Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2019

By: Hilltop Holdings Inc. via Business Wire News Releases

January 30, 2020 at 17:15 PM EST

Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2019. Hilltop produced income to common stockholders of $49.3 million, or $0.54 per diluted share, for the fourth quarter of 2019, compared to $28.1 million, or $0.30 per diluted share, for the fourth quarter of 2018. Income to common stockholders for the full year 2019 was $225.3 million, or $2.44 per diluted share, compared to $121.4 million, or $1.28 per diluted share, for the full year 2018.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per common share, a 12.5% increase from the prior quarter, payable on February 28, 2020, to all common stockholders of record as of the close of business on February 14, 2020. Additionally, Hilltop paid $73.4 million to repurchase 3,390,247 shares at a weighted average price of $21.64 during 2019, inclusive of privately negotiated transactions. These shares were returned to the pool of authorized but unissued shares of common stock. The Hilltop Board of Directors authorized a new stock repurchase program through January 2021, under which Hilltop may repurchase, in the aggregate, up to $75.0 million of its outstanding common stock.

Effective January 1, 2020, Hilltop adopted the current expected credit loss model, or CECL, which replaces the current process for estimating allowance for loan losses in its entirety. Our implementation efforts are substantially complete, and based upon the current loan portfolio, we estimate that the allowance for credit losses will be between $80 million and $100 million, inclusive of the estimate of change in reserve for unfunded commitments of between $6 million and $9 million, as of CECL’s adoption on January 1, 2020. The estimated increase over the current allowance for loan losses is driven by the fact that under CECL the allowance covers expected credit losses over the entire expected life of the loan portfolios and also takes into account forecasts of expected future macroeconomic conditions. This estimated increase, net of tax, will be reflected as a decrease to opening retained earnings at January 1, 2020. While not material, the impact of the adoption of CECL also affects our regulatory capital, performance and other asset quality ratios.

Jeremy Ford, CEO of Hilltop, said, “The strong results delivered in the fourth quarter capped off a fantastic year for Hilltop, and I credit the collective efforts of our teammates in the businesses and our holding company. PrimeLending rebounded from a challenging year in 2018 by generating $65 million of pre-tax income in 2019, an increase of $52 million. HilltopSecurities executed on its targeted strategies and grew net revenues by $103 million to $456 million during 2019. PlainsCapital Bank delivered $182 million of pre-tax income in 2019, an increase of $30 million from 2018, by focusing on prudent growth in loans and deposits while maintaining its moderate risk profile and reducing expenses. National Lloyds’ results reflect improved core operations and lower loss experience during 2019 as it generated $17 million of pre-tax income.

“In addition to these favorable financial results, we continued to position Hilltop for long-term success by executing on our platform for efficiency and growth initiatives. In 2019, we delivered significant productivity improvements through key technology investments and the addition of talented professionals across our organization. We enter 2020 with strong momentum and focus.”

Fourth Quarter 2019 Highlights for Hilltop:

Hilltop’s annualized return on average assets and return on average equity for the fourth quarter of 2019 were 1.40% and 9.43%, respectively, compared to 0.86% and 5.76%, respectively, for the fourth quarter of 2018;
Hilltop’s book value per common share increased to $23.20 at December 31, 2019, compared to $22.71 at September 30, 2019;
Hilltop’s total assets were $15.2 billion at December 31, 2019, compared to $14.8 billion at September 30, 2019;
Loans1, net of allowance for loan losses, remained stable at $6.7 billion compared to September 30, 2019;
Non-performing loans were $36.1 million, or 0.38% of total loans at December 31, 2019, compared to $35.5 million, or 0.38% of total loans, at September 30, 2019;
Loans held for sale increased by 6.2% from September 30, 2019 to $2.1 billion at December 31, 2019;
Total deposits were $9.0 billion at December 31, 2019, compared to $8.7 billion at September 30, 2019;
Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio2 of 12.71% and a Common Equity Tier 1 Capital Ratio of 16.69% at December 31, 2019;
Hilltop’s net interest margin3 decreased to 3.30% for the fourth quarter of 2019, compared to 3.45% in the third quarter of 2019;
The provision for loan losses was $6.9 million during the fourth quarter of 2019, compared to $47 thousand in the third quarter of 2019;
- The provision for loan losses increased during the fourth quarter 2019 primarily as a result of adjustments to qualitative factors associated with concentrations in the commercial real estate loan portfolio, growth in the overall loan portfolio and the recast of cash flows associated with certain PCI loans
For the fourth quarter of 2019, noninterest income was $299.3 million, compared to $238.5 million in the fourth quarter of 2018, a 25.5% increase;
For the fourth quarter of 2019, noninterest expense was $336.9 million, compared to $310.8 million in the fourth quarter of 2018, a 8.4% increase; and
Hilltop’s effective tax rates were 22.5% and 22.4% during the fourth quarter and full year of 2019, respectively, compared to 23.2% and 21.8% during the same periods in 2018.

_____________

1		“Loans” reflect loans held for investment excluding broker-dealer loans, net of allowance for loan losses, of $576.5 million and $558.1 million at December 31, 2019 and September 30, 2019, respectively
2		Based on the end of period Tier 1 capital divided by total average assets during the quarter, 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		December 31,			September 30,			June 30,			March 31,			December 31,
(in 000's)			2019			2019			2019			2019			2018
Cash and due from banks		$	484,959		$	326,129		$	342,001		$	313,192		$	644,073
Federal funds sold			394			423			521			438			400
Assets segregated for regulatory purposes			157,436			83,878			151,271			156,851			133,993
Securities purchased under agreements to resell			59,031			49,998			50,660			65,205			61,611
Securities:
	Trading, at fair value		689,576			707,268			601,524			703,295			745,466
	Available for sale, at fair value		998,392			1,003,850			1,009,924			1,019,851			875,658
	Held to maturity, at amortized cost		386,326			371,361			365,905			369,865			351,012
	Equity, at fair value		20,007			19,494			19,592			19,343			19,679
			2,094,301			2,101,973			1,996,945			2,112,354			1,991,815
Loans held for sale			2,106,361			1,984,231			1,609,477			1,059,280			1,393,246
Loans held for investment, net of unearned income			7,381,400			7,321,208			7,202,604			7,011,679			6,930,458
Allowance for loan losses			(61,136	)		(55,604	)		(55,177	)		(58,809	)		(59,486	)
	Loans held for investment, net		7,320,264			7,265,604			7,147,427			6,952,870			6,870,972

Broker-dealer and clearing organization receivables			1,780,280			1,731,979			1,707,249			1,651,199			1,440,287
Premises and equipment, net			219,982			213,757			208,975			210,333			237,373
Operating lease right-of-use assets			117,059			121,838			123,832			108,806			—
Other assets			516,134			633,794			602,143			591,442			580,362
Goodwill			291,435			291,435			291,435			291,435			291,435
Other intangible assets, net			30,155			31,990			33,934			35,965			38,005
	Total assets	$	15,177,791		$	14,837,029		$	14,265,870		$	13,549,370		$	13,683,572

Deposits:
	Non-interest bearing	$	2,769,556		$	2,732,325		$	2,598,253		$	2,490,144		$	2,560,750
	Interest bearing		6,262,658			5,998,547			5,864,826			5,807,975			5,975,406
Total deposits			9,032,214			8,730,872			8,463,079			8,298,119			8,536,156
Broker-dealer and clearing organization payables			1,605,518			1,546,163			1,531,891			1,490,227			1,294,925
Short-term borrowings			1,424,010			1,502,755			1,338,893			914,525			1,065,807
Securities sold, not yet purchased, at fair value			43,817			59,249			45,447			69,354			81,667
Notes payable			283,769			245,341			231,923			225,372			228,872
Operating lease liabilities			128,402			131,133			132,750			118,452			—
Junior subordinated debentures			67,012			67,012			67,012			67,012			67,012
Other liabilities			464,253			471,077			403,070			351,178			435,240
	Total liabilities		13,048,995			12,753,602			12,214,065			11,534,239			11,709,679

Common stock			906			906			928			938			936
Additional paid-in capital			1,445,233			1,441,604			1,473,599			1,491,585			1,489,816
Accumulated other comprehensive income (loss)			11,419			12,305			7,862			(1,062	)		(8,627	)
Retained earnings			644,860			602,835			544,275			499,452			466,737
Deferred compensation employee stock trust, net			776			789			788			827			825
Employee stock trust			(155	)		(170	)		(171	)		(213	)		(217	)
Total Hilltop stockholders' equity			2,103,039			2,058,269			2,027,281			1,991,527			1,949,470
Noncontrolling interests			25,757			25,158			24,524			23,604			24,423
Total stockholders' equity			2,128,796			2,083,427			2,051,805			2,015,131			1,973,893
	Total liabilities & stockholders' equity	$	15,177,791		$	14,837,029		$	14,265,870		$	13,549,370		$	13,683,572


		Three Months Ended						Year Ended
Consolidated Income Statements		December 31,		September 30,		December 31,		December 31,		December 31,
(in 000's, except per share data)			2019		2019		2018		2019		2019
Interest income:
	Loans, including fees	$	115,696	$	119,580	$	119,322	$	460,471	$	436,725
	Securities borrowed		16,196		21,010		16,782		69,582		66,914
	Securities:
	Taxable		16,040		15,764		15,512		62,104		50,975
	Tax-exempt		1,572		1,576		1,648		6,159		6,834
	Other		3,273		4,026		4,438		16,513		17,980
Total interest income			152,777		161,956		157,702		614,829		579,428

Interest expense:
	Deposits		17,480		18,887		14,838		71,509		46,002
	Securities loaned		13,989		17,889		13,935		60,086		56,733
	Short-term borrowings		6,244		8,166		7,476		26,778		25,816
	Notes payable		2,769		2,715		2,627		10,754		10,263
	Junior subordinated debentures		909		955		968		3,851		3,663
	Other		99		132		143		545		627
Total interest expense			41,490		48,744		39,987		173,523		143,104

Net interest income			111,287		113,212		117,715		441,306		436,324
Provision for loan losses			6,880		47		6,926		7,206		5,088
Net interest income after provision for loan losses			104,407		113,165		110,789		434,100		431,236

Noninterest income:
	Net gains from sale of loans and other mortgage production income		120,573		157,050		90,628		504,935		445,116
	Mortgage loan origination fees		36,939		37,782		26,615		130,003		103,563
	Securities commissions and fees		33,205		34,426		36,984		137,742		150,989
	Investment and securities advisory fees and commissions		32,083		28,685		26,260		103,787		90,066
	Net insurance premiums earned		32,961		32,654		34,146		132,284		136,751
	Other		43,515		50,804		23,883		197,265		96,305
Total noninterest income			299,276		341,401		238,516		1,206,016		1,022,790

Noninterest expense:
	Employees' compensation and benefits		215,427		235,197		179,881		856,265		768,688
	Occupancy and equipment, net		30,883		27,202		30,512		114,327		115,207
	Professional services		25,052		24,346		26,793		96,093		105,752
	Loss and loss adjustment expenses		14,356		14,677		20,694		68,940		79,347
	Other		51,218		48,687		52,939		204,182		224,255
Total noninterest expense			336,936		350,109		310,819		1,339,807		1,293,249

Income before income taxes			66,747		104,457		38,486		300,309		160,777
Income tax expense			15,045		22,750		8,928		67,332		35,050
Net income			51,702		81,707		29,558		232,977		125,727
Less: Net income attributable to noncontrolling interest			2,426		2,289		1,443		7,686		4,286
Income attributable to Hilltop		$	49,276	$	79,418	$	28,115	$	225,291	$	121,441

Earnings per common share:
	Basic	$	0.54	$	0.87	$	0.30	$	2.44	$	1.28
	Diluted	$	0.54	$	0.86	$	0.30	$	2.44	$	1.28

Cash dividends declared per common share		$	0.08	$	0.08	$	0.07	$	0.32	$	0.28

Weighted average shares outstanding:
	Basic		90,606		91,745		94,092		92,345		94,969
	Diluted		90,711		91,824		94,130		92,394		95,067


		Three Months Ended December 31, 2019
Segment Results							Mortgage								All Other and			Hilltop
(in 000s)		Banking		Broker-Dealer			Origination			Insurance		Corporate			Eliminations			Consolidated
Net interest income (expense)		$	95,503	$	13,324		$	(2,049	)	$	527	$	(1,496	)	$	5,478		$	111,287
Provision (recovery) for loan losses			6,926		(46	)		—			—		—			—			6,880
Noninterest income			11,534		99,804			157,554			35,543		371			(5,530	)		299,276
Noninterest expense			58,779		88,943			146,966			29,068		13,571			(391	)		336,936
	Income (loss) before income taxes	$	41,332	$	24,231		$	8,539		$	7,002	$	(14,696	)	$	339		$	66,747

		Year Ended December 31, 2019
Segment Results							Mortgage								All Other and			Hilltop
(in 000s)		Banking		Broker-Dealer			Origination			Insurance		Corporate			Eliminations			Consolidated
Net interest income (expense)		$	379,258	$	51,308		$	(6,273	)	$	2,329	$	(5,541	)	$	20,225		$	441,306
Provision (recovery) for loan losses			7,280		(74	)		—			—		—			—			7,206
Noninterest income			41,753		404,411			634,992			143,082		2,221			(20,443	)		1,206,016
Noninterest expense			231,524		366,031			563,998			127,920		50,968			(634	)		1,339,807
	Income (loss) before income taxes	$	182,207	$	89,762		$	64,721		$	17,491	$	(54,288	)	$	416		$	300,309


		Three Months Ended						Year Ended
		December 31,		September 30,		December 31,		December 31,		December 31,
Selected Financial Data		2019		2019		2018		2019		2018

Hilltop Consolidated:
Return on average stockholders' equity		9.43	%	15.55	%	5.76	%	11.18	%	6.33	%
Return on average assets		1.40	%	2.26	%	0.86	%	1.66	%	0.93	%
Net interest margin (1):		3.30	%	3.45	%	3.75	%	3.48	%	3.55	%
Net interest margin (taxable equivalent) (2):
	As reported	3.31	%	3.46	%	3.76	%	3.48	%	3.56	%
	Impact of purchase accounting	19	bps	26	bps	43	bps	25	bps	34	bps
Book value per common share ($)		23.20		22.71		20.83		23.20		20.83
Shares outstanding, end of period (000's)		90,641		90,629		93,610		90,641		93,610
Dividend payout ratio (3)		14.71	%	9.24	%	23.43	%	13.12	%	21.90	%

Banking Segment:
Net interest margin (1):		3.77	%	3.97	%	4.50	%	4.00	%	4.23	%
Net interest margin (taxable equivalent) (2):
	As reported	3.78	%	3.98	%	4.51	%	4.01	%	4.24	%
	Impact of purchase accounting	25	bps	35	bps	61	bps	33	bps	48	bps
Accretion of discount on loans ($000's)		5,698		7,868		12,737		28,745		39,094
Net charge-offs (recoveries) ($000's)		1,348		(380	)	7,592		5,556		9,288
Return on average assets		1.17	%	1.51	%	1.31	%	1.36	%	1.23	%
Fee income ratio		10.8	%	8.3	%	10.1	%	9.9	%	10.5	%
Efficiency ratio		54.9	%	50.5	%	56.8	%	55.0	%	61.9	%
Employees' compensation and benefits ($000's)		31,455		31,309		31,955		127,985		132,086

Broker-Dealer Segment:
Net revenue ($000's) (4)		113,128		121,466		89,750		455,719		352,592
Employees' compensation and benefits ($000's)		64,301		69,954		54,249		267,663		218,467
Variable compensation expense ($000's)		39,505		44,921		31,744		163,840		115,948
Compensation as a % of net revenue		56.8	%	57.6	%	60.4	%	58.7	%	62.0	%
Pre-tax margin (5)		21.4	%	22.2	%	12.1	%	19.7	%	9.2	%

Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
	Home purchases	2,958,176		3,380,812		2,586,677		11,718,772		11,798,804
	Refinancings	1,442,329		1,390,989		384,990		3,860,665		1,893,680
	Total mortgage loan originations - volume	4,400,505		4,771,801		2,971,667		15,579,437		13,692,484
Mortgage loan sales - volume ($000's)		4,226,425		4,316,118		3,008,793		14,591,727		13,735,885
Net gains from mortgage loan sales (basis points):
	As reported	304		335		334		324		328
	Impact of sales to banking segment	(8	)	(1	)	0		(3	)	0
Mortgage servicing rights asset ($000's) (6)		55,504		51,297		66,102		55,504		66,102
Employees' compensation and benefits ($000's)		109,753		123,890		84,334		419,135		389,131
Variable compensation expense ($000's)		67,224		81,287		44,529		252,956		216,038

Insurance Segment:
Loss and LAE ratio		43.6	%	44.9	%	60.6	%	52.1	%	58.0	%
Expense ratio		40.5	%	38.3	%	37.9	%	39.7	%	39.0	%
	Combined ratio	84.1	%	83.2	%	98.5	%	91.8	%	97.0	%
Employees' compensation and benefits ($000's)		2,929		2,748		2,670		11,663		11,474

_____________

(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. Taxable equivalent adjustments are based on the applicable 21% federal income tax rate for all periods presented. 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. The taxable equivalent adjustments to interest income for Hilltop (consolidated) were $0.1 million, $0.1 million, $0.3 million, $0.6 million, and $0.9 million, respectively, for the periods presented and for the banking segment were $0.1 million, $0.1 million, $0.2 million, $0.6 million, and $0.8 million, respectively, for each of the periods presented.
(3)		Dividend payout ratio is defined as cash dividends declared per common share divided by basic earnings per common share.
(4)		Net revenue is defined as the sum of total broker-dealer net interest income plus total broker-dealer noninterest income.
(5)		Pre-tax margin is defined as income before income taxes divided by net revenue
(6)		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.


		December 31,		September 30,		June 30,		March 31,		December 31,
Capital Ratios		2019		2019		2019		2019		2018
Tier 1 capital (to average assets):
	PlainsCapital	11.61	%	11.79	%	12.53	%	12.61	%	12.47	%
	Hilltop	12.71	%	12.67	%	13.00	%	13.22	%	12.53	%
Common equity Tier 1 capital (to risk-weighted assets):
	PlainsCapital	13.45	%	13.25	%	13.84	%	13.89	%	13.90	%
	Hilltop	16.69	%	16.15	%	16.32	%	16.75	%	16.58	%
Tier 1 capital (to risk-weighted assets):
	PlainsCapital	13.45	%	13.25	%	13.84	%	13.89	%	13.90	%
	Hilltop	17.13	%	16.58	%	16.77	%	17.22	%	17.04	%
Total capital (to risk-weighted assets):
	PlainsCapital	14.13	%	13.87	%	14.48	%	14.60	%	14.63	%
	Hilltop	17.55	%	16.95	%	17.14	%	17.64	%	17.47	%


		December 31,		September 30,		June 30,		March 31,		December 31,
Non-Performing Loans Portfolio Data		2019		2019		2019		2019		2018
Loans accounted for on a non-accrual basis ($000's):
	Commercial real estate	7,308		8,727		5,276		5,332		5,324
	Commercial and industrial	15,262		13,313		14,152		13,350		14,870
	Construction and land development	1,316		1,358		1,413		1,473		3,278
	1-4 family residential	12,204		12,103		11,136		10,662		10,437
	Mortgage warehouse	-		-		-		-		-
	Consumer	26		30		34		38		41
	Broker-dealer	-		-		-		-		-
	Covered	-		-		-		-		-
		36,116		35,531		32,011		30,855		33,950

Non-performing loans as a % of total loans		0.38	%	0.38	%	0.36	%	0.38	%	0.41	%

Other real estate owned ($000's)		18,202		18,738		20,753		23,066		27,578

Other repossessed assets ($000's)		-		-		-		30		68

Non-performing assets ($000's)		54,318		54,269		52,764		53,951		61,596

Non-performing assets as a % of total assets		0.36	%	0.37	%	0.37	%	0.40	%	0.45	%

Non-PCI loans past due 90 days or more and still accruing ($000's)		102,707		81,678		77,425		77,045		83,131

Troubled debt restructurings included in accruing loans held for investment ($000's)		2,173		2,222		2,256		1,313		1,339

				Three Months Ended December 31,
				2019							2018
				Average			Interest		Annualized		Average			Interest		Annualized
				Outstanding			Earned or		Yield or		Outstanding			Earned or		Yield or
Net Interest Margin (Taxable Equivalent) Details				Balance			Paid		Rate		Balance			Paid		Rate
Assets
	Interest-earning assets
		Loans held for sale		$	1,914,703		$	19,124	4.00	%	$	1,286,668		$	15,273	4.75	%
		Loans held for investment, gross (1)			7,258,086			96,572	5.24	%		6,946,355			104,049	5.90	%
		Investment securities - taxable			1,871,993			16,011	3.42	%		1,820,088			15,482	3.40	%
		Investment securities - non-taxable (2)			244,378			1,763	2.89	%		229,533			1,861	3.24	%
		Federal funds sold and securities purchased
			under agreements to resell		68,278			228	1.32	%		136,492			535	1.55	%
		Interest-bearing deposits in other
			financial institutions		325,984			1,408	1.71	%		410,942			2,400	2.32	%
		Securities borrowed			1,589,465			16,196	3.99	%		1,537,619			16,782	4.27	%
		Other			87,188			1,654	7.55	%		68,646			1,514	8.77	%
	Interest-earning assets, gross (2)				13,360,075			152,956	4.52	%		12,436,343			157,896	5.01	%
		Allowance for loan losses			(56,124	)						(59,912	)
	Interest-earning assets, net				13,303,951							12,376,431
	Noninterest-earning assets				1,367,971							1,338,890
Total assets				$	14,671,922						$	13,715,321

Liabilities and Stockholders' Equity
	Interest-bearing liabilities
		Interest-bearing deposits		$	6,100,621		$	17,480	1.14	%	$	5,800,152		$	14,838	1.01	%
		Securities loaned			1,487,288			13,989	3.73	%		1,419,680			13,935	3.89	%
		Notes payable and other borrowings			1,526,567			10,021	2.59	%		1,401,984			11,214	3.17	%
	Total interest-bearing liabilities				9,114,476			41,490	1.80	%		8,621,816			39,987	1.84	%
	Noninterest-bearing liabilities
		Noninterest-bearing deposits			2,789,662							2,565,607
		Other liabilities			670,701							565,897
	Total liabilities				12,574,839							11,753,320
	Stockholders' equity				2,072,865							1,939,010
	Noncontrolling interest				24,218							22,991
Total liabilities and stockholders' equity				$	14,671,922						$	13,715,321

Net interest income (2)							$	111,466						$	117,909
Net interest spread (2)									2.72	%						3.17	%
Net interest margin (2)									3.31	%						3.76	%

				Year Ended December 31,
				2019							2018
				Average			Interest		Annualized		Average			Interest		Annualized
				Outstanding			Earned or		Yield or		Outstanding			Earned or		Yield or
Net Interest Margin (Taxable Equivalent) Details				Balance			Paid		Rate		Balance			Paid		Rate
Assets
	Interest-earning assets
		Loans held for sale		$	1,501,154		$	64,830	4.32	%	$	1,472,772		$	68,536	4.65	%
		Loans held for investment, gross (1)			7,088,208			395,641	5.58	%		6,601,453			368,189	5.58	%
		Investment securities - taxable			1,803,622			61,983	3.44	%		1,680,976			50,860	3.03	%
		Investment securities - non-taxable (2)			233,713			6,803	2.91	%		247,651			7,752	3.13	%
		Federal funds sold and securities purchased
			under agreements to resell		63,598			1,236	1.94	%		189,183			2,831	1.50	%
		Interest-bearing deposits in other
			financial institutions		371,312			8,469	2.28	%		459,628			8,683	1.89	%
		Securities borrowed			1,550,322			69,582	4.49	%		1,542,539			66,914	4.34	%
		Other			75,298			6,869	9.12	%		74,684			6,535	8.75	%
	Interest-earning assets, gross (2)				12,687,227			615,413	4.85	%		12,268,886			580,300	4.73	%
		Allowance for loan losses			(57,690	)						(62,681	)
	Interest-earning assets, net				12,629,537							12,206,205
	Noninterest-earning assets				1,397,647							1,288,718
Total assets				$	14,027,184						$	13,494,923

Liabilities and Stockholders' Equity
	Interest-bearing liabilities
		Interest-bearing deposits		$	5,916,491		$	71,509	1.21	%	$	5,568,473		$	46,002	0.83	%
		Securities loaned			1,423,847			60,086	4.22	%		1,395,947			56,733	4.06	%
		Notes payable and other borrowings			1,398,559			41,928	3.00	%		1,477,966			40,369	2.73	%
	Total interest-bearing liabilities				8,738,897			173,523	1.99	%		8,442,386			143,104	1.70	%
	Noninterest-bearing liabilities
		Noninterest-bearing deposits			2,635,924							2,504,599
		Other liabilities			614,392							617,227
	Total liabilities				11,989,213							11,564,212
	Stockholders' equity				2,014,535							1,919,940
	Noncontrolling interest				23,436							10,771
Total liabilities and stockholders' equity				$	14,027,184						$	13,494,923

Net interest income (2)							$	441,890						$	437,196
Net interest spread (2)									2.86	%						3.03	%
Net interest margin (2)									3.48	%						3.56	%

_____________

(1)		Average balance includes non-accrual loans.
(2)		Presented on a taxable equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rates for the periods presented. The adjustment to interest income was $0.1 million and $0.3 million for the three months ended December 31, 2019 and 2018, respectively, and $0.6 million and $0.9 million for the year ended December 31, 2019 and 2018, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, January 31, 2020. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review fourth quarter and full year 2019 financial results. 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 December 31, 2019, Hilltop employed approximately 4,950 people and operated approximately 440 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 the estimate of allowance for credit losses pursuant to CECL when adopted and our plans, objectives, strategies, expectations, intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “building,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view,” “will” 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 materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate loan losses and increases to the allowance for loan losses as a result of the implementation of CECL; (ii) the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (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) severe catastrophic events in Texas and other areas of the southern United States; and (vi) the remediation of the material weakness may not be effected in a timely manner. For further discussion of such factors, see the risk factors described in our most recent Annual Report on Form 10-K, and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200130005856/en/

Contacts:

Investor Relations Contact:
Erik Yohe
214-525-4634
eyohe@hilltop-holdings.com

Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2019

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