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

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

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

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

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

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

Fourth Quarter 2019 Highlights for Hilltop:

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

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1		“Loans” reflect loans held for investment excluding broker-dealer loans, net of allowance for loan losses, of $576.5 million and $558.1 million at December 31, 2019 and September 30, 2019, respectively
2		Based on the end of period Tier 1 capital divided by total average assets during the quarter, excluding goodwill and intangible assets.
3		Net interest margin is defined as net interest income divided by average interest-earning assets

Consolidated Financial and Other Information

Consolidated Balance Sheets			December 31,				September 30,				June 30,				March 31,				December 31,
(in 000's)				2019				2019				2019				2019				2018
Cash and due from banks			$	484,959			$	326,129			$	342,001			$	313,192			$	644,073
Federal funds sold				394				423				521				438				400
Assets segregated for regulatory purposes				157,436				83,878				151,271				156,851				133,993
Securities purchased under agreements to resell				59,031				49,998				50,660				65,205				61,611
Securities:
	Trading, at fair value			689,576				707,268				601,524				703,295				745,466
	Available for sale, at fair value			998,392				1,003,850				1,009,924				1,019,851				875,658
	Held to maturity, at amortized cost			386,326				371,361				365,905				369,865				351,012
	Equity, at fair value			20,007				19,494				19,592				19,343				19,679
				2,094,301				2,101,973				1,996,945				2,112,354				1,991,815
Loans held for sale				2,106,361				1,984,231				1,609,477				1,059,280				1,393,246
Loans held for investment, net of unearned income				7,381,400				7,321,208				7,202,604				7,011,679				6,930,458
Allowance for loan losses				(61,136	)			(55,604	)			(55,177	)			(58,809	)			(59,486	)
	Loans held for investment, net			7,320,264				7,265,604				7,147,427				6,952,870				6,870,972
Broker-dealer and clearing organization receivables				1,780,280				1,731,979				1,707,249				1,651,199				1,440,287
Premises and equipment, net				219,982				213,757				208,975				210,333				237,373
Operating lease right-of-use assets				117,059				121,838				123,832				108,806				—
Other assets				516,134				633,794				602,143				591,442				580,362
Goodwill				291,435				291,435				291,435				291,435				291,435
Other intangible assets, net				30,155				31,990				33,934				35,965				38,005
	Total assets		$	15,177,791			$	14,837,029			$	14,265,870			$	13,549,370			$	13,683,572
Deposits:
	Non-interest bearing		$	2,769,556			$	2,732,325			$	2,598,253			$	2,490,144			$	2,560,750
	Interest bearing			6,262,658				5,998,547				5,864,826				5,807,975				5,975,406
Total deposits				9,032,214				8,730,872				8,463,079				8,298,119				8,536,156
Broker-dealer and clearing organization payables				1,605,518				1,546,163				1,531,891				1,490,227				1,294,925
Short-term borrowings				1,424,010				1,502,755				1,338,893				914,525				1,065,807
Securities sold, not yet purchased, at fair value				43,817				59,249				45,447				69,354				81,667
Notes payable				283,769				245,341				231,923				225,372				228,872
Operating lease liabilities				128,402				131,133				132,750				118,452				—
Junior subordinated debentures				67,012				67,012				67,012				67,012				67,012
Other liabilities				464,253				471,077				403,070				351,178				435,240
	Total liabilities			13,048,995				12,753,602				12,214,065				11,534,239				11,709,679
Common stock				906				906				928				938				936
Additional paid-in capital				1,445,233				1,441,604				1,473,599				1,491,585				1,489,816
Accumulated other comprehensive income (loss)				11,419				12,305				7,862				(1,062	)			(8,627	)
Retained earnings				644,860				602,835				544,275				499,452				466,737
Deferred compensation employee stock trust, net				776				789				788				827				825
Employee stock trust				(155	)			(170	)			(171	)			(213	)			(217	)
Total Hilltop stockholders' equity				2,103,039				2,058,269				2,027,281				1,991,527				1,949,470
Noncontrolling interests				25,757				25,158				24,524				23,604				24,423
Total stockholders' equity				2,128,796				2,083,427				2,051,805				2,015,131				1,973,893
	Total liabilities & stockholders' equity		$	15,177,791			$	14,837,029			$	14,265,870			$	13,549,370			$	13,683,572

			Three Months Ended										Year Ended
Consolidated Income Statements			December 31,			September 30,			December 31,				December 31,			December 31,
(in 000's, except per share data)				2019			2019			2018				2019			2019
Interest income:
	Loans, including fees		$	115,696		$	119,580		$	119,322			$	460,471		$	436,725
	Securities borrowed			16,196			21,010			16,782				69,582			66,914
	Securities:
	Taxable			16,040			15,764			15,512				62,104			50,975
	Tax-exempt			1,572			1,576			1,648				6,159			6,834
	Other			3,273			4,026			4,438				16,513			17,980
Total interest income				152,777			161,956			157,702				614,829			579,428
Interest expense:
	Deposits			17,480			18,887			14,838				71,509			46,002
	Securities loaned			13,989			17,889			13,935				60,086			56,733
	Short-term borrowings			6,244			8,166			7,476				26,778			25,816
	Notes payable			2,769			2,715			2,627				10,754			10,263
	Junior subordinated debentures			909			955			968				3,851			3,663
	Other			99			132			143				545			627
Total interest expense				41,490			48,744			39,987				173,523			143,104
Net interest income				111,287			113,212			117,715				441,306			436,324
Provision for loan losses				6,880			47			6,926				7,206			5,088
Net interest income after provision for loan losses				104,407			113,165			110,789				434,100			431,236
Noninterest income:
	Net gains from sale of loans and other mortgage production income			120,573			157,050			90,628				504,935			445,116
	Mortgage loan origination fees			36,939			37,782			26,615				130,003			103,563
	Securities commissions and fees			33,205			34,426			36,984				137,742			150,989
	Investment and securities advisory fees and commissions			32,083			28,685			26,260				103,787			90,066
	Net insurance premiums earned			32,961			32,654			34,146				132,284			136,751
	Other			43,515			50,804			23,883				197,265			96,305
Total noninterest income				299,276			341,401			238,516				1,206,016			1,022,790
Noninterest expense:
	Employees' compensation and benefits			215,427			235,197			179,881				856,265			768,688
	Occupancy and equipment, net			30,883			27,202			30,512				114,327			115,207
	Professional services			25,052			24,346			26,793				96,093			105,752
	Loss and loss adjustment expenses			14,356			14,677			20,694				68,940			79,347
	Other			51,218			48,687			52,939				204,182			224,255
Total noninterest expense				336,936			350,109			310,819				1,339,807			1,293,249
Income before income taxes				66,747			104,457			38,486				300,309			160,777
Income tax expense				15,045			22,750			8,928				67,332			35,050
Net income				51,702			81,707			29,558				232,977			125,727
Less: Net income attributable to noncontrolling interest				2,426			2,289			1,443				7,686			4,286
Income attributable to Hilltop			$	49,276		$	79,418		$	28,115			$	225,291		$	121,441
Earnings per common share:
	Basic		$	0.54		$	0.87		$	0.30			$	2.44		$	1.28
	Diluted		$	0.54		$	0.86		$	0.30			$	2.44		$	1.28
Cash dividends declared per common share			$	0.08		$	0.08		$	0.07			$	0.32		$	0.28
Weighted average shares outstanding:
	Basic			90,606			91,745			94,092				92,345			94,969
	Diluted			90,711			91,824			94,130				92,394			95,067

			Three Months Ended December 31, 2019
Segment Results										Mortgage											All Other and				Hilltop
(in 000s)			Banking			Broker-Dealer				Origination				Insurance			Corporate				Eliminations				Consolidated
Net interest income (expense)			$	95,503		$	13,324			$	(2,049	)		$	527		$	(1,496	)		$	5,478			$	111,287
Provision (recovery) for loan losses				6,926			(46	)			—				—			—				—				6,880
Noninterest income				11,534			99,804				157,554				35,543			371				(5,530	)			299,276
Noninterest expense				58,779			88,943				146,966				29,068			13,571				(391	)			336,936
	Income (loss) before income taxes		$	41,332		$	24,231			$	8,539			$	7,002		$	(14,696	)		$	339			$	66,747
			Year Ended December 31, 2019
Segment Results										Mortgage											All Other and				Hilltop
(in 000s)			Banking			Broker-Dealer				Origination				Insurance			Corporate				Eliminations				Consolidated
Net interest income (expense)			$	379,258		$	51,308			$	(6,273	)		$	2,329		$	(5,541	)		$	20,225			$	441,306
Provision (recovery) for loan losses				7,280			(74	)			—				—			—				—				7,206
Noninterest income				41,753			404,411				634,992				143,082			2,221				(20,443	)			1,206,016
Noninterest expense				231,524			366,031				563,998				127,920			50,968				(634	)			1,339,807
	Income (loss) before income taxes		$	182,207		$	89,762			$	64,721			$	17,491		$	(54,288	)		$	416			$	300,309

			Three Months Ended										Year Ended
			December 31,			September 30,			December 31,				December 31,			December 31,
Selected Financial Data			2019			2019			2018				2019			2018
Hilltop Consolidated:
Return on average stockholders' equity			9.43	%		15.55	%		5.76	%			11.18	%		6.33	%
Return on average assets			1.40	%		2.26	%		0.86	%			1.66	%		0.93	%
Net interest margin (1):			3.30	%		3.45	%		3.75	%			3.48	%		3.55	%
Net interest margin (taxable equivalent) (2):
	As reported		3.31	%		3.46	%		3.76	%			3.48	%		3.56	%
	Impact of purchase accounting		19	bps		26	bps		43	bps			25	bps		34	bps
Book value per common share ($)			23.20			22.71			20.83				23.20			20.83
Shares outstanding, end of period (000's)			90,641			90,629			93,610				90,641			93,610
Dividend payout ratio (3)			14.71	%		9.24	%		23.43	%			13.12	%		21.90	%
Banking Segment:
Net interest margin (1):			3.77	%		3.97	%		4.50	%			4.00	%		4.23	%
Net interest margin (taxable equivalent) (2):
	As reported		3.78	%		3.98	%		4.51	%			4.01	%		4.24	%
	Impact of purchase accounting		25	bps		35	bps		61	bps			33	bps		48	bps
Accretion of discount on loans ($000's)			5,698			7,868			12,737				28,745			39,094
Net charge-offs (recoveries) ($000's)			1,348			(380	)		7,592				5,556			9,288
Return on average assets			1.17	%		1.51	%		1.31	%			1.36	%		1.23	%
Fee income ratio			10.8	%		8.3	%		10.1	%			9.9	%		10.5	%
Efficiency ratio			54.9	%		50.5	%		56.8	%			55.0	%		61.9	%
Employees' compensation and benefits ($000's)			31,455			31,309			31,955				127,985			132,086
Broker-Dealer Segment:
Net revenue ($000's) (4)			113,128			121,466			89,750				455,719			352,592
Employees' compensation and benefits ($000's)			64,301			69,954			54,249				267,663			218,467
Variable compensation expense ($000's)			39,505			44,921			31,744				163,840			115,948
Compensation as a % of net revenue			56.8	%		57.6	%		60.4	%			58.7	%		62.0	%
Pre-tax margin (5)			21.4	%		22.2	%		12.1	%			19.7	%		9.2	%
Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
	Home purchases		2,958,176			3,380,812			2,586,677				11,718,772			11,798,804
	Refinancings		1,442,329			1,390,989			384,990				3,860,665			1,893,680
	Total mortgage loan originations - volume		4,400,505			4,771,801			2,971,667				15,579,437			13,692,484
Mortgage loan sales - volume ($000's)			4,226,425			4,316,118			3,008,793				14,591,727			13,735,885
Net gains from mortgage loan sales (basis points):
	As reported		304			335			334				324			328
	Impact of sales to banking segment		(8	)		(1	)		0				(3	)		0
Mortgage servicing rights asset ($000's) (6)			55,504			51,297			66,102				55,504			66,102
Employees' compensation and benefits ($000's)			109,753			123,890			84,334				419,135			389,131
Variable compensation expense ($000's)			67,224			81,287			44,529				252,956			216,038
Insurance Segment:
Loss and LAE ratio			43.6	%		44.9	%		60.6	%			52.1	%		58.0	%
Expense ratio			40.5	%		38.3	%		37.9	%			39.7	%		39.0	%
	Combined ratio		84.1	%		83.2	%		98.5	%			91.8	%		97.0	%
Employees' compensation and benefits ($000's)			2,929			2,748			2,670				11,663			11,474

^{_____________}

(1)		Net interest margin is defined as net interest income divided by average interest-earning assets.
(2)		Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Taxable equivalent adjustments are based on the applicable 21% federal income tax rate for all periods presented. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. The taxable equivalent adjustments to interest income for Hilltop (consolidated) were $0.1 million, $0.1 million, $0.3 million, $0.6 million, and $0.9 million, respectively, for the periods presented and for the banking segment were $0.1 million, $0.1 million, $0.2 million, $0.6 million, and $0.8 million, respectively, for each of the periods presented.
(3)		Dividend payout ratio is defined as cash dividends declared per common share divided by basic earnings per common share.
(4)		Net revenue is defined as the sum of total broker-dealer net interest income plus total broker-dealer noninterest income.
(5)		Pre-tax margin is defined as income before income taxes divided by net revenue
(6)		Reported on a consolidated basis and therefore does not include mortgage servicing rights assets related to loans serviced for the banking segment, which are eliminated in consolidation.

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

			December 31,			September 30,			June 30,			March 31,			December 31,
Non-Performing Loans Portfolio Data			2019			2019			2019			2019			2018
Loans accounted for on a non-accrual basis ($000's):
	Commercial real estate		7,308			8,727			5,276			5,332			5,324
	Commercial and industrial		15,262			13,313			14,152			13,350			14,870
	Construction and land development		1,316			1,358			1,413			1,473			3,278
	1-4 family residential		12,204			12,103			11,136			10,662			10,437
	Mortgage warehouse		-			-			-			-			-
	Consumer		26			30			34			38			41
	Broker-dealer		-			-			-			-			-
	Covered		-			-			-			-			-
			36,116			35,531			32,011			30,855			33,950
Non-performing loans as a % of total loans			0.38	%		0.38	%		0.36	%		0.38	%		0.41	%
Other real estate owned ($000's)			18,202			18,738			20,753			23,066			27,578
Other repossessed assets ($000's)			-			-			-			30			68
Non-performing assets ($000's)			54,318			54,269			52,764			53,951			61,596
Non-performing assets as a % of total assets			0.36	%		0.37	%		0.37	%		0.40	%		0.45	%
Non-PCI loans past due 90 days or more and still accruing ($000's)			102,707			81,678			77,425			77,045			83,131
Troubled debt restructurings included in accruing loans held for investment ($000's)			2,173			2,222			2,256			1,313			1,339

					Three Months Ended December 31,
					2019										2018
					Average				Interest			Annualized			Average				Interest			Annualized
					Outstanding				Earned or			Yield or			Outstanding				Earned or			Yield or
Net Interest Margin (Taxable Equivalent) Details					Balance				Paid			Rate			Balance				Paid			Rate
Assets
	Interest-earning assets
		Loans held for sale			$	1,914,703			$	19,124		4.00	%		$	1,286,668			$	15,273		4.75	%
		Loans held for investment, gross (1)				7,258,086				96,572		5.24	%			6,946,355				104,049		5.90	%
		Investment securities - taxable				1,871,993				16,011		3.42	%			1,820,088				15,482		3.40	%
		Investment securities - non-taxable (2)				244,378				1,763		2.89	%			229,533				1,861		3.24	%
		Federal funds sold and securities purchased
			under agreements to resell			68,278				228		1.32	%			136,492				535		1.55	%
		Interest-bearing deposits in other
			financial institutions			325,984				1,408		1.71	%			410,942				2,400		2.32	%
		Securities borrowed				1,589,465				16,196		3.99	%			1,537,619				16,782		4.27	%
		Other				87,188				1,654		7.55	%			68,646				1,514		8.77	%
	Interest-earning assets, gross (2)					13,360,075				152,956		4.52	%			12,436,343				157,896		5.01	%
		Allowance for loan losses				(56,124	)									(59,912	)
	Interest-earning assets, net					13,303,951										12,376,431
	Noninterest-earning assets					1,367,971										1,338,890
Total assets					$	14,671,922									$	13,715,321
Liabilities and Stockholders' Equity
	Interest-bearing liabilities
		Interest-bearing deposits			$	6,100,621			$	17,480		1.14	%		$	5,800,152			$	14,838		1.01	%
		Securities loaned				1,487,288				13,989		3.73	%			1,419,680				13,935		3.89	%
		Notes payable and other borrowings				1,526,567				10,021		2.59	%			1,401,984				11,214		3.17	%
	Total interest-bearing liabilities					9,114,476				41,490		1.80	%			8,621,816				39,987		1.84	%
	Noninterest-bearing liabilities
		Noninterest-bearing deposits				2,789,662										2,565,607
		Other liabilities				670,701										565,897
	Total liabilities					12,574,839										11,753,320
	Stockholders' equity					2,072,865										1,939,010
	Noncontrolling interest					24,218										22,991
Total liabilities and stockholders' equity					$	14,671,922									$	13,715,321
Net interest income (2)									$	111,466									$	117,909
Net interest spread (2)												2.72	%									3.17	%
Net interest margin (2)												3.31	%									3.76	%

					Year Ended December 31,
					2019										2018
					Average				Interest			Annualized			Average				Interest			Annualized
					Outstanding				Earned or			Yield or			Outstanding				Earned or			Yield or
Net Interest Margin (Taxable Equivalent) Details					Balance				Paid			Rate			Balance				Paid			Rate
Assets
	Interest-earning assets
		Loans held for sale			$	1,501,154			$	64,830		4.32	%		$	1,472,772			$	68,536		4.65	%
		Loans held for investment, gross (1)				7,088,208				395,641		5.58	%			6,601,453				368,189		5.58	%
		Investment securities - taxable				1,803,622				61,983		3.44	%			1,680,976				50,860		3.03	%
		Investment securities - non-taxable (2)				233,713				6,803		2.91	%			247,651				7,752		3.13	%
		Federal funds sold and securities purchased
			under agreements to resell			63,598				1,236		1.94	%			189,183				2,831		1.50	%
		Interest-bearing deposits in other
			financial institutions			371,312				8,469		2.28	%			459,628				8,683		1.89	%
		Securities borrowed				1,550,322				69,582		4.49	%			1,542,539				66,914		4.34	%
		Other				75,298				6,869		9.12	%			74,684				6,535		8.75	%
	Interest-earning assets, gross (2)					12,687,227				615,413		4.85	%			12,268,886				580,300		4.73	%
		Allowance for loan losses				(57,690	)									(62,681	)
	Interest-earning assets, net					12,629,537										12,206,205
	Noninterest-earning assets					1,397,647										1,288,718
Total assets					$	14,027,184									$	13,494,923
Liabilities and Stockholders' Equity
	Interest-bearing liabilities
		Interest-bearing deposits			$	5,916,491			$	71,509		1.21	%		$	5,568,473			$	46,002		0.83	%
		Securities loaned				1,423,847				60,086		4.22	%			1,395,947				56,733		4.06	%
		Notes payable and other borrowings				1,398,559				41,928		3.00	%			1,477,966				40,369		2.73	%
	Total interest-bearing liabilities					8,738,897				173,523		1.99	%			8,442,386				143,104		1.70	%
	Noninterest-bearing liabilities
		Noninterest-bearing deposits				2,635,924										2,504,599
		Other liabilities				614,392										617,227
	Total liabilities					11,989,213										11,564,212
	Stockholders' equity					2,014,535										1,919,940
	Noncontrolling interest					23,436										10,771
Total liabilities and stockholders' equity					$	14,027,184									$	13,494,923
Net interest income (2)									$	441,890									$	437,196
Net interest spread (2)												2.86	%									3.03	%
Net interest margin (2)												3.48	%									3.56	%

^{_____________}

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

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, January 31, 2020. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review fourth quarter and full year 2019 financial results. Interested parties can access the conference call by dialing 1-877-508-9457 (domestic) or 1-412-317-0789 (international). The conference call also will be webcast simultaneously on Hilltop’s Investor Relations website (http://ir.hilltop-holdings.com).

About Hilltop

Hilltop Holdings is a Dallas-based financial holding company. Its primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank. PlainsCapital Bank’s wholly owned subsidiary, PrimeLending, provides residential mortgage lending throughout the United States. Hilltop Holdings’ broker-dealer subsidiaries, Hilltop Securities Inc. and Hilltop Securities Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. Through Hilltop Holdings’ other wholly owned subsidiary, National Lloyds Corporation, it provides property and casualty insurance through two insurance companies, National Lloyds Insurance Company and American Summit Insurance Company. At December 31, 2019, Hilltop employed approximately 4,950 people and operated approximately 440 locations in 44 states. Hilltop Holdings’ common stock is listed on the New York Stock Exchange under the symbol "HTH." Find more information at Hilltop-Holdings.com, PlainsCapital.com, PrimeLending.com, Nationallloydsinsurance.com and Hilltopsecurities.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as the estimate of allowance for credit losses pursuant to CECL when adopted and our plans, objectives, strategies, expectations, intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “building,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view,” “will” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate loan losses and increases to the allowance for loan losses as a result of the implementation of CECL; (ii) the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (iii) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (iv) risks associated with concentration in real estate related loans; (v) severe catastrophic events in Texas and other areas of the southern United States; and (vi) the remediation of the material weakness may not be effected in a timely manner. For further discussion of such factors, see the risk factors described in our most recent Annual Report on Form 10-K, and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

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