The Hilltop Companies’ Performance Analysis & Benchmarking capabilities help target your company’s performance strategy. Further, we can assist in identifying those areas of your business that are considered strengths and those that require improvement. The performance analysis and benchmarking effort is critical to any company’s efforts to understand their profit drivers, key dependencies and outside factors that impact such drivers. In our experience, many companies do not know what their key profitability indicators (KPIs) are. Performance analysis engagements can assist you with the following:
- Targeting business units, operational areas, customer relationships, etc. that need improvement
- Profitability concerns – identify core profit drivers and lagging performance areas
- Pricing rationale – assessing the market pricing strategy of your products and the impact on earnings
- Cost management -becoming a lower cost provider
- Process efficiency – assessing productivity, speed to market and flexibility to change operations
- Risk mitigation – identifying the level of financial and operating risks like repurchase risk, credit risk, interest rate
risk, consumer compliance and regulatory risks
The Hilltop Companies has two proprietary benchmarking tools:
- LoanProBM – this tool measures the revenues, expenses, overhead, efficiency factors, and other key benchmarks relating to the lending function and if applicable, the loan sale activity.
- LoanServBM – this tool measures the revenues, expenses, overhead, efficiency factors, and other key benchmarks relating to the loan servicing function
In addition, we have tools and databases to assist our teams in analyzing management and personnel costs, overhead costs, technology costs, etc.
We have also applied our deep industry experience to execute performance analysis and benchmarking services in specific business units or functional areas. For example, we have done extensive analysis of the default servicing operations. Our teams have analyzed the cost of servicing a non-performing loan, the amount of escrow and foreclosure advances that are typical, the recovery rate of such advances, the claims recovery rate, the cost of REO management, the loss per loan for various resolutions (foreclosures, deed in lieu, short sales, rate and term modification, principal reduction or any other forebearance structure).
While we measure the financial results, we also assess efficiency measures. For example, in the default servicing areas we have assessed the efficiency measured by cases handled per default servicing FTE, the timeline to complete each type of default resolution, number of calls made, number of physical visits (common on large commercial or multifamily loans), number of “cures” i.e. the success of reinstatement, the number of actions completed on time (within regulatory requirements), etc.
Based on our performance analysis and benchmarking experience, we can identify what the results of assessing your company suggest relative to your business strategies. We have a realistic picture of how your company can be more successful and the impact on your various strategies such as:
- Market share and volume strategies – will increasing volume improve profitability?
- Customer strategy – are your biggest customers profitable? Which customers are profitable relationships? Is it profitable to have a national or regional customer base? Cross sale penetration?
- Distribution strategy – retail, on-line, purchase business – what makes the most sense for your company given its current performance?
- Operational platform strategy – operating structure design, centralized –v- decentralized, geographic location, etc.
- Technology strategy – are current technologies effective? Have they been maximized? Are there new technology investments that are needed and what is the priority?
- Growth strategy – organic or acquisition? Which way is best? Does an acquisition help or hurt the company’s performance?
- Pricing strategy – are products and services being priced to market or to make money?
- Disposition or down-sizing strategy – informing you of the who, what, where and how should your company execute such strategy
We would normally have your accounting team prepare information to put into our proprietary benchmarking tools. However, we can assist in gathering the financial and operating data for your company, calculating the benchmarks, and explain how the benchmarks are utilized.