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Hilltop Holdings Inc. Announces Financial Results for Fourth Quarter and Full Year 2016

DALLAS--(BUSINESS WIRE)--

Hilltop Holdings Inc. (HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2016. Hilltop produced income of $35.3 million, or $0.36 per diluted share, for the fourth quarter of 2016, compared to $20.7 million, or $0.21 per diluted share, for the fourth quarter of 2015. During the fourth quarter of 2016, our results included a specific legal reserve of $16.0 million related to one matter involving Hilltop Securities. Income to common stockholders for the full year 2016 was $145.9 million, or $1.48 per diluted share, compared to $209.1 million, or $2.09 per diluted share, for the full year 2015. Income to common stockholders during the full year 2015 included the recognition of a bargain purchase gain related to the acquisition of SWS Group, Inc. (“SWS Merger”) of $81.3 million, or $0.81 per diluted share. Hilltop’s annualized return on average assets and return on average equity for the fourth quarter of 2016 were 1.13% and 7.56%, respectively, compared to 0.68% and 4.70%, respectively, for the fourth quarter of 2015. The return on average assets and return on average equity for the full year 2016 were 1.21% and 8.13%, respectively, compared to 1.70% and 12.32% for the full year 2015, respectively.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.06 per common share, payable on February 28, 2017, to all common stockholders of record as of the close of business on February 15, 2017. Additionally, the Hilltop Board of Directors reauthorized the stock repurchase program originally approved during 2016 through January 2018, under which Hilltop may repurchase, in the aggregate, up to $50.0 million of its outstanding common stock.

Jeremy Ford, Co-CEO of Hilltop, said, “With the notable exception of two significant adverse items, we are very pleased with our financial and operating results for 2016. Despite these charges, our results demonstrate the diversification and resilience of our franchise. With a strong capital base, solid liquidity and great business model, we are well positioned for the future.”

Alan White, Co-CEO of Hilltop, added, “All of our businesses generated impressive financial results in 2016. Highlights from this year’s performance include double-digit total loan growth at PlainsCapital Bank, record mortgage volume at PrimeLending, significantly improved operating margins at Hilltop Securities, and a solid underwriting profit at National Lloyds. We remain focused on growing all of our businesses profitably, serving our customers and providing a great place for our associates to thrive.”

Fourth Quarter 2016 Highlights for Hilltop:

  • Hilltop’s total assets were $12.7 billion at December 31, 2016, compared to $12.4 billion at September 30, 2016;
  • Hilltop’s common equity increased by $24.8 million from September 30, 2016 to $1.9 billion at December 31, 2016;
  • Non-covered loans1 held for investment, net of allowance for loan losses, increased by 3.0% to $5.8 billion and covered loans1, net of allowance for loan losses, decreased by 12.4% to $255.7 million at December 31, 2016 from September 30, 2016;
  • Non-covered non-performing loans decreased to $24.4 million, or 0.32% of total non-covered loans, at December 31, 2016, compared to $25.2 million, or 0.34% of total non-covered loans, at September 30, 2016;
  • Energy classified and criticized loans were $28.7 million at December 31, 2016, down from $39.4 million at September 30, 2016;
  • Loans held for sale increased by 7.3% to $1.8 billion from September 30, 2016 to December 31, 2016;
  • Total deposits were $7.1 billion at December 31, 2016, compared to $7.0 billion at September 30, 2016;
  • Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio2 of 13.51% and a Common Equity Tier 1 Capital Ratio of 18.30% at December 31, 2016;
  • Hilltop’s net interest margin3 increased to 3.80% for the fourth quarter of 2016, from 3.65% in the third quarter of 2016;
  • The provision for loan losses was $4.3 million during the fourth quarter of 2016, compared to $4.0 million in the third quarter of 2016;
  • For the fourth quarter of 2016, noninterest income was $309.1 million, compared to $276.9 million in the fourth quarter of 2015, an 11.6% increase;
  • For the fourth quarter of 2016, noninterest expense was $355.8 million, compared to $338.7 million in the fourth quarter of 2015, a 5.0% increase; and
  • During the fourth quarter of 2016, Hilltop incurred $0.8 million in pre-tax transaction and integration costs related to the SWS Merger, consisting of $0.1 million in the broker-dealer segment and $0.7 million within corporate.

___________________________

1   “Covered loans” refer to loans acquired in the FNB Transaction that are subject to loss-share agreements with the FDIC, while all other loans are referred to as “non-covered loans.”
2 Based on the end of period Tier 1 capital divided by total average assets during 2016, excluding goodwill and intangible assets.
3 Net interest margin is defined as net interest income divided by average interest-earning assets.
 

Consolidated Financial and Other Information

         
Consolidated Balance Sheets December 31, September 30, June 30, March 31, December 31,
(in 000's)   2016     2016     2016     2016     2015  
Cash and due from banks $ 669,357 $ 528,519 $ 583,984 $ 512,103 $ 652,036
Federal funds sold 21,407 40,419 29,677 15,406 17,409
Securities purchased under agreements to resell 89,430 138,284 149,474 96,646 105,660
Assets segregated for regulatory purposes 180,993 173,840 120,214 120,714 158,613
Securities:
Trading, at fair value 265,534 402,104 305,418 368,425 214,146
Available for sale, at fair value 598,007 563,720 517,784 666,328 673,706
Held to maturity, at amortized cost   351,831     365,934     354,443     310,478     332,022  
1,215,372 1,331,758 1,177,645 1,345,231 1,219,874
Loans held for sale 1,795,463 1,673,069 1,550,475 1,344,333 1,533,678
Non-covered loans, net of unearned income 5,843,499 5,674,655 5,472,446 5,335,547 5,207,617
Allowance for non-covered loan losses   (54,186 )   (52,625 )   (51,013 )   (48,450 )   (45,415 )
Non-covered loans, net 5,789,313 5,622,030 5,421,433 5,287,097 5,162,202
 
Covered loans, net of allowance for covered loan losses 255,714 292,031 322,073 346,169 378,762
Broker-dealer and clearing organization receivables 1,497,741 1,340,617 2,257,480 1,370,622 1,362,499
Premises and equipment, net 190,361 190,645 189,511 198,414 200,618
FDIC indemnification asset 71,313 73,351 74,460 80,522 91,648
Covered other real estate owned 51,642 61,988 67,634 78,890 99,090
Other assets 613,453 657,805 832,344 631,699 578,236
Goodwill 251,808 251,808 251,808 251,808 251,808
Other intangible assets, net   44,695     47,112     49,690     52,274     54,868  
Total assets $ 12,738,062   $ 12,423,276   $ 13,077,902   $ 11,731,928   $ 11,867,001  
 
Deposits:
Non-interest bearing $ 2,199,483 $ 2,232,813 $ 2,280,108 $ 2,233,608 $ 2,235,436
Interest bearing   4,864,328     4,797,772     4,846,705     4,750,567     4,717,247  
Total deposits 7,063,811 7,030,585 7,126,813 6,984,175 6,952,683
Broker-dealer and clearing organization payables 1,347,128 1,251,839 2,111,994 1,284,016 1,338,305
Short-term borrowings 1,417,289 1,265,022 1,012,862 832,921 947,373
Securities sold, not yet purchased, at fair value 153,889 164,633 178,235 165,704 130,044
Notes payable 317,912 313,313 319,636 232,190 238,716
Junior subordinated debentures 67,012 67,012 67,012 67,012 67,012
Other liabilities   496,501     481,504     464,904     405,899     454,743  
Total liabilities 10,863,542 10,573,908 11,281,456 9,971,917 10,128,876
 
Common stock 985 985 985 986 989
Additional paid-in capital 1,572,877 1,570,025 1,568,053 1,567,150 1,577,270
Accumulated other comprehensive income 485 8,039 8,782 6,878 2,629
Retained earnings 295,568 266,048 214,116 183,042 155,475
Deferred compensation employee stock trust, net 903 900 938 1,020 1,034
Employee stock trust   (309 )   (309 )   (347 )   (428 )   (443 )
Total Hilltop stockholders' equity 1,870,509 1,845,688 1,792,527 1,758,648 1,736,954
Noncontrolling interests   4,011     3,680     3,919     1,363     1,171  
Total stockholders' equity   1,874,520     1,849,368     1,796,446     1,760,011     1,738,125  
Total liabilities & stockholders' equity $ 12,738,062   $ 12,423,276   $ 13,077,902   $ 11,731,928   $ 11,867,001  
         
Three Months Ended Year Ended
Consolidated Income Statements December 31, September 30, December 31, December 31, December 31,
(in 000's, except per share data)   2016   2016   2015   2016   2015
Interest income:
Loans, including fees $ 102,046 $ 97,590 $ 94,689 $ 389,637 $ 390,359
Securities borrowed 6,566 9,037 11,242 29,518 41,051
Securities:
Taxable 7,097 5,935 7,046 26,233 26,584
Tax-exempt 1,530 1,518 1,647 6,222 6,628
Other   1,096   1,183   1,338   4,344   5,216
Total interest income 118,335 115,263 115,962 455,954 469,838
 
Interest expense:
Deposits 3,971 3,996 3,589 15,843 15,523
Securities loaned 4,653 6,954 8,388 22,510 29,893
Short-term borrowings 1,829 1,497 1,218 5,803 4,574
Notes payable 2,856 2,793 2,661 10,849 8,143
Junior subordinated debentures 703 673 616 2,676 2,401
Other   199   180   177   742   721
Total interest expense 14,211 16,093 16,649 58,423 61,255
 
Net interest income 104,124 99,170 99,313 397,531 408,583
Provision for loan losses   4,347   3,990   4,277   40,620   12,715
Net interest income after provision for loan losses 99,777 95,180 95,036 356,911 395,868
 
Noninterest income:
Net realized gains on securities 4,403
Net gains from sale of loans and other mortgage production income 137,270 175,412 114,080 606,991 519,103
Mortgage loan origination fees 24,850 26,807 19,514 96,267 77,708
Securities commissions and fees 39,425 39,722 37,459 157,906 160,660
Investment and securities advisory fees and commissions 31,690 31,129 33,678 115,992 115,932
Net insurance premiums earned 38,344 38,747 41,001 155,545 162,082
Bargain purchase gain 81,289
Other   37,548   42,641   31,195   154,264   106,465
Total noninterest income 309,127 354,458 276,927 1,286,965 1,227,642
 
Noninterest expense:
Employees' compensation and benefits 208,760 225,194 182,472 834,113 765,887
Occupancy and equipment, net 27,154 27,460 30,285 109,418 119,653
Loss and loss adjustment expenses 14,018 16,055 21,630 89,243 99,066
Policy acquisition and other underwriting expenses 10,757 11,064 11,928 44,389 47,126
Other   95,095   84,360   92,406   335,308   308,284
Total noninterest expense 355,784 364,133 338,721 1,412,471 1,340,016
 
Income before income taxes 53,120 85,505 33,242 231,405 283,494
Income tax expense   17,582   33,017   12,020   83,461   70,915
Net income 35,538 52,488 21,222 147,944 212,579
Less: Net income attributable to noncontrolling interest   217   556   495   2,050   1,606
Income attributable to Hilltop 35,321 51,932 20,727 145,894 210,973
Dividends on preferred stock           1,854
Income applicable to Hilltop common stockholders $ 35,321 $ 51,932 $ 20,727 $ 145,894 $ 209,119
 
Earnings per common share:
Basic $ 0.36 $ 0.53 $ 0.21 $ 1.48 $ 2.10
Diluted $ 0.36 $ 0.53 $ 0.21 $ 1.48 $ 2.09
 
Cash dividends declared per common share $ 0.06 $ $ $ 0.06 $
 
Weighted average shares outstanding:
Basic 98,514 98,490 98,412 98,404 99,074
Diluted 98,810 98,625 99,266 98,629 99,962
             
Three Months Ended December 31, 2016
Segment Results Mortgage All Other and Hilltop
(in 000's) Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated
Net interest income (expense) $ 94,401 $ 8,858 $ (3,648 ) $ 951 $ (1,844 ) $ 5,406 $ 104,124
Provision for loan losses 4,381 (34 ) 4,347
Noninterest income 13,567 98,473 162,347 40,475 (5,735 ) 309,127
Noninterest expense   63,699   107,389     149,278     28,095   7,565     (242 )   355,784
Income (loss) before income taxes $ 39,888 $ (24 ) $ 9,421   $ 13,331 $ (9,409 ) $ (87 ) $ 53,120
 
Year Ended December 31, 2016
Mortgage All Other and Hilltop
(in 000's) Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated
Net interest income (expense) $ 363,083 $ 31,172 $ (11,589 ) $ 3,164 $ (7,257 ) $ 18,958 $ 397,531
Provision for loan losses 40,673 (53 ) 40,620
Noninterest income 52,579 385,766 704,126 164,841 2 (20,349 ) 1,286,965
Noninterest expense   244,715   377,524     614,741     146,601   29,938     (1,048 )   1,412,471
Income (loss) before income taxes $ 130,274 $ 39,467   $ 77,796   $ 21,404 $ (37,193 ) $ (343 ) $ 231,405
         
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
Selected Financial Data 2016   2016   2015   2016   2015  
 

Hilltop Consolidated:

Return on average stockholders' equity 7.56 % 11.41 % 4.70 % 8.13 % 12.32 %
Return on average assets 1.13 % 1.69 % 0.68 % 1.21 % 1.70 %
Net interest margin (1) 3.80 % 3.65 % 3.70 % 3.74 % 3.78 %
Net interest margin (taxable equivalent) (2):
As reported 3.82 % 3.67 % 3.73 % 3.76 % 3.81 %
Impact of purchase accounting 71 bps 64 bps 79 bps 67 bps 94 bps
Book value per common share ($) 18.98 18.73 17.56 18.98 17.56
Shares outstanding, end of period (000's) 98,544 98,541 98,896 98,544 98,896
 

Banking Segment:

Net interest margin (1) 4.57 % 4.50 % 4.90 % 4.65 % 5.05 %
Net interest margin (taxable equivalent) (2):
As reported 4.59 % 4.53 % 4.92 % 4.68 % 5.08 %
Impact of purchase accounting 96 bps 90 bps 119 bps 93 bps 142 bps
Accretion of discount on loans ($000's) 17,926 15,969 19,503 67,870 96,119
Non-covered net charge-offs (recoveries) ($000's) 3,083 3,107 2,088 32,970 3,799
Return on average assets 1.09 % 1.09 % 1.07 % 0.94 % 1.36 %
Fee income ratio 12.57 % 12.31 % 13.83 % 12.65 % 14.50 %
Efficiency ratio 59.00 % 59.59 % 62.78 % 58.87 % 56.45 %
Employees' compensation and benefits ($000's) 32,350 31,167 27,456 123,489 120,650
 

Broker-Dealer Segment:

Employees' compensation and benefits ($000's) 62,929 68,051 62,868 252,772 255,629
Variable compensation expense ($000's) 37,984 42,446 35,298 148,611 136,337
Compensation as a % of net revenue 58.6 % 61.1 % 63.2 % 60.6 % 69.6 %
Pre-tax margin -0.02 % 15.65 % 3.70 % 9.47 % -0.07 %
 

Mortgage Origination Segment:

Mortgage loan originations - volume ($000's):
Home purchases 2,772,316 3,191,851 2,344,328 11,276,378 9,891,792
Refinancings 1,115,764   1,300,702   721,308   4,183,835   3,460,327  
Total mortgage loan originations - volume 3,888,080 4,492,553 3,065,636 15,460,213 13,352,119
Mortgage loan sales - volume ($000's) 3,723,751 4,349,794 2,888,903 15,155,340 13,129,069
Mortgage servicing rights asset ($000's) (3) 61,968 43,751 52,285 61,968 52,285
Employees' compensation and benefits ($000's) 106,894 120,548 87,387 435,669 370,643
Variable compensation expense ($000's) 64,809 75,271 48,706 266,373 228,590
 

Insurance Segment:

Loss and LAE ratio 36.6 % 41.4 % 52.8 % 57.4 % 61.1 %
Expense ratio 33.2 % 33.6 % 34.2 % 33.5 % 33.8 %
Combined ratio 69.8 % 75.0 % 87.0 % 90.9 % 94.9 %
Employees' compensation and benefits ($000's) 2,262 2,401 2,180 9,145 8,426

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(1)   Net interest margin is defined as net interest income divided by average interest-earning assets.
(2) Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Taxable equivalent adjustments are based on a 35% federal income tax rate. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. For the periods presented, the taxable equivalent adjustments to interest income for Hilltop Consolidated were $0.6 million, $0.5 million, $0.8 million, $0.7 million and $0.8 million, respectively, and for the Banking Segment were $0.4 million, $0.4 million, $0.5 million, $2.4 million and $3.0 million, respectively.
(3) Reported on a consolidated basis and therefore does not include mortgage servicing rights assets related to loans serviced for the banking segment, which are eliminated in consolidation.
         
 
December 31, September 30, June 30, March 31, December 31,
Capital Ratios 2016   2016   2016   2016   2015  
Tier 1 capital (to average assets):
PlainsCapital 12.35 % 12.65 % 12.72 % 12.70 % 13.22 %
Hilltop 13.51 % 13.41 % 13.18 % 13.35 % 12.65 %
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital 14.64 % 15.15 % 14.71 % 15.10 % 16.23 %
Hilltop 18.30 % 17.80 % 16.67 % 17.56 % 17.87 %
Tier 1 capital (to risk-weighted assets):
PlainsCapital 14.64 % 15.15 % 14.77 % 15.12 % 16.25 %
Hilltop 18.87 % 18.37 % 17.26 % 18.17 % 18.48 %
Total capital (to risk-weighted assets):
PlainsCapital 15.38 % 15.90 % 15.51 % 15.87 % 16.99 %
Hilltop 19.34 % 18.82 % 17.69 % 18.60 % 18.89 %
         
December 31, September 30, June 30, March 31, December 31,
Non-Covered Non-Performing Loans Portfolio Data 2016   2016   2016   2016   2015  
 
Non-covered loans accounted for on a non-accrual basis ($000's):
Commercial and industrial 9,515 19,651 18,412 19,179 17,764
Real estate 13,932 4,817 4,777 7,802 7,160
Construction and land development 755 703 139 102 114
Consumer 244 50 61 1 7
Broker-dealer          
24,446 25,221 23,389 27,084 25,045
 
Non-covered non-performing loans as a % of total non-covered loans 0.32 % 0.34 % 0.33 % 0.40 % 0.37 %
 
Non-covered other real estate owned ($000's) 4,507 3,063 2,656 543 394
 
Other repossessed assets ($000's) 1,117 1,654 30
 
Non-covered non-performing assets ($000's) 30,070 29,938 26,045 27,657 25,439
 
Non-covered non-performing assets as a % of total assets 0.24 % 0.24 % 0.20 % 0.24 % 0.21 %
 
Non-covered non-PCI loans past due 90 days or more and still accruing ($000's) 47,680 41,824 50,032 51,943 50,776
 
Troubled debt restructurings included in accruing non-covered loans ($000's) 1,196 1,216 1,235 1,409 1,418
         
December 31, September 30, June 30, March 31, December 31,
PlainsCapital Bank - Energy Exposure 2016   2016   2016   2016   2015  
 
 

Select Energy Statistics

Outstanding energy loan balance ($MM) 166.5 168.8 223.6 233.5 179.8
Energy unfunded commitments ($MM) 121.4 120.7 88.5 102.9 108.7
Energy loans as a % of total loans 3.0 % 3.1 % 4.2 % 4.5 % 3.6 %
Classified and criticized energy loans ($MM):
Criticized energy loans 0.0 1.8 12.7 13.0 3.4
Performing classified energy loans 23.5 24.2 22.1 33.4 25.7
Non-performing classified energy loans 5.2   13.4   6.7   4.9   3.6  
28.7 39.4 41.5 51.3 32.7
 
Unimpaired energy reserves ($MM) 10.6 10.0 9.8 9.2 7.3
Energy reserves as a % of energy loans 6.5 % 6.7 % 4.7 % 4.3 % 4.4 %
Energy NCOs ($MM) 1.5 1.0 0.4 0.2 1.2
 
 

Energy Portfolio Breakdown

Exploration and production 11 % 13 % 10 % 13 % 19 %
Services:
Field services 22 % 26 % 22 % 22 % 21 %
Pipeline construction 21 % 21 % 15 % 15 % 23 %
43 % 47 % 37 % 37 % 44 %
Midstream:
Distribution 30 % 21 % 38 % 37 % 25 %
Transportation 9 % 11 % 9 % 7 % 7 %
39 % 32 % 47 % 44 % 32 %
Other:
Wholesalers 1 % 1 % 1 % 1 % 2 %
Equipment rentals 0 % 0 % 0 % 0 % 1 %
Equipment wholesalers 6 % 7 % 5 % 5 % 2 %
Total 100 % 100 % 100 % 100 % 100 %
           
Three Months Ended December 31,
2016   2015  
Average Interest Annualized Average Interest Annualized
Outstanding Earned or Yield or Outstanding Earned or Yield or
Balance Paid Rate Balance Paid Rate
Assets
Interest-earning assets
Loans, gross (1) $ 7,588,895 $ 102,046 5.32 % $ 6,641,385 $ 94,689 5.63 %
Investment securities - taxable 1,031,667 7,076 2.74 % 1,089,791 7,027 2.57 %
Investment securities - non-taxable (2) 282,027 2,139 3.03 % 251,733 2,369 3.76 %
Federal funds sold and securities purchased under agreements to resell 145,354 40 0.11 % 109,365 68 0.25 %
Interest-bearing deposits in other financial institutions 411,538 500 0.48 % 461,738 352 0.30 %
Other   1,446,216     7,142 1.94 %   2,098,123     12,179 2.27 %
Interest-earning assets, gross 10,905,697 118,943 4.31 % 10,652,135 116,684 4.33 %
Allowance for loan losses   (54,089 )   (44,995 )
Interest-earning assets, net 10,851,608 10,607,140
Noninterest-earning assets   1,646,800     1,684,642  
Total assets $ 12,498,408   $ 12,291,782  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits $ 4,839,376 $ 3,971 0.33 % $ 4,657,125 $ 3,588 0.31 %
Notes payable and other borrowings   2,767,672     10,240 1.46 %   2,999,487     13,060 1.72 %
Total interest-bearing liabilities 7,607,048 14,211 0.74 % 7,656,612 16,648 0.86 %
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,356,373 2,248,847
Other liabilities   674,297     636,884  
Total liabilities 10,637,718 10,542,343
Stockholders’ equity 1,857,830 1,748,632
Noncontrolling interest   2,860     807  
Total liabilities and stockholders' equity $ 12,498,408   $ 12,291,782  
   
Net interest income (2) $ 104,732 $ 100,036
Net interest spread (2) 3.57 % 3.47 %
Net interest margin (2) 3.82 % 3.73 %
           
Year Ended December 31,
2016   2015  
Average Interest Annualized Average Interest Annualized
Outstanding Earned or Yield or Outstanding Earned or Yield or
Balance Paid Rate Balance Paid Rate
Assets
Interest-earning assets
Loans, gross (1) $ 7,153,769 $ 389,637 5.45 % $ 6,550,164 $ 390,359 5.96 %
Investment securities - taxable 1,038,838 26,152 2.52 % 1,112,524 26,511 2.38 %
Investment securities - non-taxable (2) 282,780 8,674 3.07 % 250,870 9,629 3.84 %
Federal funds sold and securities purchased under agreements to resell 150,337 155 0.10 % 99,037 120 0.12 %
Interest-bearing deposits in other financial institutions 426,150 2,024 0.47 % 587,742 1,491 0.25 %
Other   1,589,283     31,765 2.00 %   2,189,579     44,729 2.04 %
Interest-earning assets, gross 10,641,157 458,407 4.31 % 10,789,916 472,839 4.38 %
Allowance for loan losses   (51,925 )   (42,924 )
Interest-earning assets, net 10,589,232 10,746,992
Noninterest-earning assets   1,606,572     1,734,266  
Total assets $ 12,195,804   $ 12,481,258  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits $ 4,824,374 $ 15,843 0.33 % $ 4,804,077 $ 15,523 0.32 %
Notes payable and other borrowings   2,666,438     42,580 1.60 %   3,128,152     45,732 1.46 %
Total interest-bearing liabilities 7,490,812 58,423 0.78 % 7,932,229 61,255 0.77 %
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,241,561 2,187,336
Other liabilities   665,878     647,985  
Total liabilities 10,398,251 10,767,550
Stockholders’ equity 1,795,219 1,713,030
Noncontrolling interest   2,334     678  
Total liabilities and stockholders' equity $ 12,195,804   $ 12,481,258  
   
Net interest income (2) $ 399,984 $ 411,584
Net interest spread (2) 3.53 % 3.61 %
Net interest margin (2) 3.76 % 3.81 %

___________________________

(1)   Average balance includes non-accrual loans.
(2) Presented on a taxable equivalent basis with taxable equivalent adjustments based on a 35% federal income tax rate. The taxable equivalent adjustments to interest income were $0.6 million and $0.8 million for the three months ended December 31, 2016 and 2015, respectively, and $2.4 million and $3.0 million for the year ended December 31, 2016 and 2015, respectively.
 

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, January 27, 2017. Hilltop Co-CEOs Jeremy B. Ford and Alan B. White and other key management members will review fourth quarter 2016 financial results. Interested parties can access the conference call by dialing 1-877-508-9457 (domestic) or 1-412-317-0789 (international). The conference call also will be webcast simultaneously on Hilltop’s Investor Relations website (http://ir.hilltop-holdings.com).

About Hilltop

Hilltop Holdings is a Dallas-based financial holding company. Its primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank. PlainsCapital Bank’s wholly owned subsidiary, PrimeLending, provides residential mortgage lending throughout the United States. Hilltop Holdings’ broker-dealer subsidiaries, Hilltop Securities Inc. and Hilltop Securities Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. Through Hilltop Holdings’ other wholly owned subsidiary, National Lloyds Corporation, it provides property and casualty insurance through two insurance companies, National Lloyds Insurance Company and American Summit Insurance Company. At December 31, 2016, Hilltop employed approximately 5,400 people and operated approximately 450 locations in 43 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 other plans, objectives, strategies, expectations and intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “might,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view” or “would” or the negative of these words and phrases or similar words or phrases. For a discussion of certain factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

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