Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2016

Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2016

Dallas Texas (October 27, 2016)

DALLAS--(BUSINESS WIRE)--

Hilltop Holdings Inc. (HTH) (“Hilltop”) today announced financial results for the third quarter of 2016. Hilltop produced income of $51.9 million, or $0.53 per diluted share, for the third quarter of 2016, compared to $46.9 million, or $0.47 per diluted share, for the third quarter of 2015. Hilltop’s annualized return on average assets and return on average equity for the third quarter of 2016 were 1.69% and 11.41%, respectively, compared to 1.49% and 10.97%, respectively, for the third quarter of 2015.

Hilltop also announced that, for the first time in its history, it will now start paying a quarterly dividend. Hilltop’s Board of Directors authorized a dividend program and declared a quarterly cash dividend of $0.06 per common share, payable on November 30, 2016, to all common stockholders of record as of the close of business on November 15, 2016.

Jeremy Ford, Co-CEO of Hilltop, said, “We are excited to announce that Hilltop’s Board of Directors has approved the initiation of a cash dividend to its stockholders. Our strong capital position and consistent earnings generation enable us to invest in future acquisitions and organic growth, while also returning cash to our stockholders.”

Mr. Ford continued, “During the quarter, we also began implementing the previously announced changes to our organization. The new structure and addition of William Furr as Hilltop CFO create a solid foundation to support the operations of our subsidiary companies and ensure Hilltop has the right platform for future growth.”

Alan White, Co-CEO of Hilltop, added, “Our strong third quarter earnings highlight the diversity of our franchise and the earnings power of our collective business. PlainsCapital Bank delivered strong commercial loan growth, PrimeLending produced outstanding results by growing originations and expanding margins, HilltopSecurities generated solid revenue growth in its core businesses and National Lloyds experienced seasonally lower claims volumes.”

Third Quarter 2016 Highlights for Hilltop:

  • Hilltop’s total assets were $12.4 billion at September 30, 2016, compared to $13.1 billion at June 30, 2016;
  • Hilltop’s common equity increased by $53.2 million from June 30, 2016 to $1.8 billion at September 30, 2016;
  • Non-covered loans1 held for investment, net of allowance for loan losses, increased by 3.7% to $5.6 billion and covered loans1, net of allowance for loan losses, decreased by 9.3% to $292.0 million from June 30, 2016 to September 30, 2016;
  • Non-covered non-performing loans increased to $25.2 million, or 0.34% of total non-covered loans, at September 30, 2016, compared to $23.4 million, or 0.33% of total non-covered loans, at June 30, 2016;
  • Energy classified and criticized loans were $39.4 million at September 30, 2016, down from $41.5 million at June 30, 2016;
  • Loans held for sale increased by 7.9% to $1.7 billion from June 30, 2016 to September 30, 2016;
  • Total deposits were $7.0 billion at September 30, 2016, compared to $7.1 billion at June 30, 2016;
  • Hilltop maintains strong capital levels with a Tier 1 Leverage Ratio2 of 13.41% and Total Capital Ratio of 18.82% at September 30, 2016;
  • Hilltop’s net interest margin3 decreased to 3.65% for the third quarter of 2016, from 3.77% in the second quarter of 2016;
  • The provision for loan losses was $4.0 million during the third quarter of 2016, compared to $28.9 million in the second quarter of 2016;
    • The second quarter of 2016 included an isolated, $24.5 million charge-off as a result of irregularities in connection with a single loan that is currently in default, representing the entire outstanding principal balance of the loan;
  • The second quarter of 2016 included an isolated, $24.5 million charge-off as a result of irregularities in connection with a single loan that is currently in default, representing the entire outstanding principal balance of the loan;
  • For the third quarter of 2016, noninterest income was $354.5 million, compared to $296.5 million in the third quarter of 2015, a 19.6% increase;
  • For the third quarter of 2016, noninterest expense was $364.1 million, compared to $333.5 million in the third quarter of 2015, a 9.2% increase; and
  • In connection with the SWS Merger, during the third quarter of 2016, Hilltop incurred $5.4 million in pre-tax transaction and integration costs, consisting of $1.0 million in the broker-dealer segment and $4.4 million within corporate.

___________________________

1

  “Covered loans” refer to loans acquired in the FNB Transaction that are subject to loss-share agreements with the FDIC, while all other loans are referred to as “non-covered loans.”

2

  Based on the end of period Tier 1 capital divided by total average assets during the third quarter of 2016, excluding goodwill and intangible assets.

3

  Net interest margin is defined as net interest income divided by average interest-earning assets.
 
 

Consolidated Financial and Other Information

 
Consolidated Balance Sheets     September 30,     June 30,     March 31,     December 31,     September 30,
(in 000's)       2016         2016         2016         2015         2015  
Cash and due from banks     $ 528,519       $ 583,984       $ 512,103       $ 652,036       $ 526,692  
Federal funds sold       40,419         29,677         15,406         17,409         24,861  
Securities purchased under agreements to resell       138,284         149,474         96,646         105,660         83,889  
Assets segregated for regulatory purposes       173,840         120,214         120,714         158,613         228,251  
Securities:                              
Trading, at fair value       402,104         305,418         368,425         214,146         292,418  
Available for sale, at fair value       563,720         517,784         666,328         673,706         726,132  
Held to maturity, at amortized cost       365,934         354,443         310,478         332,022         305,316  
        1,331,758         1,177,645         1,345,231         1,219,874         1,323,866  
Loans held for sale       1,673,069         1,550,475         1,344,333         1,533,678         1,354,107  
Non-covered loans, net of unearned income       5,674,655         5,472,446         5,366,065         5,220,040         4,999,529  
Allowance for non-covered loan losses       (52,625 )       (51,013 )       (48,450 )       (45,415 )       (42,989 )
Non-covered loans, net       5,622,030         5,421,433         5,317,615         5,174,625         4,956,540  
                               
Covered loans, net of allowance for covered loan losses       292,031         322,073         346,169         378,762         420,547  
Broker-dealer and clearing organization receivables       1,340,617         2,257,480         1,370,622         1,362,499         2,111,864  
Premises and equipment, net       190,645         189,511         198,414         200,618         204,273  
FDIC indemnification asset       73,351         74,460         80,522         91,648         92,902  
Covered other real estate owned       61,988         67,634         78,890         99,090         106,024  
Other assets       657,805         832,344         601,181         565,813         644,916  
Goodwill       251,808         251,808         251,808         251,808         251,808  
Other intangible assets, net       47,112         49,690         52,274         54,868         58,916  
Total assets     $ 12,423,276       $ 13,077,902       $ 11,731,928       $ 11,867,001       $ 12,389,456  
                               
Deposits:                              
Non-interest bearing     $ 2,232,813       $ 2,280,108       $ 2,233,608       $ 2,235,436       $ 2,173,890  
Interest bearing       4,797,772         4,846,705         4,750,567         4,717,247         4,646,859  
Total deposits       7,030,585         7,126,813         6,984,175         6,952,683         6,820,749  
Broker-dealer and clearing organization payables       1,251,839         2,111,994         1,284,016         1,338,305         2,045,604  
Short-term borrowings       1,265,022         1,012,862         832,921         947,373         910,490  
Securities sold, not yet purchased, at fair value       164,633         178,235         165,704         130,044         156,775  
Notes payable       313,313         319,636         232,190         238,716         243,556  
Junior subordinated debentures       67,012         67,012         67,012         67,012         67,012  
Other liabilities       481,504         464,904         405,899         454,743         428,442  
Total liabilities       10,573,908         11,281,456         9,971,917         10,128,876         10,672,628  
                               
Common stock       985         985         986         989         989  
Additional paid-in capital       1,570,025         1,568,053         1,567,150         1,577,270         1,574,769  
Accumulated other comprehensive income       8,039         8,782         6,878         2,629         4,592  
Retained earnings       266,048         214,116         183,042         155,475         134,748  
Deferred compensation employee stock trust, net       900         938         1,020         1,034         1,182  
Employee stock trust       (309 )       (347 )       (428 )       (443 )       (590 )
Total Hilltop stockholders' equity       1,845,688         1,792,527         1,758,648         1,736,954         1,715,690  
Noncontrolling interests       3,680         3,919         1,363         1,171         1,138  
Total stockholders' equity       1,849,368         1,796,446         1,760,011         1,738,125         1,716,828  
Total liabilities & stockholders' equity     $ 12,423,276       $ 13,077,902       $ 11,731,928       $ 11,867,001       $ 12,389,456  
 
 
      Three Months Ended
Consolidated Income Statements     September 30,     June 30,     March 31,     December 31,     September 30,
(in 000's, except per share data)     2016     2016     2016     2015     2015
Interest income:                              
Loans, including fees     $ 97,590     $ 98,468       $ 91,533     $ 94,689     $ 111,315
Securities borrowed       9,037       6,326         7,589       11,242       10,116
Securities:                              
Taxable       5,935       6,834         6,367       7,046       6,262
Tax-exempt       1,518       1,537         1,637       1,647       1,683
Other       1,183       1,037         1,028       1,338       1,169
Total interest income       115,263       114,202         108,154       115,962       130,545
                               
Interest expense:                              
Deposits       3,996       4,037         3,839       3,589       3,719
Securities loaned       6,954       4,916         5,987       8,388       7,110
Short-term borrowings       1,497       1,392         1,085       1,218       1,189
Notes payable       2,793       2,618         2,582       2,661       2,524
Junior subordinated debentures       673       655         645       616       605
Other       180       187         176       177       187
Total interest expense       16,093       13,805         14,314       16,649       15,334
                               
Net interest income       99,170       100,397         93,840       99,313       115,211
Provision for loan losses       3,990       28,876         3,407       4,277       5,593
Net interest income after provision for loan losses       95,180       71,521         90,433       95,036       109,618
                               
Noninterest income:                              
Net realized gains (losses) on securities             (46 )       46            
Net gains from sale of loans and other mortgage production income       175,412       167,012         127,297       114,080       137,303
Mortgage loan origination fees       26,807       25,797         18,813       19,514       22,647
Net insurance premiums earned       38,747       38,721         39,733       41,001       41,196
Securities commissions and fees       39,722       40,442         38,317       37,459       39,070
Investment and securities advisory fees and commissions       31,129       29,354         23,819       33,678       27,667
Other       42,641       44,725         29,350       31,195       28,586
Total noninterest income       354,458       346,005         277,375       276,927       296,469
                               
Noninterest expense:                              
Employees' compensation and benefits       225,194       217,398         182,761       182,472       200,620
Loss and loss adjustment expenses       16,055       37,211         21,959       21,630       17,335
Policy acquisition and other underwriting expenses       11,064       11,316         11,252       11,928       11,784
Occupancy and equipment, net       27,460       26,971         27,833       30,285       29,341
Other       84,360       74,469         81,384       92,406       74,422
Total noninterest expense       364,133       367,365         325,189       338,721       333,502
                               
Income before income taxes       85,505       50,161         42,619       33,242       72,585
Income tax expense       33,017       18,439         14,423       12,020       25,338
Net income       52,488       31,722         28,196       21,222       47,247
Less: Net income attributable to noncontrolling interest       556       648         629       495       353
Income attributable to Hilltop     $ 51,932     $ 31,074       $ 27,567     $ 20,727     $ 46,894
                               
Earnings per common share:                              
Basic     $ 0.53     $ 0.32       $ 0.28     $ 0.21     $ 0.47
Diluted     $ 0.53     $ 0.32       $ 0.28     $ 0.21     $ 0.47
Weighted average shares outstanding:                              
Basic       98,490       98,457         98,153       98,412       98,676
Diluted       98,625       98,586         98,669       99,266       99,556
 
 
      Three Months Ended September 30, 2016
Segment Results                 Mortgage                 All Other and     Hilltop
(in 000's)     Banking     Broker-Dealer     Origination     Insurance     Corporate     Eliminations     Consolidated
Net interest income (expense)     $ 90,549     $ 7,823       $ (3,076 )     $ 716     $ (1,854 )     $ 5,012       $ 99,170
Provision for loan losses       4,179       (189 )                                     3,990
Noninterest income       12,711       103,511         202,560         41,170               (5,494 )       354,458
Noninterest expense       61,536       94,094         168,303         30,415       10,041         (256 )       364,133
Income (loss) before income taxes     $ 37,545     $ 17,429       $ 31,181       $ 11,471     $ (11,895 )     $ (226 )     $ 85,505
 
 
      Three Months Ended
      September 30,     June 30,     March 31,     December 31,     September 30,
Selected Financial Data     2016     2016     2016     2015     2015
                               

Hilltop Consolidated:

                             
Return on average stockholders' equity     11.41 %     7.07 %     6.32 %     4.70 %     10.97 %
Return on average assets     1.69 %     1.05 %     0.96 %     0.68 %     1.49 %
Net interest margin (1)     3.65 %     3.77 %     3.67 %     3.70 %     4.18 %
Net interest margin (taxable equivalent) (2):                              
As reported     3.67 %     3.80 %     3.70 %     3.73 %     4.20 %
Impact of purchase accounting     64 bps     72 bps     74 bps     79 bps     137 bps
Book value per common share ($)     18.73       18.20       17.84       17.56       17.35  
Shares outstanding, end of period (000's)     98,541       98,498       98,585       98,896       98,893  
                               

Banking Segment:

                             
Net interest margin (1)     4.50 %     4.85 %     4.70 %     4.90 %     5.77 %
Net interest margin (taxable equivalent) (2):                              
As reported     4.53 %     4.87 %     4.73 %     4.92 %     5.79 %
Impact of purchase accounting     90 bps     104 bps     103 bps     119 bps     210 bps
Accretion of discount on loans ($000's)     15,969       17,344       16,631       19,503       36,000  
Non-covered net charge-offs (recoveries) ($000's)     3,108       26,130       650       2,088       1,775  
Return on average assets     1.09 %     0.66 %     0.98 %     1.07 %     1.64 %
Fee income ratio     12.31 %     12.67 %     13.08 %     13.83 %     11.64 %
Efficiency ratio     59.59 %     52.32 %     64.97 %     62.78 %     50.56 %
Employees' compensation and benefits ($000's)     31,167       30,847       29,125       27,456       29,881  
                               

Broker-Dealer Segment:

                             
Employees' compensation and benefits ($000's)     68,051       63,976       57,816       62,868       64,099  
Variable compensation expense ($000's)     42,446       38,750       29,431       35,298       36,157  
Compensation as a % of net revenue     61.1 %     58.0 %     65.7 %     63.2 %     69.6 %
Pre-tax margin     15.65 %     16.58 %     4.28 %     3.70 %     1.58 %
                               

Mortgage Origination Segment:

                             
Mortgage loan originations - volume ($000's):                              
Home purchases     3,191,851       3,261,386       2,050,825       2,344,328       2,945,626  
Refinancings     1,300,702       889,078       878,291       721,308       693,572  
Total mortgage loan originations - volume     4,492,553       4,150,464       2,929,116       3,065,636       3,639,198  
Mortgage loan sales - volume ($000's)     4,349,794       3,964,190       3,117,605       2,888,903       3,699,047  
Mortgage servicing rights asset ($000's) (3)     43,751       33,491       39,863       52,285       47,527  
Employees' compensation and benefits ($000's)     120,548       117,537       90,690       87,387       101,490  
Variable compensation expense ($000's)     75,271       74,604       51,689       48,706       64,582  
                               

Insurance Segment:

                             
Loss and LAE ratio     41.4 %     96.1 %     55.3 %     52.8 %     42.1 %
Expense ratio     33.6 %     33.9 %     33.2 %     34.2 %     33.3 %
Combined ratio     75.0 %     130.0 %     88.5 %     87.0 %     75.4 %
Employees' compensation and benefits ($000's)     2,401       2,304       2,178       2,180       2,182  

___________________________

(1)   Net interest margin is defined as net interest income divided by average interest-earning assets.
(2)   Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Annualized taxable equivalent adjustments are based on a 35% federal income tax rate. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. For the periods presented, the taxable equivalent adjustments to interest income for Hilltop Consolidated were $0.5 million, $0.6 million, $0.7 million, $0.8 million and $0.8 million, respectively, and for the Banking Segment were $0.4 million, $0.5 million, $0.4 million, $0.4 million and $0.4 million, respectively.
(3)   Reported on a consolidated basis and therefore does not include mortgage servicing rights assets related to loans serviced for the banking segment, which are eliminated in consolidation.
 
 
      September 30,     June 30,     March 31,     December 31,     September 30,
Capital Ratios     2016     2016     2016     2015     2015
Tier 1 capital (to average assets):                              
Bank     12.65 %     12.72 %     12.70 %     13.22 %     12.77 %
Hilltop     13.41 %     13.18 %     13.35 %     12.65 %     12.01 %
Common equity Tier 1 capital (to risk-weighted assets):                              
Bank     15.15 %     14.71 %     15.10 %     16.23 %     17.36 %
Hilltop     17.80 %     16.67 %     17.56 %     17.87 %     18.36 %
Tier 1 capital (to risk-weighted assets):                              
Bank     15.15 %     14.77 %     15.12 %     16.25 %     17.36 %
Hilltop     18.37 %     17.26 %     18.17 %     18.48 %     18.89 %
Total capital (to risk-weighted assets):                              
Bank     15.90 %     15.51 %     15.87 %     16.99 %     18.13 %
Hilltop     18.82 %     17.69 %     18.60 %     18.89 %     19.29 %
 
 
      September 30,     June 30,     March 31,     December 31,     September 30,
Non-Covered Non-Performing Loans Portfolio Data     2016     2016     2016     2015     2015
                               
Non-covered loans accounted for on a non-accrual basis ($000's):                              
Commercial and industrial     19,651       18,412       19,179       17,764       22,302  
Real estate     4,817       4,777       7,802       7,160       7,087  
Construction and land development     703       139       102       114       118  
Consumer     50       61       1       7       14  
Broker-dealer                              
      25,221       23,389       27,084       25,045       29,521  
                               
Non-covered non-performing loans as a % of total non-covered loans     0.34 %     0.33 %     0.40 %     0.37 %     0.46 %
                               
Non-covered other real estate owned ($000's)     3,063       2,656       543       394       511  
                               
Other repossessed assets ($000's)     1,654             30              
                               
Non-covered non-performing assets ($000's)     29,938       26,045       27,657       25,439       30,032  
                               
Non-covered non-performing assets as a % of total assets     0.24 %     0.20 %     0.24 %     0.21 %     0.24 %
                               
Non-covered non-PCI loans past due 90 days or more and still accruing ($000's)     41,824       50,032       51,943       50,776       37,435  
                               
Troubled debt restructurings included in accruing non-covered loans ($000's)     1,216       1,235       1,409       1,418       3,664  
 
 
      Three Months Ended September 30,
      2016     2015
      Average     Interest     Annualized     Average     Interest     Annualized
      Outstanding     Earned or     Yield or     Outstanding     Earned or     Yield or
      Balance     Paid     Rate     Balance     Paid     Rate
Assets                                    
Interest-earning assets                                    
Loans, gross (1)     $ 7,315,433       $ 97,590     5.26 %     $ 6,636,328       $ 111,315     6.64 %
Investment securities - taxable       999,394         5,915     2.36 %       1,110,813         6,243     2.24 %
Investment securities - non-taxable(2)       296,013         2,052     2.77 %       253,170         2,439     3.85 %
Federal funds sold and securities purchased under agreements to resell       185,533         52     0.11 %       122,826         20     0.07 %
Interest-bearing deposits in other financial institutions       478,560         567     0.47 %       442,689         237     0.21 %
Other       1,542,155         9,622     2.44 %       2,381,905         11,047     1.82 %
Interest-earning assets, gross       10,817,088         115,798     4.22 %       10,947,731         131,301     4.74 %
Allowance for loan losses       (53,470 )                   (43,446 )            
Interest-earning assets, net       10,763,618                     10,904,285              
Noninterest-earning assets       1,588,921                     1,706,720              
Total assets     $ 12,352,539                   $ 12,611,005              
                                     
Liabilities and Stockholders' Equity                                    
Interest-bearing liabilities                                    
Interest-bearing deposits     $ 4,851,952       $ 3,996     0.33 %     $ 4,709,244       $ 3,719     0.31 %
Notes payable and other borrowings       2,729,466         12,097     1.76 %       3,385,804         11,615     1.36 %
Total interest-bearing liabilities       7,581,418         16,093     0.84 %       8,095,048         15,334     0.75 %
Noninterest-bearing liabilities                                    
Noninterest-bearing deposits       2,251,744                     2,177,319              
Other liabilities       705,985                     641,456              
Total liabilities       10,539,147                     10,913,823              
Stockholders’ equity       1,810,266                     1,696,396              
Noncontrolling interest       3,126                     786              
Total liabilities and stockholders' equity     $ 12,352,539                   $ 12,611,005              
                                     
Net interest income (2)           $ 99,705                 $ 115,967      
Net interest spread (2)                 3.38 %                 3.99 %
Net interest margin (2)                 3.67 %                 4.20 %

___________________________

(1)   Average balance includes non-accrual loans.
(2)   Annualized taxable equivalent adjustments are based on a 35% federal income tax rate. The taxable equivalent adjustments to interest income were $0.5 million and $0.8 million for the three months ended September 30, 2016 and 2015, respectively.
 
 
      September 30,     June 30,     March 31,     December 31,     September 30,
PlainsCapital Bank - Energy Exposure     2016     2016     2016     2015     2015
                               

Select Energy Statistics

                             
Outstanding energy loan balance ($M)     168.8       223.6       233.5       179.8       194.9  
Energy unfunded commitments ($M)     120.7       88.5       102.9       108.7       110.0  
Energy loans as a % of total loans     3.1 %     4.2 %     4.5 %     3.6 %     4.0 %
Classified and criticized energy loans ($M):                              
Criticized energy loans     1.8       12.7       13.0       3.4       0.0  
Performing classified energy loans     24.2       22.1       33.4       25.7       27.0  
Non-performing classified energy loans     13.4       6.7       4.9       3.6       2.8  
      39.4       41.5       51.3       32.7       29.8  
                               
Unimpaired energy reserves ($M)     10.0       9.8       9.2       7.3       6.5  
Energy reserves as a % of energy loans     6.7 %     4.7 %     4.3 %     4.4 %     3.4 %
Energy NCOs ($M)     1.0       0.4       0.2       1.2       1.1  
                               

Energy Portfolio Breakdown

                             
Exploration and production     13 %     10 %     13 %     19 %     20 %
Services:                              
Field services     26 %     22 %     22 %     21 %     15 %
Pipeline construction     21 %     15 %     15 %     23 %     25 %
      47 %     37 %     37 %     44 %     40 %
Midstream:                              
Distribution     21 %     38 %     37 %     25 %     25 %
Transportation     11 %     9 %     7 %     7 %     7 %
      32 %     47 %     44 %     32 %     32 %
Other:                              
Wholesalers     1 %     1 %     1 %     2 %     2 %
Equipment rentals     0 %     0 %     0 %     1 %     5 %
Equipment wholesalers     7 %     5 %     5 %     2 %     1 %
Total     100 %     100 %     100 %     100 %     100 %
 
 

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, October 28, 2016. Hilltop Co-CEOs Jeremy B. Ford and Alan B. White and other key management members will discuss results for the third quarter of 2016. Interested parties can access the conference call by dialing 1-877-508-9457 (domestic) or 1-412-317-0789 (international). The conference call also will be webcast simultaneously on Hilltop’s Investor Relations website (http://ir.hilltop-holdings.com).

About Hilltop

Hilltop Holdings is a Dallas-based financial holding company. Its primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank. PlainsCapital Bank’s wholly owned subsidiary, PrimeLending, provides residential mortgage lending throughout the United States. Hilltop Holdings’ broker-dealer subsidiaries, Hilltop Securities Inc. and Hilltop Securities Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. Through Hilltop Holdings’ other wholly owned subsidiary, National Lloyds Corporation, it provides property and casualty insurance through two insurance companies, National Lloyds Insurance Company and American Summit Insurance Company. At September 30, 2016, Hilltop employed approximately 5,500 people and operated approximately 450 locations in 44 states. Hilltop Holdings' common stock is listed on the New York Stock Exchange under the symbol "HTH." Find more information at Hilltop-Holdings.com, PlainsCapital.com, PrimeLending.com, Nationallloydsinsurance.com and Hilltopsecurities.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as our business strategy, our financial condition, our efforts to make strategic acquisitions, the integration of the operations acquired in the SWS Merger, our revenue, our liquidity and sources of funding, market trends, operations and business, stock repurchases, dividend payments, expectations concerning mortgage loan origination volume, expected losses on covered loans and related reimbursements from the Federal Deposit Insurance Corporation (“FDIC”), expected levels of refinancing as a percentage of total loan origination volume, projected losses on mortgage loans originated, anticipated changes in our revenues or earnings, the effects of government regulation applicable to our operations, the appropriateness of our allowance for loan losses and provision for loan losses, the collectability of loans and the outcome of litigation, our other plans, objectives, strategies, expectations and intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “might,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: (i) our ability to estimate loan losses; (ii) changes in the default rate of our loans; (iii) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (iv) risks associated with concentration in real estate related loans; (v) risks associated with merger and acquisition integration, including our ability to promptly and effectively integrate our businesses with those acquired in the SWS Merger and achieve the anticipated synergies and cost savings in connection therewith, as well as the diversion of management time on acquisition- and integration-related issues; (vi) severe catastrophic events in Texas and other areas of the southern United States; (vii) changes in the interest rate environment; (viii) cost and availability of capital; (vix) effectiveness of our data security controls in the face of cyber attacks; (x) changes in state and federal laws, regulations or policies affecting one or more of the our business segments, including changes in regulatory fees, deposit insurance premiums, capital requirements and the Dodd-Frank Wall Street Reform and Consumer Protection Act; (xi) approval of new, or changes in, accounting policies and practices; (xii) changes in key management; (xiii) competition in our banking, broker-dealer, mortgage origination and insurance segments from other banks and financial institutions, as well as investment banking and financial advisory firms, mortgage bankers, asset-based non-bank lenders, government agencies and insurance companies; (xiv) our ability to obtain reimbursements for losses on acquired loans under loss-share agreements with the FDIC to the extent the FDIC determines that we did not adequately manage the covered loan portfolio; (xv) failure of our insurance segment reinsurers to pay obligations under reinsurance contracts; and (xvi) our ability to use excess cash in an effective manner, including the execution of successful acquisitions. For further discussion of such factors, see the risk factors described in the Hilltop Annual Report on Form 10-K for the year ended December 31, 2015 and other reports filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.