HTH - Earnings call transcript Q2 2020

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Operator

Good morning. Welcome to Hilltop Holdings Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. to President conference of like Yohe, to now Vice Executive Corporate would turn over the Erik I Development. Please go ahead.

Erik Yohe

Thank you.

started, are historical condition, allowance Before today’s outlook, business such get please plans, certain our that we financial future statements items presentation, as that including not fact, of for strategy, statements statements concerning note during that, are losses the impact current are to statements These statements. on uncertainties. and and management’s COVID-XX nature, credit are concerning expectations by risk and events future forward-looking subject potential impacts their based of

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

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

Jeremy Ford

ongoing an than most of Bank. and and more from had sizeable reserve Despite our pandemic earnings Hilltop with unbelievable quarter, at Thank judicious the you, record morning. the a and Erik, working home, breaking offset good build that team mortgage

company an COVID-XX we the have From very on to quarter, the our response health while an has three operation a ensure company. our of by safety to Before to us Slide operating past of the holding results I employees. enabled and pandemic. getting of integrating continuity, our prioritizing the Well, X robust fortunate Hilltop the provide this and on years like start functional and the to departments update building over realigned are business standpoint, would into

with that essential staff of We employees to from majority working operate our continue the can safely offices. our work remotely, so

tracking so offices can are open possible. all they and cases get ensure cleansed, as impacted are to employees the quarantine ensure that soon We back of COVID-XX to as affected

We safety communication, and also and are providing open that so adheres frequent connected. everyone to feels protocols

in been in required. Bank our particular, were While impact $X billion employee our relief pandemic, $XXX material principal low the the their quarter, see the clients principal cases and by with overall past in has for Since been of borrowers of businesses. increase with on more continue the which we an the contact number where has that and, $XXX to borrowers. provide and provided to deferrals this did start have not impacted constant had were only our and serve severely and remains have partnering of we million a support interest million on By loan, COVID-XX, impacted needs

second of received XX-day million initial Bank modification. due, round approximately the As are the come for deferrals has to already requests starting $XXX

basis they more been We restaurants, of impacted. will Certain and ensure a are severely each on be reviewing and have including industries, case-by-case requests these hotel need-based their viability. assess to

will anticipate be deferral. portion So those a of we credits large requesting second

our over in many was bankers, This As huge help totaling customers $XXX who well, a booked million. to loans, were the need. PPP able Bank X,XXX by effort

of and the persists, personal daily suspension spending pandemic the we residential assistance, fee, provide the banking to As of activity. limits, foreclosure will waving including increased continue

Slide Moving to X.

million. share, assets X.X% continuing income the $X.XX equity. was XX% $XXX.X second return operations Net resulting a XXXX, from quarter or For average of on average return diluted Hilltop reported million, a $XX.X of net and income on per in

Lloyds National the the period are at noted and for included in this the results operations. gain the discontinued As bottom its of sale on page,

and sale strategic I’m for had of team most on and net Hilltop that proud the many our to great diversification, of our of successful and hard transaction. but a closely million, National was future subordinated resulting also This and proceeds outcome quarter $XX mortgage from in the Favorable with our National conditions before the June working which Align debt, On a gain so that the the businesses, for the importance together Lloyds of opportunities was $XXX and on the $XXX for that issuance enhance results, businesses in the non-taxable. Hilltop the for worked XX, total I position parties, current an Bank. and our market provision million with of opportunities. both capital bolsters of cash further the a to dealer fee the at of team delivering years important of aided the broker impact sale income strength to to on recession which both persevere thank alleviated accomplishment Lloyds take liquidity arose. illustrates million, This and strong of quarter advantage growth our during closed executing Financial

quarter, XXXX. credit risk, deteriorated million economic the in QX allowance Hilltop its As that The included for increased was by for charge-offs which net to period loan losses for were this $XX.X that QX million built was managing reflect oil as and XXXX. reserves reserved $XX.X outlook from a million, $XX.X credit gas for the

continue ended our the cash, liquidity period capacity. position We borrowing of and and secured $X.X with securities enhance billion also to

CECL on to an from offset lower pre-provision deferral team That and in team by QX of $X investment and become job raising well million PPNR, the servicing. margin. and and $XX advantage worked to took retaining PPP net it had of to gain volume, Notably, increased in the an $XX Jerry PrimeLending million, revenue in the basis increase increased loan the and was million, income Moving and increase driven the finance are to of Bank pre-tax million stable $XXX.X the prices Winges Brad services pre-tax profitable structured tirelessly preeminent and sizable XX% a income overwhelming firm income and and by process PrimeLending team Thompson increase quarter Bank and sale expenses. driven by quarter operating industry’s municipal in borrower was volume second process million, XXXX. from a origination pre-tax caliber to overtime of Securities underway did Hilltop X. loss bank. due entire to fixed great growing raising oversupply X% partially and point Steve the Slide while requests. XX net outstanding PlainsCapital profile working the generated the the of a businesses. recorded that by million, interest $XXX focused of $XX.X The by a Hilltop Bank’s XXXX. Securities provision largely our growth

in Additionally, they quarter. Hilltop for system completed Securities the a major conversion

business company. our X. synergistic and durable Through we purposes. That initially been and of acquisitions, has Hilltop we throughout to something Moving company a for have capital integrated Slide towards funding model. building life is our the

anchored PlainsCapital efficiency Securities. growth we and have Over now, past franchise scalable integrating the powerful of services solidified income augmented And with a shared businesses a three in and our which Bank Hilltop National implemented sale Lloyds, fee with efficiency executing for by largely and have business departments the is model, the our platform. to PrimeLending on build projects and years, by initiatives we platform

financial. and talent, talk believe these investments Will presentation businesses. significant further that, a about made to in have turn I over the we We position solid and professionals core to in With the systems are now to grow

William Furr

I’ll start Jeremy. on Thank you, Page X.

common increased brings As million, operations PPNR driven equated Jeremy second of led or the pre-provision second the of million, our or to million. or the reported year revenue by was prior equating $X.XX $XX.X which the Growth diluted versus of first-half diluted attributable mortgage total Hilltop’s $XXX $X.XX operations $XXX million, share. prior quarter, common streams stockholders discussed, period to net strong per to Income revenue, attributable PPNR share. originations. $XXX Hilltop XXXX, net during for to stockholders diversified income quarter by million versus from XXX% per of the to PPNR, year period. by and generated XXXX continuing continuing $XXX.X consolidated

and During purchase pre-tax deposit the million current million, represent related accounting $X.X amortization $X.X period, revenue In intangible the quarter. accounting expenses the purchase were of the second and purchase million $X.X for quarter, assets in net related a was of largely impact acquisition. resulting to other prior expenses accounting to

expect loan revenue million the from the We continues per we purchase XXXX. expect purchase run million between as remainder of will loan portfolio $X quarter decline, $X loan to accretion for average will accretion Further, the off. revenue and from continue to purchase

during position subordinated National time. company loan both the has debt Tier the held for in pandemic decline loans take Tier coupled in with income by The offset period-end versus for Given as opportunities XXXX. successful earnings, was I’m may from interest strengthened, $X.X quarter, accretion quarter and Hilltop’s to significantly the and of continuing the by advantage presented quarter second capital the to ratio and during by growth XX.X%. income address the ongoing of $X.X Lloyds income completed the impacts sale of over Page the equated common rate investment lower purchase that sale second operations loans X significant million X declined second Hilltop’s from net driven to leverage the quarter. interest ratio million X. been XX.XX% and equated of moving equity we to for position higher of equated million, interest held the the Net and $XXX.X be to

deposit acquired billion, During across Federal with million; customer QX, $X.X $XXX types. which versus in National the contributed experienced as rate; significant all approximately of increase Hilltop’s balance the sub-debt Lloyds, quarter. approximately product by broker $X.X the increased actions, prior business consolidated billion of increase coupled all grew from of of the deposits growth, the cash sale Deposit Hilltop’s $XXX of million including an earning by the to planned ending assets on in average and period proceeds inflows deposits Reserve,

will of approximately the In loans. fees, life generated million, $XXX PPP million of addition, recognized net of over Bank $XX deferred of the loans which be

Hilltop business mortgage equated as prior of second growth to in quarter. in volume by the generated securities, second XXX margin by mortgage earning aforementioned growth interest driven declined XX the and as basis quarter, average loans, $XXX the the assets; million versus This In yield lower build on was warehouse net consolidated prior surge quarter. quarter, and approximately Lastly, lending well deposits. the versus liquidity; the basis as decline the points in points

and quarter NIM that see during will expect the a the rebound pressured the we will expect modest billion quarter into of We second-half continue and we fourth third $X to which of over that in reduce our quarter, $X first improvement after will be year efforts XXXX. and A our billion. the be begin to to the position significant driver to the cash of liquidity between

We related continue capital mortgage against excess liquidity continue monitor Hilltop’s to time. functions to will over to liquidity, markets, our the risk we market and overall volumes balance and

billion Turning to at The Bank The approximately Page bottom on dividends four times secured $X.X X. million of ended parent as sources. of both $XXX of cash period-end, the period which over Page X liquidity service. XX. liquidity, table and of annual highlights borrowing the at that the expenses, with debt Bank the we to maintained securities June maintain cash, and including right Further, the equates

Noninterest $XXX for to million. income quarter the Moving XX. to equated second Page

last and mortgages were quarter lower mortgage business mortgages. period, as $X.X expected year the and During million mortgage new in of $XXX production billion PrimeLending This and and versus sale rate combination in robust, impact lost for demand locks our on of across rates increasing better approximately markets. fee prior volume period. resulted the a is for spreads lock-in strong reflected income the by very record purchase gain applications origination in the The than improving

expand points on margins XXXX. basis mortgage second the of quarter versus did the our During first quarter, in sale business gain XX by

XXXX. historical XXX We spreads margins will gain elevated moderate sale quarter Further, begin we expect that XXX third will to versus but during levels, the the of higher on the quarter remain expect during to fourth and move between basis points.

quarter, to by finance growth volatile, that approximately revenue pipeline show versus revenue markets increased $XX businesses as note capital the prior to mark fixed During business continued delivered income stood finance fixed income year. rates, the solid securities period It the be spreads second million the important and – our and change as from progress structured million. $XX can loan volumes on our structured to the improve million significantly period-end, $X.X conditions market at remains At of at structured results market from finance and period-to-period. can the and

was the compensation from versus to both and approximately increased This were Securities. XX. expenses The the period in variable by Noninterest Page million. year an prior to increase Turning prior million well year quarter as increase year spend Hilltop same PrimeLending our million compared strong overtime as revenue $XX $XX to and compensation in by growth variable in the project notably prior expenses rose in million, driven operations, in by directly the year period. growth to prior versus labor hours linked and driven of compensation $XXX worked, in Non-variable personal mortgage increases in period. fee by deferred the the the in expenses $X

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

$X.X During system $X.X improvement. Hilltop the incurred costs our spend million ongoing quarter, core in on to million second related

During final securities implementation the moving begun of our installation. platform of final new core continue to have and make across three Securities. operating the are Hilltop The we been general mortgage core into of of the and The system now has team ledger the system deployment stages we new completed Phase ERP business. quarter, X Hilltop. progress the installed second new the throughout loan implementation of system the And

has million approximately versus average these growth the Gross We prior second of versus future. coupled Other declined our $XXX for position expect XX. same net with continue quarter of rates, year for coupled year has PPP the prior the of warehouse four lower continue Those of in the lower be accretion, and yields of as versus business loan second including quarter. solid. $XXX by of quarters market will yield low rate rates will customer franchise to to mortgage loans XXXX, quarter period the basis that LIBOR added versus prior Loan in prime yields significant demand in driven and by loans X% lending business, first was pressured quarters, our points. expect over declined all and originations, that turning remained loans investment growth in the value profitable do decline. as million to XXXX. experienced the grew period. yield We have XXX rates, to loan coming market in million growth which with to Page the Hilltop Total decline the personal remain PPP contributed I’m and implementations deliver that we’ve $XXX held

Lastly, new are pandemic. our economic of loan the stable, many clients funding clarity greater pipeline remain until delaying impact pricing commitments and loan have through where of the they

XX. to Moving Page

mortgage pandemic of the potential the outsized disruptions During excess may quarter, liquidity that and support prepare building caused continue Hilltop for process the second the by be origination to activity.

total average the have XX% $X.X quarter $XX.X approximately and versus Second deposits or billion, billion first were of increased XXXX. quarter by

deposit, funds of excess approximately can the Bank a million of return $XXX can those better the During and to the on earn business the swept back the as cash. business Bank achieve quarter, securities securities

the the continued proceeds Excluding the Lloyds, from and customer emerges to to until retain PPP economic cash as sub-debt National deposits from customers deposits, – the sale growth clarity grow, raise related have the activity. National

first the As XX% $XXX which the in been growth approximately in on an million, or able to basis. XXXX by quarter versus the has deposits, balance shown increased ending Bank noninterest-bearing deliver graph, of

XX. to Page Turning

largely of properties bank two for energy this the final XX reserved disposition the loans during that and the represent During $XX.X of related assets were to for during equated million, the quarter, a to basis. of all single or Charge-offs an real credit write-down estate points on annualized the basis first net charge-offs held quarter. investment total quarter

bottom $XXX as a improved note important the assets these percentage loan in non-performing is million the loans second While on graph of is quarter, approved the in during X.X% deferrals that in investment modifications criticized the for second the COVID-XX-related Bank’s Further, to held It and quarter. right, in Bank reflected for increased are quarter. loans allowance the on this credit during Hilltop losses, the to page. not the graph

to loss allowance time will the content collateral the of because to relates PPP credit loans, balances to our loans we it over which loan collateral we ratio which ratio, As and mortgage maintenance believe turning and loss coverage equates margin the coverage dealer little loans XX. loans. bank exclude at warehouse the broker include types, have of and I’m of The the period correspondent X.X%. lending to Page end to

the outlook we outlook During deteriorated first leveraged during macroeconomic allowance credit quarter. evaluate from the materially second for the losses that the to quarter,

XXXX. The rate our yielded these of XXXX. the third quarter, assumes reserves. end and in impacts, metrics slower, significantly CECL the of in allowance U.S. our at the will economic Further, by Pacific the few impact approximately have losses steady fall for elevated net between million page. as base The reflects outlook then in X% XX, through the million changes at $XX with comparison in quarter and bottom and the a case modeling as in QX key including we a of a maturity the We least build quarter. improvement XXXX allowance charge-off, that increased the economic The of June unemployment for of the credit presented second of for $XX use base XX% case GDP QX table but through

ongoing portions including modification addition the model of to efforts, incorporated government overlays impacts of at-risk loan the COVID-XX portfolio stimulus. the reopening well the the in impact potential included In to we – the as to changes as economic reflect most factors, portfolio,

over continues the it period, react assess coming the remains the difficult quarters. how to future it to very pandemic As as will relates economy

the time. originations allowance will be credit aligns with base economic current However, and portfolio new case assuming primary performance over affecting migrations loan outlook, our factors the generally

allowance one do that credit volatile potential to shifts past, noted another. losses significant be period expect in in in future, the we’ve given the economic from the As the could for reporting for outlook we

XX. Page to Turning

our that COVID-XX We we’ve those teams discussed customer loans of group during performance, versus clients COVID-XX these that represents and views requested during the management to challenging relationship to portfolio these the very related these the believe that through highest the period quarter. to payment views the are represent risk managing that deferral credit relationships progress monitor portfolio received the updating a impacted as portfolio first We of and this loans times. broader are

As deferrals of portfolio, loan XX.X% the total million $XXX the approximately for approved excluding portfolio, previously of loan. loan representing mentioned, Bank PPP

loss Importantly, and and principal segments million $XXX million provided how the loan were principal dollars for amount this deferrals table, of we were period-end. on coverage as of only is million ACL to XX. percent and portfolio also $XXX in credit prior Notably, terms of deferrals. and X.X% interest the loans stratified across as allowance these detail In June the $XXX industry on

requests received As many follow-on hotels. and July million significant are quarter. we hotel and restaurant that have show of will and XX% those Of during to as our of do for follow-on be those We bars evaluating related clients the XX% we’ll continue request, deferrals $XXX XX, are expect of requests to additional third deferrals, loans the stress. businesses request

the to target is the our exchange need-based principle through As will will progressing be be round well our period. unprecedented for protecting of these aid the deferrals, working an first case our of follow-on XX-day top deferrals in in Any times. to as priority clients and bank, additional while the

XX. Page Moving to

of exposure declined the large the credit represents XXXX. of final quarter, and customer outstanding referenced of $XX energy pay total, of balances million. during commitments a portfolio In energy decline driven QX $XX was second $XXX energy for total and by we in unfunded The the charge-off $XXX portfolio of million. the During resolution down million million by

only our of As for energy to the portfolio losses or XX, million, equates $X June X.X% balances. of credit allowance outstanding

Page XX. Turning to

growth million, The stable the and during of XXXX, lower incurred previously quarter’s efficiency provision ongoing to drive $XX ratio XX% quarter to Bank loss reflect deposit time. reduce expenses. noninterest PlainsCapital During and expense, second the costs, net operating efforts quarter a The over improvement in costs, reviewed. results of reflects our $XX.X by and a and pre-tax ongoing million as income operating the driven revenue proven equated

During impacts, the first and pandemic quarter, the unknown economic single-family Bank. suspended of the we and in retention the mortgages to by the response

to to As consumer we we XXXX. originating credit the begin forward and during in second-half PrimeLending and of fashion retaining continue remains an mortgages move markets function assuming orderly stable, expect

Page that to million of pre-tax prior XX. $XXX the by of PrimeLending loss $X.X increased Turning second quarter generated during from driven year XX%. by XXXX, billion, volumes a or the origination strong

earlier, market for provided during volumes quarter noted as year, the margins spreads. versus gain second and As the higher on expanded sale pricing prior actions

our during During XX% level. represented will the originations the we historical period, origination. Further, refinanced remain expect are quarter, portion the refinanced third of total elevated activity that of that transactions, from

During of quarter, accelerated. quarter, as related retained in servicer funding, concerns second the rights advances, deteriorated into during the sold second servicing March as escalated period. mortgage the the Hilltop requirements substantially pandemic to Beginning and as the loans servicing the regarding well XX% approximately as margin hearing market for

grow Given quarter. between by we during is circumstances loans We rights the The very during Hilltop’s retain liquidity under is coming with $XX we could continue results year-end. servicing the rights a approximately portion servicing million to that executed million. the expect over significant the and we’re for solid, capital asset business pleased asset retaining sold were the of second team now quarter origination our very strong $XXX and mortgage the to and $XXX able our do and challenging and the quarters the will position, how were mortgage of some mortgage

have same the in both continue substantial negotiate revenue performance and of growth progress in pre-tax this make in the happily Page Securities $XX services liquidity. and able the We profit generated March. from to are of to were finance the investments and we their delivered our Structured a versus demonstrates and as important dividends fixed to of business. prior the the the $X.X The be the returning in million, those significantly Turning as traders business terms mortgage-related rates, market pricing capabilities, the investments market It can of income conditions, results fixed remains in dislocation period from period-to-period. finance XXXX. secondary million delivered volumes from of XX. spreads for can structured in second improved to volatile, of year bonds markets quarter businesses and as in income and note challenging team quarter, growth solid set change In XXXX. team broad made Hilltop our the

their during significant As noted team earlier, securities second system the the progress new operating in made launching quarter.

While to this is a significant milestone, over the quarters the team the will system. continue coming optimize and working enhance

XX. to Turning Page

surrounding updating pandemic, Given XXXX the uncertainty providing economy, to guidance but commentaries, specifically outlook. the the related we’re not our or updated we’re

that it which exactly of can will the how linked the focused and or directly delivering rebound, clear subsequent economy We the control. that to managing outbreaks. against on remain those items believe will virus the timeline be in While is we success not rebound, we

that and delivering pandemic clients, of We’re as and associates our work to presented as to commitments. unprecedented We the committed our the the clients XXXX our safety through initiatives committing remain growth we’re well platform – and helping has efficiency challenges ongoing to all. our our committed against executing these us

and business delivering concludes we value. comments, to prepared the for important, section Q&A growth all long-term you across and while that lines, focused of call. over Lastly, are prudent delivering risk call moderate of will a turn and maintaining our the on most we profile our shareholder Operator, the

Operator

[Operator first from is Young ahead. session. question-and-answer Instructions] Go the SunTrust. begin question now from Our will We Michael

Michael Young

good Hey, morning.

Jeremy Ford

Michael. Hey,

William Furr

Michael. Hey,

Michael Young

between A kind of the broker TBA moving municipal coming you’ve then with to got the kind the a lot guess, the good having new dealer. business, wanted start actually and and – business online. system quarter I the of pieces I investment the of here

lot just terms new of system but second-half, think the kind to revenue both and transpire So that potential outlook guess, TBA-related savings business? trying in in pieces, business, could there’s cost in given for the from the or of what the about the – a I moving of

Jeremy Ford

on Yes, incredible then CEO little lot came quarter And and he to job. good done them first done there. the the accomplished bit. And of a and a he just Winges a of well has raise team embraced the feel kind they’ve would Well, businesses, Him as year, that over to has be prove past we And an XXXX. Brad there’s the and the in really he so really with the he inherited, business lot has much. team. has about I

think prospects and the the recruiting we’re really business mortgage, the has clients streets are business. why firm. to I my fixed structured the really our services And really finance there. the profile businesses. for they’re also in strong really wealth was, public that first-time The raising has that’s up picked And management income and commentary so in lot supply is finance tied of it homebuyer and it limited a caliber the in a The of and but in with growing appetite

been for doing. something they’re we’re the systems on several worked that’s And has there been positive what converge, with about very So now years.

platform of have really to we’ll clearing our as clients, a our wealth think, sort I management rep. corresponding well market as better

revenue the of to the high-level $XXX build So be year, million. of strong some impact is to last I quarter kind the on And business. a a kind look say as had it’ll year. of we anyway, think, net for for of kind dynamics had of year, would the market structured of start slow the really finance last strong But that. I’d And of what like as that’s and the I as as second-half year it. the far They revenue given concerned,

municipal on the debt. outlook positive the a national have issuance We on

Michael Young

how gain the business, was maybe specifically, kind or is with this versus Okay. volume-driven? the And TBA quarter much of mark-to-market fair value

William Furr

which $XX call had of first experienced March in market kind about $X we that – had period. acknowledged the Well, as during month quarter for the the we negative million left of pipeline the negative million mark,

positive in the million. was June – at noted mark comments, pipeline I my As of $XX during the XX,

to that’s So that, that obviously, expect a of et you – origination given change, there, that from mean, the cetera. trends volumes a just so perspective that different obviously mortgage there, million turned window volume group continue. a strong And from then pipeline different understanding pipeline. loans, I yields will a $XX likely we it’s over, And TBA during that saw kind of year-on-year. the

Michael Young

a just in Okay. Jeremy, lot ask you or kind may And of There’s But price a more acquire. M&A difficulty may step volatility not and question, right and I’ll of higher-level of back. and a kind one discovery on now, maybe what then M&A just outlook. on

a something begin to kind credit would right what volatility maybe at comfort in for of dynamics now? to given the you in transaction, what and give be just the So look comment looking would kind M&A on you of

Jeremy Ford

Sure. do specific bank amount that have Well, capital I through mean, like of a largely to deploy, we M&A. excess we’d

we We be look and to And need And at we to there’s be converge, that just got if as the aggressive really the deferral of a amount that motivate I balances, the those also industry, our quarter. the we not to two We’ve then amount opportunities. through with have. own would, related most nonperforming until in they lot all expect transaction. have declined this cases, assets right we work as material have the I would things which hope issues to And far you deferral patient. think, feel

Michael Young

Okay.

to industry, the that more confidence kind that step now and for of would probably So clear you give pipeline in?

Jeremy Ford

to we’re a anything going But going be to look what to confidence of we we that are be we the is be ready know at asset Yes. and because future of monitoring – appealing. would actively these like. harder, don’t still classes find ready part The lot to

Michael Young

thanks. Okay, back. step I’ll

Operator

is ahead. Gailey from KBW. Go Brady from next Our question

Brady Gailey

morning, Good Hey, thanks. guys.

Jeremy Ford

morning. Good

William Furr

morning. Good

Brady Gailey

of remind you time follow-up be is outside it target’s Maybe big M&A a Southeast the the And a far as big us as then you consider clearly, on Can assets? Texas deal ready. just franchises feels ? have When Would right, you franchise. guys like a you the you a would Texas in will consider just dialogue. like how of

Jeremy Ford

of I less. be of would and size, of And transaction. really prefer to still that, we it that level believe On a going we’d think do by rationale something at we to more end think, that if and there’s that we But deal. drives now, hope with the of a the strategic the than do and partner that, something as state, to day, strategic there’s at particularly of think just I try that. think, we same there’s of consideration to But scale we’re stock sure lot do out scale depend Texas We in included the make large, on reasons the consider to well. in that time, will right the anything somebody would that would I

think really will that define that, I so our interest. And

Brady Gailey

right. up sale mortgage margin All on And the basis gain at points looking was business, quarter. helpful. last then XX the That’s

margin sale up XXX points. – You’re this XX you guidance quarter, at if gain on midpoint and at up guiding is – the XXX for look that’s another the another to basis

I I one. So has volumes – mortgage up. gone margin like it’s feel than a even this still think are just that sale robust, slowing the business about all. it quarter a down mean, mean, it? mortgage could fair gain at you Is is way better doesn’t the next on have to quarter

William Furr

when loans, calculate final sale is, sale gain measure. the the remember sale, to so about on on final of it at as I think the it gain the the we disclose the way you is here, disposition we calculate thing

As it the lock. revenue rate XX% kind revenue relates to of to we of at recognition, recognized the XX%

of in would the, we again, we of about is defining moment overall we why second that really during revenue say, close are But going activity a was early the the parts of commentary, that’s which third have we the think, to But comments, and the rate certainly earnings in $X.X through a pull-through our I have mortgage the we see XXXX you will, and record of repeat not talked that I if application quarter. parts of that in applications quarter. It’s volume, of life said pull-through of in my our do early strong asset. volumes rate seeing, the forward. volumes in context it quarter, I expectation solid terms quarter to billion. some the third lock continued So – of lock the

can we So we’ll, expect, be be – going it to it’s volatile.

confidence it’s resolution the overall going as economic little activity. and be as how overall to people expect about the feel to related We consumer bit of well a pandemic,

loan. third in but third again, we’re quarter parts again, reasonable – some it as the forwards, we seeing quarter mortgage guiding relates the So, early of to the not are pull-through

Brady Gailey

thoughts bond just excess it’s great realize, then I of finally And today, from but deploying aren’t right. like excess into Any your some mean, All that I liquidity, the yields me. book? on notable liquidity here. cash? is And than bond better

William Furr

position. we got high – are the again, And through that it’s think get say, of lot – from the a second-half excess disruptions for credit to which I range, is over were work kind – second in my the the done the I’d I stabilize preparing into – functioning mean, billion work could we $X time. Treasury second-half down we And to of quarter we’ll But high liquidity certainly I to and very over for that suggest intra-period, and that a in had mortgage the monitoring. going of And Yes. again, overall some it the of was comments. fashion trying think they’ve some that’s, have so. reason really as markets articulated. we potential to We – the we’ve what some And it we’re market extent, as orderly $X billion work to do liquidity we occurred volumes, continue but lot also last to an pandemic.

down down work those we’ll So will principally we be working and cash. through

deposit work about We of short Securities. points broker of which then quarter. basis Hilltop during lot in, deferring in So there that we’ll the of then quarter. actions security in kind to of we I the duration those income some allow from a in it again, billion over brought on deposit a and the to very also third of the kept purchases, mature mentioned, or terms brought little as of a that fourth and And yield some in point, average. likely sweet that we to of considering XXX seeing And will to be we’re be your putting XXX cash we’ll we perspective $X.X second we’ll allow a

Brady Gailey

the Okay, color. great. Thanks for

William Furr

you. Thank

Operator

today’s our concludes concluded. for has now attending This The you presentation. question-and-answer. Thank conference

You may now disconnect.

Hilltop (HTH) 31 Jul 202020 Q2 Earnings call transcript