Hilltop Holdings Inc. · NYSE:HTH
Hilltop — Q1 2020 Earnings Presentation
37 slides from Hilltop's earnings presentation, May 7, 2020
Slide 1: Hilltop Holdings Inc. Investor Presentation May 7, 2020
Hilltop Holdings Inc. Investor Presentation May 7, 2020
Slide 2: Preface and Forward-Looking Statements
Preface Corporate Headquarters Additional Information 6565 Hillcrest Ave Please Contact: Dallas, TX 75205 Erik Yohe Phone: 214-855-2177 Phone: 214-525-4634 www.hilltop-holdings.com Email: eyohe@hilltop-holdings.com FORWARD-LOOKING STATEMENTS This presentation and statements made by representatives o
Slide 3: Company Overview
Company Overview |...
Slide 4: Overview
Hilltop Holdings– Overview • Hilltop Holdings is a Dallas, Texas-based diversified financial holding company with a complementary set of operating companies • Hilltop Holdings Inc. ranked No. 35 on Forbes’ best banks listing of the Top 100 largest publicly traded banks and thrifts (1) • Hilltop prov
Slide 5: Timeline
Hilltop Holdings – Timeline 2004 2005 2006 2007 Operated as Affordable Gerald J. Ford invested Announced the Company sold all assets of manufactured home Residential in ARC and joined the acquisition of communities business Communities (“ARC”) Board of Directors National Lloyds (ARC) for $1.8 billio
Slide 6: Leadership
Hilltop Holdings – Leadership • Gerald J. Ford, Hilltop’s Chairman and largest shareholder, has successfully acquired, managed and sold banks and other financial institutions for the past 45 years • Our senior management teams have complimentary expertise in management and acquisitions • Hilltop Hol
Slide 7: Historical Profitability
Hilltop Holdings – Historical Profitability Return on Average Assets (ROAA) History 2013 - Q1 2020 Average ROAA: 1.37% Note: 2017 includes estimated non-cash, non-recurring charges to Hilltop consolidated and banking segment results of $28.4 million and $25.7 million, respectively, primarily attribu
Slide 8: Hilltop & PlainsCapital Bank – Capital Ratios
Hilltop Holdings & PlainsCapital Bank – Capital Ratios Tier 1 Leverage Ratio Tier 1 Capital Ratio Common Equity Tier 1 Ratio Total Capital Ratio
Slide 9: PlainsCapital Bank – Asset Quality Track Record
PlainsCapital Bank – Asset Quality Track Record Asset Quality History NPAs / Loans HFI + OREO 1 NCOs / Average HFI Loans Related to non-recurring, full charge-off of $24.5 million loan Note: Figures represent bank asset quality metrics only (excludes Loans HFS and Broker Dealer Margin Loans). Figure
Slide 10: COVID-19 Update
COVID-19 Update |...
Slide 11: COVID-19 Response and Business Continuity
COVID-19 Response and Business Continuity Employee Benefits & Health •COVID-19 testing 100% covered under employee benefits plan • All employees continue to be paid regardless of ability to work from home • Social distancing and no face to face meetings in offices • Tracking COVID-19 cases and quara
Slide 12: Delivering Support To Our Impacted Banking Clients
Delivering Support To Our Impacted Banking Clients COVID-19 Modified Loan Summary Paycheck Protection Program (PPP) • Partnering with borrowers that have been impacted by COVID-19 • Approximately $775 million of loan modification (up to 90 days) requests in process as of April 23, 2020 • Completed p
Slide 13: Recent Results & Operational Highlights
Recent Results & Operational Highlights
Slide 14: Investor Highlights – Q1 2020
Investor Highlights – Q1 2020 HTH Consolidated 1 Continuing Operations Net Income $$4928..61MM $ 46.5 MM Diversified Growth EPS – Diluted ROAA ROAE $ 0.5530 01.86%47% 95.76%38% $ 0.51 1.41% 9.30% • Mortgage origination volume of $3.6 billion in Q1 2020 grew by $1.2 billion, or 48%, compared to the s
Slide 15: Business Results – Q1 2020
Business Results – Q1 2020 Pre-Tax Income vs. Prior Year ($ in millions) Business Drivers for1Q120192020 • Banking pre-tax income of $11.5 million declined by approximately $30.1 million from Q1 2019 as the first CECL-impacted provision expense equated to $34.3 million. Partially offsetting the prov
Slide 16: Financial Summary
Hilltop Holdings – Financial Summary Notes: (1) Pre-provision net revenue is calculated as the sum of net interest income and noninterest income less noninterest expense (except provision for credit losses). (2) Includes impact of Purchase Accounting, FDIC Indemnification and True-up accrual. (3) Ke
Slide 17: CECL – Reserve Build on Loans HFI
CECL – Reserve Build on Loans HFI CECL Loans HFI Rollforward 12/31/19 to 3/31/20 $16.9 3/31 Reserve Composition $17.6 CRE 53.9 $12.6 C&I 38.6 ($1.5) Construction 6.4 $106.7 1-4 SFR 6.4 Consumer 1.2 $61.1 $73.7 Broker Dealer 0.3 Total $106.7 12/31/2019 CECL Adoption 1/1/2020Net Charge-Offs Specific E
Slide 18: Net Interest Income & Margin
Hilltop Holdings – Net Interest Income & Margin Average Earning Assets and NIM Trends ($ in billions) 3.66% 3.47% 3.43% 3.39% 3.27% $12.9 $13.2 $12.9 $12.3 $11.8 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Average Earning Assets (Gross) NIM continuing operations Note: Figures reflect continuing operatio
Slide 19: Noninterest Income
Hilltop Holdings – Noninterest Income Noninterest Income & Fee Income Ratio 1 ($ in millions) $306.5 $276.7 $271.7 $263.6 $216.0 Year-over-Year Noninterest Income ($MM) Q1 2019 $216.0 Mortgage Production Income & Fees 61.0 Securities Related Fees & Commissions 7.1 Other Income (12.4) Q1 2020 $271.7
Slide 20: Noninterest Expenses
Hilltop Holdings – Noninterest Expenses oninterest Expenses and Efficiency Ratio 1 ($ in millions) Selected Noninterest Expense Items Q1 2020 ($ in millions) Core system improvements $1.9 Year-over-Year Noninterest Expense ($MM) Q1 2019 $278.7 Compensation and Benefits 9.7 Occupancy and Equipment (8
Slide 21: Loans
Hilltop Holdings – Loans Loan Mix and Yield ($ in billions, ending and average balances) Notes: The sum of the period amounts may not equal the total amounts due to rounding. (1) Annualized Gross Loan HFI Yield contains purchased loan portfolio.
Slide 22: Asset Quality
Hilltop Holdings — Asset Quality Non-Performing Assets e209 Qaa0i9 2019 2 20 qrz0% q22019 G29 42019 L2020 mgeo 0.18% 156% 80% = 2008 ce : = coe “om or aa! 1.00% Bo ses oe x 1500 a es 0x 0.60% : -_ oso Gag00 Gee) 0.80% ox 0.20% Gos oe oon aoe oe rao Orso Qoama Quan Grane nent enter ts om eo nn Wnt ne
Slide 23: Deposits
Hilltop Holdings — Deposits Deposit Mix and (Gin ions ending and average balances) aa 1.26% AverageCost of Interest. 119% —e and 0.97% Seago: —— 07 Deposit Growth a. Ending Balance = es & $8.9 120% vs. PY 38. a $8.3 a $83 Average Balance vest Bearing it Growth _ vs. PY fe e Balance Q12019 Q22019 —Q3
Slide 24: Liquidity Update
Hilltop Holdings — Liquidity Update 2039 019 Qaz019 mmtLoansHFI Smt Loans HES + Hilltop’s Loan to deposit ratio increased to 98.3% from Qi 2019 while Loans Held for Sale balances increased by $1.3 billion during the same period + During March and April, HTH has secured additional funding to address
Slide 25: PlainsCapital Bank — Q1 2020 Highlights
PlainsCapital Bank — Q1 2020 Highlights Key Highlights ‘Net Interest Income 38 ROAA 134% oa3% Provision for Credit Losses 10 ma Efficiency Ratio! 588% 555% ‘Noninterest Income 106 88 Net Interest Margin 424% 388% [Noninterest Expense 607 Assets (Sha) ser S26 [income HeforeTases San + Year-over-year
Slide 26: PlainsCapital Bank — Impacted Industry Credit Portfolio
PlainsCapital Bank — “Impacted Industry” Credit Portfolio + ‘The “Impacted Industry” portfolio represents loans within certain non-energy industries we have identified as potentially being severely impacted by COVID-19 + ‘The outstanding balance of the “Impacted Industry” portfolio was $1. billion a
Slide 27: PlainsCapital Bank — Energy Update
PlainsCapital Bank — Energy Update + PlainsCapital Bank's outstanding energy exposure equates to $146 million in outstanding balance, or 2.1% of the total loan portfolio, down from $239 million, or 4.6%, in Qi 2016 a,- Midteam 4% + Qr2020 energy ACL of $13.7 million, representing 8 9.4% of outstandi
Slide 28: PlainsCapital Bank — Securities Portfolio
PlainsCapital Bank — Securities Portfolio Cash and cash on Portfolio Breakout by Type") Equivalents $492.1 million ‘Agency Agency os agency Securities Portfolio $1.3 billion 24% ns 7 sed Weighted average Vela? 2s _ eos re 22 ‘Muni. Fixed RateCMO 9% 21% Portfolio Breakout by Classification HTM, A 27%
Slide 29: PlainsCapital Bank — Interest Rate Sensitivity
PlainsCapital Bank — Interest Rate Sensitivity + Estimated impact of a range of changes in interest rates (bps) on net interest income and on economic value of equity for the banking segment: Net Interest Income (Qi 2020) _ Economic Value of Equity (Q1 2020) 23.65% 15.07% 4.29% | el Paar 88% (0.33%)
Slide 30: PrimeLending — Q1 2020 Highlights
PrimeLending — Qi 2020 Highlights 2019 (os) Nonnterest Income 18.0 90 Noninterest Expense ae. 1296 [income Before Taxes $2.9 $39.8 Origination volume of $3.6 billion in Qs 2020 increased from Qs 2019 by $1.2 billion, or 48% + 12020 loan sales to PCB equated to $131 million + Executed sale of $19 mil
Slide 31: Securities — Q1 2020 Highlights
HilltopSecurities — Q1 2020 Highlights 2019 ‘Net Interest Income aS Fr Provision for Credit Loses (oa) o3 ‘Noninterest Income ws 860 Noninterest Expense 878 809 [tncome Before Taxes $16.4 $18.2 ‘Compensation/Net Revenue (%) 60.6% 569% FDIC Insured Balances at PCB Seger Sus00 Other FDIC Insured Balan
Slide 32: National Lloyds Corporation — Q1 2020 Highlights
National Lloyds Corporation — Qi 2020 Highlights ‘Announced Sale of Segment in January 2020 snmary Results millions) Giro @ Q:2019 Qs 2020 eel toies ea 06 06 Direct Premiums Written 308 300 ‘Noninteret Income 365 304 Bae se ws ce Expense 303 70 [income Before Taxes 368 so | + National Lloyds moved t
Slide 33: 2020 Commentary
Hilltop Holdings — 2020 Commentary comments + PPP loan originations expected to provide majority of loan growth Teen Gareth + Suspending the retention of single family mortgage loans at PlainsCapital Bank + Commercial Ioan pipelines remain solid, clients delaying pricing and funding until (FV Averag
Slide 34: Ratings Summary
Hilltop Holdings — Ratings Summary FitchRatings BBB A Senior Debt (Stable) (Stable) - . BBB- BBB+ Subordinated Debt (Stable) (Stable) * |...
Slide 35: Double Leverage and Interest Coverage
Hilltop Holdings — Double Leverage and Interest Coverage For the Year Ended December 31, 2017 2018 2019 Investment in Subsidiaries 1,831 1,810 1,924 Consolidated Equity 1,912 1,949 2,103 Double Leverage Ratio 95.8% 92.8% 91.5% Total Deposit Interest 24.7 46.0 715 Other Borrowing Expense ? 60.7 97-4
Slide 36: Appendix
Appendix ad
Slide 37: Non-GAAP to GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures
Non-GAAP to GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures (Continued) This presentation includes two non-GAAP financial measures, Tangible Common Equity and Tangible book value per share, or ‘TBVPS. Tangible common equity is defined as our total stockholders’ equity