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Mar 31, 2022
Hilltop Q1 2022 Earnings Report
Hilltop Holdings' performance declined due to softening in the mortgage market and a severe decline in capital markets activity.
Key Takeaways
Hilltop Holdings Inc. reported a decrease in net income attributable to Hilltop to $22.3 million, and a diluted EPS of $0.28 for Q1 2022. The results were impacted by decreased pre-tax income in PlainsCapital Bank, PrimeLending, and a pre-tax loss in HilltopSecurities.
PlainsCapital Bank generated $46.5 million in pre-tax income during Q1 2022, a decrease of $18.1 million from Q1 2021.
PrimeLending generated $6.5 million in pre-tax income during Q1 2022, a decrease of $86.5 million from Q1 2021.
HilltopSecurities incurred a pre-tax loss of $8.6 million during Q1 2022, a decrease of $26.3 million from Q1 2021.
Mortgage origination volume in Q1 2022 was $3.8 billion, a decline of 39% from Q1 2021; overall industry volume expected to decline approximately 37% over the same period.
Forward Guidance
Hilltop Holdings provided outlook for 2022, including loan growth, deposit growth, net interest income, noninterest income, noninterest expense, provision expense and effective tax rate.
Positive Outlook
- 1 – 4 family loan retention $25 – $50 million per month, throughout 2022
- Full year average bank loan growth 2% – 5%, excluding PPP loans and retained mortgages
- NII growth 3% – 6%, headwinds from lower PPP and accretion
- Outlook assumes eight rate increases by the Federal Reserve during 2022
- Non - variable expenses increase 2% – 5%
Challenges Ahead
- Full year average total deposits decline 3% – 7%, excluding any additional stimulus efforts
- Purchase accounting accretion expected to decline by 50% versus 2021 levels
- Loan floors and competition expected to pressure loan yields during 2022
- Mortgage gain on sale margins continue to be pressured as volumes decline across the industry, full year average 270 – 300 bps (third party sales)
Historical Earnings Impact
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Avg. Return Before/After Earnings
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