Hilltop Holdings Inc. · NYSE:HTH
Hilltop — Q3 2016 Earnings Presentation
23 slides from Hilltop's earnings presentation, Oct 27, 2016
Slide 1: 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@hilltop-holdings.com Corporate Headquarters Additional Information FORWARD-LOOKING STATEMENTS This presen
Slide 2: Hilltop Holdings – Q3 2016 Highlights
3 Hilltop Holdings – Q3 2016 Highlights For the third quarter of 2016, net income to common stockholders was $51.9 million, or $0.53 per diluted share Third quarter 2016 adjusted net income1 was $57.0 million, or $0.58 per diluted share, when excluding the transaction and integration costs related t
Slide 3: Hilltop Holdings – Financial Summary
4 Hilltop Holdings – Financial Summary Selected Items Q3 2015 Q2 2016 Q3 2016 Net Income to Common ($000) 46,894 31,074 51,932 EPS - Diluted ($) 0.47 0.32 0.53 Book Value Per Share ($) 17.35 18.20 18.73 NIM 4.18% 3.77% 3.65% Taxable Equivalent NIM (Pre-PAA Taxable Equivalent NIM) 1 4.20% (2.83%) 3.8
Slide 4: Hilltop Holdings – Net Interest Income & Margin
5 Hilltop Holdings – Net Interest Income & Margin Reported taxable equivalent NIM declined by 13 bps in Q3 2016 to 3.67% compared with 3.80% in Q2 2016 NIM decline primarily a result of elevated NIM in Q2 2016 that was due to a nonaccrual loan being paid in full; decline also partially driven by low
Slide 5: Hilltop Holdings – Noninterest Income
Hilltop Holdings – Noninterest Income Noninterest income for Q3 2016 was $354.5 million, up 19.6% versus Q3 2015 Net gains from the sale of loans, other mortgage production income, and mortgage loan origination fees increased $42.3 million, or 26.4%, from Q3 2015 to $202.2 million in Q3 2016, repres
Slide 6: Hilltop Holdings – Noninterest Expense
Hilltop Holdings – Noninterest Expense Noninterest expense was $364.1 million in Q3 2016, up 9.2% from Q3 2015 Compensation was $225.2 million in Q3 2016 (compared to $200.6 million in Q3 2015), representing 62% of noninterest expense for the quarter During Q3 2016 we incurred $0.8 million in employ
Slide 7: Hilltop Holdings – Balance Sheet
Hilltop Holdings – Balance Sheet Total assets declined 5.0% in Q3 2016, as loan HFI and HFS growth was more than offset by a decline in broker-dealer & clearing receivables Loans HFS increased $122.6 million, or 7.9%, from Q2 2016 to $1.7 billion at Q3 2016 Gross non-covered loans HFI (including bro
Slide 8: Company Operational Updates
9 Company Operational Updates PlainsCapital Bank Q3 2016 ROAA of 1.09% driven by solid loan growth and core NIM that are helping to offset declining purchase loan accretion Stable deposit costs have contributed to strong taxable equivalent net interest margin of 4.53% (3.63% Pre-PAA) 1 Quarterly non
Slide 9: Company Operational Updates (Continued)
10 Company Operational Updates (Continued) HilltopSecurities After adjusting for transaction and integration costs ($1.0 million), HilltopSecurities earned $18.4 million of pre-tax income during Q3 20161 Strong profitability metrics, with a pre-tax margin of 15.7% and compensation to net revenue rat
Slide 10: PlainsCapital Bank – Q3 2016 Highlights
11 Pre-tax income decreased to $37.5 million in Q3 2016 versus $53.6 million in Q3 2015 primarily due to a decrease in accretion of discount on loans of approximately $20.0 million Accretion decline was partially offset by non-covered loan growth, increased warehouse line utilization and a stable co
Slide 11: PlainsCapital Bank – Energy Exposure
12 PlainsCapital Bank – Energy Exposure Note: (1) Total loans equal to HTH consolidated gross covered and non-covered loans HFI less margin loans held at the broker-dealer. No energy SNC’s in bank loan portfolio Continue to have relatively small balance of loans in Houston and surrounding region, th
Slide 12: PlainsCapital Bank – Credit Quality and Capital Ratios
13 PlainsCapital Bank – Credit Quality and Capital Ratios Credit Quality Bank Capital Ratios Note: Non-Covered NPAs/Total Assets shown as a percentage of total Hilltop consolidated assets. 12.77% 13.22% 12.70% 12.72% 12.65% 17.36% 16.25% 15.12% 14.77% 15.15% 18.13% 16.99% 15.87% 15.51% 15.90% 0.00%
Slide 13: PrimeLending – Q3 2016 Highlights
14 PrimeLending – Q3 2016 Highlights Pre-tax income increased to $31.2 million in Q3 2016 versus $12.1 million in Q3 2015 Origination volume of $4.5 billion in Q3 2016 was $853.4 million greater than Q3 2015 Purchase volume (as a % of total volume) declined to 71.0% in Q3 2016 from 80.9% in Q3 2015
Slide 14: HilltopSecurities – Q3 2016 Highlights
15 HilltopSecurities – Q3 2016 Highlights Pre-tax income of $17.4 million in Q3 2016 versus pre-tax income of $1.5 million in Q3 2015 Q3 2016 results include pre-tax integration related costs of $1.0 million directly attributable to the acquisition of SWS After adjusting for the pre-tax integration
Slide 15: National Lloyds Corporation – Q3 2016 Highlights
16 National Lloyds Corporation – Q3 2016 Highlights Reported Summary Results ($000) Q3 2015 Q3 2016 Net Interest Income 838 716 Provision for Loan Losses - - Noninterest Income 43,534 41,170 Noninterest Expense 32,366 30,415 Income Before Taxes 12,006 11,471 Combined Ratio Q3 2016 Direct Premiums Wr
Slide 16: National Lloyds Corporation — Q3 2016 Highlights
National Lloyds Corporation — Q3 2016 Highlights + Pretax income of $11.5 million in Q3 2016 relative to pre-tax [EAE 32015 Qs 2016 income of $12.0 million in Qg 2015 Interest Income 838 716 + The seasonal decline in severe storms from Q2 to Q3 resulted | Provision for Loan Losses in a Loss & LAE ra
Slide 17: Questions?
Questions? mop RP
Slide 18: Non-GAAP to GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures
19 Hilltop Non-GAAP to GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures Q3 2016 Reconciliation of Non-GAAP Segment Adjusted Income Before Income Taxes ($MM) Broker-Dealer GAAP Income Before Income Taxes 17.4 Add: Transaction and Integration Costs (pre-tax)1 1.0 Non-GAA
Slide 19: Non-GAAP to GAAP Reconciliation (Continued)
20 Hilltop Non-GAAP to GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures (Continued) Hilltop Consolidated Reconciliation of Non-GAAP Taxable Equivalent NIM (%) Q3 2015 Q2 2016 Q3 2016 NIM 4.18 3.77 3.65 Add: Taxable Equivalent Adjustment1 0.02 0.03 0.02 Non-GAAP Taxable
Slide 20: Loan Portfolio by Classification
Loan Portfolio by Classification 21 Covered PCI Loans Covered Non-PCI Loans Non-Covered PCI Loans Non-Covered Non-PCI Loans Q3 2016 Total: $55.9 million Q3 2016 Total: $5,618.8 million Q3 2016 Total: $160.3 million Q3 2016 Total: $132.4 million Note: PCI stands for Purchased Credit Impaired loans. L
Slide 21: PCI Loans at Q3 2016
PCI Loans at Q3 2016 22 ($000) Covered PCI Non-Covered PCI Total PCI Outstanding Balance 309,966 73,372 383,338 (Discount) (149,654) (17,470) (167,124) Carrying Amount 160,312 55,902 216,214 Allowance for Loan Loss 685 2,565 3,250 Total PCI Loans, Net of Allowance 159,627 53,337 212,964 Carrying Amo
Slide 22: Non-PCI Loans at Q3 2016
Non-PCI Loans at Q3 2016 23 ($000) Covered Non-PCI Non-Covered Non-PCI Total Non-PCI Outstanding Balance 141,836 5,634,735 5,776,571 (Discount) (9,388) (15,982) (25,370) Carrying Amount 132,448 5,618,753 5,751,201 Allowance for Loan Loss 44 50,060 50,104 Total Non-PCI Loans, Net of Allowance 132,404
Slide 23: Non-PCI Loans at Q3 2016
Non-PCI Loans at Q3 2016 + Non-PCI loans include newly originated loans, aequired loans without credit impairment at acquisition, and acquired loans that have renewed + Non-PCI loans include covered loans and non-covered loans + Portfolio on balance sheet at 98.7% unpaid principal balance with a tot