Streamlining Mortgage Business for Long-Term Success: Hilltop Holdings' Strategic Efforts

2023-07-25

The company's earnings call meeting focused on their commitment to the mortgage business and their efforts to improve efficiency and productivity. Participants, including Carl Gatenio, Jeremy Ford, and William Furr, aimed to position the franchise for long-term success in a challenging market.

During the call, management highlighted their active efforts to streamline the business and align it with market conditions. They expressed dedication to the mortgage business and emphasized their focus on positioning the franchise for long-term success. While profitability was a goal, the company also took steps to enhance productivity and prepare for future market conditions. The management expressed gratitude to the participants of the conference call and did not entertain further questions.

Key drivers of the business discussed in the meeting included streamlining operations, commitment to the mortgage business, long-term success, profitability and breakeven results, and improving productivity.

Several important numbers were cited during the meeting. The company noted an increase in sweep revenues, ranging from 5% to 510 basis points, attributed to higher rates. They also mentioned the term of certain deposits, which ranged from 90 days to 180 days. Additionally, the expected level of non-interest bearing deposits over time was discussed, ranging from 30% to 32%. The potential decline in net interest margin (NIM) on a quarterly basis was also highlighted, ranging from 7 to 10 basis points for each incremental 25 basis points increase in interest rates.

In terms of the competitive landscape, the market for deposit pricing was considered stable and rational. While some competitors may offer higher rates, overall competition was stable. Customers were reported to aspire to achieve earnings rates of 4% to 5% on their deposits.

The company's outlook for the quarter and year ahead was uncertain due to various factors, including higher interest rates, potentially lower utilization rates in certain segments of commercial real estate, and an expected slowdown in economic activity. However, the company assured investors that they closely monitored their portfolio and credit quality, and no prevailing trends were causing significant concern. The company's current outlook for 2023 reflected their assessment of the economy and the markets, but they acknowledged the uncertainty and planned to provide updates on future quarterly calls as the market evolves and they adjust their business accordingly.