Hilltop Holdings Inc. Announces Financial Results for Second Quarter 2020

Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the second quarter of 2020. Hilltop produced income from continuing operations to common stockholders of $97.7 million, or $1.08 per diluted share, for the second quarter of 2020, compared to $60.1 million, or $0.64 per diluted share, for the second quarter of 2019. Including income from discontinued operations related to the insurance segment, income applicable to common stockholders was $128.5 million, or $1.42 per diluted share, for the second quarter of 2020, compared to $57.8 million, or $0.62 per diluted share, for the second quarter of 2019. Hilltop’s financial results from continuing operations for the second quarter of 2020 reflect both a significant increase in mortgage origination segment net gains from sales of loans and other mortgage production income and a significant build in the allowance for credit losses associated with the deterioration of the economic outlook from the first quarter of 2020 attributable to the market disruption and economic uncertainties caused by COVID-19.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per common share, payable on August 31, 2020, to all common stockholders of record as of the close of business on August 14, 2020.

As previously announced on April 30, 2020, in light of the uncertain outlook for 2020 due to the COVID-19 pandemic, and Hilltop’s commitment to maintain strong capital and liquidity to meet the needs of its customers and communities during this exceptional period of economic uncertainty, Hilltop’s Board of Directors suspended its stock repurchase program. Hilltop’s Board of Directors has the ability to reinstate the share repurchase program at its discretion as circumstances warrant.

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 2020 is dependent on certain developments, including, among others, the broader adverse implications 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 Ford, President and CEO of Hilltop, said, “While these remain very challenging times and there is significant uncertainty about the future impacts from the pandemic, I am very proud of our teammates across Hilltop as they continue to execute and display compassion for our clients and each other. Our results from the second quarter demonstrate the strength and durability of our operating model as the mortgage franchise delivered record pre-tax income of $138 million on $6 billion of mortgage originations, while the securities business grew pre-tax income by 26% to $28 million from strength in the fixed income capital markets and structured finance business lines. While the Bank incurred a pre-tax loss of $17 million, it generated pre-provision net revenue, or PPNR, of $48 million during the quarter driven by solid net interest income and lower operating expenses. The Bank also recognized approximately $66 million of provision expense related to significant deterioration in the economic outlook from the end of the first quarter through June. In addition to exceptional PPNR performance, we were also able to fortify our strong excess capital and liquidity positions during the quarter by executing a subordinated debt offering and closing the sale of National Lloyds.”

___________________________
Note: Pre-provision net revenue, or PPNR, is a non-GAAP financial measure which represents pre-tax income (loss) plus provision for credit losses. We believe that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.

Second Quarter 2020 Highlights for Hilltop:

• For the second quarter of 2020, net gains from sales of loans and other mortgage production income within our mortgage origination segment was $295.3 million, compared to $131.2 million in the second quarter of 2019, a 125.1% increase;
  • Mortgage loan origination production volume was $6.1 billion during the second quarter of 2020, compared to $4.0 billion in the second quarter of 2019.
• The provision for credit losses was $66.0 million during the second quarter of 2020, compared to $34.5 million in the first quarter of 2020;
  • This significant increase in the provision for credit losses during the second quarter of 2020 was primarily associated with the increase in the expected lifetime credit losses under CECL on collectively evaluated loans within the portfolio attributable to the continued market disruption and related macroeconomic uncertainties caused by COVID-19.
• Hilltop’s consolidated annualized return on average assets and return on average equity for the second quarter of 2020 were 3.30% and 23.32%, respectively, compared to 1.74% and 11.63%, respectively, for the second quarter of 2019;
• Hilltop’s book value per common share increased to $25.08 at June 30, 2020, compared to $23.71 at March 31, 2020;
• Hilltop’s total assets were $16.9 billion at June 30, 2020 compared to $15.7 billion at March 31, 2020;
  • Included $249.8 million in assets of discontinued operations associated with the insurance segment at March 31, 2020.
• Loans¹, net of allowance for credit losses, increased to $7.3 billion compared to $6.7 billion at March 31, 2020;
  • Included supporting our impacted banking clients through funding of over 2,800 loans totaling approximately $672 million at June 30, 2020 through the Paycheck Protection Program, or PPP.
• Non-performing loans were $68.3 million, or 0.65% of total loans at June 30, 2020, compared to $87.4 million, or 0.89% of total loans, at March 31, 2020;
• As of June 30, 2020, we approved approximately $968 million in COVID-19 related loan modifications;
  • Extent of progression of these loans into non-performing loans during future periods is uncertain.
• Loans held for sale increased by 6.5% from March 31, 2020 to $2.6 billion at June 30, 2020;
• Total deposits were $11.6 billion at June 30, 2020, compared to $9.9 billion at March 31, 2020;
• On May 11, 2020, Hilltop completed the issuance and sale of $50 million aggregate principal amount of 5.75% fixed-to-floating rate subordinated notes due May 2030 and $150 million aggregate principal amount of 6.125% fixed-to-floating rate subordinated notes due May 2035;
• Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio² of 12.60% and a Common Equity Tier 1 Capital Ratio of 18.46% at June 30, 2020;
  • 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.
• Hilltop’s consolidated net interest margin³ decreased to 2.80% for the second quarter of 2020, compared to 3.41% in the first quarter of 2020;
• For the second quarter of 2020, noninterest income from continuing operations was $468.1 million, compared to $276.7 million in the second quarter of 2019, a 69.2% increase;
• For the second quarter of 2020, noninterest expense from continuing operations was $370.2 million, compared to $304.1 million in the second quarter of 2019, a 21.7% increase; and
• Hilltop’s effective tax rate from continuing operations was 23.3% during the second quarter of 2020, compared to 23.0% during the same period in 2019.

Discontinued Operations

On June 30, 2020, Hilltop completed the sale of its insurance segment, National Lloyds Corporation, for cash proceeds of $154.1 million. Insurance segment results and its assets and liabilities have been presented as discontinued operations. Included within discontinued operations for the second quarter of 2020 is the recognition of a gain associated with this transaction of $32.3 million, net of $5.1 million in transaction costs and subject to post-closing adjustments. The resulting book gain from this sale transaction was not recognized for tax purposes pursuant to the rules under the Internal Revenue code. Income (loss) from discontinued operations, net of income taxes, was $30.8 million, or $0.34 per diluted share, for the second quarter of 2020, compared to ($2.3) million, or ($0.02) per diluted share, for the second quarter of 2019.

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Note: “Consolidated” refers to our consolidated financial position and consolidated results of operations, including discontinued operations and assets and liabilities classified as held for sale.
¹ “Loans” reflect loans held for investment excluding broker-dealer loans, net of allowance for credit losses, of $422.1 million and $505.9 million at June 30, 2020 and March 31, 2020, 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		June 30,				March 31,				December 31,				September 30,				June 30,
(in 000's)		2020				2020				2019				2019				2019
Cash and due from banks		$	1,655,492			$	524,370			$	433,626			$	281,445			$	303,424
Federal funds sold			385				401				394				423				521
Assets segregated for regulatory purposes			194,626				178,805				157,436				83,878				151,271
Securities purchased under agreements to resell			161,457				23,356				59,031				49,998				50,660
Securities:
Trading, at fair value			648,037				393,581				689,576				707,268				601,524
Available for sale, at fair value, net			1,091,348				972,318				911,493				915,334				916,519
Held to maturity, at amortized cost, net			343,198				355,110				386,326				371,361				365,905
Equity, at fair value			122				107				166				164				150
			2,082,705				1,721,116				1,987,561				1,994,127				1,884,098
Loans held for sale			2,592,307				2,433,407				2,106,361				1,984,231				1,609,477
Loans held for investment, net of unearned income			7,849,904				7,345,250				7,381,400				7,321,208				7,202,604
Allowance for credit losses			(156,383	)			(106,739	)			(61,136	)			(55,604	)			(55,177	)
Loans held for investment, net			7,693,521				7,238,511				7,320,264				7,265,604				7,147,427
Broker-dealer and clearing organization receivables			1,222,627				1,838,789				1,780,280				1,731,979				1,707,249
Premises and equipment, net			210,975				215,261				210,375				203,601				198,266
Operating lease right-of-use assets			119,954				113,395				114,320				119,035				120,965
Other assets			709,246				876,615				460,258				578,422				547,768
Goodwill			267,447				267,447				267,447				267,447				267,447
Other intangible assets, net			23,374				25,019				26,666				28,432				30,308
Assets of discontinued operations			—				249,758				248,429				248,407				246,989
Total assets		$	16,934,116			$	15,706,250			$	15,172,448			$	14,837,029			$	14,265,870
Deposits:
Noninterest-bearing		$	3,467,500			$	2,865,192			$	2,769,556			$	2,732,325			$	2,598,253
Interest-bearing			8,182,098				7,082,297				6,262,658				5,998,547				5,864,826
Total deposits			11,649,598				9,947,489				9,032,214				8,730,872				8,463,079
Broker-dealer and clearing organization payables			1,158,628				1,259,181				1,605,518				1,546,163				1,531,891
Short-term borrowings			720,164				1,329,948				1,424,010				1,502,755				1,338,893
Securities sold, not yet purchased, at fair value			55,340				22,768				43,817				59,249				45,447
Notes payable			450,158				244,042				256,269				217,841				204,423
Operating lease liabilities			131,411				124,123				125,619				128,295				129,858
Junior subordinated debentures			67,012				67,012				67,012				67,012				67,012
Other liabilities			409,672				408,224				348,519				355,629				284,136
Liabilities of discontinued operations			—				139,730				140,674				145,786				149,326
Total liabilities			14,641,983				13,542,517				13,043,652				12,753,602				12,214,065
Common stock			902				901				906				906				928
Additional paid-in capital			1,439,686				1,437,301				1,445,233				1,441,604				1,473,599
Accumulated other comprehensive income			23,813				20,939				11,419				12,305				7,862
Retained earnings			797,331				676,946				644,860				602,835				544,275
Deferred compensation employee stock trust, net			778				774				776				789				788
Employee stock trust			(150	)			(150	)			(155	)			(170	)			(171	)
Total Hilltop stockholders' equity			2,262,360				2,136,711				2,103,039				2,058,269				2,027,281
Noncontrolling interests			29,773				27,022				25,757				25,158				24,524
Total stockholders' equity			2,292,133				2,163,733				2,128,796				2,083,427				2,051,805
Total liabilities & stockholders' equity		$	16,934,116			$	15,706,250			$	15,172,448			$	14,837,029			$	14,265,870

		Three Months Ended
Consolidated Income Statements		June 30,			March 31,			December 31,			September 30,			June 30,
(in 000's, except per share data)		2020			2020			2019			2019			2019
Interest income:
Loans, including fees		$	107,860		$	111,168		$	115,696		$	119,580		$	114,325
Securities borrowed			12,883			13,327			16,196			21,010			15,517
Securities:
Taxable			11,698			15,695			15,174			14,885			13,778
Tax-exempt			1,539			1,610			1,572			1,576			1,513
Other			951			3,075			3,180			3,889			3,867
Total interest income			134,931			144,875			151,818			160,940			149,000
Interest expense:
Deposits			11,947			15,124			17,480			18,887			18,036
Securities loaned			10,796			11,277			13,989			17,889			13,470
Short-term borrowings			2,367			4,744			6,244			8,166			6,897
Notes payable			3,768			2,418			2,337			2,265			2,165
Junior subordinated debentures			705			850			909			955			986
Other			790			126			99			132			162
Total interest expense			30,373			34,539			41,058			48,294			41,716
Net interest income			104,558			110,336			110,760			112,646			107,284
Provision for (reversal of) credit losses			66,026			34,549			6,880			47			(672	)
Net interest income after provision for (reversal of) credit losses			38,532			75,787			103,880			112,599			107,956
Noninterest income:
Net gains from sale of loans and other mortgage production income			295,317			150,486			120,573			157,050			131,173
Mortgage loan origination fees			45,341			28,554			36,939			37,782			33,409
Securities commissions and fees			34,234			40,069			33,205			34,426			34,142
Investment and securities advisory fees and commissions			29,120			23,180			32,083			28,685			22,859
Other			64,113			29,424			40,846			48,562			55,120
Total noninterest income			468,125			271,713			263,646			306,505			276,703
Noninterest expense:
Employees' compensation and benefits			276,893			196,356			212,498			232,449			212,959
Occupancy and equipment, net			26,174			19,522			30,617			27,002			27,938
Professional services			15,737			14,798			17,211			15,472			13,773
Other			51,405			51,225			47,542			46,263			49,418
Total noninterest expense			370,209			281,901			307,868			321,186			304,088
Income from continuing operations before income taxes			136,448			65,599			59,658			97,918			80,571
Income tax expense			31,808			15,148			13,579			21,472			18,526
Income from continuing operations			104,640			50,451			46,079			76,446			62,045
Income (loss) from discontinued operations, net of income taxes			30,775			3,151			5,623			5,261			(2,254	)
Net income			135,415			53,602			51,702			81,707			59,791
Less: Net income attributable to noncontrolling interest			6,939			3,966			2,426			2,289			1,980
Income attributable to Hilltop		$	128,476		$	49,636		$	49,276		$	79,418		$	57,811
Earnings per common share:
Basic:
Earnings from continuing operations		$	1.08		$	0.51		$	0.48		$	0.81		$	0.64
Earnings (losses) from discontinued operations			0.34			0.04			0.06			0.06			(0.02	)
		$	1.42		$	0.55		$	0.54		$	0.87		$	0.62
Diluted:
Earnings from continuing operations		$	1.08		$	0.51		$	0.48		$	0.81		$	0.64
Earnings (losses) from discontinued operations			0.34			0.04			0.06			0.05			(0.02	)
		$	1.42		$	0.55		$	0.54		$	0.86		$	0.62
Cash dividends declared per common share		$	0.09		$	0.09		$	0.08		$	0.08		$	0.08
Weighted average shares outstanding:
Basic			90,164			90,509			90,606			91,745			93,399
Diluted			90,164			90,550			90,711			91,824			93,418

		Three Months Ended June 30, 2020
Segment Results									Mortgage												All Other and				Hilltop
(in 000's)		Banking				Broker-Dealer			Origination				Insurance				Corporate				Eliminations				Consolidated
Net interest income (expense)		$	94,102			$	9,663		$	(1,667	)		$	—			$	(3,232	)		$	5,692			$	104,558
Provision for credit losses			65,600				426			—				—				—				—				66,026
Noninterest income			10,656				122,961			340,487				—				550				(6,529	)			468,125
Noninterest expense			56,622				104,411			200,493				—				8,888				(205	)			370,209
Income (loss) from continuing operations before taxes			(17,464	)			27,787			138,327				—				(11,570	)			(632	)			136,448
Income (loss) from discontinued operations before taxes			—				—			—				(1,911	)			32,341				—				30,430
		$	(17,464	)		$	27,787		$	138,327			$	(1,911	)		$	20,771			$	(632	)		$	166,878

		Six Months Ended June 30, 2020
Segment Results									Mortgage											All Other and				Hilltop
(in 000's)		Banking				Broker-Dealer			Origination				Insurance			Corporate				Eliminations				Consolidated
Net interest income (expense)		$	188,025			$	22,836		$	(1,299	)		$	—		$	(4,888	)		$	10,220			$	214,894
Provision for credit losses			99,875				700			—				—			—				—				100,575
Noninterest income			19,427				209,170			519,455				—			2,838				(11,052	)			739,838
Noninterest expense			113,589				185,350			340,045				—			13,741				(615	)			652,110
Income (loss) from continuing operations before taxes			(6,012	)			45,956			178,111				—			(15,791	)			(217	)			202,047
Income from discontinued operations before taxes			—				—			—				2,103			32,341				—				34,444
		$	(6,012	)		$	45,956		$	178,111			$	2,103		$	16,550			$	(217	)		$	236,491

		Three Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Selected Financial Data		2020			2020			2019			2019			2019
Hilltop Consolidated (1):
Return on average stockholders' equity			23.32%			9.38%			9.43%			15.55%			11.63%
Return on average assets			3.30%			1.47%			1.40%			2.26%			1.74%
Net interest margin (2)			2.80%			3.41%			3.30%			3.45%			3.49%
Net interest margin (taxable equivalent) (3):
As reported			2.81%			3.42%			3.31%			3.46%			3.49%
Impact of purchase accounting			10 bps			22 bps			19 bps			26 bps			23 bps
Book value per common share ($)			25.08			23.71			23.20			22.71			21.85
Shares outstanding, end of period (000's)			90,222			90,108			90,641			90,629			92,775
Dividend payout ratio (4)			6.32%			16.41%			14.71%			9.24%			12.92%
Banking Segment:
Net interest margin (2)			3.11%			3.81%			3.77%			3.97%			4.06%
Net interest margin (taxable equivalent) (3):
As reported			3.12%			3.82%			3.78%			3.98%			4.06%
Impact of purchase accounting			12 bps			30 bps			25 bps			35 bps			31 bps
Accretion of discount on loans ($000's)			3,217			6,639			5,698			7,868			6,444
Net charge-offs (recoveries) ($000's)			16,382			1,508			1,348			(380)			2,960
Return on average assets			-0.42%			0.33%			1.17%			1.51%			1.43%
Fee income ratio			10.2%			8.5%			10.8%			8.3%			10.3%
Efficiency ratio			54.1%			55.5%			54.9%			50.5%			55.9%
Employees' compensation and benefits ($000's)			31,583			32,347			31,455			31,309			33,050
Broker-Dealer Segment:
Net revenue ($000's) (5)			132,624			99,382			113,128			121,466			116,969
Employees' compensation and benefits ($000's)			79,697			56,550			64,301			69,954			70,333
Variable compensation expense ($000's)			52,372			32,024			39,505			44,921			44,833
Compensation as a % of net revenue			60.1%			56.9%			56.8%			57.6%			60.1%
Pre-tax margin (6)			21.0%			18.3%			21.4%			22.2%			18.9%
Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases			3,204,573			2,341,847			2,958,176			3,380,812			3,329,024
Refinancings			2,894,486			1,280,741			1,442,329			1,390,989			631,065
Total mortgage loan originations - volume			6,099,059			3,622,588			4,400,505			4,771,801			3,960,089
Mortgage loan sales - volume ($000's)			5,934,914			3,486,249			4,226,425			4,316,118			3,338,070
Net gains from mortgage loan sales (basis points):
As reported			368			325			304			335			333
Impact of sales to banking segment			(1	)		(13	)		(8	)		(1	)		0
Mortgage servicing rights asset ($000's) (7)			81,263			30,298			55,504			51,297			53,695
Employees' compensation and benefits ($000's)			160,824			100,328			109,753			123,890			106,449
Variable compensation expense ($000's)			113,826			58,280			67,224			81,287			65,516
Insurance Segment:
Loss and LAE ratio			78.5%			39.7%			43.6%			44.9%			74.6%
Expense ratio			39.1%			38.0%			40.5%			38.3%			38.4%
Combined ratio			117.6%			77.7%			84.1%			83.2%			113.0%
Employees' compensation and benefits ($000's)			3,220			2,777			2,929			2,748			2,784

____________________________________
(1)		Ratios and financial data presented on a consolidated basis and includes discontinued operations and those assets and liabilities classified as held for sale.
(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 $0.3 million, $0.3 million, $0.1 million, $0.1 million, and $0.2 million, respectively, for the periods presented and for the banking segment were $0.2 million, $0.2 million, $0.1 million, $0.1 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 plus 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.

		June 30,			March 31,			December 31,			September 30,			June 30,
Capital Ratios		2020			2020			2019			2019			2019
Tier 1 capital (to average assets):
PlainsCapital			10.37%			12.06%			11.61%			11.79%			12.53%
Hilltop			12.60%			13.03%			12.71%			12.67%			13.00%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital			14.03%			13.33%			13.45%			13.25%			13.84%
Hilltop			18.46%			15.96%			16.70%			16.15%			16.32%
Tier 1 capital (to risk-weighted assets):
PlainsCapital			14.03%			13.33%			13.45%			13.25%			13.84%
Hilltop			19.06%			16.38%			17.13%			16.58%			16.77%
Total capital (to risk-weighted assets):
PlainsCapital			14.88%			14.26%			14.13%			13.87%			14.48%
Hilltop			21.82%			17.00%			17.55%			16.95%			17.14%

		June 30,			March 31,			December 31,			September 30,			June 30,
Non-Performing Assets Portfolio Data		2020			2020			2019			2019			2019
Loans accounted for on a non-accrual basis ($000's) (1):
Commercial real estate			13,743			23,352			7,308			8,727			5,276
Commercial and industrial			32,259			47,121			15,262			13,313			14,152
Construction and land development			1,404			1,402			1,316			1,358			1,413
1-4 family residential			20,552			15,237			12,204			12,103			11,136
Consumer			308			310			26			30			34
Broker-dealer			—			—			—			—			—
			68,266			87,422			36,116			35,531			32,011
Non-performing loans as a % of total loans			0.65%			0.89%			0.38%			0.38%			0.36%
Other real estate owned ($000's)			26,602			15,429			18,202			18,738			20,753
Other repossessed assets ($000's)			315			315			—			—			—
Non-performing assets ($000's)			95,183			103,166			54,318			54,269			52,764
Non-performing assets as a % of total assets			0.56%			0.66%			0.36%			0.37%			0.37%
Loans past due 90 days or more and still accruing ($000's)			124,682			101,300			102,707			81,678			77,425
Troubled debt restructurings included in accruing loans held for investment ($000's)			2,025			2,286			2,173			2,222			2,256

____________________________________
(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 maturity date of the existing loan. As of June 30, 2020, the Bank’s actions included approval of approximately $968 million in COVID-19 related loan modifications. The extent to which these measures will impact with Bank is uncertain, and any progression of these loans into non-accrual status, during future periods is uncertain and will depend on future developments that cannot be predicted.

		Three Months Ended June 30,
		2020										2019
		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		$	2,308,368			$	20,036			3.47	%	$	1,307,251			$	15,041		4.60	%
Loans held for investment, gross (2)			7,744,395				87,823			4.50	%		7,078,807				99,284		5.57	%
Investment securities - taxable			1,681,336				12,489			2.97	%		1,733,536				14,654		3.38	%
Investment securities - non-taxable (3)			215,645				1,822			3.38	%		227,953				1,687		2.96	%
Federal funds sold and securities purchased under agreements to resell			61,956				(7	)		(0.04	)%		69,369				369		2.13	%
Interest-bearing deposits in other financial institutions			1,569,277				541			0.14	%		325,130				1,982		2.44	%
Securities borrowed			1,375,849				12,883			3.70	%		1,598,063				15,517		3.84	%
Other			59,917				439			2.95	%		68,990				1,682		9.77	%
Interest-earning assets, gross (3)			15,016,743				136,026			3.60	%		12,409,099				150,216		4.81	%
Allowance for credit losses			(102,216	)									(59,437	)
Interest-earning assets, net			14,914,527										12,349,662
Noninterest-earning assets			1,603,791										1,414,227
Total assets		$	16,518,318									$	13,763,889
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits		$	7,925,031			$	11,946			0.61	%	$	5,792,236			$	18,036		1.25	%
Securities loaned			1,280,958				10,797			3.39	%		1,462,370				13,470		3.69	%
Notes payable and other borrowings			1,110,516				7,998			2.88	%		1,389,295				10,674		3.06	%
Total interest-bearing liabilities			10,316,505				30,741			1.20	%		8,643,901				42,180		1.95	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			3,303,165										2,549,792
Other liabilities			658,416										551,333
Total liabilities			14,278,086										11,745,026
Stockholders’ equity			2,215,538										1,995,811
Noncontrolling interest			24,694										23,052
Total liabilities and stockholders' equity		$	16,518,318									$	13,763,889
Net interest income (3)						$	105,285									$	108,036
Net interest spread (3)										2.40	%								2.86	%
Net interest margin (3)										2.81	%								3.49	%

_____________________________________
(1)		Information presented on a consolidated basis and includes discontinued operations and those assets and liabilities classified as held for sale.
(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 $0.3 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, July 31, 2020. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review second quarter 2020 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. At June 30, 2020, Hilltop employed approximately 4,800 people and operated approximately 420 locations in 48 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,” “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) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (ii) 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; (iii) 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; (iv) changes in the interest rate environment; and (v) risks associated with concentration in real estate related loans. 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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