HTH - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Hilltop Holdings' Q1 2018 Earnings 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

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

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

presentation appendix Additionally, at would the measures measure in found includes of And which website hand posted I to may over presentation ir.hilltop-holdings.com. Ford. the Jeremy be on nearest these now, A to is our the reconciliation this like GAAP this to presentation, of non-GAAP measures. certain

Jeremy Ford

Isabell good Thank you, and morning.

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

for remains in retail, our expense revenues. term deposits our income top pressures XXXX securities and insurance loan net losses While increase grew that revenues. adversely XX.X delivered. we driven franchise a which from business quarter, XX% compensation this Hilltop. lower supported the market Non-interest in by XXXX, X% lower and benefited interest QX very Higher priority. our rates million shareholders or businesses and losses, XX.X to are quarter, and grew net our a with core business in or by by Delivering lower by in excuse total securities performance million and the banking X% the businesses mortgage QX, X% securities a impacted loan short versus interest Year-over-year, value clearing lending pleased expense versus in reduced increase our the were XX% decreased X%, generating portfolio me,

X.X share quarter, returned shareholders through dividends the During million first to Hilltop repurchases. and

announced also of to in the acquire accelerating our The very through agreement about Oaks execution of the and We River the definitive a market franchise. robust excited efforts that growth Houston Bank are

share, Directors declared of on Additionally, cash a common per May $X.XX of Hilltop's XXXX. Board payable dividend quarterly XX,

risk $XX.X recorded down as This quarter, consecutive first previously for the quarter commercial XX% from trended a a the LAE XXXX. well the off of recovered and bank loss insurance XX.X% third business X.X our for management, ratio quarter non-performing on from during million assets charged emphasis as the QX, to highlighted down million loan and successfully

slide margin and resulting our in Bank, entity, net to healthy favorable which from interest Hilltop million, a delivered increase from $XX PlainsCapital Moving X, cornerstone XX% income to of benefited the pretax quality. strength asset X.XX% a of

X billion, to income raises to many enactment secondary decrease to was $X $X the to which planned structured fixed in a lower volumes volumes finance of pretax debt and the public portfolio their decline X% and tightening a produced the into tax driven in year lending. Securities issuers spreads finance, prime loss act. from XXXX, by in accelerated million, origination QX for the in spreads by mortgage capital market largely Although pretax Hilltop prior as a increased markets income volatility led of offerings, prior million

to million now and experiences of in quarter Notably, Will its financial. frequency will the presentation storms. through with $X line to storm drove expectations Finally, walk experienced of typically highest over the low I National is Lloyds income. losses, pretax the which seasonal turn second the

Will Furr

Jeremy. decrease the for quarter million, the first you, equated quarter of start first page to a Thank $XX.X income million. on from net Hilltop's XXXX X. I'll of $X

As in of the XXXX, a was effective the XXXX enactment rate for first tax in quarter the same result QX prior XX.X% of GAAP tax versus the the act of XX.X% year. period

year. XX% expected throughout the rate full-year of be will effective We tax GAAP driven impact state XX% by taxes between variability with and the the

low million for $X Hilltop's approximately prior For net mortgage income pretax positively The ratio year impact the the of results prior impact, first impacted of primarily impacted the estimated declined quarter non-interest from end the of and these were prior positive as expected million has from year decrease the segment, income is was our our quarter. $X.X range decline the of modest and per expense. pretax from quarter contribution XX% XXXX, by efficiency a period million. the to of within non-interest purchase at $X XXXX. by by $X in improvements in by million million items $X.X offset for accounting This

Jeremy resume X approximately by tier repurchase lower activity second XX.XX%. a the we quarter, expenses significant non-interest As and higher market million, Of capital and note, in quarter, of remains leverage any with ratio during first related repurchased XX,XXX shares. ratio do Hilltop's discretionary expect during strong, level compensation period a shifts. equity lower We XX.X% of a mentioned, common incentive year-over-year driven X the notwithstanding to position $XX by losses. improved insurance tier of

pre-purchase quarter the increase and through driven to interest first of both accounting pre-purchase six, the is to interest net impact equated cycle. of rate XXXX, the this competitive from approximately model XXXX. beta Related versus equivalent interest cycle is XX%. through X.XX% as purchase for from accounting basis The of points XX levels XX% betas time. of the We by market deposit The equates margin The to cost the the quarter increase move points of resulting our curve the interest the through an in taxable on net expect to beta we deposit XXXX. ongoing for first included yields towards quarter. core the total asset over with is or as we XX and Moving growing basis deposits has aggressively December page margin quarter, interest will XX% margin in margin securities accretion funding to continued overall on increase net levels higher of flat. in as getting net to move to The our remain of focused accounting deposit yield costs, cycle managing management coupled equated higher and X.XX% costs, loans rates the deposit more our

increase to minus X.X% March, margin accounting points. X net guidance plus interest point during equivalent Given rate we basis our pre-purchases basis or the that occurred XX are taxable revising

continue the federal will on the to on Reserve outcome Federal movements We and of revisit future - portfolios. our rate impacts our based assumptions rate

growth income securities to moving past and of have increased XXXX the Hilltop's year, related to in growth earning in $X.X $XXX I'm the Total HFI of average for by securities $XXX billion, loan approximately first to Hilltop growth X. quarter a million. principally million, at backed million mortgage Over driven assets by of noninterest bank the page and bank portfolio securities. equated $XXX non-covered

income versus the and First million fees quarter $XX by XXXX. of first quarter declined mortgage related

We tighter declined by competitive is relatively economic of the rates increased in and revenues $X spreads volumes in mortgage view by pricing as XX pressure short X% pressures. the decreased prior third volumes secondary XXXX, a a basis for aggressive term could backdrop to While on terms, by result market offerings. the driven second a year million, intermediate higher primarily ongoing decline however, to and price in public $XXX the and constructive secondary long and Securities coupled compared competition result fees purchase ongoing strong QX current quarters. driven by lower related finance origination million, with point or spreads, in market versus

quarter. debt enactment with some instruments capital did the in adoption $XX.X of market income The other reduced the million into Further, the production structured by in financial income quarter. variability of markets and income With the $X.X other QX, act million lower tax was new accounting fixed decrease the driven in in by standard rate planned issuers the spreads tighter business the coupled financial raises accelerate primarily regarding volumes fourth portfolio. driven the of in finance XXXX,

mortgage by enhancements. lower lower incentives. this driving volumes. million Non-interest compensation the to ongoing were insurance quarter core related expenses business variable system related costs in the X. $XX million. to XXXX quarter $XXX million frequency of million X% Compensation expenses by production and expenses with $X.X storm improvement the to related from lower came $X.X origination expenses and of production from during were page severity in revenues, to are LAE replacements million aligned low. commissions note, Moving first and lower $X or improved and generally Of and Further, included the discretionary loss seasonally period

the same or to X% loans, total is occurred covered year XX million to quarter Hilltop prior year period related to quarter. the X% margin the basis Moving the throughout is loans certain a line was of $XXX loan loan year at full expectations with Total loans modest The million and that within in housed first and X% on growth. outlook real a grew bank in page we XXXX. including and X. of our full by Securities approximately maintain This quarter performance first versus paydowns in of decline estate results large balances the consistent linked the with

franchise. or $X approximately X% Non-interest have active customer quarter. deposits deposits, rates interest increased increased our provide intentional we and the competitive, XX. quarter, non-interest leading reflecting business's X% very total terms first decline 'XX rates terms deposits. the page remain were bearing have our quarter to we I'll turn or million more and while XXX short XX% relationships being increased Total in term bearing by rates. has in to billion now the Further, and to and improved Deposit versus across a versus growing it of by to in $XXX interest represent Moving focus over relatively on by deposits the million bearing are of on ensure remain market performance. time, offset of and the banking continued higher costs have not fourth which stable linked Alan insights modestly deposits market, with in expanding testing X%

Alan White

Thank a good solid quarter. good and had start with the you, Will bank bank I'll and the morning.

Our was to tax income XX% before XX up million.

ROA Our XXX. was

XX%. Our efficiency was ratio

purchase direction, be costs income. before control points our basis to see the and net margin pleased accounting we continue our head continue and year-over-year. our interest was help our Our net that margin deposit to to was right up loan X That's as we in with XXX. costs that We're and interest able really XXX to continuing

about Our We growth assets loan X%. of billion. had were year-over-year X.X

area. about, a can XX% X% going to subject to the year to throughout be to We that and and up the still estate. commercial are quarter lot expect real that had we continues that's make and to of loans First it's to estate loans, construction talking to flat. focused new that we've lot reason X% to you'd course credits that that commercial I in do subject it. additional believe back it's our but able paydowns. you we of some are being of say was pay still real The been fund off paydowns, construction get we loans And going that those would a go and the of growth

standards discipline we're and see to to these is the in you we and our tough. not very fire C&I we're - And lending give to The continue competitive that business very our market why to that's able continue through tough. be our we large But that. not way entire going to going is So and keep payoffs.

growth, deposit excluding X% Our our grew deposits, dealer year-over-year. broker

licenses focus the is on focus most quality. thing credit continue and Will the on here We concerned think as And to I mind I am said. is as then far important and as the that

outstanding have credit quality. We

in improve. just there's of our you concerned anything any hurricane any at NPAs that, look Our about. the see area of continue activity, don't all credit. there When not weakness We material any to activity, we're particular that

to going help to in Austin, of get Dallas, anxious loan Houston because and River able think us growth Oaks books, Our Worth, Bank on Fort strong and area Lubbock we're be are we the our significantly going in forward. our to that's markets

So looking to that transactions forward that, happening. we're

quality. loan I think with one thing too them, that goes along

If of people, proud the that I'm I I charge net on they we at you of $X.X look proud with very resonates that's you. and portfolio. very million at quarter $X done and prime. the Prime had hope pretty they've portfolio offs, are lending, a year-over-year size billion of that remarkable pretty what guess tough our and that on the

us in had refi refi some to on really this were that and still quarter. However, quarter first we when you year that it year, compare where business there business last no helped going last

or before we tax. ended nevertheless, we were up what where far it's to off we'd from but million X.X not be. anticipating It's not like losing So budgeting,

and that where minute. is, said, the around volume October, purchase close XX%. pretty are you XX the so this cutting as have in loss. would competitive that rise, I significant were sale, to it's rise where and on you the That can the X%. was Starting effect percentage up was origination tribute about had which on it seeing at million be margins Sales to is is got it business XX% today That really the people a quarter. began on I and to two then, - year starting really through on that's Will the has us our to trying worth started you marketplace gain rates isn't we business in gain a basis continued some tell but gain Our and and deals, hurt why see significant the last stay significantly. We to of $XX that ten not has tell affected far in to too. and When volume about in business first a itself, caused is figure did and the loans. sale drop note we we're a to as is the think as interest year round income point to Pretty that's reason look we it the volumes had up, able sale. our One, the in got on interesting I'll XX% really about here and things. purchase at make you

will go in you're that that fall we're that see forward. fall out second we hope hoping sale XXX%, on as we're market then hope going business as people and quarter, and are to we back to turn will start that a as and gain we them to going you're to see gets seeing to going the that, market happens, we as still gets not there stronger be the Now into out close purchase where better but go the maybe were

to However, rates that products. obstacles withstand have there. to in there have be do is able to are it's The to continued to going the economy Fed some and rise interest well going the

So that very to we're closely. watch going

there. First quarter, already okay, we are

I is probably we be quarter than and volume. see as going third the what's purchase Second in it want and to fourth we'll softer with then what going to happen said quarters

going the business handle year, are able that continue to right but tough So position on this to in mortgage poised focus and purchase to be the our we is we to a market volume. be and

what and the was hope bigger the the tough markets and the as of and a year, it's the bottom Act, so to actually grew of so the in of to was line. Our X national and first public quarter we're as related it market actual rest able basis struggle. first stronger percentage hit banking, is but the that, that fact pleased Part dealer, the that's much that far deals points, that. a it Tax as strong we do getting to market end lot and people we're traditionally, comes didn't a that pretty about with the especially XX% At it continue at the broker to our of quarter, of share for to be did gets off quarter. isn't but the continues Capital average year the

lot municipal that do is, lot now. right don't can have When we don't you use One product don't stuff of markets of public finance, the and a have lot for capital you a bonds of reasons the of a the sector. actually you

business with and there. then probably us been involved [indiscernible] deals structured that been a that that finance we the So the business very back we've and mortgage hurt done lot one has of the we've the and most

I from. can't see we as and I things, ground the in a will with stronger through is Security these structured go back. Clearing up we better of back of helps quarter these rising better can't we year. come for year. management than rates interest last on than the and come think things, None we'll year. believe is lending better finance Retail the was our make really second cash last year of recovery a last than that profitable lot course None that us. in and business,

some So to going things able the in broker got optimistic to we've some we're I'm but the back dealer. to get business, we've We've help, things had we've good small improve going insurance that bounce got getting to storms. on. got business, and no we In be some got

anytime and go And our pretty insurance business. have line will to not on to the So we well don't fairly normally second we'll not which we really is this we quarter, do hope in continue we through storms a see drive negative. the I big well think storms, reported that Jeremy as that bottom quarter, significant any lines any those just that

I thing continues and the made versus before our that because X.X we'll that income it and line start last us we've in income, driving around the $X.X but improve most so that we that competitive to think tax got premium the the concerns better Texas that to turn fact to million a decline of nature is our return, again year.

lot insurance second fingers forward quarters year than crossed as the better the third and here last So in our we keep did and business. go a we'll we into

going side broker those in on drive and optimistically So on we reports. headwinds I back, hard and we I help quality credit us we certainly got of feel I and feel ahead couple look have. very the my come that towards will discipline that We've what's mortgage very of is a with happy and those bank that to confident work that the dealer work will are and the us

So that's my report.

Isabell Novakov

prepared This concludes our remarks.

now take questions. will We

Operator

Instructions] SunTrust. [Operator first Our with Young comes question Michael from

Michael Young

kind Wanted just market a this to outlook be of you to shift environment an and you the now? got maybe more think issuance with municipal that in down little or lower secular do rebuild it's tax there. a bit pipelines just go and start of a we're of could think with Do that the

Jeremy Ford

was also our the to kind And even think we weaker out we is National first quarter the saw quarter, that of significantly, year-over-year a Well, - issuance drop greater I issuance. it. in of come than quarter

we think finance think be I to it going is be off. it's But should going that last year. business the public that versus build through the year, to as not brave,

I past year at if that about far think you in at from hope of I we're revenue as look of where as kind today, last XX% comes year, it off.

Michael Young

pick given do back point? that, year for full this the the can and hit some think of the And up of at our do assumptions Okay. can there other be guidance you kind you carrying should slack year we mean, I think businesses we the still of kind or

Jeremy Ford

range, we've to revenue to million you And think public to at [indiscernible]. year, in I the range. the look the the year. off - at looking I structured of capital in in the broker think got percent a probably TV a be businesses weak I over markets to and XX for mean start get XX-ish I view finance pretax the our dealer, about, I net of and XXX and you million institutional think would would kind if that XXX XX-ish had, the update finance, margin

by the that kind shocks. in had and were I that think I hope coming into quarter, and next of quarter year, the sudden some we first that rate driven - things some For

a we but of normalize in and rest the think higher, kind at just 'XX kind will were stuff I levels don't rebound just will I little that bit of think will moderate the yet.

Michael Young

more the existing quarter, business, And just there been guess, purely you what active of or it structured is is you is saw just Okay. finance I in competition you've seeing in the that, lower. areas are the kind volume that this

Jeremy Ford

the we decreased and first that to that was can that's there I that quarter will a volume profitability speaking compressing. and said, had moderate. so as think The rate shock in be the the to well. the spreads, first, business Well, kind off degree That is in of that

general, be to secondarily I overall of is market, the think just then one And going tied competition. mortgage is it's that to. also

really that. I periods so, And had strong that we think with

revenue the that had think of we kind about me, that net quarter. on like, excuse collective business of so for I of million X

I quarter, significantly rebound that that probably million 'XX. of fourth it the the but will quarter XX did not in to think that next

Michael Young

kind River about quarter, comments conversations the share last of big more just provide you following Okay. in I you outlook on being could And side one and any increase heard transaction maybe on there. next picture, just announcement, the buyback just a one but little the the M&A aggressive any have seen Oaks

Jeremy Ford

Yeah.

get on for really I and about excited are franchise signed think do that's integrated River and to foremost, and hard we're first what what Oaks and working going we're to grow. is, get working executed, Bank and us transaction as of The that we a

said, distressed I We that compelling. lot do we that there, people seen there of not cash additional conversations it's there's to as that economy that think I a us. are deals but Texas a far additional interest and think in strong our So think and find have talking in as,

that there. don't evaluating So and what it pursuing still that's right I don't the M&A - seen preclude we And we've from think now.

Operator

Brady with next KBW. question Gailey from Our comes

Unidentified Analyst

in lender there? - of doing outlook to team the the the touching again thoughts be scale to to can ups build interest. that, there or growth coming on does back hires seem you It's kind just are Maybe and if an of [indiscernible]. I there. plans perhaps your up outlook guess lift you guys lot and There provide maybe, Houston interesting a

Jeremy Ford

quality which River of Houston. most acquiring we're It's geography desirable Well, of is Oaks, franchise. real a Bank

partnering with market. work team growing are PlainsCapital to able going where that's some that with get with that the really are we, to existing going that, seasoned in executives you the So be to boost we're banking and

to to the mean I want speak at recruiting. think lender we're continue can franchise. the we'd Alan, where and that to on that's build you I So

Alan White

I The yes, because economy are the they of and their able with and Obviously, think going to have is additional additional quite with this opportunities opportunities to We'd does everybody that. the going we're be find and like look ability we're to to picking up these there a guys lending in few for relationships to Houston lenders. teams. expand and bank find

we'll the we do all So, as things do. always

come those we be a I fast. of see us half this hold we'll opportunity able this be to to ought it loan think is pretty Houston and good to to of take able of be it, advantages pretty for this the centrally part build and grow think, well can second and be and a in located we side hope in Once to the able good of very we I advantage year. get so

So standpoint. I'm pretty optimistic from that

Unidentified Analyst

pay be do guidance And something I maybe? was it construction but no that kind then the of elevated X% activity is kind recognize that funds still X% ex-construction to can maybe of this maintaining and quarter that growth, to to loan and off, lumpy, loans, actually paydown

Alan White

Yeah.

through. hard mean $XX a payoffs we in the got pretty just this and or us get we got in loans, payoff loan quarter, those first had you you up $XX million of growth then $XX XX% now, million we of thought I you made million hammered worth up may $XXX end worth we and in construction in come it's and paydowns and going and hit pipeline. we and $XX the to we new and at through what million lot year right If We the to the got first up of first know, happened come good quarter quarter that's bunch get or but because we're to hard the million have of gone loan year, us recall a million not a that a we but payoffs 'XX payoffs loans. of all to $XXX ended 'XX, as

when sized to pretty We of a know not have funded loans. We to a do good and signings construction have book approved they just it, ago, them time to just used it closed, note today like I them lot long have get you resign to while these is on get don't takes it loans, a a don't get get fund and to a while the to especially takes books, up. I it

I and loan has having whatever what it's quality. of our reserve good you about a process, say So the I don't growth, it feel is I you about good and we're the our say just to but can want if bunch good really but mean, good. feel that's we pretty been quarter, and money every quality whole loan have into a not problems about

just it's off for I'm good give them on to have going us. growth the are have and So not I paying to it. pressure to loan I and have be growth want loan to want to we disciplined and

in loan that over billion charge-offs against and portfolio, of I million quarters put so And up $X five $X.X anybody. worth

Unidentified Analyst

perform of that wanting the of sense. on two of and you you're It to what Credit I are topics, cautious makes to continues last CRE. space in maybe makes thing kind more one kind relates to kind well. focus those seeing definitely guess you C&I

Alan White

that. them not. doing loans. are things make so we're competitive, a love on C&I we're waste rate. them problem we The We'd Well, to like them them structuralized, give going opinion things do. is give We're not We the people we're We do and mind terms not don't the see give structure. going to don't a We'll to not give is structure problem in in very don't weakness They're that. my that. C&I. We going not a competitiveness basis, and to see

terms got We a off got and we we made just them million give relationships. loan week will our $XX rates. based that we We and on got this it our

these and of not. a So mean, to see structure a the in just we're I this, difficult guys in weakness time willing of the and C&I. I competitiveness don't some weakness, a do see I

Operator

Our next question Piper Jaffray. comes from Brett Rabatin with

Brett Rabatin

I Wanted sales better little heard just as But you Can do then I commentary gain around reconcile also you thought say correctly, Alan, to make sure you then think expect mortgage said on if heard on I you understood in pressure spread bit you you price. a continued you I and banking. guess? just maybe the I XQ. that

Alan White

Traditionally, good. is not quarter first

quarter, is are we we're a Second going us. quarter, were our good Volume okay. money. soft. purchase is money second make thought. to as out go us just going more but stronger a did, it's more and the It but but didn't then it quarter towards get because we We're that and the going saying bad be see to is and spreads going be quarters may purchase those to was refi thought past and going move and because the moves the I a and quarter, competition towards I'm plus it's about spreads, there, is spread It's yet I a are us going and going it of said, as Well, little it seen have XXX% helps to do is going isn't, has therefore where up. we that happen to with there's guys business worse We'll volumes we the held in think gets than deals, that's to to the be going and for traditionally the less. improve that's maybe this forward. what year. that much gone be the mean not just to what be going tough to it. the we'll third business was doesn't be second no to fourth make are to what - that they're And our in volume we not to to not we gone hurt think business have quarter we our we're going more don't our and make I off mean if like the we're money feel, to be first there decent

to tough. be second I is slow think it's quarter going and to be going

an you will And X% weak been. the be it the all but volumes right, example all X.X%. the last won't it great NBA as to week, as I is because and has time. we're it will money think week gave be call and NBA the then to going margins from changing think purchase I I loans last there be increased increased have profitability

and you of other at got the and probably get purchase going it over So it's out to down you force to rate be problems. as to And or long with stop keep If because we've able else people we'll to look to we to that, margins we of If survive We've comes all our business think economy getting something at can because increases, are there because our other to interest we're last doesn't costs, have be well, grow your the I like business going, inventory as else. you volumes the would now going got the to of there's and worry have Fed about. worry you got year, think, cut the up. with economy. nothing a they're see, The not get right. about problem X% better is if lot are doing is but to the it can't we've has costs, purchase share can economy got

that officers that, And do okay, so you you've going those to need loans lose are. we don't loans, that you commissioned, close but and then allow don't and got to well, if able say, going to what make you not leave to do you and get things be be can volume, able we're they're your your those loan you and make tools to to

we've environment this in difference saw competitive last the this before are be haven't too. we and before. course to for in of rising what fact rates got long the is it seen just between that you've interest been We this So and

trying I'm only struggle stay it. facing in also to we're the confused we're you, real people that to totally business, at this And total which rising rates, on effect I interest So hope not has facing I not sure point because.

Brett Rabatin

a appreciate mention even are I expense lot it. what's little And cut And year, realize do about and rate? into there's lines go maybe business actually color. managed this as bit that great or was thoughts you little But down. it. that them can your on year, you a guys run you thinking then you last the did of That pretty I cost, flat, expenses

Jeremy Ford

lending? talking you about Are prime

Brett Rabatin

No.

- the Just

Will Furr

Yes.

our we cost but that of move lot planning. We down This obviously, they from are year that office as middle the are system as will really quarter. businesses we were we produce. core drove call the streamline we a draw last levers we're forward. look and doing cost we this at look and think implementations have I to mentioned we as Those a lot results million back of perspective remain all working working that focused. diligently and and in across doing growth cost implementing the we'll at We of be the $X.X in the a ongoing, we XXXX, of

Brett Rabatin

Okay. Will? Any the idea magnitude, of

Will Furr

provide quarter we little work as sit through clarity that second here, going help of I to a think we're time. over to more the

Brett Rabatin

me, what's but And growth Okay. great driving you're core Fair know about and one DDA what's I sort maybe then just core you enough. of you deposits? that deposit deposits. Can last focused, for talk maybe guys the had driving

Jeremy Ford

Yeah.

their had I of clients a balances. think number increase of we just couple

client couple that we we've One, deposits. incremental view So that the Two, it relationship the we remains relationships. there. of XX again as and core kind We clients bearing the some as on are non-interest had some in focus. but some core it a last view put account, that a been on of as client client relationships. new things dollars went in focused for deposits We growing and unequivocally talking growing business months, core

that of it's reflection just that, So over time. a

Operator

Raymond Rose Our James. with comes next question from Michael

Michael Rose

continues go that margin. volume to of that or organically more got couple you market actually be industrywide or But that in I more confidence gain hikes it to you the guidance decline. just do a on can Is the can is back rate you a function gives share it muni wanted range, business what cost broker actually pretax and appreciate think that grow? to assuming Jeremy, we dealer. the

Jeremy Ford

dealer. to broker the speaking You're entire

Michael Rose

Maybe - on or it XX% cuts more you is grow? it of I cost pieces think greater that Thanks. you margins? get color you some business of just grow, that can mean to the how you XX% to Yeah. is think what can do are there areas other

Jeremy Ford

on it issuance bit interest the and the impact of a mean, that of rate public XX certain and due in a fourth the quarter. been $XXX shocks million. TBA I we've of it the about I is amount it, of This finance capital to million net was a revenue that of quarter. of the markets shooting kind related in of little and well, to There acceleration was Yeah. past business for is think it Well, past quarter, some

get XXX looking over if So you the that's and will shift look where in quarter XX-ish a about won't mix that probably but the given kind of to back quarters the I million, and I that next a out XX three revenue get pretax - the back at margin. to think percent those normalize, businesses, million net think you're

businesses some where solid So so haven't I is volatility, these through which performance by our guess in lending business. struggled a that, some in into also from has short to term grown been broker talked we've stock have is, rates clearing about and other higher lot balances, short that's in my had a we interest underpinned term the the uncommon is the grown confidence business has rates, businesses real not institutional it, in dealer retail but business of through has aided rise interest and and segment but that

as environment think deliver. - in they and the actually those are And as so those predictable far the this revenue and margins - I more

Michael Rose

a target? change maybe about you meet been then the X.X would Thanks. give I growth Alan, confidence that previously you think talked that guys I any back it didn't commercial you this see around trending to billion, pipeline, quarter, loan there And but loan the pipeline, growth, could it's

Alan White

about loans pipeline I that pipeline just we've and is continue right It's in up. got and still running about to can these they've see will there been them the in XXX to get approved, fund now running our closed. construction

So quarter. have think going to we're I a stronger

off on don't going fund but bit little used closing problem to I our to that's have pay just I out loan they it good up underwriting. it not doing okay a can and quarter a commercial it getting be, our what's can job explain This tough up make see growth any It's finishes, supposed there. this not and come up but real and get am problems. than your big certainly of off see things credit growth quality [indiscernible] to wake to this chunk the wake way million excited. just is pretty a we're back it. and pretty a done. it went you replace going I So $XX economy and to to just get construction and or up got some it's on a lumpiness pretty and that's want business of quarter. find good up and good happen. hope is can second disciplined of to those get paydowns, I gets loan, back I think and and to estate I'm and I and to a I to there you, staying got get people to it have lot harder a

Michael Rose

you guys I a more of, one buyback. little the suspect, me, for used just Maybe bit

January, that head I would left. think maybe million decent you got into use a or all the? it is that it of in or Jeremy, you still just expires XXX it about chunk expect

Jeremy Ford

authorization And we the doing and for of market quarters million. last just have have So year did we is million, over kind share the repurchases. the XX light not a XXX open repurchase two we're

given to So active repurchase, is, do want we share markets to in we that, the and there's it the be so we is time it's least this open in have spent issue thinking something at a point equity certainly get lot of goal awards our some when but we've to to about. back buy environment, and we then are - what and to

Operator

you today's attending today's question-and-answer Thank This well conference. for concludes session as as presentation. our

You may now disconnect.

Jeremy Ford

Thank you.

Hilltop (HTH) 27 Apr 182018 Q1 Earnings call transcript