Hilltop Holdings Inc. · NYSE:HTH
Hilltop — Q4 FY2014 Earnings Presentation
26 slides from Hilltop's earnings presentation, Sep 3, 2014
Slide 1: Fourth Quarter Fiscal 2014 SWS Group Conference Call
Filed by SWS Group, Inc. Pursuant to Rule 425 of the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: Hilltop Holdings, Inc. (Commission File No. for Registration Statement on Form S-4: 333-196367) The following Earnings Presenta
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements. Readers are cautioned that any forward- looking statements, including those predicting or forecasting future events or results, which depend on future events for their accuracy, embody projections or assumptions, or ex
Slide 3: Use of Non-GAAP Measures (Slides 4, 8, 9 & 16)
Use of Non-GAAP Measures (Slides 4, 8, 9 & 16) SWS Group, Inc. (“SWS” or the “Company”) has included presentations of Fully Diluted Tangible Book Value Per Share (Slide #4 and #8), Adjusted Pre-tax Loss (Slide #9) and Adjusted Compensation Ratio (Slide #16). Fully Diluted Tangible Book Value Per Sha
Slide 4: Fully Diluted Tangible Book Value (Non-GAAP)
Fully Diluted Tangible Book Value (Non-GAAP)* (in thousands) 6/30/14 6/30/13 Book Value 309,872 315,286 Less: Goodwill (7,552) (7,552) Tangible Book Value 302,320 307,734 Pro-forma Adjustments: New equity from full warrant exercise 100,000 100,000 Total recorded value of debt and warrants 115,565 10
Slide 5: Presenters
Presenters Presenters: James H. Ross President & CEO SWS Group, Inc. J. Michael Edge SVP & CFO SWS Group, Inc. 5
Slide 6: Agenda
Agenda Opening Remarks Chief Financial Officer’s Report Questions 6
Slide 7: Opening Remarks
Opening Remarks Merger with Hilltop Holdings Business segments posted pre-tax profits for quarter and year Continued Bank improvement Broker Bank (87% of Q4 Revenues) (13% of Q4 Revenues) 2.91% net interest Retail Institutional Clearing margin 153 Reps 46 Reps 159,816 tickets $1.3 billion in assets
Slide 8: Fourth Quarter & Fiscal 2014 Overview
Fourth Quarter & Fiscal 2014 Overview Three Months Ended Twelve Months Ended ($ in thousands, except per share amounts) 6/30/14 6/30/13 6/30/14 6/30/13 Revenues $73,822 $68,578 $311,288 $318,114 Net Revenues 63,207 55,445 266,362 271,653 Pre-tax Income (Loss) 637 (3,712) (6,110) (6,690) Net Loss (30
Slide 9: Adjusted Pre-tax Loss (Non-GAAP)
Adjusted Pre-tax Loss (Non-GAAP)* Three Months Twelve Months Ended Ended (in thousands) 6/30/14 6/30/13 Change 6/30/14 6/30/13 Change Income (loss) before income tax expense $ 637 $ (3,712) $ 4,349 $ (6,110) $ (6,690) $ 580 Valuation adjustment for warrants (3,237) (3,877) 640 3,599 (3,613) 7,212 Me
Slide 10: SWS Priorities
SWS Priorities Improve operating results Address impact of challenging markets Continue improvement at Bank 10
Slide 11: Chief Financial Officer’s Report
* * * * * * * Chief Financial Officer’s Report 11
Slide 12: Fourth Quarter Fiscal 2014 Net Revenues
Fourth Quarter Fiscal 2014 Net Revenues ($ in Thousands) 6/30/14 3/31/14 %Change 6/30/13 %Change Operating Revenues: Clearing Operations $ 2,163 $ 2,170 (0.3) $ 2,321 (6.8) Commissions 28,976 30,247 (4.2) 30,655 (5.5) Investment Banking & Advisory 8,918 9,704 (8.1) 13,894 (35.8) Net Gains on Princip
Slide 13: Fiscal 2014 Net Revenues
Fiscal 2014 Net Revenues ($ in Thousands) 12 Months Ended 6/30/14 6/30/13 Change % Change Operating Revenues: Clearing Operations $ 8,839 $ 8,719 $ 120 1.4 Commissions 119,534 125,620 (6,086) (4.8) Investment Banking & Advisory 40,021 45,255 (5,234) (11.6) Net Gains on Principal Transactions 29,655
Slide 14: Fourth Quarter Fiscal 2014 Expenses
Fourth Quarter Fiscal 2014 Expenses ($ in Thousands) 6/30/14 3/31/14 %Change 6/30/13 %Change Operating Expenses: Commissions and Other Employee Compensation $46,388 $48,753 (4.9) $48,908 (5.2) Occupancy, Equipment and Computer Service Costs 7,457 7,676 (2.9) 8,189 (8.9) Communications 3,341 3,384 (1
Slide 15: Fiscal 2014 Expenses
Fiscal 2014 Expenses ($ in Thousands) 12 Months Ended 6/30/14 6/30/13 Change %Change Operating Expenses: Commissions and Other Employee Compensation $196,470 $207,246 $(10,776) (5.2) Occupancy, Equipment and Computer Service Costs 30,614 31,278 (664) (2.1) Communications 13,435 13,277 158 1.2 Floor
Slide 16: Compensation Ratios
Compensation Ratios ($ in Thousands) Three Months Ended 6/30/14 3/31/14 6/30/13 Commissions and Other Employee Compensation $46,388 $48,753 $48,908 Net Revenues $63,207 $65,674 $55,445 GAAP Compensation Ratio 73.4% 74.2% 88.2% Three Months Ended Adjusted Compensation Ratio (Non-GAAP)*: 6/30/14 3/31/
Slide 17: Warrant Valuation
Warrant Valuation 6/30/14 3/31/14 6/30/13 Derived Volatility 28% 30% 51% Price $ 7.28 $ 7.48 $ 5.45 Valuation (in millions) $ 27.8 $ 31.0 $ 24.2 Adjustment (in millions) $ (3.2) $ 6.7 $ (3.9) 17
Slide 18: Segment Results
Segment Results (In Thousands) 3 Months Ended 12 Months Ended 6/30/14 6/30/13 % Change 6/30/14 6/30/13 % Change Clearing Net Revenues $ 5,151 $ 4,748 8.5 $ 20,244 $ 18,938 6.9 Pre-Tax $ 1,195 $ 56 >100 $ 3,286 $ (481) >100 Retail Net Revenues $26,826 $28,453 (5.7) $112,457 $110,440 1.8 Pre-Tax $ 1,9
Slide 19: Key Metrics
Key Metrics 6/30/14 3/31/14 %Change 6/30/13 %Change Clearing Transactions Processed 159,816 186,059 (14.1) 197,423 (19.0) Representatives: PCG 153 157 (2.5) 167 (8.4) Fixed Income 46 50 (8.0) 64 (28.1) Independent Contractors 278 279 (0.4) 297 (6.4) Correspondents 141 145 (2.8) 151 (6.6) Total Loan
Slide 20: Classified Assets
Classified Assets ($ in Thousands) 6/30/14 3/31/14 6/30/13 Non-accrual Loans $14,321 $14,388 $22,446 Performing Troubled Debt Restructurings 3,673 4,819 5,349 REO & Other Repossessed Assets 4,875 5,880 10,165 Total Non-performing Assets $22,869 $25,087 $37,960 Current Classified Assets 18,466 15,835
Slide 21: Key Bank Statistics – Fourth Quarter Fiscal 2014
Key Bank Statistics – Fourth Quarter Fiscal 2014 ($ in Thousands) 6/30/14 3/31/14 6/30/13 Total Loan Loss Recapture $(492) $(1,578) $ (6,268) Net Recovery / (Charge-offs) 342 222 (155) Allowance for Loan Losses 7,942 8,092 12,343 Reserve / Loan Ratio* 1.82% 1.83% 2.85% Yield on Earning Assets 3.10%
Slide 22: Bank Balances
Bank Balances ($ in Millions) 6/30/14 3/31/14 %Change 6/30/13 %Change Investment Portfolio $ 514.6 $ 596.9 (13.8) $ 529.1 (2.7) Loans Held for Investment – Gross 622.3 566.1 9.9 620.9 0.2 Total Core Deposits 1,000.6 995.9 0.5 993.9 0.7 Capital 174.1 170.3 2.2 168.2 3.5 Core Capital 14.1% 13.9% 13.5%
Slide 23: Bank Loans by Type
Bank Loans by Type ($ in Millions) 6/30/14 3/31/14 %Change 6/30/13 %Change Residential Real Estate Purchased Mortgage – HFI $ 133.9 $ 72.5 84.7 $ 174.0 (23.0) 1-4 Family 83.3 92.4 (9.8) 59.9 39.1 Construction Residential Construction 0.6 0.8 (25.0) 1.4 (57.1) Commercial Construction 9.7 5.5 76.4 1.7
Slide 24: SWS Office Locations
SWS Office Locations Srsws GROUP HEADQUARTERS Municipal Finance Equity and Fixed Income Trading Clearing Services Corporate Administration @ TAXABLE FIXED INCOME @ MUNICIPAL SECURITIES D/FW area is home to /PUBLIC FINANCE 5 Banking Centers @ PRIVATE CLIENT GROUP 3 Private Client Offices @ BANK 24
Slide 25: Important Information for Investors & Shareholders
Important Information for Investors & Shareholders This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation
Slide 26: Questions & Answers
* * * * * * * Questions & Answers 26