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

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8-K - 8-K - Hilltop Holdings Inc.	f8-k.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 2018

DALLAS — (BUSINESS WIRE) January 24, 2019 — Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2018. Hilltop produced income to common stockholders of $28.1 million, or $0.30 per diluted share, for the fourth quarter of 2018, compared to $13.4 million, or $0.14 per diluted share, for the fourth quarter of 2017. Income to common stockholders for the full year 2018 was $121.4 million, or $1.28 per diluted share, compared to $132.5 million, or $1.36 per diluted share, for the full year 2017. Hilltop’s financial results include the impact of the enactment of the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”), which significantly contributed to reductions in Hilltop’s effective tax rates during the fourth quarter and full year 2018, compared to the same periods in 2017.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.08 per common share, a 14.3% increase from the prior quarter, payable on February 28, 2019, to all common stockholders of record as of the close of business on February 15, 2019. Additionally, Hilltop paid $59.0 million to repurchase 2,729,568 shares at an average price of $21.61 during 2018 pursuant to its stock repurchase program. As this stock repurchase program expired in January 2019, the Hilltop Board of Directors authorized a new stock repurchase program through January 2020, under which Hilltop may repurchase, in the aggregate, up to $50.0 million of its outstanding common stock. Share repurchase amounts include the repurchase of common shares to offset issuances under the employee compensation plan.

Jeremy Ford, Co-CEO of Hilltop, said, “During 2018, Hilltop made significant progress on a number of key strategic priorities, including the acquisition and integration of The Bank of River Oaks, which continues to outperform our expectations. We also continued to execute on our enhanced capital program in which Hilltop distributed $86 million through a combination of share repurchases and dividends to our shareholders and began executing our platform for growth objectives through the deployment of shared services across the franchise. While our businesses experienced some headwinds throughout the year, we believe our focus on prudent diversified growth, sound capital management and efficient execution positions us well for 2019.”

Alan White, Co-CEO of Hilltop, added, “In 2018, our associates remained intensely focused on serving our clients, growing our businesses and managing risks. PlainsCapital delivered solid loan and deposit growth and improved credit quality versus 2017. The mortgage business remained pressured throughout 2018, but we believe that our client-focused purchase mortgage strategy positions us well to compete in the future as market capacity rationalizes. HilltopSecurities continues to focus on growing its Public Finance business and delivered solid results in its Retail and Clearing businesses during the year. National Lloyds was profitable in 2018 and showed improvement in its expense ratio.”

Fourth Quarter 2018 Highlights for Hilltop:

In October 2018, the Bank and the FDIC entered into a Termination Agreement pursuant to which all rights and obligations under each of the loss-share agreements were resolved and terminated1;

During the fourth quarter of 2018, Hilltop’s merchant bank subsidiary recognized a $5.3 million pre-tax gain from the sale of a $10.0 million investment made in December 2017, and recorded a $2.5 million charge associated with a legacy merchant bank equity investment in conjunction with its periodic fair value assessment;

Hilltop’s annualized return on average assets and return on average equity for the fourth quarter of 2018 were 0.86% and 5.76%, respectively, compared to 0.41% and 2.78%, respectively, for the fourth quarter of 2017;

Hilltop’s book value per common share increased to $20.83 at December 31, 2018, compared to $20.51 at September 30, 2018;

Hilltop’s total assets were $13.7 billion at December 31, 2018, compared to $13.8 billion at September 30, 2018;

Loans2, net of allowance for loan losses, remained stable at $6.3 billion compared to September 30, 2018;

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Non-performing loans decreased to $34.0 million, or 0.41% of combined loans held for sale and investment at December 31, 2018, compared to $42.5 million, or 0.50%, at September 30, 2018;

Loans held for sale decreased by 8.6% from September 30, 2018 to $1.4 billion at December 31, 2018;

Total deposits were $8.5 billion at December 31, 2018, compared to $8.3 billion at September 30, 2018;

Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio3 of 12.53% and a Common Equity Tier 1 Capital Ratio of 16.58% at December 31, 2018;

Hilltop’s net interest margin4 increased to 3.75% for the fourth quarter of 2018, compared to 3.48% in the third quarter of 2018;

The provision (recovery) for loan losses was $6.9 million during the fourth quarter of 2018, compared to ($0.4) million in the third quarter of 2018;

For the fourth quarter of 2018, noninterest income was $238.5 million, compared to $290.5 million in the fourth quarter of 2017, a 17.9% decrease;

For the fourth quarter of 2018, noninterest expense was $310.8 million, compared to $328.7 million in the fourth quarter of 2017, a 5.4% decrease; and

Hilltop’s effective tax rates decreased to 23.2% and 21.8% during the fourth quarter and full year 2018, respectively, compared to 79.0% and 45.3% during the same periods in 2017, and included significant items related to the following:

Reduction of the corporate tax rate in 2018 from 35% to 21% pursuant to the enactment of the Tax Legislation; and

A non-cash, non-recurring charge of $28.4 million in the fourth quarter of 2017 primarily attributable to the revaluation of deferred tax assets as a result of the enactment of the Tax Legislation. Deferred tax asset amounts recorded in December 2017 were final as of September 30, 2018.

1 As a result of the termination of the loss-share agreements, loans which were previously referred to as either “covered loans” if covered by the loss-share agreements or otherwise “non-covered loans” are collectively referred to as loans held for investment within the consolidated balance sheets. In addition, other real estate owned previously covered by the loss-share agreements and the FDIC indemnification asset are included in other assets within the consolidated balance sheets for all periods presented. The presentation of loan-related tables and the calculation of loan-related measures for all periods presented have been modified to reflect this change for purposes of comparability.

2 “Loans” reflect loans held for investment excluding broker-dealer loans, net of allowance for loan losses, of $578.2 million and $593.2 million at December 31, 2018 and September 30, 2018, respectively.

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

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

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Consolidated Financial and Other Information


Consolidated Balance Sheets	December 31,		September 30,		June 30,		March 31,		December 31,
(in 000's)	2018		2018		2018		2018		2017
Cash and due from banks	$	644,073	$	405,682	$	353,432	$	470,127	$	486,977
Federal funds sold		400		468		403		400		405
Assets segregated for regulatory purposes		133,993		220,115		128,417		198,170		186,578
Securities purchased under agreements to resell		61,611		164,656		229,172		244,978		186,537
Securities:
Trading, at fair value		745,466		660,314		634,197		756,151		730,685
Available for sale, at fair value		875,658		874,496		811,218		806,583		744,319
Held to maturity, at amortized cost		351,012		348,163		353,192		356,452		355,849
Equity, at fair value		19,679		21,555		21,218		20,876		21,241
		1,991,815		1,904,528		1,819,825		1,940,062		1,852,094
Loans held for sale		1,393,246		1,524,980		1,953,562		1,409,634		1,715,357
Loans held for investment, net of unearned income		6,930,458		6,940,306		6,545,630		6,387,413		6,455,798
Allowance for loan losses		(59,486)		(60,152)		(61,970)		(63,194)		(63,686)
Loans held for investment, net		6,870,972		6,880,154		6,483,660		6,324,219		6,392,112

Broker-dealer and clearing organization receivables		1,440,287		1,491,507		1,614,951		1,660,720		1,464,378
Premises and equipment, net		237,373		236,172		172,911		173,637		177,577
Other assets		580,362		604,445		648,317		637,802		615,531
Goodwill		291,435		291,435		251,808		251,808		251,808
Other intangible assets, net		38,005		40,394		32,716		34,569		36,432
Total assets	$	13,683,572	$	13,764,536	$	13,689,174	$	13,346,126	$	13,365,786

Deposits:
Non interest-bearing	$	2,560,750	$	2,525,677	$	2,468,332	$	2,565,825	$	2,411,849
Interest-bearing		5,975,406		5,764,556		5,345,290		5,393,897		5,566,270
Total deposits		8,536,156		8,290,233		7,813,622		7,959,722		7,978,119
Broker-dealer and clearing organization payables		1,294,925		1,396,401		1,409,904		1,504,172		1,287,563
Short-term borrowings		1,065,807		1,216,649		1,610,735		1,064,325		1,206,424
Securities sold, not yet purchased, at fair value		81,667		179,582		251,581		255,551		232,821
Notes payable		228,872		220,192		227,736		202,700		208,809
Junior subordinated debentures		67,012		67,012		67,012		67,012		67,012
Other liabilities		435,240		430,309		392,171		367,188		470,231
Total liabilities		11,709,679		11,800,378		11,772,761		11,420,670		11,450,979

Common stock		936		946		946		960		960
Additional paid-in capital		1,489,816		1,504,467		1,502,105		1,526,867		1,526,369
Accumulated other comprehensive loss		(8,627)		(14,722)		(11,846)		(9,698)		(394)
Retained earnings		466,737		448,923		419,683		404,260		384,545
Deferred compensation employee stock trust, net		825		860		857		857		848
Employee stock trust		(217)		(252)		(252)		(254)		(247)
Total Hilltop stockholders' equity		1,949,470		1,940,222		1,911,493		1,922,992		1,912,081
Noncontrolling interests		24,423		23,936		4,920		2,464		2,726
Total stockholders' equity		1,973,893		1,964,158		1,916,413		1,925,456		1,914,807
Total liabilities & stockholders' equity	$	13,683,572	$	13,764,536	$	13,689,174	$	13,346,126	$	13,365,786

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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)	2018		2018		2017		2018		2017
Interest income:
Loans, including fees	$	119,322	$	113,535	$	105,658	$	436,725	$	411,988
Securities borrowed		16,782		16,346		11,994		66,914		41,048
Securities:
Taxable		15,512		11,994		10,824		50,975		36,472
Tax-exempt		1,648		1,717		1,717		6,834		5,807
Other		4,438		4,734		3,472		17,980		11,841
Total interest income		157,702		148,326		133,665		579,428		507,156

Interest expense:
Deposits		14,838		12,353		7,700		46,002		24,695
Securities loaned		13,935		13,984		9,581		56,733		32,337
Short-term borrowings		7,476		7,831		4,118		25,816		13,751
Notes payable		2,627		2,702		2,611		10,263		10,931
Junior subordinated debentures		968		955		787		3,663		3,016
Other		143		160		176		627		678
Total interest expense		39,987		37,985		24,973		143,104		85,408

Net interest income		117,715		110,341		108,692		436,324		421,748
Provision (recovery) for loan losses		6,926		(371)		5,453		5,088		14,271
Net interest income after provision (recovery) for loan losses		110,789		110,712		103,239		431,236		407,477

Noninterest income:
Net gains from sale of loans and other mortgage production income		90,628		116,243		122,132		445,116		538,468
Mortgage loan origination fees		26,615		27,004		23,156		103,563		93,944
Securities commissions and fees		36,984		36,968		40,868		150,989		156,464
Investment and securities advisory fees and commissions		26,260		23,487		36,561		90,066		109,920
Net insurance premiums earned		34,146		34,185		35,645		136,751		142,298
Other		23,883		31,810		32,094		96,305		163,970
Total noninterest income		238,516		269,697		290,456		1,022,790		1,205,064

Noninterest expense:
Employees' compensation and benefits		179,881		205,575		205,642		768,688		816,994
Occupancy and equipment, net		30,512		29,015		29,658		115,207		113,943
Professional services		26,793		27,984		24,220		105,752		101,521
Loss and loss adjustment expenses		20,694		18,712		8,583		79,347		94,701
Other		52,939		54,425		60,567		224,255		242,096
Total noninterest expense		310,819		335,711		328,670		1,293,249		1,369,255

Income before income taxes		38,486		44,698		65,025		160,777		243,286
Income tax expense		8,928		7,600		51,350		35,050		110,142
Net income		29,558		37,098		13,675		125,727		133,144
Less: Net income attributable to noncontrolling interest		1,443		1,293		247		4,286		600
Income attributable to Hilltop	$	28,115	$	35,805	$	13,428	$	121,441	$	132,544

Earnings per common share:
Basic	$	0.30	$	0.38	$	0.14	$	1.28	$	1.36
Diluted	$	0.30	$	0.38	$	0.14	$	1.28	$	1.36

Cash dividends declared per common share	$	0.07	$	0.07	$	0.06	$	0.28	$	0.24

Weighted average shares outstanding:
Basic		94,092		94,554		95,903		94,969		97,137
Diluted		94,130		94,610		96,080		95,067		97,353


	Three Months Ended December 31, 2018
Segment Results					Mortgage						All Other and		Hilltop
(in 000's)	Banking		Broker-Dealer		Origination		Insurance		Corporate		Eliminations		Consolidated
Net interest income (expense)	$	101,216	$	13,005	$	(523)	$	712	$	(1,328)	$	4,633	$	117,715
Provision for loan losses		6,850		76		—		—		—		—		6,926
Noninterest income		11,400		76,745		117,598		34,278		3,646		(5,151)		238,516
Noninterest expense		63,951		78,785		119,738		35,389		13,229		(273)		310,819
Income (loss) before income taxes	$	41,815	$	10,889	$	(2,663)	$	(399)	$	(10,911)	$	(245)	$	38,486


	Year Ended December 31, 2018
					Mortgage						All Other and		Hilltop
(in 000's)	Banking		Broker-Dealer		Origination		Insurance		Corporate		Eliminations		Consolidated
Net interest income (expense)	$	370,732	$	50,878	$	1,485	$	3,025	$	(9,176)	$	19,380	$	436,324
Provision (recovery) for loan losses		5,319		(231)		—		—		—		—		5,088
Noninterest income		43,588		301,714		551,860		142,565		4,893		(21,830)		1,022,790
Noninterest expense		256,577		320,241		540,474		139,921		36,628		(592)		1,293,249
Income (loss) before income taxes	$	152,424	$	32,582	$	12,871	$	5,669	$	(40,911)	$	(1,858)	$	160,777

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	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
Selected Financial Data	2018		2018		2017		2018		2017

Hilltop Consolidated:
Return on average stockholders' equity (1)		5.76%		7.41%		2.78%		6.33%		7.00%
Return on average assets (1)		0.86%		1.07%		0.41%		0.93%		1.03%
Net interest margin (2)		3.75%		3.48%		3.57%		3.55%		3.61%
Net interest margin (taxable equivalent) (3):
As reported		3.76%		3.49%		3.59%		3.56%		3.63%
Impact of purchase accounting		43 bps		28 bps		43 bps		34 bps		53 bps
Book value per common share ($)		20.83		20.51		19.92		20.83		19.92
Shares outstanding, end of period (000's)		93,610		94,594		95,982		93,610		95,982
Dividend payout ratio (1) (4)		23.43%		18.48%		42.86%		21.90%		17.59%

Banking Segment:
Net interest margin (2)		4.50%		4.13%		4.23%		4.23%		4.31%
Net interest margin (taxable equivalent) (3):
As reported		4.51%		4.14%		4.24%		4.24%		4.33%
Impact of purchase accounting		61 bps		39 bps		60 bps		48 bps		72 bps
Accretion of discount on loans ($000's)		12,737		8,147		12,642		39,094		58,445
Net charge-offs ($000's)		7,592		1,447		2,687		9,288		5,184
Return on average assets (1)		1.31%		1.19%		-0.08%		1.23%		0.85%
Fee income ratio		10.12%		10.69%		10.22%		10.52%		14.05%
Efficiency ratio		56.79%		63.71%		60.18%		61.93%		58.24%
Employees' compensation and benefits ($000's)		31,955		36,878		31,159		132,086		125,271

Broker-Dealer Segment:
Net revenue ($000's) (5)		89,750		95,266		114,326		352,592		412,156
Employees' compensation and benefits ($000's)		54,249		59,535		70,169		218,467		250,614
Variable compensation expense ($000's)		31,744		33,574		41,239		115,948		143,688
Compensation as a % of net revenue		60.4%		62.5%		61.4%		62.0%		60.8%
Pre-tax margin		12.13%		10.42%		16.73%		9.24%		15.68%

Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases		2,586,677		3,237,444		2,870,864		11,798,804		11,974,571
Refinancings		384,990		416,201		732,129		1,893,680		2,483,342
Total mortgage loan originations - volume		2,971,667		3,653,645		3,602,993		13,692,484		14,457,913
Mortgage loan sales - volume ($000's)		3,008,793		4,015,051		3,791,638		13,735,885		14,454,260
Net gains from mortgage loan sales (basis points)		334		330		380		328		371
Mortgage servicing rights asset ($000's) (6)		66,102		68,804		54,714		66,102		54,714
Employees' compensation and benefits ($000's)		84,334		102,025		96,257		389,131		412,537
Variable compensation expense ($000's) (7)		44,529		58,686		57,434		216,038		236,676

Insurance Segment:
Loss and LAE ratio		60.6%		54.7%		24.1%		58.0%		66.6%
Expense ratio		37.9%		38.8%		41.0%		39.0%		39.9%
Combined ratio		98.5%		93.5%		65.1%		97.0%		106.5%
Employees' compensation and benefits ($000's)		2,670		2,595		3,418		11,474		11,562

(1)

Noted measures during the three months ended December 31, 2017, include non-cash, non-recurring charges to Hilltop Consolidated and Banking Segment results of $28.4 million and $25.7 million, respectively, primarily attributable to the revaluation of deferred tax assets as a result of the enactment of the Tax Legislation. Deferred tax asset amounts recorded in December 2017 were final as of September 30, 2018.

(2)

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

(3)

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 the 2018 periods presented and 35% federal income tax rate for 2017 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. For the periods presented, the taxable equivalent adjustments to interest income for Hilltop Consolidated were $0.3 million, $0.2 million, $0.2 million, $1.8 million, and $2.2 million, respectively, and for the Banking Segment were $0.2 million, $0.2 million, $0.2 million, $0.8 million, and $1.6 million, respectively.

(4)

Dividend payout ratio is defined as cash dividends declared per common share divided by basic earnings per common share.

(5)

Net revenue is defined as the sum of total broker-dealer net interest income plus total broker-dealer noninterest income.

(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.

(7)

Noted measure during the three months and year ended December 31, 2017, reflect certain category reclassifications that affect variable compensation expense to conform with the current period presentation.

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	December 31,		September 30,		June 30,		March 31,		December 31,
Capital Ratios	2018		2018		2018		2018		2017
Tier 1 capital (to average assets):
PlainsCapital		12.47%		11.86%		12.80%		13.01%		12.32%
Hilltop		12.53%		12.40%		12.90%		13.26%		12.94%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital		13.90%		13.88%		14.59%		15.39%		14.47%
Hilltop		16.58%		16.95%		17.61%		18.60%		17.71%
Tier 1 capital (to risk-weighted assets):
PlainsCapital		13.90%		13.88%		14.59%		15.39%		14.47%
Hilltop		17.04%		17.42%		18.10%		19.11%		18.24%
Total capital (to risk-weighted assets):
PlainsCapital		14.63%		14.63%		15.38%		16.25%		15.29%
Hilltop		17.47%		17.87%		18.58%		19.63%		18.78%


	December 31,		September 30,		June 30,		March 31,		December 31,
Non-Performing Loans Portfolio Data	2018		2018		2018		2018		2017
Loans accounted for on a non-accrual basis ($000's):
Commercial real estate		5,324		7,506		14,256		13,674		14,620
Commercial and industrial		14,870		21,323		22,815		20,768		20,878
Construction and land development		3,278		3,402		569		595		611
1-4 family residential		10,437		4,476		4,273		4,297		4,358
Mortgage warehouse		—		—		—		—		—
Consumer		41		45		49		52		56
Broker-dealer		—		—		—		—		—
Covered		—		5,777		5,277		5,849		5,104
		33,950		42,529		47,239		45,235		45,627

Non-performing loans as a % of total loans		0.41%		0.50%		0.56%		0.58%		0.56%

Other real estate owned ($000's)		27,578		32,518		37,824		38,354		40,627

Other repossessed assets ($000's)		68		99		168		246		323

Non-performing assets ($000's)		61,596		75,146		85,231		83,835		86,577

Non-performing assets as a % of total assets		0.45%		0.55%		0.62%		0.63%		0.65%

Non-PCI loans past due 90 days or more and still accruing ($000's)		83,131		80,664		74,060		77,590		85,396

Troubled debt restructurings included in accruing loans held for investment ($000's)		1,339		1,362		1,389		1,404		1,433


	Three Months Ended December 31,
	2018						2017
	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	$	1,286,668	$	15,273	4.75	%	$	1,548,744	$	16,132	4.17	%
Loans held for investment, gross (1)		6,946,355		104,049	5.90	%		6,347,212		89,526	5.56	%
Investment securities - taxable		1,820,088		15,482	3.40	%		1,564,445		10,799	2.76	%
Investment securities - non-taxable (2)		229,533		1,861	3.24	%		257,779		2,323	3.60	%
Federal funds sold and securities purchased under agreements to resell		136,492		535	1.55	%		156,691		320	0.81	%
Interest-bearing deposits in other financial institutions		410,942		2,400	2.32	%		589,594		1,952	1.31	%
Securities borrowed		1,537,619		16,782	4.27	%		1,524,086		11,994	3.08	%
Other		68,646		1,514	8.77	%		82,471		1,225	5.91	%
Interest-earning assets, gross (2)		12,436,343		157,896	5.01	%		12,071,022		134,271	4.39	%
Allowance for loan losses		(59,912)						(61,674)
Interest-earning assets, net		12,376,431						12,009,348
Noninterest-earning assets		1,338,890						1,315,530
Total assets	$	13,715,321					$	13,324,878

Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	5,800,152	$	14,838	1.01	%	$	5,446,430	$	7,700	0.56	%
Securities loaned		1,419,680		13,935	3.89	%		1,365,153		9,581	2.78	%
Notes payable and other borrowings		1,401,984		11,214	3.17	%		1,516,192		7,692	2.01	%
Total interest-bearing liabilities		8,621,816		39,987	1.84	%		8,327,775		24,973	1.19	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		2,565,607						2,438,605
Other liabilities		565,897						641,302
Total liabilities		11,753,320						11,407,682
Stockholders’ equity		1,939,010						1,915,184
Noncontrolling interest		22,991						2,012
Total liabilities and stockholders' equity	$	13,715,321					$	13,324,878

Net interest income (2)			$	117,909					$	109,298
Net interest spread (2)					3.17	%					3.21	%
Net interest margin (2)					3.76	%					3.59	%

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	Year Ended December 31,
	2018						2017
	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	$	1,472,772	$	68,536	4.65	%	$	1,541,000	$	64,344	4.18	%
Loans held for investment, gross (1)		6,601,453		368,189	5.58	%		6,177,933		347,644	5.63	%
Investment securities - taxable		1,680,976		50,860	3.03	%		1,399,379		36,378	2.60	%
Investment securities - non-taxable (2)		247,651		7,752	3.13	%		234,741		8,012	3.41	%
Federal funds sold and securities purchased under agreements to resell		189,183		2,831	1.50	%		140,337		923	0.66	%
Interest-bearing deposits in other financial institutions		459,628		8,683	1.89	%		572,829		6,114	1.07	%
Securities borrowed		1,542,539		66,914	4.34	%		1,518,041		41,048	2.70	%
Other		74,684		6,535	8.75	%		85,550		4,897	5.72	%
Interest-earning assets, gross (2)		12,268,886		580,300	4.73	%		11,669,810		509,360	4.36	%
Allowance for loan losses		(62,681)						(59,153)
Interest-earning assets, net		12,206,205						11,610,657
Noninterest-earning assets		1,288,718						1,345,174
Total assets	$	13,494,923					$	12,955,831

Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	5,568,473	$	46,002	0.83	%	$	5,220,359	$	24,695	0.47	%
Securities loaned		1,395,947		56,733	4.06	%		1,378,748		32,337	2.35	%
Notes payable and other borrowings		1,477,966		40,369	2.73	%		1,515,874		28,376	1.87	%
Total interest-bearing liabilities		8,442,386		86,371	1.70	%		8,114,981		85,408	1.05	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		2,504,599						2,309,776
Other liabilities		617,227						634,630
Total liabilities		11,564,212						11,059,387
Stockholders’ equity		1,919,940						1,894,009
Noncontrolling interest		10,771						2,435
Total liabilities and stockholders' equity	$	13,494,923					$	12,955,831

Net interest income (2)			$	493,929					$	423,952
Net interest spread (2)					3.03	%					3.31	%
Net interest margin (2)					3.56	%					3.63	%

(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 rate for 2018 periods presented and 35% for 2017 periods presented. The adjustment to interest income was $0.3 million and $0.6 million for the three months ended December 31, 2018 and 2017, respectively, and $1.8 million and $2.2 million for the year ended December 31, 2018 and 2017, 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 25, 2019. Hilltop Co-CEOs Jeremy B. Ford and Alan B. White and other key management members will review fourth quarter 2018 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, 2018, Hilltop employed approximately 5,200 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.

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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 plans, objectives, strategies, expectations, intentions, expected tax impacts, strategic acquisitions 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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