HTH - Earnings call transcript Q2 2018

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Operator

Good day and welcome to the Hilltop Holdings' Second Quarter 2018 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]. is event this note being recorded. Please now Ms. would like to to over conference the turn I Novakov. Isabell go Please ahead.

Isabell Novakov

Good morning.

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

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

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

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

Jeremy B. Ford

and Isabell good you, Thank morning.

For or quarter the we share. diluted million $X.XX per second XXXX, $XX.X income net reported of

growth the pressures, delivered to businesses and cornerstone our banking organization. and broker-dealer earnings consistent mortgage strong our market for continued While franchise experience

picked by lower over up continues -- same year. prior origination industry with market period grew and to deposits environment up During was the by and the X basis X% a of noninterest-bearing quarter, refinancing. purchase the share, compared year points move volume XX% as Mortgage to prior prior to grew X% loans held-for-investment core

million versus continued reduction by businesses lower compensation revenue Lending expense XXXX, reduced the and lower in X% or Non-interest increases Clearing to Our $XX and Retail, rate losses insurance with year-over-year X%. business. driven benefit QX securities revenues business and of decreased growth short-term Securities the from in from seasonally expense

PlainsCapital was adversely which victim impacted wire Additionally, earnings a $X.X of million. a Bank fraud, by quarterly

continue stockholders. year, through optimize We we opportunities first to for to share for million capital and shareholders. look $XX in returned of months to our dividends our the have repurchases And six the

$X.XX million repurchases cash Board January Our quarterly of $XX approved share declared payable on XX, of August a additional dividend an per of through of share and common also Directors XXXX, XXXX.

the organization of during proud down are extremely our recorded charge-offs asset M&A, on and prior only per and share ratio River for $XXX,XXX. close risk quarter of LAE operations. and year. fundamental view the net a insurance from quality to Bank year. loss our shareholder regulatory has X% Regarding of Meanwhile, receiving from this tangible acquisition book approval. remains as We for quarter are management by after and our Year-to-date, second the value prior Oaks credit grown track XX% The the business XX.X% management

covers of X, slide $XX XXXX Moving of million $XX.X the receivable when million the year; an of significant non-recurring two prior insurance second overall, to pretax the going the to significantly corporate. SWS compared items million reported declined accounting quarter to to of also for drove by at rights however, at and decline, which financials. bank; majority the he reported were: $XX.X appraisal decline, Purchase the income address proceedings in Will which resolution the the favorable year-over-year is contributed

non-covered to a Real XX non-covered loan loans non-covered linked-quarter continues total organic quality growth non-performing growth as to estate very lending credit generate dipped down. in of and business X% competitive Our supported loans market. core basis remains points banking

we industry in overall business and spite As of lower increased to market noted competition mortgage earlier, increase volume. the in share continue

and originations loan benefited pretax growth and to Lloyds income rates. in Lloyds may of significantly by National Texas increased, year, in in while which offset secondary period can weather operating capital the short-term lower the markets market be partially quarter, fees historical of $X.X mild an program, largely the prior third its have spreads. finance, Note, its finance has to Our higher pressure decreased State structured year prior businesses four our the declined volatility. public million was servicing which the served expenses weather National for from quarter below businesses, active from loss Due compared compared to revenue LAE to second and that and average. year, the have during ratio offset HilltopSecurities' the create

So very long-term address professionals quality to positive ability the overall, and strength challenges the and I of continue and Hilltop, feel grow to about our of organization. prospects the market current

capital Bank turn over businesses, exercise to the our Oaks transaction. by shareholders prudent Will to of financials. the organic evidenced River desirable capital our of through will continue as of growth return transactions, to to the make I impending talk close opportunistic the and to support will management presentation the We now

William B. Furr

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

$XX the declined half equated XXXX. million the of million of by of the recover include purchased interest includes The Currently, of quarter Net second proceeds and $XXX incidence. during second in income a to pretax XXXX portion $X.X accretion, from insurance million significant fraud $X.X loss million quarter second a this this second to related year. of versus wire we expenses approximately results expect quarter we loan of which will

oil from prices. million the were and in improving the the the portfolio, income. experiencing $XXX,XXX. particular ongoing oil significant noted, quarter Provision XXXX approximately expense quarter items, of of resulting for of approximately gas noninterest reflects the second in Jeremy included $XX in was higher As in which improvement Provision expense quarter non-recurring are business results both but recorded operating clients across

second net the quarter of the contributed items impact $X.X of accounting million. purchase XXXX, During

for Common during accounting repurchased ratio the expect market Oaks notwithstanding Tier of has do XX.XX% remainder will we second program. a million Tier X.X of any period-end through and third $XX While outlook repurchasing the continue XXXX. the expect ratio range repurchase Equity quarter, benefits excludes versus between million leverage Hilltop's capital We million $X of declined X This and XX.X%. with to the acquisition. purchase additional The we prior of note, to our quarter, per of X shifts. Bank year remain open shares the contribution during as Of significant market River for $X million guidance approximately results, expected shares quarter that any a impacts and do position strong

to interest the to margin Moving Net basis second higher X.XX% to quarter X margin loan equivalent stable points points, including quarter by purchase improved offset X.XX%. accretion. accounting taxable HFI XX basis interest X, XXXX, interest equated yields remained of somewhat equated second Page accounting net net The of the non-covered during in deposit margin by relatively pre-purchase as cost.

we curve approximately expect The focused Federal net to and as to move have through-the-cycle rates pursuing and the While NIM up we as extremely beta levels higher our we to both Reserve. XX%. some have shift rate we've favorably seen market costs, X%, has activity from remain incremental continues as rates total XX% December cost the months, from the will levels yields cost deposit managing in higher-yielding deposit flattening of and market Further, continue through-the-cycle model to above as of and beta the betas XX%. seen absolute Further, These stable. our deposit CD accounts, XX betas is more we cash competitive increase the more while over as approximately higher, have time. longer-term beta mix deposit our compare in short-term yield expected to get market the across have continue our pressure clients and last towards movements total XX%, to rise portfolio. products gotten resulting increased interest moved borrowing money rates on XXXX, on move deposit relatively is asset remain income over from total Related deposit risen

moves and in growing While on we funding focused aggressively. cost this as higher expected this shift deposits overall mix the market our through remain deposit managing core cycle, is

maintaining factors accounting, pre-purchase the equivalent at outlook noted X.X% margin we interest our current points. plus net taxable Given previously, X basis are minus or

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

HFI Over Bank loan bank increased portfolios $XXX high-liquid the $XXX in mortgage-backed of securities and non-covered million of at growth to related earning PlainsCapital Hilltop's million, past growth assets average year, driven low-risk, earnings assets and both principally in million, by growth by securities $XXX HilltopSecurities. have -- approximately

million. total second X, Page quarter XXXX of equated $XXX the income Moving for to to non-interest

by and income million XXXX. quarter of mortgage-related quarter Second the fees declined versus $XX second

by XX economic and quarter competitive market remained secondary While stable XXXX point strong terms. constructive declined as for a of pressures. short strong We levels, of prior second as mortgage revenues origination a the decline as and spreads view tighter basis in current market versus year, volumes driven volumes in purchase backdrop the versus the intermediate ongoing pricing and relatively relatively the result

pressure housing on tight throughout competition additional sale result the inventories second coupled quarter. price in gain aggressive However, on did with margins

offering the million non-interest primarily XXXX the production business volumes. -- throughout gain $X decreased could the market prior SWS XX% driven final other the to quarter. tighter Securities-related significant rights market million, the the appraisal in finance of versus of settlement spreads and pressured remainder driven the current structured matter related margins the Given conditions, income Other volumes did lower $XX decline by versus XXXX. declined during the receivable public a insurance $XX.X by declined including sale by as items, fraud. remain of one-time expect on million, finance related a lower two Further, by XXXX volumes we on fees incomes recognition by year and

costs origination elevated, origination-related million $XX discretionary expenses, $XX variable X, Page volume. to to overall compensation approximately in fraud commissions seasonally to quarter second wire note, are business from with period therefore, the million lower X% $X.X of production lower related $X XXXX driving the as volumes lower storm loss line lower million during stability severity expenses in or Further, related related Turning and Of and and FDIC incentives. LAE $XXX the related of from Compensation production second $X to and during ongoing mortgage indemnification approximately remained and improvement by low and improved enhancements, this million. the generally expenses $X.X the came system core non-interest the the to to frequency quarter. incident. insurance in the revenues in they were expenses included the were by have given million and million replacements quarter million aforementioned expenses clawback-related

held refinanced loans our the covered Page Turning by finalized of the of pay total or within margin loans high X, of and XXXX. X.X% to experienced including a them clients second million projects we've as XXXX, or downs versus $XXX term. bank, loans to quarter grew HilltopSecurities level approximately Throughout

However, closings we second loan quarter, loan provided growth. did late in linked-quarter see improved the strong which

we result year of strong the total close strong X% the of X% growth. quarter and the to to As a outlook maintaining a full pipeline, loan are

million now reflecting which are seasonal year. million has tax-related quarter the expanding and our we deposits. quarter $X.X on XX, to The banking million to deposits CDs Since client have money relationships of mix costs or municipalities. in of Moving or balances Non-interest continued high-value payments on These across $XXX with total improving billion continued have reductions improved funding deposits our allowed interest of to in increased represent time. prior brokered growing ongoing second XX% by linked-quarter bearing of Deposit turn normal over a approximately the growing increase time, the performance. in versus bearing reflects that modestly trends remain and deposits includes deposits while in XXXX, approximately our remain X.X% focus the market franchise. on short-term on brokered reflect or Further, XX% rates, higher we second businesses' over active deposits and the mature and to of customer have not total declining return competitive our basis being and market very $XXX Page have and $XXX deposits non-interest XXXX. terms increased decline focus to versus approximately it we intentional insights by more rates. to ensure market provide Alan in and terms leading the testing I'll rates

Alan B. White

Okay. Thank Will. you,

credit to solid is and very decisions. in the Let quarter start The had the earned in the with me quality bad number. XX% bank our bank out due bank. a outstanding and making our chasing We and primarily performance that's a the to of an patience strong and about loans underwriting continues income, second maintain not from which standards

quarter. will are people a for these says, fund that take growth place, the second X% several about through but to in they add still X% we're will and was a have loans, that They and In it that Will we've we get had. while X% real level, substantial but loans are year. these do, the they We are a able loans and known as business these and estate growth growth us added main up, anticipate for to quarter. level value quite the to with to have the certainly while. done for Our attract to relationships We've

awkward the those you're at Oaks our $XXX additional the will here Dallas-Fort business but or it loans, The opportunity third certainly of XX% are fund It and level an coming vibrant in estate to behind loan steadfast at market about. about portfolio, very loans remain we're our that, the is Texas behind that soon in to we it on concerned get So we're point very going will little ones look attract and region; probably with will being to the we And and the uneasy to obviously, are loans underwriting that X. stay River But pleased because shortly. up which should today and a in in it, market and August which of we stops, what our we're we doing About will able become very loans; in new market guidelines it once opportunities best excited also Austin -- Bank Houston real when it help doing. us be market, provide our add our we million at continue with have growth. strongest and for new a Worth, some in closing

to as mentioned, manage and with we've and keep Our need able been do. I deposit line it costs to growth deposit in strong, we remains what our

quarter forward. Our as pleased net X.XX%, Fed to X have interest first watch we're unfortunately for fraud to points quarter issue with they did and increased the make from actually that margin basis a as we the their the going We in continue receiving dealing of X.XX% so third on with a was with insurance do wire $X.X that that quarter second Total help million, a the an quarter. probably of recovery but in the that mitigate will fraud it, $XXX,XXX was we about expense anticipate that in recovery -- most loss. moves

help add to growth we forward. the will will that's XX have to pay want we other operating mitigate we'll We're and go branches that X We on but of about be, in and and where right XX think prime us branches, that. gives opportunities going deductible, today, Houston in have X certainly I $XXX,XXX to in it to August area as

loan The well. performing is is bank the portfolio strong. So

good. well loan feel team remarkable like And hold. PrimeLending, I our our into and and like operation. pretty States. underwriting which We future, standards And to the very positioned anything credit pretty in I and haven't last might had It mortgage quarters struggling that. X to reserve business mortgage for is that's Switching the the we United is head the to it struggles we're whatever our as

than before thing Our it $XX.X volume was more is is strange actually to this our million. tax The off origination about XXXX income year-over-year. from was

got June, XX%. we loans, mostly to loans. actually purchase originate understand volume, running on is the very little continue and to we're a XX% and it There and money are So was strong refinancing in you originations purchase

X.XX% year increased And over ago. market. we market's Actually, the said of we're has share NBA that down actually market. and the We're overall come out a share market our our getting were So the to X%. X% of has the

going no you outperforming -- of of the our So difficult lot to there on cutting I pricing costs consolidation we're get to can lot a out volumes, to is see, There's very and driving we're mean, tries these the as problem, the and in market, The competition of that survive. cutting loans. volumes. struggling try is of and surprise, everybody

half sale, would affected our income into that is cut were that and on really gain what our has has it we we which So have hoping about of somewhat.

at do We ways improve at prudently doing and increase are We're ways measures. try to in that looking that. at to be like looking We're to the diligently you'd a time cost fees looking things this.

with at We assure have very to a new up ways this gain and team. coming a And very team, and sale. talented working we're day experienced hard improve knowledgeable will that that try on you to improve, I every

but we working significant the year-end, and hired know are XX As company, certainly new we before standpoint if have Will up a XX opened don't says, mortgage on From can new we in officers, we've expect I branches. improvement a it. posse loan

going in are able me, opportunistic and ones an interesting in industry regions to our we stronger and we of continue and for that situation our it's there's that's is us, a take the to the in this country. want to franchise, and especially enhance business. the one our able the of share on consolidation want the lot that going we purchase the to to able being because in we part the officers Now loan in on market market today Northeast, To that that's gain and there be we want, cherry-pick

So we recruit continue to hard.

going We to organization our dividends outstanding be and us. pay able continue to to just that's attract to to people

professionalism quarter. We finance did volume HilltopSecurities. XX%. one, as production. reacting on in of not of the and I go people downturn, and company off proud doing they're the doing have and company I think sale, gain I as things, how is this all the the we're have far that on public right to this is positioned am well, is, good we a reasons to Couple We guess, our great

It's the is big hurt XX%, and the on of own. cost Now in structured reason back to down are went to to but in but lost again, need we're we Other soft their to our area. that a reduce volumes we XX%, The things we're the of one which, and lending, finance business necessarily area are come is revenue much like back. The okay. is costs but do Houston. own, cutting the out reasons see back went estate in same come it our that have little They down, different doing going that but seeing gain the be business that that they're so We sales of better. chunk areas soft been doing people, one bit little the seeing real business, improvement it business area, recruiting, on industry everybody of some down all that's the the do type out off people hopefully, mortgage to able the they tied as and we financed we just a our to finance need on a as in down is we're there. their clearing, is. gain We're is public in or to we're and that area. utility have been the retail, and And mortgage back, securities reason

of HilltopSecurities are Those time accounts with $X.X thing the say to that get we So a back the bank. to we're hoping that billion margin period core is deposits get their in on providing better a sweep here I bank. pretax can will it. this a and over that funds

certainly to that our in stool. and bank that's of really the real organization X-legged So plus us and liquidity significant contribution to is a for the a the

good as God weather. a no concerned, As National is Mother Lloyds thank had we quarter for with far Nature,

year a nothing show did loss you here, the rained Harvey it If small in but quarter. relieved. and was and a had We rained and it ago, from like that we it Harvey. took look loss, second substantial at a we were We

continue. substantially keep you provide, that crossed will we and know we provide, says, Jeremy a will we As weather what quarter than better fingers what but anticipated our might we here, we'll never hope that, never but and had quarter third know

to is report I turn Novakov. that my over I know, and who don't have it Isabell to. So else

Isabell Novakov

This remarks. our prepared concludes

We will now take questions.

Operator

[Operator you. Instructions]. Thank

Michael will Our today first question Please come go of from SunTrust. Young ahead.

Michael Young

rate-driven the Hey, good provided the I just securities business And Alan, -- you've Any additional but going forces? interest this of delta broker-dealer, any I there, what's quarter? is outlook appreciate future there there then market-driven trading to up still driver would through the Could you I mean, public it be helpful? of walk were Is there morning. kind start there? Wanted provide or think be biggest that all you could volume finance to the is picking color additional impacts the with piece. it just clients,

Alan B. White

business, rate a mentioned seeing and bit had decline in XX% then, the you the competition affecting so volume $X.X down billion quarter we I for getting saw a our we in and little public dovetailed from that it. in And an what spreads think, getting I billion. Michael, in having fees a the and structured that's the you we're we're that rising finance. think and can volume structured us. carrying And is to also hurt the effect pay-ups we're finance the -- Sure. But margin that $X.X charge that that on environment on the decline of finance we was

Michael Young

think do see better you moving of run do mean, I is so anything you changing a rate forward? Or there? this And kind

Alan B. White

say would from somewhat that have rebounded the first quarter. to I it

rate-driven just I for past got probably would we've think the in businesses. from it's to particularly structured think did And I that business modestly the finance offset given say public whole, finance our and quarter. improve business, of rate -- think the a broker-dealer, I improvement the going steady by environment, kind this short-term what as in it pressure I

is kind single-digit that of and high the margin. revenue year in think coming million, $XXX net a the have is my for about I probably that So view pretax we'll

Michael Young

single-digit, okay. High

opportunity not reduction the of offset to cost revenue? So kind enough

Alan B. White

we've had that's of lot a there and the related to mean compensation. cost is variable I a No. variable lot reduction a of

Michael Young

on gain on just other side then And sale. on the really Okay. quickly

is from there's throughout a pretty normally on covered is kind curve a I seeing -- bell come think you flat think in here, margin. of but or just gain it little it more of of far? of you're the sort bit Is sale additional thus well, what based there compression on just kind to that year assuming you

Alan B. White

it. We're to to on at to think, what to going got of do. our Well, different can't kick what be everybody all days we're And still traditionally, hadn't people and kind happen but XX is working fighting -- seen clearly things. was out for when and disappear to pressure come to come a and you've eventually, this trying business for of and on or tell there we or know and looking manage I it you maybe kept there's and see and it but And I it back, some going it's -- down. if of we're and don't now, it be going manage the I to we for they're going the they're back continue we're know when going when aspects but we we're know I to continue if don't come trying those through. kind margins cycle back, our think I trying up, to to going down. do back get see to good right come going happen, see to cost way if is I

these to doing we're got at look branches, profitability that. and You in

of is, time they're those officer off a what making doing money the And alive? all loan got is that doing you're of are have not them. a now last went but any of have to Michael, kind that. you went just out mean, You stay happened, officers, people got -- know, to I -- profitability, the long affect can of things, the they're out there doing these the to question But that's evaluate consolidating. all we will And just out gain these we're and things look on is volume you at what sale. people how they lot loan And was you business. going

stay longer, they're in so money. able business be but to couldn't And they much being making

money. been believe don't way how and long alive you and even the We able we the a a we're whether a have how making company have It all we environment And time is for the of the we there a a this expertise not good not, has -- to. run, money really doesn't will company, company. have know really today. company well great or great is it to any have stay want just that making We're with I out they're a

Michael Young

I now. thanks. step will Okay, for back

Operator

Our will KBW. from Brady Gailey come of ahead. next question go Please

Brady Gailey

Hey, good morning guys.

I about was seems driving wondering mean, your per quarter talked million know a will half to being step $X pretty you step million $X of like million in here, range. $X aggressive for just mean, I a the it know for accretable quarter. level guidance at yield accretable was Will, what So fall to down. that in first I naturally from accretion off of you that from that's I yield? all seen the decent don't lower the we've year a but down closer what I

William B. Furr

contribution, clean costs is quarter which accretable guidance maybe million FDIC certain that would yield includes $X on indemnification say related The side, which of to and pretax per Yes, I think scheduled I million then. would $X the $X just indemnification, basis. on million is to a clawback. -- $X the million accretion actual to we up The would

$X million, pretax of to was it to quarters. contribution, in last million we call $X though, the try a over the couple presentation the So which

Brady Gailey

when about Oaks, of changed you platform next And aggressive going? you hiring talk deal Maybe talk from mean have that has hiring you just guess, out, it? Houston-based close you then got Has some this -- the lenders? now about look first on opportunity Houston, River here pretty to the that I announced Then Bank your been Okay, be I week. The will front, will how in assumptions that it. any of

Jeremy B. Ford

together can whatnot. kind It's and X where really has as and ROA. Alan our has months. of the and little really And the from the and had close between test talk made It's been with exceeded to net working they've just to the bank, for deposits, of bank far deposit a going the everything And beta. on -- well also first have excited hiring. well -- it $X.X about I'll X.X% expectations. we're million quality as But performed very virtually and the plans had first signing really Yes, income now integration -- they've transaction,

we say when assumptions same tangible keep went Overall, So it's listed the book announced, I that that would we I X% when guess and value it's going modestly announced, we higher. traveling would to still back dilutive. I be but to

hopefully So the there's there. on hiring? Alan, opportunity

Alan B. White

create XX Brady. They in to that market. the right where right well come and of going new know offer their a Yes, so there's going and we're lots There's their going of business people. know more as the bankers, to and going to the that's as in be we be, there's certainly we up because going there. familiar bankers. relationships loan lot the is kind are. set to to And They their transition years able to the a to there we're and able know Houston is opportunity their we're with know branches, limit experience perfect hire and opportunity lot And to there's there knowledge market, the the immediately existing on about bank. do are our open guys core This right contact. [indiscernible] bankers. some of customers opportunity stuff, area, experience of being of knowledge an market where to expand there each. some be And the the to do, because they These you customers. and as the River with be. With businesses to bank we their They possibly They're lenders and the I are a area, with of that they're not getting three after opportunity of give for that as in a after people we're Tanglewood banks go in with Oaks to and want have us not go to as because to market an

good expecting going. pleased. glad We're things it. out this be of we're And to am think excited, get And So excited. I very I we'll that they're

quality us quality a it quality with it's a organization, portfolio and a right. fits just So franchise

Brady Gailey

front great with $XX million, stock my just was you the then on fairly the tangible at order. appetite I'm to your in buyback final guys back question. be more just quarter. buyback? in And active the the buy which what's cleaned it's see It left Alright, X.Xx could Maybe short stock the guessing see here this up additional to trading beyond about talk good to

Jeremy B. Ford

had million that active Well, quarter, a make came to our we I bought second pretty then we that and note which deflating about think we close first, $XX year-to-date, authorization.

market. an of got use open and I about authorization. additional in going stand pullback, think we kind consider but we've more We're and think to think value So company we'll opportunistic. that know we authorization that to And we'll our to look something we prudent the is, a bigger it, be I ready see what if or intrinsic

Brady Gailey

Right, guys. great, thanks

Operator

ahead. go Please Olney from come Matt Stephens. next The of will question

Matt Olney

Thanks and good morning.

Jeremy B. Ford

Good morning Matt.

Matt Olney

this XX% it give And repurchase. the I want that assume shareholders at in implies authorization, be to dividend think Jeremy, way current when I daily discussion. will XX% capital or levels look and to Is with if hold, through think this I stick about about the your income take right the if I to new near-term? returned --

Jeremy B. Ford

organic think will be return of XX% to near-term longer-term mean, would excess to and I right. near-term is growth in the retained repurchases. that's probably And to largely of of that kind generation some to, for one, use for environment the say I our the kind strategy -- that the would I more capital of we Yes, our earnings today, and in the dictated and capital of growth. think balance shareholder I the share think seeing by to tilt And M&A. be want way then we're our loan XX% have I

Matt Olney

there that be total clarify to the Jeremy where And cap statement over a XXX%. could scenario is return

Jeremy B. Ford

We're And I Not of going be what million million maintain to that the able excess somewhere capital. long be about to deploy in capital we over Bank over the Well, to right $XXX now $XXX earnings? No. term $XXX Oaks is The of perpetuity. to And want million think with of River opportunistic. around transaction. of excess we have

certain market, a on we do sense? evaluating but any daily period shareholder may basis, a Given the return another. as active we Does in more in be period, than that make

Matt Olney

Prime anything us by to in gave well, has this offsetting so. looking sale Alan, there good your that Are margin. mortgage, you like and on very presence. with some just you any And going a the going sounds the aside points Yes, Northeast It back national setting then us footprint? share yes, good data data gain I points geography? on is can think volumes, But at

Alan B. White

#X. to And surprisingly our know, California our problem. is we continues is Northeast as Texas is a market, you strong. then California pretty always well. foothold. XX% probably in became -- Texas Inventory Well, expand But the doing course has been of be of

One enough things house, and buy play where loans, wants that is it, inventory they get we we really of out renovate to they that there comes is there somebody house. do, and do isn't do existing the can't into a instead renovation what their when

volume large So lack going on on, volume Northeast inventory. of the that of business we business large in the that of got a because is of going

great aside, Now #X the job really always Northwest now, the just the the strong. doing that is in #X a is the California in been Kansas Texas, company. Kansas company. City take in We're in Dallas, City, branch that market. branch has

on It's they to me affected more looks got the depend that the going earlier to a that's I companies it or is where on of and strong. market. And gain on alive, to affected that that pretty know been alive. rates staying the to competition competition acquiring staying on sale they're of of between of up for not been. of we've out going It's those just people So really thing means said people the were buy-ins And ago, good anything somebody, now look really are side getting and here. don't And stay going have the alive. Interest this Today, -- to spread years difference people pretty anything. it -- the and staying consolidation I staying the if couple alive. are the there's business. loan the who rate these have

making but other we run it, companies our looking would company at a I just how lending, business in fast that not We are And again, good. the they We making at money, I of these about staying we've don't these were companies of So know and the boy, well If they've take, And Matt, I kind alive. warehouse this. I -- places do And do. mortgage lines they're them but, just know going because is couple can't these and because just be But this, I'd really close how money I'd all at -- and more…. and on a we we work in warehouse bank. they're are cautious as think. and away how concerned be not to some sure look any these we as I do. lot warehouse as asked mortgage they're be but that's of my doing just of got. that's leave hard

Matt Olney

back the margins of I are [ph]? margins? appreciate Alan, interesting seeing data on that. any far, the it consolidate sale month margins, And those call when so going June points, to you indication stabilization seeing Or are are Those of the look July No. or at, you you gain

Alan B. White

but back But anyway, it back back And I June. it's June I it stable I I mean, didn't down, push May up -- any it would June, or wouldn't I pretty stay to Between but and think big back think June. not where we I now. it in bounce bounced wanted tell bounced would up. to dropped anticipate right in you be, this. flat. mean, up May It bounced

and have these got to get through things. We this year through weather

have areas going to how got we're our away controlling in more to significantly do We're figure how to out cut operating costs certain costs anything giving it. to manage these going things. out the create going that's loan it help we I to get going think and to much. We're in to figure a our in that's to if putting new managing have system as going us to and come And and efficiently. have to not in, we're

bottom Thompson. what Trust And buttons. the out so are They're all at thinking, it. regions, out looking line. people are And pushing -- sales we're And those couple big ahead and We're people thinking all doing over I at right ways can to run more people way the right a there and with of Todd meetings got Steve me, fees. things. these been to was I'm a mean, we've the are I've they all looking I organization. drive of very just they're that and impressed, revenue X

the it impressed. way me, I'm to that's So is.

Matt Olney

all Okay, Thank for me. that's you guys.

Operator

Please Rabatin Our Jaffray. go Piper Brett next comes from question of ahead.

Brett Rabatin

of the just some give mortgage on back year XQ about I If little cost talk we the about quarter. can half typically on thinking to say gain on doing try maybe Hey, is just segment, also let's that wanted other and sale sale mortgage side on are margins us some to you maybe your the and of profitability color margins things flat…? good a gain go you we're morning. aid and further a strongest about just and on the talked cutting lot and the the you the some

Alan B. White

margin I anything. we the now. expect back bit. can I would little if we'll it I keep be sale twice on We've a go flat, happy. wouldn't gain answered And mean,

I'm So to not look gain going at on sale.

yes, at. cutting We as looking got we satellite some profitable. not at consolidation got cost got and We eliminate. expense branches we We're and a we that some loan charge officers at We far some make. that better we do that can can As control collecting. branches fees are that probably got better. are can that probably can job of got to we looking stuff, that some we The We've things. profitability. branches of look as got marketing We've probably

an can as on of lots look speak. you basis looking at we we are at different there's ongoing that aspects So a that

$X know down said in those So be the standpoint could X% are. good purchase don't affects from token, going loan is billion. the trying our keep going they are I bottom up. And news. of better all to think the that's line MBA things there's Well, to profitability. to stay came volume same that the I our everybody. a the to volume try that those help levels we're out are today, that where do, are GDP things and

we're but in the all is So things we of big a have here. of over we're business, top game. lot it's angles working But and company, and a we're different there lot of on a it big playing and

So I feel like positioned well. we're

Brett Rabatin

of potential what I magnitude things, that profitability that segment mean Alan, Okay, is trying is improvement some about get just those can just to the to and profitability was that of the that…? I thinking in of

Alan B. White

I like amounts think, to $XX point, million. basis One

change you X If things point. could basis

change hard it's hard -- X that it to Now sounds basis that to but point. believe, is

good a so angles there's but working a different and a in different And lot this. communicate, either. on got you X,XXX do loan we're things isn't lot big And those to maybe officers having all the you're ways. officers, of loan very things. and volume, to we've lot of And So of that educate profitability different got produce

that. the in end, So to at you've got look

the all doing. to need doing be we're So things we

Brett Rabatin

on was the Okay make you or understood, about that construction is I loan estate to are good more the see sure you to want and doing real quarter side income? talked I it estate, this doing real commercial growth and more

Jeremy B. Ford

have it Well, it's of deals takes they pretty we couple very feel are talking dollars. to deals, I'm million that fund with and construction up, comfortable that them that things. that the while the most projects, but to we before. doing larger with amount big relationships about, kind customer we of these have done are a size Those business hundred And

why existing the X% to year. that probably funded So up we you to number that's think are and going that with growth those get add ones to X% for loan can the be we

change are to We underwriting our standards. going not

and not had that do. a business we've the we've like seeing things. me, seeing good But that's things people solid we're which we're solid rate relationships done loans and to on people people of time. We're with However, nature we will that, and And good making long give structure game. chase for to the

really in We up to worked loan you and that. were nothing soft any when that spots we to your be and that. mean, going portfolio. pick and came X time or adding a Harvey X worried fine. had every new you're of our Everything don't we portfolio out keep You on have Hurricane I

of So I top on think it. we're

ago, a any part We we got loss it. the X we and than on still back of haven't kind and about years had other had deal that major of fraud working

it I about and So growth, I we're are I loan wouldn't doing we're good in any people and real know some doing I our a the not feel we people in feel also that real discipline I good people. doing what about have vibrant patience. that things the don't do, economy, too. see think but

Brett Rabatin

like I I margin on Yeah, think the okay your and through plus points X.XX margin on some on costs and I mentioned then like sure pressure walk can is three same the the make just base? are maybe being maybe higher some want maybe just of you one funding guidance margins understood betas last kind deposit being the to it increased or minus funding pressure you some sounds is stable also one, stable having the but side, basis but you higher

William B. Furr

Yes, is so this Will.

curve, flatter yield borrowings, costs it would deposit it's think the -- flatter look at gotten we the have whether it, sooner expected as we I there. have NIM, on seen, that certainly obviously, it'd has That than -- short-term be pressure we otherwise to. it put

have. yields certainly have rates our those asset risen So faster than

based now such current projecting the what's so And as of and that, that environment yielding the we future of that's flatter curve the kind are on pressure persist on. yield into kind

a deposit about the really to kind judicious move are we've of we -- we side, again, defensive stated extent, and and, of quarters, how number rates. thoughtful as some I'd On say

that's In relationships overall terms our pricing objective, few strong end. side. cycle actions clients can product of specials a most we versus kind we asking, cases, of that they're have do profile on and introductory through -- market on in mentioned normal strong to we our cash seeing a being product, just I that in of and another deposit one go expected rate are shift do and calling being have mix my comments, of that's in again aggressive But and the X% and from rates that. the it's we and that with you are the pricing, The kind lot deposit they front as liquidity the move given defending

will, yield real the the difference, and it's that is expectation or curve you our So longer. if flat flatter

Brett Rabatin

all great, color. Okay, appreciate the

Operator

James. Rose next Our question Michael go will ahead. of come from Please Raymond

Michael Rose

good Hey, morning are how guys, you?

Jeremy B. Ford

are how you? Michael Hi,

Michael Rose

know so, for I'm context but insurance and you it or maybe changes I questions Thanks. and and have about think thanks Jeremy, on you of you the asking. doing two wanted changes had broader stand answered my get a just to some Most the thoughts made great, pricing about years there organization? do in new where an President business. how for updated ago some of the been

Jeremy B. Ford

we've guess, at relocated from what we're have which Dallas on is a company the Waco, we Well, Sure. couple away. is, where that to I done, hours

and competitive. getting on are to And soft. has a trying favorable The up we've And been It's so now. things moved with exposures. the and we're heads. the I company track quarter year, of being think. before just had -- And good Darren have all And in So CEO here. hire departed, interim who that and the the of weather right We're be very revenues. of on company served we first trying year. is this the it's line Parmenter, And department is far we capable it -- interim announced kind in was as here to he serving as have this he CEO as operating. kind been CEO our top We a did we've a of the selective focus XXXX lot

that. So the of it's where just kind think I Strategically, company it's is.

of We continue a upon and Hilltop are to taking approval in the other here companies, process million we of out And seeking to it to of so. part the $XX dividend trying we Dallas it. do -- are just improve we're in that now it's that

Michael Rose

about, the commercial you GDP one there a we're growth And pipeline hearing about of and That's very you're Alan. that loan from mentioned just optimism any X% the And customers improvement that where stands? for maybe kind helpful. talk seeing Can you today. sort based on of if

expect to Just for look stands? rates the more up? recently? And then Thanks. utilization pipeline would the you address any where if And of essentially paydowns can like sense maybe if kind go you what

Alan B. White

it. estate construction a But people there, we of I'm pay downs had period lot know into The about. We've we're pretty year. as that about pipeline those moved we'll got and million of to big them real $XXX going a money fund are that that matured, put those and time. you Yes, to out up first well of first a permanents. some down loans over do, We I fund the good relationships got replaced talking before some their as they of

that time. bit So little takes of a

to just We're really they'll -- And That's good this get get they'll X% around standards, to going It's competitive going to real hard that. unfunded work have to to mean, change, C&I to the not really -- pretty you to going on at we're doesn't a stay commitment good their loan Lubbock are like you're what Fort out is and because, still for And game Austin bring going it's by to are going things. And us. it year. out out done do and just it. change that and this there we'll where and we've the But are a because take one of do from, change going be market at going not guys And a good of whatever much. relationships and we X% be keep one a Lubbock, time. come a -- way And get been there. those. Houston one. be We isn't to I'm hurt and some $XX is this to that is a door making getting and to and we're get a things I ad good to to down in. that people get billion, able have have And just with because these But try to something. it's running time or strong have. hoping opportunity, one anything. we're the good do intrigued give going it there's I'm it is be successful. to Our and and is. where it -- has Texas. market, we've do Worth took while month, pretty thinking all will to some It's in people market, the $X It been estate. always working been It's size and things on oil, an these and It's pretty so we hammer that opportunity they going But obviously, these knocking nice is certainly Dallas on continue chip has want market. there. for loan

kind of X that $XX going go you You all miss kind money because a of to years it's deal. bunch of was up I to betting ago. said

get didn't place. big a there, that old So down And helping economy and there that's there. it's it now, that's but

think And us going there's so for opportunity be there. to there I good some

that. about optimistic I'm So

It we're people loan it's got working which far. and you hard has doors, there keep out just like XXX it can't going, got some unfortunately, and on at point. to but has calling officers, knocking we're We on concern So estate, most every and real of day. so

Michael Rose

color. taking Thanks guys. my great question for That's

Operator

come Our from of Chris go ahead. next will Gamaitoni Please Compass question Point.

Chris Gamaitoni

moving tell you of that is to Probably there about? strategies one, have strategies specific morning, clear. Deposit you any my could have answered. deposit been forward just more us Good be most questions

William B. Furr

testament we're kind -- clients focused aggressive, deposit pricing we have aggressive servicing then call, going existing to or to and and that our execution our every targeting Yes, and we're are -- and highlight serving the cause prospects of new in banking so day to And what mean, and I on strategies share any what the deposit clients. is growth I'd I XX% regime. continue don't product their XX% move It's needs. strategies again, year-on-year rates take don't that a really or does to double-digit that kind the growth grow approximately as of relationship again, day-to-day to noninterest-bearing base. strategy work team approach I'd of

Chris Gamaitoni

Perfect, thank you.

Operator

second we gentleman ladies conclude We and webcast. call And will conference will and for today's Holdings question-and-answer session also thank quarter you attending at XXXX this presentation. our conclude and time the this Hilltop

may disconnect lines. You your now

Hilltop (HTH) 27 Jul 182018 Q2 Earnings call transcript