HTH - Earnings call transcript Q4 2019

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Operator

Good day, and welcome to the Hilltop Holdings Fourth Quarter and Full Year 2019 Earnings Conference Call and Webcast. [Operator Instructions]. Please note this event is being recorded.

I would now like to turn the conference over to Eric Yohe. Please go ahead.

William Furr

you. Thank

This started, posted point as National an a.m. this get have that of Lloyds like information Central and incorporates announced filed updated morning. morning. Corporation, I'd which we sale earlier out to we X:XX on was Before the presentation this of updated earnings presentation

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

condition today, annual report Our in cautionary including the from differ recent the materially due and our referenced most report of quarterly actual SEC. and these our in those factors, results, statements financial included discussion may with filed to capital and statements a variety

extent update disclaim required expressly by we as Except new of statements to result earlier the information. law, to obligation any a

this measures, on this ir.hilltop-holdings.com. book certain the to be to common in nearest reconciliation is A which GAAP tangible non-GAAP at these the of found including includes per share. tangible measure value appendix and our may equity website presentation, posted Additionally, presentation measures

With Jeremy to to Ford. that, I turn CEO, would over President and like the presentation

Jeremy Ford

increase what XXXX a a $XXX was $X.XX million $X.XX XXXX. equated X.X%. increase $XXX net diluted great diluted on million was diluted strong period an quarter diluted share. the Thank per income you, average per share, for Eric, $XX.X average or XXXX. on and the finish of fourth $X.XX good million assets the Page The return XXXX X, XXXX of an net in fourth year per This $X.XX million equity morning. quarter reported for fourth share. on Return was and per share to from or we income or Starting Full $XX.X was was to quarter X.X% or from

environment reflect this be results well our work efficiency people the of every drive and as ability such the to day as the model its our to business growth. an as and of do they strength Our in positioned well and quality

deposits compared lending Weatherford for prior driven For the investment and year. in Lending, average Dallas Loan Fort quarter, to loans by our driven regions. by Warehouse was X% average growth Worth largely held our and PrimeLending the from mortgage Deposit growth West of grew commercial and was fourth Texas Fort Worth National loans by region. purchase

to its market compared year the remains quarter At business refi at of $X.X and PrimeLending, XX% volume as the billion. origination strong, prior recorded increased best fourth fundings

Structured and delivered HilltopSecurities, Finance, Capital $XX of net million, million or XXXX. revenues an Finance XX% Public compared Within increase QX to Markets of $XX

that and XXXX, from consistent the from year, improved prior Finance dynamics QX and amongst the municipal benefited saw Markets market Public Structured Capital which robust was across industry. activity For Finance notably issuer,

year, share enabled Our capital strong dividends repurchases. to past to position million through in shareholders platform-building also this while returning initiatives and reinvest $XXX us

cash quarterly increased our by XXXX. share on XX, XX.X% per payable Additionally, our February Directors a declaring of dividend of dividend recently Board $X.XX by common

is to into the Fourth million and estate on $X.X impairment real Will concentration. the of and quarter $X classified million outlook provisions for reflects loans to X we of brief XX/XX CECL. a to update of $X.X going loans losses net charge-offs, financial related for million million provide of review, updates When impact for $X.X get qualitative and factors the

talented businesses as transaction transaction. parties banking, to allow Align is on definitive and Financial broker-dealer a disclosed, for the focus Hilltop a will this We million market. involved. agreement of opportunity ownership. well I'm now and insurance core achieved all an insurance of agency with under in the Hilltop work very entered Holdings leadership company National proud with into our compelling our Lloyds financial is during Align sale niche with $XXX for the Corporation, we cash and subsidiary, better and results to National an is previously long-standing As Lloyds this team. accomplishments exceptional mortgage all for It National experience exciting insurance-focused employees, grow and believe their relationships Lloyds proven our

quarter in currently We to to close approvals. required the customary closing subject transaction expect regulatory second the of including conditions, XXXX,

in was this X, the business pretax by expenses. development professional and the bank at was income to expense done the with bank's reflected offset improvements a $X the purchase to lot relatively decrease of during quarter. efficiency Slide accretion at was flat work has positive Moving the improve the business been million in and accounting There ratio lower

decline An to pricing increase the cost for is a in production billion and retained and increase $X.X XXXX. actions mortgage gain-on-sale resulted decline XX income QX The offset million, stable point attributed basis in Bank. margin of for million pretax volume $X.X the $XX.X and the of an taken gain-on-sale volumes PlainsCapital at agency in margin fixed by period of in

the Brad on the XX% actively in for and net of want quarter while Notably, extremely stewardship to officers This a to hard team post pretax pretax income advertising and HilltopSecurities all improvements margin. work. results and business has nearly the in leadership I their segments, strong million been year revenue PrimeLending, increase for solid efforts. demonstrated brand our the strong with build his improving and quarter, loan commend conferences fourth $XX an financial demonstrated million, and $XXX

had Lloyds noncore XX.X% states National LAE Overall, commercial and have results strategy fourth improved businesses as year XXXX. at XX.X% substantially storm to to is exit of positive prior Less lines QX loss in the Lloyds of in our quarter. a a compared National activities severe complete. in ratio drove

in on track growth. includes and X, Through our to $XX have recently in with meet end year acquisitive year target a broad platform lowering Moving million we and XXXX. of to benefits, our X. have set costs organic of building a goal $XX that of operations We Slide initiatives a are that completed actions first future foundation of X-year enhance streamline and by the and completed program the to for million the operating resulted

already HilltopSecurities, the mortgage have those have to our mortgage the in improvements of to the environment unit, the investing Further, of loan efficiency, giving product in our to service customers. we efforts through in our system tools mentioned business from and at began have drive are XXXX. and securitized better We been build-out better deployment favorable loan streamlining originators XXXX, XXXX. operation In phase we origination in asset, earn and their able of seen that while continue react new in the results we our the also will PrimeLending made

realized that to XXXX saves. they contracts across consolidate procurement the has The work in started as due enabled and enterprise come cost us existing

We our IT be next had real over have years. to larger the and recently work on contracts optimistic are and savings for estate X in potential started the

has key HR, office shared organization. a legal, change been and across functions back real of creation estate Our through with a to support other the of lot the IT, services platform

services our scalability. continue been While mature, improve able and departments redundancies, shared to to consistency we already reduce enhance have

job and transitioned goals. financially year for has was an our through on of a amazing working organization succession organizationally. We and the to both together fantastic XXXX substantial planning, done deliver Hilltop, Overall,

outlook momentum XXXX provide of through walk We focus. the with XXXX. to an I strong that, now Will the turn financials will With presentation and to and enter over

William Furr

moving X. you, Thank I'm Page Jeremy. now to

for quarter reported stockholders discussed, diluted XXXX, of equating Hilltop As fourth attributable Jeremy to income per the to million of $XX.X $X.XX common share.

share. XXXX per stockholders, EPS the diluted increase to equated versus attributable full year XXXX, common million reported which to results. $XXX For reflect results Hilltop Full diluted $X.XX a XX% of income year in

the and overall the During provision concentration to the to for related building the acquired fourth impairments allowance and credit approximately reflect million charge-offs, of both the pools, loan losses included million of credit net previously portfolio risk negative loan $X.X during migrations certain to in quarter. quarter, $X.X

related quarter. period, revenue remains were purchase ratio deposit common with and the Hilltop's to purchase expenses XX.XX% XX.XX%. largely quarter, for the equity to in and strong assets purchase represent leverage of a In current accounting of of million, X fourth period-end the impact intangible a Tier million amortization accounting X of prior acquisitions. $X.X capital ratio the other $X.X related Tier expenses position accounting million net $X.X was a resulting pretax During and

to prior was by the The loan accretion year the versus the loan interest ongoing in quarter fourth $X.X to and interest million the including new Versus the loan by These HFI yields accretion $X Reserve declines year XXXX decline competitive originations. Further, of XX net X. decline million, the Turning during quarter declined income $XXX accounting yields mentioned. in decreased million average yields income Page pressure fourth or of versus quarter, net both by equated X%. period, prior interest by purchase loan driven XX previously respectively. Net million income both in purchase accounting the $X.X raise have and of average lowering reflect HFS points, of and basis Federal XXXX. for in

basis basis deposit a XX deposits, points declined basis. increased on XXXX peaked Interest-bearing the versus points cost period, and by prior year XX during QX linked-quarter but

to will We asset yields earlier. slower expect at continue decline noted in the deposit albeit a pace costs the XXXX, than

the margin loans interest loans compression both investment portfolios. growth held has for of sale the in held offsetting Somewhat for been net and

volumes. lower calls, have mortgage update the we rates versus loan growth by prior our portfolios year, driven prior significant strong As shown mentioned mortgage-related origination have on principally and

versus million period during as quarter fourth for an that cycle. of held and million, the quarter. moving same these a traditional the During on and loans held mortgage-related both sale business National in Lending, portfolios, to conditions will the sale by basis. of impacted the levels positively first and of to mortgage prior $XXX increased business We expect during portfolios Both loans by of Warehouse more seasonal loan decline year, begin is $XXX higher for were these National production favorable the XXXX quarter, experienced Warehouse the do both growth Lending the balance

XXXX X. versus $XX fourth moving income for XXXX. of quarter Page I'm the by Total noninterest increased fees fourth equated quarter mortgage-related quarter $XXX to million. and of million Fourth the income to

$X.X strong, the of increased billion volumes, business quarter mortgage drove mortgages. demand principally by driven outperformed year, by of improved by prior mortgage both million volumes fourth XXX%. Versus refinance terms origination and or volumes $XXX purchase expectations banking environment rates, our XX%, in During which XXXX, remained lower our the increased or in and mortgage refinance and purchase for

sheet, were the While volumes reduced gain pricing on compressed sale balance loans increase basis as margins participants the points. margins in impact retained and on banks strong, an XX changes by of market quarter capital the by when were during

be to throughout XXXX. annual we points, move during volatile within margins we assuming XXX While range remain to could of a XXXX, consistent somewhat basis sale XXX expect conditions expect margins market

at making businesses benefits, $XX interest the by in to rates, Finance activities increase provide resulted businesses benefits to improvements third the driven while primarily securitized XX% HilltopSecurities. increased market both overall prior structuring, improve can liquidity to and will Finance market and we've trading the volumes we been period-to-period our by from production conditions income Favorable Capital these investments believe a Structured continue businesses to and is sales distribution trends. of continue as these the recognize period. Other of in And volatile million, XXXX. investments capabilities mortgage-backed they that and product are since year quarter Markets by ongoing important be it realize in securities sales impacted versus in These Structured

prior growth Turning in prior and in compared growth to the year increase increased linked variable This million $XX from to approximately the of in compensation were strong in prior HilltopSecurities same expenses million PrimeLending. period of Noninterest The variable year an the $XXX was the revenue to to the at by $XX X. fee driven by versus compensation quarter period. increase expenses million. year Page

Over efforts, initiatives. our these the efficiency franchise. service conditions progress continued lower past in compensation, headcount, marketing the X the quarters, progress against to current and expenses to efficiencies make professional driving nonvariable continue we as our to costs businesses and across have market trend aligning development and make Through we

accounting of final at the are million During new system to core Hilltop. PrimeLending quarter, in the of system costs the implementation across new incurred HilltopSecurities and we and ongoing significant enterprise-wide loan origination at core the improvements, progress are moving related system stages $X making into the on system Hilltop implementing fourth

quarter HFI to XX. Total Page fourth X% grew XXXX. Turning the versus average by of loans

Loan versus the in period our by in the business, declined Lending year throughout growth driven partially real result loan yields growth in is which previously noted, the Warehouse growth the and portfolio. mortgage estate have was prior of purchase lower As same accretion. XXXX,

resets the rate addition to yields funding XX% In as to which excluding declined lines, of internal represents accretion, the market lower lower bank's have floating loans, portfolio, rates.

Further, the fixed than loans rate newly are are they lower-yielding originated loans replacing.

to in down the approximately at have our loans case we commercial loan contractual billion As And agreements. their $X.X floors continue of was priced standard rate XX/XX/XXXX, had as rate in of PlainsCapital cycle, the floors. prior

can floors protection renewals, other they against be or market rates these contractual While lower at periods, at provide renegotiated time. over some

Page XX. to Turning

net remained quarter, and total to low million or the charge-offs X basis loans. HFI of points During $X.X equated

fourth into As in noted during seeing with the and are the quarter, portfolio. energy third deterioration the the trend quarter, continuing we

As a moved of energy the criticize result, million we $XX quarter. to sector approximately loans during

As it to of total energy for were $XXX million. million $XXX balances approximately relates were at outstanding X.X% commitments portfolio the lending, total XX/XX total loans loan approximately bank's and HFI

profile managing credit across for existing While prudent the executing we a risk on Hilltop. moderate within growth, portfolio focused our credit competitive, and market remains very remain

million approximately $X.X and X% the versus have $XXX fourth to Fourth quarter are by quarter billion, Turning XX. increased of deposits total XXXX. or average Page

remain is overall pressure portfolio. to clients, costs new our base we focused competitive the existing expand with in on clients, deposit continuing and intense, While acquiring deposit lowering

versus As prior basis. the noninterest-bearing is or shown $XXX been to increased deposits, X% ending-balance year million the by an in growth able period in which the on deliver bank has graph,

Moving to Page XX.

pretax volume Bank quarter's fourth PlainsCapital in $XX The the solid as retain generating Warehouse to fourth expense during PrimeLending quarter of Further, the versus and solid of quarter. during profitability, of the National the XXXX, growth well PlainsCapital continued reflect million during year. up of mortgage benefits reductions originated total XXXX. demonstrate to of the origination million $XXX as approximately from Lending results at retained During income PrimeLending X% prior may loans the quarter,

retention mortgage sheet levels loan outlook an balance XXXX, determined the review positioning Hilltop and During will commercial through rates, of loan be our prevailing ongoing at for mortgage growth.

while declined related fourth to footprint. at by costs remains efficiency. provide reducing million expenses clients, lower revenue the balancing the the growth to across quarter real noninterest $X onetime versus service estate a and risk PlainsCapital moderate delivering maintaining million operating operating long-term by our consistent, aimed actions focus expenses include Board-related year Further, at $X period, the The cost growth prior absence costs and of positive profitable Total by great expenses. and profile leverage driven expense approximately deliver of

XXXX, I'm by $X.X XX%. XX. that driven PrimeLending of prior moving $X.X strong for pretax origination volumes to quarter generated by from million profit increased a or Page fourth the year the of billion

As quarter. sale margins fourth gain the noted compressed on earlier, during

do expect to we begin XXXX. that margins recover during However, will

not While around expenses middle focus rigor XXXX, overall volumes PrimeLending waned were consistent elevated office in and the as the maintained and other on operating platform. efficiencies back staffing has has across

Our efficiencies on for continue launch of loan origination successful execute profitable mortgage to volume, generate to PrimeLending mortgage operational system. new the is and focus focus our

and businesses, the quarter and condition. $XX distribution Moving a Markets has which by XX. our sales of million Capital ongoing to from Page delivered market structuring, investments in fourth driven pretax the execution benefited HilltopSecurities of solid in profit in Finance XXXX, both and Structured improved

by versus period grew client in bankers the invest year these strong can as was spreads period. market long-term significantly from franchises $X change and volatile quarter, growth, results continue same of banking, prior while to our volumes be public to acquisition. net activity million in as revenues support from to we both strategically for businesses the period can Related and rates, While expansion in to hiring the

liquidity HilltopSecurities risk for new risk the profile operating focus operating revenue, market Our finalize the profitable within is deployment system. expenses, and to moderate of optimize manage grow core and a

impact Hurricane that the a of of million results of Please severity claim-related $X activity pretax of Turning frequency contributed include which to lower the quarter, losses. that profit XX. National reflected and $X.X Michael, QX storm losses Page period. which XXXX note during million for Lloyds recorded and

at to and Related the equated XX/XX/XXXX, million goodwill $XXX transaction to million, $X.X equated Lloyds announced to equated million. today, intangibles National book $XX value other to

expect will quarter As during of transaction the this noted, we that close second XXXX.

moving Page I'm XX. to

growth value. prudent and a comments release below previously. and on delivering announced centered in shareholder and businesses our maintaining included outlook business include related of for the growth executing Please sale was profile our to insurance initiatives, while the note delivering moderate any across risk do Our our remains XXXX impact financial platform our priorities efficiency not that long-term

this closing. expect outlook provide updates we to will and after year our We quarterly will during quarter, that transaction full in second review close the the

growth remain levels. X% growing we the is full mortgage low-cost average Lending franchise. between For as origination XXXX, year to levels deposits decline balances to expect X% loans as outlook as Full deposit consistent of on reflects we year XXXX across grow growth This average our X%. lower HFI with loan focused expectation at performance X% our Warehouse and market business National stabilizes

away on We interest net given stabilizing net environment. moving focusing from the and margin income current are outlook interest

interest Federal our income remain net we current movements accretion Further, with reflects we Our are and Reserve loan not decline, to do purchased XXXX stable of as levels, XXXX. relatively previously expect accounting projecting XX% decline levels. outlook portfolios current view that further rates continue balances the our to to purchase the XX% by in versus

our XXXX, results able we take to of strong as solid market advantage fee During delivered businesses were condition.

stabilizes. evaluate we expecting a businesses, fee of XXXX lower as activity we As mortgage level mortgage-related our during the market are

Overall, reported levels. noninterest decline X% the we X% by versus revenue levels XXXX expect to to

versus noninterest result that a in core in enhancements. our we investments expenses ongoing also noninterest includes X% levels declines the This of outlook As system the by revenues, decline to expect these XXXX will X%.

net in over charge-offs While years, XX expecting and to XX the between -- average past we increase XXXX to to basis to credit remained low points. HFI costs few are loans have HFI

credit improved management While reflect levels, solid across this XXXX the we an versus increase believe to portfolios. economy, Hilltop this a is continues

commonly standard as we XXXX, the adopt X, CECL. new January referred for to on losses, accounting did loan Lastly,

to our to updating X $XXX million range million. are impact day for We $XX potential

loss on a loans provide are providing provision in the updated quarterly outcomes throughout expense of range we key outlook year. as potential and that allowed We are loan do quarterly basis assumptions XXXX. noted prepayments wider charge-offs As to net the macroeconomic, credit and previously, results expect other HFI for not a on could

and prepared we'll comments, you our section concludes turn that over the Operator, of call the Q&A call. to the for

Operator

[Operator Instructions].

Gailey comes KBW. question first from Our Brady with

Brady Gailey

Slide XXXX the does insurance any to the not of be sale the of impact the XX, company? on just outlook of include clear, So that

William Furr

That is correct.

Brady Gailey

insurance -- line the the you be do when And the more Okay. expect update to to of outlook with sale guys in company?

William Furr

We are in the of update the after closed, guidance. update announced. the has full expecting second we quarterly year quarter call, a transaction once transaction And close that, will

Brady Gailey

so -- capital And million Okay. It there. Lloyds. at looks of have tangible about I the levels on the capital appreciate math $XX.X like National you

puts about the gain million. So tangible that $XX.X at

$XX.X taxed? gain, million that So is that

William Furr

push book Well, got we a would towards gain. -- we've

do entire So take the have acknowledged book gain, the as said, in we taxable. the expect that adjustments disclosure That do closing to book understanding the price could you not price value occur. be that we versus

Jeremy Ford

The million minus book $XXX $XXX book gain the is million the value.

William Furr

correct. That's

Brady Gailey

Yes, not tax? million gain so million $XX of roughly and the then be of would $XX the tax gain, book other

Jeremy Ford

Well, is book which tangible I that to technically not value from number, you're it that's a trying -- -- mean, subtract GAAP.

We goodwill have $XXX a million. that stated of intangibles of book $XX million includes value and

this that of kind gain tax, the price difference of range it's not a So And given value, not of and but minus above we stated a book value range, $XXX is million purchase $XXX taxable us. book our transaction the and for book in it's below situation, tax have the million. between

Brady Gailey

right. All

What's little tangible question the a So to the maybe capital impact this to transaction? from simpler. ask

Jeremy Ford

Sure.

to an accretive it's And that dilutive So $XXX earnings And be of be to book we X%. by share it'll capital to we per by excess this, increase tangible million. that be value X%. going we with it'll think think expect to

Brady Gailey

think to capital? the And Okay. All you do how relates excess it of That's about helpful. that buyback inflow right. as then

Jeremy Ford

going transaction. to But about pleased I'm now, right We're very think it. with this

for great both it's think I parties.

we going I be few invest but know work be really months go But frankly there. because we'll level found that it's been, hard the we employing to approval. to get to time, through the And as to with of great and we And right we'll Tax we going to. a can work -- got about them it's regulatory buyer how that Lloyd able hard next money. going insurance great we're what think the to with that them. clearly for to National closed to be this have thinking weren't Department over And to a team take during

Brady Gailey

All me, about to think the for a for right. into was XXXX? pretax How pretax XXXX look And year then you XX% mean dealer margin do as broker the finally much broker pretty the dealer. and we margin from the great I doubled XX%.

Jeremy Ford

and of organization tailwinds, given it's to a just Well, of we too. similar and credit -- kind tremendous guidance. but get broader lot I lot it, should of that here. out of work trying think a XXXX, there to had Is gates of a We're the a for the the that to mortgage was lot there's be

kind want we about So of this to little time. be that cautious a at

as million out being low- the of kind and I $XXX to about So to going make try early, to it's margin. mid-teens revenue of pretax that would net gate, coming of now we're assume

Operator

next Rose Raymond James. Our with comes from question Michael

Michael Rose

Just your comments, following up Jeremy. on

laid I of outlook, by National relate improvements said can And of understand the the you of of think asking, positive You how leverage, XXXX? the PPNR in you've given X%. X% in not end by to how the end we make the you my guidance can as in earnings to the XXXX? that Lloyds, the to first that. by do which to the to repeat, earnings And goals out? I the So to sale operating up to generate out operating Is the Basically purchase that is from you've right? implies accretion, dilution guess, relates -- going the mortgage But $XX that actually accounting it leverage year? laid get you million does additional negative that understand, dilutive is, fully question that earnings with

Jeremy Ford

and on last made over EPS a first fact Well, little all, a an consolidated of based million number that's the that's $XX far on company we that $XXX made year Thanks. as and as million. dilution, basis, LTM the Okay.

So annually Lloyds quarterly margins. produced that's that. National But good volatile, and profitable was

an So we're to that's earnings going to just going thing. be without be those earnings. And

how have that back we the that still The million as holds, we're coverage, platform and to holds, but be still execute and Now much that marginally relates have $XX don't going might to million on. some there think continue areas the $XX initiatives? I to to

Michael Rose

seems Okay. And then kind of up I the it's booking to can of you of to the CECL talk million looked Is been point? expecting. on adjustment that $XX the over selling kind did are match just that guys about you at this at bid guys and with kind the timing off that the sale? hit -- speculated decision have mean you The here drive this the years. of

Jeremy Ford

that we we've where is feel future. We're This a obviously, has core -- asset this something for No. not the been long-term like not coordinated.

really takes attractive. next that that's lot it And find it that have put to been thought be in We trying always led buyer here. was what good the to to to And really a it right great for it the everybody. the do we It us really it a could level. we position and would time if improve

Michael Rose

in I given of the that doing been growth would thought have relatively implies, rate. maybe growth held solid If outlook, me. that it average for I on outlook? for low-single-digit, market dynamics for if kind loans the right, your And average, footprint? full held period-end I I'm just investment investment guess what's stronger, finally Okay. take year a driving then it

William Furr

we I of and to prudent continued are this of believe, next loan cycle are think the do growth. moving We the as the we around -- end be to commercial and stated, into we're believe, portion we've going cycle. towards

be will but commercial be around will ours, that. growth we So loan prudent focus of a

my The provided second guidance in noted activity to levels decline they positioning. stated, rates our do in XXXX, our expect business as the which board. loans them sheet well in balance in XXXX, we we've balance as Lending, retaining noted we We and then across do loan we've to as returns that, decline expect as the mortgage outlook anticipate originate more Warehouse commercial is we PrimeLending the piece And but on current normal against as do the as market as in environment. will lastly, I sheet, evaluate National to outsized growth well from comments,

So thinking -- about it. that's way our that's the we're

Operator

next Olney comes from question Our Matt Stephens. with

Matthew Olney

know follow-up And to is X% around to get business, expectations for XXXX wanted in limited to discussion think mortgage is are in on your I XX% the I that volume be visibility XXXX. the you guidance mortgage. the the I there but down versus And in data provide or down you you already 'XX? term? a sometime later to volumes just are forecast in more to other us In for near words, any in can trying you volumes Or points us are X% conservative slowing seeing 'XX XX% XXXX? early versus early give

William Furr

normal QX, yielded going the noted, what back outsized think performance. I -- again, And as market was Well, will to the trend. we're return expecting seasonal there we to that is is we

be expecting in the rallied XX on January. just of to kind are XXXX level. normalized of guidance we can of mortgage. We're quarter-by-quarter QX kind So acknowledge the give here volatile. a not do that going on years We to month return It

XX-year within that XXX to So move around. been XXX basis said, points past will obviously, or here the has or That couple range, over the quarters. of the months

So again, more we QX a but than going think quarterly curve it bell-shaped are and softer do QX as it, where as guidance view traditional generally expect on it, year to just QX about last again, to we we're year XX% and we received and X% not we was this we stronger be, than the that by do market expect And output the -- to QX. year, range.

Matthew Olney

discussion also just the you falling Prime. going that review And quarter. to else $XXX mortgage this? Are portion was loans the back beyond protect And just the it. in retaining what behind you from fourth XXXX? is retained Got of expectation trying against to for review something they've And the strategic said rationale million that? And in again Or can those the rates? there think around bank Okay. I numbers XXXX? a you Well,

William Furr

Prime from a just be for Well, to have loans years. retained of clear, we number

this say, is a I new the potentially not of So is retention volume increasing. will the strategy.

QX, in up As million during $XXX to did my retain I looking retain period. volume an And X% we are noted about XXXX. perspective, from we asset/liability the to comments, during Prime's origination in of

and hybrid Now mix, products, it will products, be market products, whether also will for would mix also so that rates our growth. matter. prevailing the XX-year the drivers jumbo of commercial The loan outlook matter, be ARM the

XXXX. little we we fixed-rate-exposure, and an about the us objective little relative be to are not update will a But think was looking again, as X%. overwhelming this do So we with what on production, sheet think to we again, fixed-rate-exposure, position quarter that more to more But Prime's up but amount overall fixed-rate-exposure, a it, retained. helps balance an provide throughout only every of we'll

will they origination plus of volumes. their XX% selling be So

Matthew Olney

pending around that of I it. does which Got this and understand robust, your the I trying feeling my question, insurance $XXX is And to capital, already anything? signal you're Okay. think, guess, million I'm to if interpret last then we about currently? excess with deploy sale the should company, ability better

Jeremy Ford

other X does signal. That's not this Lloyd thought that more will National core. allow to something grow focus is no really businesses, It Yes. segue exact those we This -- just as and us considered -- to not the on there's over really wasn't them. and businesses time,

Operator

from question next comes Our with Compass Point. Chris Gamaitoni

Chris Gamaitoni

benefit that is run total benefit that I'm unclear. help means? in rate cost? what $XX understand year? of me you million amount is Does the -- end of that the mean Can the the PPNR Or

William Furr

date. actions rate run that year-end been benefit the have That's to executed of

Chris Gamaitoni

right. understand help you guidance. expense All Can your me

production to X% X% the relation I year-over-year mortgage X% down if benefit base. and would that the year me overall to there'd think to XX% I a on XX% volume, the mortgage year. rolling comp I the just on in Just take a that for of lower decline it reduction company next business, gets be variable in actions completed to expense just through throughout assume were

of struggling expense So cut. with I'm kind the

William Furr

Yes.

X first, it are year as So way -- to into a we the about noted, think is, program. X-year we

designed. and are amortization-related to we've Number expenses recognize got to of have is related the occurring. things into couple we're continuing number depreciation- through those, put to achieving so a benefits And while service one, and of as systems the work starting things, we

We on to be what the which XXXX, higher you in also, expected saw programs expense for was than $XX XXXX, our projects approximately new and modestly overall million.

still and mortgage got businesses coming that in gain that in guided business the those the virtue we sale there, by as profitability, would declines and and down our business, production. X, we revenue but be have potential mortgage sale compressed, in businesses because they XXXX, substantial remixing, those be margins be, in fee making in compressed, deployments will we we've revenue From expect on mortgage of that, our with the also, on investments compensate remixing So while the we there's on don't are happen. of to gain we've can and rather on the

will, an be will overall that expense if So from versus compression, you a basis. revenue

estate as And then and cost business got our we that in have. you in compensation headwinds recognizing other of XXXX, well real we've that also are as lastly, the normally terms expense costs inflationary-related inflationary in both traditional of

factored of that's how systems, the those derived. to core all deployment our our was through, including -- related spend So and X% to the to the expected we ongoing X% of

Chris Gamaitoni

think XXXX -- Is cadence XXXX? in all makes That of how on it sense. update progression happen. can right. sorry, backloaded XXXX? Is any any us idea you of benefit the you the type give the remaining remaining PPNR Is will it in kind of backloaded all All realizing base? Just you the I expect? mean that all

William Furr

business, of 'XX our that throughout platform occur in a Hilltop, across the about will system to accounting in systems, the operating earnest, the is quarter-by-quarter, XXXX; tied which the process, core and at we securities way final deployment matter. which, of our underway the remaining and Jeremy is will, deployment deployment kind mentioned, these of do into it, remaining large well of as that our system, you the of deployment is which benefit deployment the the and year loan as final then XXXX giving origination go expect during think of to platform Without portion the

to to So well in our the really good those to getting will And perspective, rates, of But tied present actions occur. throughout improve those try platforms. be the and be run large expense then XXXX and capture continue our final as year pools will progress taken those there we'll to and those those deployment we and directly underway they modest deployed. savings from making are

Operator

Young Our next with question SunTrust. comes from Michael

Michael Young

I wanted of to quick the on follow-ups ask business. a couple insurance

from business any Just insurance tangential or impacts might just there businesses are the even the relationships one, we the where of to any outside other insurance other corporate and segment? segment, see

Jeremy Ford

no. really, Not

William Furr

financial to related encompasses generally that stand-alone franchise. costs a the segment being It

Michael Young

any happen factors given I that's around any that or deal of kind just storm a the, a storm season? second, or then peak close, the right better closing season. could of timing being And there of the it Are risk worse result usually to adjustments the of guess, as Okay.

Jeremy Ford

of so Yes. price tangible or more $XXX are than We're retain we of and upon there's to and then $XX million extent million, value deliver to to -- going less book that. we agreed the

we'll retain have and if liability. dollar-for-dollar we storm a that we have earnings, make we So loss, that and

William Furr

think running as business until usual as with we exposures a commensurate the important that. matter, are all what's I and up Michael, is business are closing, that we we -- this have

Michael Young

I much And the well. that, a X% as then, derivative as And obviously, still think guess, to year kind and think much balances mean, in XQ basis the it about of know, in just normal average an than is holistically that of I on sheet seasonally kind of year, the for X% it warehouse to balance of I Okay. range? higher right I finished growth higher

forward? how next trying year, growth just total to the So I the think both that size about moves guess, and I'm sort sheet balance cadence, of of

William Furr

Yes.

X% X%. expect will growing guided, as think, be I So we to loans we

wouldn't rate. However, expect we sheet, portfolios other kind on the growth the of to balance like, have assets securities and same the

total a aggregate grow asset range of the of low So would kind single-digit matter assets as in growth.

Operator

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

may disconnect. You now

Jeremy Ford

you. Thank

Hilltop (HTH) 31 Jan 202019 Q4 Earnings call transcript