Hilltop Holdings Inc. · NYSE:HTH
Hilltop — Q2 2016 Earnings Presentation
23 slides from Hilltop's earnings presentation, Jul 27, 2016
Slide 1: Forward-Looking Statements and Additional Information
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 Corporate Headquarters Additional Information FORWARD-LOOKING STATEMENTS This presentat
Slide 2: Hilltop Holdings – Q2 2016 Highlights
3 Hilltop Holdings – Q2 2016 Highlights For the second quarter of 2016, net income to common stockholders was $31.1 million, or $0.32 per diluted share Provision for loan losses was $28.9 million for the second quarter of 2016, primarily driven by a non-recurring, full charge-off related to one larg
Slide 3: Hilltop Holdings – Financial Summary
4 Hilltop Holdings – Financial Summary Selected Items Q2 2015 Q1 2016 Q2 2016 Net Income to Common ($000) 29,622 27,567 31,074 EPS - Diluted ($) 0.30 0.28 0.32 Book Value Per Share ($) 16.82 17.84 18.20 NIM 3.72% 3.67% 3.77% NIM (taxable equivalent) 1 3.75% 3.70% 3.80% Assets ($000) 12,478,339 11,73
Slide 4: Hilltop Holdings – Net Interest Income & Margin
5 Hilltop Holdings – Net Interest Income & Margin Reported taxable equivalent NIM increased by 10 bps in Q2 2016 to 3.80% compared with 3.70% in Q1 2016 Higher loan yields and balances, coupled with lower rates on borrowings, drove the improvement Cost of interest bearing deposits was flat relative
Slide 5: Hilltop Holdings – Noninterest Income
Hilltop Holdings – Noninterest Income Noninterest income for Q2 2016 was $346.0 million, up 14.8% versus Q2 2015 Net gains from the sale of loans, other mortgage production income, and mortgage loan origination fees increased $24.7 million, or 14.7%, from Q2 2015 to $192.8 million in Q2 2016, repres
Slide 6: Hilltop Holdings – Noninterest Expense
Hilltop Holdings – Noninterest Expense Noninterest expense was $367.4 million in Q2 2016, up 4.0% from Q2 2015 Compensation was $217.3 million in Q2 2016 (compared to $200.3 million in Q2 2015), representing 59% of noninterest expense for the quarter During Q2 2016 we incurred $0.4 million in employ
Slide 7: Hilltop Holdings – Balance Sheet
Hilltop Holdings – Balance Sheet Total assets grew 11.5% in Q2 2016, driven by growth in loans HFS, loans HFI and broker-dealer & clearing receivables Loans HFS increased $206.1 million, or 15.3%, from Q1 2016 to $1.6 billion at Q2 2016 Gross non-covered loans HFI (including broker-dealer margin loa
Slide 8: Company Operational Updates
9 Company Operational Updates PlainsCapital Bank Q2 2016 ROAA of 0.66% driven by an elevated provision (substantially due to 1 large loan) that more than offset an improved taxable equivalent net interest margin of 4.87% (3.83% Pre-PAA)1 and improved expense efficiency Irregularities were discovered
Slide 9: Company Operational Updates (Continued)
10 Company Operational Updates (Continued) HilltopSecurities After adjusting for transaction and integration costs ($0.8 million), HilltopSecurities made $19.1 million of pre-tax income during Q2 20161 Pre-tax margin (including pre-tax integration related costs) has steadily improved over the last f
Slide 10: PlainsCapital Bank – Q2 2016 Highlights
11 Pre-tax income decreased to $21.6 million in Q2 2016 versus $45.3 million in Q2 2015, largely due to $24.5 million full charge off of a single large loan Increase in net interest income was driven by non-covered loan growth and improving NIM (pre-PAA) Noninterest income decreased compared to Q2 2
Slide 11: PlainsCapital Bank – Energy Exposure
12 PlainsCapital Bank – Energy Exposure Select Energy Statistics Q3 2015 Q4 2015 Q1 2016 Q2 2016 Outstanding Energy Balance ($M) 194.9 179.8 233.5 223.6 Energy Unfunded Commitments ($M) 110.0 108.7 102.9 88.5 Energy Loans / Total Loans1 (%) 4.0 3.6 4.5 4.2 Criticized Energy Loans ($M) 0.0 3.4 13.0 1
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. 12.17% 12.77% 13.22% 12.70% 12.72% 16.46% 17.36% 16.25% 15.12% 14.77% 17.17% 18.13% 16.99% 15.87% 15.51% 0.00%
Slide 13: PlainsCapital Bank – Loan Portfolio by Classification
PlainsCapital Bank – Loan Portfolio by Classification 14 Note: PCI stands for Purchased Credit Impaired loans. Loan classification mix represents consolidated balances at Hilltop and, therefore, eliminate intercompany loans. Broker-dealer loans represent margin loans to customers and correspondents
Slide 14: PlainsCapital Bank – PCI Loans at June 30, 2016
PlainsCapital Bank – PCI Loans at June 30, 2016 15 ($000) Covered PCI Non-Covered PCI Total PCI Outstanding Balance 345,715 79,434 425,149 (Discount) (161,151) (18,034) (179,185) Carrying Amount 184,564 61,400 245,964 Allowance for Loan Loss 1,410 3,322 4,732 Total PCI Loans, Net of Allowance 183,15
Slide 15: PlainsCapital Bank – Non-PCI Loans at June 30, 2016
PlainsCapital Bank – Non-PCI Loans at June 30, 2016 16 ($000) Covered Non-PCI Non-Covered Non-PCI Total Non-PCI Outstanding Balance 148,979 5,429,858 5,578,837 (Discount) (10,015) (18,812) (28,827) Carrying Amount 138,964 5,411,046 5,550,010 Allowance for Loan Loss 45 47,691 47,736 Total Non-PCI Loa
Slide 16: PrimeLending – Q2 2016 Highlights
17 PrimeLending – Q2 2016 Highlights Pre-tax income increased to $28.1 million in Q2 2016 versus $21.1 million in Q2 2015 Origination volume of $4.2 billion in Q2 2016 was $316.7 million greater than Q2 2015 due to growth in purchase business Purchase volume (as % of total volume) increased to 78.6%
Slide 17: HilltopSecurities – Q2 2016 Highlights
18 HilltopSecurities – Q2 2016 Highlights Pre-tax income of $18.3 million in Q2 2016 versus pre-tax loss of $1.9 million in Q2 2015 Q2 2016 results include pre-tax integration related costs of $0.8 million directly attributable to the acquisition of SWS After adjusting for the pre-tax integration re
Slide 18: National Lloyds Corporation – Q2 2016 Highlights
19 National Lloyds Corporation – Q2 2016 Highlights Reported Summary Results ($000) Q2 2015 Q2 2016 Net Interest Income 699 758 Provision for Loan Losses - - Noninterest Income 42,837 41,392 Noninterest Expense 56,061 51,717 Loss Before Taxes (12,525) (9,567) Combined Ratio Q2 2016 Direct Premiums W
Slide 19: National Lloyds Corporation — Q2 2016 Highlights
National Lloyds Corporation — Q2 2016 Highlights + Pre-tax loss of $9.6 million in Q2 2016 relative to pretax loss ry Results ($000) of $12.5 million in Q2 2015 Interest Income 659 758 + Seasonally normal severe weather in Texas during the first half | Provision for Loan Losses ‘of 2016, though clai
Slide 20: Questions?
Questions? rap sno
Slide 21: Hilltop Non-GAAP to GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures
22 Hilltop Non-GAAP to GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures Q2 2016 Reconciliation of Non-GAAP Segment Adjusted Income Before Income Taxes ($M) Broker-Dealer GAAP Income Before Income Taxes 18.3 Add: Transaction and Integration Costs (pre-tax)1 0.8 Non-GAAP
Slide 22: Hilltop Non-GAAP to GAAP Reconciliation (Continued)
23 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 (%) Q2 2015 Q1 2016 Q2 2016 NIM 3.72 3.67 3.77 Add: Taxable Equivalent Adjustment1 0.03 0.03 0.03 Non-GAAP Taxable
Slide 23: Hilltop Non-GAAP to GAAP Reconciliation (Continued)
Hilltop Non-GAAP to GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures (Continued) Hilltop Reconciliation of Non-GAAPTaxable qe N 2015 2016 2016 Equivalent NIM (%) Equivalent NI 375 370 380 Aad Taxable Equivalent Adjustment* Non-GAAP Taxable Equivalent NIM Purchase Accou