8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,  D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):    October 25, 2018

Hilltop Holdings Inc.

(Exact name of registrant as specified in its charter)

Maryland	1-31987	84-1477939
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2323 Victory Avenue, Suite 1400
Dallas, Texas	75219
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 855-2177

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b– 2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Section 2 – Financial Information

Item 2.02  Results of Operations and Financial Condition.

On October 25, 2018,  Hilltop Holdings Inc., or the Company, issued a press release announcing its results of operations and financial condition as of and for the three months ended September 30, 2018. The text of the release is set forth in Exhibit 99.1 attached to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Current Report on Form 8-K (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth in such filing.

Section 8 – Other Events

Item 8.01  Other Events.

On October 25, 2018, the Board of Directors of the Company declared a quarterly cash dividend of $0.07 per common share, payable on November 30, 2018, to stockholders of record as of the close of business on November 15, 2018. 

Section 9 – Financial Statements and Exhibits

Item 9.01  Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

Not applicable.

(b) Pro forma financial information.

Not applicable.

(c) Shell company transactions.

Not applicable.

(d) Exhibits.

The following exhibit(s) are filed or furnished, depending on the relative item requiring such exhibit, in accordance with the provisions of Item 601 of Regulation S-K and Instruction B.2 to this form.

Exhibit Number	Description of Exhibit
99.1	Press Release dated October 25, 2018 (furnished pursuant to Item 2.02).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		Hilltop Holdings Inc.,
		a Maryland corporation
Date:	October 25, 2018	By:	/s/ COREY PRESTIDGE
		Name:	Corey G. Prestidge
		Title:	Executive Vice President,
			General Counsel & Secretary

EX-99.1

Exhibit 99.1

Investor Relations Contact:

Isabell Novakov

214-252-4029

inovakov@hilltop-holdings.com

Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2018

DALLAS — (BUSINESS WIRE) October  25, 2018 — Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2018. Hilltop produced income of $35.8 million, or $0.38 per diluted share, for the third quarter of 2018, compared to $30.2 million, or $0.31 per diluted share, for the third quarter of 2017.  

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.07 per common share, payable on November  30, 2018, to all common stockholders of record as of the close of business on November 15, 2018.  Additionally,  pursuant to the stock repurchase program authorized by the Hilltop Board of Directors, Hilltop has paid $38.8 million to repurchase 1,702,696 shares at an average price of $22.81 during the first nine months of 2018. These shares were returned to the pool of authorized but unissued shares of common stock. Aggregate repurchases of $61.2 million remain available under this program which expires in January 2019. Amounts repurchased are inclusive of repurchases to offset dilution related to grants of stock-based compensation.

On August 1, 2018, Hilltop completed its $85 million, all-cash acquisition of The Bank of River Oaks (“BORO”).  Based on preliminary purchase date valuations, the fair value of the assets acquired was $434.8 million (excluding goodwill), including $326.6 million in loans (net of a $17.3 million fair value adjustment), while the fair value of liabilities assumed was $389.4 million, consisting primarily of $376.4 million in deposits. The operations of BORO were included in Hilltop operating results beginning August 1, 2018. The estimated fair value of the core deposit intangible asset acquired as of August 1, 2018 was $10.0 million (approximately 3.1% of core deposits) and resulting preliminary goodwill was $39.6 million. In connection with the acquisition, BORO was merged into PlainsCapital  Bank, and all customer accounts were converted to the PlainsCapital Bank platform in October 2018. Transaction expenses related to the BORO acquisition were $6.6 million during the third quarter of 2018.

Jeremy Ford, Co-CEO of Hilltop, said, “Hilltop’s results this quarter reflect our focus on execution, as we closed and successfully integrated The Bank of River Oaks and delivered profitability in all of our operating segments. We continue to make progress with our strategic objectives to enhance our financial services platform through investments in technology solutions and to streamline our operations through the adoption of shared services. During 2018, Hilltop has deployed $85 million of capital through the acquisition of The Bank of River Oaks and returned $59 million of capital through dividends and share repurchases.”

Alan White, Co-CEO of Hilltop, added, “Serving our clients and expanding relationships across all of our businesses remains the primary focus. PlainsCapital Bank has continued to demonstrate strong credit quality and prudent loan growth. The mortgage business remains challenging given competitive pressures on both pricing and volume.  PrimeLending, through our purchase mortgage-focused strategy, remained profitable in the quarter and took steps to optimize its cost structure. HilltopSecurities delivered improved profitability from its Structured Finance and Clearing businesses. National Lloyds’ performance for the quarter was substantially improved versus 2017 from lower storm activity within our footprint.”

Third  Quarter 2018 Highlights for Hilltop:

· Hilltop invested a total of $24.6 million in land and a mixed-use real estate project that is currently under construction, which is expected to serve as the headquarters for both Hilltop and PlainsCapital Bank starting in the fourth quarter of 2019;

· Hilltop’s annualized return on average assets and return on average equity for the third quarter of 2018 were 1.07% and 7.41%, respectively, compared to 0.90% and 6.32%, respectively, for the third quarter of 2017;

· Hilltop’s book value per common share increased to $20.51 at September 30, 2018, compared to $20.21 at June 30, 2018; 

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

· Non-covered loans1 held for investment, net of allowance for loan losses, increased by 7.3% to $6.1 billion and covered loans2, net of allowance for loan losses, decreased by 10.2%  to $142.7 million at September 30, 2018 compared to June 30, 2018;

· Non-covered non-performing loans decreased to $36.8 million, or 0.44% of total non-covered loans, at September 30, 2018, compared to $42.0 million, or 0.50% of total non-covered loans, at June 30, 2018;

· Loans held for sale  decreased by 21.9% from  June 30, 2018 to $1.5 billion at September 30, 2018;

· Total deposits were $8.3 billion at September 30, 2018, compared to $7.8 billion at June 30, 2018;

· Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio3 of 12.40% and a Common Equity Tier 1 Capital Ratio of 16.95% at September 30, 2018;

· Hilltop’s net interest margin4increased to 3.48% for the third quarter of 2018, compared to 3.46% in the second quarter of 2018;

· The provision (recovery) for loan losses was  ($0.4)  million during the third quarter of 2018, compared to $0.3 million in the second quarter of 2018;  

· For the third quarter of 2018, noninterest income was $269.7 million, compared to $298.5 million in the third quarter of 2017,  a 9.6%  decrease;

· For the third quarter of 2018, noninterest expense was $335.7 million, compared to $353.8 million in the third quarter of 2017, a 5.1%  decrease; and

· Hilltop’s effective tax rate decreased to 17.0% during the third quarter of 2018, compared to 37.2% during the third quarter of 2017, and included significant items related to the following:

o Reduction of the corporate tax rate in 2018 from 35% to 21% pursuant to the enactment of the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”); and

o Reduction in the third quarter of 2018 due to tax planning strategies and a tax benefit recognized on the deductible portion of settlement of litigation.

1   “Non-covered loans” exclude broker-dealer margin loans.

2“Covered loans” refer to loans acquired in the FNB Transaction that were subject to loss-share agreements with the FDIC as of September 30, 2018. 

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.

Consolidated Financial and Other Information

Consolidated Balance Sheets	September 30,		June 30,		March 31,		December 31,		September 30,
(in 000's)	2018		2018		2018		2017		2017
Cash and due from banks	$	405,682	$	353,432	$	470,127	$	486,977	$	354,569
Federal funds sold		468		403		400		405		400
Assets segregated for regulatory purposes		220,115		128,417		198,170		186,578		207,336
Securities purchased under agreements to resell		164,656		229,172		244,978		186,537		134,654
Securities:
Trading, at fair value		660,314		634,197		756,151		730,685		676,411
Available for sale, at fair value		874,496		811,218		806,583		744,319		744,559
Held to maturity, at amortized cost		348,163		353,192		356,452		355,849		368,031
Equity, at fair value		21,555		21,218		20,876		21,241		20,983
		1,904,528		1,819,825		1,940,062		1,852,094		1,809,984
Loans held for sale		1,524,980		1,953,562		1,409,634		1,715,357		1,939,321
Non-covered loans, net of unearned income		6,796,278		6,384,660		6,216,809		6,273,669		6,148,813
Allowance for non-covered loan losses		(58,861)		(59,996)		(60,371)		(60,957)		(58,779)
Non-covered loans, net		6,737,417		6,324,664		6,156,438		6,212,712		6,090,034
Covered loans, net of allowance for covered loan losses		142,737		158,996		167,781		179,400		188,269
Broker-dealer and clearing organization receivables		1,491,507		1,614,951		1,660,720		1,464,378		1,672,123
Premises and equipment, net		236,172		172,911		173,637		177,577		176,281
FDIC indemnification asset		22,831		23,525		25,458		29,340		33,143
Covered other real estate owned		29,856		34,895		35,777		36,744		40,343
Other assets		551,758		589,897		576,567		549,447		596,095
Goodwill		291,435		251,808		251,808		251,808		251,808
Other intangible assets, net		40,394		32,716		34,569		36,432		38,440
Total assets	$	13,764,536	$	13,689,174	$	13,346,126	$	13,365,786	$	13,532,800
Deposits:
Non interest-bearing	$	2,525,677	$	2,468,332	$	2,565,825	$	2,411,849	$	2,279,633
Interest-bearing		5,764,556		5,345,290		5,393,897		5,566,270		5,383,814
Total deposits		8,290,233		7,813,622		7,959,722		7,978,119		7,663,447
Broker-dealer and clearing organization payables		1,396,401		1,409,904		1,504,172		1,287,563		1,517,698
Short-term borrowings		1,216,649		1,610,735		1,064,325		1,206,424		1,477,201
Securities sold, not yet purchased, at fair value		179,582		251,581		255,551		232,821		173,509
Notes payable		220,192		227,736		202,700		208,809		300,196
Junior subordinated debentures		67,012		67,012		67,012		67,012		67,012
Other liabilities		430,309		392,171		367,188		470,231		424,381
Total liabilities		11,800,378		11,772,761		11,420,670		11,450,979		11,623,444
Common stock		946		946		960		960		959
Additional paid-in capital		1,504,467		1,502,105		1,526,867		1,526,369		1,525,169
Accumulated other comprehensive income (loss)		(14,722)		(11,846)		(9,698)		(394)		2,585
Retained earnings		448,923		419,683		404,260		384,545		376,873
Deferred compensation employee stock trust, net		860		857		857		848		840
Employee stock trust		(252)		(252)		(254)		(247)		(241)
Total Hilltop stockholders' equity		1,940,222		1,911,493		1,922,992		1,912,081		1,906,185
Noncontrolling interests		23,936		4,920		2,464		2,726		3,171
Total stockholders' equity		1,964,158		1,916,413		1,925,456		1,914,807		1,909,356
Total liabilities & stockholders' equity	$	13,764,536	$	13,689,174	$	13,346,126	$	13,365,786	$	13,532,800

	Three Months Ended
Consolidated Income Statements	September 30,		June 30,		March 31,		December 31,		September 30,
(in 000's, except per share data)	2018		2018		2018		2017		2017
Interest income:
Loans, including fees	$	113,535	$	103,924	$	99,944	$	105,658	$	102,546
Securities borrowed		16,346		17,486		16,300		11,994		11,404
Securities:
Taxable		11,994		12,516		10,953		10,824		10,214
Tax-exempt		1,717		1,697		1,772		1,717		1,471
Other		4,734		4,417		4,391		3,472		3,309
Total interest income		148,326		140,040		133,360		133,665		128,944
Interest expense:
Deposits		12,353		10,136		8,675		7,700		6,841
Securities loaned		13,984		15,075		13,739		9,581		8,935
Short-term borrowings		7,831		6,466		4,043		4,118		4,567
Notes payable		2,702		2,437		2,497		2,611		2,680
Junior subordinated debentures		955		918		822		787		774
Other		160		160		164		176		167
Total interest expense		37,985		35,192		29,940		24,973		23,964
Net interest income		110,341		104,848		103,420		108,692		104,980
Provision (recovery) for loan losses		(371)		340		(1,807)		5,453		1,260
Net interest income after provision (recovery) for loan losses		110,712		104,508		105,227		103,239		103,720
Noninterest income:
Net gains from sale of loans and other mortgage production income		116,243		132,478		105,767		122,132		138,498
Mortgage loan origination fees		27,004		29,318		20,626		23,156		25,256
Securities commissions and fees		36,968		38,320		38,717		40,868		38,735
Investment and securities advisory fees and commissions		23,487		21,965		18,354		36,561		25,620
Net insurance premiums earned		34,185		34,105		34,315		35,645		34,493
Other		31,810		23,248		17,364		32,094		35,875
Total noninterest income		269,697		279,434		235,143		290,456		298,477
Noninterest expense:
Employees' compensation and benefits		205,575		200,632		182,600		205,642		209,747
Occupancy and equipment, net		29,015		27,893		27,830		29,658		29,073
Professional services		27,984		26,020		24,704		24,220		25,560
Loss and loss adjustment expenses		18,712		24,409		15,532		8,583		31,234
Other		54,425		59,563		57,536		60,567		58,228
Total noninterest expense		335,711		338,517		308,202		328,670		353,842
Income before income taxes		44,698		45,425		32,168		65,025		48,355
Income tax expense		7,600		11,034		7,488		51,350		18,003
Net income		37,098		34,391		24,680		13,675		30,352
Less: Net income attributable to noncontrolling interest		1,293		1,311		239		247		146
Income attributable to Hilltop	$	35,805	$	33,080	$	24,441	$	13,428	$	30,206
Earnings per common share:
Basic	$	0.38	$	0.35	$	0.25	$	0.14	$	0.31
Diluted	$	0.38	$	0.35	$	0.25	$	0.14	$	0.31
Cash dividends declared per common share	$	0.07	$	0.07	$	0.07	$	0.06	$	0.06
Weighted average shares outstanding:
Basic		94,554		95,270		95,985		95,903		96,096
Diluted		94,610		95,358		96,146		96,080		96,306

	Three Months Ended September 30, 2018
Segment Results					Mortgage						All Other and		Hilltop
(in 000's)	Banking		Broker-Dealer		Origination		Insurance		Corporate		Eliminations		Consolidated
Net interest income (expense)	$	94,921	$	12,432	$	363	$	733	$	(3,275)	$	5,167	$	110,341
Provision for loan losses		—		(371)		—		—		—		—		(371)
Noninterest income		11,365		82,834		144,400		36,724		523		(6,149)		269,697
Noninterest expense		67,714		85,713		140,006		33,807		8,656		(185)		335,711
Income (loss) before income taxes	$	38,572	$	9,924	$	4,757	$	3,650	$	(11,408)	$	(797)	$	44,698

	Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,
Selected Financial Data	2018		2018		2018		2017		2017
Hilltop Consolidated:
Return on average stockholders' equity (1)		7.41%		6.95%		5.19%		2.78%		6.32%
Return on average assets (1)		1.07%		1.03%		0.77%		0.41%		0.90%
Net interest margin (2) (3)		3.48%		3.46%		3.52%		3.57%		3.44%
Net interest margin (taxable equivalent) (3) (4):
As reported		3.49%		3.47%		3.53%		3.59%		3.46%
Impact of purchase accounting		28 bps		29 bps		36 bps		43 bps		37 bps
Book value per common share ($)		20.51		20.21		20.02		19.92		19.88
Shares outstanding, end of period (000's)		94,594		94,571		96,048		95,982		95,904
Dividend payout ratio (1) (5)		18.48%		20.16%		27.49%		42.86%		19.09%
Banking Segment:
Net interest margin (2)		4.13%		4.11%		4.15%		4.23%		4.03%
Net interest margin (taxable equivalent) (4):
As reported		4.14%		4.12%		4.16%		4.24%		4.05%
Impact of purchase accounting		39 bps		42 bps		51 bps		60 bps		51 bps
Accretion of discount on loans ($000's)		8,147		8,343		9,867		12,642		10,541
Non-covered net charge-offs (recoveries) ($000's)		1,442		1,510		(1,312)		2,646		908
Return on average assets (1)		1.19%		1.09%		1.31%		-0.08%		0.94%
Fee income ratio		10.69%		10.79%		10.51%		10.22%		11.33%
Efficiency ratio		63.71%		66.47%		61.32%		60.18%		62.29%
Employees' compensation and benefits ($000's)		36,878		32,442		30,811		31,159		30,810
Broker-Dealer Segment:
Net revenue (6)		95,266		86,479		81,097		114,326		103,633
Employees' compensation and benefits ($000's)		59,535		52,418		52,265		70,169		60,365
Variable compensation expense ($000's)		33,574		26,036		24,594		41,239		35,085
Compensation as a % of net revenue		62.5%		60.6%		64.4%		61.4%		58.2%
Pre-tax margin		10.42%		9.45%		4.44%		16.73%		19.49%
Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases		3,237,444		3,615,991		2,358,692		2,870,864		3,332,441
Refinancings		416,201		491,384		601,105		732,129		640,064
Total mortgage loan originations - volume		3,653,645		4,107,375		2,959,797		3,602,993		3,972,505
Mortgage loan sales - volume ($000's)		4,015,051		3,526,603		3,185,438		3,791,638		4,002,195
Net gains from mortgage loan sales (basis points)		330		317		333		380		375
Mortgage servicing rights asset ($000's) (7)		68,804		57,373		63,957		54,714		47,766
Employees' compensation and benefits ($000's)		102,025		111,713		91,059		96,257		111,133
Variable compensation expense ($000's) (8)		58,686		66,531		46,292		57,434		64,956
Insurance Segment:
Loss and LAE ratio		54.7%		71.6%		45.3%		24.1%		90.6%
Expense ratio		38.8%		39.5%		39.9%		41.0%		40.4%
Combined ratio		93.5%		111.1%		85.2%		65.1%		131.0%
Employees' compensation and benefits ($000's)		2,595		2,954		3,255		3,418		2,578

(1) Noted measures during the three months 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. Deferred tax asset amounts recorded in December 2017 are final as of September 30, 2018.  

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

(3) Noted measures during the 2017 periods presented reflect certain category reclassifications within the detailed calculations to conform with the current period presentation.

(4) 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 and 35% federal income tax rate for the 2017 periods. 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 $0.2 million, $0.2 million, $0.3 million, $0.6 million, and  $0.6 million, respectively, and for the Banking Segment were $0.2 million, $0.2  million, $0.2 million, $0.4 million, and $0.4 million, respectively.

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

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

(7) 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.

(8) Noted measure during the 2017 periods presented reflects certain category reclassifications that affect variable compensation expense to conform with the current period presentation.

	September 30,		June 30,		March 31,		December 31,		September 30,
Capital Ratios	2018		2018		2018		2017		2017
Tier 1 capital (to average assets):
PlainsCapital		11.86%		12.80%		13.01%		12.32%		12.18%
Hilltop		12.40%		12.90%		13.26%		12.94%		12.87%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital		13.88%		14.59%		15.39%		14.47%		14.44%
Hilltop		16.95%		17.61%		18.60%		17.71%		17.66%
Tier 1 capital (to risk-weighted assets):
PlainsCapital		13.88%		14.59%		15.39%		14.47%		14.44%
Hilltop		17.42%		18.10%		19.11%		18.24%		18.20%
Total capital (to risk-weighted assets):
PlainsCapital		14.63%		15.38%		16.25%		15.29%		15.23%
Hilltop		17.87%		18.58%		19.63%		18.78%		18.71%

	September 30,		June 30,		March 31,		December 31,		September 30,
Non-Covered Non-Performing Loans Portfolio Data	2018		2018		2018		2017		2017
Non-covered loans accounted for on a non-accrual basis ($000's):
Commercial and industrial		21,323		22,815		20,768		20,878		21,434
Real estate		11,982		18,529		17,971		18,978		17,996
Construction and land development		3,402		569		595		611		626
Consumer		45		49		52		56		63
Broker-dealer		—		—		—		—		—
		36,752		41,962		39,386		40,523		40,119
Non-covered non-performing loans as a % of total non-covered loans		0.44%		0.50%		0.52%		0.51%		0.50%
Non-covered other real estate owned ($000's)		2,662		2,929		2,577		3,883		4,827
Other repossessed assets ($000's)		99		168		246		323		437
Non-covered non-performing assets ($000's)		39,513		45,059		42,209		44,729		45,383
Non-covered non-performing assets as a % of total assets		0.29%		0.33%		0.32%		0.33%		0.34%
Non-covered non-PCI loans past due 90 days or more and still accruing ($000's)		80,664		74,060		77,590		85,113		45,134
Troubled debt restructurings included in accruing non-covered loans ($000's)		1,086		1,111		1,123		1,150		1,163

	Three Months Ended September 30,
	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	$	1,718,410	$	20,409	4.75	%	$	1,787,119	$	18,469	4.13	%
Loans held for investment, gross (1)		6,767,004		93,126	5.41	%		6,290,685		84,077	5.26	%
Investment securities - taxable		1,625,368		11,964	2.94	%		1,538,890		10,191	2.65	%
Investment securities - non-taxable (2)		250,042		1,950	3.12	%		229,089		2,032	3.54	%
Federal funds sold and securities purchased under agreements to resell		202,274		956	1.87	%		139,398		284	0.81	%
Interest-bearing deposits in other financial institutions		379,160		1,915	2.00	%		477,904		1,514	1.26	%
Securities borrowed		1,550,902		16,346	4.12	%		1,548,039		11,404	2.88	%
Other		89,718		1,879	8.33	%		87,281		1,536	7.00	%
Interest-earning assets, gross (2)		12,582,878		148,545	4.66	%		12,098,405		129,507	4.23	%
Allowance for loan losses		(61,736)						(61,243)
Interest-earning assets, net		12,521,142						12,037,162
Noninterest-earning assets		1,299,974						1,311,454
Total assets	$	13,821,116					$	13,348,616
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	5,608,748	$	12,353	0.87	%	$	5,350,959	$	6,841	0.51	%
Securities loaned		1,415,231		13,984	3.92	%		1,398,922		8,935	2.53	%
Notes payable and other borrowings		1,720,823		11,648	2.68	%		1,781,498		8,188	1.81	%
Total interest-bearing liabilities		8,744,802		37,985	1.72	%		8,531,379		23,964	1.11	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		2,538,833						2,290,151
Other liabilities		602,983						627,907
Total liabilities		11,886,618						11,449,437
Stockholders’ equity		1,918,977						1,896,838
Noncontrolling interest		15,521						2,341
Total liabilities and stockholders' equity	$	13,821,116					$	13,348,616
Net interest income (2)			$	110,560					$	105,543
Net interest spread (2)					2.94	%					3.12	%
Net interest margin (2)					3.49	%					3.46	%

(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 the three months ended September 30, 2018 and 35% federal income tax rate for the three months ended September 30, 2017. The adjustment to interest income was $0.2 million and $0.6 million for the three months ended September 30, 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,  October 26, 2018. Hilltop Co-CEOs Jeremy B. Ford and Alan B. White and other key management members will review third 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 September 30, 2018, Hilltop employed approximately 5,300 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.

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.