Hilltop Holdings Inc. · NYSE:HTH
Hilltop — Investor Presentation (March 2015)
32 slides from Hilltop's investor presentation, Mar 19, 2015
Slide 1: Hilltop Holdings Inc. Corporate Presentation March 2015
Hilltop Holdings Inc. Corporate Presentation March 2015
Slide 2: Preface and Forward-Looking Statements
Preface 2 200 Crescent Court, Suite 1330 Dallas, TX 75201 Phone: (214) 855-2177 Fax: (817) 887-1687 www.hilltop-holdings.com Please contact: Isabell Novakov Phone: (214) 252-4029 Email: inovakov@plainscapital.com FORWARD-LOOKING STATEMENTS This presentation and statements made by representatives of
Slide 3: Hilltop Holdings Overview
Hilltop Holdings Overview 3
Slide 4: Overview
4 Hilltop Holdings – Overview • Hilltop Holdings is a Dallas, Texas-based diversified financial holding company with a complementary set of operating companies • Hilltop provides banking, broker-dealer, mortgage origination, and insurance through its wholly-owned subsidiaries PlainsCapital Bank, Hil
Slide 5: History
5 Hilltop Holdings – History 2004 Operated as Affordable Residential Communities (“ARC”) and completed IPO on NYSE 2005 Gerald J. Ford invested in ARC and joined the Board of Directors 2006 Announced the acquisition of National Lloyds Corporation (completed in 2007) 2007 Company sold all assets of m
Slide 6: Experienced Leadership
Gerald J. Ford Chairman of the Board and Largest Shareholder • Company Tenure: 10 years • Financial Services Experience: 40 years Jeremy B. Ford President and CEO • Company Tenure: 5 years • Financial Services Experience: 15 years Darren E. Parmenter Principal Financial Officer • Company Tenure: 15
Slide 7: Core Banking Franchise
$0 $1,000 $2,000 $3,000 $4,000 $5,000 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 7 Hilltop Holdings – Core Banking Franchise Organic Loans ($M) Recession1 Source: SNL Financial; Data represents PlainsCapital Bank Notes: 2013 bank results include FNB bargain purchase gain; Organic growth rep
Slide 8: SWS Transaction Rationale
8 Hilltop Holdings – SWS Transaction Rationale Overview • Significant opportunity to bolster market share and scale of complementary brokerdealer businesses • Fortifies strong presence in Texas, while adding complementary offices throughout the United States • Larger, diversified organization benefi
Slide 9: SWS Acquisition Update
9 Hilltop Holdings – SWS Acquisition Update • Acquisition closed on January 1st, 2015 Broker-Dealer • Formed Hilltop Securities Holdings, a new holding company • First Southwest and Southwest Securities will run as parallel entities under Hilltop Securities Holdings until final systems conversion •
Slide 10: Pro Forma Summary Balance Sheet
Hilltop Holdings – Pro Forma Summary Balance Sheet 10 • Pro forma for SWS transaction is as of Dec. 31, 2014 and includes mark to market and transaction adjustments • Merger consideration of $349.0 million, includes issuance of 10.0 million shares of Hilltop stock, $78.2 million of cash and $70.3 mi
Slide 11: FNB Transaction
Hilltop Holdings – FNB Transaction Transaction SummaryLoss Share Summary •In Sep. 2013, Hilltop acquired the assets and liabilities of Edinburg, TX-based First National Bank (“FNB”) from the FDIC (“FNB ($M) Covered Assets% FDIC Transaction”) Tranche 1Up to $24080% •Acquired $2.2 billion of assets an
Slide 12: 2014 Financial Summary
12 Hilltop Holdings – 2014 Financial Summary Selected Items Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Net Income to Common ($000) $23,760 $27,085 $23,386 $31,716 $105,947 EPS - Diluted ($) $0.26 $0.30 $0.26 $0.35 $1.17 ROAA (%) 1.14% 1.24% 1.03% 1.42% 1.26% ROAE (%) 7.65% 7.99% 6.51% 8.55% 8.01% Book
Slide 13: Operational Updates
13 Hilltop Holdings – Operational Updates PlainsCapital Bank • PlainsCapital Bank continues to prudently grow legacy platform, while managing expenses at former FNB franchise that are exceeded by gains from working out covered assets • Favorable loan pipeline with $1.43 billion in unfunded commitmen
Slide 14: Existing Long Term Obligations
Hilltop Holdings – Existing Long Term Obligations 14 SBLF TruPS Insurance Company Debt Entity Held At • Hilltop Holdings (Parent Company) • PlainsCapital Corporation (Parent Company) • National Lloyds Corporation and insurance subsidiaries Description • Small Business Loan Fund – Govt Program • Seri
Slide 15: Subsidiaries Financial Review
Subsidiaries Financial Review 15
Slide 16: PlainsCapital Bank Summary Results
C&I 39% Real Estate 49% C&D 10% Consumer 1% 16 • Pre-tax income increased to $41.1 million in Q4 2014 versus $24.6 million in Q3 2014 primarily due to OREO write-down in Q3 2014 and an increase in loan interest income related to accretion and higher yields in Q4 2014 • Provision for Loan Losses of $
Slide 17: PlainsCapital Bank – Loan Portfolio by Classification
PlainsCapital Bank – Loan Portfolio by Classification 17 Note: PCI stands for Purchased Credit Impaired loans. Loan classification mix represents consolidated balances at Hilltop and, therefore, eliminate intercompany loans. Amounts above equal carrying value, after deductions for discount Covered P
Slide 18: PlainsCapital Bank – PCI Loans at Dec. 31, 2014
PlainsCapital Bank – PCI Loans at Dec. 31, 2014 18 ($000) Covered PCI Non-Covered PCI Total PCI Outstanding Balance 685,393 67,740 753,133 (Discount) (250,005) (18,831) (268,836) Carrying Amount 435,388 48,909 484,297 Allowance for Loan Loss 4,534 5,319 9,853 Total PCI Loans, Net of Allowance 430,85
Slide 19: PlainsCapital Bank – Non-PCI Loans at Dec. 31, 2014
PlainsCapital Bank – Non-PCI Loans at Dec. 31, 2014 19 ($000) Covered Non-PCI Non-Covered Non-PCI Total Non-PCI Outstanding Balance 222,105 3,896,773 4,118,878 (Discount) (14,853) (25,206) (40,059) Carrying Amount 207,252 3,871,567 4,078,819 Allowance for Loan Loss 77 31,722 31,799 Total Non-PCI Loa
Slide 20: PlainsCapital Bank – Asset Quality Trends
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 20 PlainsCapital Bank – Asset Quality Trends PlainsCapital Recession1 U.S. Average2 Source: SNL Financial, Company Filings Notes: (1) U.S. recessions as declared by the National Bureau of Econo
Slide 21: PlainsCapital Bank – Markets and Deposits
Non Int. Bearing Demand 33% NOW 19% Money Market 15% Demand 2% Savings 5% Time 26% 21 PlainsCapital Bank – Markets and Deposits • PCB is now in all major Texas markets with seasoned lenders and core deposits • Founded in Lubbock with #1 market share • Legacy PCB has strong positions in Dallas, Ft. W
Slide 22: PlainsCapital Bank – Liquidity and Securities
22 PlainsCapital Bank – Liquidity and Securities • The securities portfolio is a conservative mix with predominantly Agency Step-Up bonds • The securities portfolio is a source of liquidity and diversity; managed to have minimal credit risk • During the 4th quarter of 2014, the Bank’s investment por
Slide 23: PlainsCapital Bank – Interest Rate Sensitivity
23 PlainsCapital Bank – Interest Rate Sensitivity Change in Interest Rates (bps) -50 +100 +200 +300 Q4 2013 - % 1.51% (3.84%) (3.23%) 1.41% Q4 2013 - $ 3,979 (10,155) (8,538) 3,732 Q4 2014 - % 0.17% (1.12%) 1.65% 6.16% Q4 2014 - $ 414 (2,762) 4,087 15,201 Changes in Net Interest Income • FNB Transac
Slide 24: PrimeLending – Overview
24 PrimeLending – Overview • Headquartered in Dallas, Texas, PrimeLending has grown from a staff of 20 producing $80 million in annual closed loan volume to a staff of more than 2,500 producing approximately $10.4 billion in 2014 • PrimeLending focuses on the purchase mortgage business, which repres
Slide 25: PrimeLending – Q4 2014 Highlights
25 PrimeLending – Q4 2014 Highlights Summary Results ($000) Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Net Interest Income (4,139) (2,389) (3,197) (2,866) (12,591) Provision for Loan Losses – – – – – Noninterest Income 91,763 122,820 128,989 113,204 456,776 Noninterest Expense (90,632) (111,224) (114,6
Slide 26: First Southwest – Overview and Q4 2014 Highlights
Public Finance, 47% Capital Markets, 14% Correspondent Clearing, 15% Housing and Structured Finance, 15% Asset Management, 5% Other, 5% 26 First Southwest – Overview and Q4 2014 Highlights Summary Results ($000) Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Net Interest Income 2,629 3,178 3,269 3,068 12,1
Slide 27: National Lloyds Corp. – Overview and Q4 2014 Highlights
27 National Lloyds Corp. – Overview and Q4 2014 Highlights Summary Results ($000) Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Net Interest Income 980 838 808 1,046 3,672 Provision for Loan Losses – – – – – Noninterest Income 42,773 43,123 44,014 43,667 173,577 Noninterest Expense (32,341) (49,420) (36,6
Slide 28: Hilltop Holdings Financial Review
Hilltop Holdings Financial Review 28
Slide 29: 2014 Summary Income Statement
29 Hilltop Holdings – 2014 Summary Income Statement ($000) Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Interest income 91,828 104,408 93,217 99,316 388,769 Interest expense 6,407 5,962 7,457 7,802 27,628 Net interest income 85,421 98,446 85,760 91,514 361,141 Provision for loan losses 3,242 5,533 4,033
Slide 30: Net Interest Income & Margin
30 Hilltop Holdings – Net Interest Income & Margin • NIM increased by 34 bps in Q4 2014 to 4.72% compared with 4.38% in Q3 2014 due to higher yields on gross loans, partially offset by higher costs of interest bearing deposits • Yield on earning assets of 5.09% driven by increase in gross loan balan
Slide 31: Noninterest Income
31 Hilltop Holdings – Noninterest Income • Noninterest income was $213.8 million in Q4 2014, up 17.2% from Q4 2013 • Net gains from the sale of loans, other mortgage production income and mortgage loan origination fees increased $14.5 million, or 14.8%, from Q4 2013 to $112.7 million in Q4 2014, rep
Slide 32: Noninterest Expense
32 Hilltop Holdings – Noninterest Expense • Noninterest expense was $246.8 million in Q4 2014, up 12.3% from Q4 2013 • Compensation increased $21.0 million, or 18.7%, from Q4 2013 to $133.4 million in Q4 2014, representing 54% of noninterest expense for the quarter • Occupancy and equipment expense
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