Hilltop Holdings Inc. Announces Financial Results for First Quarter 2016

DALLAS--(BUSINESS WIRE)--

Hilltop Holdings Inc. HTH ("Hilltop") today announced financial results for the first quarter of 2016. Hilltop produced income to common stockholders of $27.6 million, or $0.28 per diluted share, for the first quarter of 2016, compared to $111.9 million, or $1.11 per diluted share, for the first quarter of 2015. This year-over-year change in income to common stockholders included the recognition of a bargain purchase gain related to the acquisition of SWS ("SWS Merger") of $81.3 million, or $0.81 per diluted share, during the first quarter of 2015. Hilltop's annualized return on average assets and return on average equity for the first quarter of 2016 were 0.96% and 6.32%, respectively, compared to 3.64% and 26.76% for the first quarter of 2015, respectively.

Jeremy Ford, CEO of Hilltop, said "We are pleased to report solid financial results for the first quarter of 2016. PlainsCapital Bank continues to generate capital driven by consistent loan growth, stable credit quality and a low-cost deposit franchise. With sound underlying fundamentals, the Bank remains well-positioned to serve its customers and gain market share in the current market environment. PrimeLending delivered impressive mortgage origination growth during the quarter. With its primary focus on purchase business, PrimeLending has maintained a durable market position. National Lloyds offset unseasonably early spring storms in Texas with a slight increase in net premiums earned and a reduced expense ratio to deliver another profitable quarter to start the year."

Mr. Ford continued, "HilltopSecurities successfully merged the broker-dealers into one entity in January 2016 and, adjusting for transaction and integration related costs, has steadily improved its pre-tax margin over the last five quarters."

First Quarter 2016 Highlights for Hilltop:

• Hilltop's total assets were $11.7 billion at March 31, 2016, compared to $11.9 billion at December 31, 2015;
• Hilltop's common equity increased by $21.7 million from December 31, 2015 to $1.8 billion at March 31, 2016;
• Non-covered loans¹ held for investment, net of allowance for loan losses, increased by 2.8% to $5.3 billion and covered loans¹, net of allowance for loan losses, decreased by 8.6% to $346.2 million from December 31, 2015 to March 31, 2016;
• Total deposits were $7.0 billion at March 31, 2016 and December 31, 2015;
• Hilltop was well-capitalized with a Tier 1 Leverage Ratio² of 13.35% and Total Capital Ratio of 18.60% at March 31, 2016;
• Hilltop's taxable equivalent net interest margin³ was 3.70% for the first quarter of 2016, a three basis point decrease from 3.73% in the fourth quarter of 2015;
• The provision for loan losses was $3.4 million during the first quarter of 2016, compared to $4.3 million in the fourth quarter of 2015;
• For the first quarter of 2016, noninterest income was $277.7 million, compared to $352.8 million in the first quarter of 2015 and $271.6 million without the bargain purchase gain of $81.3 million noted above, a 2.3% increase;
• For the first quarter of 2016, noninterest expense was $325.2 million, compared to $314.5 million in the first quarter of 2015, a 3.4% increase;
• Noninterest expense during the first quarter of 2016 included a downward valuation adjustment associated with a significant covered other real estate owned property of $7.9 million; and
• In connection with the SWS Merger, during the first quarter of 2016, Hilltop incurred $4.8 million in pre-tax transaction and integration costs, consisting of $4.0 million in the broker-dealer segment and $0.8 million within corporate.

¹ "Covered loans" refers 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 first quarter of 2016, excluding goodwill and intangible assets.

³ Taxable equivalent adjustments are based on a 35% tax rate. Measure is defined as taxable equivalent net interest income divided by average interest-earning assets.

Consolidated Financial and Other Information
Consolidated Balance Sheets				March 31,					December 31,					September 30,					June 30,					March 31,
(in 000's)				2016					2015					2015					2015					2015
Cash and due from banks				$	512,103				$	652,036				$	526,692				$	583,043				$	694,108
Federal funds sold					15,406					17,409					24,861					22,814					14,425
Securities purchased under agreements to resell					96,646					105,660					83,889					79,153					67,227
Assets segregated for regulatory purposes					120,714					158,613					228,251					188,094					278,280
Securities:
Trading, at fair value					368,425					214,146					292,418					265,429					320,153
Available for sale, at fair value					666,328					673,706					726,132					763,463					859,212
Held to maturity, at amortized cost					310,478					332,022					305,316					312,960					183,792
					1,345,231					1,219,874					1,323,866					1,341,852					1,363,157
Loans held for sale					1,344,333					1,533,678					1,354,107					1,397,617					1,215,308
Non-covered loans, net of unearned income					5,366,065					5,220,040					4,999,529					4,956,969					4,834,687
Allowance for non-covered loan losses					(48,450	)				(45,415	)				(42,989	)				(40,484	)				(39,365	)
Non-covered loans, net					5,317,615					5,174,625					4,956,540					4,916,485					4,795,322
Covered loans, net of allowance for covered loan losses					346,169					378,762					420,547					493,299					550,626
Broker-dealer and clearing organization receivables					1,370,622					1,362,499					2,111,864					2,070,598					2,221,756
Premises and equipment, net					198,414					200,618					204,273					206,411					215,684
FDIC indemnification asset					80,522					91,648					92,902					102,381					107,567
Covered other real estate owned					78,890					99,090					106,024					125,510					137,703
Other assets					601,181					565,813					644,916					637,747					585,909
Goodwill					251,808					251,808					251,808					251,808					251,808
Other intangible assets, net					52,274					54,868					58,916					61,527					64,267
Total assets				$	11,731,928				$	11,867,001				$	12,389,456				$	12,478,339				$	12,563,147
Deposits:
Non-interest bearing				$	2,233,608				$	2,235,436				$	2,173,890				$	2,135,988				$	2,259,790
Interest bearing					4,750,567					4,717,247					4,646,859					4,660,449					4,869,487
Total deposits					6,984,175					6,952,683					6,820,749					6,796,437					7,129,277
Broker-dealer and clearing organization payables					1,284,016					1,338,305					2,045,604					2,048,585					1,951,495
Short-term borrowings					832,921					947,373					910,490					1,100,025					999,476
Securities sold, not yet purchased, at fair value					165,704					130,044					156,775					135,592					139,481
Notes payable					232,190					238,716					243,556					245,420					108,682
Junior subordinated debentures					67,012					67,012					67,012					67,012					67,012
Other liabilities					405,899					454,743					428,442					410,004					386,932
Total liabilities					9,971,917					10,128,876					10,672,628					10,803,075					10,782,355
Preferred stock					—					—					—					—					114,068
Common stock					986					989					989					995					1,003
Additional paid-in capital					1,567,150					1,577,270					1,574,769					1,582,655					1,592,585
Accumulated other comprehensive income (loss)					6,878					2,629					4,592					(1,105	)				5,750
Retained earnings					183,042					155,475					134,748					91,008					65,918
Deferred compensation employee stock trust, net					1,020					1,034					1,182					1,182					1,189
Employee stock trust					(428	)				(443	)				(590	)				(590	)				(597	)
Total Hilltop stockholders' equity					1,758,648					1,736,954					1,715,690					1,674,145					1,779,916
Noncontrolling interests					1,363					1,171					1,138					1,119					876
Total stockholders' equity					1,760,011					1,738,125					1,716,828					1,675,264					1,780,792
Total liabilities & stockholders' equity				$	11,731,928				$	11,867,001				$	12,389,456				$	12,478,339				$	12,563,147

				Three Months Ended
Consolidated Income Statements				March 31,				December 31,				September 30,				June 30,				March 31,
(in 000's, except per share data)				2016				2015				2015				2015				2015
Interest income:
Loans, including fees				$	91,551			$	94,689			$	111,315			$	96,967			$	87,388
Securities borrowed					7,589				11,242				10,116				9,675				10,018
Securities:
Taxable					6,367				7,046				6,262				6,227				7,049
Tax-exempt					1,637				1,647				1,683				1,557				1,741
Other					1,009				1,338				1,169				1,236				1,473
Total interest income					108,153				115,962				130,545				115,662				107,669
Interest expense:
Deposits					4,102				3,589				3,719				3,900				4,315
Securities loaned					5,987				8,388				7,110				6,889				7,506
Short-term borrowings					1,120				1,218				1,189				1,143				1,024
Notes payable					2,582				2,661				2,524				2,289				669
Junior subordinated debentures					645				616				605				595				585
Other					176				177				187				179				178
Total interest expense					14,612				16,649				15,334				14,995				14,277
Net interest income					93,541				99,313				115,211				100,667				93,392
Provision for loan losses					3,407				4,277				5,593				158				2,687
Net interest income after provision for loan losses					90,134				95,036				109,618				100,509				90,705
Noninterest income:
Net realized gains on securities					46				—				—				—				4,403
Net gains from sale of loans and other mortgage production income					127,297				114,080				137,303				147,175				120,545
Mortgage loan origination fees					18,813				19,514				22,647				20,958				14,589
Net insurance premiums earned					39,733				41,001				41,196				40,318				39,567
Securities commissions and fees					38,752				37,459				39,070				41,213				42,918
Investment and securities advisory fees and commissions					23,819				33,678				27,667				29,665				24,922
Bargain purchase gain					—				—				—				—				81,289
Other					29,226				31,195				28,586				22,071				24,613
Total noninterest income					277,686				276,927				296,469				301,400				352,846
Noninterest expense:
Employees' compensation and benefits					182,655				182,472				200,620				200,291				182,504
Loss and loss adjustment expenses					21,959				21,630				17,335				41,241				18,860
Policy acquisition and other underwriting expenses					11,252				11,928				11,784				11,740				11,674
Occupancy and equipment, net					27,791				30,285				29,341				30,842				29,185
Other					81,544				92,406				74,422				69,203				72,253
Total noninterest expense					325,201				338,721				333,502				353,317				314,476
Income before income taxes					42,619				33,242				72,585				48,592				129,075
Income tax expense					14,423				12,020				25,338				18,137				15,420
Net income					28,196				21,222				47,247				30,455				113,655
Less: Net income attributable to noncontrolling interest					629				495				353				405				353
Income attributable to Hilltop					27,567				20,727				46,894				30,050				113,302
Dividends on preferred stock					—				—				—				428				1,426
Income applicable to Hilltop common stockholders				$	27,567			$	20,727			$	46,894			$	29,622			$	111,876
Earnings per common share:
Basic				$	0.28			$	0.21			$	0.47			$	0.30			$	1.12
Diluted				$	0.28			$	0.21			$	0.47			$	0.30			$	1.11
Weighted average shares outstanding:
Basic					98,153				98,412				98,676				99,486				99,741
Diluted					98,669				99,266				99,556				100,410				100,627

				Three Months Ended March 31, 2016
Segment Results													Mortgage														All Other and					Hilltop
(in 000's)				Banking				Broker-Dealer					Origination					Insurance				Corporate					Eliminations					Consolidated
Net interest income (expense)				$	86,105			$	7,051				$	(2,569	)			$	740			$	(1,714	)			$	3,928				$	93,541
Provision for loan losses					3,500				(93	)				—					—				—					—					3,407
Noninterest income					12,956				80,883					146,338					41,804				1					(4,296	)				277,686
Noninterest expense					64,357				84,261					134,671					36,375				5,849					(312	)				325,201
Income (loss) before income taxes				$	31,204			$	3,766				$	9,098				$	6,169			$	(7,562	)			$	(56	)			$	42,619

				Three Months Ended
				March 31,				December 31,				September 30,				June 30,				March 31,
Selected Financial Data				2016				2015				2015				2015				2015
Hilltop Consolidated:
Return on average stockholders' equity				6.32	%			4.70	%			10.97	%			7.12	%			26.76	%
Return on average assets				0.96	%			0.68	%			1.49	%			0.97	%			3.64	%
Net interest margin (taxable equivalent)(1):
As reported				3.70	%			3.73	%			4.20	%			3.75	%			3.53	%
Impact of purchase accounting				74 bps				79 bps				137 bps				96 bps				69 bps
Book value per common share ($)				17.84				17.56				17.35				16.82				16.61
Shares outstanding, end of period (000's)				98,585				98,896				98,893				99,515				100,286
Banking Segment:
Net interest margin (taxable equivalent)(1):
As reported				4.73	%			4.92	%			5.79	%			5.02	%			4.59	%
Impact of purchase accounting				103 bps				119 bps				210 bps				145 bps				109 bps
Accretion of discount on loans ($000's)				16,631				19,503				36,000				23,632				16,984
Non-covered net charge-offs (recoveries) ($000's)				650				2,088				1,775				(532	)			470
Return on average assets				0.98	%			1.07	%			1.64	%			1.41	%			1.28	%
Fee income ratio				13.08	%			13.83	%			11.64	%			14.20	%			18.79	%
Efficiency ratio				64.97	%			62.78	%			50.56	%			57.14	%			56.96	%
Employees' compensation and benefits ($000's)				29,125				27,456				29,881				30,689				32,624
Broker-Dealer Segment:
Employees' compensation and benefits ($000's)				57,816				62,868				64,099				64,304				64,358
Compensation as a % of net revenue				65.7	%			63.2	%			69.6	%			72.8	%			73.5	%
Pre-tax margin (2)				8.78	%			8.62	%			3.85	%			3.54	%			-0.36	%
Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases				2,050,825				2,344,328				2,945,626				2,913,479				1,688,359
Refinancings				878,291				721,308				693,572				920,286				1,125,161
Total mortgage loan originations - volume				2,929,116				3,065,636				3,639,198				3,833,765				2,813,520
Mortgage loan sales - volume ($000's)				3,117,605				2,888,903				3,699,047				3,635,853				2,905,266
Mortgage servicing rights asset ($000's) (3)				39,863				52,285				47,527				44,985				31,648
Employees' compensation and benefits ($000's)				90,690				87,387				101,490				101,220				80,546
Variable compensation expense ($000's)				51,689				48,706				64,582				67,172				48,130
Insurance Segment:
Loss and LAE ratio				55.3	%			52.8	%			42.1	%			102.3	%			47.7	%
Expense ratio				33.2	%			34.2	%			33.3	%			33.5	%			34.1	%
Combined ratio				88.5	%			87.0	%			75.4	%			135.8	%			81.8	%
Employees' compensation and benefits ($000's)				2,178				2,180				2,182				2,065				1,999

(1) Taxable equivalent adjustments are based on a 35% tax rate. Measure is defined as taxable equivalent net interest income divided by average interest-earning assets.

(2) Excludes pre-tax merger and integration-related costs directly attributable to the SWS Merger.

(3) Excludes mortgage servicing rights assets related to loans serviced for the banking segment.

				March 31,				December 31,				September 30,				June 30,				March 31,
Capital Ratios				2016				2015				2015				2015				2015
Tier 1 capital (to average assets):
Bank				12.70	%			13.22	%			12.77	%			12.17	%			11.34	%
Hilltop				13.35	%			12.65	%			12.01	%			11.87	%			12.68	%
Common equity Tier 1 capital (to risk-weighted assets):
Bank				15.10	%			16.23	%			17.36	%			16.46	%			16.46	%
Hilltop				17.56	%			17.87	%			18.36	%			18.02	%			18.05	%
Tier 1 capital (to risk-weighted assets):
Bank				15.12	%			16.25	%			17.36	%			16.46	%			16.46	%
Hilltop				18.17	%			18.48	%			18.89	%			18.74	%			20.26	%
Total capital (to risk-weighted assets):
Bank				15.87	%			16.99	%			18.13	%			17.17	%			17.19	%
Hilltop				18.60	%			18.89	%			19.29	%			19.29	%			20.82	%

				March 31,				December 31,				September 30,				June 30,				March 31,
Non-Covered Non-Performing Loans Portfolio Data				2016				2015				2015				2015				2015
Non-covered loans accounted for on a non-accrual basis ($000's):
Commercial and industrial				19,179				17,764				22,302				23,353				23,222
Real estate				7,802				7,160				7,087				6,612				2,481
Construction and land development				102				114				118				253				726
Consumer				1				7				14				21				—
Broker-dealer				—				—				—				—				—
				27,084				25,045				29,521				30,239				26,429
Non-covered non-performing loans as a % of total non-covered loans				0.40	%			0.37	%			0.46	%			0.48	%			0.44	%
Non-covered other real estate owned ($000's)				543				394				511				920				6,263
Other repossessed assets ($000's)				30				—				—				—				87
Non-covered non-performing assets ($000's)				27,657				25,439				30,032				31,159				32,779
Non-covered non-performing assets as a percentage of total assets				0.24	%			0.21	%			0.24	%			0.25	%			0.26	%
Non-covered non-PCI loans past due 90 days or more and still accruing ($000's)				51,943				50,776				37,435				31,073				24,248
Troubled debt restructurings included in accruing non-covered loans ($000's)				1,409				1,418				3,664				2,830				2,879

				Three Months Ended March 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)				$	6,733,697				$	91,551			5.41	%			$	6,354,615				$	87,388			5.50	%
Investment securities - taxable					1,044,705					6,348			2.44	%				1,164,030					7,049			2.80	%
Investment securities - non-taxable (2)					261,656					2,327			3.56	%				264,123					2,525			3.84	%
Federal funds sold and securities purchased under agreements to resell					125,308					26			0.08	%				70,449					17			0.10	%
Interest-bearing deposits in other financial institutions					428,082					474			0.45	%				872,032					574			0.27	%
Other					1,610,483					8,119			2.00	%				2,088,380					10,901			2.11	%
Interest-earning assets, gross					10,203,931					108,845			4.24	%				10,813,629					108,454			4.06	%
Allowance for loan losses					(48,851	)												(41,424	)
Interest-earning assets, net					10,155,080													10,772,205
Noninterest-earning assets					1,596,627													1,796,232
Total assets				$	11,751,707												$	12,568,437
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits				$	4,784,004				$	4,102			0.34	%			$	5,104,544				$	4,315			0.34	%
Notes payable and other borrowings					2,444,807					10,510			1.72	%				2,877,686					9,962			1.40	%
Total interest-bearing liabilities					7,228,811					14,612			0.81	%				7,982,230					14,277			0.72	%
Noninterest-bearing liabilities
Noninterest-bearing deposits					2,153,901													2,152,610
Other liabilities					624,971													725,469
Total liabilities					10,007,683													10,860,309
Stockholders' equity					1,743,209													1,707,624
Noncontrolling interest					815													504
Total liabilities and stockholders' equity				$	11,751,707												$	12,568,437
Net interest income (2)									$	94,233												$	94,177
Net interest spread (2)													3.43	%												3.34	%
Net interest margin (2)													3.70	%												3.53	%

(1) Average balance includes non-accrual loans.

(2) Annualized taxable equivalent adjustments are based on a 35% tax rate. The adjustment to interest income was $0.7 million and $0.8 million for the three months ended March 31, 2016 and 2015, respectively.

				March 31,				December 31,				September 30,
PlainsCapital Bank - Energy Exposure				2016				2015				2015
Select Energy Statistics
Outstanding energy loan balance ($M)				233.5				179.8				194.9
Energy unfunded commitments ($M)				102.9				108.7				110.0
Energy loans as a % of total loans				4.5	%			3.6	%			4.0	%
Classified and criticized energy loans ($M):
Criticized energy loans				13.0				3.4				0.0
Performing classified energy loans				33.4				25.7				27.0
Non-performing classified energy loans				4.9				3.6				2.8
				51.3				32.7				29.8
Unimpaired energy reserves ($M)				9.2				7.3				6.5
Energy reserves as a % of energy loans				4.3	%			4.4	%			3.4	%
Energy NCOs ($M)				0.2				1.2				1.1
Energy Portfolio Breakdown
Exploration and production				13	%			19	%			20	%
Services:
Field services				22	%			21	%			15	%
Pipeline construction				15	%			23	%			25	%
				37	%			44	%			40	%
Midstream:
Distribution				37	%			25	%			25	%
Transportation				7	%			7	%			7	%
				44	%			32	%			32	%
Other:
Wholesalers				1	%			2	%			2	%
Equipment rentals				0	%			1	%			5	%
Equipment wholesalers				5	%			2	%			1	%
Total				100	%			100	%			100	%

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, April 29, 2016. Hilltop President and CEO Jeremy B. Ford and other key management members will discuss results for the first 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 March 31, 2016, Hilltop employed approximately 5,300 people and operated approximately 400 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, and the collectability of loans and 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.

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