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Mar 31, 2023
Hilltop Q1 2023 Earnings Report
Hilltop Holdings' financial performance decreased due to decline in noninterest income and increase in noninterest expense.
Key Takeaways
Hilltop Holdings reported a net income of $27.8 million, with earnings per share of $0.40. The company experienced a decrease in noninterest income and an increase in noninterest expenses, impacting overall profitability. PlainsCapital Bank's pre-tax income increased, while PrimeLending incurred a pre-tax loss. HilltopSecurities saw an increase in pre-tax income.
PlainsCapital Bank's pre-tax income grew, driven by net interest income growth.
PrimeLending faced a pre-tax loss due to declining mortgage origination volume and gain-on-sale margins.
HilltopSecurities' pre-tax income increased, with revenue growth across most business lines.
Average bank deposits decreased due to customers moving into higher-yielding assets.
Forward Guidance
Hilltop Holdings provided its 2023 outlook, which is market dependent. The company anticipates loan growth between 0% and 2%, and a deposit decline of 7% to 13%. Net interest income is expected to grow between 0% and 5%.
Positive Outlook
- Full year average bank loan growth 0% – 2% (excluding retained mortgages from PrimeLending and National Warehouse Lending)
- NII growth 0% – 5% driven by higher interest rates
- Broker Dealer fees increase 5% – 10%
- Non-variable expenses decrease 5% – 10%
- Mortgage gain on sale margins full year average 195-215 bps (third party sales)
Challenges Ahead
- Full year average total deposits to decline 7% to 13%
- Expect to retain $0 – $20 million per quarter of mortgages from PrimeLending
- Outlook assumes Fed Funds rate peaks during Q2 2023
- Deposit betas 55 – 65% (through the cycle)
Historical Earnings Impact
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Avg. Return Before/After Earnings
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