Hilltop Holdings Inc. · NYSE:HTH
Hilltop — Q2 2020 Earnings Presentation
23 slides from Hilltop's earnings presentation, Jul 30, 2020
Slide 1: Hilltop Holdings Inc. Earnings Presentation Q2 2020
Hilltop Holdings Inc. Earnings Presentation Q2 2020 July 2020
Slide 2: Preface: Additional Information and Forward-Looking Statements
Preface 2 Additional Information Corporate Headquarters 6565 Hillcrest Ave Dallas, TX 75205 Phone: 214-855-2177 www.hilltop-holdings.com Please Contact: Erik Yohe Phone: 214-525-4634 Email: eyohe@hilltop-holdings.com FORWARD-LOOKING STATEMENTS This presentation and statements made by representatives
Slide 3: COVID-19 Response and Customer Support Update
3 COVID-19 Response and Customer Support Update Customer Support Operations and Employee Health • Essential employees are working from corporate offices and bank branches; the majority of employees are working remotely at this time • Continue tracking COVID-19 cases and quarantining impacted employe
Slide 4: Investor Highlights
4 Investor Highlights – Net Income $128.5 MM ROAA ..86% EPS – Diluted $0.30 ROAE 5.76% Notes: (1) HTH Consolidated defined as continuing and discontinued operations. (2) Total Loans HFI reflect loans held for investment excluding broker-dealer loans. (3) For a reconciliation of tangible book value p
Slide 5: Business Results – Pre-Tax Income vs. Prior Year
5 Business Results – Pre-Tax Income vs. Prior Year ($ in millions) • Banking pre-tax loss of $17.5 million resulting from higher provision for credit losses of $65.6 million. Net interest income remained stable, as higher balances from PPP loans and National Warehouse Lending offset lower accretion
Slide 6: Synergistic & Differentiated Business Model
Synergistic & Differentiated Business Model 6 • Completion of sale of National Lloyds enhances focus and solidifies long term business model • Preeminent financial services franchise anchored by a strong commercial bank and enhanced by powerful fee businesses, including a leading national mortgage o
Slide 7: Hilltop Holdings – Financial Summary
7 Notes: (1) Pre-provision net revenue, or PPNR, is a non-GAAP financial measure and is calculated as the sum of net interest income and noninterest income less noninterest expense. Management believes that this financial measure is useful in assessing the ability of a lending institution to generat
Slide 8: Hilltop Holdings – Net Interest Income & Margin
$12.4 $13.0 $13.4 $13.1 $15.0 3.49% 3.45% 3.30% 3.41% 2.80% Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Average Earning Assets (Gross) Net Interest Margin 8 Hilltop Holdings – Net Interest Income & Margin Average Earning Assets and NIM Trends1 2 Net Interest Income Highlights ($ in billions) • Net inter
Slide 9: Hilltop Holdings – Liquidity Update
Hilltop Holdings – Liquidity Update 9 • Hilltop’s loan to deposit ratio decreased to 89.6% in Q2 2020 from 104.1% in Q2 2019 even as Loans Held for Sale balances increased by $1.0 billion during the same period • Liquidity totaled approximately $6.6 billion at Q2 2020, up from $4.4 billion at Q4 201
Slide 10: Hilltop Holdings – Noninterest Income
10 Hilltop Holdings – Noninterest Income • Noninterest income of $468.1 million increased by $191.4 million compared to the second quarter 2019 • $176.1 million increase in mortgage production income and fees driven by improved gain on sale, improving pull-through rates and mortgage lock volumes • C
Slide 11: Hilltop Holdings – Noninterest Expenses
$304.1 $321.2 $307.9 $281.9 $370.2 79.2% 76.6% 82.2% 73.8% 64.6% Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Noninterest Expense Efficiency Ratio 11 Hilltop Holdings – Noninterest Expenses Year-over-Year Noninterest Expense ($MM) Noninterest Expenses and Efficiency Ratio Noninterest Expense Highlights •
Slide 12: Hilltop Holdings – Loans
12 Notes: The sum of the period amounts may not equal the total amounts due to rounding. (1) Annualized Gross Loan Yield contains purchased loan portfolio. Loan Mix and Yield Total Loan Growth Ending Balance h9% vs. PY Average Balance h9% vs. PY ($ in billions, ending and average balances) Hilltop H
Slide 13: Hilltop Holdings – Deposits
13 Deposit Mix and Cost ($ in billions, ending and average balances) Notes: Noninterest-bearing deposits excludes broker-dealer sweep deposits. The sum of the period amounts may not equal the total amounts due to rounding. Total Deposit Growth Ending Balance h38% vs. PY Average Balance h35% vs. PY I
Slide 14: Hilltop Holdings – Bank Asset Quality
14 Hilltop Holdings – Bank Asset Quality Note: The sum of the period amounts may not equal the total amounts due to rounding. Figures represent bank asset quality metrics only (excludes Loans HFS and Broker Dealer Margin Loans)
Slide 15: Allowance for Credit Losses – Loans HFI
15 Allowance for Credit Losses – Loans HFI CECL Loans HFI Rollforward 3/31/20 to 6/30/20 During Q2 2020, Total Allowance for Credit Losses (ACL) on Loans HFI increased to $156.4 million • Reserves on collectively evaluated loans increased as the economic outlook deteriorated from Q1 2020. • Addition
Slide 16: COVID-19 Deferred Loan Portfolio Update
16 COVID-19 Deferred Loan Portfolio Update • The outstanding balance of approved modifications related to COVID-19 impacted loans was $968 million as of June 30, 2020 • $349 million are 90 day interest and principal deferrals, approximately 58% are Hotel and Restaurants • $619 million are 90 day pri
Slide 17: Energy Loan Portfolio Update
4.6% 1.4% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Energy Loan Portfolio Update 17 • PlainsCapital Bank’s outstanding energy exposure equates to $104 million in outstanding balance, or 1.4% of the total loan portfolio, down from $239 million, or 4.6%, at March 31, 2016 • Energy balance
Slide 18: PlainsCapital Bank – Highlights
Summary Results ($ in millions) Q2 2019 Q2 2020 Net Interest Income 93.4 94.1 Prov ision for Credit Losses (0.7 ) 65.6 Noninterest Income 1 0.7 1 0.7 Noninterest Expense 58.3 56.6 Income (Loss) Before Taxes $46.6 ($17 .5) 18 PlainsCapital Bank – Highlights Efficiency and NIM Q2 2020 Highlights Q1 20
Slide 19: PrimeLending – Highlights
Net Interest Expense (1 .0) (1 .7 ) Noninterest Income 1 64.5 340.5 Noninterest Expense 1 41 .7 200.5 Income Before Taxes $21.8 $138.3 Key Highlights Q2 2019 Q2 2020 Origination Volume ($mm) $3,960 $6,099 % Purchase 84% 53% Sales Volume ($mm) $3,338 $5,935 MSR Asset ($mm) $55 $82 19 PrimeLending – H
Slide 20: HilltopSecurities – Highlights
Summary Results ($ in millions) Q2 2019 Q2 2020 Net Interest Income 11.4 9.7 Provision (recovery) for Loan Losses (0.0) 0.4 Noninterest Income 105.6 123.0 Noninterest Expense 94.9 104.4 Income Before Taxes $22.1 $27.8 Key Highlights ($ in millions) Q2 2019 Q2 2020 Compensation/Net Revenue (%) 60.1%
Slide 21: Hilltop Holdings – 2020 Commentary
21 Hilltop Holdings – 2020 Commentary Continuing Operations Commentary Loan Growth (FY Average HFI Loan Growth) • PPP loan originations expected to provide majority of loan growth • Expect retention of single family mortgage loans to restart in late Q3 2020 Deposit Growth (Full year average deposit
Slide 22: Appendix
Appendix tops RP
Slide 23: Non-GAAP to GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures
23 Non-GAAP to GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures (Continued) • Hilltop Consolidated Tangible Common Equity, is a non-GAAP financial measure. Tangible common equity is defined as our total stockholders’ equity, excluding preferred stock, reduced by goodwi