Business Wire | Apr 22, 2021 05:15PM EDT

Hilltop Holdings Inc. Announces Financial Results for First Quarter 2021

Apr. 22, 2021

DALLAS--(BUSINESS WIRE)--Apr. 22, 2021--Hilltop Holdings Inc. (NYSE: HTH) ("Hilltop") today announced financial results for the first quarter 2021. Hilltop produced income from continuing operations to common stockholders of $120.3 million, or $1.46 per diluted share, for the first quarter of 2021, compared to $46.5 million, or $0.51 per diluted share, for the first quarter of 2020. Hilltop's financial results from continuing operations for the first quarter of 2021 reflected a significant increase in mortgage origination segment net gains from sale of loans and other mortgage production income, while the first quarter of 2020 results included a build in the allowance for credit losses associated with the impact of macroeconomic forecast assumptions attributable to the market disruption and economic uncertainties caused by COVID-19.

Including income from discontinued operations related to the former insurance business, income applicable to common stockholders was $120.3 million, or $1.46 per diluted share, for the first quarter of 2021, compared to $49.6 million, or $0.55 per diluted share, for the first quarter of 2020.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per common share, payable on May 28, 2021, to all common stockholders of record as of the close of business on May 14, 2021. Additionally, during the first quarter of 2021, Hilltop paid $5.0 million to repurchase an aggregate of 149,878 shares of its common stock at an average price of $33.01 per share pursuant to the 2021 stock repurchase program. These shares were returned to the pool of authorized but unissued shares of common stock.

The COVID-19 pandemic has negatively impacted financial markets and overall economic conditions, and is expected to continue to have implications on our business and operations. The extent of the impact of COVID-19 on our operational and financial performance for the remainder of 2021 is dependent on certain developments, including, among others, the ongoing distribution and effectiveness of vaccines, government stimulus, the ultimate impact of COVID-19 on our customers and clients, potential further disruption and deterioration in the financial services industry, including the mortgage servicing and commercial paper markets, and additional, or extended, federal, state and local government orders and regulations that might be imposed in response to the pandemic, all of which are uncertain.

Jeremy B. Ford, President and CEO of Hilltop, said, "Hilltop's results in the first quarter reflect the focus of our teammates across Hilltop on serving our clients and executing on our strategic initiatives. The mortgage origination segment had another exceptional quarter, generating $6.2 billion of production volume, a year-over-year increase of 71%, and $93 million of pre-tax income. The banking segment generated $65 million of pre-tax income, including a $5 million reduction in credit reserves, and delivered an efficiency ratio below 50%. The banking team also continued to support its clients through the origination of approximately $200 million of additional PPP loans, bringing the total PPP originations since the inception of the program to approximately $900 million. Additionally, the broker-dealer segment generated $18 million of pre-tax income, as its structured finance and public finance services businesses produced revenue growth versus the prior year in a very volatile interest rate market.

"Overall, we are very pleased with the strong start to 2021, as our diversified, yet integrated, business model continues to generate solid results for our shareholders. At Hilltop, we are focused on value creation over the long-term and will continue to make investments in people and technology for prudent future growth."

First Quarter 2021 Highlights for Hilltop:

* For the first quarter of 2021, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $310.2 million, compared to $179.0 million in the first quarter of 2020, a 73.3% increase; Mortgage loan origination production volume was $6.2 billion during the first quarter of 2021, compared to $3.6 billion in the first quarter of 2020. * The reversal of credit losses was $5.1 million during the first quarter of 2021, compared to a reversal of credit losses of $3.5 million in the fourth quarter of 2020; The reversal of credit losses during the first quarter of 2021 primarily reflected improvements in loan portfolio macroeconomic forecast assumptions from the prior quarter, partially offset by slower prepayment assumptions on certain portfolios, changes in risk rating grades and updated realizable values. * Hilltop's consolidated annualized return on average assets and return on average equity for the first quarter of 2021 were 2.90% and 20.58%, respectively, compared to 1.47% and 9.38%, respectively, for the first quarter of 2020; * Hilltop's book value per common share increased to $29.41 at March 31, 2021, compared to $28.28 at December 31, 2020; * Hilltop's total assets were $17.7 billion at March 31, 2021, compared to $16.9 billion at December 31, 2020; * Loans1, net of allowance for credit losses, were $7.1 billion at both March 31, 2021 and December 31, 2020; Includes supporting our impacted banking clients through funding of over 3,950 loans through both rounds of the Paycheck Protection Program, or PPP, with a remaining balance of approximately $492 million as of March 31, 2021, compared to approximately $487 million as of December 31, 2020; Through April 16, 2021, the SBA had approved approximately 2,270 initial round PPP forgiveness applications from the Bank totaling approximately $420 million, with PPP loans of approximately $185 million pending SBA review and approval. * Non-performing loans were $79.9 million, or 0.77% of total loans, at March 31, 2021, compared to $79.9 million, or 0.76% of total loans, at December 31, 2020; * We further supported our impacted banking clients through the approval of COVID-19 related loan modifications of approximately $1.0 billion, resulting in a portfolio of active deferrals that have not reached the end of their deferral period of approximately $130 million as of March 31, 2021, compared to approximately $240 million in active deferment as of December 31, 2020; While the majority of the portfolio of COVID-19 related loan modifications no longer require deferral, such loans may continue to represent elevated risk, and therefore management continues to monitor these loans; The extent of these loans progressing into non-performing loans during future periods is uncertain. * Loans held for sale decreased by 8.9% from December 31, 2020 to $2.5 billion at March 31, 2021; * Total deposits were $11.7 billion at March 31, 2021, compared to $11.2 billion at December 31, 2020; * Hilltop maintained strong capital levels2 with a Tier 1 Leverage Ratio3 of 13.01% and a Common Equity Tier 1 Capital Ratio of 19.63% at March 31, 2021; * Hilltop's consolidated net interest margin4 decreased to 2.69% for the first quarter of 2021, compared to 2.71% in the fourth quarter of 2020; * For the first quarter of 2021, noninterest income from continuing operations was $417.6 million, compared to $271.7 million in the first quarter of 2020, a 53.7% increase; * For the first quarter of 2021, noninterest expense from continuing operations was $366.7 million, compared to $281.9 million in the first quarter of 2020, a 30.1% increase; and * Hilltop's effective tax rate from continuing operations was 23.4% during the first quarter of 2021, compared to 23.1% during the same period in 2020.

Discontinued Operations

On June 30, 2020, Hilltop completed the sale of National Lloyds Corporation, or NLC, which comprised the operations of its former insurance segment, for cash proceeds of $154.1 million. During 2020, Hilltop recognized an aggregate gain associated with this transaction of $36.8 million, net of transaction costs. Accordingly, insurance segment results and its assets and liabilities have been presented as discontinued operations. The resulting book gain from this sale transaction was not recognized for tax purposes pursuant to the rules promulgated under the Internal Revenue Code.

_________________________________Note: "Consolidated" refers to our consolidated financial position and consolidated results of operations, including discontinued operations and assets and liabilities of discontinued operations. 1 "Loans" reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $519.9 million and $436.8 million at March 31, 2021 and December 31, 2020, respectively. 2 Capital ratios reflect Hilltop's decision to elect the transition option as issued by the federal banking regulatory agencies in March 2020 that permits banking institutions to mitigate the estimated cumulative regulatory capital effects from CECL over a five-year transitionary period. 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 March 31, December 31, September June 30, March 31,Balance Sheets 30,

(in 000's) 2021 2020 2020 2020 2020

Cash and due from $ 1,564,489 $ 1,062,560 $ 1,277,865 $ 1,655,492 $ 524,370banks

Federal funds sold 396 386 420 385 401

Assets segregatedfor regulatory 273,393 290,357 221,621 194,626 178,805purposes

Securitiespurchased under 106,342 80,319 90,103 161,457 23,356agreements toresell

Securities:

Trading, at fair 528,712 694,255 667,751 648,037 393,581value

Available for sale, 1,715,406 1,462,205 1,310,240 1,091,348 972,318at fair value, net

Held to maturity,at amortized cost, 300,088 311,944 323,299 343,198 355,110net

Equity, at fair 189 140 117 122 107value

2,544,395 2,468,544 2,301,407 2,082,705 1,721,116

Loans held for sale 2,538,986 2,788,386 2,547,975 2,592,307 2,433,407

Loans held forinvestment, net of 7,810,657 7,693,141 7,945,560 7,849,904 7,345,250unearned income

Allowance for (144,499) (149,044) (155,214) (156,383) (106,739)credit losses

Loans held for 7,666,158 7,544,097 7,790,346 7,693,521 7,238,511investment, net



Broker-dealer andclearing 1,596,817 1,404,727 1,363,478 1,222,627 1,838,789organizationreceivables

Premises and 213,304 211,595 208,078 210,975 215,261equipment, net

Operating lease 101,055 105,757 109,354 119,954 113,395right-of-use assets

Mortgage servicing 142,125 143,742 127,712 81,264 30,299assets

Other assets 648,895 555,983 607,932 627,982 846,316

Goodwill 267,447 267,447 267,447 267,447 267,447

Other intangible 19,035 20,364 21,814 23,374 25,019assets, net

Assets ofdiscontinued - - - - 249,758operations

Total assets $ 17,682,837 $ 16,944,264 $ 16,935,552 $ 16,934,116 $ 15,706,250



Deposits:

Noninterest-bearing $ 4,031,181 $ 3,612,384 $ 3,557,603 $ 3,467,500 $ 2,865,192

Interest-bearing 7,701,598 7,629,935 7,704,312 8,182,098 7,082,297

Total deposits 11,732,779 11,242,319 11,261,915 11,649,598 9,947,489

Broker-dealer andclearing 1,546,227 1,368,373 1,310,835 1,158,628 1,259,181organizationpayables

Short-term 676,652 695,798 780,109 720,164 1,329,948borrowings

Securities sold,not yet purchased, 97,055 79,789 56,023 55,340 22,768at fair value

Notes payable 401,713 381,987 396,006 450,158 244,042

Operating lease 120,339 125,450 122,402 131,411 124,123liabilities

Junior subordinated 67,012 67,012 67,012 67,012 67,012debentures

Other liabilities 595,045 632,889 502,517 409,672 408,224

Liabilities ofdiscontinued - - - - 139,730operations

Total liabilities 15,236,822 14,593,617 14,496,819 14,641,983 13,542,517



Common stock 823 822 902 902 901

Additional paid-in 1,319,518 1,317,929 1,443,588 1,439,686 1,437,301capital

Accumulated othercomprehensive 3,486 17,763 23,790 23,813 20,939income

Retained earnings 1,094,727 986,792 942,461 797,331 676,946

Deferredcompensation 752 771 774 778 774employee stocktrust, net

Employee stock (121) (138) (143) (150) (150)trust

Total Hilltopstockholders' 2,419,185 2,323,939 2,411,372 2,262,360 2,136,711equity

Noncontrolling 26,830 26,708 27,361 29,773 27,022interests

Total stockholders' 2,446,015 2,350,647 2,438,733 2,292,133 2,163,733equity

Total liabilities &stockholders' $ 17,682,837 $ 16,944,264 $ 16,935,552 $ 16,934,116 $ 15,706,250equity

Three Months Ended

Consolidated Income Statements

March 31,

December 31,

September 30,

June 30,

March 31,

(in 000's, except per share data)

2021

2020

2020

2020

2020

Interest income:

Loans, including fees

$

104,277

$

109,328

$

104,955

$

107,860

$

111,168

Securities borrowed

28,972

14,445

10,705

12,883

13,327

Securities:

Taxable

10,251

9,845

11,035

11,698

15,695

Tax-exempt

2,102

1,862

1,687

1,539

1,610

Other

1,321

1,381

1,446

951

3,075

Total interest income

146,923

136,861

129,828

134,931

144,875

Interest expense:

Deposits

7,741

9,269

10,700

11,947

15,124

Securities loaned

25,486

12,014

8,729

10,796

11,277

Short-term borrowings

2,013

2,154

2,346

2,367

4,744

Notes payable

4,797

4,807

4,904

3,768

2,418

Junior subordinated debentures

562

609

608

705

850

Other

642

636

641

790

126

Total interest expense

41,241

29,489

27,928

30,373

34,539

Net interest income

105,682

107,372

101,900

104,558

110,336

Provision for (reversal of) credit losses

(5,109)

(3,482)

(602)

66,026

34,549

Net interest income after provision for (reversal of) credit losses

110,791

110,854

102,502

38,532

75,787

Noninterest income:

Net gains from sale of loans and other mortgage production income

267,080

247,360

307,896

295,317

150,486

Mortgage loan origination fees

43,155

50,193

47,681

45,341

28,554

Securities commissions and fees

38,314

35,921

32,496

34,234

40,069

Investment and securities advisory fees and commissions

27,695

42,161

36,866

29,120

23,180

Other

41,341

72,296

77,772

64,113

29,424

Total noninterest income

417,585

447,931

502,711

468,125

271,713

Noninterest expense:

Employees' compensation and benefits

270,353

291,489

294,907

276,893

196,356

Occupancy and equipment, net

24,429

27,596

26,124

26,174

19,522

Professional services

13,585

21,927

17,522

15,737

14,798

Other

58,295

61,336

60,792

51,405

51,225

Total noninterest expense

366,662

402,348

399,345

370,209

281,901

Income from continuing operations before income taxes

161,714

156,437

205,868

136,448

65,599

Income tax expense

37,770

39,295

46,820

31,808

15,148

Income from continuing operations

123,944

117,142

159,048

104,640

50,451

Income from discontinued operations, net of income taxes

-

3,734

736

30,775

3,151

Net income

123,944

120,876

159,784

135,415

53,602

Less: Net income attributable to noncontrolling interest

3,599

4,431

6,505

6,939

3,966

Income attributable to Hilltop

$

120,345

$

116,445

$

153,279

$

128,476

$

49,636

Earnings per common share:

Basic:

Earnings from continuing operations

$

1.46

$

1.31

$

1.69

$

1.08

$

0.51

Earnings from discontinued operations

-

0.04

0.01

0.34

0.04

$

1.46

$

1.35

$

1.70

$

1.42

$

0.55

Diluted:

Earnings from continuing operations

$

1.46

$

1.30

$

1.69

$

1.08

$

0.51

Earnings from discontinued operations

-

0.05

0.01

0.34

0.04

$

1.46

$

1.35

$

1.70

$

1.42

$

0.55

Cash dividends declared per common share

$

0.12

$

0.09

$

0.09

$

0.09

$

0.09

Weighted average shares outstanding:

Basic

82,169

86,269

90,200

90,164

90,509

Diluted

82,657

86,420

90,200

90,164

90,550



Three Months Ended

Consolidated March 31, December September June 30, March 31, Income Statements 31, 30,

(in 000's, except 2021 2020 2020 2020 2020 per share data)

Interest income:

Loans, including $ 104,277 $ 109,328 $ 104,955 $ 107,860 $ 111,168 fees

Securities 28,972 14,445 10,705 12,883 13,327 borrowed

Securities:

Taxable 10,251 9,845 11,035 11,698 15,695

Tax-exempt 2,102 1,862 1,687 1,539 1,610

Other 1,321 1,381 1,446 951 3,075

Total interest 146,923 136,861 129,828 134,931 144,875 income



Interest expense:

Deposits 7,741 9,269 10,700 11,947 15,124

Securities loaned 25,486 12,014 8,729 10,796 11,277

Short-term 2,013 2,154 2,346 2,367 4,744 borrowings

Notes payable 4,797 4,807 4,904 3,768 2,418

Juniorsubordinated 562 609 608 705 850 debentures

Other 642 636 641 790 126

Total interest 41,241 29,489 27,928 30,373 34,539 expense



Net interest 105,682 107,372 101,900 104,558 110,336 income

Provision for(reversal of) (5,109) (3,482) (602) 66,026 34,549 credit losses

Net interestincome afterprovision for 110,791 110,854 102,502 38,532 75,787 (reversal of)credit losses



Noninterest income:

Net gains fromsale of loans and 267,080 247,360 307,896 295,317 150,486 other mortgageproduction income

Mortgage loan 43,155 50,193 47,681 45,341 28,554 origination fees

Securitiescommissions and 38,314 35,921 32,496 34,234 40,069 fees

Investment andsecurities 27,695 42,161 36,866 29,120 23,180 advisory fees andcommissions

Other 41,341 72,296 77,772 64,113 29,424

Total noninterest 417,585 447,931 502,711 468,125 271,713 income



Noninterest expense:

Employees'compensation and 270,353 291,489 294,907 276,893 196,356 benefits

Occupancy and 24,429 27,596 26,124 26,174 19,522 equipment, net

Professional 13,585 21,927 17,522 15,737 14,798 services

Other 58,295 61,336 60,792 51,405 51,225

Total noninterest 366,662 402,348 399,345 370,209 281,901 expense



Income fromcontinuing 161,714 156,437 205,868 136,448 65,599 operations beforeincome taxes

Income tax 37,770 39,295 46,820 31,808 15,148 expense

Income fromcontinuing 123,944 117,142 159,048 104,640 50,451 operations

Income fromdiscontinued - 3,734 736 30,775 3,151 operations, netof income taxes

Net income 123,944 120,876 159,784 135,415 53,602

Less: Net incomeattributable to 3,599 4,431 6,505 6,939 3,966 noncontrollinginterest

Incomeattributable to $ 120,345 $ 116,445 $ 153,279 $ 128,476 $ 49,636 Hilltop



Earnings per common share:

Basic:

Earnings fromcontinuing $ 1.46 $ 1.31 $ 1.69 $ 1.08 $ 0.51 operations

Earnings fromdiscontinued - 0.04 0.01 0.34 0.04 operations

$ 1.46 $ 1.35 $ 1.70 $ 1.42 $ 0.55

Diluted:

Earnings fromcontinuing $ 1.46 $ 1.30 $ 1.69 $ 1.08 $ 0.51 operations

Earnings fromdiscontinued - 0.05 0.01 0.34 0.04 operations

$ 1.46 $ 1.35 $ 1.70 $ 1.42 $ 0.55



Cash dividendsdeclared per $ 0.12 $ 0.09 $ 0.09 $ 0.09 $ 0.09 common share



Weighted averageshares outstanding:

Basic 82,169 86,269 90,200 90,164 90,509

Diluted 82,657 86,420 90,200 90,164 90,550

Three Months Ended March 31, 2021

Segment Results

Mortgage

All Other and

Continuing

(in 000's)

Banking

Broker-Dealer

Origination

Corporate

Eliminations

Operations

Net interest income (expense)

$

103,884

$

10,514

$

(7,098)

$

(4,692)

$

3,074

$

105,682

Provision for (reversal of) credit losses

(5,175)

66

-

-

-

(5,109)

Noninterest income

11,324

98,623

310,444

506

(3,312)

417,585

Noninterest expense

55,788

91,404

210,334

9,588

(452)

366,662

Income (loss) from continuing operations before taxes

$

64,595

$

17,667

$

93,012

$

(13,774)

$

214

$

161,714



Three Months Ended March 31, 2021

Segment Mortgage All Other ContinuingResults and

(in 000's) Banking Broker-Dealer Origination Corporate Eliminations Operations

Netinterest $ 103,884 $ 10,514 $ (7,098) $ (4,692) $ 3,074 $ 105,682income(expense)

Provisionfor(reversal (5,175) 66 - - - (5,109)of) creditlosses

Noninterest 11,324 98,623 310,444 506 (3,312) 417,585income

Noninterest 55,788 91,404 210,334 9,588 (452) 366,662expense

Income(loss) fromcontinuing $ 64,595 $ 17,667 $ 93,012 $ (13,774) $ 214 $ 161,714operationsbeforetaxes

Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

Selected Financial Data

2021

2020

2020

2020

2020

Hilltop Consolidated (1):

Return on average stockholders' equity

20.58%

20.56%

25.94%

23.32%

9.38%

Return on average assets

2.90%

2.83%

3.71%

3.30%

1.47%

Net interest margin (2)

2.69%

2.71%

2.56%

2.80%

3.41%

Net interest margin (taxable equivalent) (3):

As reported

2.69%

2.72%

2.57%

2.81%

3.42%

Impact of purchase accounting

13 bps

15 bps

10 bps

10 bps

22 bps

Book value per common share ($)

29.41

28.28

26.72

25.08

23.71

Shares outstanding, end of period (000's)

82,261

82,185

90,238

90,222

90,108

Dividend payout ratio (4)

8.19%

6.67%

5.30%

6.32%

16.41%

Banking Segment:

Net interest margin (2)

3.30%

3.37%

3.03%

3.11%

3.81%

Net interest margin (taxable equivalent) (3):

As reported

3.31%

3.38%

3.03%

3.12%

3.82%

Impact of purchase accounting

17 bps

20 bps

13 bps

12 bps

30 bps

Accretion of discount on loans ($000's)

4,851

5,629

3,346

3,217

6,639

Net recoveries (charge-offs) ($000's)

564

(2,688)

(567)

(16,382)

(1,508)

Return on average assets

1.48%

1.37%

1.14%

-0.42%

0.33%

Fee income ratio

9.8%

10.2%

9.2%

10.2%

8.5%

Efficiency ratio

48.4%

53.0%

52.7%

54.1%

55.5%

Employees' compensation and benefits ($000's)

30,992

34,007

29,808

31,583

32,347

Broker-Dealer Segment:

Net revenue ($000's) (5)

109,137

150,070

149,190

132,624

99,382

Employees' compensation and benefits ($000's)

66,027

87,469

88,063

79,697

56,550

Variable compensation expense ($000's)

37,412

60,295

60,774

52,372

32,024

Compensation as a % of net revenue

60.5%

58.3%

59.0%

60.1%

56.9%

Pre-tax margin (6)

16.2%

22.8%

23.7%

21.0%

18.3%

Mortgage Origination Segment:

Mortgage loan originations - volume ($000's):

Home purchases

2,902,710

3,683,564

4,183,560

3,204,573

2,341,847

Refinancings

3,281,395

3,114,630

2,266,793

2,894,486

1,280,741

Total mortgage loan originations - volume

6,184,105

6,798,194

6,450,353

6,099,059

3,622,588

Mortgage loan sales - volume ($000's)

6,350,837

6,571,234

6,521,773

5,934,914

3,486,249

Net gains from mortgage loan sales (basis points):

As reported

388

448

440

368

325

Impact of sales to banking segment

(10)

(3)

(1)

(1)

(13)

Mortgage servicing rights asset ($000's) (7)

142,125

143,742

127,712

81,263

30,299

Employees' compensation and benefits ($000's)

166,248

163,822

161,738

160,824

100,328

Variable compensation expense ($000's)

115,486

116,736

116,275

113,826

58,280

________________________________(1) Ratios and financial data presented on a consolidated basis. For all 2020 periods presented, information includes discontinued operations and as of March 31, 2020 those assets and liabilities of discontinued operations

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

(3) Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Taxable equivalent adjustments are based on the applicable 21% federal income tax rate for 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 $0.2 million, $0.3 million, $0.3 million, $0.3 million, and $0.3 million, respectively, for the periods presented and for the banking segment were $0.2 million, $0.2 million, $0.2 million, $0.2 million, and $0.2 million, respectively, for the periods presented.(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 and total broker-dealer noninterest income.(6) Pre-tax margin is defined as income before income taxes divided by net revenue.(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.



Three Months Ended

March 31, December September June 30, March 31, 31, 30,

Selected Financial Data 2021 2020 2020 2020 2020



Hilltop Consolidated ^(1):

Return on average stockholders' 20.58% 20.56% 25.94% 23.32% 9.38% equity

Return on average assets 2.90% 2.83% 3.71% 3.30% 1.47%

Net interest margin ^(2) 2.69% 2.71% 2.56% 2.80% 3.41%

Net interest margin (taxable equivalent) ^(3):

As reported 2.69% 2.72% 2.57% 2.81% 3.42%

Impact of purchase accounting 13 bps 15 bps 10 bps 10 bps 22 bps

Book value per common share ($) 29.41 28.28 26.72 25.08 23.71

Shares outstanding, end of 82,261 82,185 90,238 90,222 90,108 period (000's)

Dividend payout ratio ^(4) 8.19% 6.67% 5.30% 6.32% 16.41%



Banking Segment:

Net interest margin ^(2) 3.30% 3.37% 3.03% 3.11% 3.81%

Net interest margin (taxable equivalent)^ (3):

As reported 3.31% 3.38% 3.03% 3.12% 3.82%

Impact of purchase accounting 17 bps 20 bps 13 bps 12 bps 30 bps

Accretion of discount on loans 4,851 5,629 3,346 3,217 6,639 ($000's)

Net recoveries (charge-offs) 564 (2,688) (567) (16,382) (1,508) ($000's)

Return on average assets 1.48% 1.37% 1.14% -0.42% 0.33%

Fee income ratio 9.8% 10.2% 9.2% 10.2% 8.5%

Efficiency ratio 48.4% 53.0% 52.7% 54.1% 55.5%

Employees' compensation and 30,992 34,007 29,808 31,583 32,347 benefits ($000's)



Broker-Dealer Segment:

Net revenue ($000's) ^(5) 109,137 150,070 149,190 132,624 99,382

Employees' compensation and 66,027 87,469 88,063 79,697 56,550 benefits ($000's)

Variable compensation expense 37,412 60,295 60,774 52,372 32,024 ($000's)

Compensation as a % of net 60.5% 58.3% 59.0% 60.1% 56.9% revenue

Pre-tax margin ^(6) 16.2% 22.8% 23.7% 21.0% 18.3%



Mortgage Origination Segment:

Mortgage loan originations - volume ($000's):

Home purchases 2,902,710 3,683,564 4,183,560 3,204,573 2,341,847

Refinancings 3,281,395 3,114,630 2,266,793 2,894,486 1,280,741

Total mortgage loan originations 6,184,105 6,798,194 6,450,353 6,099,059 3,622,588 - volume

Mortgage loan sales - volume 6,350,837 6,571,234 6,521,773 5,934,914 3,486,249 ($000's)

Net gains from mortgage loan sales (basis points):

As reported 388 448 440 368 325

Impact of sales to banking (10) (3) (1) (1) (13) segment

Mortgage servicing rights asset 142,125 143,742 127,712 81,263 30,299 ($000's) ^(7)

Employees' compensation and 166,248 163,822 161,738 160,824 100,328 benefits ($000's)

Variable compensation expense 115,486 116,736 116,275 113,826 58,280 ($000's)

________________________________ (1) Ratios and financial data presented on a consolidated basis. For all 2020 periods presented, information includes discontinued operations and as of March 31, 2020 those assets and liabilities of discontinued operations

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

(3) Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Taxable equivalent adjustments are based on the applicable 21% federal income tax rate for 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 $0.2 million, $0.3 million, $0.3 million, $0.3 million, and $0.3 million, respectively, for the periods presented and for the banking segment were $0.2 million, $0.2 million, $0.2 million, $0.2 million, and $0.2 million, respectively, for the periods presented. (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 and total broker-dealer noninterest income. (6) Pre-tax margin is defined as income before income taxes divided by net revenue. (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.

March 31,

December 31,

September 30,

June 30,

March 31,

Capital Ratios

2021

2020

2020

2020

2020

Tier 1 capital (to average assets):

PlainsCapital

10.50%

10.44%

10.19%

10.37%

12.06%

Hilltop

13.01%

12.64%

13.03%

12.60%

13.03%

Common equity Tier 1 capital (to risk-weighted assets):

PlainsCapital

14.74%

14.40%

14.64%

14.03%

13.33%

Hilltop

19.63%

18.97%

19.85%

18.46%

15.96%

Tier 1 capital (to risk-weighted assets):

PlainsCapital

14.74%

14.40%

14.64%

14.03%

13.33%

Hilltop

20.22%

19.57%

20.46%

19.06%

16.38%

Total capital (to risk-weighted assets):

PlainsCapital

15.64%

15.27%

15.49%

14.88%

14.26%

Hilltop

22.96%

22.34%

23.22%

21.82%

17.00%



March December September June 30, March 31, 31, 30, 31,

Capital Ratios 2021 2020 2020 2020 2020

Tier 1 capital (to average assets):

PlainsCapital 10.50% 10.44% 10.19% 10.37% 12.06%

Hilltop 13.01% 12.64% 13.03% 12.60% 13.03%

Common equity Tier 1capital (to risk-weighted assets):

PlainsCapital 14.74% 14.40% 14.64% 14.03% 13.33%

Hilltop 19.63% 18.97% 19.85% 18.46% 15.96%

Tier 1 capital (to risk-weighted assets):

PlainsCapital 14.74% 14.40% 14.64% 14.03% 13.33%

Hilltop 20.22% 19.57% 20.46% 19.06% 16.38%

Total capital (to risk-weighted assets):

PlainsCapital 15.64% 15.27% 15.49% 14.88% 14.26%

Hilltop 22.96% 22.34% 23.22% 21.82% 17.00%

March 31,

December 31,

September 30,

June 30,

March 31,

Non-Performing Assets Portfolio Data

2021

2020

2020

2020

2020

Loans accounted for on a non-accrual basis ($000's) (1):

Commercial real estate

10,668

11,133

14,079

13,743

23,352

Commercial and industrial

36,144

34,049

38,708

32,259

47,121

Construction and land development

501

507

528

1,404

1,402

1-4 family residential

30,937

32,263

28,707

20,552

15,237

Consumer

26

28

53

308

310

Broker-dealer

-

-

-

-

-

78,276

77,980

82,075

68,266

87,422

Troubled debt restructurings included in accruing loans held for investment ($000's)

1,584

1,954

1,919

2,025

2,286

Non-performing loans ($000's)

79,860

79,934

83,994

70,291

89,708

Non-performing loans as a % of total loans

0.77%

0.76%

0.80%

0.67%

0.92%

Other real estate owned ($000's)

19,899

21,289

25,387

26,602

15,429

Other repossessed assets ($000's)

-

101

239

315

315

Non-performing assets ($000's)

99,759

101,324

109,620

97,208

105,452

Non-performing assets as a % of total assets

0.56%

0.60%

0.65%

0.57%

0.67%

Loans past due 90 days or more and still accruing ($000's)

265,230

243,630

187,105

124,682

101,300

________________________________(1) Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications. The Bank's COVID-19 payment deferral programs allow for a deferral of principal and/or interest payments with such deferred principal payments due and payable on the maturity date of the existing loan. During the first quarter of 2021, the Bank's actions included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $130 million as of March 31, 2021, down from approximately $240 million as of December 31, 2020. The extent to which these measures will impact the Bank is uncertain, and any progression of loans, whether receiving COVID-19 payment deferrals or not, into non-accrual status, during future periods is uncertain and will depend on future developments that cannot be predicted.



March 31, December September June 30, March 31, 31, 30,

Non-Performing Assets Portfolio 2021 2020 2020 2020 2020Data

Loans accounted for on a non-accrual basis ($000's) ^(1):

Commercial real estate 10,668 11,133 14,079 13,743 23,352

Commercial and industrial 36,144 34,049 38,708 32,259 47,121

Construction and land development 501 507 528 1,404 1,402

1-4 family residential 30,937 32,263 28,707 20,552 15,237

Consumer 26 28 53 308 310

Broker-dealer - - - - -

78,276 77,980 82,075 68,266 87,422

Troubled debt restructuringsincluded in accruing loans held 1,584 1,954 1,919 2,025 2,286for investment ($000's)

Non-performing loans ($000's) 79,860 79,934 83,994 70,291 89,708



Non-performing loans as a % of 0.77% 0.76% 0.80% 0.67% 0.92%total loans



Other real estate owned ($000's) 19,899 21,289 25,387 26,602 15,429



Other repossessed assets ($000's) - 101 239 315 315



Non-performing assets ($000's) 99,759 101,324 109,620 97,208 105,452



Non-performing assets as a % of 0.56% 0.60% 0.65% 0.57% 0.67%total assets



Loans past due 90 days or more and 265,230 243,630 187,105 124,682 101,300still accruing ($000's)

________________________________(1) Loans accounted for on a non-accrual basis do not include COVID-19 relatedloan modifications. The Bank's COVID-19 payment deferral programs allow for adeferral of principal and/or interest payments with such deferred principalpayments due and payable on the maturity date of the existing loan. During thefirst quarter of 2021, the Bank's actions included approval of COVID-19 relatedloan modifications, resulting in active loan modifications of approximately$130 million as of March 31, 2021, down from approximately $240 million as ofDecember 31, 2020. The extent to which these measures will impact the Bank isuncertain, and any progression of loans, whether receiving COVID-19 paymentdeferrals or not, into non-accrual status, during future periods is uncertainand will depend on future developments that cannot be predicted.

Three Months Ended March 31,

2021

2020

Average

Interest

Annualized

Average

Interest

Annualized

Outstanding

Earned or

Yield or

Outstanding

Earned or

Yield or

Net Interest Margin (Taxable Equivalent) Details (1)

Balance

Paid

Rate

Balance

Paid

Rate

Assets

Interest-earning assets

Loans held for sale

$

2,573,085

$

16,233

2.52

%

$

1,619,644

$

15,631

3.86

%

Loans held for investment, gross (2)

7,645,883

88,044

4.62

%

7,262,282

95,538

5.23

%

Investment securities - taxable

2,267,709

10,233

1.80

%

1,798,897

16,606

3.69

%

Investment securities - non-taxable (3)

284,001

2,280

3.21

%

208,863

1,902

3.64

%

Federal funds sold and securities purchased under agreements to resell

93,525

-

0.00

%

60,943

134

0.89

%

Interest-bearing deposits in other financial institutions

1,565,879

582

0.15

%

461,775

1,512

1.32

%

Securities borrowed

1,452,704

28,972

7.98

%

1,568,737

13,327

3.36

%

Other

49,916

762

6.18

%

78,595

1,512

7.72

%

Interest-earning assets, gross (3)

15,932,702

147,106

3.70

%

13,059,736

146,162

4.45

%

Allowance for credit losses

(149,397)

(74,430)

Interest-earning assets, net

15,783,305

12,985,306

Noninterest-earning assets

1,559,039

1,633,387

Total assets

$

17,342,344

$

14,618,693

Liabilities and Stockholders' Equity

Interest-bearing liabilities

Interest-bearing deposits

$

7,626,575

$

7,741

0.41

%

$

6,264,827

$

15,125

0.97

%

Securities loaned

1,355,945

25,486

7.62

%

1,474,988

11,277

3.07

%

Notes payable and other borrowings

1,130,068

8,014

2.85

%

1,368,038

8,544

2.50

%

Total interest-bearing liabilities

10,112,588

41,241

1.65

%

9,107,853

34,946

1.54

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

3,729,994

2,730,975

Other liabilities

1,101,972

633,722

Total liabilities

14,944,554

12,472,550

Stockholders' equity

2,371,281

2,121,877

Noncontrolling interest

26,509

24,266

Total liabilities and stockholders' equity

$

17,342,344

$

14,618,693

Net interest income (3)

$

105,865

$

111,216

Net interest spread (3)

2.05

%

2.91

%

Net interest margin (3)

2.69

%

3.42

%

________________________________(1) Information presented on a consolidated basis. For the three months ended March 31, 2020, information includes discontinued operations and those assets and liabilities classified of discontinued operations.(2) Average balance includes non-accrual loans.(3) 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 $0.2 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively. Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, April 23, 2021. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review first quarter 2021 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 Momentum Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. At March 31, 2021, Hilltop employed approximately 4,980 people and operated approximately 430 locations in 47 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 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 and other statements that are not statements of historical fact, and may be identified by words such as "anticipates," "believes," "building," "could," "estimates," "expects," "extent," "focus," "forecasts," "goal," "guidance," "intends," "may," "might," "outlook," "plan," "probable," "progressing," "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 COVID-19 pandemic and the response of governmental authorities to the pandemic, which have caused and are causing significant harm to the global economy and our business; (ii) the credit risks of lending activities, including our ability to estimate credit losses, as well as the effects of, and trends in, loan delinquencies and write-offs; (iii) effectiveness of our data security controls in the face of cyber attacks; (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; and (vi) changes in the interest rate environment and transitions away from the London Interbank Offered Rate. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210422006088/en/

CONTACT: Investor Relations Contact: Erik Yohe 214-525-4634 eyohe@hilltop-holdings.com