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Sep 30, 2022
Hilltop Q3 2022 Earnings Report
Hilltop Holdings' profitability decreased due to lower mortgage origination volume and gain-on-sale margins.
Key Takeaways
Hilltop Holdings reported net income of $32.1 million, or $0.50 per diluted share, for the third quarter of 2022, compared to $92.9 million, or $1.15 per diluted share, for the third quarter of 2021. The decrease in profitability was primarily due to lower mortgage origination volume and gain-on-sale margins at PrimeLending.
PlainsCapital Bank generated $63.6 million in pre-tax income during Q3 2022, an increase of $0.7 million from Q3 2021.
PrimeLending incurred a $23.1 million pre-tax loss during Q3 2022, a decrease in profitability of $85.3 million from Q3 2021.
HilltopSecurities generated pre-tax income of $17.5 million during Q3 2022, stable relative to Q3 2021.
Headcount at PrimeLending has declined by 642, or 23%, since October 2021 as the organization continues efforts to reset operations and back-office departments to better align with a lower volume mortgage market
Forward Guidance
Hilltop Holdings provided guidance for the full year 2022.
Positive Outlook
- 1 –4 family loan retention $25 –$75 million per month, throughout the remainder of 2022
- Full year average bank loan growth 1% –3%, excluding PPP loans and retained mortgages, lower guidance due to mortgage warehouse balances declining
- NII growth 5% –9%, headwinds from lower PPP and accretion
- Outlook assumes full year Fed Funds rate hike of 450-500bps
- Non-variable expenses decline 1% –4%
Challenges Ahead
- Full year average total deposits decline 1% –3%
- Purchase accounting accretion expected to decline by 40% -60% versus 2021 levels
- Mortgage gain on sale margins continue to be pressured as volumes decline across the industry, full year average 250 –270 bps (third party sales), market dependent
- Full year mortgage origination volume $12 –$14 billion
Historical Earnings Impact
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Avg. Return Before/After Earnings
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