cause actual results to differ materially[24]. - The company emphasizes the importance of effective data security controls to mitigate risks from cyber attacks[24].

Stock Performance - Hilltop Holdings Inc (HTH) shares hit a new 52-week low of $27 85 during Friday's trading session [1] - Over the past year, the stock has declined 18 7%, underperforming the industry, Zacks Finance sector, and S&P 500 index [1] - HTH stock has performed worse than its peers, Commerce Bancshares Inc (CBSH) and Hancock Whitney Corp (HWC) [1] Headwinds for Hilltop Holdings - Excessive reliance on fee-based revenues, with non-interest income accounting for 65% of total revenues, growing only 4 6% YoY in the first nine months of 2024 [2] - Deteriorating asset quality, with net charge-offs to average total loans increasing by 9 bps to 0 12% and non-accrual loans to total loans jumping 68 bps to 1 02% YoY [3] - Challenging macroeconomic outlook and anticipated increase in delinquencies likely to further deteriorate asset quality [4] - Subdued mortgage origination segment performance, with mortgage volumes declining 44 2% in 2022 and 34 9% in 2023, with the downtrend persisting in the first nine months of 2024 [7] - Mortgage origination volumes expected to remain subdued due to mortgage rates creeping back toward 7% [11] Supporting Factors for Hilltop Holdings - Relatively higher rates aiding net interest income (NII), with a CAGR of 1 5% over the five years ended in 2023 [12] - Net interest margin (NIM) increased to 3 09% in 2023 from 2 88% in 2022, expected to stabilize gradually as the Fed lowers interest rates [13] - Encouraging capital distributions, with total debt at $1 31 billion and cash and due from banks at $1 96 billion as of Sept 30, 2024 [16] - Regular dividend hikes since 2016, with an annualized dividend growth of 16 2% over the last five years [17] - Share repurchase plan with $55 2 million worth of authorization remaining as of Sept 30, 2024 [19] - Prudent expense management, with non-interest expenses reflecting a negative CAGR of 10 9% over the three years ended in 2023 [20] - Variable expenses expected to decline 1-3% in 2024 [22] - Bullish analyst sentiments, with the Zacks Consensus Estimate for 2025 earnings moving marginally upward to $1 55 per share [23] Final Thoughts - Prudent expense management and a solid balance sheet likely to support Hilltop Holdings' financials [26] - Relatively higher rates expected to aid NII, though higher funding costs may strain margin expansion [26] - Weak asset quality, subdued mortgage origination volumes, and high reliance on fee-based revenues remain major near-term headwinds [26]

Core Viewpoint - Hilltop Holdings (HTH) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which are a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it focuses on earnings estimate revisions, which are strongly correlated with near-term stock price movements [2][4]. - The upgrade reflects an improvement in Hilltop Holdings' underlying business, suggesting that investor sentiment may lead to increased stock prices [5]. Earnings Estimate Revisions - For the fiscal year ending December 2024, Hilltop Holdings is expected to earn $1.48 per share, which represents a decrease of 12.4% from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Hilltop Holdings has increased by 9%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Hilltop Holdings' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10][11].

Financial Performance - Net income for the three months ended September 30, 2024, was $32.9 million, a decrease of 16.2% from $39.3 million in the same period of 2023[186]. - Diluted earnings per common share for the three months ended September 30, 2024, was $0.46, compared to $0.57 in the same period of 2023, reflecting a decrease of 19.3%[185]. - Income applicable to common stockholders for the three months ended September 30, 2024, was $29.7 million, or $0.46 per diluted share, down from $37.0 million, or $0.57 per diluted share, in the same period of 2023[211]. - The efficiency ratio for Q3 2024 increased to 55.20% from 51.38% in Q3 2023, indicating a decline in profitability[232]. - Return on average stockholders' equity decreased to 5.51% for the three months ended September 30, 2024, down from 7.11% in the same period of 2023[214]. - Return on average assets for Q3 2024 was 1.14%, slightly down from 1.20% in Q3 2023[232]. Asset and Liability Management - Total assets decreased to $15.93 billion as of September 30, 2024, down from $16.47 billion at the end of 2023, representing a decline of 3.2%[190]. - Total liabilities as of September 30, 2024, were $13,573,402 thousand, a decrease from $14,500,839 thousand as of the same date in 2023[226]. - The total loans held for investment amounted to $7.98 billion as of September 30, 2024, with a total allowance for credit losses of $110.92 million[333]. - Interest-earning assets decreased from $15.19 billion in September 2023 to $14.68 billion in September 2024[217]. - The average interest-earning assets decreased to $12.15 billion in the nine months ended September 30, 2024, from $12.76 billion in the same period of 2023[234]. Credit Losses and Allowances - The allowance for credit losses was $110.9 million as of September 30, 2024, slightly down from $111.4 million at the end of 2023[186]. - The provision for credit losses for the three months ended September 30, 2024, was a reversal of $(1,440) thousand, compared to an expense of $675 thousand in the same period of 2023, reflecting a variance of $(2,115) thousand[226]. - The allowance for credit losses as a percentage of the total loan portfolio was 1.51% as of September 30, 2024, compared to 1.47% as of December 31, 2023[331]. - The total allowance for credit losses was $110,918 million as of September 30, 2024, compared to $111,413 million at the end of the previous period[344]. - The company experienced a reversal of credit losses of $2.5 million during the three months ended September 30, 2024, and $6.5 million during the nine months ended September 30, 2024[329]. Segment Performance - The banking segment contributed $48.1 million to income before income taxes for the three months ended September 30, 2024, while the mortgage origination segment incurred losses of $8.7 million[187]. - The mortgage origination segment reported a net loss of $4.4 million for the three months ended September 30, 2024, compared to a loss of $5.5 million in the same period of 2023, reflecting a 19% improvement[205]. - The broker-dealer segment generates a majority of its revenues from fees and commissions earned from investment advisory and securities brokerage services[202]. - Noninterest income increased by 2% to $200.4 million for the three months ended September 30, 2024, compared to $196.8 million in the same period of 2023[211]. - The corporate segment reported a significant increase in noninterest income, rising by 57% to $4.9 million for the three months ended September 30, 2024, compared to $3.2 million in the same period of 2023[209]. Economic Outlook and Market Conditions - The company anticipates that economic conditions, including changes in U.S. Treasury yields and mortgage interest rates, will continue to impact financial performance[191]. - The company expects inflationary pressures to continue, resulting in higher fixed costs during the remainder of 2024[223]. - The economic outlook indicates elevated borrowing costs and concerns about international conflicts, which may adversely impact business and consumer sentiment[327]. - The company expects ongoing economic headwinds to impact financial performance, influenced by factors such as U.S. Treasury yields and inflationary pressures[364]. - The company anticipates that competitive pressures and broader economic conditions will continue to influence deposit costs throughout 2024[228]. Capital Management - The board of directors declared a quarterly cash dividend of $0.17 per common share, payable on November 22, 2024[365]. - The board of directors authorized a new stock repurchase program of up to $75.0 million through January 2025, with $19.9 million spent to repurchase 640,042 shares at an average price of $31.04 per share during the nine months ended September 30, 2024[366]. - As of September 30, 2024, PlainsCapital's Tier 1 capital ratio was 10.34%, while Hilltop's was 12.95%, both exceeding the minimum capital requirements[371]. - Hilltop's Common Equity Tier 1 capital ratio was 20.48% as of September 30, 2024, significantly above the regulatory minimum of 7.0%[371]. - Total capital to risk-weighted assets for Hilltop was 23.68% as of September 30, 2024, well above the minimum requirement of 10.5%[371]. Stock and Shareholder Returns - Cash dividends declared per common share increased to $0.17 for the quarter, up from $0.16 in the previous quarter, with a total of $33.2 million paid in dividends during the nine months ended September 30, 2024[187]. - The company repurchased 640,042 shares of common stock at an average price of $31.04 per share, totaling $19.9 million under the stock repurchase program[188]. - The cumulative interest-bearing deposit pricing beta approximated 68%, indicating a significant response to changes in market interest rates[355]. Regulatory and Compliance - The company is subject to various regulatory capital requirements, and failure to meet these could adversely affect its financial condition[369]. - The bank's underwriting procedures are designed to ensure a return on stockholders' equity sufficient to maintain capital ratios that meet or exceed established regulations[323]. - The company is monitoring potential impairment indicators, including economic conditions and performance of its reporting segments[195].

Financial Data and Key Metrics Changes - Hilltop reported net income of approximately $30 million, or $0.46 per diluted share, with a return on average assets of 0.8% and return on average equity of 5.5% [4] - The company experienced a quarter-over-quarter increase in pre-provision net revenue and net income, despite a modest compression in consolidated net interest margin [4][8] - Net interest income for the third quarter was $105 million, a decrease of $11 million or 9% year-over-year, primarily due to higher yields on deposits and declining earning assets [17] Business Line Data and Key Metrics Changes - PlainsCapital Bank generated $48 million of pre-tax income on $12.8 billion of average assets, with a return on average assets of 1.14% [5] - PrimeLending reported a pre-tax loss of $8.7 million, driven by a reduction in origination volume of $72 million and a decline in gain on sale margin [9] - Hilltop Securities generated pre-tax income of $17 million on net revenues of $124 million, with public finance services showing flat net revenues year-over-year [10][11] Market Data and Key Metrics Changes - Average total deposits were approximately $10.5 billion, declining by $759 million or 7% year-over-year, primarily due to a decrease in broker-dealer sweep deposits [18] - The bank's net interest margin decreased by 5 basis points to 3.05%, attributed to increased costs of interest-bearing deposits [8] - Non-interest income for the third quarter was $200 million, with mortgage revenues declining by $8.8 million [10][22] Company Strategy and Development Direction - The company aims to responsibly grow its high-quality relationship-based core loan portfolio while managing liquidity and funding [8] - Management is focused on maintaining competitive positioning while balancing long-term customer relationships [19] - The company is optimistic about industry-wide mortgage origination volumes for 2025, despite expecting a challenging operating environment in the near term [9][22] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding credit trends, noting ongoing cash flow challenges for clients and potential negative credit migration due to higher interest rates and inflation [16][46] - The outlook for 2024 reflects current economic assessments, with management committed to adjusting business strategies in response to market changes [28] - Management expects modest but ongoing pressure on net interest margin in the coming quarters until a more stable interest rate environment is reached [40] Other Important Information - The allowance for credit losses declined by $4 million to $111 million, with specific reserves increasing due to evaluations of large auto lending credits [14] - The company returned $11 million to shareholders through dividends during the period [12] Q&A Session Summary Question: Does the structured finance business have more opportunities due to Down Payment Assistance programs? - Management indicated that while there has been consistent support from certain states, the continuation of these programs is dependent on state budgetary decisions [29] Question: Can the fixed income business continue to trend higher in the fourth quarter? - Management expects continued improvement in the fixed income business due to lower rates and an upward sloping yield curve, though results can be volatile [30] Question: Are fixed mortgage expenses expected to increase? - Management anticipates that fixed expenses will remain stable but may start to increase slowly as they look to hire quality loan originators [31][32] Question: What are the expectations for loan yields and deposit costs? - Management noted that loan yields have declined slightly and expects deposit costs to have peaked, with a target of 50% to 55% beta for future rate reductions [36][38] Question: What is the outlook for loan growth? - Management indicated that loan growth may be challenging due to competitive pressures, but they expect to retain more loans from PrimeLending to bolster earning assets [41][42] Question: What is the current status of non-performing loans (NPLs)? - Management reported a decline in NPLs, driven by paydowns in the auto note portfolio, but remains cautious about future credit trends [44][46] Question: What is the target range for overnight liquidity balances? - Management aims to maintain an operating range of $300 million to $750 million for overnight liquidity, planning to rotate cash into earning assets [51]

Core Viewpoint - Hilltop Holdings Inc. reported third-quarter 2024 earnings of 46 cents per share, exceeding the Zacks Consensus Estimate of 39 cents, but reflecting a 19.3% decline from the prior-year quarter [1] Financial Performance - Net income attributable to common stockholders was $29.7 million, down 19.8% year over year, while the estimate was $24.2 million [1] - Net revenues were $305.5 million, a decline of 2.2% year over year, but above the Zacks Consensus Estimate of $302.3 million [2] - Net interest income (NII) decreased by 9.2% year over year to $105 million, slightly below the estimate of $106.6 million [2] - Non-interest income increased by 1.8% year over year to $200.4 million, surpassing the projected $192.5 million [2] - Non-interest expenses rose by 1.7% from the prior-year quarter to $264.3 million, higher than the estimate of $259.9 million [2] Loan and Deposit Trends - As of September 30, 2024, net loans held for investment were $7.9 billion, down 2.4% sequentially, while total deposits increased by 4% to $10.8 billion [3] Credit Quality - Hilltop Holdings recorded a reversal of provision for credit losses of $1.3 million in the third quarter, compared to a reversal of $40,000 in the prior-year quarter [4] - Non-performing assets as a percentage of total assets were 0.59%, an increase of 37 basis points from the year-ago quarter [4] Profitability and Capital Ratios - Return on average assets was 0.84%, down from 0.94% in the prior-year quarter, while return on average stockholders' equity decreased to 5.51% from 7.11% [5] - Common equity tier 1 capital ratio improved to 20.48% as of September 30, 2024, up from 18.60% in the corresponding period of 2023 [5] - Total capital ratio increased to 23.68%, compared to 21.54% in the year-ago period [5] Outlook - The company’s solid balance sheet, business restructuring efforts, and improving fee income, along with high rates and decent loan demand, are expected to support revenue growth [6]

Hilltop Holdings Inc. Q3 2024Earnings Presentation October 25, 2024 Preface Corporate Headquarters Additional Information 6565 Hillcrest Ave Dallas, TX 75205 Phone: 214-855-2177 www.hilltop.com Please Contact: Matt Dunn Phone: 214-525-4636 Email: mdunn@hilltop.com FORWARD-LOOKING STATEMENTS This presentation and statements made by representatives of Hilltop Holdings Inc. ("Hilltop" or the "Company") during the course of this presentation include "forwardlooking statements" within the meaning of the Private ...