Hilltop Holdings Inc. Announces Financial Results for Second Quarter 2016

Company Release - 7/27/2016 5:05 PM ET

DALLAS--(BUSINESS WIRE)-- Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the second quarter of 2016. Hilltop produced income to common stockholders of $31.1 million, or $0.32 per diluted share, for the second quarter of 2016, compared to $29.6 million, or $0.30 per diluted share, for the second quarter of 2015. Hilltop’s annualized return on average assets and return on average equity for the second quarter of 2016 were 1.05% and 7.07%, respectively, compared to 0.97% and 7.12% for the second quarter of 2015, respectively.

Jeremy Ford, CEO of Hilltop, said, “We are pleased to report solid financial results for the second quarter of 2016, led by exceptional performance in our mortgage-related businesses. We achieved positive operating leverage in the quarter with a 14.8% increase in noninterest income relative to a 4.0% increase in noninterest expense.”

Mr. Ford continued, “PlainsCapital Bank maintained a strong net interest margin and improved expense efficiency, however irregularities discovered in a single large loan resulted in an elevated loan loss provision. Outside of this isolated issue, nonperforming loans declined during the quarter. PrimeLending delivered impressive mortgage origination growth in its purchase volume, driven by increased market share and a decline in interest rates. Top-line revenue growth in mortgage- and municipal-related businesses, as well as continued execution of integration initiatives, drove profitability at HilltopSecurities.”

Mr. Ford concluded, “With seasonal spring storms beginning and ending earlier this year, National Lloyds reported a lower loss and LAE ratio compared to the second quarter average over the previous three years. Additionally, process improvements and a reduction in variable expenses resulted in a relatively flat expense ratio.”

Second Quarter 2016 Highlights for Hilltop:

  • Hilltop’s total assets were $13.1 billion at June 30, 2016, compared to $11.7 billion at March 31, 2016;
  • Hilltop’s common equity increased by $33.9 million from March 31, 2016 to $1.8 billion at June 30, 2016;
  • Non-covered loans1 held for investment, net of allowance for loan losses, increased by 2.0% to $5.4 billion and covered loans1, net of allowance for loan losses, decreased by 7.0% to $322.1 million from March 31, 2016 to June 30, 2016;
  • Non-covered non-performing loans declined to $23.4 million, or 0.33% of total non-covered loans, at June 30, 2016, compared to $27.1 million, or 0.40% of total non-covered loans, at March 31, 2016;
  • Energy classified and criticized loans were $41.5 million at June 30, 2016, down from $51.3 million at March 31, 2016;
  • Loans held for sale increased by 15.3% to $1.6 billion from March 31, 2016 to June 30, 2016;
  • Total deposits were $7.1 billion at June 30, 2016, compared to $7.0 billion at March 31, 2016;
  • Hilltop was well-capitalized with a Tier 1 Leverage Ratio2 of 13.18% and Total Capital Ratio of 17.69% at June 30, 2016;
  • Hilltop’s net interest margin3 increased to 3.77% for the second quarter of 2016, from 3.67% in the first quarter of 2016;
  • Hilltop’s taxable equivalent net interest margin4 was 3.80% for the second quarter of 2016, a ten basis point increase from 3.70% in the first quarter of 2016;
  • The provision for loan losses was $28.9 million during the second quarter of 2016, compared to $3.4 million in the first quarter of 2016, and primarily driven by a non-recurring, full charge-off related to one large loan;
    • During the second quarter of 2016, the Bank discovered irregularities in connection with a single loan that is currently in default. As a result, the Bank increased its provision for loan losses and recorded a $24.5 million charge-off, representing the entire outstanding principal balance of the loan;
  • For the second quarter of 2016, noninterest income was $346.0 million, compared to $301.4 million in the second quarter of 2015, a 14.8% increase;
  • For the second quarter of 2016, noninterest expense was $367.4 million, compared to $353.3 million in the second quarter of 2015, a 4.0% increase; and
  • In connection with the SWS Merger, during the second quarter of 2016, Hilltop incurred $2.3 million in pre-tax transaction and integration costs, consisting of $0.8 million in the broker-dealer segment and $1.5 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 second quarter of 2016, excluding goodwill and intangible assets.
3 Net interest margin is defined as net interest income divided by average interest-earning assets.
4 Taxable equivalent net interest margin 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. Refer to footnote 2 to the Selected Financial Data table for further discussion on this non-GAAP measure and the taxable equivalent adjustments to interest income.
 

Consolidated Financial and Other Information

         
Consolidated Balance Sheets June 30, March 31, December 31, September 30, June 30,
(in 000's)   2016     2016     2015     2015     2015  
Cash and due from banks $ 583,984 $ 512,103 $ 652,036 $ 526,692 $ 583,043
Federal funds sold 29,677 15,406 17,409 24,861 22,814
Securities purchased under agreements to resell 149,474 96,646 105,660 83,889 79,153
Assets segregated for regulatory purposes 120,214 120,714 158,613 228,251 188,094
Securities:
Trading, at fair value 305,418 368,425 214,146 292,418 265,429
Available for sale, at fair value 517,784 666,328 673,706 726,132 763,463
Held to maturity, at amortized cost   354,443     310,478     332,022     305,316     312,960  
1,177,645 1,345,231 1,219,874 1,323,866 1,341,852
Loans held for sale 1,550,475 1,344,333 1,533,678 1,354,107 1,397,617
Non-covered loans, net of unearned income 5,472,446 5,366,065 5,220,040 4,999,529 4,956,969
Allowance for non-covered loan losses   (51,013 )   (48,450 )   (45,415 )   (42,989 )   (40,484 )
Non-covered loans, net 5,421,433 5,317,615 5,174,625 4,956,540 4,916,485
 
Covered loans, net of allowance for covered loan losses 322,073 346,169 378,762 420,547 493,299
Broker-dealer and clearing organization receivables 2,257,480 1,370,622 1,362,499 2,111,864 2,070,598
Premises and equipment, net 189,511 198,414 200,618 204,273 206,411
FDIC indemnification asset 74,460 80,522 91,648 92,902 102,381
Covered other real estate owned 67,634 78,890 99,090 106,024 125,510
Other assets 832,344 601,181 565,813 644,916 637,747
Goodwill 251,808 251,808 251,808 251,808 251,808
Other intangible assets, net   49,690     52,274     54,868     58,916     61,527  
Total assets $ 13,077,902   $ 11,731,928   $ 11,867,001   $ 12,389,456   $ 12,478,339  
 
Deposits:
Non-interest bearing $ 2,280,108 $ 2,233,608 $ 2,235,436 $ 2,173,890 $ 2,135,988
Interest bearing   4,846,705     4,750,567     4,717,247     4,646,859     4,660,449  
Total deposits 7,126,813 6,984,175 6,952,683 6,820,749 6,796,437
Broker-dealer and clearing organization payables 2,111,994 1,284,016 1,338,305 2,045,604 2,048,585
Short-term borrowings 1,012,862 832,921 947,373 910,490 1,100,025
Securities sold, not yet purchased, at fair value 178,235 165,704 130,044 156,775 135,592
Notes payable 319,636 232,190 238,716 243,556 245,420
Junior subordinated debentures 67,012 67,012 67,012 67,012 67,012
Other liabilities   464,904     405,899     454,743     428,442     410,004  
Total liabilities 11,281,456 9,971,917 10,128,876 10,672,628 10,803,075
 
Common stock 985 986 989 989 995
Additional paid-in capital 1,568,053 1,567,150 1,577,270 1,574,769 1,582,655
Accumulated other comprehensive income (loss) 8,782 6,878 2,629 4,592 (1,105 )
Retained earnings 214,116 183,042 155,475 134,748 91,008
Deferred compensation employee stock trust, net 938 1,020 1,034 1,182 1,182
Employee stock trust   (347 )   (428 )   (443 )   (590 )   (590 )
Total Hilltop stockholders' equity 1,792,527 1,758,648 1,736,954 1,715,690 1,674,145
Noncontrolling interests   3,919     1,363     1,171     1,138     1,119  
Total stockholders' equity   1,796,446     1,760,011     1,738,125     1,716,828     1,675,264  
Total liabilities & stockholders' equity $ 13,077,902   $ 11,731,928   $ 11,867,001   $ 12,389,456   $ 12,478,339  
         
Three Months Ended
Consolidated Income Statements June 30, March 31, December 31, September 30, June 30,
(in 000's, except per share data)   2016     2016   2015   2015   2015
Interest income:
Loans, including fees $ 98,468 $ 91,533 $ 94,689 $ 111,315 $ 96,967
Securities borrowed 6,326 7,589 11,242 10,116 9,675
Securities:
Taxable 6,834 6,367 7,046 6,262 6,227
Tax-exempt 1,537 1,637 1,647 1,683 1,557
Other   1,037     1,028   1,338   1,169   1,236
Total interest income 114,202 108,154 115,962 130,545 115,662
 
Interest expense:
Deposits 4,037 3,839 3,589 3,719 3,900
Securities loaned 4,916 5,987 8,388 7,110 6,889
Short-term borrowings 1,392 1,085 1,218 1,189 1,143
Notes payable 2,618 2,582 2,661 2,524 2,289
Junior subordinated debentures 655 645 616 605 595
Other   187     176   177   187   179
Total interest expense 13,805 14,314 16,649 15,334 14,995
 
Net interest income 100,397 93,840 99,313 115,211 100,667
Provision for loan losses   28,876     3,407   4,277   5,593   158
Net interest income after provision for loan losses 71,521 90,433 95,036 109,618 100,509
 
Noninterest income:
Net realized gains (losses) on securities (46 ) 46
Net gains from sale of loans and other mortgage production income 167,012 127,297 114,080 137,303 147,175
Mortgage loan origination fees 25,797 18,813 19,514 22,647 20,958
Net insurance premiums earned 38,721 39,733 41,001 41,196 40,318
Securities commissions and fees 40,444 38,319 37,459 39,070 41,213
Investment and securities advisory fees and commissions 29,354 23,819 33,678 27,667 29,665
Other   44,723     29,348   31,195   28,586   22,071
Total noninterest income 346,005 277,375 276,927 296,469 301,400
 
Noninterest expense:
Employees' compensation and benefits 217,346 182,655 182,472 200,620 200,291
Loss and loss adjustment expenses 37,211 21,959 21,630 17,335 41,241
Policy acquisition and other underwriting expenses 11,316 11,252 11,928 11,784 11,740
Occupancy and equipment, net 26,937 27,791 30,285 29,341 30,842
Other   74,555     81,532   92,406   74,422   69,203
Total noninterest expense 367,365 325,189 338,721 333,502 353,317
 
Income before income taxes 50,161 42,619 33,242 72,585 48,592
Income tax expense   18,439     14,423   12,020   25,338   18,137
Net income 31,722 28,196 21,222 47,247 30,455
Less: Net income attributable to noncontrolling interest   648     629   495   353   405
Income attributable to Hilltop 31,074 27,567 20,727 46,894 30,050
Dividends on preferred stock             428
Income applicable to Hilltop common stockholders $ 31,074   $ 27,567 $ 20,727 $ 46,894 $ 29,622
 
Earnings per common share:
Basic $ 0.32 $ 0.28 $ 0.21 $ 0.47 $ 0.30
Diluted $ 0.32 $ 0.28 $ 0.21 $ 0.47 $ 0.30
Weighted average shares outstanding:
Basic 98,457 98,153 98,412 98,676 99,486
Diluted 98,586 98,669 99,266 99,556 100,410
             
Three Months Ended June 30, 2016
Segment Results Mortgage All Other and Hilltop
(in 000's) Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated
Net interest income (expense) $ 92,029 $ 7,440 $ (2,299 ) $ 758 $ (1,846 ) $ 4,315 $ 100,397
Provision for loan losses 28,613 263 28,876
Noninterest income 13,346 102,900 192,881 41,392 1 (4,515 ) 346,005
Noninterest expense   55,132   91,780   162,488     51,717     6,483     (235 )   367,365
Income (loss) before income taxes $ 21,630 $ 18,297 $ 28,094   $ (9,567 ) $ (8,328 ) $ 35   $ 50,161
         
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
Selected Financial Data 2016   2016   2015   2015   2015  
 

Hilltop Consolidated:

Return on average stockholders' equity 7.07 % 6.32 % 4.70 % 10.97 % 7.12 %
Return on average assets 1.05 % 0.96 % 0.68 % 1.49 % 0.97 %
Net interest margin (1) 3.77 % 3.67 % 3.70 % 4.18 % 3.72 %
Net interest margin (taxable equivalent) (2):
As reported 3.80 % 3.70 % 3.73 % 4.20 % 3.75 %
Impact of purchase accounting 72 bps 74 bps 79 bps 137 bps 96 bps
Book value per common share ($) 18.20 17.84 17.56 17.35 16.82
Shares outstanding, end of period (000's) 98,498 98,585 98,896 98,893 99,515
 

Banking Segment:

Net interest margin (1) 4.85 % 4.70 % 4.90 % 5.77 % 5.00 %
Net interest margin (taxable equivalent) (2):
As reported 4.87 % 4.73 % 4.92 % 5.79 % 5.02 %
Impact of purchase accounting 104 bps 103 bps 119 bps 210 bps 145 bps
Accretion of discount on loans ($000's) 17,344 16,631 19,503 36,000 23,632
Non-covered net charge-offs (recoveries) ($000's) 26,130 650 2,088 1,775 (532 )
Return on average assets 0.66 % 0.98 % 1.07 % 1.64 % 1.41 %
Fee income ratio 12.67 % 13.08 % 13.83 % 11.64 % 14.20 %
Efficiency ratio 52.32 % 64.97 % 62.78 % 50.56 % 56.95 %
Employees' compensation and benefits ($000's) 30,847 29,125 27,456 29,881 30,689

 

Broker-Dealer Segment:

Employees' compensation and benefits ($000's) 63,976 57,816 62,868 64,099 64,304
Variable compensation expense ($000's) 38,750 29,431 35,298 36,157 33,058
Compensation as a % of net revenue 58.0 % 65.7 % 63.2 % 69.6 % 72.8 %
Pre-tax margin 16.58 % 4.28 % 3.70 % 1.58 % -2.19 %
 

Mortgage Origination Segment:

Mortgage loan originations - volume ($000's):
Home purchases 3,261,386 2,050,825 2,344,328 2,945,626 2,913,479
Refinancings 889,078   878,291   721,308   693,572   920,286  
Home purchases 4,150,464 2,929,116 3,065,636 3,639,198 3,833,765
Mortgage loan sales - volume ($000's) 3,964,190 3,117,605 2,888,903 3,699,047 3,635,853
Mortgage servicing rights asset ($000's) (3) 33,491 39,863 52,285 47,527 44,985
Employees' compensation and benefits ($000's) 117,537 90,690 87,387 101,490 101,220
Variable compensation expense ($000's) 74,604 51,689 48,706 64,582 67,172
 

Insurance Segment:

Loss and LAE ratio 96.1 % 55.3 % 52.8 % 42.1 % 102.3 %
Expense ratio 33.9 % 33.2 % 34.2 % 33.3 % 33.5 %
Combined ratio 130.0 % 88.5 % 87.0 % 75.4 % 135.8 %
Employees' compensation and benefits ($000's) 2,304 2,178 2,180 2,182 2,065
 
(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 $0.6 million, $0.7 million, $0.8 million, $0.8 million and $0.7 million, respectively, and for the Banking Segment were $0.5 million, $0.4 million, $0.4 million, $0.4 million and $0.5 million, respectively.
(3) Reported on a consolidated basis, and does not include mortgage servicing rights assets related to loans serviced for the banking segment, which are eliminated in consolidation.

         
June 30, March 31, December 31, September 30, June 30,
Capital Ratios 2016   2016   2015   2015   2015  
Tier 1 capital (to average assets):
Bank 12.72 % 12.70 % 13.22 % 12.77 % 12.17 %
Hilltop 13.18 % 13.35 % 12.65 % 12.01 % 11.87 %
Common equity Tier 1 capital (to risk-weighted assets):
Bank 14.71 % 15.10 % 16.23 % 17.36 % 16.46 %
Hilltop 16.67 % 17.56 % 17.87 % 18.36 % 18.02 %
Tier 1 capital (to risk-weighted assets):
Bank 14.77 % 15.12 % 16.25 % 17.36 % 16.46 %
Hilltop 17.26 % 18.17 % 18.48 % 18.89 % 18.74 %
Total capital (to risk-weighted assets):
Bank 15.51 % 15.87 % 16.99 % 18.13 % 17.17 %
Hilltop 17.69 % 18.60 % 18.89 % 19.29 % 19.29 %
         
June 30, March 31, December 31, September 30, June 30,
Non-Covered Non-Performing Loans Portfolio Data 2016   2016   2015   2015   2015  
 
Non-covered loans accounted for on a non-accrual basis ($000's):
Commercial and industrial 18,412 19,179 17,764 22,302 23,353
Real estate 4,777 7,802 7,160 7,087 6,612
Construction and land development 139 102 114 118 253
Consumer 61 1 7 14 21
Broker-dealer          
23,389 27,084 25,045 29,521 30,239
 
Non-covered non-performing loans as a % of total non-covered loans 0.33 % 0.40 % 0.37 % 0.46 % 0.48 %
 
Non-covered other real estate owned ($000's) 2,656 543 394 511 920
 
Other repossessed assets ($000's) 30
 
Non-covered non-performing assets ($000's) 26,045 27,657 25,439 30,032 31,159
 
Non-covered non-performing assets as a percentage of total assets 0.20 % 0.24 % 0.21 % 0.24 % 0.25 %
 
Non-covered non-PCI loans past due 90 days or more and still accruing ($000's) 50,032 51,943 50,776 37,435 31,073
 
Troubled debt restructurings included in accruing non-covered loans ($000's) 1,235 1,409 1,418 3,664 2,830
           
Three Months Ended June 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) $ 7,038,518 $ 98,468 5.56 % $ 6,563,094 $ 96,967 5.88 %
Investment securities - taxable 1,080,097 6,813 2.53 % 1,087,238 6,210 2.29 %
Investment securities - non-taxable (2) 291,288 2,166 2.98 % 235,229 2,296 3.91 %
Federal funds sold and securities purchased under agreements to resell 144,820 36 0.10 % 93,871 15 0.06 %
Interest-bearing deposits in other financial institutions 388,520 484 0.50 % 580,610 327 0.23 %
Other   1,760,367     6,864 1.54 %   2,293,444     10,586 1.83 %
Interest-earning assets, gross 10,703,610 114,831 4.27 % 10,853,486 116,401 4.27 %
Allowance for loan losses   (51,247 )   (41,789 )
Interest-earning assets, net 10,652,363 10,811,697
Noninterest-earning assets   1,523,095     1,748,109  
Total assets $ 12,175,458   $ 12,559,806  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits $ 4,821,695 $ 4,037 0.34 % $ 4,749,690 $ 3,900 0.33 %
Notes payable and other borrowings   2,722,028     9,768 1.44 %   3,345,511     11,095 1.32 %
Total interest-bearing liabilities 7,543,723 13,805 0.73 % 8,095,201 14,995 0.74 %
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,203,065 2,168,728
Other liabilities   657,435     601,480  
Total liabilities 10,404,223 10,865,409
Stockholders’ equity 1,768,717 1,693,785
Noncontrolling interest   2,518     612  
Total liabilities and stockholders' equity $ 12,175,458   $ 12,559,806  
   
Net interest income (2) $ 101,026 $ 101,406
Net interest spread (2) 3.53 % 3.53 %
Net interest margin (2) 3.80 % 3.75 %
 
(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 $0.6 million and $0.7 million for the three months ended June 30, 2016 and 2015, respectively.

       
June 30, March 31, December 31, September 30,
PlainsCapital Bank - Energy Exposure 2016   2016   2015   2015  
 

Select Energy Statistics

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

Energy Portfolio Breakdown

Exploration and production 10 % 13 % 19 % 20 %
Services:
Field services 22 % 22 % 21 % 15 %
Pipeline construction 15 % 15 % 23 % 25 %
37 % 37 % 44 % 40 %
Midstream:
Distribution 38 % 37 % 25 % 25 %
Transportation 9 % 7 % 7 % 7 %
47 % 44 % 32 % 32 %
Other:
Wholesalers 1 % 1 % 2 % 2 %
Equipment rentals 0 % 0 % 1 % 5 %
Equipment wholesalers 5 % 5 % 2 % 1 %
Total 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 Thursday, July 28, 2016. Hilltop President and CEO Jeremy B. Ford and other key management members will discuss results for the second 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. Through its wholly owned subsidiary, PlainsCapital Corporation, a regional commercial banking franchise, it has two operating subsidiaries: PlainsCapital Bank and PrimeLending. Through its wholly owned subsidiaries, Hilltop Securities Inc. and Hilltop Securities Independent Network Inc., it provides 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 June 30, 2016, Hilltop employed approximately 5,400 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, 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) 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; (ii) our ability to estimate loan losses; (iii) changes in the default rate of our loans; (iv) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (v) risks associated with concentration in real estate related loans; (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.

Hilltop Holdings Inc.
Isabell Novakov, 214-252-4029
inovakov@plainscapital.com

Source: Hilltop Holdings Inc.