Hilltop Holdings Inc. - FORM 8-K - EX-99.1

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8-K - 8-K - Hilltop Holdings Inc.	hth-20170126x8k.htm

Exhibit 99.1

	Investor Relations Contact:
	Isabell Novakov
	214-252-4029
	inovakov@hilltop-holdings.com

Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2016

DALLAS — (BUSINESS WIRE) January 26, 2017 — Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2016. Hilltop produced income of $35.3 million, or $0.36 per diluted share, for the fourth quarter of 2016, compared to $20.7 million, or $0.21 per diluted share, for the fourth quarter of 2015. During the fourth quarter of 2016, our results included a specific legal reserve of $16.0 million related to one matter involving Hilltop Securities. Income to common stockholders for the full year 2016 was $145.9 million, or $1.48 per diluted share, compared to $209.1 million, or $2.09 per diluted share, for the full year 2015. Income to common stockholders during the full year 2015 included the recognition of a bargain purchase gain related to the acquisition of SWS Group, Inc. (“SWS Merger”) of $81.3 million, or $0.81 per diluted share. Hilltop’s annualized return on average assets and return on average equity for the fourth quarter of 2016 were 1.13% and 7.56%, respectively, compared to 0.68% and 4.70%, respectively, for the fourth quarter of 2015. The return on average assets and return on average equity for the full year 2016 were 1.21% and 8.13%, respectively, compared to 1.70% and 12.32% for the full year 2015, respectively.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.06 per common share, payable on February 28, 2017, to all common stockholders of record as of the close of business on February 15, 2017. Additionally, the Hilltop Board of Directors reauthorized the stock repurchase program originally approved during 2016 through January 2018, under which Hilltop may repurchase, in the aggregate, up to $50.0 million of its outstanding common stock.

Jeremy Ford, Co-CEO of Hilltop, said, “With the notable exception of two significant adverse items, we are very pleased with our financial and operating results for 2016. Despite these charges, our results demonstrate the diversification and resilience of our franchise. With a strong capital base, solid liquidity and great business model, we are well positioned for the future.”

Alan White, Co-CEO of Hilltop, added, “All of our businesses generated impressive financial results in 2016. Highlights from this year’s performance include double-digit total loan growth at PlainsCapital Bank, record mortgage volume at PrimeLending, significantly improved operating margins at Hilltop Securities, and a solid underwriting profit at National Lloyds. We remain focused on growing all of our businesses profitably, serving our customers and providing a great place for our associates to thrive.”

Fourth Quarter 2016 Highlights for Hilltop:

Hilltop’s total assets were $12.7 billion at December 31, 2016, compared to $12.4 billion at September 30, 2016;

Hilltop’s common equity increased by $24.8 million from September 30, 2016 to $1.9 billion at December 31, 2016;

Non-covered loans1 held for investment, net of allowance for loan losses, increased by 3.0% to $5.8 billion and covered loans1, net of allowance for loan losses, decreased by 12.4% to $255.7 million at December 31, 2016 from September 30, 2016;

Non-covered non-performing loans decreased to $24.4 million, or 0.32% of total non-covered loans, at December 31, 2016, compared to $25.2 million, or 0.34% of total non-covered loans, at September 30, 2016;

Energy classified and criticized loans were $28.7 million at December 31, 2016, down from $39.4 million at September 30, 2016;

Loans held for sale increased by 7.3% to $1.8 billion from September 30, 2016 to December 31, 2016;

Total deposits were $7.1 billion at December 31, 2016, compared to $7.0 billion at September 30, 2016;

Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio2 of 13.51% and a Common Equity Tier 1 Capital Ratio of 18.30% at December 31, 2016;

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Hilltop’s net interest margin3 increased to 3.80% for the fourth quarter of 2016, from 3.65% in the third quarter of 2016;

The provision for loan losses was $4.3 million during the fourth quarter of 2016, compared to $4.0 million in the third quarter of 2016;

For the fourth quarter of 2016, noninterest income was $309.1 million, compared to $276.9 million in the fourth quarter of 2015, an 11.6% increase;

For the fourth quarter of 2016, noninterest expense was $355.8 million, compared to $338.7 million in the fourth quarter of 2015, a 5.0% increase; and

During the fourth quarter of 2016, Hilltop incurred $0.8 million in pre-tax transaction and integration costs related to the SWS Merger, consisting of $0.1 million in the broker-dealer segment and $0.7 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 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	December 31,		September 30,		June 30,		March 31,		December 31,
(in 000's)	2016		2016		2016		2016		2015
Cash and due from banks	$	669,357	$	528,519	$	583,984	$	512,103	$	652,036
Federal funds sold		21,407		40,419		29,677		15,406		17,409
Securities purchased under agreements to resell		89,430		138,284		149,474		96,646		105,660
Assets segregated for regulatory purposes		180,993		173,840		120,214		120,714		158,613
Securities:
Trading, at fair value		265,534		402,104		305,418		368,425		214,146
Available for sale, at fair value		598,007		563,720		517,784		666,328		673,706
Held to maturity, at amortized cost		351,831		365,934		354,443		310,478		332,022
		1,215,372		1,331,758		1,177,645		1,345,231		1,219,874
Loans held for sale		1,795,463		1,673,069		1,550,475		1,344,333		1,533,678
Non-covered loans, net of unearned income		5,843,499		5,674,655		5,472,446		5,335,547		5,207,617
Allowance for non-covered loan losses		(54,186)		(52,625)		(51,013)		(48,450)		(45,415)
Non-covered loans, net		5,789,313		5,622,030		5,421,433		5,287,097		5,162,202

Covered loans, net of allowance for covered loan losses		255,714		292,031		322,073		346,169		378,762
Broker-dealer and clearing organization receivables		1,497,741		1,340,617		2,257,480		1,370,622		1,362,499
Premises and equipment, net		190,361		190,645		189,511		198,414		200,618
FDIC indemnification asset		71,313		73,351		74,460		80,522		91,648
Covered other real estate owned		51,642		61,988		67,634		78,890		99,090
Other assets		613,453		657,805		832,344		631,699		578,236
Goodwill		251,808		251,808		251,808		251,808		251,808
Other intangible assets, net		44,695		47,112		49,690		52,274		54,868
Total assets	$	12,738,062	$	12,423,276	$	13,077,902	$	11,731,928	$	11,867,001

Deposits:
Non-interest bearing	$	2,199,483	$	2,232,813	$	2,280,108	$	2,233,608	$	2,235,436
Interest bearing		4,864,328		4,797,772		4,846,705		4,750,567		4,717,247
Total deposits		7,063,811		7,030,585		7,126,813		6,984,175		6,952,683
Broker-dealer and clearing organization payables		1,347,128		1,251,839		2,111,994		1,284,016		1,338,305
Short-term borrowings		1,417,289		1,265,022		1,012,862		832,921		947,373
Securities sold, not yet purchased, at fair value		153,889		164,633		178,235		165,704		130,044
Notes payable		317,912		313,313		319,636		232,190		238,716
Junior subordinated debentures		67,012		67,012		67,012		67,012		67,012
Other liabilities		496,501		481,504		464,904		405,899		454,743
Total liabilities		10,863,542		10,573,908		11,281,456		9,971,917		10,128,876

Common stock		985		985		985		986		989
Additional paid-in capital		1,572,877		1,570,025		1,568,053		1,567,150		1,577,270
Accumulated other comprehensive income		485		8,039		8,782		6,878		2,629
Retained earnings		295,568		266,048		214,116		183,042		155,475
Deferred compensation employee stock trust, net		903		900		938		1,020		1,034
Employee stock trust		(309)		(309)		(347)		(428)		(443)
Total Hilltop stockholders' equity		1,870,509		1,845,688		1,792,527		1,758,648		1,736,954
Noncontrolling interests		4,011		3,680		3,919		1,363		1,171
Total stockholders' equity		1,874,520		1,849,368		1,796,446		1,760,011		1,738,125
Total liabilities & stockholders' equity	$	12,738,062	$	12,423,276	$	13,077,902	$	11,731,928	$	11,867,001

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	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)	2016		2016		2015		2016		2015
Interest income:
Loans, including fees	$	102,046	$	97,590	$	94,689	$	389,637	$	390,359
Securities borrowed		6,566		9,037		11,242		29,518		41,051
Securities:
Taxable		7,097		5,935		7,046		26,233		26,584
Tax-exempt		1,530		1,518		1,647		6,222		6,628
Other		1,096		1,183		1,338		4,344		5,216
Total interest income		118,335		115,263		115,962		455,954		469,838

Interest expense:
Deposits		3,971		3,996		3,589		15,843		15,523
Securities loaned		4,653		6,954		8,388		22,510		29,893
Short-term borrowings		1,829		1,497		1,218		5,803		4,574
Notes payable		2,856		2,793		2,661		10,849		8,143
Junior subordinated debentures		703		673		616		2,676		2,401
Other		199		180		177		742		721
Total interest expense		14,211		16,093		16,649		58,423		61,255

Net interest income		104,124		99,170		99,313		397,531		408,583
Provision for loan losses		4,347		3,990		4,277		40,620		12,715
Net interest income after provision for loan losses		99,777		95,180		95,036		356,911		395,868

Noninterest income:
Net realized gains on securities		—		—		—		—		4,403
Net gains from sale of loans and other mortgage production income		137,270		175,412		114,080		606,991		519,103
Mortgage loan origination fees		24,850		26,807		19,514		96,267		77,708
Securities commissions and fees		39,425		39,722		37,459		157,906		160,660
Investment and securities advisory fees and commissions		31,690		31,129		33,678		115,992		115,932
Net insurance premiums earned		38,344		38,747		41,001		155,545		162,082
Bargain purchase gain		—		—		—		—		81,289
Other		37,548		42,641		31,195		154,264		106,465
Total noninterest income		309,127		354,458		276,927		1,286,965		1,227,642

Noninterest expense:
Employees' compensation and benefits		208,760		225,194		182,472		834,113		765,887
Occupancy and equipment, net		27,154		27,460		30,285		109,418		119,653
Loss and loss adjustment expenses		14,018		16,055		21,630		89,243		99,066
Policy acquisition and other underwriting expenses		10,757		11,064		11,928		44,389		47,126
Other		95,095		84,360		92,406		335,308		308,284
Total noninterest expense		355,784		364,133		338,721		1,412,471		1,340,016

Income before income taxes		53,120		85,505		33,242		231,405		283,494
Income tax expense		17,582		33,017		12,020		83,461		70,915
Net income		35,538		52,488		21,222		147,944		212,579
Less: Net income attributable to noncontrolling interest		217		556		495		2,050		1,606
Income attributable to Hilltop		35,321		51,932		20,727		145,894		210,973
Dividends on preferred stock		—		—		—		—		1,854
Income applicable to Hilltop common stockholders	$	35,321	$	51,932	$	20,727	$	145,894	$	209,119

Earnings per common share:
Basic	$	0.36	$	0.53	$	0.21	$	1.48	$	2.10
Diluted	$	0.36	$	0.53	$	0.21	$	1.48	$	2.09

Cash dividends declared per common share	$	0.06	$	—	$	—	$	0.06	$	—

Weighted average shares outstanding:
Basic		98,514		98,490		98,412		98,404		99,074
Diluted		98,810		98,625		99,266		98,629		99,962


	Three Months Ended December 31, 2016
Segment Results					Mortgage						All Other and		Hilltop
(in 000's)	Banking		Broker-Dealer		Origination		Insurance		Corporate		Eliminations		Consolidated
Net interest income (expense)	$	94,401	$	8,858	$	(3,648)	$	951	$	(1,844)	$	5,406	$	104,124
Provision for loan losses		4,381		(34)		—		—		—		—		4,347
Noninterest income		13,567		98,473		162,347		40,475		—		(5,735)		309,127
Noninterest expense		63,699		107,389		149,278		28,095		7,565		(242)		355,784
Income (loss) before income taxes	$	39,888	$	(24)	$	9,421	$	13,331	$	(9,409)	$	(87)	$	53,120


	Year Ended December 31, 2016
					Mortgage						All Other and		Hilltop
(in 000's)	Banking		Broker-Dealer		Origination		Insurance		Corporate		Eliminations		Consolidated
Net interest income (expense)	$	363,083	$	31,172	$	(11,589)	$	3,164	$	(7,257)	$	18,958	$	397,531
Provision for loan losses		40,673		(53)		—		—		—		—		40,620
Noninterest income		52,579		385,766		704,126		164,841		2		(20,349)		1,286,965
Noninterest expense		244,715		377,524		614,741		146,601		29,938		(1,048)		1,412,471
Income (loss) before income taxes	$	130,274	$	39,467	$	77,796	$	21,404	$	(37,193)	$	(343)	$	231,405

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	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
Selected Financial Data	2016		2016		2015		2016		2015

Hilltop Consolidated:
Return on average stockholders' equity		7.56%		11.41%		4.70%		8.13%		12.32%
Return on average assets		1.13%		1.69%		0.68%		1.21%		1.70%
Net interest margin (1)		3.80%		3.65%		3.70%		3.74%		3.78%
Net interest margin (taxable equivalent) (2):
As reported		3.82%		3.67%		3.73%		3.76%		3.81%
Impact of purchase accounting		71 bps		64 bps		79 bps		67 bps		94 bps
Book value per common share ($)		18.98		18.73		17.56		18.98		17.56
Shares outstanding, end of period (000's)		98,544		98,541		98,896		98,544		98,896

Banking Segment:
Net interest margin (1)		4.57%		4.50%		4.90%		4.65%		5.05%
Net interest margin (taxable equivalent) (2):
As reported		4.59%		4.53%		4.92%		4.68%		5.08%
Impact of purchase accounting		96 bps		90 bps		119 bps		93 bps		142 bps
Accretion of discount on loans ($000's)		17,926		15,969		19,503		67,870		96,119
Non-covered net charge-offs (recoveries) ($000's)		3,083		3,107		2,088		32,970		3,799
Return on average assets		1.09%		1.09%		1.07%		0.94%		1.36%
Fee income ratio		12.57%		12.31%		13.83%		12.65%		14.50%
Efficiency ratio		59.00%		59.59%		62.78%		58.87%		56.45%
Employees' compensation and benefits ($000's)		32,350		31,167		27,456		123,489		120,650

Broker-Dealer Segment:
Employees' compensation and benefits ($000's)		62,929		68,051		62,868		252,772		255,629
Variable compensation expense ($000's)		37,984		42,446		35,298		148,611		136,337
Compensation as a % of net revenue		58.6%		61.1%		63.2%		60.6%		69.6%
Pre-tax margin		-0.02%		15.65%		3.70%		9.47%		-0.07%

Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases		2,772,316		3,191,851		2,344,328		11,276,378		9,891,792
Refinancings		1,115,764		1,300,702		721,308		4,183,835		3,460,327
Total mortgage loan originations - volume		3,888,080		4,492,553		3,065,636		15,460,213		13,352,119
Mortgage loan sales - volume ($000's)		3,723,751		4,349,794		2,888,903		15,155,340		13,129,069
Mortgage servicing rights asset ($000's) (3)		61,968		43,751		52,285		61,968		52,285
Employees' compensation and benefits ($000's)		106,894		120,548		87,387		435,669		370,643
Variable compensation expense ($000's)		64,809		75,271		48,706		266,373		228,590

Insurance Segment:
Loss and LAE ratio		36.6%		41.4%		52.8%		57.4%		61.1%
Expense ratio		33.2%		33.6%		34.2%		33.5%		33.8%
Combined ratio		69.8%		75.0%		87.0%		90.9%		94.9%
Employees' compensation and benefits ($000's)		2,262		2,401		2,180		9,145		8,426

(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 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, $0.5 million, $0.8 million, $0.7 million and $0.8 million, respectively, and for the Banking Segment were $0.4 million, $0.4 million, $0.5 million, $2.4 million and $3.0 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.


	December 31,		September 30,		June 30,		March 31,		December 31,
Capital Ratios	2016		2016		2016		2016		2015
Tier 1 capital (to average assets):
PlainsCapital		12.35%		12.65%		12.72%		12.70%		13.22%
Hilltop		13.51%		13.41%		13.18%		13.35%		12.65%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital		14.64%		15.15%		14.71%		15.10%		16.23%
Hilltop		18.30%		17.80%		16.67%		17.56%		17.87%
Tier 1 capital (to risk-weighted assets):
PlainsCapital		14.64%		15.15%		14.77%		15.12%		16.25%
Hilltop		18.87%		18.37%		17.26%		18.17%		18.48%
Total capital (to risk-weighted assets):
PlainsCapital		15.38%		15.90%		15.51%		15.87%		16.99%
Hilltop		19.34%		18.82%		17.69%		18.60%		18.89%

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	December 31,		September 30,		June 30,		March 31,		December 31,
Non-Covered Non-Performing Loans Portfolio Data	2016		2016		2016		2016		2015

Non-covered loans accounted for on a non-accrual basis ($000's):
Commercial and industrial		9,515		19,651		18,412		19,179		17,764
Real estate		13,932		4,817		4,777		7,802		7,160
Construction and land development		755		703		139		102		114
Consumer		244		50		61		1		7
Broker-dealer		—		—		—		—		—
		24,446		25,221		23,389		27,084		25,045

Non-covered non-performing loans as a % of total non-covered loans		0.32%		0.34%		0.33%		0.40%		0.37%

Non-covered other real estate owned ($000's)		4,507		3,063		2,656		543		394

Other repossessed assets ($000's)		1,117		1,654		—		30		—

Non-covered non-performing assets ($000's)		30,070		29,938		26,045		27,657		25,439

Non-covered non-performing assets as a % of total assets		0.24%		0.24%		0.20%		0.24%		0.21%

Non-covered non-PCI loans past due 90 days or more and still accruing ($000's)		47,680		41,824		50,032		51,943		50,776

Troubled debt restructurings included in accruing non-covered loans ($000's)		1,196		1,216		1,235		1,409		1,418


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


Select Energy Statistics
Outstanding energy loan balance ($MM)		166.5		168.8		223.6		233.5		179.8
Energy unfunded commitments ($MM)		121.4		120.7		88.5		102.9		108.7
Energy loans as a % of total loans		3.0%		3.1%		4.2%		4.5%		3.6%
Classified and criticized energy loans ($MM):
Criticized energy loans		0.0		1.8		12.7		13.0		3.4
Performing classified energy loans		23.5		24.2		22.1		33.4		25.7
Non-performing classified energy loans		5.2		13.4		6.7		4.9		3.6
		28.7		39.4		41.5		51.3		32.7

Unimpaired energy reserves ($MM)		10.6		10.0		9.8		9.2		7.3
Energy reserves as a % of energy loans		6.5%		6.7%		4.7%		4.3%		4.4%
Energy NCOs ($MM)		1.5		1.0		0.4		0.2		1.2


Energy Portfolio Breakdown
Exploration and production		11%		13%		10%		13%		19%
Services:
Field services		22%		26%		22%		22%		21%
Pipeline construction		21%		21%		15%		15%		23%
		43%		47%		37%		37%		44%
Midstream:
Distribution		30%		21%		38%		37%		25%
Transportation		9%		11%		9%		7%		7%
		39%		32%		47%		44%		32%
Other:
Wholesalers		1%		1%		1%		1%		2%
Equipment rentals		0%		0%		0%		0%		1%
Equipment wholesalers		6%		7%		5%		5%		2%
Total		100%		100%		100%		100%		100%

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	Three Months Ended December 31,
	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)	$	7,588,895	$	102,046	5.32	%	$	6,641,385	$	94,689	5.63	%
Investment securities - taxable		1,031,667		7,076	2.74	%		1,089,791		7,027	2.57	%
Investment securities - non-taxable (2)		282,027		2,139	3.03	%		251,733		2,369	3.76	%
Federal funds sold and securities purchased under agreements to resell		145,354		40	0.11	%		109,365		68	0.25	%
Interest-bearing deposits in other financial institutions		411,538		500	0.48	%		461,738		352	0.30	%
Other		1,446,216		7,142	1.94	%		2,098,123		12,179	2.27	%
Interest-earning assets, gross		10,905,697		118,943	4.31	%		10,652,135		116,684	4.33	%
Allowance for loan losses		(54,089)						(44,995)
Interest-earning assets, net		10,851,608						10,607,140
Noninterest-earning assets		1,646,800						1,684,642
Total assets	$	12,498,408					$	12,291,782

Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	4,839,376	$	3,971	0.33	%	$	4,657,125	$	3,588	0.31	%
Notes payable and other borrowings		2,767,672		10,240	1.46	%		2,999,487		13,060	1.72	%
Total interest-bearing liabilities		7,607,048		14,211	0.74	%		7,656,612		16,648	0.86	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		2,356,373						2,248,847
Other liabilities		674,297						636,884
Total liabilities		10,637,718						10,542,343
Stockholders’ equity		1,857,830						1,748,632
Noncontrolling interest		2,860						807
Total liabilities and stockholders' equity	$	12,498,408					$	12,291,782

Net interest income (2)			$	104,732					$	100,036
Net interest spread (2)					3.57	%					3.47	%
Net interest margin (2)					3.82	%					3.73	%


	Year Ended December 31,
	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)	$	7,153,769	$	389,637	5.45	%	$	6,550,164	$	390,359	5.96	%
Investment securities - taxable		1,038,838		26,152	2.52	%		1,112,524		26,511	2.38	%
Investment securities - non-taxable (2)		282,780		8,674	3.07	%		250,870		9,629	3.84	%
Federal funds sold and securities purchased under agreements to resell		150,337		155	0.10	%		99,037		120	0.12	%
Interest-bearing deposits in other financial institutions		426,150		2,024	0.47	%		587,742		1,491	0.25	%
Other		1,589,283		31,765	2.00	%		2,189,579		44,729	2.04	%
Interest-earning assets, gross		10,641,157		458,407	4.31	%		10,789,916		472,839	4.38	%
Allowance for loan losses		(51,925)						(42,924)
Interest-earning assets, net		10,589,232						10,746,992
Noninterest-earning assets		1,606,572						1,734,266
Total assets	$	12,195,804					$	12,481,258

Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	4,824,374	$	15,843	0.33	%	$	4,804,077	$	15,523	0.32	%
Notes payable and other borrowings		2,666,438		42,580	1.60	%		3,128,152		45,732	1.46	%
Total interest-bearing liabilities		7,490,812		58,423	0.78	%		7,932,229		61,255	0.77	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		2,241,561						2,187,336
Other liabilities		665,878						647,985
Total liabilities		10,398,251						10,767,550
Stockholders’ equity		1,795,219						1,713,030
Noncontrolling interest		2,334						678
Total liabilities and stockholders' equity	$	12,195,804					$	12,481,258

Net interest income (2)			$	399,984					$	411,584
Net interest spread (2)					3.53	%					3.61	%
Net interest margin (2)					3.76	%					3.81	%

(1)

Average balance includes non-accrual loans.

(2)

Presented on a taxable equivalent basis with taxable equivalent adjustments based on a 35% federal income tax rate. The taxable equivalent adjustments to interest income were $0.6 million and $0.8 million for the three months ended December 31, 2016 and 2015, respectively, and $2.4 million and $3.0 million for the year ended December 31, 2016 and 2015, respectively.

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Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, January 27, 2017. Hilltop Co-CEOs Jeremy B. Ford and Alan B. White and other key management members will review fourth quarter 2016 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, 2016, Hilltop employed approximately 5,400 people and operated approximately 450 locations in 43 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 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. For a discussion of certain factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed 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.

Source: Hilltop Holdings Inc.

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