Market Overview

Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2017

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Hilltop Holdings Inc. (NYSE:HTH) ("Hilltop") today announced financial
results for the fourth quarter and full year of 2017. Hilltop produced
income of $13.4 million, or $0.14 per diluted share, for the fourth
quarter of 2017, compared to $35.3 million, or $0.36 per diluted share,
for the fourth quarter of 2016. Income to common stockholders for the
full year 2017 was $132.5 million, or $1.36 per diluted share, compared
to $145.9 million, or $1.48 per diluted share, for the full year 2016.

Hilltop's results during the fourth quarter and full year of 2017
include the estimated impact of a non-recurring, non-cash charge1
of $28.4 million primarily attributable to the revaluation of deferred
tax assets as a result of the enactment of the Tax Cuts and Jobs Act
("Tax Legislation"). Our results during the full year of 2017 were also
impacted by losses from Hurricanes Harvey and Irma of $8.2 million, as
well as increases to other noninterest income of $15.0 million from
coverage provided by an insurance policy for forgery of a document
delivered in connection with a single, large loan charged off by the
Bank in 2016 and $11.6 million from the resolution of the appraisal
proceedings from the SWS merger, both of which occurred during the
second quarter of 2017. The results for the fourth quarter and full year
of 2016 included a specific legal reserve of $16.0 million related to
one matter involving HilltopSecurities. The results for the full year of
2016 also included a $24.5 million charge-off of the previously
discussed loan by the Bank.

Hilltop also announced that its Board of Directors declared a quarterly
cash dividend of $0.07 per common share, a 16.7% increase from prior
quarter, payable on February 28, 2018, to all common stockholders of
record as of the close of business on February 15, 2018. Furthermore,
the Hilltop Board of Directors authorized a new stock repurchase program
through January 2019, 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, "Hilltop's fourth quarter earnings
reflect solid performance across our businesses, particularly from our
insurance segment. We remain focused on profitable growth, efficiency
improvements and sound capital management. Importantly, in 2017 Hilltop
returned $50.5 million of capital to shareholders through dividends and
share repurchases."

Alan White, Co-CEO of Hilltop, added, "Hilltop's operating companies
continued to thrive from a shared commitment to our clients and
communities. During this quarter, PlainsCapital Bank was able to grow
core deposits and commercial loans, PrimeLending was able to increase
mortgage market share, and HilltopSecurities was able to build on its
earnings and margin momentum."

Fourth Quarter 2017 Highlights for Hilltop:

  • Hilltop's annualized return on average assets1 and return
    on average equity1 for the fourth quarter of 2017 were
    0.41% and 2.78%, respectively, compared to 1.13% and 7.56%,
    respectively, for the fourth quarter of 2016;
  • Hilltop's total assets were $13.4 billion at December 31, 2017,
    compared to $13.5 billion at September 30, 2017;
  • Hilltop's common equity increased by $5.9 million from September 30,
    2017 to $1.9 billion at December 31, 2017;
  • Non-covered loans2 held for investment, net of allowance
    for loan losses, increased by 2.0% to $6.2 billion and covered loans2,
    net of allowance for loan losses, decreased by 4.7% to $179.4 million
    at December 31, 2017 compared to September 30, 2017;
  • Non-covered non-performing loans increased to $40.5 million, or 0.51%
    of total non-covered loans, at December 31, 2017, compared to $40.1
    million, or 0.50% of total non-covered loans, at September 30, 2017;
  • Energy classified and criticized loans were $28.6 million at December
    31, 2017, increasing from $24.4 million at September 30, 2017;
  • Loans held for sale decreased by 11.6% from September 30, 2017 to $1.7
    billion at December 31, 2017;
  • Total deposits were $8.0 billion at December 31, 2017, compared to
    $7.7 billion at September 30, 2017;
  • Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio3
    of 12.94% and a Common Equity Tier 1 Capital Ratio of 17.69% at
    December 31, 2017;
  • Hilltop's net interest margin4 of 3.63% for the fourth
    quarter of 2017, compared to 3.50% in the third quarter of 2017;
  • The provision for loan losses was $5.5 million during the fourth
    quarter of 2017, compared to $1.3 million in the third quarter of 2017;
  • For the fourth quarter of 2017, noninterest income was $290.5 million,
    compared to $309.1 million in the fourth quarter of 2016, a 6.0%
    decrease; and
  • For the fourth quarter of 2017, noninterest expense was $328.7
    million, compared to $355.8 million in the fourth quarter of 2016, a
    7.6% decrease.
____________________
1   The enactment of Tax Legislation during the noted periods resulted
in an estimated non-cash, non-recurring charge of $28.4 million
primarily attributable to the revaluation of deferred tax assets.
Certain Tax Legislation amounts are considered reasonable estimates
as of December 31, 2017 and could be adjusted during the measurement
period, which will end in December 2018, as a result of further
refinement of our calculations, changes in interpretations and
assumptions made, guidance that may be issued and actions we may
take as a result of Tax Legislation.
2 "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."
3 Based on the end of period Tier 1 capital divided by total average
assets during 2017, excluding goodwill and intangible assets.
4 Net interest margin is defined as net interest income divided by
average interest-earning assets.
 
                     
Consolidated Balance Sheets December 31, September 30, June 30, March 31, December 31,
(in 000's)       2017     2017     2017     2017     2016
Cash and due from banks $ 486,977 $ 354,569 $ 405,938 $ 545,928 $ 669,357
Federal funds sold 405 400 388 24,404 21,407
Securities purchased under agreements to resell 186,537 134,654 125,188 113,228 89,430
Assets segregated for regulatory purposes 186,578 207,336 167,565 166,395 180,993
Securities:
Trading, at fair value 730,685 676,411 471,485 373,300 265,534
Available for sale, at fair value 765,560 765,542 763,206 755,546 598,007
Held to maturity, at amortized cost   355,849         368,031         359,847         337,357         351,831  
1,852,094 1,809,984 1,594,538 1,466,203 1,215,372
Loans held for sale 1,715,357 1,939,321 2,000,257 1,329,493 1,795,463
Non-covered loans, net of unearned income 6,273,669 6,148,813 6,118,211 5,783,853 5,843,499
Allowance for non-covered loan losses   (60,957 )   (58,779 )   (59,208 )   (55,157 )   (54,186 )
Non-covered loans, net 6,212,712 6,090,034 6,059,003 5,728,696 5,789,313
 
Covered loans, net of allowance for covered loan losses 179,400 188,269 205,877 234,681 255,714
Broker-dealer and clearing organization receivables 1,464,378 1,672,123 1,552,525 1,574,031 1,497,741
Premises and equipment, net 177,577 176,281 183,994 184,091 190,361
FDIC indemnification asset 29,340 33,143 40,304 47,940 71,313
Covered other real estate owned 36,744 40,343 42,304 45,374 51,642
Other assets 556,683 596,095 618,368 583,554 613,453
Goodwill 251,808 251,808 251,808 251,808 251,808
Other intangible assets, net   36,432     38,440     40,516     42,601     44,695  
Total assets $ 13,373,022   $ 13,532,800   $ 13,288,573   $ 12,338,427   $ 12,738,062  
 
Deposits:
Non-interest bearing $ 2,411,849 $ 2,279,633 $ 2,251,208 $ 2,272,905 $ 2,199,483
Interest bearing   5,566,270         5,383,814         5,323,414         5,056,957         4,864,328  
Total deposits 7,978,119 7,663,447 7,574,622 7,329,862 7,063,811
Broker-dealer and clearing organization payables 1,287,563 1,517,698 1,395,314 1,437,548 1,347,128
Short-term borrowings 1,206,424 1,477,201 1,515,069 753,777 1,417,289
Securities sold, not yet purchased, at fair value 232,821 173,509 149,869 144,193 153,889
Notes payable 216,045 300,196 300,283 324,701 317,912
Junior subordinated debentures 67,012 67,012 67,012 67,012 67,012
Other liabilities   470,231     424,381     393,351     392,025     496,501  
Total liabilities 11,458,215 11,623,444 11,395,520 10,449,118 10,863,542
 
Common stock 960 959 963 984 985
Additional paid-in capital 1,526,369 1,525,169 1,529,903 1,570,329 1,572,877
Accumulated other comprehensive income (394 ) 2,585 2,112 897 485
Retained earnings 384,545 376,873 356,564 313,197 295,568
Deferred compensation employee stock trust, net 848 840 845 893 903
Employee stock trust   (247 )   (241 )   (248 )   (300 )   (309 )
Total Hilltop stockholders' equity 1,912,081 1,906,185 1,890,139 1,886,000 1,870,509
Noncontrolling interests   2,726     3,171     2,914     3,309     4,011  
Total stockholders' equity   1,914,807     1,909,356     1,893,053     1,889,309     1,874,520  
Total liabilities & stockholders' equity $ 13,373,022   $ 13,532,800   $ 13,288,573   $ 12,338,427   $ 12,738,062  
 
                     
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)       2017     2017     2016 2017     2016
Interest income:
Loans, including fees $ 105,658 $ 102,546 $ 102,046 $ 411,988 $ 389,637
Securities borrowed 11,994 11,404 6,566 41,048 29,518
Securities:
Taxable 11,910 11,157 7,097 39,633 26,233
Tax-exempt 1,717 1,471 1,530 5,807 6,222
Other   2,386   2,366   1,096   8,680   4,344
Total interest income 133,665 128,944 118,335 507,156 455,954
 
Interest expense:
Deposits 7,700 6,841 3,971 24,695 15,843
Securities loaned 9,581 8,935 4,653 32,337 22,510
Short-term borrowings 4,118 4,567 1,829 13,751 5,803
Notes payable 2,611 2,680 2,856 10,931 10,849
Junior subordinated debentures 787 774 703 3,016 2,676
Other   176   167   199   678   742
Total interest expense 24,973 23,964 14,211 85,408 58,423
 
Net interest income 108,692 104,980 104,124 421,748 397,531
Provision for loan losses   5,453   1,260   4,347   14,271   40,620
Net interest income after provision for loan losses 103,239 103,720 99,777 407,477 356,911
 
Noninterest income:
Net gains from sale of loans and other mortgage production income 122,132 138,498 137,270 538,468 606,991
Mortgage loan origination fees 23,156 25,256 24,850 93,944 96,267
Securities commissions and fees 40,868 38,735 39,425 156,464 157,906
Investment and securities advisory fees and commissions 36,561 25,620 31,690 109,920 115,992
Net insurance premiums earned 35,645 34,493 38,344 142,298 155,545
Other   32,094   35,875   37,548   163,970   154,264
Total noninterest income 290,456 298,477 309,127 1,205,064 1,286,965
 
Noninterest expense:
Employees' compensation and benefits 205,642 209,747 208,760 816,994 834,113
Occupancy and equipment, net 29,658 29,073 27,154 113,943 109,418
Professional services 24,220 25,560 42,983 101,521 128,176
Loss and loss adjustment expenses 8,583 31,234 14,018 94,701 89,243
Other   60,567   58,228   62,869   242,096   251,521
Total noninterest expense 328,670 353,842 355,784 1,369,255 1,412,471
 
Income before income taxes 65,025 48,355 53,120 243,286 231,405
Income tax expense   51,350   18,003   17,582   110,142   83,461
Net income 13,675 30,352 35,538 133,144 147,944
Less: Net income attributable to noncontrolling interest   247   146   217   600   2,050
Income attributable to Hilltop $ 13,428 $ 30,206 $ 35,321 $ 132,544 $ 145,894
 
Earnings per common share:
Basic $ 0.14 $ 0.31 $ 0.36 $ 1.36 $ 1.48
Diluted $ 0.14 $ 0.31 $ 0.36 $ 1.36 $ 1.48
 
Cash dividends declared per common share $ 0.06 $ 0.06 $ 0.06 $ 0.24 $ 0.06
 
Weighted average shares outstanding:
Basic 95,903 96,096 98,514 97,137 98,404
Diluted 96,080 96,306 98,810 97,353 98,629
 
     

Three Months Ended December 31, 2017

Segment Results ($000s)         Mortgage             All Other and     Hilltop

Three Months Ended December 31, 2017

Banking Broker-Dealer   Origination Insurance Corporate Eliminations Consolidated
Net interest income (expense) $ 92,986 $ 12,684 $ (124 ) $ 880 $ (2,656 ) $ 4,922 $ 108,692
Provision for loan losses 5,166 287 - - - - 5,453
Noninterest income 10,580 101,642 145,355 37,820 5 (4,946 ) 290,456
Noninterest expense   62,328   94,917   137,636     24,910     8,974     (95 )   328,670
Income (loss) before income taxes $ 36,072 $ 19,122 $ 7,595   $ 13,790   $ (11,625 ) $ 71   $ 65,025
 

Year Ended December 31, 2017

Segment Results ($000s) Mortgage All Other and Hilltop

Year Ended December 31, 2017

Banking Broker-Dealer   Origination Insurance Corporate Eliminations Consolidated
Net interest income (expense) $ 366,581 $ 43,735 $ (915 ) $ 2,861 $ (10,069 ) $ 19,555 $ 421,748
Provision for loan losses 14,073 198 - - - - 14,271
Noninterest income 59,904 368,421 632,388 151,382 12,798 (19,829 ) 1,205,064
Noninterest expense   248,404   347,314   581,899     158,354     33,983     (699 )   1,369,255
Income (loss) before income taxes $ 164,008 $ 64,644 $ 49,574   $ (4,111 ) $ (31,254 ) $ 425   $ 243,286
 
                   
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
Selected Financial Data     2017     2017     2016 2017     2016
 

Hilltop Consolidated:

Return on average stockholders' equity (1) 2.78% 6.32% 7.56% 7.00% 8.13%
Return on average assets (1) 0.41% 0.90% 1.13% 1.03% 1.21%
Net interest margin (2): 3.63% 3.50% 3.80% 3.67% 3.74%
Net interest margin (taxable equivalent) (3):
As reported 3.65% 3.52% 3.82% 3.69% 3.76%
Impact of purchase accounting 44 bps 37 bps 71 bps 53 bps 67 bps
Book value per common share ($) 19.92 19.88 18.98 19.92 18.98
Shares outstanding, end of period (000's) 95,982 95,904 98,544 95,982 98,544
Dividend payout ratio (4) 42.86% 19.09% 16.71% 17.59% 4.05%
 

Banking Segment:

Net interest margin (2): 4.23% 4.03% 4.57% 4.31% 4.65%
Net interest margin (taxable equivalent) (3):
As reported 4.24% 4.05% 4.59% 4.33% 4.68%
Impact of purchase accounting 60 bps 51 bps 96 bps 72 bps 93 bps
Accretion of discount on loans ($000's) 12,642 10,541 17,926 58,445 67,870
Non-covered net charge-offs (recoveries) ($000's) 4,635 908 3,083 4,635 32,970
Return on average assets (1) -0.08% 0.94% 1.09% 0.85% 0.94%
Fee income ratio 10.22% 11.33% 12.57% 14.05% 12.65%
Efficiency ratio 60.18% 62.29% 59.00% 58.24% 58.87%
Employees' compensation and benefits ($000's) 31,159 30,810 32,350 125,271 123,489
 

Broker-Dealer Segment:

Net revenue (5) 114,326 103,633 107,331 412,156 416,938
Employees' compensation and benefits ($000's) 70,169 60,365 62,929 250,614 252,772
Variable compensation expense ($000's) 41,239 35,085 37,984 143,688 148,611
Compensation as a % of net revenue 61.4% 58.2% 58.6% 60.8% 60.6%
Pre-tax margin 16.73% 19.49% -0.02% 15.68% 9.47%
 

Mortgage Origination Segment:

Mortgage loan originations - volume ($000's):
Home purchases 2,870,864 3,332,441 2,772,316 11,974,571 11,276,378
Refinancings 732,129     640,064     1,115,764 2,483,342     4,183,835

Total mortgage loan originations - volume

3,602,993 3,972,505 3,888,080 14,457,913 15,460,213
Mortgage loan sales - volume ($000's) 3,791,638 4,002,195 3,723,751 14,454,260 15,155,340
Mortgage servicing rights asset ($000's) (6) 54,714 47,766 61,968 54,714 61,968
Employees' compensation and benefits ($000's) 96,257 111,133 106,894 412,537 435,669
Variable compensation expense ($000's) 59,130 66,420 64,809 244,333 266,373
 

Insurance Segment:

Loss and LAE ratio 24.1% 90.6% 36.6% 66.6% 57.4%
Expense ratio 41.0%     40.4%     33.2% 39.9%     33.5%
Combined ratio 65.1% 131.0% 69.8% 106.5% 90.9%
Employees' compensation and benefits ($000's) 3,418 2,578 2,262 11,562 9,145
 
____________________
(1)   Noted measures during the three months and year ended December 31,
2017 include estimated 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. Certain Tax Legislation amounts are considered
reasonable estimates as of December 31, 2017 and could be adjusted
during the measurement period, which will end in December 2018, as a
result of further refinement of our calculations, changes in
interpretations and assumptions made, guidance that may be issued
and actions we may take as a result of Tax Legislation.
(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
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, $0.6 million, $0.6 million, $2.2
million, and $2.4 million, respectively, and for the Banking Segment
were $0.4 million, $0.4 million, $0.4 million, $1.6 million, and
$1.5 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.
 
                     
December 31, September 30, June 30, March 31, December 31,
Capital Ratios       2017     2017     2017     2017     2016
 
Tier 1 capital (to average assets):
PlainsCapital 12.32 % 12.18 % 12.11 % 13.09 % 12.35 %
Hilltop 12.94 % 12.87 % 13.07 % 13.98 % 13.51 %
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital 14.46 % 14.44 % 13.95 % 15.50 % 14.64 %
Hilltop 17.69 % 17.66 % 17.53 % 19.03 % 18.30 %
Tier 1 capital (to risk-weighted assets):
PlainsCapital 14.46 % 14.44 % 13.95 % 15.50 % 14.64 %
Hilltop 18.23 % 18.20 % 18.07 % 19.62 % 18.87 %
Total capital (to risk-weighted assets):
PlainsCapital 15.28 % 15.23 % 14.72 % 16.30 % 15.38 %
Hilltop 18.77 % 18.71 % 18.57 % 20.12 % 19.34 %
 
                     
December 31, September 30, June 30, March 31, December 31,
Non-Covered Non-Performing Loans Portfolio Data       2017     2017     2017     2017     2016
 
Non-covered loans accounted for on a non-accrual basis ($000's):
Commercial and industrial 20,878 21,434 13,818 13,490 9,515
Real estate 18,978 17,996 14,877 14,437 13,932
Construction and land development 611 626 632 661 755
Consumer 56 63 208 223 244
Broker-dealer -       -       -       -       -  
40,523 40,119 29,535 28,811 24,446
 
Non-covered non-performing loans as a % of total non-covered loans 0.51 % 0.50 % 0.36 % 0.41 % 0.32 %
 
Non-covered other real estate owned ($000's) 3,883 4,827 4,591 4,556 4,507
 
Other repossessed assets ($000's) 323 437 723 681 1,117
 
Non-covered non-performing assets ($000's) 44,729 45,383 34,849 34,048 30,070
 
Non-covered non-performing assets as a % of total assets 0.33 % 0.34 % 0.26 % 0.28 % 0.24 %
 
Non-covered non-PCI loans past due 90 days or more and still
accruing ($000's)
61,082 45,134 48,757 42,767 47,486
 
Troubled debt restructurings included in accruing non-covered loans
($000's)
1,150 1,163 1,170 1,180 1,196
 
                   
December 31, September 30, June 30, March 31, December 31,
PlainsCapital Bank - Energy Exposure     2017     2017     2017     2017     2016
 

Select Energy Statistics

Outstanding energy loan balance ($MM) 151.3 151.3 158.2 149.1 166.5
Energy unfunded commitments ($MM) 126.2 137.9 121.9 130.4 121.4
Energy loans as a % of total loans 2.6% 2.6% 2.7% 2.7% 3.0%
Classified and criticized energy loans ($MM):
Criticized energy loans 0.0 0.0 0.0 0.0 0.0
Performing classified energy loans 16.1 11.6 23.6 22.5 23.5
Non-performing classified energy loans 12.5     12.8     3.3     4.0     5.2
28.6 24.4 26.9 26.5 28.7
 
Unimpaired energy reserves ($MM) 12.0 12.0 11.3 10.6 10.6
Energy reserves as a % of energy loans 7.9% 7.9% 7.1% 7.1% 6.5%
Energy NCOs ($MM) 0.0 0.0 0.0 0.0 1.5
 

Energy Portfolio Breakdown

Exploration and production 13% 14% 14% 13% 11%
Services:
Field services 22% 23% 22% 24% 22%
Pipeline construction 26%     22%     22%     22%     21%
48% 45% 44% 46% 43%
Midstream:
Distribution 16% 16% 16% 18% 30%
Transportation 8%     9%     9%     10%     9%
24% 25% 25% 28% 39%
Other:
Wholesalers <1% 1% 1% 1% 1%
Equipment rentals 0% 0% 0% 0% 0%
Equipment wholesalers 15%     15%     16%     12%     6%
Total 100% 100% 100% 100% 100%
 
                   
Three Months Ended December 31,
2017 2016
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) $ 7,895,956 $ 105,658 5.28 % $ 7,588,895 $ 102,046 5.32 %
Investment securities - taxable 1,564,445 11,885 3.02 % 1,031,667 7,076 2.74 %
Investment securities - non-taxable (2) 257,779 2,323 3.59 % 282,027 2,139 3.03 %
Federal funds sold and securities purchased
under agreements to resell 156,691 - 0.00 % 145,354 40 0.11 %
Interest-bearing deposits in other
financial institutions 388,930 1,186 1.21 % 411,538 500 0.48 %
Securities borrowed 1,524,086 11,994 3.08 % 1,371,633 6,566 1.87 %
Other   80,787     1,225 6.04 %   74,583     576 3.06 %
Interest-earning assets, gross (2) 11,868,674 134,271 4.47 % 10,905,697 118,943 4.31 %
Allowance for loan losses   (61,674 )   (54,089 )
Interest-earning assets, net 11,807,000 10,851,608
Noninterest-earning assets   1,518,435     1,646,800  
Total assets $ 13,325,435   $ 12,498,408  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits $ 5,446,430 $ 7,700 0.56 % $ 4,839,376 $ 3,971 0.33 %
Securities loaned 1,365,153 9,581 2.78 % 1,260,159 4,653 1.47 %
Notes payable and other borrowings   1,516,749     7,692 2.00 %   1,507,513     5,587 1.47 %
Total interest-bearing liabilities 8,328,332 24,973 1.19 % 7,607,048 14,211 0.74 %
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,438,605 2,356,373
Other liabilities   641,302     674,297  
Total liabilities 11,408,239 10,637,718
Stockholders' equity 1,915,184 1,857,830
Noncontrolling interest   2,012     2,860  
Total liabilities and stockholders' equity $ 13,325,435   $ 12,498,408  
   
Net interest income (2) $ 109,298 $ 104,732
Net interest spread (2) 3.28 % 3.57 %
Net interest margin (2) 3.65 % 3.82 %
 
     
Year Ended December 31,
2017       2016
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) $ 7,718,933 $ 411,987 5.34 % $ 7,153,769 $ 389,637 5.45 %
Investment securities - taxable 1,399,379 39,539 2.83 % 1,038,838 26,152 2.52 %
Investment securities - non-taxable (2) 234,741 8,012 3.41 % 282,780 8,674 3.07 %
Federal funds sold and securities purchased
under agreements to resell 140,337 50 0.04 % 150,337 155 0.10 %
Interest-bearing deposits in other
financial institutions 387,258 3,826 0.99 % 426,150 2,024 0.47 %
Securities borrowed 1,518,041 41,048 2.70 % 1,523,195 29,518 1.94 %
Other   85,125     4,897 5.75 %   66,088     2,247 3.40 %
Interest-earning assets, gross (2) 11,483,814 509,359 4.44 % 10,641,157 458,407 4.31 %
Allowance for loan losses   (59,153 )   (51,925 )
Interest-earning assets, net 11,424,661 10,589,232
Noninterest-earning assets   1,531,311     1,606,572  
Total assets $ 12,955,972   $ 12,195,804  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits $ 5,220,359 $ 24,695 0.47 % $ 4,824,374 $ 15,843 0.33 %
Securities loaned 1,378,748 32,337 2.35 % 1,428,829 22,510 1.58 %
Notes payable and other borrowings   1,516,015     28,378 1.87 %   1,237,609     20,070 1.62 %
Total interest-bearing liabilities 8,115,122 85,410 1.05 % 7,490,812 58,423 0.78 %
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,309,776 2,241,561
Other liabilities   634,630     665,878  
Total liabilities 11,059,528 10,398,251
Stockholders' equity 1,894,009 1,795,219
Noncontrolling interest   2,435     2,334  
Total liabilities and stockholders' equity $ 12,955,972   $ 12,195,804  
   
Net interest income (2) $ 423,949 $ 399,984
Net interest spread (2) 3.38 % 3.53 %
Net interest margin (2) 3.69 % 3.76 %

____________________

(1)   Average balance includes non-accrual loans.
(2) Presented on a taxable equivalent basis with annualized taxable
equivalent adjustments based on a 35% federal income tax rate. The
adjustment to interest income was $0.6 million and $0.6 million for
the three months ended December 31, 2017 and 2016, respectively, and
$2.2 million and $2.4 million for the year ended December 31, 2017
and 2016, 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 26, 2018. Hilltop Co-CEOs Jeremy B.
Ford and Alan B. White and other key management members will review
fourth quarter 2017 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, 2017, Hilltop employed
approximately 5,500 people and operated approximately 475 locations in
45 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 plans,
objectives, strategies, expectations, intentions, expected tax impacts
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.

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