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Jun 30, 2023
Hilltop Q2 2023 Earnings Report
Hilltop Holdings' performance decreased due to lower net income and EPS compared to the previous year.
Key Takeaways
Hilltop Holdings reported a net income of $19.9 million and EPS of $0.28 for Q2 2023. The results reflect a decrease compared to Q2 2022, with net income attributable to Hilltop at $18.1 million, a 45% decrease year-over-year. The company faced challenges in its mortgage origination segment due to increased interest rates and competitive pricing, while HilltopSecurities saw an increase in pre-tax income.
PlainsCapital Bank's pre-tax income decreased to $39.8 million, driven by higher provision expense.
PrimeLending experienced a pre-tax loss of $14.5 million due to declining mortgage origination volume and gain-on-sale margins.
HilltopSecurities' pre-tax income increased to $18.5 million, supported by improved revenues from sweep deposits and a strong TBA market.
Mortgage origination volume decreased by 36% year-over-year to $2.5 billion.
Forward Guidance
Hilltop Holdings provided its outlook for 2023, including expectations for loan and deposit growth, net interest income, noninterest income and expenses, provision expense, and effective tax rate.
Positive Outlook
- Full year average bank loan growth 0% – 2% (excluding retained mortgages from PrimeLending and mortgage warehouse lending)
- Expect to retain $0 – $20 million per quarter of mortgages from PrimeLending
- NII growth 0% – 5% driven by higher interest rates
- Mortgage gain on sale margins full year average 195-215 bps (third party sales)
- Broker Dealer fees increase 10% – 15%
Challenges Ahead
- Full year average total deposits to decline 7% to 13%
- Outlook assumes Fed Funds rate peaks during second half 2023
- Interest-bearing deposit betas 55 – 65% (through the cycle)
- Full year mortgage origination volume $8 – $10 billion
Historical Earnings Impact
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Avg. Return Before/After Earnings
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