Hilltop Holdings Inc. · NYSE:HTH
Hilltop — Q1 2020 Earnings Presentation
24 slides from Hilltop's earnings presentation, Apr 30, 2020
Slide 1: Hilltop Holdings Inc. Earnings Presentation Q1 2020
Hilltop Holdings Inc. Earnings Presentation Q1 2020 May 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 Business Continuity
3 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 quaran
Slide 4: Delivering Support To Our Impacted Banking Clients
• PlainsCapital Bank, an SBA preferred lender, is dedicated to providing relief to small businesses in our communities • Initial PPP effort focused on serving existing PCB clients • Started taking PPP applications on April 3, 2020 PPP Funded Loan Statistics • Average loan amount: $282k • 1,682 loans
Slide 5: Investor Highlights – Value Creation and Capital Optimization
$ 46.5 MM $ 0.51 1.41% 9.30% 5 Investor Highlights – Value Creation and Capital Optimization • Net charge-offs in Q1 2020 equated to $1.5 million, or 9 basis points of average loans HFI • Allowance for credit losses of $106.7 million at March 31, 2020, an increase in the reserve balance of $33.0 mil
Slide 6: Business Results – Pre-Tax Income vs. Prior Year
6 Business Results – Pre-Tax Income vs. Prior Year ($ in millions) • 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 provision expense was increased net intere
Slide 7: Financial Summary
7 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) Key metrics are for HTH Consolidated
Slide 8: CECL – Reserve Build on Loans HFI
8 CECL – Reserve Build on Loans HFI $61.1 $12.6 $73.7 ($1.5) $17.6 $16.9 $106.7 12/31/2019 CECL Adoption Impact 1/1/2020 Net Charge-Offs Specific Reserves Economic Factors 3/31/2020 CECL Loans HFI Rollforward 12/31/19 to 3/31/20 CRE 53.9 C&I 38.6 Construction 6.4 1-4 SFR 6.4 Consumer 1.2 Broker Deal
Slide 9: Net Interest Income & Margin
$11.8 $12.3 $12.9 $13.2 $12.9 3.66% 3.47% 3.43% 3.27% 3.39% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Average Earning Assets (Gross) NIM continuing operations 9 Hilltop Holdings – Net Interest Income & Margin • Net interest income of $110.3 million increased $2.0 million, or 2%, from Q1 2019 • Q1 2020
Slide 10: Noninterest Income
10 Hilltop Holdings – Noninterest Income • Noninterest income of $271.7 million increased by $55.8 million compared to Q1 2019 • $61 million increase in mortgage production income and fees driven by origination volumes of $3.6 billion, an increase of $1.2 billion from Q1 2019. The increased originat
Slide 11: Noninterest Expenses
11 Hilltop Holdings – Noninterest Expenses Year-over-Year Noninterest Expense ($MM) Noninterest Expenses and Efficiency Ratio Noninterest Expense Highlights • Total compensation increased by $9.7 million from Q1 2019 primarily driven by increased variable compensation related to higher mortgage volu
Slide 12: Loan Mix and Yield
12 Notes: The sum of the period amounts may not equal the total amounts due to rounding. (1) Annualized Gross Loan HFI Yield contains purchased loan portfolio. Loan Mix and Yield ($ in billions, ending and average balances) Hilltop Holdings – Loans
Slide 13: Asset Quality
13 Hilltop Holdings – 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 14: Deposit Mix and Cost
14 Deposit Mix and Cost Notes: Noninterest-bearing deposits excludes broker-dealer sweep deposits. The sum of the period amounts may not equal the total amounts due to rounding. Hilltop Holdings – Deposits ($ in billions, ending and average balances)
Slide 15: Liquidity Update
Hilltop Holdings – Liquidity Update 2 15 • Hilltop’s Loan to deposit ratio increased to 98.3% from Q1 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 expected and unexpected liquidity dem
Slide 16: PlainsCapital Bank – Highlights
58.8% 55.9% 50.5% 54.9% 55.5% 4.24% 4.06% 3.97% 3.77% 3.81% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Efficiency Ratio Net Interest Margin 16 PlainsCapital Bank – Highlights Efficiency and NIM Highlights Q1 2019 Note: (1) Efficiency Ratio is calculated as noninterest expense divided by the sum of net
Slide 17: PlainsCapital Bank – Impacted Industry Credit Portfolio
17 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 $1.1 billion
Slide 18: PlainsCapital Bank – Energy Update
4.6% 2.1% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 PlainsCapital Bank – Energy Update 18 • PlainsCapital Bank’s outstanding energy exposure equates to $146 million in outstanding balance, or 2.1% of the total loan portfolio, down from $239 millio
Slide 19: PrimeLending – Highlights
$2.4 $4.0 $4.8 $4.4 $3.6 330 333 335 304 325 100 150 200 250 300 350 $(0.3) $0.7 $1.7 $2.7 $3.7 $4.7 $5.7 $6.7 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Mortgage Originations ($bn) Gain on Sale (bps) 19 PrimeLending – Highlights Mortgage Originations and Gain on Sale Q4 2018 Highlights • Origination v
Slide 20: HilltopSecurities – Highlights
Key Highlights ($ in millions) Q1 2018 Q1 2019 Compensation/Net Revenue (%) FDIC Insured Balances at PCB Other FDIC Insured Balances Public Finance Offerings TBA Volume Summary Results ($ in millions) Q1 2018 Q1 2019 Net Interest Income Provision for Credit Losses Noninterest Income Noninterest Expe
Slide 21: National Lloyds Corporation – Highlights
45.0% 74.6% 44.9% 43.6% 39.7% 41.5% 38.4% 38.3% 40.5% 38.0% 86.5% 113.0% 83.2% 84.1% 77.7% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Loss & LAE Ratio Expense Ratio Total 21 National Lloyds Corporation – Highlights • National Lloyds moved to discontinued opera
Slide 22: 2020 Commentary
22 Hilltop Holdings – 2020 Commentary Comments Loan Growth (FY Average HFI Loan Growth) • PPP loan originations expected to provide majority of loan growth • Suspending the retention of single family mortgage loans at PlainsCapital Bank • Commercial loan pipelines remain solid, clients delaying pric
Slide 23: Appendix
Appendix tops RP
Slide 24: Non-GAAP to GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures
24 Non-GAAP to GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures (Continued) • Hilltop Consolidated 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 t