Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 05, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-31987 | |
Entity Registrant Name | Hilltop HoldingsĀ Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 84-1477939 | |
Entity Address, Address Line One | 6565 Hillcrest Avenue | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75205 | |
City Area Code | 214 | |
Local Phone Number | 855-2177 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | HTH | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 90,207,574 | |
Entity Central Index Key | 0001265131 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and due from banks | $ 524,370 | $ 433,626 |
Federal funds sold | 401 | 394 |
Assets segregated for regulatory purposes | 178,805 | 157,436 |
Securities purchased under agreements to resell | 23,356 | 59,031 |
Securities: | ||
Trading, at fair value | 393,581 | 689,576 |
Available for sale, at fair value (amortized cost of $945,156 and $899,817, respectively) | 972,318 | 911,493 |
Held to maturity, at amortized cost (fair value of $369,614 and $388,930, respectively) | 355,110 | 386,326 |
Equity, at fair value | 107 | 166 |
Total securities | 1,721,116 | 1,987,561 |
Loans held for sale | 2,433,407 | 2,106,361 |
Loans held for investment, net of unearned income | 7,345,250 | 7,381,400 |
Allowance for loan losses | (106,739) | (61,136) |
Loans held for investment, net | 7,238,511 | 7,320,264 |
Broker-dealer and clearing organization receivables | 1,838,789 | 1,780,280 |
Premises and equipment, net | 215,261 | 210,375 |
Operating lease right-of-use assets | 113,395 | 114,320 |
Other assets | 876,615 | 460,258 |
Goodwill | 267,447 | 267,447 |
Other intangible assets, net | 25,019 | 26,666 |
Assets held for sale | 249,758 | 248,429 |
Total assets | 15,706,250 | 15,172,448 |
Deposits: | ||
Noninterest-bearing | 2,865,192 | 2,769,556 |
Interest-bearing | 7,082,297 | 6,262,658 |
Total deposits | 9,947,489 | 9,032,214 |
Broker-dealer and clearing organization payables | 1,259,181 | 1,605,518 |
Short-term borrowings | 1,329,948 | 1,424,010 |
Securities sold, not yet purchased, at fair value | 22,768 | 43,817 |
Notes payable | 244,042 | 256,269 |
Operating lease liabilities | 124,123 | 125,619 |
Junior subordinated debentures | 67,012 | 67,012 |
Other liabilities | 408,224 | 348,519 |
Liabilities held for sale | 139,730 | 140,674 |
Total liabilities | 13,542,517 | 13,043,652 |
Commitments and contingencies (see Notes 19 and 20) | ||
Hilltop stockholders' equity: | ||
Common stock, $0.01 par value, 125,000,000 shares authorized; 90,108,336 and 90,640,944 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 901 | 906 |
Additional paid-in capital | 1,437,301 | 1,445,233 |
Accumulated other comprehensive income | 20,939 | 11,419 |
Retained earnings | 676,946 | 644,860 |
Deferred compensation employee stock trust, net | 774 | 776 |
Employee stock trust (7,539 and 7,794 shares, at cost, at March 31, 2020 and December 31, 2019, respectively) | (150) | (155) |
Total Hilltop stockholders' equity | 2,136,711 | 2,103,039 |
Noncontrolling interests | 27,022 | 25,757 |
Total stockholders' equity | 2,163,733 | 2,128,796 |
Total liabilities and stockholders' equity | $ 15,706,250 | $ 15,172,448 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Available for sale, amortized cost | $ 945,156 | $ 899,817 |
Held to maturity, fair value | $ 369,614 | $ 388,930 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 90,108,336 | 90,640,944 |
Common stock, shares outstanding | 90,108,336 | 90,640,944 |
Employee stock trust, shares | 7,539 | 7,794 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Interest income: | ||
Loans, including fees | $ 111,168 | $ 110,870 |
Securities borrowed | 13,327 | 16,859 |
Securities: | ||
Taxable | 15,695 | 14,656 |
Tax-exempt | 1,610 | 1,498 |
Other | 3,075 | 5,055 |
Total interest income | 144,875 | 148,938 |
Interest expense: | ||
Deposits | 15,124 | 17,106 |
Securities loaned | 11,277 | 14,738 |
Short-term borrowings | 4,744 | 5,471 |
Notes payable | 2,418 | 2,181 |
Junior subordinated debentures | 850 | 1,001 |
Other | 126 | 152 |
Total interest expense | 34,539 | 40,649 |
Net interest income | 110,336 | 108,289 |
Provision for credit losses | 34,549 | 951 |
Net interest income after provision for credit losses | 75,787 | 107,338 |
Noninterest income: | ||
Net gains from sale of loans and other mortgage production income | 150,486 | 96,139 |
Mortgage loan origination fees | 28,554 | 21,873 |
Securities commissions and fees | 40,069 | 35,969 |
Investment and securities advisory fees and commissions | 23,180 | 20,160 |
Other | 29,424 | 41,822 |
Total noninterest income | 271,713 | 215,963 |
Noninterest expense: | ||
Employees' compensation and benefits | 196,356 | 186,696 |
Occupancy and equipment, net | 19,522 | 27,779 |
Professional services | 14,798 | 14,109 |
Other | 51,225 | 50,163 |
Total noninterest expense | 281,901 | 278,747 |
Income from continuing operations before income taxes | 65,599 | 44,554 |
Income tax expense | 15,148 | 10,137 |
Income from continuing operations | 50,451 | 34,417 |
Income from discontinued operations, net of income taxes | 3,151 | 5,360 |
Net income | 53,602 | 39,777 |
Less: Net income attributable to noncontrolling interest | 3,966 | 991 |
Income attributable to Hilltop | $ 49,636 | $ 38,786 |
Basic: | ||
Earnings from continued operations (in dollars per share) | $ 0.51 | $ 0.36 |
Income from discontinued operations (in dollars per share) | 0.04 | 0.05 |
Basic earnings per common share (in dollars per share) | 0.55 | 0.41 |
Diluted: | ||
Earnings from continued operations (in dollars per share) | 0.51 | 0.36 |
Income from discontinued operations (in dollars per share) | 0.04 | 0.05 |
Diluted earnings per common share (in dollars per share) | $ 0.55 | $ 0.41 |
Weighted average share information: | ||
Basic (in shares) | 90,509 | 93,669 |
Diluted (in shares) | 90,550 | 93,669 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 53,602 | $ 39,777 |
Other comprehensive income: | ||
Change in fair value of cash flow hedges, net of tax of $(933) and $0, respectively | (3,200) | |
Net unrealized gains (losses) on securities available for sale, net of tax of $3,726 and $2,208, respectively | 12,605 | 7,549 |
Reclassification adjustment for gains (losses) included in net income, net of tax of $34 and $5, respectively | 115 | 16 |
Comprehensive income | 63,122 | 47,342 |
Less: comprehensive income attributable to noncontrolling interest | 3,966 | 991 |
Comprehensive income applicable to Hilltop | $ 59,156 | $ 46,351 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Cash flow hedge, tax | $ (933) | $ 0 |
Net unrealized gains (losses) on securities available for sale, tax | 3,726 | 2,208 |
Reclassification adjustment, tax | $ 34 | $ 5 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Parent | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Deferred Compensation Employee Stock Trust, Net | Employee Stock Trust | Noncontrolling Interest | Total |
Increase (Decrease) in Stockholders' Equity | |||||||||
Adoption of accounting standards | $ 1,393 | $ 1,393 | $ 1,393 | ||||||
Balance at Dec. 31, 2018 | 1,949,470 | $ 936 | $ 1,489,816 | $ (8,627) | 466,737 | $ 825 | $ (217) | $ 24,423 | 1,973,893 |
Balance (in shares) at Dec. 31, 2018 | 93,610,000 | 11,000 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income | 38,786 | 38,786 | 991 | 39,777 | |||||
Other comprehensive loss | 7,565 | 7,565 | 7,565 | ||||||
Stock-based compensation expense | 2,354 | 2,354 | 2,354 | ||||||
Common stock issued to board members | 140 | 140 | 140 | ||||||
Common stock issued to board members (in shares) | 8,000 | ||||||||
Issuance of common stock related to share-based awards, net | (723) | $ 2 | (725) | (723) | |||||
Issuance of common stock related to share-based awards, net (in shares) | 203,000 | ||||||||
Dividends on common stock | (7,464) | (7,464) | (7,464) | ||||||
Deferred compensation plan | 6 | 2 | $ 4 | 6 | |||||
Net cash distributed to noncontrolling interest | (1,810) | (1,810) | |||||||
Balance at Mar. 31, 2019 | 1,991,527 | $ 938 | 1,491,585 | (1,062) | 499,452 | 827 | $ (213) | 23,604 | 2,015,131 |
Balance (in shares) at Mar. 31, 2019 | 93,821,000 | 11,000 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Adoption of accounting standards | (5,691) | (5,691) | (5,691) | ||||||
Balance at Dec. 31, 2019 | 2,103,039 | $ 906 | 1,445,233 | 11,419 | 644,860 | 776 | $ (155) | 25,757 | 2,128,796 |
Balance (in shares) at Dec. 31, 2019 | 90,641,000 | 8,000 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income | 49,636 | 49,636 | 3,966 | 53,602 | |||||
Other comprehensive loss | 9,520 | 9,520 | 9,520 | ||||||
Stock-based compensation expense | 3,642 | 3,642 | 3,642 | ||||||
Common stock issued to board members | 146 | 146 | 146 | ||||||
Common stock issued to board members (in shares) | 10,000 | ||||||||
Issuance of common stock related to share-based awards, net | (469) | $ 2 | (471) | (469) | |||||
Issuance of common stock related to share-based awards, net (in shares) | 158,000 | ||||||||
Repurchases of common stock | (14,957) | $ (7) | (11,249) | (3,701) | $ (14,957) | ||||
Repurchases of common stock (in shares) | (701,000) | (700,901) | |||||||
Dividends on common stock | (8,158) | (8,158) | $ (8,158) | ||||||
Deferred compensation plan | 3 | (2) | $ 5 | 3 | |||||
Net cash distributed to noncontrolling interest | (2,701) | (2,701) | |||||||
Balance at Mar. 31, 2020 | $ 2,136,711 | $ 901 | $ 1,437,301 | $ 20,939 | $ 676,946 | $ 774 | $ (150) | $ 27,022 | $ 2,163,733 |
Balance (in shares) at Mar. 31, 2020 | 90,108,000 | 8,000 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | Apr. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||
Cash dividends declared per common share | $ 0.09 | $ 0.09 | $ 0.08 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Activities | ||
Net income | $ 53,602 | $ 39,777 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Provision for credit losses | 34,549 | 951 |
Depreciation, amortization and accretion, net | 1,883 | (2,283) |
Net realized losses (gains) on securities | (158) | |
Net change in fair value of equity securities | 59 | (24) |
Deferred income taxes | (2,053) | 876 |
Other, net | (2,311) | 2,601 |
Net change in securities purchased under agreements to resell | 35,675 | (3,594) |
Net change in trading securities | 295,995 | 42,171 |
Net change in broker-dealer and clearing organization receivables | 11,768 | (124,407) |
Net change in other assets | (243,683) | (534) |
Net change in broker-dealer and clearing organization payables | (281,891) | 119,673 |
Net change in other liabilities | (73,963) | (55,210) |
Net change in securities sold, not yet purchased | (21,049) | (12,313) |
Proceeds from sale of mortgage servicing rights asset | 18,650 | |
Net gains from sales of loans | (150,486) | (96,139) |
Loans originated for sale | (4,256,981) | (2,596,880) |
Proceeds from loans sold | 3,994,119 | 3,009,282 |
Net Cash Provided by (Used in) Operating Activities, Continuing Operations, Total | (586,275) | 323,947 |
Net cash provided by operating activities for discontinued operations | 3,505 | 2,155 |
Net cash provided by (used in) operating activities | (582,770) | 326,102 |
Investing Activities | ||
Proceeds from maturities and principal reductions of securities held to maturity | 37,624 | 6,340 |
Proceeds from sales, maturities and principal reductions of securities available for sale | 73,889 | 30,620 |
Purchases of securities held to maturity | (6,532) | (25,243) |
Purchases of securities available for sale | (119,778) | (172,511) |
Net change in loans held for investment | (19,692) | (159,202) |
Purchases of premises and equipment and other assets | (17,754) | (8,454) |
Proceeds from sales of premises and equipment and other real estate owned | 15,350 | 5,892 |
Net cash received from (paid for) Federal Home Loan Bank and Federal Reserve Bank stock | 18,685 | 7,172 |
Net cash used in investing activities for continuing operations | (18,208) | (315,386) |
Net cash provided by investing activities for discontinued operations | 1,794 | 8,576 |
Net cash provided by investing activities | (16,414) | (306,810) |
Financing Activities | ||
Net change in deposits | 850,829 | (162,408) |
Net change in short-term borrowings | (94,062) | (151,282) |
Proceeds from notes payable | 273,386 | 134,639 |
Payments on notes payable | (285,639) | (138,160) |
Payments to repurchase common stock | (14,957) | |
Dividends paid on common stock | (8,158) | (7,464) |
Net cash received from (distributed to) noncontrolling interest | (2,701) | (1,810) |
Taxes paid on employee stock awards netting activity | (469) | (723) |
Other, net | (155) | (69) |
Net cash provided by financing activities | 718,074 | (327,277) |
Net change in cash, cash equivalents and restricted cash | 118,890 | (307,985) |
Cash, cash equivalents and restricted cash, beginning of period | 642,789 | 778,466 |
Cash, cash equivalents and restricted cash, end of period | 761,679 | 470,481 |
Supplemental Disclosures of Cash Flow Information | ||
Cash paid for interest | 37,041 | 39,297 |
Cash paid for income taxes, net of refunds | 1,771 | (270) |
Supplemental Schedule of Non-Cash Activities | ||
Derecognition of construction in progress related to build-to-suit lease obligations | 29,195 | |
Conversion of loans to other real estate owned | 182 | 1,578 |
Additions to mortgage servicing rights | $ 4,475 | $ 1,861 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Mar. 31, 2019 |
Reconciliation of Cash, Cash Equivalents and Restricted Cash to Consolidated Balance Sheets | ||
Cash and due from banks | $ 524,370 | $ 273,589 |
Cash and due from bank included within assets held for sale | 58,103 | 39,603 |
Federal funds sold | 401 | 438 |
Assets segregated for regulatory purposes | 178,805 | 156,851 |
Total cash, cash equivalents and restricted cash | $ 761,679 | $ 470,481 |
Summary of Significant Accounti
Summary of Significant Accounting and Reporting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting and Reporting Policies | |
Summary of Significant Accounting and Reporting Policies | 1. Summary of Significant Accounting and Reporting Policies ā Nature of Operations ā Hilltop Holdings Inc. (āHilltopā and, collectively with its subsidiaries, the āCompanyā) is a financial holding company registered under the Bank Holding Company Act of 1956. The Companyās primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank (the āBankā). In addition, the Company provides an array of financial products and services through its broker-dealer, mortgage origination and insurance subsidiaries. ā The Company, headquartered in Dallas, Texas, provides its products and services through three primary business units, PlainsCapital Corporation (āPCCā), Hilltop Securities Holdings LLC (āSecurities Holdingsā) and National Lloyds Corporation (āNLCā). PCC is a financial holding company that provides, through its subsidiaries, traditional banking, wealth and investment management and treasury management services primarily in Texas and residential mortgage lending throughout the United States. Securities Holdings is a holding company that provides, through its subsidiaries, investment banking and other related financial services, including municipal advisory, sales, trading and underwriting of taxable and tax-exempt fixed income securities, equity trading, clearing, securities lending, structured finance and retail brokerage services throughout the United States. NLC is a property and casualty insurance holding company that provides, through its subsidiaries, fire and homeowners insurance to low value dwellings and manufactured homes primarily in Texas and other areas of the southern United States. ā On January 30, 2020, Hilltop entered into an agreement to sell all of the outstanding capital stock of NLC, which comprises the operations of the insurance segment, for a cash purchase price of $150.0 million, subject to post-closing adjustments. Consummation of the transaction is subject to customary closing conditions, including required regulatory approvals, and is expected to close during the second quarter of 2020. Accordingly, as of March 31, 2020 and for all prior periods, NLCās results have been presented as discontinued operations and its assets and liabilities have been classified as held for sale in the consolidated financial statements. Unless otherwise indicated, information included in the notes to the consolidated financial statements are presented on a consolidated operations basis, which includes results from both continuing and discontinued operations, for all periods presented. For further details, see Note 3 to the consolidated financial statements. ā Basis of Presentation ā The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (āGAAPā), and in conformity with the rules and regulations of the Securities and Exchange Commission (the āSECā). In the opinion of management, these financial statements contain all adjustments necessary for a fair statement of the results of the interim periods presented. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companyās Annual Report on Form 10-K for the year ended December 31, 2019 (ā2019 Form 10-Kā). Results for interim periods are not necessarily indicative of results to be expected for a full year or any future period. ā The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates regarding the allowance for credit losses, the fair values of financial instruments, reserves for losses and loss adjustment expenses (āLAEā), the mortgage loan indemnification liability, and the potential impairment of assets are particularly subject to change. Other than changes related to the implementation of the current expected credit losses standard (ASU 2016-13), the Company has applied its critical accounting policies and estimation methods consistently in all periods presented in these consolidated financial statements. Actual amounts and values as of the balance sheet dates may be materially different than the amounts and values reported due to the inherent uncertainty in the estimation process. Also, future amounts and values could differ materially from those estimates due to changes in values and circumstances after the balance sheet date. ā Hilltop owns 100% of the outstanding stock of PCC. PCC owns 100% of the outstanding stock of the Bank and 100% of the membership interest in Hilltop Opportunity Partners LLC, a merchant bank utilized to facilitate investments in companies engaged in non-financial activities. The Bank owns 100% of the outstanding stock of PrimeLending, a PlainsCapital Company (āPrimeLendingā). ā PrimeLending owns a 100% membership interest in PrimeLending Ventures Management, LLC (āVentures Managementā), which holds an ownership interest in and is the managing member of certain affiliated business arrangements (āABAsā). ā PCC also owns 100% of the outstanding common securities of PCC Statutory Trusts I, II, III and IV (the āTrustsā), which are not included in the consolidated financial statements under the requirements of the Variable Interest Entities (āVIEā) Subsections of the Financial Accounting Standards Board (āFASBā) Accounting Standards Codification (āASCā) because the primary beneficiaries of the Trusts are not within the consolidated group. ā Hilltop has a 100% membership interest in Securities Holdings, which operates through its wholly owned subsidiaries, Hilltop Securities Inc. (āHilltop Securitiesā), Hilltop Securities Independent Network Inc. (āHTS Independent Networkā) (collectively, the āHilltop Broker-Dealersā) and Hilltop Securities Asset Management, LLC. Hilltop Securities is a broker-dealer registered with the SEC and Financial Industry Regulatory Authority (āFINRAā) and a member of the New York Stock Exchange (āNYSEā), HTS Independent Network is an introducing broker-dealer that is also registered with the SEC and FINRA, and Hilltop Securities Asset Management, LLC is a registered investment adviser under the Investment Advisers Act of 1940. ā Hilltop also owns 100% of NLC, which operates through its wholly owned subsidiaries, National Lloyds Insurance Company (āNLICā) and American Summit Insurance Company (āASICā). ā In addition, Hilltop owns 100% of the membership interest in each of HTH Hillcrest Project LLC (āHTH Project LLCā) and Hilltop % of the membership interest in HTH Diamond Hillcrest Land LLC (āHillcrest Land LLCā) which is consolidated under the aforementioned VIE Subsections of the ASC. These entities are related to the Hilltop Plaza investment discussed in detail in Note 18 to the consolidated financial statements included in the Companyās 2019 Form 10-K and are collectively referred to as the āHilltop Plaza Entities.ā ā The consolidated financial statements include the accounts of the above-named entities. Intercompany transactions and balances have been eliminated. Noncontrolling interests have been recorded for minority ownership in entities that are not wholly owned and are presented in compliance with the provisions of Noncontrolling Interest in Subsidiary Subsections of the ASC. ā Certain reclassifications have been made to the prior period consolidated financial statements to conform with the current period presentation, including reclassifications due to the adoption of new accounting pronouncements and reclassifications due to the presentation of NLCās results as discontinued operations and its assets and liabilities classified as held for sale. In preparing these consolidated financial statements, subsequent events were evaluated through the time the financial statements were issued. Financial statements are considered issued when they are widely distributed to all stockholders and other financial statement users, or filed with the SEC. ā Significant accounting policies are detailed in Note 1 to the consolidated financial statements included in the Companyās 2019 Form 10-K. As a result of the adoption of ASU 2016-13 and related updates, improvements and technical corrections (collectively, āCECLā), the Company has included new or modified significant accounting policies as summarized below. ā Securities ā Management classifies securities at the time of purchase and reassesses such designations at each balance sheet date. Securities held for resale to facilitate principal transactions with customers are classified as trading and are carried at fair value, with changes in fair value reflected in the consolidated statements of operations. The Company reports interest income on trading securities as interest income on securities and other changes in fair value as other noninterest income. ā Debt securities held but not intended to be held to maturity or on a long-term basis are classified as available for sale. Securities included in this category are those that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, prepayment risk or other factors related to interest rate and prepayment risk. Debt securities available for sale are carried at fair value. Unrealized holding gains and losses on debt securities available for sale, net of taxes, are reported in other comprehensive income (loss) until realized. Premiums and discounts are recognized in interest income using the effective interest method and reflect any optionality that may be embedded in the security. ā Equity securities are carried at fair value, with changes in fair value reflected in the consolidated statements of operations. Equity securities that do not have readily determinable fair values are initially recorded at cost and subsequently remeasured when there is (i) an observable transaction involving the same investment, (ii) an observable transaction involving a similar investment from the same issuer or (iii) an impairment. These remeasurements are reflected in the consolidated statements of operations. Purchases and sales (and related gain or loss) of securities are recorded on the trade date, based on specific identification. ā Allowance for Credit Losses on Available for Sale and Held to Maturity Securities ā Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available for sale debt securities, a decline in fair value due to credit loss results in recording an allowance for credit losses to the extent the fair value is less than the amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through other comprehensive income, net of applicable taxes. ā Allowances for credit losses may result from credit deterioration of the issuer or the collateral underlying the security. In performing an assessment of whether any decline in fair value is due to a credit loss, all relevant information is considered at the individual security level. In assessing whether a credit loss exists, the Company compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount by which the fair value is less than the amortized cost basis. ā CECL has replaced the previous other-than-temporary-impairment (āOTTIā) model. Under the OTTI model, credit losses were recognized as a reduction to the cost basis of the investment with recovery of an impairment loss recognized prospectively over time as interest income, and reversals of impairment were not allowed. Under CECL, effective January 1, 2020, if the Company intends to sell a debt security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged against the allowance for credit losses, with any incremental impairment reported in earnings. Reversals of the allowance for credit losses are permitted and should not exceed the allowance amount initially recognized. ā For debt securities held to maturity, estimated expected credit losses are calculated in a manner like that used for loans held for investment. That is, the historical lifetime probability of default and severity of loss in the event of default is derived or obtained from external sources and adjusted for the expected effects of reasonable and supportable forecasts over the expected lives of the securities on those historical credit losses. With respect to certain classes of debt securities, primarily U.S. Treasuries, the Company considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to technically default. Therefore, for those securities, the Company does not record expected credit losses. ā Loans Held for Investment ā Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the amount of unpaid principal reduced by unearned income, net unamortized deferred fees and an allowance for credit losses. Unearned income on installment loans and interest on other loans is recognized using the effective interest method. Net fees received for providing loan commitments and letters of credit that result in loans are deferred and amortized to interest income over the life of the related loan, beginning with the initial borrowing. Net fees on commitments and letters of credit that are not expected to be funded are amortized to noninterest income over the commitment period. Income on direct financing leases is recognized on a basis that achieves a constant periodic rate of return on the outstanding investment. ā The accrual of interest on credit deteriorated loans is discontinued when, in managementās opinion, there is a clear indication that the borrowerās cash flow may not be sufficient to meet principal and interest payments, which is generally when a loan is 90 days past due unless the asset is both well secured and in the process of collection. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is charged against income. Once placed on non-accrual status, interest income is recognized on a cash basis. Additionally, accretion of purchased discount on non-accrual loans is suspended. ā The Company follows applicable regulatory guidance when measuring past due status. The Company uses the actual days elapsed since the payment due date of the loan to determine delinquency. ā Management defines loans acquired in a business combination as acquired loans. Acquired loans are recorded at estimated fair value on their purchase date with no carryover of the related allowance for credit losses. Acquired loans are segregated between those considered to be credit deteriorated and those without credit deterioration at acquisition. To make this determination, management considers such factors as past due status, non-accrual status and credit risk ratings. For acquired performing loans, a lifetime allowance for credit losses is estimated as of the date of acquisition and is recorded through provision for (reversal of) credit losses. The difference between the purchase price and loan receivable is amortized over the remaining life of the loan. ā All formerly designated purchased credit impaired (āPCIā) loans became purchased credit deteriorated (āPCDā) loans effective January 1, 2020. PCD loans are loans that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination. For PCD loans, any non-credit discount or premium related to an acquired pool of PCD loans is allocated to each individual asset within the pool. On the acquisition date, the initial allowance for credit losses measured on a pooled basis is allocated to each individual asset within the pool to allocate any non-credit discount or premium. Credit losses are measured based on unpaid principal balance. A lifetime allowance for credit losses is estimated as of the date of acquisition. The initial allowance for credit losses is added to the purchase price and is considered to be part of the PCD loan amortized cost basis. ā Allowance for Credit Losses for Loans Held for Investment ā Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses for loans. The allowance for credit losses, or reserve, is an estimate of expected losses over the lifetime of a loan within the Companyās existing loans held for investment portfolio. The allowance for credit losses for loans held for investment is adjusted by a provision for (reversal of) credit losses, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. ā The credit loss estimation process involves procedures to appropriately consider the unique characteristics of the Companyās loan portfolio segments, which are further disaggregated into loan classes, the level at which credit risk is monitored. The allowance for credit losses for loans not evaluated for specific reserves is calculated using statistical credit factors, including probabilities of default (āPDā) and loss given default (āLGDā), to the amortized cost of pools of loan exposures with similar risk characteristics over its contractual life, adjusted for prepayments, to arrive at an estimate of expected credit losses. Economic forecasts are applied over the period management believes it can estimate reasonable and supportable forecasts. Reasonable and supportable forecast periods and reversion assumptions to historical data are credit model specific. The Company typically forecasts economic variables over a one to four year horizon. Prepayments are estimated by loan type using historical information and adjusted for current and future conditions. ā Commercial loans that exceed a minimum size scope are underwritten and graded using credit models that leverage national industry default data to score the loans. At the conclusion of the process of underwriting or re-grading a borrower, each borrower (for commercial and industrial loans) or property (for commercial real estate loans) is assigned a PD grade threshold. The valuation methodology of risk rating internal grades is based on the merits of the financial ratios of the borrower or the property. In addition, an LGD grade is determined by the credit models utilizing collateral information provided. A master rating scale effectively "pools" the loans by credit scores and assigns a standard one year PD percentage and an LGD percentage equally for all loans that have a given score. For borrowers or loans that do not meet the minimum balance threshold, an internal scorecard is utilized to approximate the grades derived from the credit models and is mapped to the master rating scale. The resulting numerical PD grade is the credit quality indicator for commercial loans. The grades on borrowers or properties that are scored in the credit models are determined at origination and updated at least annually. The grades on the internal scorecards are updated annually if they meet a minimum threshold, or if new circumstances (favorable or unfavorable) warrant a re-scoring. ā When computing allowance levels, credit loss assumptions are estimated using models that analyze loans according to credit risk ratings, historic loss experience, past due status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Future factors and forecasts may result in significant changes in the allowance and provision (reversal) for credit losses in those future periods. The allowance for credit losses will primarily reflect estimated losses for pools of loans that share similar risk characteristics, but will also consider individual loans that do not share risk characteristics with other loans. ā Loans that Share Risk Characteristics with Other Loans ā In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan classes. Loans are designated into loan classes based on loans pooled by product types and similar risk characteristics or areas of risk concentration. In determining the allowance for credit losses, the Company derives an estimated credit loss assumption from a model that categorizes loan pools based on loan type and internal risk rating or past due category as follows. ā Commercial and Industrial and Commercial Real Estate Loans. ā These factors are based on an evaluation of historical and current information and sometimes involve subjective assessment and interpretation. Specific considerations for construction are considered in the internal PD and LGD risk ratings including property type, development phase and complexity, as well as lease-up and stabilization projections. The PD and LGD factors are further sensitized in the models for future expectations over the loanās contractual life, adjusted for prepayments. ā 1-4 Family Residential Loans. The 1-4 family residential loan portfolio is segmented into pools of residential real estate loans with similar credit risk characteristics. The models calculate expected losses and prepayments using borrower information at origination, including FICO score, loan type, collateral type, lien position, geography, origination year, and loan to value. Past due status post-origination is also a key input in the models. Current and future changes in economic conditions, including unemployment rates, home prices, index rates, and mortgage rates, are also considered. ā Consumer Loans. The consumer loan portfolio is segmented into pools of consumer installment loans or revolving lines of credit with similar credit characteristics. The models calculate expected losses using borrower information at origination, including FICO score, origination year, geography, and collateral type. ā Broker-Dealer Loans. The broker-dealer loan portfolio is evaluated on an individual basis using the collateral-dependent practical expedient. The collateral-dependent practical expedient allows the broker-dealer to compare the fair value of the collateral of each loan as of the reporting date to loan value. The underlying collateral of the loans to customers and correspondents is marked to market daily and any required additional collateral is collected. The allowance represents the amount of unsecured loan balances at the end of the period. ā Qualitative Factors ā Estimating the timing and amounts of future loss cash flows is subject to significant management judgment as these loss cash flows rely upon estimates such as default rates, loss severities, collateral valuations, the amounts and timing of principal payments (including any expected prepayments) or other factors that are reflective of current or future expected conditions. These estimates, in turn, depend on the duration of current overall economic conditions, industry, borrower, or portfolio specific conditions, the expected outcome of bankruptcy or insolvency proceedings, as well as, in certain circumstances, other economic factors, including the level of current and future real estate prices. All of these estimates and assumptions require significant management judgment and certain assumptions that are highly subjective. Model imprecision also exists in the allowance for credit losses estimation process due to the inherent time lag of available industry information and differences between expected and actual outcomes. ā Management considers adjustments for these conditions in its allowance for credit loss estimates qualitatively where they may not be measured directly in its individual or collective assessments, including but not limited to: ā an adjustment to historical loss data to measure credit risk even if that risk is remote and does not meet the scope of assets with zero expected losses; ā the environmental factors and the areas in which credit is concentrated, such as the regulatory, environmental, or technological environment, the geographical area or key industries, or in the national or regional economic and business conditions where the borrower has exposure; ā the nature and volume of the borrowerās financial assets; ā the borrowerās financial condition, credit rating, credit score, asset quality, or business prospects; ā the borrowerās ability to make scheduled interest or principal payments; ā the remaining payment terms of the financial assets and the remaining time to maturity and the timing and extent of prepayments on the financial assets; ā the volume and severity of past due or adversely classified financial assets; ā the value of underlying collateral in which the collateral-dependent practical expedient has not been utilized; ā any updates to credit lending policies and procedures, including lending strategies, underwriting standards, collection and recovery practices, not reflected in the models; and ā the quality of the internal credit review system. ā Loans that Do Not Share Risk Characteristics with Other Loans ā When a loan is assigned a substandard non-accrual risk rating grade, the loan subsequently is evaluated on an individual basis and no longer evaluated on a collective basis. The net realizable value of the loan is compared to the appropriate loan basis (i.e. PCD loan versus non-PCD loan) to determine any allowance for credit losses. Loans that are below a predetermined threshold, with the exception of 1-4 family residential loans, are fully reserved. ā The Company generally considers non-accrual loans to be collateral-dependent. The practical expedient to measure credit losses using the fair value of the collateral has been exercised. ā For commercial real estate loans, the fair value of collateral primarily is based on appraisals. For owner occupied real estate loans, underlying properties are occupied by the borrower in its business, and evaluations are based on business operations used to service the debt. For non-owner occupied real estate loans, underlying properties are income-producing and evaluations are based on tenant revenues. For income producing construction and land development loans, appraisals reflect the assumption that properties are completed. ā For 1-4 family residential loans that are graded substandard non-accrual, an assessment of value is made using the most recent appraisal on file. If the appraisal on file is older than two years, the latest property tax assessment is used as a screening value to determine if a reserve might be required. If the assessed value is less than the appraised value, this value is discounted for selling costs and is used to measure the reserve required. If the appraisal is less than two years old, the value is discounted for selling costs and compared to the appropriate basis in the loan. ā Consumer loans are charged off when they reach 90 days delinquency as a general rule. There are limited cases where the loan is not charged off due to special circumstances and is subject to the collateral review process. ā Off-Balance Sheet Credit Exposures, Including Unfunded Loan Commitments ā The Company maintains a separate allowance for credit losses from off-balance sheet credit exposures, including unfunded loan commitments, which is included in other liabilities within the consolidated balance sheets. The Company estimates expected losses by calculating a commitment usage factor based on industry usage factors. The commitment usage factor is applied over the relevant contractual period. Loss factors from the underlying loans to which commitments are related are applied to the results of the usage calculation to estimate any liability for credit losses related for each loan type. ā ā |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 3 Months Ended |
Mar. 31, 2020 | |
Recently Issued Accounting Standards | |
Recently Issued Accounting Standards | 2. Recently Issued Accounting Standards ā Accounting Standards Adopted During 2020 ā In March 2020, FASB issued ASU 2020-03 which included various clarifications and improvements related to financial instruments. The following topics are addressed: fair value option disclosures, applicability of portfolio exception to non-financial items, disclosures for depository and lending institutions, cross-reference to line-of-credit or revolving debt arrangements, cross-reference to net asset value practical expedient, the contractual term of a net investment in a lease for measuring expected credit losses, and recording of an allowance for credit losses when control of financial assets sold is regained. All items had various effective dates, which for the Company ranged from January 1, 2020 to the date of issuance. The adoption of ASU 2020-03 did not have a material impact on the Companyās consolidated financial statements. ā In December 2019, FASB issued ASU 2019-12 which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the ASC and is intended to improve consistency by clarifying and amending existing guidance. The amendments are effective for annual periods beginning after December 15, 2020. As permitted within the amendment, the Company elected to early adopt and prospectively apply the provisions of this amendment as of January 1, 2020. The removal of the exceptions did not result in a material change in the Companyās current or deferred income tax provisions and did not have a material impact on the Companyās consolidated financial statements. ā In August 2018, FASB issued ASU 2018-15 which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software licenses). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendment also includes presentation and disclosure provisions regarding capitalized implementation costs. The amendment is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. The Company adopted the provisions of this amendment as of January 1, 2020. The impact of this amendment is limited to presentation and disclosure changes that did not have an impact on the Companyās consolidated financial statements. ā In August 2018, FASB issued ASU 2018-13 which includes various removals, modifications and additions to existing guidance regarding fair value disclosures. The amendments are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. The Company adopted the provisions of these amendments as of January 1, 2020. The impact of these amendments is limited to presentation and disclosure changes that did not have an impact on the Companyās consolidated financial statements. ā In June 2016, FASB issued ASU 2016-13 which sets forth a ācurrent expected credit lossā (CECL) model that requires entities to measure all credit losses expected over the life of an exposure (or pool of exposures) for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The FASB has issued various updates, improvements and technical corrections to the standard since the issuance of ASU 2016-13. The new standard, which is codified in ASC 326, Financial Instruments ā Credit Losses , replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. For available for sale securities, the standard modifies the current OTTI model by requiring entities to record an allowance for credit losses rather than reducing the carrying amount of securities. Additionally, the new standard eliminated the former accounting model for PCI loans, but requires an allowance to be recognized for PCD assets. The new standard also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entityās portfolio. The Companyās implementation efforts have included, among other activities, the development, testing and validation of credit forecasting models and a new credit scoring system for significant loan portfolio segments, reassessment of risk rating grades and matrix, as well as development of the policies, systems and controls required to fully implement CECL. The new standard is effective for the Company for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2019, with a cumulative-effect adjustment to retained earnings at the date of adoption. On January 1, 2020, the Company adopted the new CECL standard and recorded entries that resulted in an aggregate allowance for credit losses of $83.6 million within the consolidated balance sheets. The transition adjustment resulted in a net of tax, decrease of $5.7 million to opening retained earnings at January 1, 2020. The decrease to retained earnings included an initial estimate of lifetime expected credit losses for PCD loans and was recognized through a balance sheet gross-up. While not material, the impact of the adoption of CECL also affected the Companyās regulatory capital, performance and other asset quality ratios. Future changes in the allowance for credit losses are expected to be volatile given dependence upon, among other things, the portfolio composition and quality, as well as the impact of significant drivers, including prepayment assumptions and macroeconomic conditions and forecasts. ā Accounting Standards Issued But Not Yet Adopted ā In March 2020, FASB issued ASU 2020-04, which is intended to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements. ā In January 2020, FASB issued ASU 2020-01 to clarify the interaction among ASC 321, ASC 323, and ASC 815 for equity securities, equity method investments, and certain financial instruments to acquire equity securities. ASU 2020-01 clarifies whether re-measurement of equity investments is appropriate when observable transactions cause the equity method to be triggered or discontinued. ASU 2020-01 also provides that certain forward contracts and purchased options to acquire equity securities will be measured under ASC 321 without an assessment of subsequent accounting upon settlement or exercise. The amendment is effective in periods beginning after December 15, 2020. The Company does not expect the adoption of ASU 2020-01 to have a material impact on its consolidated financial statements. ā ā |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations | |
Discontinued Operations | T 3. Discontinued Operations ā NLC Sale ā On January 30, 2020, Hilltop entered into an agreement to sell all of the outstanding capital stock of NLC, which comprises the operations of the insurance segment, for a cash purchase price of $150.0 million, subject to post-closing adjustments. Consummation of the transaction is subject to customary closing conditions, including required regulatory approvals. Management determined that the pending sale of NLC represents a strategic shift away from one of the historically core business units of the Company. Accordingly, as of March 31, 2020 and for all prior periods, NLCās results have been presented as discontinued operations and its assets and liabilities have been classified as held for sale in the consolidated financial statements. Hilltop anticipates that this transaction will result in a net gain. ā All related notes to consolidated financial statements for discontinued operations have been included in this note. ā The following table details the carrying amounts of assets and liabilities of NLC reflected in the consolidated balance sheets under the caption āAssets held for saleā and āLiabilities held for saleā, respectively. ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 2019 Assets ā ā ā ā ā ā Cash and due from banks ā $ 58,103 ā $ 51,333 Securities: ā ā ā ā ā ā Available for sale, at fair value ā ā 86,101 ā ā 86,899 Equity, at fair value ā ā 15,440 ā ā 19,841 ā ā ā 101,541 ā ā 106,740 ā ā ā ā ā ā ā Premises and equipment, net ā ā 9,058 ā ā 9,607 Operating lease right-of-use assets ā ā 2,674 ā ā 2,739 Other assets ā ā 50,966 ā ā 50,533 Goodwill ā ā 23,988 ā ā 23,988 Other intangible assets, net ā ā 3,428 ā ā 3,489 Total assets held for sale ā $ 249,758 ā $ 248,429 ā ā ā ā ā ā ā Liabilities ā ā ā ā ā ā Notes payable ā $ 27,500 ā $ 27,500 Operating lease liabilities ā ā 2,727 ā ā 2,783 Other liabilities ā ā 109,503 ā ā 110,391 Total liabilities held for sale ā $ 139,730 ā $ 140,674 ā The following table presents the results of discontinued operations for NLC for the periods indicated. ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Interest income: ā ā ā ā ā ā Securities: ā ā ā ā ā ā Taxable ā $ 938 ā $ 960 Other ā ā 67 ā ā 142 Total interest income ā ā 1,005 ā ā 1,102 ā ā ā ā ā ā ā Interest expense: ā ā ā ā ā ā Notes payable ā ā 406 ā ā 460 ā ā ā ā ā ā ā Noninterest income: ā ā ā ā ā ā Net insurance premiums earned ā ā 32,637 ā ā 33,203 Other ā ā (2,246) ā ā 3,302 Total noninterest income ā ā 30,391 ā ā 36,505 ā ā ā ā ā ā ā Noninterest expense: ā ā ā ā ā ā Employees' compensation and benefits ā ā 2,777 ā ā 3,202 Occupancy and equipment, net ā ā 247 ā ā 244 Professional services ā ā 8,527 ā ā 8,833 Loss and loss adjustment expenses ā ā 12,949 ā ā 14,926 Other ā ā 2,476 ā ā 3,133 Total noninterest expense ā ā 26,976 ā ā 30,338 ā ā ā ā ā ā ā Income from discontinued operations before income taxes ā ā 4,014 ā ā 6,809 Income tax expense ā ā 863 ā ā 1,449 Income from discontinued operations, net of income taxes ā $ 3,151 ā $ 5,360 ā ā ā ā Securities ā The available for sale securities held by NLC at March 31, 2020 and December 31, 2019 reflected in the consolidated balance sheets under the caption āAssets held for saleā were primarily comprised of U.S. Treasury, residential mortgage-backed and corporate debt securities with aggregate unrealized gross gains of $3.5 million and $2.5 million, respectively, and measured using Level 2 inputs on a recurring basis. NLCās available for sale portfolio had no unrealized gross losses at March 31, 2020 and nominal unrealized gross losses at December 31, 2019. ā NLC had unrealized net losses of $3.3 million and unrealized net gains of $1.1 million from the equity securities held at March 31, 2020 and December 31, 2019, respectively, measured using Level 1 inputs on a recurring basis. NLC recognized net losses of $4.4 million and net gains of $1.2 million during the three months ended March 31, 2020 and 2019, respectively, due to changes in the fair value of equity securities still held at the balance sheet date. ā At March 31, 2020 and December 31, 2019, NLC had investments on deposit in custody for various state insurance departments with aggregate carrying values of $9.5 million and $9.3 million, respectively . ā Notes Payable ā The NLIC and ASIC notes payable of $27.5 million, with maturities ranging from May 2033 to April 2034, to unaffiliated companies are each subordinated in right of payment to all policy claims and other indebtedness of NLIC and ASIC, respectively. ā Regulatory Matters ā The statutory financial statements of the Company's insurance subsidiaries, which are domiciled in the State of Texas, are presented on the basis of accounting practices prescribed or permitted by the Texas Department of Insurance. Texas has adopted the statutory accounting practices of the National Association of Insurance Commissioners (āNAICā) as the basis of its statutory accounting practices with certain differences that are not significant to the insurance company subsidiariesā statutory equity. ā A summary of statutory capital and surplus and statutory net income (loss) of each insurance subsidiary is as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā 2020 2019 Statutory capital and surplus: ā ā ā ā ā ā ā National Lloyds Insurance Company ā $ 73,892 ā $ 70,112 ā American Summit Insurance Company ā 17,999 ā 19,201 ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Statutory net income (loss): ā ā ā ā ā ā National Lloyds Insurance Company $ 6,527 ā $ 3,417 ā American Summit Insurance Company (185) ā 417 ā ā Regulations of the Texas Department of Insurance require insurance companies to maintain minimum levels of statutory surplus to ensure their ability to meet their obligations to policyholders. At March 31, 2020, the Company's insurance subsidiaries had statutory surplus in excess of the minimum required. ā The NAIC has adopted a risk based capital (āRBCā) formula for insurance companies that establishes minimum capital requirements indicating various levels of available regulatory action on an annual basis relating to insurance risk, asset credit risk, interest rate risk and business risk. The RBC formula is used by the NAIC and certain state insurance regulators as an early warning tool to identify companies that require additional scrutiny or regulatory action. At March 31, 2020, the Company's insurance subsidiaries' RBC ratio exceeded the level at which regulatory action would be required. ā Reserve for Losses and Loss Adjustment Expenses ā A rollforward of NLCās reserve for unpaid losses and LAE, as included in other liabilities and reflected as a part of liabilities held for sale for all periods within the consolidated balance sheets, is as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā March 31, ā ā ā 2020 2019 ā Balance, beginning of period ā $ 15,342 ā $ 20,552 ā Less reinsurance recoverables ā ā (1,005) ā ā (3,214) ā Net balance, beginning of period ā ā 14,337 ā ā 17,338 ā ā ā ā ā ā ā ā ā Incurred related to: ā ā ā ā ā ā ā Current year ā ā 11,657 ā ā 13,993 ā Prior years ā ā 1,474 ā ā 935 ā Total incurred ā ā 13,131 ā ā 14,928 ā ā ā ā ā ā ā ā ā Payments related to: ā ā ā ā ā ā ā Current year ā ā (7,377) ā ā (7,029) ā Prior years ā ā (6,329) ā ā (7,152) ā Total payments ā ā (13,706) ā ā (14,181) ā ā ā ā ā ā ā ā ā Net balance, end of period ā ā 13,762 ā ā 18,085 ā Plus reinsurance recoverables ā ā 746 ā ā 2,506 ā Balance, end of period ā $ 14,508 ā $ 20,591 ā ā A summary of claims loss reserve development activity is presented in the following table (dollars in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance ā March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Total of ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Incurred ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā But Not ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Reported ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Reserves Plus Cumulative ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Development Number of Accident ā March 31, 2020 ā ā On Reported Reported Year ā 2017 ā 2018 ā 2019 ā 2020 ā Claims Claims 2017 ā $ 87,899 ā $ 88,025 ā $ 87,534 ā $ 87,568 ā $ 216 ā 20,174 2018 ā ā ā ā ā 75,217 ā ā 73,261 ā ā 73,314 ā ā 927 ā 14,713 2019 ā ā ā ā ā ā ā ā 71,687 ā ā 73,072 ā ā 4,009 ā 13,798 2020 ā ā ā ā ā ā ā ā ā ā ā 11,657 ā 1,565 ā 2,317 ā ā ā ā ā ā ā ā ā ā ā $ 245,611 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance ā ā ā ā ā Accident ā March 31, 2020 ā ā ā ā ā Year ā 2017 ā 2018 ā 2019 ā 2020 ā ā ā ā ā 2017 ā $ 77,675 ā $ 86,319 ā $ 87,203 ā $ 87,291 ā ā ā ā ā 2018 ā ā ā ā ā 61,922 ā ā 70,958 ā ā 72,255 ā ā ā ā ā 2019 ā ā ā ā ā ā ā ā 55,014 ā ā 66,150 ā ā ā ā ā 2020 ā ā ā ā ā ā ā ā ā ā ā 7,377 ā ā ā ā ā Total ā $ 233,073 ā ā ā ā ā All outstanding reserves prior to 2017, net of reinsurance ā ā 466 ā ā ā ā ā Reserve for unpaid losses and allocated loss adjustment expenses, net of reinsurance ā $ 13,004 ā ā ā ā ā ā Reinsurance Activity ā NLC limits the maximum net loss that can arise from large risks or risks in concentrated areas of exposure by reinsuring (ceding) certain levels of risk. Substantial amounts of business are ceded, and these reinsurance contracts do not relieve NLC from its obligations to policyholders. Such reinsurance includes quota share, excess of loss, catastrophe, and other forms of reinsurance on essentially all property and casualty lines of insurance. Net insurance premiums earned, losses and LAE and policy acquisition and other underwriting expenses are reported net of the amounts related to reinsurance ceded to other companies. Amounts recoverable from reinsurers related to the portions of the liability for losses and LAE and unearned insurance premiums ceded to them are reported as assets. Failure of reinsurers to honor their obligations could result in losses to NLC; consequently, an allowance for credit losses is established for amounts deemed uncollectible as NLC evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. At March 31, 2020, total reinsurance recoverables and receivables had a carrying value of $1.5 million, which is included in other assets within the consolidated balance sheets. There was no allowance for credit losses on reinsurance receivables at March 31, 2020, based on NLCās quality requirements. ā The effects of reinsurance on premiums written and earned are included within discontinued operations for all periods presented and are summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā ā 2020 ā 2019 ā ā ā Written Earned Written Earned Premiums from direct business ā $ 29,980 ā $ 30,746 ā $ 30,790 ā $ 31,737 ā ā Reinsurance assumed ā 2,952 ā 3,244 ā 3,129 ā 3,191 ā ā Reinsurance ceded ā (1,353) ā (1,353) ā (1,725) ā (1,725) ā ā Net premiums ā $ 31,579 ā $ 32,637 ā $ 32,194 ā $ 33,203 ā ā ā ā The effects of reinsurance on incurred losses and LAE are included within discontinued operations for all periods and are as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Losses and LAE incurred ā $ 12,763 ā $ 14,985 ā ā Reinsurance recoverables ā 186 ā (59) ā ā Net loss and LAE incurred ā $ 12,949 ā $ 14,926 ā ā ā ā Catastrophic coverage ā Effective July 1, 2019, NLC renewed its catastrophic excess of loss reinsurance coverage for a one-year period. At March 31, 2020, NLC had catastrophic excess of loss reinsurance coverage of losses per event in excess of $8 million retention by NLIC and $2 million retention by ASIC. ASIC maintained an underlying layer of coverage, providing $6 million of reinsurance coverage in excess of its $2 million retention to bridge to the primary program. The reinsurance for NLIC and ASIC in excess of $8 million is comprised of three layers of protection: $12 million in excess of $8 million retention and/or loss; $25 million in excess of $20 million loss; and $50 million in excess of $45 million loss. NLIC and ASIC retain no participation in any of the layers, beyond the first $8 million and $2 million, respectively. At March 31, 2020, total retention for any one catastrophe that affects both NLIC and ASIC was limited to $8 million in the aggregate. ā NLC did not renew its underlying excess of loss contract that provides $10.0 million aggregate coverage in excess of NLCās per event retention of $1.0 million and aggregate retention of $15.0 million for sub-catastrophic events through December 31, 2019. During 2019, NLC retained 37.5% participation in this coverage. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 4. Fair Value Measurements ā Fair Value Measurements and Disclosures ā The Company determines fair values in compliance with The Fair Value Measurements and Disclosures Topic of the ASC (the āFair Value Topicā). The Fair Value Topic defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. The Fair Value Topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Fair Value Topic assumes that transactions upon which fair value measurements are based occur in the principal market for the asset or liability being measured. Further, fair value measurements made under the Fair Value Topic exclude transaction costs and are not the result of forced transactions. ā The Fair Value Topic includes a fair value hierarchy that classifies fair value measurements based upon the inputs used in valuing the assets or liabilities that are the subject of fair value measurements. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs, as indicated below. ā ā Level 1 Inputs : Unadjusted quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date. ā ā Level 2 Inputs : Observable inputs other than Level 1 prices. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, yield curves, prepayment speeds, default rates, credit risks and loss severities), and inputs that are derived from or corroborated by market data, among others. ā ā Level 3 Inputs : Unobservable inputs that reflect an entityās own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. Level 3 inputs include pricing models and discounted cash flow techniques, among others . ā Fair Value Option ā The Company has elected to measure substantially all of PrimeLendingās mortgage loans held for sale and retained mortgage servicing rights (āMSRā) asset at fair value, under the provisions of the Fair Value Option. The Company elected to apply the provisions of the Fair Value Option to these items so that it would have the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. At March 31, 2020 and December 31, 2019, the aggregate fair value of PrimeLendingās mortgage loans held for sale accounted for under the Fair Value Option was $2.09 billion and $1.94 billion, respectively, and the unpaid principal balance of those loans was $2.00 billion and $1.88 billion, respectively. The interest component of fair value is reported as interest income on loans in the accompanying consolidated statements of operations. ā The Company holds a number of financial instruments that are measured at fair value on a recurring basis, either by the application of the Fair Value Option or other authoritative pronouncements. The fair values of those instruments are determined primarily using Level 2 inputs. Those inputs include quotes from mortgage loan investors and derivatives dealers and data from independent pricing services. The fair value of loans held for sale is determined using an exit price method. ā The following tables present information regarding financial assets and liabilities measured at fair value on a recurring basis (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Level 1 Level 2 Level 3 Total March 31, 2020 ā Inputs ā Inputs ā Inputs ā Fair Value Trading securities ā $ 1,485 ā $ 392,096 ā $ ā ā $ 393,581 ā Available for sale securities ā ā ā ā ā 972,318 ā ā ā ā ā 972,318 ā Equity securities ā ā 107 ā ā ā ā ā ā ā ā 107 ā Loans held for sale ā ā ā ā ā 2,010,381 ā ā 79,588 ā ā 2,089,969 ā Derivative assets ā ā ā ā ā 192,729 ā ā ā ā ā 192,729 ā MSR asset ā ā ā ā ā ā ā ā 30,299 ā ā 30,299 ā Securities sold, not yet purchased ā ā 11,333 ā ā 11,435 ā ā ā ā ā 22,768 ā Derivative liabilities ā ā ā ā ā 171,210 ā ā ā ā ā 171,210 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Level 1 Level 2 Level 3 ā Total ā December 31, 2019 ā Inputs ā Inputs ā Inputs ā ā Fair Value ā Trading securities ā $ ā ā $ 689,576 ā $ ā ā $ 689,576 ā Available for sale securities ā ā ā ā ā 911,493 ā ā ā ā ā 911,493 ā Equity securities ā ā 166 ā ā ā ā ā ā ā ā 166 ā Loans held for sale ā ā ā ā ā 1,868,518 ā ā 67,195 ā ā 1,935,713 ā Derivative assets ā ā ā ā ā 33,129 ā ā ā ā ā 33,129 ā MSR asset ā ā ā ā ā ā ā ā 55,504 ā ā 55,504 ā Securities sold, not yet purchased ā ā 29,080 ā ā 14,737 ā ā ā ā ā 43,817 ā Derivative liabilities ā ā ā ā ā 17,140 ā ā ā ā ā 17,140 ā ā The following tables include a rollforward for those financial instruments measured at fair value using Level 3 inputs (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Total Gains or Losses ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā (Realized or Unrealized) ā ā ā ā Balance at ā ā ā ā ā ā ā Included in Other ā ā ā ā ā Beginning of ā Purchases/ ā Sales/ ā Transfers to ā Included in ā Comprehensive ā Balance at ā ā Period ā Additions ā Reductions ā (from) Level 3 ā Net Income ā Income (Loss) ā End of Period Three months ended March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Loans held for sale ā $ 67,195 ā $ 14,285 ā $ (4,175) ā $ 6,220 ā $ (3,937) ā $ ā ā $ 79,588 ā MSR asset ā 55,504 ā ā 4,475 ā ā (18,650) ā ā ā ā ā (11,030) ā ā ā ā 30,299 ā Total ā $ 122,699 ā $ 18,760 ā $ (22,825) ā $ 6,220 ā $ (14,967) ā $ ā ā $ 109,887 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended March 31, 2019 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Loans held for sale ā $ 50,464 ā $ 15,427 ā $ (6,976) ā $ 1,037 ā $ (2,108) ā $ ā ā $ 57,844 ā MSR asset ā ā 66,102 ā ā 1,861 ā ā ā ā ā ā ā ā (5,914) ā ā ā ā ā 62,049 ā Total ā $ 116,566 ā $ 17,288 ā $ (6,976) ā $ 1,037 ā $ (8,022) ā $ ā ā $ 119,893 ā ā All net realized and unrealized gains (losses) in the tables above are reflected in the accompanying consolidated financial statements. The unrealized gains (losses) relate to financial instruments still held at March 31, 2020. ā For Level 3 financial instruments measured at fair value on a recurring basis at March 31, 2020 and December 31, 2019, the significant unobservable inputs used in the fair value measurements were as follows. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Range (Weighted-Average) ā ā ā ā ā ā March 31, ā December 31, Financial instrument Valuation Technique Unobservable Inputs 2020 ā 2019 Loans ā Discounted cash flows / Market comparable ā Projected price ā 90 - 94 % ( 93 %) ā 92 - 96 % ( 95 %) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā MSR asset ā Discounted cash flows ā Constant prepayment rate ā ā ā 16.98 % ā ā ā ā ā 13.16 % ā ā ā ā ā ā Discount rate ā ā ā 11.01 % ā ā ā ā ā 11.14 % ā ā ā The fair value of certain loans held for sale that cannot be sold through normal sale channels or are non-performing is measured using Level 3 inputs. The fair value of such loans is generally based upon estimates of expected cash flows using unobservable inputs, including listing prices of comparable assets, uncorroborated expert opinions, and/or managementās knowledge of underlying collateral. ā The MSR asset, which is included in other assets within the Companyās consolidated balance sheets, is reported at fair value using Level 3 inputs. The MSR asset is valued by projecting net servicing cash flows, which are then discounted to estimate the fair value. The fair value of the MSR asset is impacted by a variety of factors. Prepayment rates and discount rates, the most significant unobservable inputs, are discussed further in Note 7 to the consolidated financial statements. ā The Company had no transfers between Levels 1 and 2 during the periods presented. Any transfers are based on changes in the observability and/or significance of the valuation inputs and are assumed to occur at the beginning of the quarterly reporting period in which they occur. ā The following table presents those changes in fair value of instruments recognized in the consolidated statements of operations that are accounted for under the Fair Value Option (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, 2020 ā Three Months Ended March 31, 2019 ā ā ā Other Total ā Other Total ā ā Net ā Noninterest ā Changes in ā Net ā Noninterest ā Changes in ā ā ā Gains (Losses) ā Income ā Fair Value ā Gains (Losses) ā Income ā Fair Value ā Loans held for sale ā $ 33,979 ā $ ā ā $ 33,979 ā $ (13,324) ā $ ā ā $ (13,324) ā MSR asset ā (11,030) ā ā ā (11,030) ā (5,914) ā ā ā (5,914) ā ā ā The Fair Value of Financial Instruments Subsection of the ASC requires disclosure of the fair value of financial assets and liabilities, including the financial assets and liabilities previously discussed. There have been no changes to the methods for determining estimated fair value for financial assets and liabilities as described in detail in Note 3 to the consolidated financial statements included in the Companyās 2019 Form 10-K. ā The following tables present the carrying values and estimated fair values of financial instruments not measured at fair value on either a recurring or non-recurring basis (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Estimated Fair Value ā Carrying Level 1 Level 2 Level 3 ā ā March 31, 2020 ā Amount ā Inputs ā Inputs ā Inputs ā Total Financial assets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Cash and cash equivalents ā $ 524,771 ā $ 524,771 ā $ ā ā $ ā ā $ 524,771 ā Assets segregated for regulatory purposes ā ā 178,805 ā ā 178,805 ā ā ā ā ā ā ā ā 178,805 ā Securities purchased under agreements to resell ā ā 23,356 ā ā ā ā ā 23,356 ā ā ā ā ā 23,356 ā Held to maturity securities ā ā 355,110 ā ā ā ā ā 369,614 ā ā ā ā ā 369,614 ā Loans held for sale ā ā 343,438 ā ā ā ā ā 343,438 ā ā ā ā ā 343,438 ā Loans held for investment, net ā ā 7,238,511 ā ā ā ā ā 506,250 ā ā 6,845,844 ā ā 7,352,094 ā Broker-dealer and clearing organization receivables ā 1,838,789 ā ā ā 1,838,789 ā ā ā 1,838,789 ā Other assets ā 73,118 ā ā ā 70,544 ā 2,574 ā 73,118 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Financial liabilities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Deposits ā 9,947,489 ā ā ā 9,962,915 ā ā ā 9,962,915 ā Broker-dealer and clearing organization payables ā 1,259,181 ā ā ā 1,259,181 ā ā ā 1,259,181 ā Short-term borrowings ā 1,329,948 ā ā ā 1,329,948 ā ā ā 1,329,948 ā Debt ā 311,054 ā ā ā 311,054 ā ā ā 311,054 ā Other liabilities ā 6,376 ā ā ā 6,376 ā ā ā 6,376 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Estimated Fair Value ā Carrying Level 1 Level 2 Level 3 ā ā December 31, 2019 ā Amount ā Inputs ā Inputs ā Inputs ā Total Financial assets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Cash and cash equivalents ā $ 434,020 ā $ 434,020 ā $ ā ā $ ā ā $ 434,020 ā Assets segregated for regulatory purposes ā ā 157,436 ā ā 157,436 ā ā ā ā ā ā ā ā 157,436 ā Securities purchased under agreements to resell ā ā 59,031 ā ā ā ā ā 59,031 ā ā ā ā ā 59,031 ā Held to maturity securities ā ā 386,326 ā ā ā ā ā 388,930 ā ā ā ā ā 388,930 ā Loans held for sale ā ā 170,648 ā ā ā ā ā 170,648 ā ā ā ā ā 170,648 ā Loans held for investment, net ā ā 7,320,264 ā ā ā ā ā 576,527 ā ā 6,990,706 ā ā 7,567,233 ā Broker-dealer and clearing organization receivables ā 1,780,280 ā ā ā 1,780,280 ā ā ā 1,780,280 ā Other assets ā 71,040 ā ā ā 69,580 ā 1,460 ā 71,040 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Financial liabilities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Deposits ā 9,032,214 ā ā ā 9,032,496 ā ā ā 9,032,496 ā Broker-dealer and clearing organization payables ā 1,605,518 ā ā ā 1,605,518 ā ā ā 1,605,518 ā Short-term borrowings ā 1,424,010 ā ā ā 1,424,010 ā ā ā 1,424,010 ā Debt ā 323,281 ā ā ā 323,281 ā ā ā 323,281 ā Other liabilities ā 8,340 ā ā ā 8,340 ā ā ā 8,340 ā ā The Company held equity investments other than securities of $34.9 million and $36.6 million at March 31, 2020 and December 31, 2019, respectively, which are included within other assets in the consolidated balance sheets. Of the $34.9 million of such equity investments held at March 31, 2020, $19.1 million do not have readily determinable fair values and each is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The following table presents the adjustments to the carrying value of these investments during the periods presented (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Balance, beginning of period ā $ 19,771 $ 20,376 Additional investments ā ā ā ā ā ā ā Upward adjustments ā ā ā 106 ā ā 101 Impairments and downward adjustments ā ā ā (789) ā ā ā Dispositions ā ā ā ā ā Balance, end of period ā ā $ 19,088 ā $ 20,477 ā |
Securities
Securities | 3 Months Ended |
Mar. 31, 2020 | |
Securities | |
Securities | 5. Securities ā The fair value of trading securities is summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā ā 2020 2019 U.S. Treasury securities $ 1,485 $ ā U.S. government agencies: ā ā ā ā ā ā ā ā Bonds ā ā ā ā ā 24,680 ā ā Residential mortgage-backed securities ā 164,899 ā 331,601 ā ā Commercial mortgage-backed securities ā 2,136 ā 2,145 ā ā Collateralized mortgage obligations ā ā 80,262 ā ā 191,154 ā ā Corporate debt securities ā ā 28,893 ā ā 36,973 ā ā States and political subdivisions ā ā 103,075 ā ā 93,117 ā ā Unit investment trusts ā ā ā ā ā 3,468 ā ā Private-label securitized product ā ā 650 ā ā 2,992 ā ā Other ā ā 12,181 ā ā 3,446 ā ā Totals ā $ 393,581 ā $ 689,576 ā ā ā In addition to the securities shown above, the Hilltop Broker-Dealers enter into transactions that represent commitments to purchase and deliver securities at prevailing future market prices to facilitate customer transactions and satisfy such commitments. Accordingly, the Hilltop Broker-Dealersā ultimate obligations may exceed the amount recognized in the financial statements. These securities, which are carried at fair value and reported as securities sold, not yet purchased in the consolidated balance sheets, had a value of $22.8 million and $43.8 million at March 31, 2020 and December 31, 2019, respectively. ā The amortized cost and fair value of available for sale and held to maturity securities are summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Available for Sale ā ā ā Amortized ā Unrealized ā Unrealized ā ā ā March 31, 2020 ā Cost ā Gains ā Losses ā Fair Value U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds ā $ 88,299 ā $ 1,437 ā $ ā ā $ 89,736 ā Residential mortgage-backed securities ā 415,399 ā 14,435 ā ā ā 429,834 ā Commercial mortgage-backed securities ā ā 11,436 ā 967 ā ā ā 12,403 ā Collateralized mortgage obligations ā 385,409 ā 9,634 ā (1,057) ā 393,986 ā States and political subdivisions ā 44,613 ā 1,746 ā ā ā 46,359 ā Totals ā $ 945,156 ā $ 28,219 ā $ (1,057) ā $ 972,318 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Available for Sale ā ā ā Amortized ā Unrealized ā Unrealized ā ā ā December 31, 2019 ā Cost ā Gains ā Losses ā Fair Value U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds ā $ 84,590 ā $ 1,049 ā $ (64) ā $ 85,575 ā Residential mortgage-backed securities ā 430,514 ā 6,662 ā (147) ā 437,029 ā Commercial mortgage-backed securities ā ā 11,488 ā 543 ā ā ā 12,031 ā Collateralized mortgage obligations ā 333,256 ā 3,175 ā (815) ā 335,616 ā States and political subdivisions ā 39,969 ā 1,273 ā ā ā 41,242 ā Totals ā $ 899,817 ā $ 12,702 ā $ (1,026) ā $ 911,493 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Held to Maturity ā ā Amortized ā Unrealized ā Unrealized ā ā ā March 31, 2020 Cost Gains Losses Fair Value U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā Residential mortgage-backed securities ā $ 16,809 ā $ 676 ā $ ā ā $ 17,485 Commercial mortgage-backed securities ā ā 160,113 ā 10,405 ā ā ā 170,518 Collateralized mortgage obligations ā 106,926 ā 2,260 ā (37) ā 109,149 States and political subdivisions ā 71,262 ā 1,335 ā (135) ā 72,462 Totals ā $ 355,110 ā $ 14,676 ā $ (172) ā $ 369,614 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Held to Maturity ā ā Amortized ā Unrealized ā Unrealized ā ā ā December 31, 2019 Cost Gains Losses Fair Value U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds ā $ 24,020 ā $ 10 ā $ (35) ā $ 23,995 ā Residential mortgage-backed securities ā 17,776 ā 295 ā ā ā 18,071 ā Commercial mortgage-backed securities ā ā 161,624 ā ā 2,810 ā ā (655) ā ā 163,779 ā Collateralized mortgage obligations ā 113,894 ā 226 ā (904) ā 113,216 ā States and political subdivisions ā 69,012 ā 1,013 ā (156) ā 69,869 ā Totals ā $ 386,326 ā $ 4,354 ā $ (1,750) ā $ 388,930 ā ā Additionally, the Company had nominal unrealized net losses and unrealized net gains from equity securities with fair values of $0.1 million and $0.2 million held at March 31, 2020 and December 31, 2019, respectively. The Company recognized net losses of $0.1 million and nominal net gains during the three months ended March 31, 2020 and 2019, respectively, due to changes in the fair value of equity securities still held at the balance sheet date. During the three months ended March 31, 2020 and 2019, net gains recognized from equity securities sold were nominal. ā Information regarding available for sale and held to maturity securities that were in an unrealized loss position is shown in the following tables (dollars in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, 2020 ā December 31, 2019 ā Number of ā ā Unrealized Number of ā ā Unrealized ā ā Securities ā Fair Value ā Losses ā Securities ā Fair Value ā Losses Available for Sale ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā $ ā ā $ ā 2 ā $ 24,937 ā $ 64 ā Unrealized loss for twelve months or longer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 2 ā 24,937 ā 64 ā Residential mortgage-backed securities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā ā ā ā 37 ā 36,187 ā 87 ā Unrealized loss for twelve months or longer ā ā ā ā ā 2 ā 13,683 ā 58 ā ā ā ā ā ā ā ā ā 39 ā 49,870 ā 145 ā Commercial mortgage-backed securities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā ā ā ā 1 ā 9,967 ā 2 ā Unrealized loss for twelve months or longer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 1 ā 9,967 ā 2 ā Collateralized mortgage obligations: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 4 ā 20,214 ā 165 15 ā 94,545 ā 446 ā Unrealized loss for twelve months or longer 15 ā 58,090 ā 892 13 ā 46,217 ā 369 ā ā 19 ā ā 78,304 ā ā 1,057 28 ā 140,762 ā 815 ā States and political subdivisions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 1 ā 537 ā ā ā ā ā ā ā ā Unrealized loss for twelve months or longer ā ā ā ā ā 1 ā 487 ā ā ā ā 1 ā ā 537 ā ā ā 1 ā 487 ā ā ā Total available for sale: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 5 ā 20,751 ā 165 55 ā 165,636 ā 599 ā Unrealized loss for twelve months or longer 15 ā 58,090 ā 892 16 ā 60,387 ā 427 ā ā 20 ā $ 78,841 ā $ 1,057 71 ā $ 226,023 ā $ 1,026 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, 2020 ā December 31, 2019 ā Number of ā ā Unrealized Number of ā ā Unrealized ā ā Securities ā Fair Value ā Losses ā Securities ā Fair Value ā Losses Held to Maturity ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā $ ā ā $ ā 2 ā $ 9,665 ā $ 35 ā Unrealized loss for twelve months or longer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 2 ā 9,665 ā 35 ā Commercial mortgage-backed securities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā ā ā ā 8 ā 44,610 ā 656 ā Unrealized loss for twelve months or longer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 8 ā 44,610 ā 656 ā Collateralized mortgage obligations: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 2 ā 15,488 ā 37 4 ā 23,904 ā 287 ā Unrealized loss for twelve months or longer ā ā ā ā ā 8 ā 59,560 ā 617 ā ā 2 ā 15,488 ā 37 12 ā 83,464 ā 904 ā States and political subdivisions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 27 ā 10,470 ā 133 38 ā 15,996 ā 124 ā Unrealized loss for twelve months or longer 2 ā 604 ā 2 4 ā 1,099 ā 31 ā ā 29 ā 11,074 ā 135 42 ā 17,095 ā 155 ā Total held to maturity: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 29 ā 25,958 ā 170 52 ā 94,175 ā 1,102 ā Unrealized loss for twelve months or longer 2 ā 604 ā 2 12 ā 60,659 ā 648 ā ā 31 ā $ 26,562 ā $ 172 64 ā $ 154,834 ā $ 1,750 ā ā Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. The amortized cost and fair value of securities, excluding trading and equity securities, at March 31, 2020 are shown by contractual maturity below (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Available for Sale ā Held to Maturity ā ā Amortized ā ā Amortized ā ā ā ā Cost ā Fair Value Cost ā Fair Value Due in one year or less ā $ 2,071 ā $ 2,090 ā $ 453 ā $ 456 ā Due after one year through five years ā 73,668 ā 75,246 ā 987 ā 994 ā Due after five years through ten years ā 35,387 ā 35,914 ā 6,160 ā 6,264 ā Due after ten years ā 21,786 ā 22,845 ā 63,662 ā 64,748 ā ā ā 132,912 ā 136,095 ā 71,262 ā 72,462 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Residential mortgage-backed securities ā 415,399 ā 429,834 ā 16,809 ā 17,485 ā Collateralized mortgage obligations ā 385,409 ā 393,986 ā 106,926 ā 109,149 ā Commercial mortgage-backed securities ā 11,436 ā 12,403 ā 160,113 ā 170,518 ā ā ā $ 945,156 ā $ 972,318 ā $ 355,110 ā $ 369,614 ā ā The Company recognized net gains of $7.0 million and $8.1 million from its trading portfolio during the three months ended March 31, 2020 and 2019, respectively. In addition, the Hilltop Broker-Dealers realized net gains from structured product trading activities of $21.3 million and $25.3 million during the three months ended March 31, 2020 and 2019, respectively. During the three months ended March 31, 2020, the Company had other realized gains on securities of $0.2 million. All such realized gains and losses are recorded as a component of other noninterest income within the consolidated statements of operations. ā Securities with a carrying amount of $555.7 million and $576.0 million (with a fair value of $573.0 million and $583.6 million, respectively) at March 31, 2020 and December 31, 2019, respectively, were pledged by the Bank to secure public and trust deposits, federal funds purchased and securities sold under agreements to repurchase, and for other purposes as required or permitted by law. Substantially all of these pledged securities were included in the available for sale and held to maturity securities portfolios at March 31, 2020 and December 31, 2019. ā Mortgage-backed securities and collateralized mortgage obligations consist primarily of Government National Mortgage Association (āGNMAā), Federal National Mortgage Association (āFNMAā) and Federal Home Loan Mortgage Corporation (āFHLMCā) pass-through and participation certificates. GNMA securities are guaranteed by the full faith and credit of the United States, while FNMA and FHLMC securities are fully guaranteed by those respective United States government-sponsored enterprises, and conditionally guaranteed by the full faith and credit of the United States. ā Allowance for Credit Losses for Available for Sale Securities and Held to Maturity Securities ā The Company has evaluated available for sale debt securities that are in an unrealized loss position and has determined that the decline in value is unrelated to credit loss and is related to changes in market interest rates since purchase. In addition, as of March 31, 2020, the Company had not made a decision to sell any of its debt securities held, nor did the Company consider it more likely than not that it would be required to sell such securities before recovery of their amortized cost basis. The Company does not expect to have credit losses associated with the debt securities and no allowance was recognized on the debt securities portfolio at transition. None of the available for sale debt securities held were past due at March 31, 2020. |
Loans Held for Investment
Loans Held for Investment | 3 Months Ended |
Mar. 31, 2020 | |
Loans Held for Investment | |
Loans Held for Investment | 6. Loans Held for Investment ā Loans held for investment summarized by portfolio segment are as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 2019 Commercial real estate ā $ 3,062,042 ā $ 3,000,523 ā Commercial and industrial ā 2,101,968 ā 2,025,720 ā Construction and land development ā 955,173 ā 940,564 ā 1-4 family residential ā ā 676,630 ā 791,020 ā Consumer ā ā 43,187 ā 47,046 ā Broker-dealer (1) ā ā 506,250 ā 576,527 ā ā ā 7,345,250 ā 7,381,400 ā Allowance for credit losses ā (106,739) ā (61,136) ā Total loans held for investment, net of allowance ā $ 7,238,511 ā $ 7,320,264 ā (1) Primarily represents margin loans to customers and correspondents associated with broker-dealer segment operations. ā Non-accrual loans, excluding those classified as held for sale, are summarized by class in the following table (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā ā 2020 ā 2019 ā Commercial real estate: ā ā Non-owner occupied ā $ 18,168 ā $ 3,813 ā Owner occupied ā 5,184 ā 3,495 ā Commercial and industrial ā ā 47,121 ā 15,262 ā Construction and land development ā 1,402 ā 1,316 ā 1-4 family residential ā 10,599 ā 7,382 ā Consumer ā 310 ā 26 ā Broker-dealer ā ā ā ā ā ā ā $ 82,784 ā $ 31,294 ā ā At March 31, 2020 and December 31, 2019, an additional $4.6 million and $4.8 million, respectively, of real estate loans secured by residential properties and classified as held for sale were in non-accrual status. ā The following table provides further details associated with non-accrual loans (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended ā ā ā ā ā ā ā ā March 31, 2020 ā ā Non-accrual Loans ā Interest Income March 31, 2020 with Allowance with No Allowance Total Recognized (1) Commercial real estate: ā ā ā ā ā ā ā ā ā ā ā ā Non-owner occupied ā $ 9,179 ā $ 8,989 ā $ 18,168 ā $ (97) Owner occupied ā 1,162 ā ā 4,022 ā ā 5,184 ā ā 16 Commercial and industrial ā ā 39,950 ā ā 7,171 ā ā 47,121 ā ā 300 Construction and land development ā 176 ā ā 1,226 ā ā 1,402 ā ā 22 1-4 family residential ā 1,516 ā ā 9,083 ā ā 10,599 ā ā 983 Consumer ā 310 ā ā ā ā ā 310 ā ā (5) Broker-dealer ā ā ā ā ā ā ā ā ā ā ā ā ā $ 52,293 ā $ 30,491 ā $ 82,784 ā $ 1,219 (1) Interest income recognized on non-accrual loans during the three months ended March 31, 2019 was $0.4 million. ā The Company considers non-accrual loans to be collateral-dependent unless there are underlying mitigating circumstances. The practical expedient to measure the allowance using the fair value of the collateral has been implemented. Loans accounted for on a non-accrual basis were primarily comprised of two commercial non-owner occupied real estate loans totaling $15.3 million, a single commercial and industrial loan totaling $23.8 million and various 1-4 family residential, commercial real estate, and construction and land development loans totaling $8.0 million that were previously evaluated as a part of PCI loan pools prior to CECL. ā The Bank classifies loan modifications as TDRs when it concludes that it has both granted a concession to a debtor and that the debtor is experiencing financial difficulties. Loan modifications are typically structured to create affordable payments for the debtor and can be achieved in a variety of ways. The Bank modifies loans by reducing interest rates and/or lengthening loan amortization schedules. The Bank may also reconfigure a single loan into two or more loans (āA/B Noteā). The typical A/B Note restructure results in a ābadā loan which is charged off and a āgoodā loan or loans, the terms of which comply with the Bankās customary underwriting policies. The debt charged off on the ābadā loan is not forgiven to the debtor. ā Information regarding TDRs granted during the three months ended March 31, 2020, is shown in the following table (dollars in thousands). There were no TDRs granted during the three months ended March 31, 2019. At March 31, 2020 and December 31, 2019, the Bank had nominal unadvanced commitments to borrowers whose loans have been restructured in TDRs. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, 2020 ā ā Number of Balance at Balance at ā ā ā Loans ā Extension ā End of Period ā Commercial real estate: ā ā ā ā ā ā ā ā ā ā Non-owner occupied ā ā ā ā $ ā ā $ ā ā Owner occupied ā ā ā ā ā ā ā ā Commercial and industrial ā ā 1 ā 1,089 ā 1,166 ā Construction and land development ā ā ā ā ā ā ā ā 1-4 family residential ā ā ā ā ā ā ā ā Consumer ā ā ā ā ā ā ā ā Broker-dealer ā ā ā ā ā ā ā ā Covered ā ā ā ā ā ā ā ā ā ā ā 1 $ 1,089 $ 1,166 ā There were no TDRs granted during the twelve months preceding March 31, 2020 or 2019 for which a payment was at least 30 days past due. ā An analysis of the aging of the Companyās loan portfolio is shown in the following tables (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Accruing Loans ā ā Loans Past Due ā Loans Past Due ā Loans Past Due ā Total ā Current ā Total ā Past Due March 31, 2020 ā 30-59 Days ā 60-89 Days ā 90 Days or More ā Past Due Loans ā Loans ā Loans ā 90 Days or More Commercial real estate: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Non-owner occupied ā $ 6,488 ā $ 16,772 ā $ 199 ā $ 23,459 ā $ 1,721,265 ā $ 1,744,724 ā $ ā ā Owner occupied ā 12,152 ā 2,685 ā ā 3,400 ā 18,237 ā 1,299,081 ā ā 1,317,318 ā ā ā ā Commercial and industrial ā ā 6,740 ā 1,125 ā ā 2,768 ā 10,633 ā 2,091,335 ā ā 2,101,968 ā ā 47 ā Construction and land development ā 3,955 ā 3 ā ā 98 ā 4,056 ā 951,117 ā ā 955,173 ā ā 97 ā 1-4 family residential ā 16,832 ā 2,600 ā ā 5,896 ā 25,328 ā 651,302 ā ā 676,630 ā ā ā ā Consumer ā 167 ā 158 ā ā 284 ā 609 ā 42,578 ā ā 43,187 ā ā ā ā Broker-dealer ā ā ā ā ā ā ā ā ā ā 506,250 ā ā 506,250 ā ā ā ā ā ā $ 46,334 ā $ 23,343 ā $ 12,645 ā $ 82,322 ā $ 7,262,928 ā $ 7,345,250 ā $ 144 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Accruing Loans ā ā Loans Past Due ā Loans Past Due ā Loans Past Due ā Total ā Current ā Total ā Past Due December 31, 2019 ā 30-59 Days ā 60-89 Days ā 90 Days or More ā Past Due Loans ā Loans ā Loans ā 90 Days or More Commercial real estate: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Non-owner occupied ā $ 4,062 ā $ ā ā $ 2,790 ā $ 6,852 ā $ 1,702,500 ā $ 1,709,352 ā $ ā ā Owner occupied ā 1,813 ā ā 880 ā ā 3,265 ā 5,958 ā 1,285,213 ā ā 1,291,171 ā ā ā ā Commercial and industrial ā ā 5,967 ā ā 1,735 ā ā 3,395 ā 11,097 ā 2,014,623 ā ā 2,025,720 ā ā 3 ā Construction and land development ā 7,580 ā ā 1,827 ā ā ā ā 9,407 ā 931,157 ā ā 940,564 ā ā ā ā 1-4 family residential ā 12,058 ā ā 3,442 ā ā 6,520 ā 22,020 ā 769,000 ā ā 791,020 ā ā ā ā Consumer ā 455 ā ā 34 ā ā ā ā 489 ā 46,557 ā ā 47,046 ā ā ā ā Broker-dealer ā ā ā ā ā ā ā ā ā ā ā 576,527 ā ā 576,527 ā ā ā ā ā ā $ 31,935 ā $ 7,918 ā $ 15,970 ā $ 55,823 ā $ 7,325,577 ā $ 7,381,400 ā $ 3 ā ā In addition to the loans shown in the tables above, PrimeLending had $101.2 million and $102.7 million of loans included in loans held for sale (with an aggregate unpaid principal balance of $102.4 million and $104.0 million, respectively) that were 90 days past due and accruing interest at March 31, 2020 and December 31, 2019, respectively. These loans are guaranteed by U.S. government agencies and include loans that are subject to repurchase, or have been repurchased, by PrimeLending. ā Management tracks credit quality trends on a quarterly basis related to: (i) past due levels, (ii) non-performing asset levels, (iii) classified loan levels and (iv) general economic conditions in state and local markets. ā A description of the risk rating internal grades for commercial loans is presented in the following table. ā ā ā ā Risk Rating Internal Grade Risk Rating Description Pass low risk 1 - 3 Represents loans to very high credit quality commercial borrowers of investment or near investment grade. These borrowers have significant capital strength, moderate leverage, stable earnings and growth, and readily available financing alternatives. Smaller entities, regardless of strength, would generally not fit in these grades. Commercial borrowers entirely cash secured are also included in this category. Pass normal risk 4 - 7 Represents loans to commercial borrowers of solid credit quality with moderate risk. Borrowers in these grades are differentiated from higher grades on the basis of size (capital and/or revenue), leverage, asset quality and the stability of the industry or market area. Pass high risk 8 - 10 Represents "pass grade" loans to commercial borrowers of higher, but acceptable credit quality and risk. Such borrowers are differentiated from Pass Normal Risk in terms of size, secondary sources of repayment or they are of lesser stature in other key credit metrics in that they may be over-leveraged, under capitalized, inconsistent in performance or in an industry or an economic area that is known to have a higher level of risk, volatility, or susceptibility to weaknesses in the economy. Watch 11 Represents loans on management's "watch list" and is intended to be utilized on a temporary basis for pass grade commercial borrowers where a significant risk-modifying action is anticipated in the near term. Special mention 12 Represents loans with potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in a deterioration of the repayment prospects for the loans and weaken the Company's credit position at some future date. Substandard accrual 13 Represents loans, in accordance with regulatory guidelines, for which the accrual of interest has not been stopped, but are inadequately protected by the current sound worth and paying capacity of the obligor or the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Substandard non-accrual 14 Represents loans, in accordance with regulatory guidelines, for which the accrual of interest has been stopped and includes loans where interest is more than 90 days past due and not fully secured and loans where a specific valuation allowance may be necessary. Doubtful 15 Represents loans, in accordance with regulatory guidelines, that are placed on non-accrual status and may be dependent upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. Loss 16 Represents loans, in accordance with regulatory guidelines, that are to be charged-off or charged-down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. Rating is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt. ā For 1-4 family residential and consumer loans, the Company utilizes separate credit models designed for these types of loans to estimate the PD and LGD grades for the allowance for credit losses calculation. The primary driver of the PD score is the borrower's FICO score at origination. A portion of the Companyās 1-4 family residential loans were acquired as part of a FDIC-assisted transaction in 2013 and the FICO information at origination was incomplete. The credit scores were refreshed in 2016 and these new scores were used as a proxy for the FICO score at origination. New originations and loan purchases are scored using the FICO score at origination. FICO score bands are assigned following prevalent industry standards and are used as the credit quality indicator for these types of loans. Substandard non-accrual loans are treated as a separate category in the credit scoring grid as the probability of default is 100% and the FICO score is no longer a relevant predictor. ā The following table presents loans held for investment grouped by asset class and credit quality indicator, segregated by year of origination or renewal (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Amortized Cost Basis by Origination Year ā ā ā ā ā ā March 31, 2020 ā 2020 ā 2019 ā 2018 ā 2017 ā 2016 ā ā 2015 and Prior ā Revolving ā Total Commercial real estate: non-owner occupied ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 1-3 (Pass low risk) ā $ 2,702 ā $ 42,015 ā $ 9,354 ā $ 14,536 ā $ 15,164 ā $ 19,926 ā $ 402 ā $ 104,099 Internal Grade 4-7 (Pass normal risk) ā ā 45,963 ā ā 186,755 ā ā 150,078 ā ā 149,826 ā ā 148,241 ā ā 126,033 ā ā 25,449 ā ā 832,345 Internal Grade 8-11 (Pass high risk and watch) ā ā 48,289 ā ā 117,730 ā ā 169,739 ā ā 126,886 ā ā 174,480 ā ā 82,043 ā ā 1,145 ā ā 720,312 Internal Grade 12 (Special mention) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 13 (Substandard accrual) ā ā ā ā ā 1,189 ā ā 1,784 ā ā 4,317 ā ā 8,387 ā ā 54,123 ā ā ā ā ā 69,800 Internal Grade 14 (Substandard non-accrual) ā ā ā ā ā 15,330 ā ā ā ā ā 882 ā ā ā ā ā 1,956 ā ā ā ā ā 18,168 Commercial real estate: owner occupied ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 1-3 (Pass low risk) ā $ 19,261 ā $ 35,707 ā $ 11,362 ā $ 27,494 ā $ 23,433 ā $ 48,577 ā $ 2 ā $ 165,836 Internal Grade 4-7 (Pass normal risk) ā ā 73,334 ā ā 153,997 ā ā 219,995 ā ā 91,386 ā ā 75,445 ā ā 124,679 ā ā 31,734 ā ā 770,570 Internal Grade 8-11 (Pass high risk and watch) ā ā 6,627 ā ā 76,220 ā ā 64,306 ā ā 92,640 ā ā 33,586 ā ā 43,919 ā ā 15,103 ā ā 332,401 Internal Grade 12 (Special mention) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 48 ā ā ā ā ā 48 Internal Grade 13 (Substandard accrual) ā ā 3,466 ā ā 2,436 ā ā 3,980 ā ā 11,661 ā ā 9,105 ā ā 12,631 ā ā ā ā ā 43,279 Internal Grade 14 (Substandard non-accrual) ā ā 555 ā ā ā ā ā 81 ā ā 2,528 ā ā 1,041 ā ā 979 ā ā ā ā ā 5,184 Commercial and industrial ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 1-3 (Pass low risk) ā $ 20,004 ā $ 14,683 ā $ 7,762 ā $ 6,239 ā $ 4,817 ā $ 881 ā $ 92,106 ā $ 146,492 Internal Grade 4-7 (Pass normal risk) ā ā 36,169 ā ā 119,001 ā ā 77,750 ā ā 58,562 ā ā 25,450 ā ā 19,585 ā ā 374,251 ā ā 710,768 Internal Grade 8-11 (Pass high risk and watch) ā ā 40,361 ā ā 98,826 ā ā 64,810 ā ā 26,805 ā ā 41,982 ā ā 3,828 ā ā 200,425 ā ā 477,037 Internal Grade 12 (Special mention) ā ā 844 ā ā 1,372 ā ā 2,028 ā ā 492 ā ā 5,246 ā ā ā ā ā 13,306 ā ā 23,288 Internal Grade 13 (Substandard accrual) ā ā 28 ā ā 3,411 ā ā 8,785 ā ā 2,642 ā ā 6,596 ā ā 4,396 ā ā 16,475 ā ā 42,333 Internal Grade 14 (Substandard non-accrual) ā ā 30,145 ā ā 2,445 ā ā 1,506 ā ā 8,225 ā ā 231 ā ā 379 ā ā 4,190 ā ā 47,121 Construction and land development ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 1-3 (Pass low risk) ā $ 4,717 ā $ 21,250 ā $ 23,557 ā $ 282 ā $ 1,169 ā $ 337 ā $ 1,956 ā $ 53,268 Internal Grade 4-7 (Pass normal risk) ā ā 80,147 ā ā 237,466 ā ā 106,525 ā ā 38,310 ā ā 7,760 ā ā 5,038 ā ā 41,525 ā ā 516,771 Internal Grade 8-11 (Pass high risk and watch) ā ā 24,257 ā ā 164,164 ā ā 133,025 ā ā 22,711 ā ā 4,431 ā ā 2,119 ā ā 6,899 ā ā 357,606 Internal Grade 12 (Special mention) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 13 (Substandard accrual) ā ā ā ā ā 1,135 ā ā ā ā ā ā ā ā ā ā ā 7 ā ā ā ā ā 1,142 Internal Grade 14 (Substandard non-accrual) ā ā ā ā ā 458 ā ā ā ā ā ā ā ā 768 ā ā 176 ā ā ā ā ā 1,402 Construction and land development - individuals ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā FICO less than 620 ā $ ā ā $ ā ā $ ā ā $ ā ā $ ā ā $ ā ā $ ā ā $ ā FICO between 620 and 720 ā ā ā ā ā 4,394 ā ā 1,474 ā ā ā ā ā ā ā ā ā ā ā ā ā ā 5,868 FICO greater than 720 ā ā 3,171 ā ā 10,617 ā ā 5,184 ā ā ā ā ā ā ā ā ā ā ā ā ā ā 18,972 Substandard non-accrual ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Other (1) ā ā 144 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 144 1-4 family residential ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā FICO less than 620 ā $ ā ā $ 738 ā $ 3,724 ā $ 231 ā $ 1,110 ā $ 40,354 ā $ 545 ā $ 46,702 FICO between 620 and 720 ā ā 1,252 ā ā 11,793 ā ā 15,878 ā ā 10,850 ā ā 13,739 ā ā 48,114 ā ā 1,585 ā ā 103,211 FICO greater than 720 ā ā 16,389 ā ā 84,807 ā ā 105,533 ā ā 54,505 ā ā 50,839 ā ā 106,744 ā ā 4,521 ā ā 423,338 Substandard non-accrual ā ā ā ā ā ā ā ā ā ā ā 101 ā ā 439 ā ā 10,059 ā ā ā ā ā 10,599 Other (1) ā ā 8,660 ā ā 58,480 ā ā 9,557 ā ā 2,238 ā ā 1,466 ā ā 10,152 ā ā 2,227 ā ā 92,780 Consumer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā FICO less than 620 ā $ 318 ā $ 1,830 ā $ 312 ā $ 193 ā $ 59 ā $ 100 ā $ 373 ā $ 3,185 FICO between 620 and 720 ā ā 2,145 ā ā 5,082 ā ā 971 ā ā 919 ā ā 183 ā ā 152 ā ā 2,686 ā ā 12,138 FICO greater than 720 ā ā 2,722 ā ā 8,327 ā ā 3,694 ā ā 542 ā ā 500 ā ā 131 ā ā 5,062 ā ā 20,978 Substandard non-accrual ā ā ā ā ā ā ā ā ā ā ā 35 ā ā ā ā ā 25 ā ā 250 ā ā 310 Other (1) ā ā 2,346 ā ā 3,178 ā ā 673 ā ā 66 ā ā 56 ā ā ā ā ā 257 ā ā 6,576 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Total loans with credit quality measures ā $ 474,016 ā $ 1,484,836 ā $ 1,203,427 ā $ 756,104 ā $ 655,723 ā $ 767,491 ā $ 842,474 ā $ 6,184,071 Commercial and industrial (collateral maintenance) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 654,929 Broker-dealer (collateral maintenance) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 506,250 Total loans held for investment ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 7,345,250 (1) Loans classified in this category were assigned a FICO score based on various factors specific to the borrower for credit modeling purposes. Allowance for Credit Losses for Loans Held for Investment ā The allowance for credit losses for loans held for investment represents managementās best estimate of all expected credit losses over the expected contractual life of our existing portfolio. Management revised its methodology for determining the allowance for credit losses upon the implementation of CECL. Management considers the level of allowance for credit losses to be a reasonable and supportable estimate of expected credit losses inherent within the loans held for investment portfolio as of March 31, 2020. While the Company believes it has an appropriate allowance for the existing loan portfolio at March 31, 2020, additional provision for losses on existing loans may be necessary in the future. Future changes in the allowance for credit losses are expected to be volatile given dependence upon, among other things, the portfolio composition and quality, as well as the impact of significant drivers, including prepayment assumptions and macroeconomic conditions and forecasts. In addition to the allowance for credit losses, the Company maintains a separate allowance for credit losses related to off-balance sheet credit exposures, including unfunded loan commitments, and this amount is included in other liabilities within the consolidated balance sheets (see Note 14 to the consolidated financial statements). For further information on the policies that govern the estimation of the allowances for credit losses levels, see Note 1 to the consolidated financial statements. ā The increase in the allowance for credit losses for loans held for investment during the first quarter of 2020 was primarily attributable to changes within the Bank. As previously discussed, the Company adopted the new CECL standard and recorded transition adjustment entries that resulted in an allowance for credit losses of $73.7 million as of January 1, 2020, an increase of $12.6 million. This increase included an increase in credit losses of $18.9 million from the expansion of the loss horizon to life of loan, partially offset by the elimination of the non-credit component within the historical allowance related to previously categorized PCI loans of $6.3 million. ā During the three months ended March 31, 2020, reserves on individually evaluated loans increased $17.6 million, while reserves on expected losses of collectively evaluated loans increased primarily due to the increase in the expected lifetime credit losses under CECL attributable to the deteriorating economic outlook associated with the impact of the market disruption caused by the novel coronavirus (āCOVID-19ā) pandemic. While not material, the change in the allowance for credit losses during the three months ended March 31, 2020 was also attributable to other factors including, but not limited to, loan growth, loan mix and changes in risk rating grades. ā Changes in the allowance for credit losses for loans held for investment, distributed by portfolio segment, are shown below (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Balance, Transition Provision for ā Recoveries on Balance, ā ā ā Beginning of ā Adjustment ā (Reversal of) ā Loans ā Charged Off ā End of ā Three Months Ended March 31, 2020 ā Period ā CECL ā Credit Losses ā Charged Off ā Loans ā Period ā Commercial real estate ā $ 31,595 ā $ 8,073 ā $ 14,475 ā $ (214) ā $ 10 ā $ 53,939 ā Commercial and industrial ā 17,964 ā 3,193 ā 18,446 ā (1,440) ā 387 ā 38,550 ā Construction and land development ā 4,878 ā 577 ā 907 ā (2) ā ā ā 6,360 ā 1-4 family residential ā 6,386 ā (29) ā 201 ā (203) ā 10 ā 6,365 ā Consumer ā ā 265 ā ā 748 ā ā 246 ā ā (176) ā ā 120 ā ā 1,203 ā Broker-dealer ā ā 48 ā ā ā ā ā 274 ā ā ā ā ā ā ā ā 322 ā Total ā $ 61,136 ā $ 12,562 ā $ 34,549 ā $ (2,035) ā $ 527 ā $ 106,739 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Balance, Transition Provision for ā Recoveries on Balance, ā ā Beginning of ā Adjustment ā (Reversal of) ā Loans ā Charged Off ā End of ā Three Months Ended March 31, 2019 ā Period ā CECL ā Credit Losses ā Charged Off ā Loans ā Period ā Commercial real estate ā $ 27,100 ā $ ā ā $ (255) ā $ ā ā $ ā ā $ 26,845 ā Commercial and industrial ā 21,980 ā ā ā 458 ā (1,818) ā 648 ā 21,268 ā Construction and land development ā 6,061 ā ā ā (153) ā ā ā ā ā 5,908 ā 1-4 family residential ā 3,956 ā ā ā 389 ā (28) ā 14 ā 4,331 ā Consumer ā ā 267 ā ā ā ā ā 586 ā ā (454) ā ā 10 ā ā 409 ā Broker-dealer ā ā 122 ā ā ā ā ā (74) ā ā ā ā ā ā ā ā 48 ā Total ā $ 59,486 ā $ ā ā $ 951 ā $ (2,300) ā $ 672 ā $ 58,809 ā ā |
Mortgage Servicing Rights
Mortgage Servicing Rights | 3 Months Ended |
Mar. 31, 2020 | |
Mortgage Servicing Rights | |
Mortgage Servicing Rights | 7. Mortgage Servicing Rights ā The following tables present the changes in fair value of the Companyās MSR asset, as included in other assets within the consolidated balance sheets, and other information related to the serviced portfolio (dollars in thousands). ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā 2020 ā 2019 Balance, beginning of period $ 55,504 ā $ 66,102 ā Additions 4,475 ā 1,861 ā Sales (18,650) ā ā ā Changes in fair value: ā ā ā ā ā ā Due to changes in model inputs or assumptions (1) (9,594) ā (5,033) ā Due to customer payoffs (1,436) ā (881) ā Balance, end of period $ 30,299 ā $ 62,049 ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 ā 2019 ā Mortgage loans serviced for others $ 3,500,731 ā $ 4,948,441 ā MSR asset as a percentage of serviced mortgage loans 0.87 % 1.12 % (1) Primarily represents normal customer payments, changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates and the refinement of other MSR model assumptions. ā The key assumptions used in measuring the fair value of the Companyās MSR asset were as follows. ā ā ā ā ā ā ā ā ā March 31, ā ā December 31, ā ā ā 2020 ā 2019 ā Weighted average constant prepayment rate 16.98 % ā 13.16 % Weighted average discount rate 11.01 % ā 11.14 % Weighted average life (in years) 4.8 ā ā 6.0 ā ā A sensitivity analysis of the fair value of the Companyās MSR asset to certain key assumptions is presented in the following table (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 2019 ā Constant prepayment rate: ā ā ā ā ā ā ā Impact of 10% adverse change ā $ (2,152) ā $ (3,072) ā Impact of 20% adverse change ā (4,122) ā (5,943) ā Discount rate: ā ā ā ā ā ā ā Impact of 10% adverse change ā (1,014) ā (2,094) ā Impact of 20% adverse change ā (1,959) ā (4,028) ā ā This sensitivity analysis presents the effect of hypothetical changes in key assumptions on the fair value of the MSR asset. The effect of such hypothetical change in assumptions generally cannot be extrapolated because the relationship of the change in one key assumption to the change in the fair value of the MSR asset is not linear. In addition, in the analysis, the impact of an adverse change in one key assumption is calculated independent of any impact on other assumptions. In reality, changes in one assumption may change another assumption. ā Contractually specified servicing fees, late fees and ancillary fees earned of $5.9 million and $6.3 million during the three months ended March 31, 2020 and 2019, respectively, were included in net gains from sale of loans and other mortgage production income within the consolidated statements of operations. |
Deposits
Deposits | 3 Months Ended |
Mar. 31, 2020 | |
Deposits | |
Deposits | 8. Deposits ā Deposits are summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 2019 ā Noninterest-bearing demand ā $ 2,865,192 ā $ 2,769,556 ā Interest-bearing: ā ā ā ā ā ā ā Demand accounts ā 1,893,125 ā 1,881,614 ā Brokered - demand ā 475,080 ā ā ā Money market ā 2,823,663 ā 2,641,116 ā Brokered - money market ā 30,006 ā 5,000 ā Savings ā 198,319 ā 199,076 ā Time ā 1,386,214 ā 1,505,375 ā Brokered - time ā 275,890 ā 30,477 ā ā ā $ 9,947,489 ā $ 9,032,214 ā ā |
Short-term Borrowings
Short-term Borrowings | 3 Months Ended |
Mar. 31, 2020 | |
Short-term Borrowings | |
Short-term Borrowings | 9. Short-term Borrowings ā Short-term borrowings are summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā 2020 2019 Federal funds purchased ā $ 199,095 ā $ 81,625 ā Securities sold under agreements to repurchase ā 698,433 ā 612,125 ā Federal Home Loan Bank ā 150,000 ā 600,000 ā Short-term bank loans ā ā 250,500 ā ā 111,000 ā Commercial paper ā 31,920 ā 19,260 ā ā ā $ 1,329,948 ā $ 1,424,010 ā ā Federal funds purchased and securities sold under agreements to repurchase generally mature daily, on demand, or on some other short-term basis. The Bank and the Hilltop Broker-Dealers execute transactions to sell securities under agreements to repurchase with both customers and other broker-dealers. Securities involved in these transactions are held by the Bank, the Hilltop Broker-Dealers or a third-party dealer. ā Information concerning federal funds purchased and securities sold under agreements to repurchase is shown in the following tables (dollars in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā ā ā ā 2020 ā 2019 ā ā ā Average balance during the period ā $ 732,954 ā $ 654,117 ā ā ā ā Average interest rate during the period ā 1.78 % ā 2.63 % ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā ā ā ā 2020 2019 ā ā ā ā Average interest rate at end of period ā 1.31 % ā 1.97 % ā ā ā Securities underlying the agreements at end of period: ā ā ā ā ā ā ā ā ā ā Carrying value ā $ 705,544 ā $ 612,515 ā ā ā ā Estimated fair value ā $ 753,129 ā $ 661,023 ā ā ā ā ā Federal Home Loan Bank (āFHLBā) short-term borrowings mature over terms not exceeding 365 days and are collateralized by FHLB Dallas stock, nonspecified real estate loans and certain specific commercial real estate loans. Other information regarding FHLB short-term borrowings is shown in the following tables (dollars in thousands). ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā ā 2020 ā 2019 ā ā Average balance during the period ā $ 153,736 ā $ 4,167 ā ā Average interest rate during the period ā ā 1.63 % ā 2.65 % ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, ā ā December 31, ā ā ā ā ā 2020 ā ā 2019 ā ā Average interest rate at end of period ā ā 0.50 % ā 1.56 % ā ā The Hilltop Broker-Dealers use short-term bank loans periodically to finance securities owned, margin loans to customers and correspondents and underwriting activities. Interest on the borrowings varies with the federal funds rate. The weighted average interest rate on the borrowings at March 31, 2020 and December 31, 2019 was 1.05% and 2.52%, respectively. ā During 2019, Hilltop Securities initiated two commercial paper programs, in the ordinary course of its business, of which the net proceeds (after deducting related issuance expenses) from the sale will be used for general corporate purposes, including working capital and the funding of a portion of its securities inventories. The commercial paper notes (āCP Notesā) may be issued with maturities of 14 days to 270 days from the date of issuance. The CP Notes are issued under two separate programs, Series 2019-1 CP Notes and Series 2019-2 CP Notes, in maximum aggregate amounts of $300 million and $200 million, respectively. The CP Notes are not redeemable prior to maturity or subject to voluntary prepayment and do not bear interest, but are sold at a discount to par. The CP Notes are secured by a pledge of collateral owned by Hilltop Securities. As of March 31, 2020, the weighted average maturity of the CP Notes was 35 days at a rate of 1.50%. At March 31, 2020, the aggregate amount outstanding under these secured arrangements was $31.9 million, which was collateralized by securities held for firm accounts valued at $36.3 million. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Notes Payable | |
Notes Payable | 10. Notes Payable ā Notes payable consisted of the following (in thousands). ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā 2020 2019 Senior Notes due April 2025, net of discount of $1,191 and $1,232, respectively ā $ 148,809 ā $ 148,768 FHLB notes, including premium of $131 and $146, respectively, with maturities ranging from September 2020 to June 2030 ā 28,514 ā 28,848 Ventures Management lines of credit due May 2020 ā ā 66,719 ā ā 78,653 ā ā $ 244,042 ā $ 256,269 ā |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Leases | 11. Leases ā Hilltop and its subsidiaries lease space, primarily for corporate offices, branch facilities and automated teller machines, under both operating and finance leases. Certain of the Companyās leases have options to extend, with the longest extension option being ten years, and leases ā Supplemental balance sheet information related to finance leases is as follows (in thousands). ā ā ā ā ā ā ā ā ā ā March 31, ā ā December 31, ā ā 2020 ā ā 2019 Finance leases: ā ā ā ā ā ā Premises and equipment ā $ 7,780 ā $ 7,780 Accumulated depreciation ā ā (4,326) ā ā (4,178) Premises and equipment, net ā $ 3,454 ā $ 3,602 ā Operating lease rental cost and finance lease amortization of ROU assets is included within occupancy and equipment, net in the consolidated statements of operations. Finance lease interest expense is included within other interest expense in the consolidated statements of operations. The Company does not generally enter into leases which contain variable payments, other than due to the passage of time. The components of lease costs, including short-term lease costs, are as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā ā 2020 ā 2019 ā ā Operating lease cost ā $ 10,630 ā $ 10,531 ā ā Less operating lease and sublease income ā ā (618) ā ā (388) ā ā Net operating lease cost ā $ 10,012 ā $ 10,143 ā ā ā ā ā ā ā ā ā ā ā Finance lease cost: ā ā ā ā ā ā ā ā Amortization of ROU assets ā $ 147 ā $ 147 ā ā Interest on lease liabilities ā ā 144 ā ā 152 ā ā Total finance lease cost ā $ 291 ā $ 299 ā ā ā Supplemental cash flow information related to leases is as follows (in thousands): ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā 2020 ā 2019 ā Cash paid for amounts included in the measurement of lease liabilities: ā ā ā ā ā ā ā Operating cash flows from operating leases ā $ 9,951 ā $ 8,220 ā Operating cash flows from finance leases ā ā 144 ā ā 152 ā Financing cash flows from finance leases ā ā 155 ā ā 144 ā Right-of-use assets obtained in exchange for new lease obligations: ā ā ā ā ā ā ā Operating leases ā $ 4,049 ā $ 3,591 ā Finance leases ā ā ā ā ā ā ā ā Information regarding the lease terms and discount rates of the Companyās leases is as follows. ā ā ā ā ā ā ā March 31, 2020 ā Weighted Average ā ā ā Remaining Lease ā Weighted Average Lease Classification Term (Years) ā Discount Rate Operating 5.9 ā 5.19 % Finance 6.3 ā 4.79 % ā Future minimum lease payments under the Leasing Standard as of March 31, 2020, under lease agreements that had commenced as of or subsequent to January 1, 2019, are presented below (in thousands). The table below includes future minimum lease payments of $3.5 million at March 31, 2020 for operating lease liabilities associated with discontinued operations. ā ā ā ā ā ā ā ā Operating Leases ā Finance Leases 2020 $ 26,439 ā $ 899 2021 ā 30,275 ā ā 1,212 2022 ā 24,261 ā ā 1,241 2023 ā 19,415 ā ā 1,280 2024 ā 12,740 ā ā 1,163 Thereafter ā 35,810 ā ā 2,297 Total minimum lease payments $ 148,940 ā $ 8,092 Less amount representing interest ā (22,090) ā ā (2,751) Lease liabilities $ 126,850 ā $ 5,341 ā As of March 31, 2020, the Company had additional operating leases that have not yet commenced with aggregate future minimum lease payments of approximately $1.2 million. These operating leases are expected to commence between April 2020 and May 2020 with lease terms ranging from three ā A related party is the lessor in an operating lease with Hilltop. Hilltopās minimum payment under the lease is $0.5 million annually through 2028, for an aggregate remaining obligation of $4.2 million at March 31, 2020. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | 12. Income Taxes ā The Company applies an estimated annual effective rate to interim period pre-tax income to calculate the income tax provision for the quarter in accordance with the principal method prescribed by the accounting guidance established for computing income taxes in interim periods. The Companyās effective tax rates from continuing operations were 23.1% and 22.8% for the three months ended March 31, 2020 and 2019, respectively, and approximated the applicable statutory rates for such periods. ā |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13. Commitments and Contingencies ā Legal Matters ā The Company is subject to loss contingencies related to litigation, claims, investigations and legal and administrative cases and proceedings arising in the ordinary course of business. The Company evaluates these contingencies based on information currently available, including advice of counsel. The Company establishes accruals for those matters when a loss contingency is considered probable and the related amount is reasonably estimable. Any accruals are periodically reviewed and may be adjusted as circumstances change. A portion of the Companyās exposure with respect to loss contingencies may be offset by applicable insurance coverage. In determining the amounts of any accruals or estimates of possible loss contingencies, the Company does not take into account the availability of insurance coverage, other than that provided by reinsurers in the insurance segment. When it is practicable, the Company estimates loss contingencies for possible litigation and claims, whether or not there is an accrued probable loss. When the Company is able to estimate such probable losses, and when it estimates that it is reasonably possible it could incur losses in excess of amounts accrued, the Company is required to make a disclosure of the aggregate estimation. As available information changes, however, the matters for which the Company is able to estimate, as well as the estimates themselves, will be adjusted accordingly. ā Assessments of litigation and claims exposures are difficult due to many factors that involve inherent unpredictability. Those factors include the following: the varying stages of the proceedings, particularly in the early stages; unspecified, unsupported, or uncertain damages; damages other than compensatory, such as punitive damages; a matter presenting meaningful legal uncertainties, including novel issues of law; multiple defendants and jurisdictions; whether discovery has begun or is complete; whether meaningful settlement discussions have commenced; and whether the claim involves a class action and if so, how the class is defined. As a result of some of these factors, the Company may be unable to estimate reasonably possible losses with respect to some or all of the pending and threatened litigation and claims asserted against the Company. ā While the final outcome of litigation and claims exposures is inherently unpredictable, management is currently of the opinion that the outcome of pending and threatened litigation will not have a material effect on the Companyās business, consolidated financial position, results of operations or cash flows as a whole. However, in the event of unexpected future developments, it is reasonably possible that an adverse outcome in any matter could be material to the Companyās business, consolidated financial position, results of operations or cash flows for any particular reporting period of occurrence. ā Indemnification Liability Reserve ā The mortgage origination segment may be responsible to agencies, investors, or other parties for errors or omissions relating to its representations and warranties that each loan sold meets certain requirements, including representations as to underwriting standards and the validity of certain borrower representations in connection with the loan. If determined to be at fault, the mortgage origination segment either repurchases the affected loan from or indemnifies the claimant against loss. The mortgage origination segment has established an indemnification liability reserve for such probable losses. ā Generally, the mortgage origination segment first becomes aware that an agency, investor, or other party believes a loss has been incurred on a sold loan when it receives a written request from the claimant to repurchase the loan or reimburse the claimantās losses. Upon completing its review of the claimantās request, the mortgage origination segment establishes a specific claims reserve for the loan if it concludes its obligation to the claimant is both probable and reasonably estimable. ā An additional reserve has been established for probable agency, investor or other party losses that may have been incurred, but not yet reported to the mortgage origination segment based upon a reasonable estimate of such losses. Factors considered in the calculation of this reserve include, but are not limited to, the total volume of loans sold exclusive of specific claimant requests, actual claim settlements and the severity of estimated losses resulting from future claims, and the mortgage origination segmentās history of successfully curing defects identified in claim requests. While the mortgage origination segmentās sales contracts typically include borrower early payment default repurchase provisions, these provisions have not been a primary driver of claims to date, and therefore, are not a primary factor considered in the calculation of this reserve. ā At March 31, 2020 and December 31, 2019, the mortgage origination segmentās indemnification liability reserve totaled $12.1 million and $11.8 million, respectively. The provision for indemnification losses was $0.7 million and $0.5 million during the three months ended March 31, 2020 and 2019, respectively. ā The following tables provide for a rollforward of claims activity for loans put-back to the mortgage origination segment based upon an alleged breach of a representation or warranty with respect to a loan sold and related indemnification liability reserve activity (in thousands). ā ā ā ā ā ā ā ā ā ā ā Representation and Warranty Specific Claims ā ā Activity - Origination Loan Balance ā ā Three Months Ended March 31, ā 2020 2019 Balance, beginning of period ā $ 32,144 ā $ 33,784 ā Claims made ā 6,071 ā 3,182 ā Claims resolved with no payment ā (984) ā (5,687) ā Repurchases ā (2,330) ā (1,167) ā Indemnification payments ā (122) ā ā ā Balance, end of period ā $ 34,779 ā $ 30,112 ā ā ā ā ā ā ā ā ā ā ā Indemnification Liability Reserve Activity ā ā Three Months Ended March 31, ā ā 2020 2019 Balance, beginning of period ā $ 11,776 ā $ 10,701 ā Additions for new sales ā 725 ā 489 ā Repurchases ā (271) ā (82) ā Early payment defaults ā (39) ā (142) ā Indemnification payments ā (43) ā (3) ā Change in reserves for loans sold in prior years ā ā ā (242) ā Balance, end of period ā $ 12,148 ā $ 10,721 ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 ā 2019 Reserve for Indemnification Liability: ā ā ā ā ā ā ā Specific claims ā $ 1,186 ā $ 1,071 ā Incurred but not reported claims ā 10,962 ā 10,705 ā Total ā $ 12,148 ā $ 11,776 ā ā Although management considers the total indemnification liability reserve to be appropriate, there may be changes in the reserve over time to address incurred losses due to unanticipated adverse changes in the economy and historical loss patterns, discrete events adversely affecting specific borrowers or industries, and/or actions taken by institutions or investors. The impact of such matters is considered in the reserving process when probable and estimable. ā |
Financial Instruments with Off-
Financial Instruments with Off-Balance Sheet Risk | 3 Months Ended |
Mar. 31, 2020 | |
Financial Instruments with Off-Balance Sheet Risk | |
Financial Instruments with Off-Balance Sheet Risk | 14. Financial Instruments with Off-Balance Sheet Risk ā Banking ā The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit that involve varying degrees of credit and interest rate risk in excess of the amount recognized in the consolidated financial statements. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received. The contract amounts of those instruments reflect the extent of involvement (and therefore the exposure to credit loss) the Bank has in particular classes of financial instruments. ā Commitments to extend credit are agreements to lend to a customer provided that the terms established in the contract are met. Commitments generally have fixed expiration dates and may require payment of fees. Because some commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. These letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan commitments to customers. ā In the aggregate, the Bank had outstanding unused commitments to extend credit of $1.9 billion at March 31, 2020 and outstanding financial and performance standby letters of credit of $89.5 million at March 31, 2020. ā In order to estimate the allowance for credit loss on unfunded loan commitments, the Bank uses a process similar to that used in estimating the allowance for credit losses on the funded portion. The allowance is based on the estimated exposure at default, multiplied by the lifetime PD grade and LGD grade for that particular loan segment. The Bank estimates expected losses by calculating a commitment usage factor based on industry usage factors. The commitment usage factor is applied over the relevant contractual period. Loss factors from the underlying loans to which commitments are related are applied to the results of the usage calculation to estimate any liability for credit losses related for each loan type. The expected losses on unfunded commitments align with statistically calculated parameters used to calculate the allowance for credit losses on the funded portion. There is no reserve calculated for letters of credit as they are issued primarily as credit enhancements and the likelihood of funding is low. ā Changes in the allowance for credit losses for loans with off-balance sheet credit exposures are shown below (in thousands). ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā 2020 2019 Balance, beginning of period ā $ 2,075 ā $ 2,366 Transition adjustment CECL accounting standard ā ā 3,837 ā ā ā Expense (reversal of expense) ā ā 1,297 ā ā (111) Balance, end of period ā $ 7,209 ā $ 2,255 ā The Bank uses the same credit policies in making commitments and standby letters of credit as it does for on-balance sheet instruments. The amount of collateral obtained, if deemed necessary, in these transactions is based on managementās credit evaluation of the borrower. Collateral held varies but may include real estate, accounts receivable, marketable securities, interest-bearing deposit accounts, inventory, and property, plant and equipment. ā Broker-Dealer ā In the normal course of business, the Hilltop Broker-Dealers execute, settle, and finance various securities transactions that may expose the Hilltop Broker-Dealers to off-balance sheet risk in the event that a customer or counterparty does not fulfill its contractual obligations. Examples of such transactions include the sale of securities not yet purchased by customers or for the accounts of the Hilltop Broker-Dealers, use of derivatives to support certain non-profit housing organization clients and to hedge changes in the fair value of certain securities, clearing agreements between the Hilltop Broker-Dealers and various clearinghouses and broker-dealers, secured financing arrangements that involve pledged securities, and when-issued underwriting and purchase commitments. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Stock-Based Compensation | |
Stock-Based Compensation | 15. Stock-Based Compensation ā Pursuant to the Hilltop Holdings Inc. 2012 Equity Incentive Plan (the ā2012 Planā), the Company may grant nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (āRSUsā), performance awards, dividend equivalent rights and other awards to employees of the Company, its subsidiaries and outside directors of the Company. In the aggregate, 4,000,000 shares of common stock may be delivered pursuant to awards granted under the 2012 Plan. At March 31, 2020, 17,229 shares of common stock remained available for issuance pursuant to awards granted under the 2012 Plan, excluding shares that may be delivered pursuant to outstanding awards. Compensation expense related to the 2012 Plan was $3.8 million and $2.5 million during the three months ended March 31, 2020 and 2019, respectively. ā During the three months ended March 31, 2020 and 2019, Hilltop granted 10,291 and 7,958 shares of common stock, respectively, pursuant to the 2012 Plan to certain non-employee members of the Companyās board of directors for services rendered to the Company. ā Restricted Stock Units ā The following table summarizes information about nonvested RSU activity for the three months ended March 31, 2020 (shares in thousands). ā ā ā ā ā ā ā ā ā ā ā RSUs ā ā ā ā ā Weighted ā ā ā ā ā Average ā ā ā ā ā Grant Date ā Outstanding Fair Value Balance, December 31, 2019 ā 1,437 ā $ 22.64 ā Granted ā 535 ā $ 21.91 ā Vested/Released ā (179) ā $ 28.43 ā Forfeited ā (6) ā $ 22.94 Balance, March 31, 2020 ā 1,787 ā $ 21.84 ā Vested/Released RSUs include an aggregate of 21,057 shares withheld to satisfy employee statutory tax obligations during the three months ended March 31, 2020. Pursuant to certain RSU award agreements, an aggregate of 5,482 vested RSUs at March 31, 2020 require deferral of the settlement in shares and statutory tax obligations to a future date. ā During the three months ended March 31, 2020, the Compensation Committee of the board of directors of the Company awarded certain executives and key employees an aggregate of 520,510 RSUs pursuant to the 2012 Plan. Of the RSUs granted during the three months ended March 31, 2020, 398,278 that were outstanding at March 31, 2020, are subject to time-based vesting conditions and generally cliff vest on the third anniversary of the grant date. Of the RSUs granted during the three months ended March 31, 2020, 122,232 that were outstanding at March 31, 2020 ā At March 31, 2020, in the aggregate, 1,497,394 of the outstanding RSUs are subject to time-based vesting conditions and generally cliff vest on the third anniversary of the grant date, and 289,493 outstanding RSUs cliff vest based upon the achievement of certain performance goals over a three-year period. At March 31, 20 20 |
Regulatory Matters
Regulatory Matters | 3 Months Ended |
Mar. 31, 2020 | |
Regulatory Matters | |
Regulatory Matters | 16. Regulatory Matters ā Banking and Hilltop ā PlainsCapital, which includes the Bank and PrimeLending, and Hilltop are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory ā and possibly additional discretionary ā actions by regulators that, if undertaken, could have a direct, material effect on the consolidated financial statements. The regulations require PlainsCapital and Hilltop to meet specific capital adequacy guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company performs reviews of the classification and calculation of risk-weighted assets to ensure accuracy and compliance with the Basel III regulatory capital requirements as implemented by the Board of Governors of the Federal Reserve System. The capital classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the companies to maintain minimum amounts and ratios (set forth in the following table) of Tier 1 capital (as defined in the regulations) to total average assets (as defined), and minimum ratios of common equity Tier 1, Tier 1 and total capital (as defined) to risk-weighted assets (as defined). ā In order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers, Basel III requires banking organizations to maintain a capital conservation buffer above minimum risk-based capital requirements measured relative to risk-weighted assets. ā The following tables show PlainsCapitalās and Hilltopās actual capital amounts and ratios in accordance with Basel III compared to the regulatory minimum capital requirements including conservation buffer ratio in effect at the end of the period (dollars in thousands). Based on actual capital amounts and ratios shown in the following table, PlainsCapitalās ratios place it in the āwell capitalizedā (as defined) capital category under regulatory requirements. Actual capital amounts and ratios as of March 31, 2020 reflect PlainsCapitalās and Hilltopās decision to elect the transition option as recently issued by the federal banking regulatory agencies in March 2020 that permits banking institutions to mitigate the estimated cumulative regulatory capital effects from CECL over a five-year transitionary period. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Minimum Capital ā ā ā ā ā ā ā ā ā Requirements ā ā ā ā ā ā ā ā ā ā Including ā To Be Well ā ā Actual ā Conservation Buffer ā Capitalized ā Amount Ratio Ratio Ratio March 31, 2020 ā ā ā ā ā ā ā ā ā ā Tier 1 capital (to average assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā $ 1,263,998 12.06 % 4.0 % 5.0 % Hilltop ā 1,863,770 13.03 % 4.0 % N/A ā Common equity Tier 1 capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā ā 1,263,998 13.33 % 7.0 % 6.5 % Hilltop ā ā 1,815,640 15.96 % 7.0 % N/A ā Tier 1 capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā 1,263,998 13.33 % 8.5 % 8.0 % Hilltop ā 1,863,770 16.38 % 8.5 % N/A ā Total capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā 1,352,722 14.26 % 10.5 % 10.0 % Hilltop ā 1,934,982 17.00 % 10.5 % N/A ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Minimum Capital ā ā ā ā ā ā ā ā ā Requirements ā ā ā ā ā ā ā ā ā ā Including ā To Be Well ā ā Actual ā Conservation Buffer ā Capitalized ā Amount Ratio Ratio Ratio December 31, 2019 ā ā ā ā ā ā ā ā ā ā Tier 1 capital (to average assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā $ 1,236,289 11.61 % 4.0 % 5.0 % Hilltop ā 1,822,970 12.71 % 4.0 % N/A ā Common equity Tier 1 capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā ā 1,236,289 13.45 % 7.0 % 6.5 % Hilltop ā ā 1,776,381 16.70 % 7.0 % N/A ā Tier 1 capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā 1,236,289 13.45 % 8.5 % 8.0 % Hilltop ā 1,822,970 17.13 % 8.5 % N/A ā Total capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā 1,299,453 14.13 % 10.5 % 10.0 % Hilltop ā 1,867,771 17.55 % 10.5 % N/A ā ā Broker-Dealer ā Pursuant to the net capital requirements of the Securities Exchange Act of 1934, as amended (the āExchange Actā), Hilltop Securities has elected to determine its net capital requirements using the alternative method. Accordingly, Hilltop Securities is required to maintain minimum net capital, as defined in Rule 15c3-1 promulgated under the Exchange Act, equal to the greater of $250,000 and $1,000,000, respectively, or 2% of aggregate debit balances, as defined in Rule 15c3-3 promulgated under the Exchange Act. Additionally, the net capital rule of the NYSE provides that equity capital may not be withdrawn or cash dividends paid if resulting net capital would be less than 5% of the aggregate debit items. HTS Independent Network follows the primary (aggregate indebtedness) method, as defined in Rule 15c3-1 promulgated under the Exchange Act, which requires the maintenance of the larger of $250,000 or 6-2/3% of aggregate indebtedness. ā At March 31, 2020, the net capital position of each of the Hilltop Broker-Dealers was as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā HTS ā ā ā Hilltop ā Independent ā ā Securities Network Net capital ā $ 245,293 ā $ 3,179 ā Less: required net capital ā ā 9,502 ā ā 250 ā Excess net capital ā $ 235,791 ā $ 2,929 ā ā ā ā ā ā ā ā ā Net capital as a percentage of aggregate debit items ā ā 51.6 % ā ā ā Net capital in excess of 5% aggregate debit items ā $ 221,539 ā ā ā ā ā Under certain conditions, Hilltop Securities may be required to segregate cash and securities in a special reserve account for the benefit of customers under Rule 15c3-3 promulgated under the Exchange Act. Assets segregated under the provisions of the Exchange Act are not available for general corporate purposes. At March 31, 2020 and December 31, 2019, the Hilltop Broker-Dealers held cash of $178.8 million and $157.4 million, respectively, segregated in special reserve bank accounts for the benefit of customers. The Hilltop Broker-Dealers were not required to segregate cash and securities in special reserve accounts for the benefit of proprietary accounts of introducing broker-dealers at March 31, 2020 or December 31, 2019. ā Mortgage Origination ā As a mortgage originator, PrimeLending and its subsidiaries are subject to minimum net worth and liquidity requirements established by HUD and GNMA, as applicable. On an annual basis, PrimeLending and its subsidiaries submit audited financial statements to HUD and GNMA, as applicable, documenting their respective compliance with minimum net worth and liquidity requirements. As of March 31, 2020, PrimeLending and its subsidiariesā net worth and liquidity exceeded the amounts required by both HUD and GNMA, as applicable. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 17. Stockholdersā Equity ā Dividends ā During the three months ended March 31, 2020 and 2019, the Company declared and paid cash dividends of $0.09 and $0.08 per common share, or an aggregate of $8.2 million and $7.5 million, respectively. ā On April 30, 2020, Hilltopās board of directors declared a quarterly cash dividend of $0.09 per common share, payable on May 29, 2020, to all common stockholders of record as of the close of business on May 15, 2020. ā Stock Repurchases ā In January 2020, the Hilltop board of directors authorized a new stock repurchase program through January 2021, pursuant to which the Company is authorized to repurchase, in the aggregate, up to $75.0 million of its outstanding common stock, inclusive of repurchases to offset dilution related to grants of stock-based compensation. ā During the three months ended March 31, 2020, the Company paid $15.0 million to repurchase an aggregate of 700,901 shares of common stock at an average price of $21.32 per share. The Companyās stock repurchase program, prior year repurchases and related accounting policy are discussed in detail in Note 1 and Note 23 to the consolidated financial statements included in the Companyās 2019 Form 10-K. ā In light of the uncertain outlook for 2020 due to the COVID-19 pandemic, and Hilltopās commitment to maintaining strong capital and liquidity to meet the needs of its customers and communities during this exceptional period of economic uncertainty, Hilltopās board of directors has suspended its stock repurchase program. Hilltopās board of directors has the ability to reinstate the stock repurchase program at its discretion as circumstances warrant. ā |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 18. Derivative Financial Instruments ā The Company uses various derivative financial instruments to mitigate interest rate risk. The Bankās interest rate risk management strategy involves effectively managing the re-pricing characteristics of certain assets and liabilities to mitigate potential adverse impacts from changes in interest rates on the Bankās net interest margin. PrimeLending has interest rate risk relative to interest rate lock commitments (āIRLCsā) and its inventory of mortgage loans held for sale. PrimeLending is exposed to such interest rate risk from the time an IRLC is made to an applicant to the time the related mortgage loan is sold. To mitigate interest rate risk, PrimeLending executes forward commitments to sell mortgage-backed securities (āMBSsā) and Eurodollar futures. Additionally, PrimeLending has interest rate risk relative to its MSR asset and uses derivative instruments, including interest rate swaps and U.S. Treasury bond futures and options to hedge this risk. The Hilltop Broker-Dealers use forward commitments to both purchase and sell MBSs to facilitate customer transactions and as a means to hedge related exposure to interest rate risk in certain inventory positions. Additionally, Hilltop Securities uses U.S. Treasury bond, Eurodollar futures and municipal market data, or MMD, rate locks to hedge changes in the fair value of its securities. ā Non-Hedging Derivative Instruments and the Fair Value Option ā As discussed in Note 4 to the consolidated financial statements, the Company has elected to measure substantially all mortgage loans held for sale at fair value under the provisions of the Fair Value Option. The election provides the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without applying hedge accounting provisions. The fair values of PrimeLendingās IRLCs and forward commitments are recorded in other assets or other liabilities, as appropriate, and changes in the fair values of these derivative instruments are recorded as a component of net gains from sale of loans and other mortgage production income. These changes in fair value are attributable to changes in the volume of IRLCs, mortgage loans held for sale, commitments to purchase and sell MBSs and MSR assets, and changes in market interest rates. Changes in market interest rates also conversely affect the value of PrimeLendingās mortgage loans held for sale and its MSR asset, which are measured at fair value under the Fair Value Option. The effect of the change in market interest rates on PrimeLendingās loans held for sale and MSR asset is discussed in Note 4 to the consolidated financial statements. The fair values of the Hilltop Broker-Dealersā and the Bankās derivative instruments are recorded in other assets or other liabilities, as appropriate. ā Changes in the fair value of derivatives are presented in the following table (in thousands). ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Increase (decrease) in fair value of derivatives during period: ā ā ā ā ā ā PrimeLending ā $ 19,876 ā $ 18,187 Hilltop Broker-Dealers ā ā (8,141) ā ā (1,807) Bank ā ā (135) ā ā (61) ā Derivative positions are presented in the following table (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, 2020 ā December 31, 2019 ā Notional Estimated Notional Estimated ā ā Amount ā Fair Value ā Amount ā Fair Value Derivative instruments (not designated as hedges): ā ā ā ā ā ā ā ā ā ā ā ā IRLCs ā $ 3,063,446 ā $ 93,412 ā $ 914,526 ā $ 18,222 Customer-based written options ā 31,200 ā ā ā 31,200 ā ā Customer-based purchased options ā 31,200 ā ā ā 31,200 ā ā Commitments to purchase MBSs ā 5,431,558 ā 65,666 ā 3,346,946 ā 3,321 Commitments to sell MBSs ā ā 9,698,119 ā (133,762) ā 5,988,198 ā (5,904) Interest rate swaps ā ā 41,455 ā (192) ā 15,012 ā (178) U.S. Treasury bond futures and options (1) ā ā 66,100 ā ā ā 283,500 ā ā Eurodollar futures (1) ā ā 18,000 ā ā ā 934,000 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Derivative instruments (designated as hedges): ā ā ā ā ā ā ā ā ā ā ā ā Interest rate swaps designated as cash flow hedges ā $ 105,000 ā $ (3,605) ā $ 50,000 ā $ 528 (1) Changes in the fair value of these contracts are settled daily with the respective counterparties of PrimeLending and the Hilltop Broker-Dealers. ā PrimeLending had cash collateral advances totaling $100.7 million and $4.5 million to offset net liability derivative positions on its commitments to sell MBSs at March 31, 2020 and December 31, 2019, respectively. In addition, PrimeLending and the Hilltop Broker-Dealers advanced cash collateral totaling $1.0 million and $3.7 million on U.S. Treasury bond futures and options and Eurodollar futures at March 31, 2020 and December 31, 2019, respectively. These amounts are included in other assets within the consolidated balance sheets. |
Balance Sheet Offsetting
Balance Sheet Offsetting | 3 Months Ended |
Mar. 31, 2020 | |
Balance Sheet Offsetting | |
Balance Sheet Offsetting | 19. Balance Sheet Offsetting ā Certain financial instruments, including resale and repurchase agreements, securities lending arrangements and derivatives, may be eligible for offset in the consolidated balance sheets and/or subject to master netting arrangements or similar agreements. The following tables present the assets and liabilities subject to enforceable master netting arrangements, repurchase agreements, or similar agreements with offsetting rights (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross Amounts Not Offset in ā ā ā ā ā ā ā ā ā ā ā Net Amounts ā the Balance Sheet ā ā ā ā Gross Amounts Gross Amounts of Assets ā Cash ā ā ā of Recognized ā Offset in the ā Presented in the ā Financial ā Collateral ā Net ā ā Assets ā Balance Sheet ā Balance Sheet ā Instruments ā Pledged ā Amount March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities borrowed: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā $ 1,275,774 ā $ ā ā $ 1,275,774 ā $ (1,181,948) ā $ ā ā $ 93,826 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Interest rate swaps: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 9 ā ā ā ā ā 9 ā ā (9) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Reverse repurchase agreements: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 23,356 ā ā ā ā ā 23,356 ā ā (23,050) ā ā ā ā ā 306 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Forward MBS derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 65,666 ā ā ā 65,666 ā (65,666) ā ā ā ā ā ā $ 1,364,805 ā $ ā ā $ 1,364,805 ā $ (1,270,673) ā $ ā ā $ 94,132 December 31, 2019 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities borrowed: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā $ 1,634,782 ā $ ā ā $ 1,634,782 ā $ (1,586,820) ā $ ā ā $ 47,962 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Reverse repurchase agreements: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 59,031 ā ā ā ā ā 59,031 ā ā (58,619) ā ā ā ā ā 412 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Forward MBS derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 3,640 ā ā ā ā ā 3,640 ā ā (3,640) ā ā ā ā ā ā ā ā $ 1,697,453 ā $ ā ā $ 1,697,453 ā $ (1,649,079) ā $ ā ā $ 48,374 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross Amounts Not Offset in ā ā ā ā ā ā ā ā ā ā ā Net Amounts ā the Balance Sheet ā ā ā ā Gross Amounts Gross Amounts of Liabilities ā Cash ā ā ā of Recognized ā Offset in the ā Presented in the ā Financial ā Collateral ā Net ā ā Liabilities ā Balance Sheet ā Balance Sheet ā Instruments ā Pledged ā Amount March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities loaned: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā $ 1,167,559 ā $ ā ā $ 1,167,559 ā $ (1,075,906) ā $ ā ā $ 91,653 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Interest rate swaps: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 201 ā ā ā 201 ā ā ā ā ā 201 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Repurchase agreements: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 690,178 ā ā ā 690,178 ā (690,178) ā ā ā ā Customer counterparties ā 8,255 ā ā ā 8,255 ā (8,255) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Forward MBS derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 136,640 ā (2,878) ā 133,762 ā (74,608) ā ā ā 59,154 ā ā $ 2,002,833 ā $ (2,878) ā $ 1,999,955 ā $ (1,848,947) ā $ ā ā $ 151,008 December 31, 2019 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities loaned: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā $ 1,555,964 ā $ ā ā $ 1,555,964 ā $ (1,509,933) ā $ ā ā $ 46,031 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Interest rate swaps: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 178 ā ā ā 178 ā (112) ā ā ā 66 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Repurchase agreements: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 586,651 ā ā ā 586,651 ā (586,651) ā ā ā ā Customer counterparties ā ā 25,474 ā ā ā 25,474 ā (25,474) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Forward MBS derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 6,890 ā (667) ā 6,223 ā (2,384) ā ā ā 3,839 ā ā $ 2,175,157 ā $ (667) ā $ 2,174,490 ā $ (2,124,554) ā $ ā ā $ 49,936 ā Secured Borrowing Arrangements ā Secured Borrowings (Repurchase Agreements) ā one ā Securities Lending Activities ā ā When lending securities, the Company receives cash or similar collateral and generally pays interest (based on the amount of cash deposited) to the other party to the transaction. Securities lending transactions are executed pursuant to written agreements with counterparties that generally require securities loaned to be marked-to-market on a daily basis. The Company receives collateral in the form of cash in an amount generally in excess of the fair value of securities loaned. The Company monitors the fair value of securities loaned on a daily basis, with additional collateral obtained or refunded, as necessary. Collateral adjustments are made on a daily basis through the facilities of various clearinghouses. The Company is a principal in these securities lending transactions and is liable for losses in the event of a failure of any other party to honor its contractual obligation. Management sets credit limits with each counterparty and reviews these limits regularly to monitor the risk level with each counterparty. The Company is subject to credit risk through its securities lending activities if securities prices decline rapidly because the value of the Companyās collateral could fall below the amount of the indebtedness it secures. In rapidly appreciating markets, credit risk increases due to short positions. The Companyās securities lending business subjects the Company to credit risk if a counterparty fails to perform or if collateral securing its obligations is insufficient. In securities transactions, the Company is subject to credit risk during the period between the execution of a trade and the settlement by the customer. ā The following tables present the remaining contractual maturities of repurchase agreement and securities lending transactions accounted for as secured borrowings (in thousands). The Company had no repurchase-to-maturity transactions outstanding at both March 31, 2020 and December 31, 2019. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Remaining Contractual Maturities ā ā Overnight and ā ā ā ā ā Greater Than ā ā ā March 31, 2020 ā Continuous ā Up to 30 Days ā 30-90 Days ā 90 Days ā Total Repurchase agreement transactions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā U.S. Treasury and agency securities ā $ 16,929 ā $ ā ā $ ā ā $ ā ā $ 16,929 Asset-backed securities ā ā 323,444 ā ā 358,060 ā ā ā ā ā ā ā ā 681,504 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities lending transactions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Corporate securities ā ā 113 ā ā ā ā ā ā ā ā ā ā ā 113 Equity securities ā ā 1,167,446 ā ā ā ā ā ā ā ā ā ā ā 1,167,446 Total ā $ 1,507,932 ā $ 358,060 ā $ ā ā $ ā ā $ 1,865,992 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross amount of recognized liabilities for repurchase agreement and securities lending transactions in offsetting disclosure above ā ā ā ā $ 1,865,992 Amount related to agreements not included in offsetting disclosure above ā ā ā ā ā ā ā ā ā ā ā ā ā $ ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Remaining Contractual Maturities ā ā Overnight and ā ā ā ā ā Greater Than ā ā ā December 31, 2019 ā Continuous ā Up to 30 Days ā 30-90 Days ā 90 Days ā Total Repurchase agreement transactions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā U.S. Treasury and agency securities ā $ 45,950 ā $ ā ā $ ā ā $ ā ā $ 45,950 Asset-backed securities ā ā 257,396 ā ā 12,892 ā ā 295,887 ā ā ā ā ā 566,175 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities lending transactions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Corporate securities ā ā 120 ā ā ā ā ā ā ā ā ā ā ā 120 Equity securities ā ā 1,555,844 ā ā ā ā ā ā ā ā ā ā ā 1,555,844 Total ā $ 1,859,310 ā $ 12,892 ā $ 295,887 ā $ ā ā $ 2,168,089 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross amount of recognized liabilities for repurchase agreement and securities lending transactions in offsetting disclosure above ā ā ā ā $ 2,168,089 Amount related to agreements not included in offsetting disclosure above ā ā ā ā ā ā ā ā ā ā ā ā ā $ ā ā |
Broker-Dealer and Clearing Orga
Broker-Dealer and Clearing Organization Receivables and Payables | 3 Months Ended |
Mar. 31, 2020 | |
Broker-Dealer and Clearing Organization Receivables and Payables | |
Broker-Dealer and Clearing Organization Receivables and Payables | 20. Broker-Dealer and Clearing Organization Receivables and Payables ā Broker-dealer and clearing organization receivables and payables consisted of the following (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā 2020 2019 Receivables: ā ā ā ā ā ā ā Securities borrowed ā $ 1,275,774 ā $ 1,634,782 ā Securities failed to deliver ā 66,342 ā 18,726 ā Trades in process of settlement ā 485,330 ā 104,922 ā Other ā 11,343 ā 21,850 ā ā ā $ 1,838,789 ā $ 1,780,280 ā Payables: ā ā ā ā ā ā ā Securities loaned ā $ 1,167,559 ā $ 1,555,964 ā Correspondents ā 23,376 ā 37,036 ā Securities failed to receive ā 65,407 ā 8,568 ā Other ā 2,839 ā 3,950 ā ā ā $ 1,259,181 ā $ 1,605,518 ā ā |
Segment and Related Information
Segment and Related Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment and Related Information | |
Segment and Related Information | 21. Segment and Related Information ā The Company currently has four reportable business segments that are organized primarily by the core products offered to the segmentsā respective customers. These segments reflect the manner in which operations are managed and the criteria used by the chief operating decision maker, the Companyās President and Chief Executive Officer, to evaluate segment performance, develop strategy and allocate resources. ā The banking segment includes the operations of the Bank. The broker-dealer segment includes the operations of Securities Holdings, the mortgage origination segment is composed of PrimeLending and the insurance segment is composed of NLC. ā As discussed in Note 3 to the consolidated financial statements, management determined that the pending sale of NLC represents a strategic shift away from one of the historically core business units of the Company. Accordingly, as of March 31, 2020 and for all prior periods, insurance segment results have been presented as discontinued operations and its assets and liabilities have been classified as held for sale in the consolidated financial statements and in the tables below. ā Corporate includes certain activities not allocated to specific business segments. These activities include holding company financing and investing activities, merchant banking investment opportunities and management and administrative services to support the overall operations of the Company. ā Balance sheet amounts not discussed previously and the elimination of intercompany transactions are included in āAll Other and Eliminations.ā The following tables present certain information about reportable business segment revenues, operating results, goodwill and assets (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Mortgage ā ā All Other and Hilltop Three Months Ended March 31, 2020 ā Banking ā Broker-Dealer ā Origination ā Insurance ā Corporate ā Eliminations ā Consolidated Net interest income (expense) ā $ 93,923 ā $ 13,173 ā $ 368 ā $ ā ā $ (1,656) ā $ 4,528 ā $ 110,336 ā Provision for credit losses ā 34,275 ā ā 274 ā ā ā ā ā ā ā ā ā ā ā ā ā 34,549 ā Noninterest income ā 8,771 ā ā 86,209 ā ā 178,968 ā ā ā ā ā 2,309 ā ā (4,544) ā 271,713 ā Noninterest expense ā 56,967 ā 80,939 ā 139,552 ā ā ā ā ā 4,853 ā ā (410) ā 281,901 ā Income (loss) before taxes from continuing operations ā ā 11,452 ā ā 18,169 ā ā 39,784 ā ā ā ā ā (4,200) ā ā 394 ā ā 65,599 ā Income before taxes from discontinued operations ā ā ā ā ā ā ā ā ā ā ā 4,014 ā ā ā ā ā ā ā ā 4,014 ā ā ā $ 11,452 ā $ 18,169 ā $ 39,784 ā $ 4,014 ā $ (4,200) ā $ 394 ā $ 69,613 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Mortgage ā ā All Other and Hilltop Three Months Ended March 31, 2019 ā Banking ā Broker-Dealer ā Origination ā Insurance ā Corporate ā Eliminations ā Consolidated Net interest income (expense) ā $ 92,690 ā $ 12,850 ā $ (467) ā $ ā ā $ (1,330) ā $ 4,546 ā $ 108,289 ā Provision for (reversal of) credit losses ā 1,025 ā ā (74) ā ā ā ā ā ā ā ā ā ā ā ā ā 951 ā Noninterest income ā 10,621 ā ā 91,307 ā ā 118,033 ā ā ā ā ā 538 ā ā (4,536) ā 215,963 ā Noninterest expense ā 60,726 ā 87,807 ā 114,677 ā ā ā ā ā 15,562 ā ā (25) ā 278,747 ā Income (loss) before taxes from continuing operations ā ā 41,560 ā ā 16,424 ā ā 2,889 ā ā ā ā ā (16,354) ā ā 35 ā ā 44,554 ā Income before taxes from discontinued operations ā ā ā ā ā ā ā ā ā ā ā 6,809 ā ā ā ā ā ā ā ā 6,809 ā ā ā $ 41,560 ā $ 16,424 ā $ 2,889 ā $ 6,809 ā $ (16,354) ā $ 35 ā $ 51,363 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Mortgage ā ā All Other and Hilltop ā ā Banking ā Broker-Dealer ā Origination ā Insurance ā Corporate ā Eliminations ā Consolidated March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Goodwill ā $ 247,368 ā $ 7,008 ā $ 13,071 ā $ ā ā $ ā ā $ ā ā $ 267,447 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Assets held for sale ā $ ā ā $ ā ā $ ā ā $ 249,758 ā $ ā ā $ ā ā $ 249,758 ā Total assets ā $ 11,616,994 ā $ 3,406,300 ā $ 2,607,131 ā $ 249,758 ā $ 2,448,412 ā $ (4,622,345) ā $ 15,706,250 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2019 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Goodwill ā $ 247,368 ā $ 7,008 ā $ 13,071 ā $ ā ā $ ā ā $ ā ā $ 267,447 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Assets held for sale ā $ ā ā $ ā ā $ ā ā $ 248,429 ā $ ā ā $ ā ā $ 248,429 ā Total assets ā $ 11,147,344 ā $ 3,457,068 ā $ 2,357,415 ā $ 248,429 ā $ 2,393,604 ā $ (4,431,412) ā $ 15,172,448 ā ā |
Earnings per Common Share
Earnings per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per Common Share | |
Earnings per Common Share | 22. Earnings per Common Share ā Net earnings, less any preferred dividends accumulated for the period (whether or not declared), is allocated between the common stock and participating securities pursuant to the two-class method, if applicable. Basic earnings per common share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during the period, excluding participating nonvested restricted shares. The Company calculated basic earnings per common share using the treasury method instead of the two-class method since there were no instruments which qualified as participating securities during the three months ended March 31, 2020 or 2019. ā Diluted earnings per common share is computed in a similar manner, except that first the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares, excluding the participating securities, were issued using the treasury stock method. During the three months ended March 31, 2020 and 2019, RSUs were the only potentially dilutive non-participating instruments issued by Hilltop. Next, the Company determines and includes in the diluted earnings per common share calculation the more dilutive effect of the participating securities using the treasury stock method or the two-class method. Undistributed losses are not allocated to the nonvested share-based payment awards (the participating securities) under the two-class method as the holders are not contractually obligated to share in the losses of the Company. ā The following table presents the computation of basic and diluted earnings per common share (in thousands, except per share data). ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā 2020 2019 Basic earnings per share: ā ā ā ā ā ā ā Income from continuing operations ā $ 46,485 ā $ 33,426 ā Income from discontinued operations ā ā 3,151 ā ā 5,360 ā Income attributable to Hilltop ā $ 49,636 ā $ 38,786 ā ā ā ā ā ā ā ā ā Weighted average shares outstanding - basic ā 90,509 ā 93,669 ā ā ā ā ā ā ā ā ā Basic earnings per common share: ā ā ā ā ā ā ā Income from continuing operations ā $ 0.51 ā $ 0.36 ā Income from discontinued operations ā ā 0.04 ā ā 0.05 ā ā ā $ 0.55 ā $ 0.41 ā ā ā ā ā ā ā ā ā Diluted earnings per share: ā ā ā ā ā ā ā Income from continuing operations ā $ 46,485 ā $ 33,426 ā Income from discontinued operations ā ā 3,151 ā ā 5,360 ā Income attributable to Hilltop ā $ 49,636 ā $ 38,786 ā ā ā ā ā ā ā ā ā Weighted average shares outstanding - basic ā 90,509 ā 93,669 ā Effect of potentially dilutive securities ā 41 ā ā ā Weighted average shares outstanding - diluted ā 90,550 ā 93,669 ā ā ā ā ā ā ā ā ā Diluted earnings per common share: ā ā ā ā ā ā ā Income from continuing operations ā $ 0.51 ā $ 0.36 ā Income from discontinued operations ā ā 0.04 ā ā 0.05 ā ā ā $ 0.55 ā $ 0.41 ā ā |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Event | |
Subsequent Event | 23. Subsequent Event ā As a result of the spread of the COVID-19 pandemic, economic uncertainties continue to adversely impact the global economy and has contributed to significant volatility in banking and other financial activity in the areas in which the Company operates. The effects of COVID-19 and the governmental and societal response to the virus have negatively impacted financial markets and overall economic conditions on an unprecedented scale, resulting in the shuttering of businesses across the country and significant job loss. The Companyās business is dependent upon the willingness and ability of its employees and customers to conduct banking and other financial transactions. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty which could have a material adverse effect on the Companyās business, financial condition, results of operations and cash flows. |
Summary of Significant Accoun_2
Summary of Significant Accounting and Reporting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting and Reporting Policies | |
Nature of Operations | Nature of Operations ā Hilltop Holdings Inc. (āHilltopā and, collectively with its subsidiaries, the āCompanyā) is a financial holding company registered under the Bank Holding Company Act of 1956. The Companyās primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank (the āBankā). In addition, the Company provides an array of financial products and services through its broker-dealer, mortgage origination and insurance subsidiaries. ā The Company, headquartered in Dallas, Texas, provides its products and services through three primary business units, PlainsCapital Corporation (āPCCā), Hilltop Securities Holdings LLC (āSecurities Holdingsā) and National Lloyds Corporation (āNLCā). PCC is a financial holding company that provides, through its subsidiaries, traditional banking, wealth and investment management and treasury management services primarily in Texas and residential mortgage lending throughout the United States. Securities Holdings is a holding company that provides, through its subsidiaries, investment banking and other related financial services, including municipal advisory, sales, trading and underwriting of taxable and tax-exempt fixed income securities, equity trading, clearing, securities lending, structured finance and retail brokerage services throughout the United States. NLC is a property and casualty insurance holding company that provides, through its subsidiaries, fire and homeowners insurance to low value dwellings and manufactured homes primarily in Texas and other areas of the southern United States. ā On January 30, 2020, Hilltop entered into an agreement to sell all of the outstanding capital stock of NLC, which comprises the operations of the insurance segment, for a cash purchase price of $150.0 million, subject to post-closing adjustments. Consummation of the transaction is subject to customary closing conditions, including required regulatory approvals, and is expected to close during the second quarter of 2020. Accordingly, as of March 31, 2020 and for all prior periods, NLCās results have been presented as discontinued operations and its assets and liabilities have been classified as held for sale in the consolidated financial statements. Unless otherwise indicated, information included in the notes to the consolidated financial statements are presented on a consolidated operations basis, which includes results from both continuing and discontinued operations, for all periods presented. For further details, see Note 3 to the consolidated financial statements. ā |
Basis of Presentation | Basis of Presentation ā The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (āGAAPā), and in conformity with the rules and regulations of the Securities and Exchange Commission (the āSECā). In the opinion of management, these financial statements contain all adjustments necessary for a fair statement of the results of the interim periods presented. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companyās Annual Report on Form 10-K for the year ended December 31, 2019 (ā2019 Form 10-Kā). Results for interim periods are not necessarily indicative of results to be expected for a full year or any future period. ā The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates regarding the allowance for credit losses, the fair values of financial instruments, reserves for losses and loss adjustment expenses (āLAEā), the mortgage loan indemnification liability, and the potential impairment of assets are particularly subject to change. Other than changes related to the implementation of the current expected credit losses standard (ASU 2016-13), the Company has applied its critical accounting policies and estimation methods consistently in all periods presented in these consolidated financial statements. Actual amounts and values as of the balance sheet dates may be materially different than the amounts and values reported due to the inherent uncertainty in the estimation process. Also, future amounts and values could differ materially from those estimates due to changes in values and circumstances after the balance sheet date. ā Hilltop owns 100% of the outstanding stock of PCC. PCC owns 100% of the outstanding stock of the Bank and 100% of the membership interest in Hilltop Opportunity Partners LLC, a merchant bank utilized to facilitate investments in companies engaged in non-financial activities. The Bank owns 100% of the outstanding stock of PrimeLending, a PlainsCapital Company (āPrimeLendingā). ā PrimeLending owns a 100% membership interest in PrimeLending Ventures Management, LLC (āVentures Managementā), which holds an ownership interest in and is the managing member of certain affiliated business arrangements (āABAsā). ā PCC also owns 100% of the outstanding common securities of PCC Statutory Trusts I, II, III and IV (the āTrustsā), which are not included in the consolidated financial statements under the requirements of the Variable Interest Entities (āVIEā) Subsections of the Financial Accounting Standards Board (āFASBā) Accounting Standards Codification (āASCā) because the primary beneficiaries of the Trusts are not within the consolidated group. ā Hilltop has a 100% membership interest in Securities Holdings, which operates through its wholly owned subsidiaries, Hilltop Securities Inc. (āHilltop Securitiesā), Hilltop Securities Independent Network Inc. (āHTS Independent Networkā) (collectively, the āHilltop Broker-Dealersā) and Hilltop Securities Asset Management, LLC. Hilltop Securities is a broker-dealer registered with the SEC and Financial Industry Regulatory Authority (āFINRAā) and a member of the New York Stock Exchange (āNYSEā), HTS Independent Network is an introducing broker-dealer that is also registered with the SEC and FINRA, and Hilltop Securities Asset Management, LLC is a registered investment adviser under the Investment Advisers Act of 1940. ā Hilltop also owns 100% of NLC, which operates through its wholly owned subsidiaries, National Lloyds Insurance Company (āNLICā) and American Summit Insurance Company (āASICā). ā In addition, Hilltop owns 100% of the membership interest in each of HTH Hillcrest Project LLC (āHTH Project LLCā) and Hilltop % of the membership interest in HTH Diamond Hillcrest Land LLC (āHillcrest Land LLCā) which is consolidated under the aforementioned VIE Subsections of the ASC. These entities are related to the Hilltop Plaza investment discussed in detail in Note 18 to the consolidated financial statements included in the Companyās 2019 Form 10-K and are collectively referred to as the āHilltop Plaza Entities.ā ā The consolidated financial statements include the accounts of the above-named entities. Intercompany transactions and balances have been eliminated. Noncontrolling interests have been recorded for minority ownership in entities that are not wholly owned and are presented in compliance with the provisions of Noncontrolling Interest in Subsidiary Subsections of the ASC. ā Certain reclassifications have been made to the prior period consolidated financial statements to conform with the current period presentation, including reclassifications due to the adoption of new accounting pronouncements and reclassifications due to the presentation of NLCās results as discontinued operations and its assets and liabilities classified as held for sale. In preparing these consolidated financial statements, subsequent events were evaluated through the time the financial statements were issued. Financial statements are considered issued when they are widely distributed to all stockholders and other financial statement users, or filed with the SEC. ā Significant accounting policies are detailed in Note 1 to the consolidated financial statements included in the Companyās 2019 Form 10-K. As a result of the adoption of ASU 2016-13 and related updates, improvements and technical corrections (collectively, āCECLā), the Company has included new or modified significant accounting policies as summarized below. |
Securities | Securities ā Management classifies securities at the time of purchase and reassesses such designations at each balance sheet date. Securities held for resale to facilitate principal transactions with customers are classified as trading and are carried at fair value, with changes in fair value reflected in the consolidated statements of operations. The Company reports interest income on trading securities as interest income on securities and other changes in fair value as other noninterest income. ā Debt securities held but not intended to be held to maturity or on a long-term basis are classified as available for sale. Securities included in this category are those that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, prepayment risk or other factors related to interest rate and prepayment risk. Debt securities available for sale are carried at fair value. Unrealized holding gains and losses on debt securities available for sale, net of taxes, are reported in other comprehensive income (loss) until realized. Premiums and discounts are recognized in interest income using the effective interest method and reflect any optionality that may be embedded in the security. ā Equity securities are carried at fair value, with changes in fair value reflected in the consolidated statements of operations. Equity securities that do not have readily determinable fair values are initially recorded at cost and subsequently remeasured when there is (i) an observable transaction involving the same investment, (ii) an observable transaction involving a similar investment from the same issuer or (iii) an impairment. These remeasurements are reflected in the consolidated statements of operations. Purchases and sales (and related gain or loss) of securities are recorded on the trade date, based on specific identification. |
Allowance for Credit Losses on Available for Sale and Held to Maturity Securities | Allowance for Credit Losses on Available for Sale and Held to Maturity Securities ā Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available for sale debt securities, a decline in fair value due to credit loss results in recording an allowance for credit losses to the extent the fair value is less than the amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through other comprehensive income, net of applicable taxes. ā Allowances for credit losses may result from credit deterioration of the issuer or the collateral underlying the security. In performing an assessment of whether any decline in fair value is due to a credit loss, all relevant information is considered at the individual security level. In assessing whether a credit loss exists, the Company compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount by which the fair value is less than the amortized cost basis. ā CECL has replaced the previous other-than-temporary-impairment (āOTTIā) model. Under the OTTI model, credit losses were recognized as a reduction to the cost basis of the investment with recovery of an impairment loss recognized prospectively over time as interest income, and reversals of impairment were not allowed. Under CECL, effective January 1, 2020, if the Company intends to sell a debt security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged against the allowance for credit losses, with any incremental impairment reported in earnings. Reversals of the allowance for credit losses are permitted and should not exceed the allowance amount initially recognized. ā For debt securities held to maturity, estimated expected credit losses are calculated in a manner like that used for loans held for investment. That is, the historical lifetime probability of default and severity of loss in the event of default is derived or obtained from external sources and adjusted for the expected effects of reasonable and supportable forecasts over the expected lives of the securities on those historical credit losses. With respect to certain classes of debt securities, primarily U.S. Treasuries, the Company considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to technically default. Therefore, for those securities, the Company does not record expected credit losses. |
Loans Held for Investment | Loans Held for Investment ā Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the amount of unpaid principal reduced by unearned income, net unamortized deferred fees and an allowance for credit losses. Unearned income on installment loans and interest on other loans is recognized using the effective interest method. Net fees received for providing loan commitments and letters of credit that result in loans are deferred and amortized to interest income over the life of the related loan, beginning with the initial borrowing. Net fees on commitments and letters of credit that are not expected to be funded are amortized to noninterest income over the commitment period. Income on direct financing leases is recognized on a basis that achieves a constant periodic rate of return on the outstanding investment. ā The accrual of interest on credit deteriorated loans is discontinued when, in managementās opinion, there is a clear indication that the borrowerās cash flow may not be sufficient to meet principal and interest payments, which is generally when a loan is 90 days past due unless the asset is both well secured and in the process of collection. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is charged against income. Once placed on non-accrual status, interest income is recognized on a cash basis. Additionally, accretion of purchased discount on non-accrual loans is suspended. ā The Company follows applicable regulatory guidance when measuring past due status. The Company uses the actual days elapsed since the payment due date of the loan to determine delinquency. ā Management defines loans acquired in a business combination as acquired loans. Acquired loans are recorded at estimated fair value on their purchase date with no carryover of the related allowance for credit losses. Acquired loans are segregated between those considered to be credit deteriorated and those without credit deterioration at acquisition. To make this determination, management considers such factors as past due status, non-accrual status and credit risk ratings. For acquired performing loans, a lifetime allowance for credit losses is estimated as of the date of acquisition and is recorded through provision for (reversal of) credit losses. The difference between the purchase price and loan receivable is amortized over the remaining life of the loan. ā All formerly designated purchased credit impaired (āPCIā) loans became purchased credit deteriorated (āPCDā) loans effective January 1, 2020. PCD loans are loans that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination. For PCD loans, any non-credit discount or premium related to an acquired pool of PCD loans is allocated to each individual asset within the pool. On the acquisition date, the initial allowance for credit losses measured on a pooled basis is allocated to each individual asset within the pool to allocate any non-credit discount or premium. Credit losses are measured based on unpaid principal balance. A lifetime allowance for credit losses is estimated as of the date of acquisition. The initial allowance for credit losses is added to the purchase price and is considered to be part of the PCD loan amortized cost basis. |
Allowance for Credit Losses for Loans Held for Investment | Allowance for Credit Losses for Loans Held for Investment ā Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses for loans. The allowance for credit losses, or reserve, is an estimate of expected losses over the lifetime of a loan within the Companyās existing loans held for investment portfolio. The allowance for credit losses for loans held for investment is adjusted by a provision for (reversal of) credit losses, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. ā The credit loss estimation process involves procedures to appropriately consider the unique characteristics of the Companyās loan portfolio segments, which are further disaggregated into loan classes, the level at which credit risk is monitored. The allowance for credit losses for loans not evaluated for specific reserves is calculated using statistical credit factors, including probabilities of default (āPDā) and loss given default (āLGDā), to the amortized cost of pools of loan exposures with similar risk characteristics over its contractual life, adjusted for prepayments, to arrive at an estimate of expected credit losses. Economic forecasts are applied over the period management believes it can estimate reasonable and supportable forecasts. Reasonable and supportable forecast periods and reversion assumptions to historical data are credit model specific. The Company typically forecasts economic variables over a one to four year horizon. Prepayments are estimated by loan type using historical information and adjusted for current and future conditions. ā Commercial loans that exceed a minimum size scope are underwritten and graded using credit models that leverage national industry default data to score the loans. At the conclusion of the process of underwriting or re-grading a borrower, each borrower (for commercial and industrial loans) or property (for commercial real estate loans) is assigned a PD grade threshold. The valuation methodology of risk rating internal grades is based on the merits of the financial ratios of the borrower or the property. In addition, an LGD grade is determined by the credit models utilizing collateral information provided. A master rating scale effectively "pools" the loans by credit scores and assigns a standard one year PD percentage and an LGD percentage equally for all loans that have a given score. For borrowers or loans that do not meet the minimum balance threshold, an internal scorecard is utilized to approximate the grades derived from the credit models and is mapped to the master rating scale. The resulting numerical PD grade is the credit quality indicator for commercial loans. The grades on borrowers or properties that are scored in the credit models are determined at origination and updated at least annually. The grades on the internal scorecards are updated annually if they meet a minimum threshold, or if new circumstances (favorable or unfavorable) warrant a re-scoring. ā When computing allowance levels, credit loss assumptions are estimated using models that analyze loans according to credit risk ratings, historic loss experience, past due status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Future factors and forecasts may result in significant changes in the allowance and provision (reversal) for credit losses in those future periods. The allowance for credit losses will primarily reflect estimated losses for pools of loans that share similar risk characteristics, but will also consider individual loans that do not share risk characteristics with other loans. ā Loans that Share Risk Characteristics with Other Loans ā In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan classes. Loans are designated into loan classes based on loans pooled by product types and similar risk characteristics or areas of risk concentration. In determining the allowance for credit losses, the Company derives an estimated credit loss assumption from a model that categorizes loan pools based on loan type and internal risk rating or past due category as follows. ā Commercial and Industrial and Commercial Real Estate Loans. ā These factors are based on an evaluation of historical and current information and sometimes involve subjective assessment and interpretation. Specific considerations for construction are considered in the internal PD and LGD risk ratings including property type, development phase and complexity, as well as lease-up and stabilization projections. The PD and LGD factors are further sensitized in the models for future expectations over the loanās contractual life, adjusted for prepayments. ā 1-4 Family Residential Loans. The 1-4 family residential loan portfolio is segmented into pools of residential real estate loans with similar credit risk characteristics. The models calculate expected losses and prepayments using borrower information at origination, including FICO score, loan type, collateral type, lien position, geography, origination year, and loan to value. Past due status post-origination is also a key input in the models. Current and future changes in economic conditions, including unemployment rates, home prices, index rates, and mortgage rates, are also considered. ā Consumer Loans. The consumer loan portfolio is segmented into pools of consumer installment loans or revolving lines of credit with similar credit characteristics. The models calculate expected losses using borrower information at origination, including FICO score, origination year, geography, and collateral type. ā Broker-Dealer Loans. The broker-dealer loan portfolio is evaluated on an individual basis using the collateral-dependent practical expedient. The collateral-dependent practical expedient allows the broker-dealer to compare the fair value of the collateral of each loan as of the reporting date to loan value. The underlying collateral of the loans to customers and correspondents is marked to market daily and any required additional collateral is collected. The allowance represents the amount of unsecured loan balances at the end of the period. ā Qualitative Factors ā Estimating the timing and amounts of future loss cash flows is subject to significant management judgment as these loss cash flows rely upon estimates such as default rates, loss severities, collateral valuations, the amounts and timing of principal payments (including any expected prepayments) or other factors that are reflective of current or future expected conditions. These estimates, in turn, depend on the duration of current overall economic conditions, industry, borrower, or portfolio specific conditions, the expected outcome of bankruptcy or insolvency proceedings, as well as, in certain circumstances, other economic factors, including the level of current and future real estate prices. All of these estimates and assumptions require significant management judgment and certain assumptions that are highly subjective. Model imprecision also exists in the allowance for credit losses estimation process due to the inherent time lag of available industry information and differences between expected and actual outcomes. ā Management considers adjustments for these conditions in its allowance for credit loss estimates qualitatively where they may not be measured directly in its individual or collective assessments, including but not limited to: ā an adjustment to historical loss data to measure credit risk even if that risk is remote and does not meet the scope of assets with zero expected losses; ā the environmental factors and the areas in which credit is concentrated, such as the regulatory, environmental, or technological environment, the geographical area or key industries, or in the national or regional economic and business conditions where the borrower has exposure; ā the nature and volume of the borrowerās financial assets; ā the borrowerās financial condition, credit rating, credit score, asset quality, or business prospects; ā the borrowerās ability to make scheduled interest or principal payments; ā the remaining payment terms of the financial assets and the remaining time to maturity and the timing and extent of prepayments on the financial assets; ā the volume and severity of past due or adversely classified financial assets; ā the value of underlying collateral in which the collateral-dependent practical expedient has not been utilized; ā any updates to credit lending policies and procedures, including lending strategies, underwriting standards, collection and recovery practices, not reflected in the models; and ā the quality of the internal credit review system. ā Loans that Do Not Share Risk Characteristics with Other Loans ā When a loan is assigned a substandard non-accrual risk rating grade, the loan subsequently is evaluated on an individual basis and no longer evaluated on a collective basis. The net realizable value of the loan is compared to the appropriate loan basis (i.e. PCD loan versus non-PCD loan) to determine any allowance for credit losses. Loans that are below a predetermined threshold, with the exception of 1-4 family residential loans, are fully reserved. ā The Company generally considers non-accrual loans to be collateral-dependent. The practical expedient to measure credit losses using the fair value of the collateral has been exercised. ā For commercial real estate loans, the fair value of collateral primarily is based on appraisals. For owner occupied real estate loans, underlying properties are occupied by the borrower in its business, and evaluations are based on business operations used to service the debt. For non-owner occupied real estate loans, underlying properties are income-producing and evaluations are based on tenant revenues. For income producing construction and land development loans, appraisals reflect the assumption that properties are completed. ā For 1-4 family residential loans that are graded substandard non-accrual, an assessment of value is made using the most recent appraisal on file. If the appraisal on file is older than two years, the latest property tax assessment is used as a screening value to determine if a reserve might be required. If the assessed value is less than the appraised value, this value is discounted for selling costs and is used to measure the reserve required. If the appraisal is less than two years old, the value is discounted for selling costs and compared to the appropriate basis in the loan. ā Consumer loans are charged off when they reach 90 days delinquency as a general rule. There are limited cases where the loan is not charged off due to special circumstances and is subject to the collateral review process. ā |
Off-Balance Sheet Credit Exposures, Including Unfunded Loan Commitments | Off-Balance Sheet Credit Exposures, Including Unfunded Loan Commitments ā The Company maintains a separate allowance for credit losses from off-balance sheet credit exposures, including unfunded loan commitments, which is included in other liabilities within the consolidated balance sheets. The Company estimates expected losses by calculating a commitment usage factor based on industry usage factors. The commitment usage factor is applied over the relevant contractual period. Loss factors from the underlying loans to which commitments are related are applied to the results of the usage calculation to estimate any liability for credit losses related for each loan type. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations | |
Schedule of discontinued operations | ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 2019 Assets ā ā ā ā ā ā Cash and due from banks ā $ 58,103 ā $ 51,333 Securities: ā ā ā ā ā ā Available for sale, at fair value ā ā 86,101 ā ā 86,899 Equity, at fair value ā ā 15,440 ā ā 19,841 ā ā ā 101,541 ā ā 106,740 ā ā ā ā ā ā ā Premises and equipment, net ā ā 9,058 ā ā 9,607 Operating lease right-of-use assets ā ā 2,674 ā ā 2,739 Other assets ā ā 50,966 ā ā 50,533 Goodwill ā ā 23,988 ā ā 23,988 Other intangible assets, net ā ā 3,428 ā ā 3,489 Total assets held for sale ā $ 249,758 ā $ 248,429 ā ā ā ā ā ā ā Liabilities ā ā ā ā ā ā Notes payable ā $ 27,500 ā $ 27,500 Operating lease liabilities ā ā 2,727 ā ā 2,783 Other liabilities ā ā 109,503 ā ā 110,391 Total liabilities held for sale ā $ 139,730 ā $ 140,674 ā The following table presents the results of discontinued operations for NLC for the periods indicated. ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Interest income: ā ā ā ā ā ā Securities: ā ā ā ā ā ā Taxable ā $ 938 ā $ 960 Other ā ā 67 ā ā 142 Total interest income ā ā 1,005 ā ā 1,102 ā ā ā ā ā ā ā Interest expense: ā ā ā ā ā ā Notes payable ā ā 406 ā ā 460 ā ā ā ā ā ā ā Noninterest income: ā ā ā ā ā ā Net insurance premiums earned ā ā 32,637 ā ā 33,203 Other ā ā (2,246) ā ā 3,302 Total noninterest income ā ā 30,391 ā ā 36,505 ā ā ā ā ā ā ā Noninterest expense: ā ā ā ā ā ā Employees' compensation and benefits ā ā 2,777 ā ā 3,202 Occupancy and equipment, net ā ā 247 ā ā 244 Professional services ā ā 8,527 ā ā 8,833 Loss and loss adjustment expenses ā ā 12,949 ā ā 14,926 Other ā ā 2,476 ā ā 3,133 Total noninterest expense ā ā 26,976 ā ā 30,338 ā ā ā ā ā ā ā Income from discontinued operations before income taxes ā ā 4,014 ā ā 6,809 Income tax expense ā ā 863 ā ā 1,449 Income from discontinued operations, net of income taxes ā $ 3,151 ā $ 5,360 ā ā |
Summary of statutory capital and surplus and statutory net income (loss) of each insurance subsidiary | A summary of statutory capital and surplus and statutory net income (loss) of each insurance subsidiary is as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā 2020 2019 Statutory capital and surplus: ā ā ā ā ā ā ā National Lloyds Insurance Company ā $ 73,892 ā $ 70,112 ā American Summit Insurance Company ā 17,999 ā 19,201 ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Statutory net income (loss): ā ā ā ā ā ā National Lloyds Insurance Company $ 6,527 ā $ 3,417 ā American Summit Insurance Company (185) ā 417 ā |
Schedule of information regarding the reserve for unpaid losses and loss adjustment expenses ("LAE") as included in other liabilities within the consolidated balance sheets | A rollforward of NLCās reserve for unpaid losses and LAE, as included in other liabilities and reflected as a part of liabilities held for sale for all periods within the consolidated balance sheets, is as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā March 31, ā ā ā 2020 2019 ā Balance, beginning of period ā $ 15,342 ā $ 20,552 ā Less reinsurance recoverables ā ā (1,005) ā ā (3,214) ā Net balance, beginning of period ā ā 14,337 ā ā 17,338 ā ā ā ā ā ā ā ā ā Incurred related to: ā ā ā ā ā ā ā Current year ā ā 11,657 ā ā 13,993 ā Prior years ā ā 1,474 ā ā 935 ā Total incurred ā ā 13,131 ā ā 14,928 ā ā ā ā ā ā ā ā ā Payments related to: ā ā ā ā ā ā ā Current year ā ā (7,377) ā ā (7,029) ā Prior years ā ā (6,329) ā ā (7,152) ā Total payments ā ā (13,706) ā ā (14,181) ā ā ā ā ā ā ā ā ā Net balance, end of period ā ā 13,762 ā ā 18,085 ā Plus reinsurance recoverables ā ā 746 ā ā 2,506 ā Balance, end of period ā $ 14,508 ā $ 20,591 ā ā |
Summary of claims loss reserve development activity | A summary of claims loss reserve development activity is presented in the following table (dollars in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance ā March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Total of ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Incurred ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā But Not ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Reported ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Reserves Plus Cumulative ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Development Number of Accident ā March 31, 2020 ā ā On Reported Reported Year ā 2017 ā 2018 ā 2019 ā 2020 ā Claims Claims 2017 ā $ 87,899 ā $ 88,025 ā $ 87,534 ā $ 87,568 ā $ 216 ā 20,174 2018 ā ā ā ā ā 75,217 ā ā 73,261 ā ā 73,314 ā ā 927 ā 14,713 2019 ā ā ā ā ā ā ā ā 71,687 ā ā 73,072 ā ā 4,009 ā 13,798 2020 ā ā ā ā ā ā ā ā ā ā ā 11,657 ā 1,565 ā 2,317 ā ā ā ā ā ā ā ā ā ā ā $ 245,611 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance ā ā ā ā ā Accident ā March 31, 2020 ā ā ā ā ā Year ā 2017 ā 2018 ā 2019 ā 2020 ā ā ā ā ā 2017 ā $ 77,675 ā $ 86,319 ā $ 87,203 ā $ 87,291 ā ā ā ā ā 2018 ā ā ā ā ā 61,922 ā ā 70,958 ā ā 72,255 ā ā ā ā ā 2019 ā ā ā ā ā ā ā ā 55,014 ā ā 66,150 ā ā ā ā ā 2020 ā ā ā ā ā ā ā ā ā ā ā 7,377 ā ā ā ā ā Total ā $ 233,073 ā ā ā ā ā All outstanding reserves prior to 2017, net of reinsurance ā ā 466 ā ā ā ā ā Reserve for unpaid losses and allocated loss adjustment expenses, net of reinsurance ā $ 13,004 ā ā ā ā ā ā |
Schedule of effects of reinsurance on premiums written and earned | The effects of reinsurance on premiums written and earned are included within discontinued operations for all periods presented and are summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā ā 2020 ā 2019 ā ā ā Written Earned Written Earned Premiums from direct business ā $ 29,980 ā $ 30,746 ā $ 30,790 ā $ 31,737 ā ā Reinsurance assumed ā 2,952 ā 3,244 ā 3,129 ā 3,191 ā ā Reinsurance ceded ā (1,353) ā (1,353) ā (1,725) ā (1,725) ā ā Net premiums ā $ 31,579 ā $ 32,637 ā $ 32,194 ā $ 33,203 ā ā |
Schedule of effects of reinsurance on incurred losses | The effects of reinsurance on incurred losses and LAE are included within discontinued operations for all periods and are as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Losses and LAE incurred ā $ 12,763 ā $ 14,985 ā ā Reinsurance recoverables ā 186 ā (59) ā ā Net loss and LAE incurred ā $ 12,949 ā $ 14,926 ā ā |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Schedule of information regarding financial assets and liabilities measured at fair value on a recurring basis | The following tables present information regarding financial assets and liabilities measured at fair value on a recurring basis (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Level 1 Level 2 Level 3 Total March 31, 2020 ā Inputs ā Inputs ā Inputs ā Fair Value Trading securities ā $ 1,485 ā $ 392,096 ā $ ā ā $ 393,581 ā Available for sale securities ā ā ā ā ā 972,318 ā ā ā ā ā 972,318 ā Equity securities ā ā 107 ā ā ā ā ā ā ā ā 107 ā Loans held for sale ā ā ā ā ā 2,010,381 ā ā 79,588 ā ā 2,089,969 ā Derivative assets ā ā ā ā ā 192,729 ā ā ā ā ā 192,729 ā MSR asset ā ā ā ā ā ā ā ā 30,299 ā ā 30,299 ā Securities sold, not yet purchased ā ā 11,333 ā ā 11,435 ā ā ā ā ā 22,768 ā Derivative liabilities ā ā ā ā ā 171,210 ā ā ā ā ā 171,210 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Level 1 Level 2 Level 3 ā Total ā December 31, 2019 ā Inputs ā Inputs ā Inputs ā ā Fair Value ā Trading securities ā $ ā ā $ 689,576 ā $ ā ā $ 689,576 ā Available for sale securities ā ā ā ā ā 911,493 ā ā ā ā ā 911,493 ā Equity securities ā ā 166 ā ā ā ā ā ā ā ā 166 ā Loans held for sale ā ā ā ā ā 1,868,518 ā ā 67,195 ā ā 1,935,713 ā Derivative assets ā ā ā ā ā 33,129 ā ā ā ā ā 33,129 ā MSR asset ā ā ā ā ā ā ā ā 55,504 ā ā 55,504 ā Securities sold, not yet purchased ā ā 29,080 ā ā 14,737 ā ā ā ā ā 43,817 ā Derivative liabilities ā ā ā ā ā 17,140 ā ā ā ā ā 17,140 ā ā |
Rollforward for financial instruments measured at fair value using Level 3 inputs | The following tables include a rollforward for those financial instruments measured at fair value using Level 3 inputs (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Total Gains or Losses ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā (Realized or Unrealized) ā ā ā ā Balance at ā ā ā ā ā ā ā Included in Other ā ā ā ā ā Beginning of ā Purchases/ ā Sales/ ā Transfers to ā Included in ā Comprehensive ā Balance at ā ā Period ā Additions ā Reductions ā (from) Level 3 ā Net Income ā Income (Loss) ā End of Period Three months ended March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Loans held for sale ā $ 67,195 ā $ 14,285 ā $ (4,175) ā $ 6,220 ā $ (3,937) ā $ ā ā $ 79,588 ā MSR asset ā 55,504 ā ā 4,475 ā ā (18,650) ā ā ā ā ā (11,030) ā ā ā ā 30,299 ā Total ā $ 122,699 ā $ 18,760 ā $ (22,825) ā $ 6,220 ā $ (14,967) ā $ ā ā $ 109,887 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended March 31, 2019 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Loans held for sale ā $ 50,464 ā $ 15,427 ā $ (6,976) ā $ 1,037 ā $ (2,108) ā $ ā ā $ 57,844 ā MSR asset ā ā 66,102 ā ā 1,861 ā ā ā ā ā ā ā ā (5,914) ā ā ā ā ā 62,049 ā Total ā $ 116,566 ā $ 17,288 ā $ (6,976) ā $ 1,037 ā $ (8,022) ā $ ā ā $ 119,893 ā ā |
Schedule of significant unobservable inputs used in the fair value measurements | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Range (Weighted-Average) ā ā ā ā ā ā March 31, ā December 31, Financial instrument Valuation Technique Unobservable Inputs 2020 ā 2019 Loans ā Discounted cash flows / Market comparable ā Projected price ā 90 - 94 % ( 93 %) ā 92 - 96 % ( 95 %) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā MSR asset ā Discounted cash flows ā Constant prepayment rate ā ā ā 16.98 % ā ā ā ā ā 13.16 % ā ā ā ā ā ā Discount rate ā ā ā 11.01 % ā ā ā ā ā 11.14 % ā ā |
Schedule of changes in fair value for instruments reported at fair value under the Fair Value Option | The following table presents those changes in fair value of instruments recognized in the consolidated statements of operations that are accounted for under the Fair Value Option (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, 2020 ā Three Months Ended March 31, 2019 ā ā ā Other Total ā Other Total ā ā Net ā Noninterest ā Changes in ā Net ā Noninterest ā Changes in ā ā ā Gains (Losses) ā Income ā Fair Value ā Gains (Losses) ā Income ā Fair Value ā Loans held for sale ā $ 33,979 ā $ ā ā $ 33,979 ā $ (13,324) ā $ ā ā $ (13,324) ā MSR asset ā (11,030) ā ā ā (11,030) ā (5,914) ā ā ā (5,914) ā ā ā |
Schedule of carrying values and estimated fair values of financial instruments | ā The following tables present the carrying values and estimated fair values of financial instruments not measured at fair value on either a recurring or non-recurring basis (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Estimated Fair Value ā Carrying Level 1 Level 2 Level 3 ā ā March 31, 2020 ā Amount ā Inputs ā Inputs ā Inputs ā Total Financial assets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Cash and cash equivalents ā $ 524,771 ā $ 524,771 ā $ ā ā $ ā ā $ 524,771 ā Assets segregated for regulatory purposes ā ā 178,805 ā ā 178,805 ā ā ā ā ā ā ā ā 178,805 ā Securities purchased under agreements to resell ā ā 23,356 ā ā ā ā ā 23,356 ā ā ā ā ā 23,356 ā Held to maturity securities ā ā 355,110 ā ā ā ā ā 369,614 ā ā ā ā ā 369,614 ā Loans held for sale ā ā 343,438 ā ā ā ā ā 343,438 ā ā ā ā ā 343,438 ā Loans held for investment, net ā ā 7,238,511 ā ā ā ā ā 506,250 ā ā 6,845,844 ā ā 7,352,094 ā Broker-dealer and clearing organization receivables ā 1,838,789 ā ā ā 1,838,789 ā ā ā 1,838,789 ā Other assets ā 73,118 ā ā ā 70,544 ā 2,574 ā 73,118 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Financial liabilities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Deposits ā 9,947,489 ā ā ā 9,962,915 ā ā ā 9,962,915 ā Broker-dealer and clearing organization payables ā 1,259,181 ā ā ā 1,259,181 ā ā ā 1,259,181 ā Short-term borrowings ā 1,329,948 ā ā ā 1,329,948 ā ā ā 1,329,948 ā Debt ā 311,054 ā ā ā 311,054 ā ā ā 311,054 ā Other liabilities ā 6,376 ā ā ā 6,376 ā ā ā 6,376 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Estimated Fair Value ā Carrying Level 1 Level 2 Level 3 ā ā December 31, 2019 ā Amount ā Inputs ā Inputs ā Inputs ā Total Financial assets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Cash and cash equivalents ā $ 434,020 ā $ 434,020 ā $ ā ā $ ā ā $ 434,020 ā Assets segregated for regulatory purposes ā ā 157,436 ā ā 157,436 ā ā ā ā ā ā ā ā 157,436 ā Securities purchased under agreements to resell ā ā 59,031 ā ā ā ā ā 59,031 ā ā ā ā ā 59,031 ā Held to maturity securities ā ā 386,326 ā ā ā ā ā 388,930 ā ā ā ā ā 388,930 ā Loans held for sale ā ā 170,648 ā ā ā ā ā 170,648 ā ā ā ā ā 170,648 ā Loans held for investment, net ā ā 7,320,264 ā ā ā ā ā 576,527 ā ā 6,990,706 ā ā 7,567,233 ā Broker-dealer and clearing organization receivables ā 1,780,280 ā ā ā 1,780,280 ā ā ā 1,780,280 ā Other assets ā 71,040 ā ā ā 69,580 ā 1,460 ā 71,040 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Financial liabilities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Deposits ā 9,032,214 ā ā ā 9,032,496 ā ā ā 9,032,496 ā Broker-dealer and clearing organization payables ā 1,605,518 ā ā ā 1,605,518 ā ā ā 1,605,518 ā Short-term borrowings ā 1,424,010 ā ā ā 1,424,010 ā ā ā 1,424,010 ā Debt ā 323,281 ā ā ā 323,281 ā ā ā 323,281 ā Other liabilities ā 8,340 ā ā ā 8,340 ā ā ā 8,340 ā |
Schedule of adjustments to the carrying value of these investments | The following table presents the adjustments to the carrying value of these investments during the periods presented (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Balance, beginning of period ā $ 19,771 $ 20,376 Additional investments ā ā ā ā ā ā ā Upward adjustments ā ā ā 106 ā ā 101 Impairments and downward adjustments ā ā ā (789) ā ā ā Dispositions ā ā ā ā ā Balance, end of period ā ā $ 19,088 ā $ 20,477 |
Securities (Tables)
Securities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Securities | |
Summary of trading securities | The fair value of trading securities is summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā ā 2020 2019 U.S. Treasury securities $ 1,485 $ ā U.S. government agencies: ā ā ā ā ā ā ā ā Bonds ā ā ā ā ā 24,680 ā ā Residential mortgage-backed securities ā 164,899 ā 331,601 ā ā Commercial mortgage-backed securities ā 2,136 ā 2,145 ā ā Collateralized mortgage obligations ā ā 80,262 ā ā 191,154 ā ā Corporate debt securities ā ā 28,893 ā ā 36,973 ā ā States and political subdivisions ā ā 103,075 ā ā 93,117 ā ā Unit investment trusts ā ā ā ā ā 3,468 ā ā Private-label securitized product ā ā 650 ā ā 2,992 ā ā Other ā ā 12,181 ā ā 3,446 ā ā Totals ā $ 393,581 ā $ 689,576 ā ā |
Summary of amortized cost and fair value of available for sale securities | The amortized cost and fair value of available for sale and held to maturity securities are summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Available for Sale ā ā ā Amortized ā Unrealized ā Unrealized ā ā ā March 31, 2020 ā Cost ā Gains ā Losses ā Fair Value U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds ā $ 88,299 ā $ 1,437 ā $ ā ā $ 89,736 ā Residential mortgage-backed securities ā 415,399 ā 14,435 ā ā ā 429,834 ā Commercial mortgage-backed securities ā ā 11,436 ā 967 ā ā ā 12,403 ā Collateralized mortgage obligations ā 385,409 ā 9,634 ā (1,057) ā 393,986 ā States and political subdivisions ā 44,613 ā 1,746 ā ā ā 46,359 ā Totals ā $ 945,156 ā $ 28,219 ā $ (1,057) ā $ 972,318 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Available for Sale ā ā ā Amortized ā Unrealized ā Unrealized ā ā ā December 31, 2019 ā Cost ā Gains ā Losses ā Fair Value U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds ā $ 84,590 ā $ 1,049 ā $ (64) ā $ 85,575 ā Residential mortgage-backed securities ā 430,514 ā 6,662 ā (147) ā 437,029 ā Commercial mortgage-backed securities ā ā 11,488 ā 543 ā ā ā 12,031 ā Collateralized mortgage obligations ā 333,256 ā 3,175 ā (815) ā 335,616 ā States and political subdivisions ā 39,969 ā 1,273 ā ā ā 41,242 ā Totals ā $ 899,817 ā $ 12,702 ā $ (1,026) ā $ 911,493 ā |
Summary of amortized cost and fair value of held to maturity securities | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Held to Maturity ā ā Amortized ā Unrealized ā Unrealized ā ā ā March 31, 2020 Cost Gains Losses Fair Value U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā Residential mortgage-backed securities ā $ 16,809 ā $ 676 ā $ ā ā $ 17,485 Commercial mortgage-backed securities ā ā 160,113 ā 10,405 ā ā ā 170,518 Collateralized mortgage obligations ā 106,926 ā 2,260 ā (37) ā 109,149 States and political subdivisions ā 71,262 ā 1,335 ā (135) ā 72,462 Totals ā $ 355,110 ā $ 14,676 ā $ (172) ā $ 369,614 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Held to Maturity ā ā Amortized ā Unrealized ā Unrealized ā ā ā December 31, 2019 Cost Gains Losses Fair Value U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds ā $ 24,020 ā $ 10 ā $ (35) ā $ 23,995 ā Residential mortgage-backed securities ā 17,776 ā 295 ā ā ā 18,071 ā Commercial mortgage-backed securities ā ā 161,624 ā ā 2,810 ā ā (655) ā ā 163,779 ā Collateralized mortgage obligations ā 113,894 ā 226 ā (904) ā 113,216 ā States and political subdivisions ā 69,012 ā 1,013 ā (156) ā 69,869 ā Totals ā $ 386,326 ā $ 4,354 ā $ (1,750) ā $ 388,930 ā |
Schedule of information regarding available for sale securities that were in an unrealized loss position | Information regarding available for sale and held to maturity securities that were in an unrealized loss position is shown in the following tables (dollars in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, 2020 ā December 31, 2019 ā Number of ā ā Unrealized Number of ā ā Unrealized ā ā Securities ā Fair Value ā Losses ā Securities ā Fair Value ā Losses Available for Sale ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā $ ā ā $ ā 2 ā $ 24,937 ā $ 64 ā Unrealized loss for twelve months or longer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 2 ā 24,937 ā 64 ā Residential mortgage-backed securities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā ā ā ā 37 ā 36,187 ā 87 ā Unrealized loss for twelve months or longer ā ā ā ā ā 2 ā 13,683 ā 58 ā ā ā ā ā ā ā ā ā 39 ā 49,870 ā 145 ā Commercial mortgage-backed securities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā ā ā ā 1 ā 9,967 ā 2 ā Unrealized loss for twelve months or longer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 1 ā 9,967 ā 2 ā Collateralized mortgage obligations: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 4 ā 20,214 ā 165 15 ā 94,545 ā 446 ā Unrealized loss for twelve months or longer 15 ā 58,090 ā 892 13 ā 46,217 ā 369 ā ā 19 ā ā 78,304 ā ā 1,057 28 ā 140,762 ā 815 ā States and political subdivisions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 1 ā 537 ā ā ā ā ā ā ā ā Unrealized loss for twelve months or longer ā ā ā ā ā 1 ā 487 ā ā ā ā 1 ā ā 537 ā ā ā 1 ā 487 ā ā ā Total available for sale: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 5 ā 20,751 ā 165 55 ā 165,636 ā 599 ā Unrealized loss for twelve months or longer 15 ā 58,090 ā 892 16 ā 60,387 ā 427 ā ā 20 ā $ 78,841 ā $ 1,057 71 ā $ 226,023 ā $ 1,026 ā |
Schedule of information regarding held to maturity securities that were in an unrealized loss position | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, 2020 ā December 31, 2019 ā Number of ā ā Unrealized Number of ā ā Unrealized ā ā Securities ā Fair Value ā Losses ā Securities ā Fair Value ā Losses Held to Maturity ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā U.S. government agencies: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Bonds: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā $ ā ā $ ā 2 ā $ 9,665 ā $ 35 ā Unrealized loss for twelve months or longer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 2 ā 9,665 ā 35 ā Commercial mortgage-backed securities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months ā ā ā ā ā 8 ā 44,610 ā 656 ā Unrealized loss for twelve months or longer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 8 ā 44,610 ā 656 ā Collateralized mortgage obligations: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 2 ā 15,488 ā 37 4 ā 23,904 ā 287 ā Unrealized loss for twelve months or longer ā ā ā ā ā 8 ā 59,560 ā 617 ā ā 2 ā 15,488 ā 37 12 ā 83,464 ā 904 ā States and political subdivisions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 27 ā 10,470 ā 133 38 ā 15,996 ā 124 ā Unrealized loss for twelve months or longer 2 ā 604 ā 2 4 ā 1,099 ā 31 ā ā 29 ā 11,074 ā 135 42 ā 17,095 ā 155 ā Total held to maturity: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Unrealized loss for less than twelve months 29 ā 25,958 ā 170 52 ā 94,175 ā 1,102 ā Unrealized loss for twelve months or longer 2 ā 604 ā 2 12 ā 60,659 ā 648 ā ā 31 ā $ 26,562 ā $ 172 64 ā $ 154,834 ā $ 1,750 ā |
Schedule of amortized cost and fair value of securities, excluding trading and equity available for sale securities, by contractual maturity | The amortized cost and fair value of securities, excluding trading and equity securities, at March 31, 2020 are shown by contractual maturity below (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Available for Sale ā Held to Maturity ā ā Amortized ā ā Amortized ā ā ā ā Cost ā Fair Value Cost ā Fair Value Due in one year or less ā $ 2,071 ā $ 2,090 ā $ 453 ā $ 456 ā Due after one year through five years ā 73,668 ā 75,246 ā 987 ā 994 ā Due after five years through ten years ā 35,387 ā 35,914 ā 6,160 ā 6,264 ā Due after ten years ā 21,786 ā 22,845 ā 63,662 ā 64,748 ā ā ā 132,912 ā 136,095 ā 71,262 ā 72,462 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Residential mortgage-backed securities ā 415,399 ā 429,834 ā 16,809 ā 17,485 ā Collateralized mortgage obligations ā 385,409 ā 393,986 ā 106,926 ā 109,149 ā Commercial mortgage-backed securities ā 11,436 ā 12,403 ā 160,113 ā 170,518 ā ā ā $ 945,156 ā $ 972,318 ā $ 355,110 ā $ 369,614 ā |
Loans Held for Investment (Tabl
Loans Held for Investment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Loans Held for Investment | |
Summary of loans held for investment by portfolio segment | Loans held for investment summarized by portfolio segment are as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 2019 Commercial real estate ā $ 3,062,042 ā $ 3,000,523 ā Commercial and industrial ā 2,101,968 ā 2,025,720 ā Construction and land development ā 955,173 ā 940,564 ā 1-4 family residential ā ā 676,630 ā 791,020 ā Consumer ā ā 43,187 ā 47,046 ā Broker-dealer (1) ā ā 506,250 ā 576,527 ā ā ā 7,345,250 ā 7,381,400 ā Allowance for credit losses ā (106,739) ā (61,136) ā Total loans held for investment, net of allowance ā $ 7,238,511 ā $ 7,320,264 ā (1) Primarily represents margin loans to customers and correspondents associated with broker-dealer segment operations. ā |
Summary of non-accrual loans by portfolio segment | Non-accrual loans, excluding those classified as held for sale, are summarized by class in the following table (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā ā 2020 ā 2019 ā Commercial real estate: ā ā Non-owner occupied ā $ 18,168 ā $ 3,813 ā Owner occupied ā 5,184 ā 3,495 ā Commercial and industrial ā ā 47,121 ā 15,262 ā Construction and land development ā 1,402 ā 1,316 ā 1-4 family residential ā 10,599 ā 7,382 ā Consumer ā 310 ā 26 ā Broker-dealer ā ā ā ā ā ā ā $ 82,784 ā $ 31,294 ā ā At March 31, 2020 and December 31, 2019, an additional $4.6 million and $4.8 million, respectively, of real estate loans secured by residential properties and classified as held for sale were in non-accrual status. ā The following table provides further details associated with non-accrual loans (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended ā ā ā ā ā ā ā ā March 31, 2020 ā ā Non-accrual Loans ā Interest Income March 31, 2020 with Allowance with No Allowance Total Recognized (1) Commercial real estate: ā ā ā ā ā ā ā ā ā ā ā ā Non-owner occupied ā $ 9,179 ā $ 8,989 ā $ 18,168 ā $ (97) Owner occupied ā 1,162 ā ā 4,022 ā ā 5,184 ā ā 16 Commercial and industrial ā ā 39,950 ā ā 7,171 ā ā 47,121 ā ā 300 Construction and land development ā 176 ā ā 1,226 ā ā 1,402 ā ā 22 1-4 family residential ā 1,516 ā ā 9,083 ā ā 10,599 ā ā 983 Consumer ā 310 ā ā ā ā ā 310 ā ā (5) Broker-dealer ā ā ā ā ā ā ā ā ā ā ā ā ā $ 52,293 ā $ 30,491 ā $ 82,784 ā $ 1,219 (1) Interest income recognized on non-accrual loans during the three months ended March 31, 2019 was $0.4 million. ā |
Schedule of information regarding TDRs granted | Information regarding TDRs granted during the three months ended March 31, 2020, is shown in the following table (dollars in thousands). There were no TDRs granted during the three months ended March 31, 2019. At March 31, 2020 and December 31, 2019, the Bank had nominal unadvanced commitments to borrowers whose loans have been restructured in TDRs. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, 2020 ā ā Number of Balance at Balance at ā ā ā Loans ā Extension ā End of Period ā Commercial real estate: ā ā ā ā ā ā ā ā ā ā Non-owner occupied ā ā ā ā $ ā ā $ ā ā Owner occupied ā ā ā ā ā ā ā ā Commercial and industrial ā ā 1 ā 1,089 ā 1,166 ā Construction and land development ā ā ā ā ā ā ā ā 1-4 family residential ā ā ā ā ā ā ā ā Consumer ā ā ā ā ā ā ā ā Broker-dealer ā ā ā ā ā ā ā ā Covered ā ā ā ā ā ā ā ā ā ā ā 1 $ 1,089 $ 1,166 ā |
Schedule of analysis of the aging of the entity's loan portfolio | ā An analysis of the aging of the Companyās loan portfolio is shown in the following tables (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Accruing Loans ā ā Loans Past Due ā Loans Past Due ā Loans Past Due ā Total ā Current ā Total ā Past Due March 31, 2020 ā 30-59 Days ā 60-89 Days ā 90 Days or More ā Past Due Loans ā Loans ā Loans ā 90 Days or More Commercial real estate: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Non-owner occupied ā $ 6,488 ā $ 16,772 ā $ 199 ā $ 23,459 ā $ 1,721,265 ā $ 1,744,724 ā $ ā ā Owner occupied ā 12,152 ā 2,685 ā ā 3,400 ā 18,237 ā 1,299,081 ā ā 1,317,318 ā ā ā ā Commercial and industrial ā ā 6,740 ā 1,125 ā ā 2,768 ā 10,633 ā 2,091,335 ā ā 2,101,968 ā ā 47 ā Construction and land development ā 3,955 ā 3 ā ā 98 ā 4,056 ā 951,117 ā ā 955,173 ā ā 97 ā 1-4 family residential ā 16,832 ā 2,600 ā ā 5,896 ā 25,328 ā 651,302 ā ā 676,630 ā ā ā ā Consumer ā 167 ā 158 ā ā 284 ā 609 ā 42,578 ā ā 43,187 ā ā ā ā Broker-dealer ā ā ā ā ā ā ā ā ā ā 506,250 ā ā 506,250 ā ā ā ā ā ā $ 46,334 ā $ 23,343 ā $ 12,645 ā $ 82,322 ā $ 7,262,928 ā $ 7,345,250 ā $ 144 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Accruing Loans ā ā Loans Past Due ā Loans Past Due ā Loans Past Due ā Total ā Current ā Total ā Past Due December 31, 2019 ā 30-59 Days ā 60-89 Days ā 90 Days or More ā Past Due Loans ā Loans ā Loans ā 90 Days or More Commercial real estate: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Non-owner occupied ā $ 4,062 ā $ ā ā $ 2,790 ā $ 6,852 ā $ 1,702,500 ā $ 1,709,352 ā $ ā ā Owner occupied ā 1,813 ā ā 880 ā ā 3,265 ā 5,958 ā 1,285,213 ā ā 1,291,171 ā ā ā ā Commercial and industrial ā ā 5,967 ā ā 1,735 ā ā 3,395 ā 11,097 ā 2,014,623 ā ā 2,025,720 ā ā 3 ā Construction and land development ā 7,580 ā ā 1,827 ā ā ā ā 9,407 ā 931,157 ā ā 940,564 ā ā ā ā 1-4 family residential ā 12,058 ā ā 3,442 ā ā 6,520 ā 22,020 ā 769,000 ā ā 791,020 ā ā ā ā Consumer ā 455 ā ā 34 ā ā ā ā 489 ā 46,557 ā ā 47,046 ā ā ā ā Broker-dealer ā ā ā ā ā ā ā ā ā ā ā 576,527 ā ā 576,527 ā ā ā ā ā ā $ 31,935 ā $ 7,918 ā $ 15,970 ā $ 55,823 ā $ 7,325,577 ā $ 7,381,400 ā $ 3 ā |
Schedule of internal risk grades of loans by class | The following table presents loans held for investment grouped by asset class and credit quality indicator, segregated by year of origination or renewal (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Amortized Cost Basis by Origination Year ā ā ā ā ā ā March 31, 2020 ā 2020 ā 2019 ā 2018 ā 2017 ā 2016 ā ā 2015 and Prior ā Revolving ā Total Commercial real estate: non-owner occupied ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 1-3 (Pass low risk) ā $ 2,702 ā $ 42,015 ā $ 9,354 ā $ 14,536 ā $ 15,164 ā $ 19,926 ā $ 402 ā $ 104,099 Internal Grade 4-7 (Pass normal risk) ā ā 45,963 ā ā 186,755 ā ā 150,078 ā ā 149,826 ā ā 148,241 ā ā 126,033 ā ā 25,449 ā ā 832,345 Internal Grade 8-11 (Pass high risk and watch) ā ā 48,289 ā ā 117,730 ā ā 169,739 ā ā 126,886 ā ā 174,480 ā ā 82,043 ā ā 1,145 ā ā 720,312 Internal Grade 12 (Special mention) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 13 (Substandard accrual) ā ā ā ā ā 1,189 ā ā 1,784 ā ā 4,317 ā ā 8,387 ā ā 54,123 ā ā ā ā ā 69,800 Internal Grade 14 (Substandard non-accrual) ā ā ā ā ā 15,330 ā ā ā ā ā 882 ā ā ā ā ā 1,956 ā ā ā ā ā 18,168 Commercial real estate: owner occupied ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 1-3 (Pass low risk) ā $ 19,261 ā $ 35,707 ā $ 11,362 ā $ 27,494 ā $ 23,433 ā $ 48,577 ā $ 2 ā $ 165,836 Internal Grade 4-7 (Pass normal risk) ā ā 73,334 ā ā 153,997 ā ā 219,995 ā ā 91,386 ā ā 75,445 ā ā 124,679 ā ā 31,734 ā ā 770,570 Internal Grade 8-11 (Pass high risk and watch) ā ā 6,627 ā ā 76,220 ā ā 64,306 ā ā 92,640 ā ā 33,586 ā ā 43,919 ā ā 15,103 ā ā 332,401 Internal Grade 12 (Special mention) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 48 ā ā ā ā ā 48 Internal Grade 13 (Substandard accrual) ā ā 3,466 ā ā 2,436 ā ā 3,980 ā ā 11,661 ā ā 9,105 ā ā 12,631 ā ā ā ā ā 43,279 Internal Grade 14 (Substandard non-accrual) ā ā 555 ā ā ā ā ā 81 ā ā 2,528 ā ā 1,041 ā ā 979 ā ā ā ā ā 5,184 Commercial and industrial ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 1-3 (Pass low risk) ā $ 20,004 ā $ 14,683 ā $ 7,762 ā $ 6,239 ā $ 4,817 ā $ 881 ā $ 92,106 ā $ 146,492 Internal Grade 4-7 (Pass normal risk) ā ā 36,169 ā ā 119,001 ā ā 77,750 ā ā 58,562 ā ā 25,450 ā ā 19,585 ā ā 374,251 ā ā 710,768 Internal Grade 8-11 (Pass high risk and watch) ā ā 40,361 ā ā 98,826 ā ā 64,810 ā ā 26,805 ā ā 41,982 ā ā 3,828 ā ā 200,425 ā ā 477,037 Internal Grade 12 (Special mention) ā ā 844 ā ā 1,372 ā ā 2,028 ā ā 492 ā ā 5,246 ā ā ā ā ā 13,306 ā ā 23,288 Internal Grade 13 (Substandard accrual) ā ā 28 ā ā 3,411 ā ā 8,785 ā ā 2,642 ā ā 6,596 ā ā 4,396 ā ā 16,475 ā ā 42,333 Internal Grade 14 (Substandard non-accrual) ā ā 30,145 ā ā 2,445 ā ā 1,506 ā ā 8,225 ā ā 231 ā ā 379 ā ā 4,190 ā ā 47,121 Construction and land development ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 1-3 (Pass low risk) ā $ 4,717 ā $ 21,250 ā $ 23,557 ā $ 282 ā $ 1,169 ā $ 337 ā $ 1,956 ā $ 53,268 Internal Grade 4-7 (Pass normal risk) ā ā 80,147 ā ā 237,466 ā ā 106,525 ā ā 38,310 ā ā 7,760 ā ā 5,038 ā ā 41,525 ā ā 516,771 Internal Grade 8-11 (Pass high risk and watch) ā ā 24,257 ā ā 164,164 ā ā 133,025 ā ā 22,711 ā ā 4,431 ā ā 2,119 ā ā 6,899 ā ā 357,606 Internal Grade 12 (Special mention) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Internal Grade 13 (Substandard accrual) ā ā ā ā ā 1,135 ā ā ā ā ā ā ā ā ā ā ā 7 ā ā ā ā ā 1,142 Internal Grade 14 (Substandard non-accrual) ā ā ā ā ā 458 ā ā ā ā ā ā ā ā 768 ā ā 176 ā ā ā ā ā 1,402 Construction and land development - individuals ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā FICO less than 620 ā $ ā ā $ ā ā $ ā ā $ ā ā $ ā ā $ ā ā $ ā ā $ ā FICO between 620 and 720 ā ā ā ā ā 4,394 ā ā 1,474 ā ā ā ā ā ā ā ā ā ā ā ā ā ā 5,868 FICO greater than 720 ā ā 3,171 ā ā 10,617 ā ā 5,184 ā ā ā ā ā ā ā ā ā ā ā ā ā ā 18,972 Substandard non-accrual ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Other (1) ā ā 144 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā 144 1-4 family residential ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā FICO less than 620 ā $ ā ā $ 738 ā $ 3,724 ā $ 231 ā $ 1,110 ā $ 40,354 ā $ 545 ā $ 46,702 FICO between 620 and 720 ā ā 1,252 ā ā 11,793 ā ā 15,878 ā ā 10,850 ā ā 13,739 ā ā 48,114 ā ā 1,585 ā ā 103,211 FICO greater than 720 ā ā 16,389 ā ā 84,807 ā ā 105,533 ā ā 54,505 ā ā 50,839 ā ā 106,744 ā ā 4,521 ā ā 423,338 Substandard non-accrual ā ā ā ā ā ā ā ā ā ā ā 101 ā ā 439 ā ā 10,059 ā ā ā ā ā 10,599 Other (1) ā ā 8,660 ā ā 58,480 ā ā 9,557 ā ā 2,238 ā ā 1,466 ā ā 10,152 ā ā 2,227 ā ā 92,780 Consumer ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā FICO less than 620 ā $ 318 ā $ 1,830 ā $ 312 ā $ 193 ā $ 59 ā $ 100 ā $ 373 ā $ 3,185 FICO between 620 and 720 ā ā 2,145 ā ā 5,082 ā ā 971 ā ā 919 ā ā 183 ā ā 152 ā ā 2,686 ā ā 12,138 FICO greater than 720 ā ā 2,722 ā ā 8,327 ā ā 3,694 ā ā 542 ā ā 500 ā ā 131 ā ā 5,062 ā ā 20,978 Substandard non-accrual ā ā ā ā ā ā ā ā ā ā ā 35 ā ā ā ā ā 25 ā ā 250 ā ā 310 Other (1) ā ā 2,346 ā ā 3,178 ā ā 673 ā ā 66 ā ā 56 ā ā ā ā ā 257 ā ā 6,576 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Total loans with credit quality measures ā $ 474,016 ā $ 1,484,836 ā $ 1,203,427 ā $ 756,104 ā $ 655,723 ā $ 767,491 ā $ 842,474 ā $ 6,184,071 Commercial and industrial (collateral maintenance) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 654,929 Broker-dealer (collateral maintenance) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 506,250 Total loans held for investment ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 7,345,250 (1) Loans classified in this category were assigned a FICO score based on various factors specific to the borrower for credit modeling purposes. |
Schedule of changes in the allowance for loan losses by portfolio segment | Changes in the allowance for credit losses for loans held for investment, distributed by portfolio segment, are shown below (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Balance, Transition Provision for ā Recoveries on Balance, ā ā ā Beginning of ā Adjustment ā (Reversal of) ā Loans ā Charged Off ā End of ā Three Months Ended March 31, 2020 ā Period ā CECL ā Credit Losses ā Charged Off ā Loans ā Period ā Commercial real estate ā $ 31,595 ā $ 8,073 ā $ 14,475 ā $ (214) ā $ 10 ā $ 53,939 ā Commercial and industrial ā 17,964 ā 3,193 ā 18,446 ā (1,440) ā 387 ā 38,550 ā Construction and land development ā 4,878 ā 577 ā 907 ā (2) ā ā ā 6,360 ā 1-4 family residential ā 6,386 ā (29) ā 201 ā (203) ā 10 ā 6,365 ā Consumer ā ā 265 ā ā 748 ā ā 246 ā ā (176) ā ā 120 ā ā 1,203 ā Broker-dealer ā ā 48 ā ā ā ā ā 274 ā ā ā ā ā ā ā ā 322 ā Total ā $ 61,136 ā $ 12,562 ā $ 34,549 ā $ (2,035) ā $ 527 ā $ 106,739 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Balance, Transition Provision for ā Recoveries on Balance, ā ā Beginning of ā Adjustment ā (Reversal of) ā Loans ā Charged Off ā End of ā Three Months Ended March 31, 2019 ā Period ā CECL ā Credit Losses ā Charged Off ā Loans ā Period ā Commercial real estate ā $ 27,100 ā $ ā ā $ (255) ā $ ā ā $ ā ā $ 26,845 ā Commercial and industrial ā 21,980 ā ā ā 458 ā (1,818) ā 648 ā 21,268 ā Construction and land development ā 6,061 ā ā ā (153) ā ā ā ā ā 5,908 ā 1-4 family residential ā 3,956 ā ā ā 389 ā (28) ā 14 ā 4,331 ā Consumer ā ā 267 ā ā ā ā ā 586 ā ā (454) ā ā 10 ā ā 409 ā Broker-dealer ā ā 122 ā ā ā ā ā (74) ā ā ā ā ā ā ā ā 48 ā Total ā $ 59,486 ā $ ā ā $ 951 ā $ (2,300) ā $ 672 ā $ 58,809 ā |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Mortgage Servicing Rights | |
Schedule of change in fair value of the Company's MSR, as included in other assets within the consolidated balance sheets | The following tables present the changes in fair value of the Companyās MSR asset, as included in other assets within the consolidated balance sheets, and other information related to the serviced portfolio (dollars in thousands). ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā 2020 ā 2019 Balance, beginning of period $ 55,504 ā $ 66,102 ā Additions 4,475 ā 1,861 ā Sales (18,650) ā ā ā Changes in fair value: ā ā ā ā ā ā Due to changes in model inputs or assumptions (1) (9,594) ā (5,033) ā Due to customer payoffs (1,436) ā (881) ā Balance, end of period $ 30,299 ā $ 62,049 ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 ā 2019 ā Mortgage loans serviced for others $ 3,500,731 ā $ 4,948,441 ā MSR asset as a percentage of serviced mortgage loans 0.87 % 1.12 % (1) Primarily represents normal customer payments, changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates and the refinement of other MSR model assumptions. ā |
Schedule of key assumptions used in measuring the fair value of the Company's MSR | ā ā ā ā ā ā ā ā ā March 31, ā ā December 31, ā ā ā 2020 ā 2019 ā Weighted average constant prepayment rate 16.98 % ā 13.16 % Weighted average discount rate 11.01 % ā 11.14 % Weighted average life (in years) 4.8 ā ā 6.0 ā |
Schedule of sensitivity analysis of fair value of the Company's MSR to certain key assumptions | A sensitivity analysis of the fair value of the Companyās MSR asset to certain key assumptions is presented in the following table (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 2019 ā Constant prepayment rate: ā ā ā ā ā ā ā Impact of 10% adverse change ā $ (2,152) ā $ (3,072) ā Impact of 20% adverse change ā (4,122) ā (5,943) ā Discount rate: ā ā ā ā ā ā ā Impact of 10% adverse change ā (1,014) ā (2,094) ā Impact of 20% adverse change ā (1,959) ā (4,028) ā |
Deposits (Tables)
Deposits (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Deposits | |
Summary of deposits | Deposits are summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 2019 ā Noninterest-bearing demand ā $ 2,865,192 ā $ 2,769,556 ā Interest-bearing: ā ā ā ā ā ā ā Demand accounts ā 1,893,125 ā 1,881,614 ā Brokered - demand ā 475,080 ā ā ā Money market ā 2,823,663 ā 2,641,116 ā Brokered - money market ā 30,006 ā 5,000 ā Savings ā 198,319 ā 199,076 ā Time ā 1,386,214 ā 1,505,375 ā Brokered - time ā 275,890 ā 30,477 ā ā ā $ 9,947,489 ā $ 9,032,214 ā |
Short-term Borrowings (Tables)
Short-term Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Short-term borrowings | |
Schedule of short-term borrowings | Short-term borrowings are summarized as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā 2020 2019 Federal funds purchased ā $ 199,095 ā $ 81,625 ā Securities sold under agreements to repurchase ā 698,433 ā 612,125 ā Federal Home Loan Bank ā 150,000 ā 600,000 ā Short-term bank loans ā ā 250,500 ā ā 111,000 ā Commercial paper ā 31,920 ā 19,260 ā ā ā $ 1,329,948 ā $ 1,424,010 ā |
Federal Funds Purchased and Securities Sold under Agreements to Repurchase | |
Short-term borrowings | |
Schedule of short-term borrowings | Information concerning federal funds purchased and securities sold under agreements to repurchase is shown in the following tables (dollars in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā ā ā ā 2020 ā 2019 ā ā ā Average balance during the period ā $ 732,954 ā $ 654,117 ā ā ā ā Average interest rate during the period ā 1.78 % ā 2.63 % ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā ā ā ā 2020 2019 ā ā ā ā Average interest rate at end of period ā 1.31 % ā 1.97 % ā ā ā Securities underlying the agreements at end of period: ā ā ā ā ā ā ā ā ā ā Carrying value ā $ 705,544 ā $ 612,515 ā ā ā ā Estimated fair value ā $ 753,129 ā $ 661,023 ā ā ā ā ā |
FHLB notes | |
Short-term borrowings | |
Schedule of short-term borrowings | Other information regarding FHLB short-term borrowings is shown in the following tables (dollars in thousands). ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā ā 2020 ā 2019 ā ā Average balance during the period ā $ 153,736 ā $ 4,167 ā ā Average interest rate during the period ā ā 1.63 % ā 2.65 % ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, ā ā December 31, ā ā ā ā ā 2020 ā ā 2019 ā ā Average interest rate at end of period ā ā 0.50 % ā 1.56 % ā |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Notes Payable | |
Schedule of notes payable | Notes payable consisted of the following (in thousands). ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā 2020 2019 Senior Notes due April 2025, net of discount of $1,191 and $1,232, respectively ā $ 148,809 ā $ 148,768 FHLB notes, including premium of $131 and $146, respectively, with maturities ranging from September 2020 to June 2030 ā 28,514 ā 28,848 Ventures Management lines of credit due May 2020 ā ā 66,719 ā ā 78,653 ā ā $ 244,042 ā $ 256,269 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Schedule of supplemental balance sheet information | Supplemental balance sheet information related to finance leases is as follows (in thousands). ā ā ā ā ā ā ā ā ā ā March 31, ā ā December 31, ā ā 2020 ā ā 2019 Finance leases: ā ā ā ā ā ā Premises and equipment ā $ 7,780 ā $ 7,780 Accumulated depreciation ā ā (4,326) ā ā (4,178) Premises and equipment, net ā $ 3,454 ā $ 3,602 |
Schedule of components of lease costs | The Company does not generally enter into leases which contain variable payments, other than due to the passage of time. The components of lease costs, including short-term lease costs, are as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā ā 2020 ā 2019 ā ā Operating lease cost ā $ 10,630 ā $ 10,531 ā ā Less operating lease and sublease income ā ā (618) ā ā (388) ā ā Net operating lease cost ā $ 10,012 ā $ 10,143 ā ā ā ā ā ā ā ā ā ā ā Finance lease cost: ā ā ā ā ā ā ā ā Amortization of ROU assets ā $ 147 ā $ 147 ā ā Interest on lease liabilities ā ā 144 ā ā 152 ā ā Total finance lease cost ā $ 291 ā $ 299 ā ā |
Schedule of supplemental cash flow information | Supplemental cash flow information related to leases is as follows (in thousands): ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā ā 2020 ā 2019 ā Cash paid for amounts included in the measurement of lease liabilities: ā ā ā ā ā ā ā Operating cash flows from operating leases ā $ 9,951 ā $ 8,220 ā Operating cash flows from finance leases ā ā 144 ā ā 152 ā Financing cash flows from finance leases ā ā 155 ā ā 144 ā Right-of-use assets obtained in exchange for new lease obligations: ā ā ā ā ā ā ā Operating leases ā $ 4,049 ā $ 3,591 ā Finance leases ā ā ā ā ā ā ā |
Schedule of lease terms and discount rates | Information regarding the lease terms and discount rates of the Companyās leases is as follows. ā ā ā ā ā ā ā March 31, 2020 ā Weighted Average ā ā ā Remaining Lease ā Weighted Average Lease Classification Term (Years) ā Discount Rate Operating 5.9 ā 5.19 % Finance 6.3 ā 4.79 % ā |
Schedule of maturities of lease liabilities under the Leasing Standard | Future minimum lease payments under the Leasing Standard as of March 31, 2020, under lease agreements that had commenced as of or subsequent to January 1, 2019, are presented below (in thousands). The table below includes future minimum lease payments of $3.5 million at March 31, 2020 for operating lease liabilities associated with discontinued operations. ā ā ā ā ā ā ā ā Operating Leases ā Finance Leases 2020 $ 26,439 ā $ 899 2021 ā 30,275 ā ā 1,212 2022 ā 24,261 ā ā 1,241 2023 ā 19,415 ā ā 1,280 2024 ā 12,740 ā ā 1,163 Thereafter ā 35,810 ā ā 2,297 Total minimum lease payments $ 148,940 ā $ 8,092 Less amount representing interest ā (22,090) ā ā (2,751) Lease liabilities $ 126,850 ā $ 5,341 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Schedule of roll-forward of claims activity for loans put-back to the mortgage origination segment | The following tables provide for a rollforward of claims activity for loans put-back to the mortgage origination segment based upon an alleged breach of a representation or warranty with respect to a loan sold and related indemnification liability reserve activity (in thousands). ā ā ā ā ā ā ā ā ā ā ā Representation and Warranty Specific Claims ā ā Activity - Origination Loan Balance ā ā Three Months Ended March 31, ā 2020 2019 Balance, beginning of period ā $ 32,144 ā $ 33,784 ā Claims made ā 6,071 ā 3,182 ā Claims resolved with no payment ā (984) ā (5,687) ā Repurchases ā (2,330) ā (1,167) ā Indemnification payments ā (122) ā ā ā Balance, end of period ā $ 34,779 ā $ 30,112 ā ā ā ā ā ā ā ā ā ā ā Indemnification Liability Reserve Activity ā ā Three Months Ended March 31, ā ā 2020 2019 Balance, beginning of period ā $ 11,776 ā $ 10,701 ā Additions for new sales ā 725 ā 489 ā Repurchases ā (271) ā (82) ā Early payment defaults ā (39) ā (142) ā Indemnification payments ā (43) ā (3) ā Change in reserves for loans sold in prior years ā ā ā (242) ā Balance, end of period ā $ 12,148 ā $ 10,721 ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā ā 2020 ā 2019 Reserve for Indemnification Liability: ā ā ā ā ā ā ā Specific claims ā $ 1,186 ā $ 1,071 ā Incurred but not reported claims ā 10,962 ā 10,705 ā Total ā $ 12,148 ā $ 11,776 ā ā |
Financial Instruments with Of_2
Financial Instruments with Off-Balance Sheet Risk (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Financial Instruments with Off-Balance Sheet Risk | |
Schedule of changes in the allowance for credit losses for loans with off-balance sheet credit exposures | Changes in the allowance for credit losses for loans with off-balance sheet credit exposures are shown below (in thousands). ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā 2020 2019 Balance, beginning of period ā $ 2,075 ā $ 2,366 Transition adjustment CECL accounting standard ā ā 3,837 ā ā ā Expense (reversal of expense) ā ā 1,297 ā ā (111) Balance, end of period ā $ 7,209 ā $ 2,255 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stock-Based Compensation | |
Schedule of nonvested RSU activity | The following table summarizes information about nonvested RSU activity for the three months ended March 31, 2020 (shares in thousands). ā ā ā ā ā ā ā ā ā ā ā RSUs ā ā ā ā ā Weighted ā ā ā ā ā Average ā ā ā ā ā Grant Date ā Outstanding Fair Value Balance, December 31, 2019 ā 1,437 ā $ 22.64 ā Granted ā 535 ā $ 21.91 ā Vested/Released ā (179) ā $ 28.43 ā Forfeited ā (6) ā $ 22.94 Balance, March 31, 2020 ā 1,787 ā $ 21.84 ā |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Regulatory Matters | |
Schedule of comparison of the Plain Capital's and Hilltop's consolidated actual capital amounts and ratios to the regulatory minimum requirements and the Bank's regulatory minimum capital requirements and the Bank's regulatory minimum capital requirements needed to qualify as a well-capitalized institution without giving effect to the final Basel III capital rules adopted by the Federal Reserve Board | The following tables show PlainsCapitalās and Hilltopās actual capital amounts and ratios in accordance with Basel III compared to the regulatory minimum capital requirements including conservation buffer ratio in effect at the end of the period (dollars in thousands). Based on actual capital amounts and ratios shown in the following table, PlainsCapitalās ratios place it in the āwell capitalizedā (as defined) capital category under regulatory requirements. Actual capital amounts and ratios as of March 31, 2020 reflect PlainsCapitalās and Hilltopās decision to elect the transition option as recently issued by the federal banking regulatory agencies in March 2020 that permits banking institutions to mitigate the estimated cumulative regulatory capital effects from CECL over a five-year transitionary period. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Minimum Capital ā ā ā ā ā ā ā ā ā Requirements ā ā ā ā ā ā ā ā ā ā Including ā To Be Well ā ā Actual ā Conservation Buffer ā Capitalized ā Amount Ratio Ratio Ratio March 31, 2020 ā ā ā ā ā ā ā ā ā ā Tier 1 capital (to average assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā $ 1,263,998 12.06 % 4.0 % 5.0 % Hilltop ā 1,863,770 13.03 % 4.0 % N/A ā Common equity Tier 1 capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā ā 1,263,998 13.33 % 7.0 % 6.5 % Hilltop ā ā 1,815,640 15.96 % 7.0 % N/A ā Tier 1 capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā 1,263,998 13.33 % 8.5 % 8.0 % Hilltop ā 1,863,770 16.38 % 8.5 % N/A ā Total capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā 1,352,722 14.26 % 10.5 % 10.0 % Hilltop ā 1,934,982 17.00 % 10.5 % N/A ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Minimum Capital ā ā ā ā ā ā ā ā ā Requirements ā ā ā ā ā ā ā ā ā ā Including ā To Be Well ā ā Actual ā Conservation Buffer ā Capitalized ā Amount Ratio Ratio Ratio December 31, 2019 ā ā ā ā ā ā ā ā ā ā Tier 1 capital (to average assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā $ 1,236,289 11.61 % 4.0 % 5.0 % Hilltop ā 1,822,970 12.71 % 4.0 % N/A ā Common equity Tier 1 capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā ā 1,236,289 13.45 % 7.0 % 6.5 % Hilltop ā ā 1,776,381 16.70 % 7.0 % N/A ā Tier 1 capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā 1,236,289 13.45 % 8.5 % 8.0 % Hilltop ā 1,822,970 17.13 % 8.5 % N/A ā Total capital (to risk-weighted assets): ā ā ā ā ā ā ā ā ā ā PlainsCapital ā 1,299,453 14.13 % 10.5 % 10.0 % Hilltop ā 1,867,771 17.55 % 10.5 % N/A ā ā |
Schedule of net capital position | At March 31, 2020, the net capital position of each of the Hilltop Broker-Dealers was as follows (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā HTS ā ā ā Hilltop ā Independent ā ā Securities Network Net capital ā $ 245,293 ā $ 3,179 ā Less: required net capital ā ā 9,502 ā ā 250 ā Excess net capital ā $ 235,791 ā $ 2,929 ā ā ā ā ā ā ā ā ā Net capital as a percentage of aggregate debit items ā ā 51.6 % ā ā ā Net capital in excess of 5% aggregate debit items ā $ 221,539 ā ā ā ā ā |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Financial Instruments | |
Schedule of changes in fair value of derivatives | Changes in the fair value of derivatives are presented in the following table (in thousands). ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā ā 2020 2019 Increase (decrease) in fair value of derivatives during period: ā ā ā ā ā ā PrimeLending ā $ 19,876 ā $ 18,187 Hilltop Broker-Dealers ā ā (8,141) ā ā (1,807) Bank ā ā (135) ā ā (61) |
Schedule of derivative positions | Derivative positions are presented in the following table (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā March 31, 2020 ā December 31, 2019 ā Notional Estimated Notional Estimated ā ā Amount ā Fair Value ā Amount ā Fair Value Derivative instruments (not designated as hedges): ā ā ā ā ā ā ā ā ā ā ā ā IRLCs ā $ 3,063,446 ā $ 93,412 ā $ 914,526 ā $ 18,222 Customer-based written options ā 31,200 ā ā ā 31,200 ā ā Customer-based purchased options ā 31,200 ā ā ā 31,200 ā ā Commitments to purchase MBSs ā 5,431,558 ā 65,666 ā 3,346,946 ā 3,321 Commitments to sell MBSs ā ā 9,698,119 ā (133,762) ā 5,988,198 ā (5,904) Interest rate swaps ā ā 41,455 ā (192) ā 15,012 ā (178) U.S. Treasury bond futures and options (1) ā ā 66,100 ā ā ā 283,500 ā ā Eurodollar futures (1) ā ā 18,000 ā ā ā 934,000 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Derivative instruments (designated as hedges): ā ā ā ā ā ā ā ā ā ā ā ā Interest rate swaps designated as cash flow hedges ā $ 105,000 ā $ (3,605) ā $ 50,000 ā $ 528 (1) Changes in the fair value of these contracts are settled daily with the respective counterparties of PrimeLending and the Hilltop Broker-Dealers. |
Balance Sheet Offsetting (Table
Balance Sheet Offsetting (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Balance Sheet Offsetting | |
Schedule of the assets subject to an enforceable master netting arrangement or repurchase agreements | The following tables present the assets and liabilities subject to enforceable master netting arrangements, repurchase agreements, or similar agreements with offsetting rights (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross Amounts Not Offset in ā ā ā ā ā ā ā ā ā ā ā Net Amounts ā the Balance Sheet ā ā ā ā Gross Amounts Gross Amounts of Assets ā Cash ā ā ā of Recognized ā Offset in the ā Presented in the ā Financial ā Collateral ā Net ā ā Assets ā Balance Sheet ā Balance Sheet ā Instruments ā Pledged ā Amount March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities borrowed: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā $ 1,275,774 ā $ ā ā $ 1,275,774 ā $ (1,181,948) ā $ ā ā $ 93,826 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Interest rate swaps: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 9 ā ā ā ā ā 9 ā ā (9) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Reverse repurchase agreements: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 23,356 ā ā ā ā ā 23,356 ā ā (23,050) ā ā ā ā ā 306 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Forward MBS derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 65,666 ā ā ā 65,666 ā (65,666) ā ā ā ā ā ā $ 1,364,805 ā $ ā ā $ 1,364,805 ā $ (1,270,673) ā $ ā ā $ 94,132 December 31, 2019 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities borrowed: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā $ 1,634,782 ā $ ā ā $ 1,634,782 ā $ (1,586,820) ā $ ā ā $ 47,962 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Reverse repurchase agreements: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 59,031 ā ā ā ā ā 59,031 ā ā (58,619) ā ā ā ā ā 412 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Forward MBS derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 3,640 ā ā ā ā ā 3,640 ā ā (3,640) ā ā ā ā ā ā ā ā $ 1,697,453 ā $ ā ā $ 1,697,453 ā $ (1,649,079) ā $ ā ā $ 48,374 |
Schedule of the liabilities subject to an enforceable master netting arrangement or repurchase agreements | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross Amounts Not Offset in ā ā ā ā ā ā ā ā ā ā ā Net Amounts ā the Balance Sheet ā ā ā ā Gross Amounts Gross Amounts of Liabilities ā Cash ā ā ā of Recognized ā Offset in the ā Presented in the ā Financial ā Collateral ā Net ā ā Liabilities ā Balance Sheet ā Balance Sheet ā Instruments ā Pledged ā Amount March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities loaned: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā $ 1,167,559 ā $ ā ā $ 1,167,559 ā $ (1,075,906) ā $ ā ā $ 91,653 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Interest rate swaps: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 201 ā ā ā 201 ā ā ā ā ā 201 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Repurchase agreements: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 690,178 ā ā ā 690,178 ā (690,178) ā ā ā ā Customer counterparties ā 8,255 ā ā ā 8,255 ā (8,255) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Forward MBS derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 136,640 ā (2,878) ā 133,762 ā (74,608) ā ā ā 59,154 ā ā $ 2,002,833 ā $ (2,878) ā $ 1,999,955 ā $ (1,848,947) ā $ ā ā $ 151,008 December 31, 2019 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities loaned: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā $ 1,555,964 ā $ ā ā $ 1,555,964 ā $ (1,509,933) ā $ ā ā $ 46,031 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Interest rate swaps: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā ā 178 ā ā ā 178 ā (112) ā ā ā 66 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Repurchase agreements: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 586,651 ā ā ā 586,651 ā (586,651) ā ā ā ā Customer counterparties ā ā 25,474 ā ā ā 25,474 ā (25,474) ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Forward MBS derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Institutional counterparties ā 6,890 ā (667) ā 6,223 ā (2,384) ā ā ā 3,839 ā ā $ 2,175,157 ā $ (667) ā $ 2,174,490 ā $ (2,124,554) ā $ ā ā $ 49,936 |
Schedule of contractual maturities of repurchase agreements and secured borrowing transactions | The following tables present the remaining contractual maturities of repurchase agreement and securities lending transactions accounted for as secured borrowings (in thousands). The Company had no repurchase-to-maturity transactions outstanding at both March 31, 2020 and December 31, 2019. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Remaining Contractual Maturities ā ā Overnight and ā ā ā ā ā Greater Than ā ā ā March 31, 2020 ā Continuous ā Up to 30 Days ā 30-90 Days ā 90 Days ā Total Repurchase agreement transactions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā U.S. Treasury and agency securities ā $ 16,929 ā $ ā ā $ ā ā $ ā ā $ 16,929 Asset-backed securities ā ā 323,444 ā ā 358,060 ā ā ā ā ā ā ā ā 681,504 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities lending transactions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Corporate securities ā ā 113 ā ā ā ā ā ā ā ā ā ā ā 113 Equity securities ā ā 1,167,446 ā ā ā ā ā ā ā ā ā ā ā 1,167,446 Total ā $ 1,507,932 ā $ 358,060 ā $ ā ā $ ā ā $ 1,865,992 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross amount of recognized liabilities for repurchase agreement and securities lending transactions in offsetting disclosure above ā ā ā ā $ 1,865,992 Amount related to agreements not included in offsetting disclosure above ā ā ā ā ā ā ā ā ā ā ā ā ā $ ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Remaining Contractual Maturities ā ā Overnight and ā ā ā ā ā Greater Than ā ā ā December 31, 2019 ā Continuous ā Up to 30 Days ā 30-90 Days ā 90 Days ā Total Repurchase agreement transactions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā U.S. Treasury and agency securities ā $ 45,950 ā $ ā ā $ ā ā $ ā ā $ 45,950 Asset-backed securities ā ā 257,396 ā ā 12,892 ā ā 295,887 ā ā ā ā ā 566,175 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Securities lending transactions: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Corporate securities ā ā 120 ā ā ā ā ā ā ā ā ā ā ā 120 Equity securities ā ā 1,555,844 ā ā ā ā ā ā ā ā ā ā ā 1,555,844 Total ā $ 1,859,310 ā $ 12,892 ā $ 295,887 ā $ ā ā $ 2,168,089 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross amount of recognized liabilities for repurchase agreement and securities lending transactions in offsetting disclosure above ā ā ā ā $ 2,168,089 Amount related to agreements not included in offsetting disclosure above ā ā ā ā ā ā ā ā ā ā ā ā ā $ ā |
Broker-Dealer and Clearing Or_2
Broker-Dealer and Clearing Organization Receivables and Payables (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Broker-Dealer and Clearing Organization Receivables and Payables | |
Schedule of broker-dealer and clearing organization receivables and payables | ā Broker-dealer and clearing organization receivables and payables consisted of the following (in thousands). ā ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, ā 2020 2019 Receivables: ā ā ā ā ā ā ā Securities borrowed ā $ 1,275,774 ā $ 1,634,782 ā Securities failed to deliver ā 66,342 ā 18,726 ā Trades in process of settlement ā 485,330 ā 104,922 ā Other ā 11,343 ā 21,850 ā ā ā $ 1,838,789 ā $ 1,780,280 ā Payables: ā ā ā ā ā ā ā Securities loaned ā $ 1,167,559 ā $ 1,555,964 ā Correspondents ā 23,376 ā 37,036 ā Securities failed to receive ā 65,407 ā 8,568 ā Other ā 2,839 ā 3,950 ā ā ā $ 1,259,181 ā $ 1,605,518 ā |
Segment and Related Informati_2
Segment and Related Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment and Related Information | |
Schedule of information about the segment revenues, operating results, goodwill, and assets of entity's reportable segments | The following tables present certain information about reportable business segment revenues, operating results, goodwill and assets (in thousands). ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Mortgage ā ā All Other and Hilltop Three Months Ended March 31, 2020 ā Banking ā Broker-Dealer ā Origination ā Insurance ā Corporate ā Eliminations ā Consolidated Net interest income (expense) ā $ 93,923 ā $ 13,173 ā $ 368 ā $ ā ā $ (1,656) ā $ 4,528 ā $ 110,336 ā Provision for credit losses ā 34,275 ā ā 274 ā ā ā ā ā ā ā ā ā ā ā ā ā 34,549 ā Noninterest income ā 8,771 ā ā 86,209 ā ā 178,968 ā ā ā ā ā 2,309 ā ā (4,544) ā 271,713 ā Noninterest expense ā 56,967 ā 80,939 ā 139,552 ā ā ā ā ā 4,853 ā ā (410) ā 281,901 ā Income (loss) before taxes from continuing operations ā ā 11,452 ā ā 18,169 ā ā 39,784 ā ā ā ā ā (4,200) ā ā 394 ā ā 65,599 ā Income before taxes from discontinued operations ā ā ā ā ā ā ā ā ā ā ā 4,014 ā ā ā ā ā ā ā ā 4,014 ā ā ā $ 11,452 ā $ 18,169 ā $ 39,784 ā $ 4,014 ā $ (4,200) ā $ 394 ā $ 69,613 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Mortgage ā ā All Other and Hilltop Three Months Ended March 31, 2019 ā Banking ā Broker-Dealer ā Origination ā Insurance ā Corporate ā Eliminations ā Consolidated Net interest income (expense) ā $ 92,690 ā $ 12,850 ā $ (467) ā $ ā ā $ (1,330) ā $ 4,546 ā $ 108,289 ā Provision for (reversal of) credit losses ā 1,025 ā ā (74) ā ā ā ā ā ā ā ā ā ā ā ā ā 951 ā Noninterest income ā 10,621 ā ā 91,307 ā ā 118,033 ā ā ā ā ā 538 ā ā (4,536) ā 215,963 ā Noninterest expense ā 60,726 ā 87,807 ā 114,677 ā ā ā ā ā 15,562 ā ā (25) ā 278,747 ā Income (loss) before taxes from continuing operations ā ā 41,560 ā ā 16,424 ā ā 2,889 ā ā ā ā ā (16,354) ā ā 35 ā ā 44,554 ā Income before taxes from discontinued operations ā ā ā ā ā ā ā ā ā ā ā 6,809 ā ā ā ā ā ā ā ā 6,809 ā ā ā $ 41,560 ā $ 16,424 ā $ 2,889 ā $ 6,809 ā $ (16,354) ā $ 35 ā $ 51,363 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Mortgage ā ā All Other and Hilltop ā ā Banking ā Broker-Dealer ā Origination ā Insurance ā Corporate ā Eliminations ā Consolidated March 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Goodwill ā $ 247,368 ā $ 7,008 ā $ 13,071 ā $ ā ā $ ā ā $ ā ā $ 267,447 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Assets held for sale ā $ ā ā $ ā ā $ ā ā $ 249,758 ā $ ā ā $ ā ā $ 249,758 ā Total assets ā $ 11,616,994 ā $ 3,406,300 ā $ 2,607,131 ā $ 249,758 ā $ 2,448,412 ā $ (4,622,345) ā $ 15,706,250 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2019 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Goodwill ā $ 247,368 ā $ 7,008 ā $ 13,071 ā $ ā ā $ ā ā $ ā ā $ 267,447 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Assets held for sale ā $ ā ā $ ā ā $ ā ā $ 248,429 ā $ ā ā $ ā ā $ 248,429 ā Total assets ā $ 11,147,344 ā $ 3,457,068 ā $ 2,357,415 ā $ 248,429 ā $ 2,393,604 ā $ (4,431,412) ā $ 15,172,448 ā |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per Common Share | |
Schedule of the computation of basic and diluted earnings per common share | ā The following table presents the computation of basic and diluted earnings per common share (in thousands, except per share data). ā ā ā ā ā ā ā ā ā ā ā Three Months Ended March 31, ā 2020 2019 Basic earnings per share: ā ā ā ā ā ā ā Income from continuing operations ā $ 46,485 ā $ 33,426 ā Income from discontinued operations ā ā 3,151 ā ā 5,360 ā Income attributable to Hilltop ā $ 49,636 ā $ 38,786 ā ā ā ā ā ā ā ā ā Weighted average shares outstanding - basic ā 90,509 ā 93,669 ā ā ā ā ā ā ā ā ā Basic earnings per common share: ā ā ā ā ā ā ā Income from continuing operations ā $ 0.51 ā $ 0.36 ā Income from discontinued operations ā ā 0.04 ā ā 0.05 ā ā ā $ 0.55 ā $ 0.41 ā ā ā ā ā ā ā ā ā Diluted earnings per share: ā ā ā ā ā ā ā Income from continuing operations ā $ 46,485 ā $ 33,426 ā Income from discontinued operations ā ā 3,151 ā ā 5,360 ā Income attributable to Hilltop ā $ 49,636 ā $ 38,786 ā ā ā ā ā ā ā ā ā Weighted average shares outstanding - basic ā 90,509 ā 93,669 ā Effect of potentially dilutive securities ā 41 ā ā ā Weighted average shares outstanding - diluted ā 90,550 ā 93,669 ā ā ā ā ā ā ā ā ā Diluted earnings per common share: ā ā ā ā ā ā ā Income from continuing operations ā $ 0.51 ā $ 0.36 ā Income from discontinued operations ā ā 0.04 ā ā 0.05 ā ā ā $ 0.55 ā $ 0.41 ā |
Summary of Significant Accoun_3
Summary of Significant Accounting and Reporting Policies - Basis of Presentation, Ownership (Details) $ in Millions | Jan. 30, 2020USD ($) | Mar. 31, 2020item |
Basis of Presentation | ||
Number of primary business units | item | 3 | |
Appraisal on file period to determine if reserve is required on 1-4 family residential loans | 2 years | |
Period Delinquent Consumer Loans Written Off | 90 days | |
PPC | ||
Basis of Presentation | ||
Ownership percentage | 100.00% | |
Securities Holdings | ||
Basis of Presentation | ||
Ownership percentage | 100.00% | |
NLC | ||
Basis of Presentation | ||
Aggregate purchase price, cash | $ | $ 150 | |
Ownership percentage | 100.00% | |
HTH Hillcrest Project LLC | ||
Basis of Presentation | ||
Membership ownership percentage | 100.00% | |
Hilltop Investments I, LLC | ||
Basis of Presentation | ||
Membership ownership percentage | 100.00% | |
PPC | PlainsCapital (the Bank) | ||
Basis of Presentation | ||
Ownership percentage | 100.00% | |
PPC | Hilltop Opportunity Partners LLC | ||
Basis of Presentation | ||
Membership ownership percentage | 100.00% | |
PPC | PCC Statutory Trusts | ||
Basis of Presentation | ||
Ownership percentage | 100.00% | |
PlainsCapital (the Bank) | Prime Lending | ||
Basis of Presentation | ||
Ownership percentage | 100.00% | |
Prime Lending | Ventures Management | ||
Basis of Presentation | ||
Membership ownership percentage | 100.00% | |
Hilltop Investments I, LLC | Hillcrest Land LLC | ||
Basis of Presentation | ||
Membership ownership percentage | 50.00% |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Recent Accounting Pronouncements | ||
Retained Earnings (Accumulated Deficit) | $ 676,946 | $ 644,860 |
ASU 2016-13 | ||
Recent Accounting Pronouncements | ||
Allowance for credit loss | 83,600 | |
ASU 2016-13 | Restatement | ||
Recent Accounting Pronouncements | ||
Retained Earnings (Accumulated Deficit) | $ (5,700) |
Discontinued Operations - Balan
Discontinued Operations - Balance Sheets (Details) - USD ($) $ in Thousands | Jan. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Discontinued Operations | |||
Total assets held-for-sale | $ 249,758 | $ 248,429 | |
Total liabilities held-for-sale | 139,730 | 140,674 | |
Discontinued Operations, Held-for-sale | NLC | |||
Discontinued Operations | |||
Aggregate purchase price, cash | $ 150,000 | ||
Cash and due from banks | 58,103 | 51,333 | |
Available for sale, at fair value | 86,101 | 86,899 | |
Equity, at fair value | 15,440 | 19,841 | |
Total securities | 101,541 | 106,740 | |
Premises and equipment, net | 9,058 | 9,607 | |
Operating lease right-of-use assets | 2,674 | 2,739 | |
Other assets | 50,966 | 50,533 | |
Goodwill | 23,988 | 23,988 | |
Other intangible assets, net | 3,428 | 3,489 | |
Total assets held-for-sale | 249,758 | 248,429 | |
Note payable | 27,500 | 27,500 | |
Operating lease liabilities | 2,727 | 2,783 | |
Other liabilities | 109,503 | 110,391 | |
Total liabilities held-for-sale | $ 139,730 | $ 140,674 |
Discontinued Operations - Opera
Discontinued Operations - Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Discontinued Operations | ||
Income from discontinued operations before income taxes | $ 4,014 | $ 6,809 |
Income from discontinued operations, net of income taxes | 3,151 | 5,360 |
Discontinued Operations, Held-for-sale | NLC | ||
Discontinued Operations | ||
Securities: Taxable | 938 | 960 |
Other | 67 | 142 |
Total interest income | 1,005 | 1,102 |
Interest expense - notes payable | 406 | 460 |
Net insurance premiums earned | 32,637 | 33,203 |
Other | (2,246) | 3,302 |
Total noninterest income | 30,391 | 36,505 |
Employees' compensation and benefits | 2,777 | 3,202 |
Occupancy and equipment, net | 247 | 244 |
Professional services | 8,527 | 8,833 |
Loss and loss adjustment expenses | 12,949 | 14,926 |
Other | 2,476 | 3,133 |
Total noninterest expense | 26,976 | 30,338 |
Income from discontinued operations before income taxes | 4,014 | 6,809 |
Income tax expense | 863 | 1,449 |
Income from discontinued operations, net of income taxes | $ 3,151 | $ 5,360 |
Discontinued Operations - Secur
Discontinued Operations - Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Discontinued Operations | |||
Available-for-sale unrealized gains | $ 28,219 | $ 12,702 | |
Available-for-sale unrealized losses | (1,057) | (1,026) | |
Recognized net gain (loss) on equity securities | (100) | $ (100) | |
Discontinued Operations, Held-for-sale | NLC | |||
Discontinued Operations | |||
Available-for-sale unrealized gains | 3,500 | 2,500 | |
Available-for-sale unrealized losses | 0 | ||
Unrealized net (losses) gains from equity securities | (3,300) | 1,100 | |
Recognized net gain (loss) on equity securities | (4,400) | $ 1,200 | |
Deposit with various state insurance departments | 9,500 | $ 9,300 | |
Note payable held for sale | $ 27,500 |
Discontinued Operations - Insur
Discontinued Operations - Insurance Subsidiaries (Details) - Discontinued Operations, Held-for-sale - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
NLIC | |||
Insurance | |||
Statutory capital and surplus | $ 73,892 | $ 70,112 | |
Statutory net income (loss) | 6,527 | $ 3,417 | |
ASIC | |||
Insurance | |||
Statutory capital and surplus | 17,999 | $ 19,201 | |
Statutory net income (loss) | $ (185) | $ 417 |
Discontinued Operations - Reser
Discontinued Operations - Reserve (Details) - Discontinued Operations, Held-for-sale - NLC - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Information regarding of the reserve for unpaid losses and loss adjustment expenses | ||
Balance, beginning of period | $ 15,342 | $ 20,552 |
Less reinsurance recoverables | (1,005) | (3,214) |
Net balance, beginning of period | 14,337 | 17,338 |
Incurred related to: | ||
Current year | 11,657 | 13,993 |
Prior periods | 1,474 | 935 |
Total incurred | 13,131 | 14,928 |
Payments related to: | ||
Current year | (7,377) | (7,029) |
Prior periods | (6,329) | (7,152) |
Total payments | (13,706) | (14,181) |
Net balance, end of period | 13,762 | 18,085 |
Plus reinsurance recoverables | 746 | 2,506 |
Balance, end of period | $ 14,508 | $ 20,591 |
Discontinued Operations - Claim
Discontinued Operations - Claims Activity (Details) - Discontinued Operations, Held-for-sale - NLC $ in Thousands | Mar. 31, 2020USD ($) |
Incurred losses and allocated loss adjustment expenses, net of reinsurance | |
Total incurred | $ 245,611 |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | |
Total paid | 233,073 |
All outstanding reserves prior to 2017, net of reinsurance | 466 |
Reserve for unpaid losses and allocated loss adjustment expenses, net of reinsurance | 13,004 |
2017 | |
Incurred losses and allocated loss adjustment expenses, net of reinsurance | |
2017 | 87,899 |
2018 | 88,025 |
2019 | 87,534 |
2020 | 87,568 |
Total of incurred but not reported reserves plus expected development on reported claims | $ 216 |
Cumulative Number of Reported Claims | 20,174 |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | |
2017 | $ 77,675 |
2018 | 86,319 |
2019 | 87,203 |
2020 | 87,291 |
2018 | |
Incurred losses and allocated loss adjustment expenses, net of reinsurance | |
2018 | 75,217 |
2019 | 73,261 |
2020 | 73,314 |
Total of incurred but not reported reserves plus expected development on reported claims | $ 927 |
Cumulative Number of Reported Claims | 14,713 |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | |
2018 | $ 61,922 |
2019 | 70,958 |
2020 | 72,255 |
2019 | |
Incurred losses and allocated loss adjustment expenses, net of reinsurance | |
2019 | 71,687 |
2020 | 73,072 |
Total of incurred but not reported reserves plus expected development on reported claims | $ 4,009 |
Cumulative Number of Reported Claims | 13,798 |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | |
2019 | $ 55,014 |
2020 | 66,150 |
2020 | |
Incurred losses and allocated loss adjustment expenses, net of reinsurance | |
2020 | 11,657 |
Total of incurred but not reported reserves plus expected development on reported claims | $ 1,565 |
Cumulative Number of Reported Claims | 2,317 |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | |
2020 | $ 7,377 |
Discontinued Operations - Effec
Discontinued Operations - Effects of Reinsurance (Details) - NLC - Discontinued Operations, Held-for-sale - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Written | ||
Premiums from direct business | $ 29,980 | $ 30,790 |
Reinsurance assumed | 2,952 | 3,129 |
Reinsurance ceded | (1,353) | (1,725) |
Net premiums | 31,579 | 32,194 |
Earned | ||
Premiums from direct business | 30,746 | 31,737 |
Reinsurance assumed | 3,244 | 3,191 |
Reinsurance ceded | (1,353) | (1,725) |
Net premiums | 32,637 | 33,203 |
Effect of reinsurance on incurred losses | ||
Reinsurance Recoverables, Allowance | 0 | |
Loss and LAE incurred | 12,763 | 14,985 |
Reinsurance recoverables | 186 | (59) |
Net loss and LAE incurred | 12,949 | $ 14,926 |
Other Assets | ||
Effect of reinsurance on incurred losses | ||
Total reinsurance recoverables | $ 1,500 |
Discontinued Operations - Cover
Discontinued Operations - Coverage (Details) - Discontinued Operations, Held-for-sale $ in Millions | Jul. 01, 2019 | Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($) |
NLC | Catastrophic Coverage | |||
Reinsurance activity | |||
Renewal period of reinsurance contract | 1 year | ||
Number of layers of protection under reinsurance | item | 3 | ||
Aggregate coverage in excess of retention for per event retention and sub-catastrophic event | $ 10 | ||
Retention amount per event | $ 1 | ||
Participation retained (as a percent) | 0.00% | 37.50% | |
NLC | Catastrophic Coverage | Maximum | |||
Reinsurance activity | |||
Reinsurance in excess of retention | $ 8 | ||
NLC | Catastrophic Coverage | Sub-catastrophic | |||
Reinsurance activity | |||
Retention amount | $ 15 | ||
NLC | Catastrophic Coverage | First Layer of Protection | |||
Reinsurance activity | |||
Retention amount | 8 | ||
Reinsurance in excess of retention | 12 | ||
NLC | Catastrophic Coverage | Second Layer of Protection | |||
Reinsurance activity | |||
Retention amount | 20 | ||
Reinsurance in excess of retention | 25 | ||
NLC | Catastrophic Coverage | Third Layer of Protection | |||
Reinsurance activity | |||
Retention amount | 45 | ||
Reinsurance in excess of retention | 50 | ||
NLIC | Catastrophic Coverage | |||
Reinsurance activity | |||
Retention amount | 8 | ||
ASIC | Catastrophic Coverage | |||
Reinsurance activity | |||
Retention amount | 2 | ||
ASIC | Underlying Coverage | |||
Reinsurance activity | |||
Retention amount | 2 | ||
Reinsurance in excess of retention | $ 6 |
Fair Value Measurements - FV Op
Fair Value Measurements - FV Option (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value Measurements | ||
Mortgage loans held for sale, fair value | $ 2,090 | $ 1,940 |
Mortgage loans held for sale, unpaid principal balance | $ 2,000 | $ 1,880 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial assets: | ||
Trading securities | $ 393,581 | $ 689,576 |
Available for sale, at fair value (amortized cost of $0 and $984,211, respectively) | 972,318 | 911,493 |
Equity securities | 107 | 166 |
Financial liabilities: | ||
Securities sold, not yet purchased | 22,768 | 43,817 |
Recurring | ||
Financial assets: | ||
Trading securities | 393,581 | 689,576 |
Available for sale, at fair value (amortized cost of $0 and $984,211, respectively) | 972,318 | 911,493 |
Equity securities | 107 | 166 |
Loans held for sale | 2,089,969 | 1,935,713 |
Derivative assets | 192,729 | 33,129 |
MSR asset | 30,299 | 55,504 |
Financial liabilities: | ||
Securities sold, not yet purchased | 22,768 | 43,817 |
Derivative liabilities | 171,210 | 17,140 |
Recurring | Level 1 | ||
Financial assets: | ||
Trading securities | 1,485 | |
Equity securities | 107 | 166 |
Financial liabilities: | ||
Securities sold, not yet purchased | 11,333 | 29,080 |
Recurring | Level 2 | ||
Financial assets: | ||
Trading securities | 392,096 | 689,576 |
Available for sale, at fair value (amortized cost of $0 and $984,211, respectively) | 972,318 | 911,493 |
Loans held for sale | 2,010,381 | 1,868,518 |
Derivative assets | 192,729 | 33,129 |
Financial liabilities: | ||
Securities sold, not yet purchased | 11,435 | 14,737 |
Derivative liabilities | 171,210 | 17,140 |
Recurring | Level 3 | ||
Financial assets: | ||
Loans held for sale | 79,588 | 67,195 |
MSR asset | $ 30,299 | $ 55,504 |
Fair Value Measurements - Roll
Fair Value Measurements - Roll Forward, Level 3 (Details) - Level 3 - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Rollforward for financial instruments measured at fair value using Level 3 inputs | ||
Asset balance, beginning of period | $ 122,699 | $ 116,566 |
Purchases/Additions | 18,760 | 17,288 |
Sales/Reductions | (22,825) | (6,976) |
Transfers into Level 3 | 6,220 | 1,037 |
Total gains or losses (realized or unrealized): | ||
Included in Net Income | (14,967) | (8,022) |
Asset balance, end of period | 109,887 | 119,893 |
Loans Held for Sale | ||
Rollforward for financial instruments measured at fair value using Level 3 inputs | ||
Asset balance, beginning of period | 67,195 | 50,464 |
Purchases/Additions | 14,285 | 15,427 |
Sales/Reductions | (4,175) | (6,976) |
Transfers into Level 3 | 6,220 | 1,037 |
Total gains or losses (realized or unrealized): | ||
Included in Net Income | (3,937) | (2,108) |
Asset balance, end of period | 79,588 | 57,844 |
MSR | ||
Rollforward for financial instruments measured at fair value using Level 3 inputs | ||
Asset balance, beginning of period | 55,504 | 66,102 |
Purchases/Additions | 4,475 | 1,861 |
Sales/Reductions | (18,650) | |
Total gains or losses (realized or unrealized): | ||
Included in Net Income | (11,030) | (5,914) |
Asset balance, end of period | $ 30,299 | $ 62,049 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3, Inputs, Recurring (Details) - Level 3 - Recurring | Mar. 31, 2020item | Dec. 31, 2019itemUSD ($) |
Loans Held for Sale | ||
Significant unobservable inputs used in the fair value measurements | ||
Loans Held-for-sale, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Loans Held-for-sale, Measurement Input [Extensible List] | us-gaap:MeasurementInputPriceVolatilityMember | us-gaap:MeasurementInputPriceVolatilityMember |
Loans Held for Sale | Weighted average | ||
Significant unobservable inputs used in the fair value measurements | ||
Loans Held-for-sale, Measurement Input | 0.93 | 0.95 |
Loans Held for Sale | Minimum | ||
Significant unobservable inputs used in the fair value measurements | ||
Loans Held-for-sale, Measurement Input | 0.90 | 0.92 |
Loans Held for Sale | Maximum | ||
Significant unobservable inputs used in the fair value measurements | ||
Loans Held-for-sale, Measurement Input | 0.94 | 0.96 |
MSR | ||
Significant unobservable inputs used in the fair value measurements | ||
Servicing Asset, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
MSR | Constant Prepayment Rate | ||
Significant unobservable inputs used in the fair value measurements | ||
Servicing Asset, Measurement Input | 0.1698 | 13.16 |
MSR | Discount Rate | ||
Significant unobservable inputs used in the fair value measurements | ||
Servicing Asset, Measurement Input | 0.1101 | 11.14 |
Fair Value Measurements - Chang
Fair Value Measurements - Change in FV (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Fair Value, Transfers Between Level 1 and Level 2 | ||
Transfers of assets from level 1 to level 2 | $ 0 | $ 0 |
Transfers of assets from level 2 to level 1 | 0 | 0 |
Transfers of liabilities from level 1 to level 2 | 0 | 0 |
Transfers of liabilities from level 2 to level 1 | 0 | 0 |
Fair Value Option | ||
Net Gains (Losses) | 150,486 | 96,139 |
Other Noninterest Income | 29,424 | 41,822 |
Loans Held for Sale | ||
Fair Value Option | ||
Net Gains (Losses) | 33,979 | (13,324) |
Total Changes in Fair Value | 33,979 | (13,324) |
MSR | ||
Fair Value Option | ||
Net Gains (Losses) | (11,030) | (5,914) |
Total Changes in Fair Value | $ (11,030) | $ (5,914) |
Fair Value Measurements - Estim
Fair Value Measurements - Estimated Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial assets: | ||
Held to maturity securities | $ 369,614 | $ 388,930 |
Broker-dealer and clearing organization receivables | 1,838,789 | 1,780,280 |
Financial liabilities: | ||
Broker-dealer and clearing organization payables | 1,259,181 | 1,605,518 |
Carrying Amount | ||
Financial assets: | ||
Cash and cash equivalents | 524,771 | 434,020 |
Assets segregated for regulatory purposes | 178,805 | 157,436 |
Securities purchased under agreements to resell | 23,356 | 59,031 |
Held to maturity securities | 355,110 | 386,326 |
Loans held for sale | 343,438 | 170,648 |
Loans held for investment, net | 7,238,511 | 7,320,264 |
Broker-dealer and clearing organization receivables | 1,838,789 | 1,780,280 |
Other assets | 73,118 | 71,040 |
Financial liabilities: | ||
Deposits | 9,947,489 | 9,032,214 |
Broker-dealer and clearing organization payables | 1,259,181 | 1,605,518 |
Short-term borrowings | 1,329,948 | 1,424,010 |
Debt | 311,054 | 323,281 |
Other liabilities | 6,376 | 8,340 |
Estimate of Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 524,771 | 434,020 |
Assets segregated for regulatory purposes | 178,805 | 157,436 |
Securities purchased under agreements to resell | 23,356 | 59,031 |
Held to maturity securities | 369,614 | 388,930 |
Loans held for sale | 343,438 | 170,648 |
Loans held for investment, net | 7,352,094 | 7,567,233 |
Broker-dealer and clearing organization receivables | 1,838,789 | 1,780,280 |
Other assets | 73,118 | 71,040 |
Financial liabilities: | ||
Deposits | 9,962,915 | 9,032,496 |
Broker-dealer and clearing organization payables | 1,259,181 | 1,605,518 |
Short-term borrowings | 1,329,948 | 1,424,010 |
Debt | 311,054 | 323,281 |
Other liabilities | 6,376 | 8,340 |
Estimate of Fair Value | Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 524,771 | 434,020 |
Assets segregated for regulatory purposes | 178,805 | 157,436 |
Estimate of Fair Value | Level 2 | ||
Financial assets: | ||
Securities purchased under agreements to resell | 23,356 | 59,031 |
Held to maturity securities | 369,614 | 388,930 |
Loans held for sale | 343,438 | 170,648 |
Loans held for investment, net | 506,250 | 576,527 |
Broker-dealer and clearing organization receivables | 1,838,789 | 1,780,280 |
Other assets | 70,544 | 69,580 |
Financial liabilities: | ||
Deposits | 9,962,915 | 9,032,496 |
Broker-dealer and clearing organization payables | 1,259,181 | 1,605,518 |
Short-term borrowings | 1,329,948 | 1,424,010 |
Debt | 311,054 | 323,281 |
Other liabilities | 6,376 | 8,340 |
Estimate of Fair Value | Level 3 | ||
Financial assets: | ||
Loans held for investment, net | 6,845,844 | 6,990,706 |
Other assets | $ 2,574 | $ 1,460 |
Fair Value Measurements - Adjus
Fair Value Measurements - Adjustments to the carrying value of investments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Adjustments to the carrying value of these investments | |||
Balance, beginning of year | $ 19,771 | $ 20,376 | |
Upward adjustments | 106 | 101 | |
Impairments and downward adjustments | (789) | ||
Balance, end of year | 19,088 | $ 20,477 | |
Other Assets | |||
Equity Securities without Readily Determinable Fair Value | |||
Other equity investments | $ 34,900 | $ 36,600 |
Securities - Trading Securities
Securities - Trading Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Schedule of fair value of trading securities | ||
Debt Securities, Trading | $ 393,581 | $ 689,576 |
Investment-related Liabilities | ||
Securities sold, not yet purchased, at fair value | 22,768 | 43,817 |
US Treasury Securities | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 1,485 | |
Bonds | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 24,680 | |
Residential Mortgage Backed Securities | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 164,899 | 331,601 |
Commercial mortgage-backed securities | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 2,136 | 2,145 |
Collateralized Mortgage Obligations | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 80,262 | 191,154 |
Corporate debt securities | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 28,893 | 36,973 |
States and political subdivisions | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 103,075 | 93,117 |
Unit investment trusts | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 3,468 | |
Private-label securitized product | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | 650 | 2,992 |
Other | ||
Schedule of fair value of trading securities | ||
Debt Securities, Trading | $ 12,181 | $ 3,446 |
Securities - AFS and HTM, Amort
Securities - AFS and HTM, Amortized Cost and FV (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Available for sale | |||
Amortized cost | $ 945,156 | $ 899,817 | |
Unrealized Gains | 28,219 | 12,702 | |
Unrealized Losses | (1,057) | (1,026) | |
Fair Value | 972,318 | 911,493 | |
Held to maturity | |||
Amortized cost | 355,110 | 386,326 | |
Unrealized Gains | 14,676 | 4,354 | |
Unrealized Losses | (172) | (1,750) | |
Held to maturity, fair value | 369,614 | 388,930 | |
Equity Securities | |||
Equity, at fair value | 107 | 166 | |
Recognized net gain (loss) on equity securities | (100) | $ (100) | |
Bonds | |||
Available for sale | |||
Amortized cost | 88,299 | 84,590 | |
Unrealized Gains | 1,437 | 1,049 | |
Unrealized Losses | (64) | ||
Fair Value | 89,736 | 85,575 | |
Held to maturity | |||
Amortized cost | 24,020 | ||
Unrealized Gains | 10 | ||
Unrealized Losses | (35) | ||
Held to maturity, fair value | 23,995 | ||
Residential Mortgage Backed Securities | |||
Available for sale | |||
Amortized cost | 415,399 | 430,514 | |
Unrealized Gains | 14,435 | 6,662 | |
Unrealized Losses | (147) | ||
Fair Value | 429,834 | 437,029 | |
Held to maturity | |||
Amortized cost | 16,809 | 17,776 | |
Unrealized Gains | 676 | 295 | |
Held to maturity, fair value | 17,485 | 18,071 | |
Commercial mortgage-backed securities | |||
Available for sale | |||
Amortized cost | 11,436 | 11,488 | |
Unrealized Gains | 967 | 543 | |
Fair Value | 12,403 | 12,031 | |
Held to maturity | |||
Amortized cost | 160,113 | 161,624 | |
Unrealized Gains | 10,405 | 2,810 | |
Unrealized Losses | (655) | ||
Held to maturity, fair value | 170,518 | 163,779 | |
Collateralized Mortgage Obligations | |||
Available for sale | |||
Amortized cost | 385,409 | 333,256 | |
Unrealized Gains | 9,634 | 3,175 | |
Unrealized Losses | (1,057) | (815) | |
Fair Value | 393,986 | 335,616 | |
Held to maturity | |||
Amortized cost | 106,926 | 113,894 | |
Unrealized Gains | 2,260 | 226 | |
Unrealized Losses | (37) | (904) | |
Held to maturity, fair value | 109,149 | 113,216 | |
States and political subdivisions | |||
Available for sale | |||
Amortized cost | 44,613 | 39,969 | |
Unrealized Gains | 1,746 | 1,273 | |
Fair Value | 46,359 | 41,242 | |
Held to maturity | |||
Amortized cost | 71,262 | 69,012 | |
Unrealized Gains | 1,335 | 1,013 | |
Unrealized Losses | (135) | (156) | |
Held to maturity, fair value | $ 72,462 | $ 69,869 |
Securities - AFS in an Unrealiz
Securities - AFS in an Unrealized Loss Position (Details) $ in Thousands | Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($)item |
Number of Securities | ||
Unrealized loss for less than twelve months | item | 5 | 55 |
Unrealized loss for twelve months or longer | item | 15 | 16 |
Total | item | 20 | 71 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 20,751 | $ 165,636 |
Unrealized loss for twelve months or longer | 58,090 | 60,387 |
Total | 78,841 | 226,023 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 165 | 599 |
Unrealized loss for twelve months or longer | 892 | 427 |
Total | $ 1,057 | $ 1,026 |
Bonds | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 2 | |
Total | item | 2 | |
Fair Value | ||
Unrealized loss for less than twelve months | $ 24,937 | |
Total | 24,937 | |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 64 | |
Total | $ 64 | |
Residential Mortgage Backed Securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 37 | |
Unrealized loss for twelve months or longer | item | 2 | |
Total | item | 39 | |
Fair Value | ||
Unrealized loss for less than twelve months | $ 36,187 | |
Unrealized loss for twelve months or longer | 13,683 | |
Total | 49,870 | |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 87 | |
Unrealized loss for twelve months or longer | 58 | |
Total | $ 145 | |
Commercial mortgage-backed securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 1 | |
Total | item | 1 | |
Fair Value | ||
Unrealized loss for less than twelve months | $ 9,967 | |
Total | 9,967 | |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 2 | |
Total | $ 2 | |
Collateralized Mortgage Obligations | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 4 | 15 |
Unrealized loss for twelve months or longer | item | 15 | 13 |
Total | item | 19 | 28 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 20,214 | $ 94,545 |
Unrealized loss for twelve months or longer | 58,090 | 46,217 |
Total | 78,304 | 140,762 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 165 | 446 |
Unrealized loss for twelve months or longer | 892 | 369 |
Total | $ 1,057 | $ 815 |
States and political subdivisions | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 1 | |
Unrealized loss for twelve months or longer | item | 1 | |
Total | item | 1 | 1 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 537 | |
Unrealized loss for twelve months or longer | $ 487 | |
Total | $ 537 | $ 487 |
Securities - HTM in an Unrealiz
Securities - HTM in an Unrealized Loss Position (Details) $ in Thousands | Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($)item |
Number of Securities | ||
Unrealized loss for less than twelve months | item | 29 | 52 |
Unrealized loss for twelve months or longer | item | 2 | 12 |
Total | item | 31 | 64 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 25,958 | $ 94,175 |
Unrealized loss for twelve months or longer | 604 | 60,659 |
Total | 26,562 | 154,834 |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 170 | 1,102 |
Unrealized loss for twelve months or longer | 2 | 648 |
Total | $ 172 | $ 1,750 |
Bonds | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 2 | |
Total | item | 2 | |
Fair Value | ||
Unrealized loss for less than twelve months | $ 9,665 | |
Total | 9,665 | |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 35 | |
Total | $ 35 | |
Commercial mortgage-backed securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 8 | |
Total | item | 8 | |
Fair Value | ||
Unrealized loss for less than twelve months | $ 44,610 | |
Total | 44,610 | |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 656 | |
Total | $ 656 | |
Collateralized Mortgage Obligations | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 2 | 4 |
Unrealized loss for twelve months or longer | item | 8 | |
Total | item | 2 | 12 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 15,488 | $ 23,904 |
Unrealized loss for twelve months or longer | 59,560 | |
Total | 15,488 | 83,464 |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 37 | 287 |
Unrealized loss for twelve months or longer | 617 | |
Total | $ 37 | $ 904 |
States and political subdivisions | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 27 | 38 |
Unrealized loss for twelve months or longer | item | 2 | 4 |
Total | item | 29 | 42 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 10,470 | $ 15,996 |
Unrealized loss for twelve months or longer | 604 | 1,099 |
Total | 11,074 | 17,095 |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 133 | 124 |
Unrealized loss for twelve months or longer | 2 | 31 |
Total | $ 135 | $ 155 |
Securities - AFS Contractual Ma
Securities - AFS Contractual Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
AFS, Amortized Cost, Rolling Maturity | ||
Due in one year or less | $ 2,071 | |
Due after one year through five years | 73,668 | |
Due after five years through ten years | 35,387 | |
Due after ten years | 21,786 | |
Total | 132,912 | |
Amortized cost | 945,156 | $ 899,817 |
AFS, Fair Value, Rolling Maturity | ||
Due in one year or less | 2,090 | |
Due after one year through five years | 75,246 | |
Due after five years through ten years | 35,914 | |
Due after ten years | 22,845 | |
Total | 136,095 | |
Fair Value | 972,318 | 911,493 |
Residential Mortgage Backed Securities | ||
AFS, Amortized Cost, Rolling Maturity | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 415,399 | |
Amortized cost | 415,399 | 430,514 |
AFS, Fair Value, Rolling Maturity | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 429,834 | |
Fair Value | 429,834 | 437,029 |
Collateralized Mortgage Obligations | ||
AFS, Amortized Cost, Rolling Maturity | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 385,409 | |
Amortized cost | 385,409 | 333,256 |
AFS, Fair Value, Rolling Maturity | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 393,986 | |
Fair Value | 393,986 | 335,616 |
Commercial mortgage-backed securities | ||
AFS, Amortized Cost, Rolling Maturity | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 11,436 | |
Amortized cost | 11,436 | 11,488 |
AFS, Fair Value, Rolling Maturity | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 12,403 | |
Fair Value | $ 12,403 | $ 12,031 |
Securities - HTM Contractual Ma
Securities - HTM Contractual Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
HTM, Amortized Cost, Rolling Maturities | ||
Due in one year or less | $ 453 | |
Due after one year through five years | 987 | |
Due after five years through ten years | 6,160 | |
Due after ten years | 63,662 | |
Total | 71,262 | |
Amortized cost | 355,110 | $ 386,326 |
HTM, Fair Value, Rolling Maturities | ||
Due in one year or less | 456 | |
Due after one year through five years | 994 | |
Due after five years through ten years | 6,264 | |
Due after ten years | 64,748 | |
Total | 72,462 | |
Fair Value | 369,614 | 388,930 |
Residential Mortgage Backed Securities | ||
HTM, Amortized Cost, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 16,809 | |
Amortized cost | 16,809 | 17,776 |
HTM, Fair Value, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 17,485 | |
Fair Value | 17,485 | 18,071 |
Collateralized Mortgage Obligations | ||
HTM, Amortized Cost, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 106,926 | |
Amortized cost | 106,926 | 113,894 |
HTM, Fair Value, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 109,149 | |
Fair Value | 109,149 | 113,216 |
Commercial mortgage-backed securities | ||
HTM, Amortized Cost, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 160,113 | |
Amortized cost | 160,113 | 161,624 |
HTM, Fair Value, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 170,518 | |
Fair Value | $ 170,518 | $ 163,779 |
Securities - Additional Informa
Securities - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Securities | |||
Realized net gains from trading securities portfolio | $ 7 | $ 8.1 | |
Realized net gains from other securities | 0.2 | ||
Carrying amount of securities pledged | 555.7 | $ 576 | |
Fair value of securities pledged | 573 | $ 583.6 | |
Available for sale debt securities past due | 0 | ||
Hilltop Broker-Dealers | |||
Securities | |||
Realized net gains from trading securities portfolio | $ 21.3 | $ 25.3 |
Loans Held for Investment - Sum
Loans Held for Investment - Summary (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Loans | ||||
Total loans | $ 7,345,250 | $ 7,381,400 | ||
Allowance for loan losses | (106,739) | (61,136) | $ (58,809) | $ (59,486) |
Loans held for investment, net | 7,238,511 | 7,320,264 | ||
Commercial Real Estate | ||||
Loans | ||||
Total loans | 3,062,042 | 3,000,523 | ||
Allowance for loan losses | (53,939) | (31,595) | (26,845) | (27,100) |
Commercial | Commercial And Industrial | ||||
Loans | ||||
Total loans | 2,101,968 | 2,025,720 | ||
Allowance for loan losses | (38,550) | (17,964) | (21,268) | (21,980) |
Construction and land development | ||||
Loans | ||||
Total loans | 955,173 | 940,564 | ||
Allowance for loan losses | (6,360) | (4,878) | (5,908) | (6,061) |
1 - 4 family residential | ||||
Loans | ||||
Total loans | 676,630 | 791,020 | ||
Allowance for loan losses | (6,365) | (6,386) | (4,331) | (3,956) |
Consumer | ||||
Loans | ||||
Total loans | 43,187 | 47,046 | ||
Allowance for loan losses | (1,203) | (265) | (409) | (267) |
Broker-dealer | ||||
Loans | ||||
Total loans | 506,250 | 576,527 | ||
Allowance for loan losses | $ (322) | $ (48) | $ (48) | $ (122) |
Loans Held for Investment - Non
Loans Held for Investment - Non-accrual Loans (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)loan | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Non-accrual loans | |||
Non-accrual Loans With Allowance | $ 52,293 | ||
Non-accrual Loans With No Allowance | 30,491 | ||
Non-accrual loans | 82,784 | $ 31,294 | |
Interest Income Recognized | 1,219 | $ 400 | |
Commercial Real Estate | Non-owner occupied | |||
Non-accrual loans | |||
Non-accrual Loans With Allowance | 9,179 | ||
Non-accrual Loans With No Allowance | 8,989 | ||
Non-accrual loans | 18,168 | 3,813 | |
Interest Income Recognized | $ (97) | ||
Number of PCI loans included in non-accrual | loan | 2 | ||
Previously categorized PCI loans included in non-accrual | $ 15,300 | ||
Commercial Real Estate | Owner occupied | |||
Non-accrual loans | |||
Non-accrual Loans With Allowance | 1,162 | ||
Non-accrual Loans With No Allowance | 4,022 | ||
Non-accrual loans | 5,184 | 3,495 | |
Interest Income Recognized | 16 | ||
Commercial | Commercial And Industrial | |||
Non-accrual loans | |||
Non-accrual Loans With Allowance | 39,950 | ||
Non-accrual Loans With No Allowance | 7,171 | ||
Non-accrual loans | 47,121 | 15,262 | |
Interest Income Recognized | 300 | ||
Previously categorized PCI loans included in non-accrual | 23,800 | ||
Construction and land development | |||
Non-accrual loans | |||
Non-accrual Loans With Allowance | 176 | ||
Non-accrual Loans With No Allowance | 1,226 | ||
Non-accrual loans | 1,402 | 1,316 | |
Interest Income Recognized | 22 | ||
1 - 4 family residential | |||
Non-accrual loans | |||
Non-accrual Loans With Allowance | 1,516 | ||
Non-accrual Loans With No Allowance | 9,083 | ||
Non-accrual loans | 10,599 | 7,382 | |
Interest Income Recognized | 983 | ||
1 - 4 family residential | Secured by Residential Properties | |||
Non-accrual loans | |||
Non-accrual loans held for sale | 4,600 | 4,800 | |
Consumer | |||
Non-accrual loans | |||
Non-accrual Loans With Allowance | 310 | ||
Non-accrual loans | 310 | $ 26 | |
Interest Income Recognized | (5) | ||
Various | |||
Non-accrual loans | |||
Previously categorized PCI loans included in non-accrual | $ 8,000 |
Loans Held for Investment - TDR
Loans Held for Investment - TDRs (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)loan | Mar. 31, 2019loan | |
TDRs, Non-covered loans | ||
Number of TDR loans granted | 0 | |
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | 0 | 0 |
AB Note | Minimum | PlainsCapital (the Bank) | ||
TDRs, Non-covered loans | ||
Number of loans into which a single loan may be reconfigured | 2 | |
Payment Term Extension | ||
TDRs, Non-covered loans | ||
Number of TDR loans granted | 1 | |
TDR at extension | $ | $ 1,089 | |
TDR modifications, in which a payment was at least 30 days past due | $ | $ 1,166 | |
Commercial | Commercial And Industrial | Payment Term Extension | ||
TDRs, Non-covered loans | ||
Number of TDR loans granted | 1 | |
TDR at extension | $ | $ 1,089 | |
TDR modifications, in which a payment was at least 30 days past due | $ | $ 1,166 |
Loans Held for Investment - Agi
Loans Held for Investment - Aging (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | $ 82,322 | $ 55,823 |
Current Loans | 7,262,928 | 7,325,577 |
Total loans | 7,345,250 | 7,381,400 |
Accruing Loans Past Due 90 Days or More | 144 | 3 |
Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 46,334 | 31,935 |
Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 23,343 | 7,918 |
Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 12,645 | 15,970 |
Prime Lending | U.S. Government Agencies | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Accruing Loans Past Due 90 Days or More | 101,200 | 102,700 |
Unpaid principal balance loans past due 90 days or more | 102,400 | 104,000 |
Commercial Real Estate | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total loans | 3,062,042 | 3,000,523 |
Commercial Real Estate | Non-owner occupied | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 23,459 | 6,852 |
Current Loans | 1,721,265 | 1,702,500 |
Total loans | 1,744,724 | 1,709,352 |
Commercial Real Estate | Non-owner occupied | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 6,488 | 4,062 |
Commercial Real Estate | Non-owner occupied | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 16,772 | |
Commercial Real Estate | Non-owner occupied | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 199 | 2,790 |
Commercial Real Estate | Owner occupied | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 18,237 | 5,958 |
Current Loans | 1,299,081 | 1,285,213 |
Total loans | 1,317,318 | 1,291,171 |
Commercial Real Estate | Owner occupied | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 12,152 | 1,813 |
Commercial Real Estate | Owner occupied | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 2,685 | 880 |
Commercial Real Estate | Owner occupied | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 3,400 | 3,265 |
Commercial | Commercial And Industrial | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 10,633 | 11,097 |
Current Loans | 2,091,335 | 2,014,623 |
Total loans | 2,101,968 | 2,025,720 |
Accruing Loans Past Due 90 Days or More | 47 | 3 |
Commercial | Commercial And Industrial | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 6,740 | 5,967 |
Commercial | Commercial And Industrial | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 1,125 | 1,735 |
Commercial | Commercial And Industrial | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 2,768 | 3,395 |
Construction and land development | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 4,056 | 9,407 |
Current Loans | 951,117 | 931,157 |
Total loans | 955,173 | 940,564 |
Accruing Loans Past Due 90 Days or More | 97 | |
Construction and land development | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 3,955 | 7,580 |
Construction and land development | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 3 | 1,827 |
Construction and land development | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 98 | |
1 - 4 family residential | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 25,328 | 22,020 |
Current Loans | 651,302 | 769,000 |
Total loans | 676,630 | 791,020 |
1 - 4 family residential | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 16,832 | 12,058 |
1 - 4 family residential | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 2,600 | 3,442 |
1 - 4 family residential | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 5,896 | 6,520 |
Consumer | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 609 | 489 |
Current Loans | 42,578 | 46,557 |
Total loans | 43,187 | 47,046 |
Consumer | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 167 | 455 |
Consumer | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 158 | 34 |
Consumer | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 284 | |
Broker-dealer | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Current Loans | 506,250 | 576,527 |
Total loans | $ 506,250 | $ 576,527 |
Loans Held for Investment - Int
Loans Held for Investment - Internal Risk Grades (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Internal risk grades of non-covered loans | ||
2020 | $ 474,016 | |
2019 | 1,484,836 | |
2018 | 1,203,427 | |
2017 | 756,104 | |
2016 | 655,723 | |
2015 and Prior | 767,491 | |
Financing Receivable, Revolving | 842,474 | |
Total loans with credit quality measures | 6,184,071 | |
Total loans | 7,345,250 | $ 7,381,400 |
Commercial Real Estate | ||
Internal risk grades of non-covered loans | ||
Total loans | 3,062,042 | 3,000,523 |
Commercial Real Estate | Non-owner occupied | ||
Internal risk grades of non-covered loans | ||
Total loans | 1,744,724 | 1,709,352 |
Commercial Real Estate | Non-owner occupied | Internal Grade 1-3 | ||
Internal risk grades of non-covered loans | ||
2020 | 2,702 | |
2019 | 42,015 | |
2018 | 9,354 | |
2017 | 14,536 | |
2016 | 15,164 | |
2015 and Prior | 19,926 | |
Financing Receivable, Revolving | 402 | |
Total loans with credit quality measures | 104,099 | |
Commercial Real Estate | Non-owner occupied | Internal Grade 4-7 | ||
Internal risk grades of non-covered loans | ||
2020 | 45,963 | |
2019 | 186,755 | |
2018 | 150,078 | |
2017 | 149,826 | |
2016 | 148,241 | |
2015 and Prior | 126,033 | |
Financing Receivable, Revolving | 25,449 | |
Total loans with credit quality measures | 832,345 | |
Commercial Real Estate | Non-owner occupied | Internal Grade 8-11 | ||
Internal risk grades of non-covered loans | ||
2020 | 48,289 | |
2019 | 117,730 | |
2018 | 169,739 | |
2017 | 126,886 | |
2016 | 174,480 | |
2015 and Prior | 82,043 | |
Financing Receivable, Revolving | 1,145 | |
Total loans with credit quality measures | 720,312 | |
Commercial Real Estate | Non-owner occupied | Internal Grade 13 | ||
Internal risk grades of non-covered loans | ||
2019 | 1,189 | |
2018 | 1,784 | |
2017 | 4,317 | |
2016 | 8,387 | |
2015 and Prior | 54,123 | |
Total loans with credit quality measures | 69,800 | |
Commercial Real Estate | Non-owner occupied | Internal Grade 14 | ||
Internal risk grades of non-covered loans | ||
2019 | 15,330 | |
2017 | 882 | |
2015 and Prior | 1,956 | |
Total loans with credit quality measures | 18,168 | |
Commercial Real Estate | Owner occupied | ||
Internal risk grades of non-covered loans | ||
Total loans | 1,317,318 | 1,291,171 |
Commercial Real Estate | Owner occupied | Internal Grade 1-3 | ||
Internal risk grades of non-covered loans | ||
2020 | 19,261 | |
2019 | 35,707 | |
2018 | 11,362 | |
2017 | 27,494 | |
2016 | 23,433 | |
2015 and Prior | 48,577 | |
Financing Receivable, Revolving | 2 | |
Total loans with credit quality measures | 165,836 | |
Commercial Real Estate | Owner occupied | Internal Grade 4-7 | ||
Internal risk grades of non-covered loans | ||
2020 | 73,334 | |
2019 | 153,997 | |
2018 | 219,995 | |
2017 | 91,386 | |
2016 | 75,445 | |
2015 and Prior | 124,679 | |
Financing Receivable, Revolving | 31,734 | |
Total loans with credit quality measures | 770,570 | |
Commercial Real Estate | Owner occupied | Internal Grade 8-11 | ||
Internal risk grades of non-covered loans | ||
2020 | 6,627 | |
2019 | 76,220 | |
2018 | 64,306 | |
2017 | 92,640 | |
2016 | 33,586 | |
2015 and Prior | 43,919 | |
Financing Receivable, Revolving | 15,103 | |
Total loans with credit quality measures | 332,401 | |
Commercial Real Estate | Owner occupied | Internal Grade 12 (Special mention) | ||
Internal risk grades of non-covered loans | ||
2015 and Prior | 48 | |
Total loans with credit quality measures | 48 | |
Commercial Real Estate | Owner occupied | Internal Grade 13 | ||
Internal risk grades of non-covered loans | ||
2020 | 3,466 | |
2019 | 2,436 | |
2018 | 3,980 | |
2017 | 11,661 | |
2016 | 9,105 | |
2015 and Prior | 12,631 | |
Total loans with credit quality measures | 43,279 | |
Commercial Real Estate | Owner occupied | Internal Grade 14 | ||
Internal risk grades of non-covered loans | ||
2020 | 555 | |
2018 | 81 | |
2017 | 2,528 | |
2016 | 1,041 | |
2015 and Prior | 979 | |
Total loans with credit quality measures | 5,184 | |
Commercial | Commercial And Industrial | ||
Internal risk grades of non-covered loans | ||
Collateral maintenance | 654,929 | |
Total loans | 2,101,968 | 2,025,720 |
Commercial | Commercial And Industrial | Internal Grade 1-3 | ||
Internal risk grades of non-covered loans | ||
2020 | 20,004 | |
2019 | 14,683 | |
2018 | 7,762 | |
2017 | 6,239 | |
2016 | 4,817 | |
2015 and Prior | 881 | |
Financing Receivable, Revolving | 92,106 | |
Total loans with credit quality measures | 146,492 | |
Commercial | Commercial And Industrial | Internal Grade 4-7 | ||
Internal risk grades of non-covered loans | ||
2020 | 36,169 | |
2019 | 119,001 | |
2018 | 77,750 | |
2017 | 58,562 | |
2016 | 25,450 | |
2015 and Prior | 19,585 | |
Financing Receivable, Revolving | 374,251 | |
Total loans with credit quality measures | 710,768 | |
Commercial | Commercial And Industrial | Internal Grade 8-11 | ||
Internal risk grades of non-covered loans | ||
2020 | 40,361 | |
2019 | 98,826 | |
2018 | 64,810 | |
2017 | 26,805 | |
2016 | 41,982 | |
2015 and Prior | 3,828 | |
Financing Receivable, Revolving | 200,425 | |
Total loans with credit quality measures | 477,037 | |
Commercial | Commercial And Industrial | Internal Grade 12 (Special mention) | ||
Internal risk grades of non-covered loans | ||
2020 | 844 | |
2019 | 1,372 | |
2018 | 2,028 | |
2017 | 492 | |
2016 | 5,246 | |
Financing Receivable, Revolving | 13,306 | |
Total loans with credit quality measures | 23,288 | |
Commercial | Commercial And Industrial | Internal Grade 13 | ||
Internal risk grades of non-covered loans | ||
2020 | 28 | |
2019 | 3,411 | |
2018 | 8,785 | |
2017 | 2,642 | |
2016 | 6,596 | |
2015 and Prior | 4,396 | |
Financing Receivable, Revolving | 16,475 | |
Total loans with credit quality measures | 42,333 | |
Commercial | Commercial And Industrial | Internal Grade 14 | ||
Internal risk grades of non-covered loans | ||
2020 | 30,145 | |
2019 | 2,445 | |
2018 | 1,506 | |
2017 | 8,225 | |
2016 | 231 | |
2015 and Prior | 379 | |
Financing Receivable, Revolving | 4,190 | |
Total loans with credit quality measures | 47,121 | |
Construction and land development | ||
Internal risk grades of non-covered loans | ||
Total loans | 955,173 | 940,564 |
Construction and land development | FICO Score, 620 to 720 | ||
Internal risk grades of non-covered loans | ||
2019 | 4,394 | |
2018 | 1,474 | |
Total loans with credit quality measures | 5,868 | |
Construction and land development | FICO Score, Greater than 720 | ||
Internal risk grades of non-covered loans | ||
2020 | 3,171 | |
2019 | 10,617 | |
2018 | 5,184 | |
Total loans with credit quality measures | 18,972 | |
Construction and land development | Other | ||
Internal risk grades of non-covered loans | ||
2020 | 144 | |
Total loans with credit quality measures | 144 | |
Construction and land development | Internal Grade 1-3 | ||
Internal risk grades of non-covered loans | ||
2020 | 4,717 | |
2019 | 21,250 | |
2018 | 23,557 | |
2017 | 282 | |
2016 | 1,169 | |
2015 and Prior | 337 | |
Financing Receivable, Revolving | 1,956 | |
Total loans with credit quality measures | 53,268 | |
Construction and land development | Internal Grade 4-7 | ||
Internal risk grades of non-covered loans | ||
2020 | 80,147 | |
2019 | 237,466 | |
2018 | 106,525 | |
2017 | 38,310 | |
2016 | 7,760 | |
2015 and Prior | 5,038 | |
Financing Receivable, Revolving | 41,525 | |
Total loans with credit quality measures | 516,771 | |
Construction and land development | Internal Grade 8-11 | ||
Internal risk grades of non-covered loans | ||
2020 | 24,257 | |
2019 | 164,164 | |
2018 | 133,025 | |
2017 | 22,711 | |
2016 | 4,431 | |
2015 and Prior | 2,119 | |
Financing Receivable, Revolving | 6,899 | |
Total loans with credit quality measures | 357,606 | |
Construction and land development | Internal Grade 13 | ||
Internal risk grades of non-covered loans | ||
2019 | 1,135 | |
2015 and Prior | 7 | |
Total loans with credit quality measures | 1,142 | |
Construction and land development | Internal Grade 14 | ||
Internal risk grades of non-covered loans | ||
2019 | 458 | |
2016 | 768 | |
2015 and Prior | 176 | |
Total loans with credit quality measures | 1,402 | |
1 - 4 family residential | ||
Internal risk grades of non-covered loans | ||
Total loans | 676,630 | 791,020 |
1 - 4 family residential | FICO Score, Less than 620 | ||
Internal risk grades of non-covered loans | ||
2019 | 738 | |
2018 | 3,724 | |
2017 | 231 | |
2016 | 1,110 | |
2015 and Prior | 40,354 | |
Financing Receivable, Revolving | 545 | |
Total loans with credit quality measures | 46,702 | |
1 - 4 family residential | FICO Score, 620 to 720 | ||
Internal risk grades of non-covered loans | ||
2020 | 1,252 | |
2019 | 11,793 | |
2018 | 15,878 | |
2017 | 10,850 | |
2016 | 13,739 | |
2015 and Prior | 48,114 | |
Financing Receivable, Revolving | 1,585 | |
Total loans with credit quality measures | 103,211 | |
1 - 4 family residential | FICO Score, Greater than 720 | ||
Internal risk grades of non-covered loans | ||
2020 | 16,389 | |
2019 | 84,807 | |
2018 | 105,533 | |
2017 | 54,505 | |
2016 | 50,839 | |
2015 and Prior | 106,744 | |
Financing Receivable, Revolving | 4,521 | |
Total loans with credit quality measures | 423,338 | |
1 - 4 family residential | Substandard non-accrual | ||
Internal risk grades of non-covered loans | ||
2017 | 101 | |
2016 | 439 | |
2015 and Prior | 10,059 | |
Total loans with credit quality measures | 10,599 | |
1 - 4 family residential | Other | ||
Internal risk grades of non-covered loans | ||
2020 | 8,660 | |
2019 | 58,480 | |
2018 | 9,557 | |
2017 | 2,238 | |
2016 | 1,466 | |
2015 and Prior | 10,152 | |
Financing Receivable, Revolving | 2,227 | |
Total loans with credit quality measures | 92,780 | |
Consumer | ||
Internal risk grades of non-covered loans | ||
Total loans | 43,187 | 47,046 |
Consumer | FICO Score, Less than 620 | ||
Internal risk grades of non-covered loans | ||
2020 | 318 | |
2019 | 1,830 | |
2018 | 312 | |
2017 | 193 | |
2016 | 59 | |
2015 and Prior | 100 | |
Financing Receivable, Revolving | 373 | |
Total loans with credit quality measures | 3,185 | |
Consumer | FICO Score, 620 to 720 | ||
Internal risk grades of non-covered loans | ||
2020 | 2,145 | |
2019 | 5,082 | |
2018 | 971 | |
2017 | 919 | |
2016 | 183 | |
2015 and Prior | 152 | |
Financing Receivable, Revolving | 2,686 | |
Total loans with credit quality measures | 12,138 | |
Consumer | FICO Score, Greater than 720 | ||
Internal risk grades of non-covered loans | ||
2020 | 2,722 | |
2019 | 8,327 | |
2018 | 3,694 | |
2017 | 542 | |
2016 | 500 | |
2015 and Prior | 131 | |
Financing Receivable, Revolving | 5,062 | |
Total loans with credit quality measures | 20,978 | |
Consumer | Substandard non-accrual | ||
Internal risk grades of non-covered loans | ||
2017 | 35 | |
2015 and Prior | 25 | |
Financing Receivable, Revolving | 250 | |
Total loans with credit quality measures | 310 | |
Consumer | Other | ||
Internal risk grades of non-covered loans | ||
2020 | 2,346 | |
2019 | 3,178 | |
2018 | 673 | |
2017 | 66 | |
2016 | 56 | |
Financing Receivable, Revolving | 257 | |
Total loans with credit quality measures | 6,576 | |
Broker-dealer | ||
Internal risk grades of non-covered loans | ||
Collateral maintenance | 506,250 | |
Total loans | $ 506,250 | $ 576,527 |
Loans Held for Investment - Cre
Loans Held for Investment - Credit Loss Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 |
Allowance for loan losses | ||||
Allowance for credit losses | $ 61,136 | $ 106,739 | $ 58,809 | $ 59,486 |
Transition Adjustment CECL | 12,562 | |||
Increase in allowance on individually evaluated loans | $ 17,600 | |||
ASU 2016-13 | Restatement | ||||
Allowance for loan losses | ||||
Allowance for credit losses | 73,700 | |||
Transition Adjustment CECL | 12,600 | |||
Allowance in credit loss from expansion of horizon to life of loan | 18,900 | |||
Non-credit component with allowance of previous categorized PCI loans | $ 6,300 |
Loans Held for Investment - All
Loans Held for Investment - Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Changes in the allowance for loan losses | ||
Balance, beginning of the year | $ 61,136 | $ 59,486 |
Transition Adjustment CECL | 12,562 | |
Provision (reversal of) for credit losses | 34,549 | 951 |
Loans charged off | (2,035) | (2,300) |
Recoveries on charged off loans | 527 | 672 |
Balance, end of the year | 106,739 | 58,809 |
Commercial Real Estate | ||
Changes in the allowance for loan losses | ||
Balance, beginning of the year | 31,595 | 27,100 |
Transition Adjustment CECL | 8,073 | |
Provision (reversal of) for credit losses | 14,475 | (255) |
Loans charged off | (214) | |
Recoveries on charged off loans | 10 | |
Balance, end of the year | 53,939 | 26,845 |
Commercial | Commercial And Industrial | ||
Changes in the allowance for loan losses | ||
Balance, beginning of the year | 17,964 | 21,980 |
Transition Adjustment CECL | 3,193 | |
Provision (reversal of) for credit losses | 18,446 | 458 |
Loans charged off | (1,440) | (1,818) |
Recoveries on charged off loans | 387 | 648 |
Balance, end of the year | 38,550 | 21,268 |
Construction and land development | ||
Changes in the allowance for loan losses | ||
Balance, beginning of the year | 4,878 | 6,061 |
Transition Adjustment CECL | 577 | |
Provision (reversal of) for credit losses | 907 | (153) |
Loans charged off | (2) | |
Balance, end of the year | 6,360 | 5,908 |
1 - 4 family residential | ||
Changes in the allowance for loan losses | ||
Balance, beginning of the year | 6,386 | 3,956 |
Transition Adjustment CECL | (29) | |
Provision (reversal of) for credit losses | 201 | 389 |
Loans charged off | (203) | (28) |
Recoveries on charged off loans | 10 | 14 |
Balance, end of the year | 6,365 | 4,331 |
Consumer | ||
Changes in the allowance for loan losses | ||
Balance, beginning of the year | 265 | 267 |
Transition Adjustment CECL | 748 | |
Provision (reversal of) for credit losses | 246 | 586 |
Loans charged off | (176) | (454) |
Recoveries on charged off loans | 120 | 10 |
Balance, end of the year | 1,203 | 409 |
Broker-dealer | ||
Changes in the allowance for loan losses | ||
Balance, beginning of the year | 48 | 122 |
Provision (reversal of) for credit losses | 274 | (74) |
Balance, end of the year | $ 322 | $ 48 |
Mortgage Servicing Rights (Deta
Mortgage Servicing Rights (Details) - MSR - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Change in fair value of mortgage servicing rights | |||
Balance, beginning of year | $ 55,504 | $ 66,102 | $ 66,102 |
Additions | 4,475 | 1,861 | |
Sales | (18,650) | ||
Changes in fair value: Due to changes in model inputs or assumptions | (9,594) | (5,033) | |
Changes in fair value: Due to customer payoffs | (1,436) | (881) | |
Balance, end of year | 30,299 | $ 62,049 | 55,504 |
Mortgage loans serviced for others | $ 3,500,731 | $ 4,948,441 | |
MSR asset as a percentage of serviced mortgage loans | 0.87% | 1.12% | |
Key Assumptions | |||
Weighted average constant prepayment rate (as a percent) | 16.98% | 13.16% | |
Weighted average discount rate (as a percent) | 11.01% | 11.14% | |
Weighted average life (in years) | 4 years 9 months 18 days | 6 years |
Mortgage Servicing Rights - Sen
Mortgage Servicing Rights - Sensitivity Analysis (Details) - MSR - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Sensitivity analysis | |||
Constant prepayment rate: Impact of 10% adverse change | $ (2,152) | $ (3,072) | |
Constant prepayment rate: Impact of 20% adverse change | (4,122) | (5,943) | |
Discount rate: Impact of 10% adverse change | (1,014) | (2,094) | |
Discount rate: Impact of 20% adverse change | (1,959) | $ (4,028) | |
Contractually specified servicing fees, late fees and ancillary fees | $ 5,900 | $ 6,300 |
Deposits (Details)
Deposits (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Deposits | ||
Noninterest-bearing demand | $ 2,865,192 | $ 2,769,556 |
Interest-bearing: | ||
Demand | 1,893,125 | 1,881,614 |
Brokered - demand | 475,080 | |
Money market | 2,823,663 | 2,641,116 |
Brokered - money market | 30,006 | 5,000 |
Savings | 198,319 | 199,076 |
Time | 1,386,214 | 1,505,375 |
Brokered - time | 275,890 | 30,477 |
Total deposits | $ 9,947,489 | $ 9,032,214 |
Short-term Borrowings (Details)
Short-term Borrowings (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)item | |
Short-term borrowings | |||
Short-term borrowings | $ 1,329,948 | $ 1,424,010 | |
Hilltop Broker-Dealers | |||
Short-term borrowings | |||
Weighted average interest rate (as a percent) | 1.05% | 2.52% | |
Federal Funds Purchased. | |||
Short-term borrowings | |||
Short-term borrowings | $ 199,095 | $ 81,625 | |
Securities Sold under Agreements to Repurchase | |||
Short-term borrowings | |||
Short-term borrowings | 698,433 | 612,125 | |
FHLB notes | |||
Short-term borrowings | |||
Short-term borrowings | 150,000 | $ 600,000 | |
Average balance during the year | $ 153,736 | $ 4,167 | |
Average interest rate during the year | 1.63% | 2.65% | |
Average interest rate at end of year (as a percent) | 0.50% | 1.56% | |
FHLB notes | Maximum | |||
Short-term borrowings | |||
Maturity term of debt | 365 days | ||
Short Term Bank Loans. | |||
Short-term borrowings | |||
Short-term borrowings | $ 250,500 | $ 111,000 | |
Commercial paper | |||
Short-term borrowings | |||
Short-term borrowings | $ 31,920 | $ 19,260 | |
Number of commercial paper programs initiated | item | 2 | ||
Weighted average maturity term | 35 days | ||
Weighted average interest rate (as a percent) | 1.50% | ||
Debt instrument, collateral | $ 36,300 | ||
Commercial paper | Minimum | |||
Short-term borrowings | |||
Maturity term of debt | 14 days | ||
Commercial paper | Maximum | |||
Short-term borrowings | |||
Maturity term of debt | 270 days | ||
Series 2019-1 CP Notes | |||
Short-term borrowings | |||
Maximum borrowing capacity | $ 300,000 | ||
Series 2019-2 CP Notes | |||
Short-term borrowings | |||
Maximum borrowing capacity | $ 200,000 | ||
Federal Funds Purchased and Securities Sold under Agreements to Repurchase | |||
Short-term borrowings | |||
Average balance during the year | $ 732,954 | $ 654,117 | |
Average interest rate during the year | 1.78% | 2.63% | |
Average interest rate at end of year (as a percent) | 1.31% | 1.97% | |
Securities underlying the agreements at end of period: Carrying value | $ 705,544 | $ 612,515 | |
Securities underlying the agreements at end of period: Estimated fair value | $ 753,129 | $ 661,023 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument | ||
Notes payable | $ 244,042 | $ 256,269 |
Senior Notes due April 2025 | ||
Debt Instrument | ||
Notes payable | 148,809 | 148,768 |
Unamortized discount | 1,191 | 1,232 |
FHLB notes | ||
Debt Instrument | ||
Notes payable | 28,514 | 28,848 |
Unamortized premium | 131 | 146 |
Ventures Management lines of credit | ||
Debt Instrument | ||
Notes payable | $ 66,719 | $ 78,653 |
Lease - Narrative (Details)
Lease - Narrative (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Option to extend period - Operating | 10 years |
Option to extend period - Finance | 10 years |
Option to extend - Operating | true |
Option to extend - Finance | true |
Option to terminate period - Operating | 1 year |
Option to terminate period - Finance | 1 year |
Option to terminate - Operating | true |
Option to terminate - Finance | true |
Lease - Supplemental balance sh
Lease - Supplemental balance sheet information (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Finance leases: | ||
Premises and equipment | $ 7,780 | $ 7,780 |
Accumulated depreciation | (4,326) | (4,178) |
Premises and equipment, net | $ 3,454 | $ 3,602 |
Financial position | us-gaap:PropertyPlantAndEquipmentNet | us-gaap:PropertyPlantAndEquipmentNet |
Lease - Components of lease cos
Lease - Components of lease costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Components of operating lease costs | ||
Operating lease cost | $ 10,630 | $ 10,531 |
Less operating lease and sublease income | (618) | (388) |
Net operating lease cost | 10,012 | 10,143 |
Amortization of ROU assets | 147 | 147 |
Interest on lease liabilities | 144 | 152 |
Total finance lease cost | $ 291 | $ 299 |
Lease - Supplemental cash flow
Lease - Supplemental cash flow information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases | ||
Operating cash flows from operating leases | $ 9,951 | $ 8,220 |
Operating cash flows from finance leases | 144 | 152 |
Financing cash flows from finance leases | 155 | 144 |
Right-of-use assets obtained in exchange for new lease obligations - Operating leases | $ 4,049 | $ 3,591 |
Lease - Lease terms and discoun
Lease - Lease terms and discount rates (Details) | Mar. 31, 2020 |
Leases | |
Operating - Weighted Average Remaining Lease Term (Years) | 5 years 10 months 24 days |
Finance - Weighted Average Remaining Lease Term (Years) | 6 years 3 months 18 days |
Operating - Weighted Average Discount Rate | 5.19% |
Finance - Weighted Average Discount Rate | 4.79% |
Lease - Lease maturities - ASC
Lease - Lease maturities - ASC 842 (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Operating leases maturities | |
Minimum lease payments associated with discontinued operations | $ 3,500 |
2020 | 26,439 |
2021 | 30,275 |
2022 | 24,261 |
2023 | 19,415 |
2024 | 12,740 |
Thereafter | 35,810 |
Total minimum lease payments | 148,940 |
Less amount representing interest | (22,090) |
Lease liabilities | 126,850 |
Finance Leases maturities: | |
2020 | 899 |
2021 | 1,212 |
2022 | 1,241 |
2023 | 1,280 |
2024 | 1,163 |
Thereafter | 2,297 |
Total minimum lease payments | 8,092 |
Less amount representing interest | (2,751) |
Lease liabilities | $ 5,341 |
Lease - Operating leases that h
Lease - Operating leases that have not yet commenced (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Leases | |
Additional operating leases that have not yet commenced | $ 1,200 |
Aggregate remaining lease obligation | $ 148,940 |
Minimum | |
Leases | |
Expected to commence | 2 years |
Maximum | |
Leases | |
Expected to commence | 5 years |
Related party | |
Leases | |
Minimum annual lease payment | $ 500 |
Aggregate remaining lease obligation | $ 4,200 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Taxes | ||
Effective income tax rate (as a percent) | 23.10% | 22.80% |
Commitments and Contingencies -
Commitments and Contingencies - Legal (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Representation and Warranty Claims | ||||
Roll-forward of claims activity for loans put-back to the mortgage origination segment | ||||
Balance, beginning of year | $ 32,144 | $ 33,784 | ||
Claims made | 6,071 | 3,182 | ||
Claims resolved with no payment | (984) | (5,687) | ||
Repurchases | (2,330) | (1,167) | ||
Indemnification payments | (122) | |||
Balance, end of year | 34,779 | 30,112 | ||
Reserve for Indemnification Liability: | ||||
Total | 34,779 | 30,112 | $ 34,779 | $ 32,144 |
Indemnification Agreement | ||||
Commitments and Contingencies | ||||
Provision for indemnification losses | 700 | 500 | ||
Roll-forward of claims activity for loans put-back to the mortgage origination segment | ||||
Balance, beginning of year | 11,776 | 10,701 | ||
Additions for new sales | 725 | 489 | ||
Repurchases | (271) | (82) | ||
Early payment defaults | (39) | (142) | ||
Indemnification payments | (43) | (3) | ||
Change in reserves for loans sold in prior years | (242) | |||
Balance, end of year | 12,148 | 10,721 | ||
Reserve for Indemnification Liability: | ||||
Specific claims | 1,186 | 1,071 | ||
Incurred but not reported claims | 10,962 | 10,705 | ||
Total | $ 11,776 | $ 10,721 | $ 12,148 | $ 11,776 |
Financial Instruments with Of_3
Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Changes in the allowance for credit losses for loans with off-balance sheet credit exposures | ||
Balance, beginning of period | $ 2,075 | $ 2,366 |
Transition adjustment CECL accounting standard | 3,837 | |
Expense (reversal of expense) | 1,297 | (111) |
Balance, end of period | 7,209 | $ 2,255 |
Unused commitments to extend credit | ||
Financial Instruments with Off-Balance Sheet Risk | ||
Outstanding commitments | 1,900,000 | |
Standby letters of credit | ||
Financial Instruments with Off-Balance Sheet Risk | ||
Outstanding commitments | $ 89,500 |
Stock-Based Compensation - Plan
Stock-Based Compensation - Plan Information (Details) - 2012 Plan - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock based compensation | ||
Number of awards approved for grant (in shares) | 4,000,000 | |
Common stock remaining available for issuance (in shares) | 17,229 | |
Compensation expense | $ 3.8 | $ 2.5 |
Board of Directors | ||
Stock based compensation | ||
Common shares granted to members of board of directors as compensation for director services | 10,291 | 7,958 |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU Activity (Details) - 2012 Plan - RSUs shares in Thousands | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Number of shares outstanding | |
Balance at the beginning of the period ( in shares) | shares | 1,437 |
Granted (in shares) | shares | 535 |
Vested/Released (in shares) | shares | (179) |
Forfeited (in shares) | shares | (6) |
Balance at the end of the period ( in shares) | shares | 1,787 |
Weighted Average Grant Date Fair Value | |
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 22.64 |
Grant date fair value (in dollars per share) | $ / shares | 21.91 |
Vested/Released (in dollars per share) | $ / shares | 28.43 |
Forfeited (in dollars per share) | $ / shares | 22.94 |
Balance at the end of the period (in dollars per share) | $ / shares | $ 21.84 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - 2012 Plan - RSUs $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($)shares | |
Stock based compensation | |
Vested/Released number of shares withheld to satisfy employee statutory tax obligations (in shares) | 21,057 |
Vested RSUs which require deferral of share settlement and statutory tax obligations | 5,482 |
Number of shares awarded (in shares) | 535,000 |
Number of awards subject to time-based vesting (in shares) | 1,497,394 |
Number of awards vesting upon achievement of performance goals (in shares) | 289,493 |
Performance period | 3 years |
Vesting period | 3 years |
Unrecognized compensation expense | $ | $ 25.2 |
Weighted average period for unrecognized compensation expense (in years) | 1 year 10 months 17 days |
Certain Executives and Key Employees | |
Stock based compensation | |
Number of shares awarded (in shares) | 520,510 |
Number of awards subject to time-based vesting (in shares) | 398,278 |
Number of awards vesting upon achievement of performance goals (in shares) | 122,232 |
Performance period | 3 years |
Vesting period | 3 years |
Regulatory Matters - Minimum Ca
Regulatory Matters - Minimum Capital Requirements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Regulatory matters | ||
Regulatory capital effects from CECL transitionary period | 5 years | |
PlainsCapital (the Bank) | ||
Tier 1 capital (to average assets) | ||
Actual Amount | $ 1,263,998 | $ 1,236,289 |
Actual Ratio (as a percent) | 12.06% | 11.61% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 4.00% | 4.00% |
To Be Well Capitalized Minimum Capital Requirements, Ratio (as a percent) | 5.00% | 5.00% |
Common equity Tier 1 capital (to risk weighted assets) | ||
Actual Amount | $ 1,263,998 | $ 1,236,289 |
Actual Ratio (as a percent) | 13.33% | 13.45% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 7.00% | 7.00% |
To Be Well Capitalized Minimum Capital Requirements, Ratio (as a percent) | 6.50% | 6.50% |
Tier 1 capital (to risk-weighted assets) | ||
Actual Amount | $ 1,263,998 | $ 1,236,289 |
Actual Ratio (as a percent) | 13.33% | 13.45% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 8.50% | 8.50% |
To Be Well Capitalized Minimum Capital Requirements, Ratio (as a percent) | 8.00% | 8.00% |
Total capital (to risk-weighted assets) | ||
Actual Amount | $ 1,352,722 | $ 1,299,453 |
Actual Ratio (as a percent) | 14.26% | 14.13% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 10.50% | 10.50% |
To Be Well Capitalized Minimum Capital Requirements, Ratio (as a percent) | 10.00% | 10.00% |
Hilltop | ||
Tier 1 capital (to average assets) | ||
Actual Amount | $ 1,863,770 | $ 1,822,970 |
Actual Ratio (as a percent) | 13.03% | 12.71% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 4.00% | 4.00% |
Common equity Tier 1 capital (to risk weighted assets) | ||
Actual Amount | $ 1,815,640 | $ 1,776,381 |
Actual Ratio (as a percent) | 15.96% | 16.70% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 7.00% | 7.00% |
Tier 1 capital (to risk-weighted assets) | ||
Actual Amount | $ 1,863,770 | $ 1,822,970 |
Actual Ratio (as a percent) | 16.38% | 17.13% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 8.50% | 8.50% |
Total capital (to risk-weighted assets) | ||
Actual Amount | $ 1,934,982 | $ 1,867,771 |
Actual Ratio (as a percent) | 17.00% | 17.55% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 10.50% | 10.50% |
Regulatory Matters - Net Capita
Regulatory Matters - Net Capital Position, Broker-Dealers (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Net Capital | |||
Amount required to be segregated in cash and securities for the benefit of customers | $ 178,805 | $ 157,436 | $ 156,851 |
Hilltop Securities | |||
Net Capital | |||
Net capital | 245,293 | ||
Less required net capital | 9,502 | ||
Excess net capital | $ 235,791 | ||
Net capital as a percentage of aggregate debit items | 51.60% | ||
Net capital in excess of 5% aggregate debt items | $ 221,539 | ||
HTS Independent Network | |||
Net Capital | |||
Net capital | 3,179 | ||
Less required net capital | 250 | ||
Excess net capital | 2,929 | ||
Hilltop Broker-Dealers | |||
Net Capital | |||
Amount required to be segregated in cash and securities for the benefit of customers | $ 178,800 | $ 157,400 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Jan. 31, 2020 |
Stockholders' Equity | ||||
Cash dividends declared per common share | $ 0.09 | $ 0.09 | $ 0.08 | |
Cash dividends paid | $ 8,200 | $ 7,500 | ||
Repurchase common stock authorized amount | $ 75,000 | |||
Payments to repurchase shares | $ 14,957 | |||
Repurchase of common stock (in shares) | 700,901 | |||
Average price (per share) | $ 21.32 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Not designated as hedges | Prime Lending | |||
Derivative financial instruments | |||
Net gain (loss) due to changes in the fair value of the derivative instruments | $ 19,876 | $ 18,187 | |
Not designated as hedges | Hilltop Broker-Dealers | |||
Derivative financial instruments | |||
Net gain (loss) due to changes in the fair value of the derivative instruments | (8,141) | (1,807) | |
Not designated as hedges | PlainsCapital (the Bank) | |||
Derivative financial instruments | |||
Net gain (loss) due to changes in the fair value of the derivative instruments | (135) | $ (61) | |
IRLCs | Not designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 3,063,446 | $ 914,526 | |
Estimated Fair Value | 93,412 | 18,222 | |
Customer-based written options | Not designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 31,200 | 31,200 | |
Customer-based purchased options | Not designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 31,200 | 31,200 | |
Commitments to Purchase MBSs | Not designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 5,431,558 | 3,346,946 | |
Estimated Fair Value | 65,666 | 3,321 | |
Commitments to Sell MBSs | Not designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 9,698,119 | 5,988,198 | |
Estimated Fair Value | (133,762) | (5,904) | |
Commitments to Sell MBSs | Not designated as hedges | Prime Lending | |||
Derivative financial instruments | |||
Cash collateral advanced to offset net derivative liability | 100,700 | 4,500 | |
Interest rate swaps | Not designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 41,455 | 15,012 | |
Estimated Fair Value | (192) | (178) | |
Interest rate swaps | Cash Flow Hedging | Designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 105,000 | 50,000 | |
Estimated Fair Value | (3,605) | 528 | |
U.S. Treasury bond futures and options | Not designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 66,100 | 283,500 | |
Eurodollar futures | Not designated as hedges | |||
Derivative financial instruments | |||
Notional Amount | 18,000 | 934,000 | |
Treasury bond futures and options and Eurodollar futures | Not designated as hedges | PrimeLending and Hilltop Broker-Dealers | |||
Derivative financial instruments | |||
Cash collateral advanced to offset net derivative liability | $ 1,000 | $ 3,700 |
Balance Sheet Offsetting - Asse
Balance Sheet Offsetting - Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Reverse repurchase agreements: | ||
Net Amounts of Assets Presented in the Balance Sheet | $ 23,356 | $ 59,031 |
Total | ||
Gross Amounts of Recognized Assets | 1,364,805 | 1,697,453 |
Net Amounts of Assets Presented in the Balance Sheet | 1,364,805 | 1,697,453 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,270,673) | (1,649,079) |
Net Amount | 94,132 | 48,374 |
Institutional Counterparties | ||
Securities borrowed: | ||
Gross Amounts of Recognized Assets | 1,275,774 | 1,634,782 |
Net Amounts of Assets Presented in the Balance Sheet | 1,275,774 | 1,634,782 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,181,948) | (1,586,820) |
Net Amount | 93,826 | 47,962 |
Interest rate swaps | Institutional Counterparties | ||
Derivatives: | ||
Gross Amounts of Recognized Assets | 9 | |
Net Amounts of Assets Presented in the Balance Sheet | 9 | |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (9) | |
Reverse repurchase agreements | Institutional Counterparties | ||
Reverse repurchase agreements: | ||
Gross Amounts of Recognized Assets | 23,356 | 59,031 |
Net Amounts of Assets Presented in the Balance Sheet | 23,356 | 59,031 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (23,050) | (58,619) |
Net Amount | 306 | 412 |
Forward MBS Derivatives | Institutional Counterparties | ||
Derivatives: | ||
Gross Amounts of Recognized Assets | 65,666 | 3,640 |
Net Amounts of Assets Presented in the Balance Sheet | 65,666 | 3,640 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (65,666) | (3,640) |
Net Amounts of Assets Presented in the Balance Sheet | $ 0 | $ 0 |
Balance Sheet Offsetting - Liab
Balance Sheet Offsetting - Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Total | ||
Gross Amounts of Recognized Liabilities | $ 2,002,833 | $ 2,175,157 |
Gross Amounts Offset in the Balance Sheet | (2,878) | (667) |
Net Amounts of Liabilities Presented in the Balance Sheet | 1,999,955 | 2,174,490 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,848,947) | (2,124,554) |
Net Amount | 151,008 | 49,936 |
Institutional Counterparties | ||
Securities loaned: | ||
Gross Amounts of Recognized Liabilities | 1,167,559 | 1,555,964 |
Net Amounts of Liabilities Presented in the Balance Sheets | 1,167,559 | 1,555,964 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,075,906) | (1,509,933) |
Net Amount | 91,653 | 46,031 |
Institutional Counterparties | Interest rate swaps | ||
Derivatives: | ||
Gross Amounts of Recognized Liabilities | 201 | 178 |
Net Amounts of Liabilities Presented in the Balance Sheet | 201 | 178 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (112) | |
Net Amount | 201 | 66 |
Institutional Counterparties | Repurchase agreements | ||
Repurchase agreements: | ||
Gross Amounts of Recognized Liabilities | 690,178 | 586,651 |
Net Amounts of Liabilities Presented in the Balance Sheet | 690,178 | 586,651 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (690,178) | (586,651) |
Net Amount | 0 | 0 |
Institutional Counterparties | Forward MBS Derivatives | ||
Derivatives: | ||
Gross Amounts of Recognized Liabilities | 136,640 | 6,890 |
Gross Amounts Offset in the Balance Sheet | (2,878) | (667) |
Net Amounts of Liabilities Presented in the Balance Sheet | 133,762 | 6,223 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (74,608) | (2,384) |
Net Amount | 59,154 | 3,839 |
Customer Counterparties | Repurchase agreements | ||
Repurchase agreements: | ||
Gross Amounts of Recognized Liabilities | 8,255 | 25,474 |
Net Amounts of Liabilities Presented in the Balance Sheet | 8,255 | 25,474 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (8,255) | (25,474) |
Net Amount | $ 0 | $ 0 |
Balance Sheet Offsetting - Secu
Balance Sheet Offsetting - Secured Borrowings (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($)item | |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Number of repurchase-to-maturity transactions outstanding | item | 0 | 0 |
Total borrowings | $ 1,865,992 | $ 2,168,089 |
Gross amount of recognized liabilities for repurchase agreements and securities lending in offsetting disclosure above | $ 1,865,992 | 2,168,089 |
Minimum | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Security repurchase agreement maturity period | 1 day | |
Maximum | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Security repurchase agreement maturity period | 30 days | |
Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Total borrowings | $ 1,507,932 | 1,859,310 |
Maturity up to 30 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Total borrowings | 358,060 | 12,892 |
Maturity 30 to 90 Days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Total borrowings | 295,887 | |
US Treasury and agency securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 16,929 | 45,950 |
US Treasury and agency securities | Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 16,929 | 45,950 |
Assets-backed securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 681,504 | 566,175 |
Assets-backed securities | Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 323,444 | 257,396 |
Assets-backed securities | Maturity up to 30 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 358,060 | 12,892 |
Assets-backed securities | Maturity 30 to 90 Days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 295,887 | |
Corporate debt securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Securities lending transactions | 113 | 120 |
Corporate debt securities | Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Securities lending transactions | 113 | 120 |
Equity Securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Securities lending transactions | 1,167,446 | 1,555,844 |
Equity Securities | Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Securities lending transactions | $ 1,167,446 | $ 1,555,844 |
Broker-Dealer and Clearing Or_3
Broker-Dealer and Clearing Organization Receivables and Payables (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Receivables: | ||
Securities borrowed | $ 1,275,774 | $ 1,634,782 |
Securities failed to deliver | 66,342 | 18,726 |
Trades in process of settlement | 485,330 | 104,922 |
Other | 11,343 | 21,850 |
Total receivables | 1,838,789 | 1,780,280 |
Payables: | ||
Securities loaned | 1,167,559 | 1,555,964 |
Correspondents | 23,376 | 37,036 |
Securities failed to receive | 65,407 | 8,568 |
Other | 2,839 | 3,950 |
Total Payables | $ 1,259,181 | $ 1,605,518 |
Segment and Related Informati_3
Segment and Related Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Information about the revenues, operating results, goodwill and assets | |||
Number of reportable segments | segment | 4 | ||
Net interest income (expense) | $ 110,336 | $ 108,289 | |
Provision (reversal of) for credit losses | 34,549 | 951 | |
Noninterest income | 271,713 | 215,963 | |
Noninterest expense | 281,901 | 278,747 | |
Income from continuing operations before income taxes | 65,599 | 44,554 | |
Income before taxes from discontinued operations | 4,014 | 6,809 | |
Income before income taxes | 69,613 | 51,363 | |
Goodwill | 267,447 | $ 267,447 | |
Assets held for sale | 249,758 | 248,429 | |
Total assets | 15,706,250 | 15,172,448 | |
Operating segment | Banking | |||
Information about the revenues, operating results, goodwill and assets | |||
Net interest income (expense) | 93,923 | 92,690 | |
Provision (reversal of) for credit losses | 34,275 | 1,025 | |
Noninterest income | 8,771 | 10,621 | |
Noninterest expense | 56,967 | 60,726 | |
Income from continuing operations before income taxes | 11,452 | 41,560 | |
Income before income taxes | 11,452 | 41,560 | |
Goodwill | 247,368 | 247,368 | |
Total assets | 11,616,994 | 11,147,344 | |
Operating segment | Broker-Dealer | |||
Information about the revenues, operating results, goodwill and assets | |||
Net interest income (expense) | 13,173 | 12,850 | |
Provision (reversal of) for credit losses | 274 | (74) | |
Noninterest income | 86,209 | 91,307 | |
Noninterest expense | 80,939 | 87,807 | |
Income from continuing operations before income taxes | 18,169 | 16,424 | |
Income before income taxes | 18,169 | 16,424 | |
Goodwill | 7,008 | 7,008 | |
Total assets | 3,406,300 | 3,457,068 | |
Operating segment | Mortgage Origination Segment | |||
Information about the revenues, operating results, goodwill and assets | |||
Net interest income (expense) | 368 | (467) | |
Noninterest income | 178,968 | 118,033 | |
Noninterest expense | 139,552 | 114,677 | |
Income from continuing operations before income taxes | 39,784 | 2,889 | |
Income before income taxes | 39,784 | 2,889 | |
Goodwill | 13,071 | 13,071 | |
Total assets | 2,607,131 | 2,357,415 | |
Operating segment | Insurance Segment | |||
Information about the revenues, operating results, goodwill and assets | |||
Income before taxes from discontinued operations | 4,014 | 6,809 | |
Income before income taxes | 4,014 | 6,809 | |
Assets held for sale | 249,758 | 248,429 | |
Total assets | 249,758 | 248,429 | |
Corporate | |||
Information about the revenues, operating results, goodwill and assets | |||
Net interest income (expense) | (1,656) | (1,330) | |
Noninterest income | 2,309 | 538 | |
Noninterest expense | 4,853 | 15,562 | |
Income from continuing operations before income taxes | (4,200) | (16,354) | |
Income before income taxes | (4,200) | (16,354) | |
Total assets | 2,448,412 | 2,393,604 | |
All Other and Eliminations. | |||
Information about the revenues, operating results, goodwill and assets | |||
Net interest income (expense) | 4,528 | 4,546 | |
Noninterest income | (4,544) | (4,536) | |
Noninterest expense | (410) | (25) | |
Income from continuing operations before income taxes | 394 | 35 | |
Income before income taxes | 394 | $ 35 | |
Total assets | $ (4,622,345) | $ (4,431,412) |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic earnings per share: | ||
Participating securities | 0 | 0 |
Income from continuing operations | $ 46,485 | $ 33,426 |
Income from discontinued operations | 3,151 | 5,360 |
Income attributable to Hilltop | $ 49,636 | $ 38,786 |
Weighted average shares outstanding - basic | 90,509 | 93,669 |
Income from continuing operations (in dollars per share) | $ 0.51 | $ 0.36 |
Income from discontinued operations (in dollars per share) | 0.04 | 0.05 |
Basic earnings per common share (in dollars per share) | $ 0.55 | $ 0.41 |
Diluted earnings per share: | ||
Income from continuing operations | $ 46,485 | $ 33,426 |
Income from discontinued operations | 3,151 | 5,360 |
Income attributable to Hilltop | $ 49,636 | $ 38,786 |
Weighted average shares outstanding - basic | 90,509 | 93,669 |
Effect of potentially dilutive securities (in shares) | 41 | |
Weighted average shares outstanding - diluted | 90,550 | 93,669 |
Income from continuing operations (in dollars per share) | $ 0.51 | $ 0.36 |
Income from discontinued operations (in dollars per share) | 0.04 | 0.05 |
Diluted earnings per common share (in dollars per share) | $ 0.55 | $ 0.41 |