HTH - Earnings call transcript Q3 2017

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Operator

Good morning, and welcome to the Hilltop Holdings' Quarter Three 2017 Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Isabell Novakov. ahead. go Please

Isabell Novakov

Good morning.

are Chairman White, Furr, and call Ford, and CFO. the President Jeremy Co-CEO, Alan on Vice Co-CEO; me Joining and Will

are today's by financial concerning on concerning such to Before certain uncertainties. as are our subject statements please based started, future items their forward-looking historical presentation plans future statements. strategy, during statements and of statements we expectations not are and that events management's including note facts, nature current business that are condition get risks statements that These

to obligation actual conditions in Our required included a may disclaim materially from the our we the results, expressly most factors, new update precautionary result in those to law; extent filed of and annual our recent and Except quarterly to by due differ discussion any capital, and report statements today, information. report of referenced statements financial these variety including as earlier a SEC. with the statements,

certain taxable at may like measures to And before GAAP measure this in The these of site appendix purchase presentation, of now, is non-GAAP Jeremy margin Additionally, reconciliation measures, accounting interest interest includes equivalent margin the taxable net including presentation adjustments. equivalent found posted presentation Web and our net I the which would over the to on hand this to be ir.hilltop-holdings.com. nearest Ford.

Jeremy Ford

Thank you, morning. and Isabell, good

net $XX.X or million XXXX, was $X.XX share. income of quarter diluted third the For per

extent a adversely $X.XX by to During on hurricanes diluted million lesser Irma, per and the Harvey, quarter or $X.X impacted share. earnings

shareholders, combination our distributions we tangible top year-over-year. Delivering to Hilltop to repurchases, businesses, maximizing million grown dividends has distributions, SWS Year-to-date, capital to million. settlement have remains for book returned shareholders share a and we X% value in $XX equate Despite $XX capital XXXX, our QX, these committed our and diversified presented priority. delivering growth through including challenges the of some by While for risk. shareholders across value proactively managing quarter Hilltop, the third to value remain

We share that Board Directors Hilltop's declared per cash of on common a XX, payable announced XXXX. quarterly $X.XX also November dividend of

quarter's results losses areas only our our of and Hurricane management of $XX the efforts. actuarial of losses estimated exposure the gross devastated million, actions reflects coast over this In Additionally, risk retained years insurance while $X.X effectiveness million. the highlight business, and estimate Texas were our reinsurance our past several our certain Houston. the coverage. Harvey This management are

Our other in which have businesses certain were $X.X exposures, collectively can also million and Will hurricane, comments. detailed more by for impacted the recognized his

results next of I'll benefit our Bank the operating the to in reduction modest decline million. pretax $X.X businesses. now by side, of discuss was accounting The forward purchase PlainsCapital Moving driven a from

The results impact a at of purchase towards business billion. due bank's solid mortgage purchase loans to the mortgage increased the accounting, $X.X transition non-covered ended with growth, Excluding to continues market. loan core

During while X%. increased remains volume the market model continues the become refinance quarter, volumes focused by purchase purchase PrimeLending's declined while on by competitive. to originations, more XX%, business

XX% the Securities efforts with last business and XX.X% margin, higher short-term our well retail year. performance generated a rates. profit pleased are as We from as interest results in integration particularly pretax our results, Hilltop up strong as the positive from Included these of showed business clearing

the a two experienced in insurance challenging third Finally, occurred that and XXXX, second our business has the throughout including hurricanes environment quarter.

quarter. losses over financials. during presentation turn the be fourth now to to through seasonally storm I'll We more Will the walk to the expect overall balanced

Will Furr

growth, million driven and results third less of declined impact equated quarter loan quarter the result million XXXX, for Harvey Jeremy. million reflects of quarter. charge-offs to million, during lower the difficulty] I'll income both by provision and from $XX.X Hilltop's third expense to quarter before $X Hurricane $X.X quarter's million. during you, taxes Irma start of five. than Also the in on $X.X XXXX net Thank which linked quarter the affected $XX.X [technical page the of The pretax. by

purchase This clawback regarding the period quarter, FDIC we of details have indemnification, adjustments, added a supplemental prior accounting on table to current five and on and results. impact the page provide

XXXX, For by the clawback of equity items Hilltop adjustments, pretax year, and third XX.XX% the ratio of of impact the very impacted XXXX. positive and the maintained quarter from income million a prior 'XX. the net capitalized, quarter third remains quarter of of has at million of from $X.X positively end common the second million. and The Tier well indemnification, FDIC accounting purchase pretax by these declined impact $X.X of $XX.X X

$XXX assets XXXX, previously improving level interest XXXX. third non-covered billion page second growth and pre-purchase of to versus basis recapture quarter eight increased $XXX reflecting bank margin points investment margin interest lower taxable charged Earning by Hilltop's loan reflects than to both the portfolios security mortgage from somewhat the The in improving security the million. driven XXXX, $X.X by loans, net excluding which Hilltop. runoff deposit the and the quarter across $XXX reflecting costs, off grew X.XX%, the net accounting, higher loan in taxable XXXX, offset Securities. loans excluding lower in in of equivalent managed interest equivalent Further, of yields Hilltop third margin covered six, million, by decline by at of yields, quarter equated was this of portfolios equated by Moving the and of margin net declined loans X.X% million, a impact quarter accounting holdings of interest second to portfolio risk of purchase the in

held the of quarter $XXX loans third from for XXXX. Lastly, million grew by sale

to for non-interest quarter $XXX.X income million. the Moving seven, of total page XXXX third to equated

purchase from quarter million towards the mortgages shift declined originations mortgagee of million by mortgage-related production The and third fees XXXX. or income to of quarter This of mortgagee decline declined million the $XX.X year. as originations $XXX by ongoing 'XX. compared versus quarter XX%, a the Third third decline driven an prior reduction refinance our $XXX in is reflects by market in

As hurricane. and hurricanes in Insurance-related normalize are coupled loss improvements lower by points points and lower by lower by of loss year capital businesses. production adjustment recapture from basis $XX compensation, rates quarter turning by by versus $X during expenses is levels $XXX.X finance, lower from impacted as, has business. level to contracts, expenses our volatility, the increased which mortgage quarter. are the as slower volumes the of that pass-through million, sale lower fees in driven the fees have million, the Securities-related Expenses expenses, certain quarter expenses Non-interest and legal refinance the million non-catastrophic public were adjusted improved on page basis third expense the mortgage and pressures in driven market throughout higher the year. persisted. therefore expense nine on $XX with million, of and prior storms lower impact and levels reflected result and loss versus in prior rate result, to I'm eight. a to million in business market to negative acquisition trading reduction structured expected impacted integration Further, other, noted fourth volumes, our the XXXX. finance. of positively third expenses declined losses resulted a the costs, seasonally XXXX by the approximately the quantity XXX of gain severity a pricing variable to And mortgage XXXX. fell versus related declining $XX.X originations to The Storm-related

Alan growth rate second or XX. in XX quarter decline money adjustable $XXX $XXX including Moving versus remain versus million those up Loan accretion. stable, Currently, have of bank portfolio. show and floor $XXX million slowly are rate strong continues reset to of I'm continue levels. the is lower year, in of to remains steady is for above interest-bearing while $X.X rates margin over below yield non-brokered Approximately higher of third now deposit the versus basis page year; testing deposits Securities, of that grew deposit the to page terms Hilltop 'XX. of approximately bearing I'll continue in increase nine, of the XXXX approximately in with versus loan bearing increase accretion the the quarter and our it to in interest loans houses growth in were in Non-interest turn on the we points markets. levels as as the quarter X% remain point strength our market, by third across in slowly largest at floor of third billion towards the active a the market to loans market driver the and we loans deposits business remain excluding and 'XX. performance. continue their $X.X X% the deposits deposits of yield beta for reflect short-term moves total million XXXX. loans resent rate rates. to quarter current billion, covered rates. our bank at basis moving to loans growth certificate approximately by to improve competitive Non-covered XX prior would The ensure The more prior as driven We loan Total deposits versus the insights XX% rates products.

Alan White

-- within Thank that and to to accounting. to Will positive you, margin accounting Good purchase in said, purchase third our out, on we ROA, morning. continue interest another we increase us. the and said, had Will. net And made operate at effect quarter rate fall The have a net it X.XX solid net range loans continue XXX with our a bank adjustments very quarter continues the should as

line Our we year. XX% loan that's on said, in the talked about X% at we the to for growth growth with what continues year-to-date, X% that

us and to real be Austin. and is The we fiercely very at Our those. and loans, to strongest are we're -- the estate seeing viable. result continue and time, or continue Dallas, Worth, less commercial big the for They Fort less focus markets C&I compete big

very that about. talked to which of with Two $X billion $XXX,XXX, in figure. am quality I growth we of XX% think have that are have and at And construction the million the proud our the When quarter, hold quarter, fourth estate commitments able unfunded hold. loans X% we so that look half that to we'll for real that are on were that for will charge-offs looks have our of $X.X $XXX pretty shows loan we a be that they portfolio, to continue pipeline million been fund to up. million. favorable loan able loan X.X net We billion I year-to-date,

did companies. to awhile. we is loan for oil classified parts company a It million quite on non-accrual, that have However, things distributes a put that service distribution we $XXX loan and and machinery gas

been do loan. on this about it's put Their we caution We course, and has the non-accrual. declined, good slow. Of cash flow feel

should we El and continues to on reduced it reductions our XX see As pick see up, our bank we should sold Paso. by in XX. our We get million to and It by back continued accrual. deposits loans

El a we market. are also Paso we at branch So new The in But opened of Frisco. up Star the out out

good that are We with be happy and employees out things very there. there looking to for

be Our deposits to strong. seem still

deposits bearing happy like around about we X% this are I And with sales. non-interest with year that. growth even Our am XX%. say, deposit the I had

the XX. Going in business did $X lending, quarter quarter decline. down and in the to did prime area. about We re-finance less from about and third things was about billion XX% slowed that $XXX primarily the million a of third have kind That's we mortgage

think focus XXX market however, and of really Our to can million And continue we X%. purchase or to we take share. we increased that's course, that's where volume, where

people to to competitive. repo continue very processing because has grasp away. these for purchase the issues try business been It's We as buy gone

and game. play this We the before we have seen

keep inventory. across good volumes, We is will year-to-date as the our and help we for Not still are lacking That goes. them does issues officers and us. country. as Year-to-date out. will industry keep much our cause loan Inventories good customers far this the

are in look And if industry, X%. year-to-date is down XX%. the the We decline industry at you the

we to outpace So, the continue industry.

industry as On actually the down purchase side a X%. year-to-date or X% we're is up of it,

market taking focus. we're our there is and that So, share

that's you loan net and if interest third to But or on from by production. mean Our net due about will, at in sale quarter XX% points. we the second I the to year-to-year. non-interest the sale -- do And or improved million it's say from it gain our decrease XX% but think XX.X decline versus year I you income gain a non-basis on decreased points in quarter, actually prior look

aspect officers. good of we are one loan year-to-date up I think this new is XX

the think our side the speaks I well that company for in purchase business. of

that. we protection we does more And pipeline. in we identified can And and on quarter. stuck against the the gain and share losses $X.X so, the in when but come million reserves losses, from things If haven't up more we market as have Primarily Irma, see a Harvey this that. from and the got a did strength also industry pick put

but We being are point but really on trying to cautious side. at identified we the walk through, those, we haven't this are

As had as gain what after-tax we Jeremy been a really quarter; doing. far companies, we great said, as the securities compared have good to

think start and And the to we I we mortgage fact expenses that's that's our business bit, but been that the there to knew wouldn't business structure and something pretty our bit, banking have of primarily that be and we bunch think take business starts a been But that and control but up. has back relates because of also continues go lot little good, been this finance off expected and the much to this a our going chin continue be at pretty to a things we those. to able reduce which re-finance But we strong, to experienced little industry-wide security. company. pick Probably due to that's a as to infrastructure the occur that a it year has on retail been mortgage year. has

the one we're the to and of had billion dealer they storms we along pile cash we work providing quarter. helped expect several the So there. Lloyds income. only us Right didn't funding And third really by bank thing right billion have certainly now helped that really had have increases as up. management, planned. earnings seeing to broker of is National then course $X.X our a Hurricane Harvey, that's hit we Not goes, the to to about were continues And with quarter And we as which hit that in brought revenues $XX some tough on as Harvey. course us, were for by go the now helped we're municipalities, loss we for rate managing good that's

going are. continue the premiums where are to that in decline, way. your expenses Our one in But Arizona difficulty to lot a we lump competition, and way that's Texas results due going mainly are and and other when your premiums

continue through how Harvey continue companies the see Houston able and to we find our So work on going process to and base. to and interesting stay in how it to to we really as to that, around, we be chin. premiums, be try revenues our our and are go this increase many insurance ways to with tip It'll on many really

CAT our think because I our and that significantly. well we came reduced loss of out coverage,

well I we hurricane. if same. We'll it So a are think the others the were see covered considering was there

the a it we'll for day. quarter and around, look tough will back fourth National So Lloyds. a Hopefully was quarter better for come

me, ends from So that that's I report think remarks. the operating our and prepared

turn questions. I'll So the back for it operator to

Operator

comes from We will ahead. now The [Operator go with KBW. Please begin first the question Instructions] Brady question-and-answer session. Gailey

Brady Gailey

guys. Hi, morning good

Jeremy Ford

morning. Good

Brady Gailey

mortgage, mean, XXX. and up it points basis was linked now gain around XX maybe quarter, sale as I on So question it's the said, on one you

there at you increase Going way being that to a right would expect XXX level? is kind or forward, the about of the just you're think stable continued

Will Furr

Yes, Brady, is this Will.

I had you think related of continue how seasonal it would it and that. flow, about to as to I some think it, variability volumes expect kind

time. continues, to competitive it there. As continue for It a of the Alan pressure noted, and period we expect is

would to think stable would seasonal So way slightly about the down, be outlook the notwithstanding we it.

Brady Gailey

a basis Will, around margin quarter All plus right. XXX, you I points. of And guided or few last minus then, a that know to core

improved? kind XXX and margin But has think the the at about still range, is a the or smidge in of to better. that XXX core You maybe way came right

Will Furr

higher minus as at are plus drifting the But guidance we I'd are sit But we my keep or noted again, we think in I three. as here. watching XXX cost, comments. I deposit

so are test three. rates seeing are aggressively deposits. to but from become competitive XXX, but perspective, a continue seeing We the minus for we more rate that, we for plus terms, Not or and guidance so the market

Brady Gailey

you bond size Will, the And about in growth you will mentioned forward? this How we the bond think of book continue? then should finally, think quarter. the going some book that Do

Will Furr

My that it's here expectation generally. from stable is

look So been put here that's couple to of work. the reasonably work, we to opportunities to one I'd the but to for last to for And be cash that way we've stable continue capital expect done and quarter, the of rest it year.

Brady Gailey

and Okay, one just on Alan more, an maybe either M&A, update Jeremy. or

Jeremy Ford

million only I deploy And Texas, billion. over both as of are XX% excess And And keep But strategically, deals we -- we Yes, to $XXX are two I we're looking are over the announced looking $XXX assets, we right now been these that have personalities of Year-to-date those. pursuing of with of us. that always, M&A million we that, in in think than there's for deals. transactions. six $X for and and think stock fit platforms greater most kind kind right capital.

Brady Gailey

Great, thanks guys.

Will Furr

you. Thank

Operator

comes question Please Michael next SunTrust. from Young ahead. go with The

Michael Young

Hi, good morning.

Jeremy Ford

morning. Good

Michael Young

to Maybe account could kind here? decline steady here continue should on accretion, of obviously from run we of up a Do on sort just a back reset lower quarter. pops the any purchase a expect this or from expect rate to you little we that start

Will Furr

from $XX rate. to a we've million Obviously I you'd scheduled is I expect we pools. of the basis still quarterly of loans, have still think run a number on number as to $XX here. in mean, guided a our That decline past million over got said, time it

from here. And so you increases could see quarterly

to through a the again, scheduled end decline the of you on expect basis, would it However, pool. loan

Michael Young

on insurance to on comments the Alan, just follow-up Okay, your great. business. And wanted

premiums sort be going of You better mentioned think be and given just a or this the impacted. insurers catalyst more some from here that of might other pricing could net increasing maybe written forward? -- that you specifically Do

Alan White

on was We insurance Houston there if but we don't was had lot the I'm cover know wind. ours back covered, Obviously be book insure CAT don't going I saying And I a have to in they they is didn't not. they're devastated. to flood, down. coming guess second what had or of how that

there, out around, opportunity. them may not more be of pull do provides some of and one, that they And and competition may they two, less when

we're bank. I back, pull same way in here. people that the true and will think The

and I else. So the that's help part in think, things, it guess I do. the have as that do that people end hold that an we can that's bad it not would saying, hope the make from anybody we're ones of And do you standpoint. I'm organization, strong and our are. what we're ones as that some being you world I that right. obviously what from don't and think position will marketing some -- would as But when in purely that up on And all

Michael Young

following loss maybe business, you that pretend in think to the you your return on just Will, a the normal And rates kind up insurance that you guys… that quarter. guess, I fourth the I of in expect mentioned remarks

Alan White

Michael, The was… is what that's sky clear outside today, I

Jeremy Ford

most So, profitable most that the in have North so you mild fourth in is Texas the typically quarter. typically and Texas, weather that's the quarter

to a decent but weather quarter. a So we a top return pattern. that to expect line, have We do lower expecting we're have

Michael Young

Okay, so you quarter? this confident Harvey-related all in the that got impacts you feel

Jeremy Ford

confident feel Yes, and it. for we are reserving

Michael Young

step back I'll now. Thanks. perfect. Okay, for

Jeremy Ford

Thanks.

Operator

from with Stephens The next question Olney go Inc. Please ahead. Matt comes

Matt Olney

Hi, morning. thanks. Good

Alan White

Hi, going? how it

Matt Olney

you've volumes side. purchase XQ, month-to-month I'm the there start were just curious could seasonal variability. looks or about of and seen unusual some on going mortgage mortgage But the the Wanted just business, normal the anything like speak you to It's gains good in Alan, well, patterns before? on year-over-year thanks. Was kind to

Alan White

the Well, NBA than probably talk off refi away. as the And out down. really their business look is purchase third stats, it in you quarter strong to there as expected it business because that's went normally everybody's the business at think or if being third dropped wasn't quarter more And I we is.

much up for XX% down little I at But X%, surprise. our and We're and we're X%. if look was bit the running you at market So a a market refi. like not think that of is the purchase, gain share in year about

houses. story. isn't inventory there. loan people there But can't that. out that There's do as And officers to are continue with volume. of not is we'll and lot the find much a of approved got We lots same So that

for problem. other trying And it'll purchase this go real market quarters, I and stay we're And got the side, last the play. so that to and going going hang of customers, side, couple to XX scratch that's in we're and into in market on to going plus been then guys creates And before, of alive. it'll a guess and in our year. but we're to these that that's care processing we've refinancing deal, the through to pretty And were of didn't this there our But away. loan see where the a we're we're scrape in the significant are and in. have you've take take And our the and care the I there and people. officers But loan up whole officers out

confident So at they're they're there. be of you not leaving to can because people see some going places are these they're

be good think feel a but need would we the probably business, and mortgage to decided the in we more like help more need inventory. drive mortgage in down we're obviously need something up in the I something that And so we Washington country, business. in we So our settle industry growth position,

Matt Olney

that I or curious And states to inventory footprint drill inventory and… regions since you a pressures Alan, you issue more I'm you're down the in if certain want mentioned. guys have national Yes, on any seeing

Alan White

No, pretty I country the over inventory all problems. think it's having you're much where

a and think hurricanes Corpus I I I well But slow I quarter. this as fast that of seven it as probably the in you on think country, up I up one -- has somebody the as out there. we down -- in be just up, built wants to the there. house Or get some here the enough there's right of not think it'll crazy East, or there's across can died pretty sell area, through were kind inventory. production from did inventory top for know And it. eight some wiped our contracts of fast these everything's Coast, and as they're And it. think somebody's like slowed Gulf they quarter, Houston we see and and down building

like is largest the Dallas, Now Nature. sort Florida Worth. Texas in last our some third year, second. areas, busy devastated largest our of at Fort have our and producer, of those And Austin, and is producer, kind when look from are Mother madness But is three you first and those states by been out California

affects us it So a little bit.

Matt Olney

Okay, disclosures that's helpful, Alan. And then go five. accounting, slide the switching gears, back I on want to purchase the to around

there it are think mentioned XQ? with just the the I that some the the in Is $X.X in other indemnification was associated or slide in that million that, associated million that and that are $X.X quarter. expenses expenses there number third clawback, in

Will Furr

in the amortization-related -- total. largest but number small expenses $X.X the some there, equates of amortization principally the $X.X million is approximately are million, embedded it's There in it the and to

Matt Olney

what part you do have guidance that? Any what the can give few as the look equation that visibility like of kind next quarters? to you of Will, of on us kind And, will

Will Furr

elevated this levels. overall for portfolios; would Well, remainder to as have across year the The the third been end potentially quarter. to of down our what of And $XX next can million has been year, we and expect at the time. losses early the have in the continue And asset. to seeing amortization year amortizing be of outperform is say we, over I continued the asset this is consistent that the

Matt Olney

plan, this the stock plan, have authorization? guys And year. current you under repurchase on then Okay, more repurchase remaining committed lastly do that's you have been Are and to that helpful. how active in you much guys dry the powder active

Jeremy Ford

January to do $XX of we've done expires $XX got We million, date, and million. And to in authorization 'XX. that

So be spread that we're do we been more -- repurchases the year. fourth has And normal to throughout quarter. in kind doing the of the plan may course here out and

at. where anytime. really Not enough to by that's any market the so And try kind of move to we're means

Matt Olney

Thank you, guys.

Will Furr

you. Thank

Operator

Please with go Jaffray. next from The Rabatin Brett Piper comes ahead. question

Brett Rabatin

everyone. morning Hi, good

Will Furr

Morning.

Brett Rabatin

be also look, guess Alan, loan and I the to permanent ask, I Wanted see you just you challenges the estate real to but talked was real to grower and it, for it's this early you months, like seeing you're some movement now 'XX, in do they that? estate, Can on maybe about quarter. first, C&I next thoughts think? know just it a growth you what will headwind Maybe the over some or is commercial market. maybe seems XX C&I, that a little grow commercial construction seeing as your And in continue

Alan White

very And think I I year, C&I. next we've see going growth level C&I estate to real the into going commercial and compete. in had, of we'll continue that both think is competitive. we're to

some I think next we we've have in And think lot place we that. year. got are players some as to and we in can a do we do better markets that that will focus going help us

strong relationships grow. that some continue We have they

to we'll grow grow. continue they As

can so next a the on to big stay worth pretty we and Brett, far keep knock loan portfolio to $X.X And growth through we're X% range think year. our going organic And an loan in we lot of a quality quality. We're not growth on going losses is that's basis. feel wood, I in pretty confident the main have thing, to So of quarters, that's million I imperative. three And issues in good. that on

Brett Rabatin

about or ongoing us give on more on I'm move pretax But Okay. some the And guess thoughts down? been. look that margin every affect curious. if was optimistic some quarter. that pieces dealer, level the I there And you know highest Jeremy, to are then margin to it's are just the just pretax that you wanted to the ask pieces that the maybe might broker going I it at are up or

Jeremy Ford

we've XX% And how rates. I now overall, The guided in integration And mean, think at comfortable it be we've say, really the it. was should I would short-term would very is strong. look in I Yes, interest benefit efforts to I and XX%-ish margin. seen the our to rise the mid-teens pretax we're think that in I the quarter past of

with quarter, the kind is the I'm seasonality our future just for see being could the the So -- mid-teens. And in margins in usually, fourth finance. public in strongest quarter the looking revenue-wise, I of

Brett Rabatin

And impact value that lastly, this rate mortgage, the about commitments back lock then differently in talk on mitigate fair Okay. going just that to anything quarter. marks, Alan, the if can doing forward? then you're interest you And

Will Furr

I'll will. to it Alan. is it, take then turn This and

interest we impacted commitments rate lower us. lock On which the volumes, had obviously

caused some how move terms had we're anything And movements pipeline, the kind valuations rate of also we're managing we're doing different through period not the managing of little. how that overall We a hedge. in the to

normalize to kind we of under pressure. forward be our are outlook, again, understanding understanding here volume to go volumes to as expect So we going back

Alan White

to I nothing have add.

Brett Rabatin

can And just Okay. one I maybe one last sneak in. then

You curious M&A, to expectations stock. you with I'm a of stuff prefer be talked but buyer, cash is lot high and done guys a are if about would

of more you franchise, can improve. buyer You're things of a

think what capital? get to and you are with you do the looking are expectations do or the outbid stuff on capital I going on do the stuff. feel you other just Do high, you're sit excess if you guys like to

Jeremy Ford

do I a strategic. that. looking right our organization are to pay and we'll And that price fair -- are got opportunities to for the think foremost, for we're first pay fit and that we

a not our we're our that's goal. to sitting; at capital. opportunities ways and So we're deploy And looking lot definitely of

Brett Rabatin

enough. Thanks for the fair Okay, color.

Jeremy Ford

you. Thank

Operator

with Rose The next go Please ahead. Raymond Michael comes from question James.

Michael Rose

Hey, questions good morning one just of my Most or two more. been but answered, guys. have

the of growth, the to we that rebound? you of How think X You softer. And you related do a fourth do And impact quarter much loan to storm? the think could little bit guys we quarter, a begin talked XX% as then the about obviously, was just next see year, this about the year the C&I a Thanks. stronger the business, actually you why size strong as I growth tougher status given quo? of to understand that guys but rate we pipeline, talk remains be can think really pipeline, mean next about economy is if continue

Will Furr

helps C&I be Well, to it see I is we that. the we And grow yes, I could Washington of think we out everything continues good if could grow. some that economy this And and figure. results answer feel come drive the to grow competitive. the can feel X very is growth good good a to question a XX% next year, figure while I

We a with we on the year haven't an in think as couple think can have and ourselves about situation, as people. lot got that quarter. markets hurricane into and and of we we done I say go impact I maybe those this we a we in the it's we additional had capitalize that position are will next

it only awhile went on an those And not think but what think I there of markets had stopped everybody it we an fast had it the be is think to I think been a impact wants as is because I markets. of quarters. on. impact for slowdown everybody insurance continue will overall has from a state for and money on are that it it. coming. flowing I kind The watch in a government the And as money slowdown slow couple in those in not coming The

like things take and You people haven't a and still businesses small while got to to people hurt to And little still to back. system be to that it's going able their out it's back going gone their And this houses and are to that. haven't gone work. And with work. trying and of all back There start these get things messing out around together. to get back life

So those I don't think is markets. going the strong in to be fourth quarter

think the will that I that's can after I be see purchases stronger I you then think that on, it the be the all done. uptick. result to standpoint. And of think going think there I from And that's see will activity construction an you all going

markets will it think the I what extent right our it the construction effect think just company is do for up. businesses, in mortgage not from everything am has the see be read and bank but and see I on everything lesser like now, dealer. myself broker that's pick and some that's a back to else I I would what Now But how when tizzy. and that other in they And And and it'll I feel it it I workers all the that ground of these nerve. I activity slow. But poll of puts kind hope some a that's

right and right So our these people you that's do Houston, don't have the things be I a to couple be areas. on now will able can that the of we're going a -- business doing a are be in when optimistic with. you you that ground people And but I am the am of And share we lot optimistic and to uptick pretty right that. to able market there do loans grow to in increase easy with

So hopefully a year next it'll good year be those for us in markets.

Michael Rose

in Can one guys look some has time growth That's betas, the plus talk high and at the minus good some and the over embedded your just just like higher or cost broker money from obviously composition, XXX get over two points categories just next year? of basis that beta market year dealer. rate past the have question we if deposits when particularly been for in hike you pretty what's maybe And assumptions I the deposit you about me, another color. terms three in at or

Jeremy Ford

to we outlook Fed we generally on that QX. the are move, market will is see we we are -- I So in the going mean, assuming where the

we any And beta. here, here are this seeing pricing rate so been maintain them we we again aggregate a model out XX as there. quarter increases have from pressure to but to we XX% roughly to XX%, Again, able through model

about execute On how continue deposit prudent side, be that. and to the judicious against we we

However, the moving market is higher.

Michael Rose

there? seems to mean decision low, It have capacity relatively so you bucket? out, guess said to just is the I the flow the follow-up, the impetus a some deposit to why mean, continue that grow guys I just you of what's like time I let ratio to

Jeremy Ford

-- Well, to we just I balance we just a think deposit continue funding. manage

on seeing CRE as of are, We space. and lot loan activity the a noted, side has Alan

position deem the continue we core sheet what be so, balance we And to deposits. with to

time rates we but believe we moving want at you Again, are position good if think we at a we higher, relying also level. point it, as overly be deposits on to going do, which We are be balanced. pretty this that are to not

Michael Rose

my Okay, questions. thanks taking for

Jeremy Ford

you. Thank

Operator

Jesus The next with ahead. Bueno Point. go from Compass Please question comes

Jesus Bueno

my Good questions. taking for morning and thanks

unit is Irma insurance can Florida impact you to on Just additional provide or in was segment? some the what your again, insurance the touch the color exposure on maybe what

Alan White

we have I Irma about but have really significant, exposure million. we that Georgia. Florida, do some $X.X in Yes, wasn't any I believe but in believe it's And don't policies

Jesus Bueno

higher just more frequency kind within of your it's core So market?

Alan White

market No, lot the had late Irma. was as of Harvey our some Also had core in I Texas storm, it we a July. mean we of as higher kind Hurricane well in frequency in

Jesus Bueno

would you I the and reinsurance the of correct the of guess million in and remainder came you the to course And seem disparity in normal is Irma, your million with the mentioned quarter that in between $X.X I late $X.X from X.X this you mentioned modest, million assume the X guess it Harvey that I Okay. the be associated that in guess, reinstatement that just storms the other reinsurance of had all quarter? so guess you coverage fee. I see that losses have

Alan White

early came the the there. late season. you But, it Yes, in path quarter, on the are right in

Jesus Bueno

in. it. Got process was to earlier you from looks the thought upstreams it now I it had some the guess you year back like what in whole, and there that? had And looks driving capital the the in insurer put

Alan White

excess million insurance don't dividend we us throughout we related that off of went out Twenty at had Hilltop And of XX our back case. pay with -- capital the companies. $XX insurance National. the of million debt capital. Well, and we I foresee to million some company a needing took the put

Jesus Bueno

impacted XXX you where a your took reserves reallocation you just [indiscernible]? or is And Understood. on your established for loans million have current the the that -- reserves? allowance of the provision Was in areas, in you just Harvey

Jeremy Ford

was. It

had during a linked allowance. mentioned And we adjustment growth. I my quarter comments, the lower in in quarter our as we had methodology we also So had

$X And so, that reallocation a was of it -- the million.

Jesus Bueno

the on dealer. a guidance, of outlook the appreciate slip kind of terms more, and annually net to broker Jeremy, can revenue if That's good helpful. one the in XXX number there? And just But I use million I margin is still guess I

Will Furr

Yes, around million come -- XXX guiding made XXX but have a It still net towards but well, Year-to-date, I here, I would shy. are revenue. are year higher XXX little in kind still don't I little million drive a -- we we there. it of -- XXX am than at last we the million about in of could right

Jesus Bueno

helpful. Thank you Got my it. taking questions. That's for

Will Furr

Thank you.

Jeremy Ford

Thanks.

Operator

SunTrust. comes go from Please ahead. Next, a follow-up Michael question Young

Michael Young

for thanks Hey, the follow-up.

ask mortgage is wanted than offset is the your and/or those servicing, appetite decline were to servicing kind increased if change that more Just to to of either? appetite originations capital in would whole the if on any there change,

Jeremy Ford

the to for So mortgage the sale million. in what as we first we about had year think of kind servicing, obviously quarter $XX

in are impact. of normal and more watch potential going rules are affected, obviously and work capital watch there. back in forth MSRs kind to as punitive the intentional is to those We and MSR. our around increase closely. implications I some XXXX. quarter through an the Obviously, to capital materially think of related flows the they there of don't But they first those get we currently capital MSRs, be I is don't continue -- short-term there to overall We continue the

around rules So, watching MSRs watching that, the we industry we where the today. are are kind and guidance watching our of the but comfortable feel

Alan White

have that business, and the thing in that, is strategically I do would is markets really for we just what on the originations. capital would for bet best a MSRs on best the the think to Yes. execution more related why follow-up business, necessarily And not mortgage to reason and we

Michael Young

from to just business of next And great. expense out Okay, the one opportunities forward, You where one the looking do to going maybe see if kind know, here, year? continue just last best maybe Jeremy, you the I rationalize could, the in of kind base? within

Jeremy Ford

that growing working something what what out from loans. on, well, mean, our are that think of I can particularly company and a think are our have say part across far Well, as that are the and the focused efficiencies, company, quarter and -- would But and heavily originations, as we we businesses mortgage results, businesses. are far a I with tough good, ways but fundamentals holding as at on that's the know, positioned I for kind as looking of we I our on leverage and accretion, this really you purchase a was the we most lot this coming bank as in

Michael Young

thanks. Okay,

Jeremy Ford

you. Thank

Operator

attending you and session, concluded. question-and-answer our now conference This has the presentation. today's concludes Thank for

disconnect. now may You

Hilltop (HTH) 27 Oct 172017 Q3 Earnings call transcript