Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2022

By: Hilltop Holdings Inc. via Business Wire

October 20, 2022 at 16:45 PM EDT

Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2022. Hilltop produced income to common stockholders of $32.1 million, or $0.50 per diluted share, for the third quarter of 2022, compared to $92.9 million, or $1.15 per diluted share, for the third quarter of 2021. Hilltop’s financial results for the third quarter of 2022 reflect a significant decrease in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on November 25, 2022, to all common stockholders of record as of the close of business on November 11, 2022.

Identified headwinds during 2022, including uncertainties related to inflationary pressures on expenses, the impact of tight housing inventories on mortgage volumes, declining deposit balances, and increases in market interest rates, coupled with a declining economic forecast, rapid increases in U.S. treasury yields and mortgage interest rates, and exposure to increasing funding costs during the first nine months of 2022 have had, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2022 and into the first half of 2023.

Jeremy B. Ford, President and CEO of Hilltop, said “Our third quarter financial results were once again driven by a strong performance from PlainsCapital Bank, which continued to prudently grow its core loan portfolio while realizing the benefits of the rising rate environment and resulting expansion of net interest margin. Though deposits declined in the third quarter, the bank still maintains elevated liquidity and ample core deposit funding relative to its loan portfolio. HilltopSecurities experienced improved third quarter results from both a net revenues and pre-tax margin standpoint when compared to each of the trailing three quarters. PrimeLending continues to face material housing market headwinds, including a sharp rise in mortgage interest rates, compression in gain on sale margins and continued affordability concerns for potential home buyers. We remain focused at PrimeLending, and across the Hilltop enterprise, on controlling costs during this dynamic interest rate environment. Importantly, despite the immense and sudden pressure in the mortgage sector, we remained profitable on a consolidated basis and continued to grow capital. We look forward to finishing out 2022 with strong results from our talented team, while positioning Hilltop towards the coming year.”

Third Quarter 2022 Highlights for Hilltop:

The reversal of credit losses was $0.8 million during the third quarter of 2022, compared to a provision for credit losses of $5.3 million in the second quarter of 2022 and a reversal of credit losses of $5.8 million in the third quarter of 2021;
- The reversal of credit losses during the third quarter of 2022 reflected modest improvements in the U.S. economic outlook, specific reserves and credit metrics since the prior quarter.
For the third quarter of 2022, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $98.0 million, compared to $241.9 million in the third quarter of 2021, a 59.5% decrease;
- Mortgage loan origination production volume was $3.0 billion during the third quarter of 2022, compared to $5.6 billion in the third quarter of 2021;
- Net gains from mortgage loans sold to third parties decreased to 227 basis points during the third quarter of 2022, compared to 260 basis points in the second quarter of 2022.
Hilltop’s consolidated annualized return on average assets and return on average stockholders’ equity for the third quarter of 2022 were 0.79% and 6.26%, respectively, compared to 2.13% and 14.96%, respectively, for the third quarter of 2021;
Hilltop’s book value per common share increased to $31.46 at September 30, 2022, compared to $31.43 at June 30, 2022;
Hilltop’s total assets were $16.6 billion and $16.7 billion at September 30, 2022 and June 30, 2022, respectively;
Loans¹, net of allowance for credit losses, were $7.4 billion at both September 30, 2022 and June 30, 2022;
Non-performing loans were $34.6 million, or 0.39% of total loans, at September 30, 2022, compared to $35.7 million, or 0.38% of total loans, at June 30, 2022;
Loans held for sale decreased by 32.7% from June 30, 2022 to $1.0 billion at September 30, 2022;
Total deposits were $11.4 billion and $11.9 billion at September 30, 2022 and June 30, 2022, respectively;
Hilltop maintained strong capital levels² with a Tier 1 Leverage Ratio³ of 11.41% and a Common Equity Tier 1 Capital Ratio of 17.45% at September 30, 2022;
Hilltop’s consolidated net interest margin⁴increased to 3.19% for the third quarter of 2022, compared to 2.75% in the second quarter of 2022;
- Included previously deferred interest income of $0.2 million during the third quarter of 2022 related to PPP loan-related origination fees, compared to $1.3 million in the second quarter of 2022.
For the third quarter of 2022, noninterest income was $207.0 million, compared to $367.9 million in the third quarter of 2021, a 43.7% decrease;
For the third quarter 2022, noninterest expense was $288.7 million, compared to $355.2 million in the third quarter of 2021, a 18.7% decrease; and
Hilltop’s effective tax rate was 21.8% during the third quarter of 2022, compared to 22.8% during the same period in 2021.

___________________
¹		“Loans” reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $402.0 million and $462.4 million at September 30, 2022 and June 30, 2022, 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 Balance Sheets	September 30,			June 30,			March 31,			December 31,			September 30,
(in 000's)	2022			2022			2022			2021			2021
Cash and due from banks	$	1,777,584		$	1,783,554		$	2,886,812		$	2,823,138		$	2,463,111
Federal funds sold		663			381			383			385			406
Assets segregated for regulatory purposes		109,358			120,816			128,408			221,740			269,506
Securities purchased under agreements to resell		145,365			139,929			256,991			118,262			155,908
Securities:
Trading, at fair value		641,864			593,273			471,763			647,998			609,813
Available for sale, at fair value, net		1,584,724			1,562,222			1,462,340			2,130,568			1,994,183
Held to maturity, at amortized cost, net		889,452			920,583			953,107			267,684			277,419
Equity, at fair value		209			197			225			250			221
		3,116,249			3,076,275			2,887,435			3,046,500			2,881,636
Loans held for sale		1,003,605			1,491,579			1,643,994			1,878,190			2,108,878
Loans held for investment, net of unearned income		7,944,246			7,930,619			7,797,903			7,879,904			7,552,926
Allowance for credit losses		(91,783	)		(95,298	)		(91,185	)		(91,352	)		(109,512	)
Loans held for investment, net		7,852,463			7,835,321			7,706,718			7,788,552			7,443,414

Broker-dealer and clearing organization receivables		1,255,052			1,049,830			1,610,352			1,672,946			1,419,652
Premises and equipment, net		191,423			195,361			198,906			204,438			210,026
Operating lease right-of-use assets		103,099			106,806			108,180			112,328			115,942
Mortgage servicing assets		156,539			121,688			100,475			86,990			110,931
Other assets		624,235			513,570			546,622			452,880			526,339
Goodwill		267,447			267,447			267,447			267,447			267,447
Other intangible assets, net		12,209			13,182			14,233			15,284			16,455
Total assets	$	16,615,291		$	16,715,739		$	18,356,956		$	18,689,080		$	17,989,651

Deposits:
Noninterest-bearing	$	4,546,816		$	4,601,643		$	4,694,592		$	4,577,183		$	4,433,148
Interest-bearing		6,805,198			7,319,143			7,972,110			8,240,894			7,699,014
Total deposits		11,352,014			11,920,786			12,666,702			12,818,077			12,132,162
Broker-dealer and clearing organization payables		1,176,156			934,818			1,397,836			1,477,300			1,496,923
Short-term borrowings		942,309			822,649			835,054			859,444			747,040
Securities sold, not yet purchased, at fair value		99,515			135,968			97,629			96,586			113,064
Notes payable		390,354			389,722			395,479			387,904			395,804
Operating lease liabilities		120,635			124,406			125,919			130,960			134,296
Other liabilities		475,425			329,987			347,742			369,606			468,020
Total liabilities		14,556,408			14,658,336			15,866,361			16,139,877			15,487,309

Common stock		646			646			794			790			790
Additional paid-in capital		1,043,605			1,039,261			1,275,649			1,274,446			1,270,272
Accumulated other comprehensive income (loss)		(119,864	)		(95,279	)		(80,565	)		(10,219	)		367
Retained earnings		1,107,586			1,085,208			1,267,415			1,257,014			1,204,307
Deferred compensation employee stock trust, net		479			695			744			752			751
Employee stock trust		(641	)		(954	)		(104	)		(115	)		(116	)
Total Hilltop stockholders' equity		2,031,811			2,029,577			2,463,933			2,522,668			2,476,371
Noncontrolling interests		27,072			27,826			26,662			26,535			25,971
Total stockholders' equity		2,058,883			2,057,403			2,490,595			2,549,203			2,502,342
Total liabilities & stockholders' equity	$	16,615,291		$	16,715,739		$	18,356,956		$	18,689,080		$	17,989,651

	Three Months Ended
Consolidated Income Statements	September 30,			June 30,		March 31,		December 31,			September 30,
(in 000's, except per share data)	2022			2022		2022		2021			2021
Interest income:
Loans, including fees	$	109,165		$	98,728	$	90,408	$	96,104		$	99,769
Securities borrowed		10,938			10,498		8,817		8,524			8,585
Securities:
Taxable		19,642			17,288		15,581		13,916			12,341
Tax-exempt		2,451			2,141		2,419		2,639			2,687
Other		14,276			6,478		2,312		1,872			1,796
Total interest income		156,472			135,133		119,537		123,055			125,178

Interest expense:
Deposits		12,525			5,456		4,193		4,404			5,303
Securities loaned		9,407			8,512		7,472		6,624			6,519
Short-term borrowings		5,550			3,020		2,045		2,279			2,400
Notes payable		3,907			3,809		4,437		5,871			5,465
Junior subordinated debentures		—			—		—		—			419
Other		1,597			2,280		1,399		(417	)		(18	)
Total interest expense		32,986			23,077		19,546		18,761			20,088

Net interest income		123,486			112,056		99,991		104,294			105,090
Provision for (reversal of) credit losses		(780	)		5,336		115		(18,565	)		(5,819	)
Net interest income after provision for (reversal of) credit losses		124,266			106,720		99,876		122,859			110,909

Noninterest income:
Net gains from sale of loans and other mortgage production income		57,998			97,543		110,894		156,103			203,152
Mortgage loan origination fees		39,960			42,378		32,062		35,930			38,780
Securities commissions and fees		34,076			34,757		37,146		32,801			34,412
Investment and securities advisory fees and commissions		35,031			32,002		29,705		42,834			49,646
Other		39,910			32,593		6,621		17,178			41,955
Total noninterest income		206,975			239,273		216,428		284,846			367,945

Noninterest expense:
Employees' compensation and benefits		200,450			205,327		200,019		229,717			258,679
Occupancy and equipment, net		25,041			24,231		24,766		25,741			25,428
Professional services		10,631			16,246		10,063		9,904			14,542
Other		52,616			52,739		51,502		56,832			56,525
Total noninterest expense		288,738			298,543		286,350		322,194			355,174

Income before income taxes		42,503			47,450		29,954		85,511			123,680
Income tax expense		9,249			12,127		5,815		20,715			28,257
Net income		33,254			35,323		24,139		64,796			95,423
Less: Net income attributable to noncontrolling interest		1,186			2,063		1,889		2,611			2,517
Income attributable to Hilltop	$	32,068		$	33,260	$	22,250	$	62,185		$	92,906

Earnings per common share:
Basic	$	0.50		$	0.45	$	0.28	$	0.79		$	1.16
Diluted	$	0.50		$	0.45	$	0.28	$	0.78		$	1.15

Cash dividends declared per common share	$	0.15		$	0.15	$	0.15	$	0.12		$	0.12

Weighted average shares outstanding:
Basic		64,552			73,693		79,114		78,933			80,109
Diluted		64,669			73,838		79,356		79,427			80,542

	Three Months Ended September 30, 2022
Segment Results							Mortgage						All Other and			Hilltop
(in 000's)	Banking			Broker-Dealer			Origination			Corporate			Eliminations			Consolidated
Net interest income (expense)	$	110,939		$	13,386		$	(2,939	)	$	(3,276	)	$	5,376		$	123,486
Provision for (reversal of) credit losses		(650	)		(130	)		—			—			—			(780	)
Noninterest income		12,200			100,798			98,200			1,809			(6,032	)		206,975
Noninterest expense		60,160			96,843			118,345			14,034			(644	)		288,738
Income (loss) before taxes	$	63,629		$	17,471		$	(23,084	)	$	(15,501	)	$	(12	)	$	42,503

	Nine Months Ended September 30, 2022
Segment Results							Mortgage						All Other and			Hilltop
(in 000's)	Banking			Broker-Dealer			Origination			Corporate			Eliminations			Consolidated
Net interest income (expense)	$	304,269		$	37,481		$	(6,066	)	$	(9,856	)	$	9,705		$	335,533
Provision for (reversal of) credit losses		4,325			346			—			—			—			4,671
Noninterest income		37,438			249,139			381,477			5,655			(11,033	)		662,676
Noninterest expense		175,921			268,307			386,372			44,388			(1,357	)		873,631
Income (loss) before taxes	$	161,461		$	17,967		$	(10,961	)	$	(48,589	)	$	29		$	119,907

	Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,
Selected Financial Data	2022		2022		2022		2021		2021

Hilltop Consolidated:
Return on average stockholders' equity	6.26%		5.82%		3.60%		9.93%		14.96%
Return on average assets	0.79%		0.80%		0.53%		1.41%		2.13%
Net interest margin ⁽¹⁾	3.19%		2.75%		2.36%		2.44%		2.53%
Net interest margin (taxable equivalent) ⁽²⁾:
As reported	3.20%		2.76%		2.37%		2.45%		2.54%
Impact of purchase accounting	8 bps		8 bps		7 bps		12 bps		9 bps
Book value per common share ($)	31.46		31.43		31.02		31.95		31.36
Shares outstanding, end of period (000's)	64,591		64,576		79,439		78,965		78,959
Dividend payout ratio ⁽³⁾	30.19%		33.33%		53.57%		15.19%		10.34%

Banking Segment:
Net interest margin ⁽¹⁾	3.42%		2.97%		2.65%		2.81%		2.99%
Net interest margin (taxable equivalent)⁽²⁾:
As reported	3.43%		2.98%		2.65%		2.82%		3.00%
Impact of purchase accounting	10 bps		10 bps		8 bps		15 bps		11 bps
Accretion of discount on loans ($000's)	2,858		3,011		2,510		4,716		3,221
Net recoveries (charge-offs) ($000's)	(2,735	)	(1,223	)	(282	)	405		62
Return on average assets	1.41%		1.09%		0.98%		1.44%		1.36%
Fee income ratio	9.9%		11.0%		12.2%		10.8%		10.5%
Efficiency ratio	48.9%		50.4%		55.7%		54.2%		48.8%
Employees' compensation and benefits ($000's)	35,934		33,554		33,517		34,415		31,500

Broker-Dealer Segment:
Net revenue ($000's) ⁽⁴⁾	114,184		100,229		72,209		94,569		126,570
Employees' compensation and benefits ($000's)	70,274		64,494		55,825		65,301		82,429
Variable compensation expense ($000's)	42,567		37,471		26,625		35,939		53,505
Compensation as a % of net revenue	61.5%		64.3%		77.3%		69.1%		65.1%
Pre-tax margin ⁽⁵⁾	15.3%		9.1%		(11.9)%		1.8%		13.8%

Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases	2,832,136		3,342,103		2,753,031		3,559,137		3,948,420
Refinancings	211,075		467,117		1,011,452		1,430,369		1,646,208
Total mortgage loan originations - volume	3,043,211		3,809,220		3,764,483		4,989,506		5,594,628
Mortgage loan sales - volume ($000's)	3,419,950		3,872,935		3,868,596		4,988,538		6,195,559
Net gains from mortgage loan sales (basis points):
Loans sold to third parties	227		260		321		362		359
Impact of loans retained by banking segment	(9	)	(7	)	(9	)	(15	)	(13	)
As reported	218		253		312		347		346
Mortgage servicing rights asset ($000's) ⁽⁶⁾	156,539		121,688		100,475		86,990		110,931
Employees' compensation and benefits ($000's)	86,079		100,206		102,748		121,758		134,814
Variable compensation expense ($000's)	44,312		56,525		56,243		73,208		88,153

___________________
(1)		Net interest margin is defined as net interest income divided by average interest-earning assets.
(2)		Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest-earning assets. Taxable equivalent adjustments are based on the applicable 21% federal income tax rate for all periods presented. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. The taxable equivalent adjustments to interest income for Hilltop (consolidated) were $0.4 million, $0.4 million, $0.5 million, $0.5 million, and $0.6 million, respectively, for the periods presented and for the banking segment were $0.2 million for each of the periods presented.
(3)		Dividend payout ratio is defined as cash dividends declared per common share divided by basic earnings per common share.
(4)		Net revenue is defined as the sum of total broker-dealer net interest income and total broker-dealer noninterest income.
(5)		Pre-tax margin is defined as income before income taxes divided by net revenue.
(6)		Reported on a consolidated basis and therefore does not include mortgage servicing rights assets related to loans serviced for the banking segment, which are eliminated in consolidation.

	September 30,	June 30,	March 31,	December 31,	September 30,
Capital Ratios	2022	2022	2022	2021	2021
Tier 1 capital (to average assets):
PlainsCapital	10.29%	9.67%	9.74%	10.20%	10.02%
Hilltop	11.41%	10.53%	12.46%	12.58%	12.64%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital	14.68%	14.65%	15.37%	16.00%	15.40%
Hilltop	17.45%	17.24%	21.27%	21.22%	21.28%
Tier 1 capital (to risk-weighted assets):
PlainsCapital	14.68%	14.65%	15.37%	16.00%	15.40%
Hilltop	17.45%	17.24%	21.27%	21.22%	21.28%
Total capital (to risk-weighted assets):
PlainsCapital	15.54%	15.55%	16.18%	16.77%	16.32%
Hilltop	20.07%	19.90%	23.85%	23.75%	24.00%

	September 30,	June 30,	March 31,	December 31,	September 30,
Non-Performing Assets Portfolio Data	2022	2022	2022	2021	2021
Loans accounted for on a non-accrual basis ($000's) ⁽¹⁾:
Commercial real estate	4,735	4,947	6,153	6,601	5,705
Commercial and industrial	12,078	13,315	18,486	22,478	29,808
Construction and land development	1	1	1	2	366
1-4 family residential	16,968	16,542	18,723	21,123	25,255
Consumer	16	19	21	23	24
Broker-dealer	—	—	—	—	—
	33,798	34,824	43,384	50,227	61,158
Troubled debt restructurings included in accruing loans held for investment ($000's)	825	857	890	922	1,038
Non-performing loans ($000's)	34,623	35,681	44,274	51,149	62,196

Non-performing loans as a % of total loans	0.39%	0.38%	0.47%	0.52%	0.64%

Other real estate owned ($000's)	1,637	1,516	2,175	2,833	21,605

Other repossessed assets ($000's)	—	—	—	—	—

Non-performing assets ($000's)	36,260	37,197	46,449	53,982	83,801

Non-performing assets as a % of total assets	0.22%	0.22%	0.25%	0.29%	0.47%

Loans past due 90 days or more and still accruing ($000's) ⁽²⁾:	96,532	82,410	87,489	60,775	175,734

___________________
(1)		Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications through January 1, 2022. The banking segment’s COVID-19 payment deferment programs since the second quarter of 2020 allowed 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. For the periods presented, the banking segment’s actions through December 31, 2021 included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $4 million and $17 million as of December 31, 2021 and September 30, 2021, respectively.
(2)		Loans past due 90 days or more and still accruing were primarily comprised of loans held for sale and guaranteed by U.S. government agencies, including loans that are subject to repurchase, or have been repurchased, by PrimeLending.

	Three Months Ended September 30,
	2022							2021
	Average			Interest		Annualized		Average			Interest		Annualized
	Outstanding			Earned		Yield or		Outstanding			Earned		Yield or
Net Interest Margin (Taxable Equivalent) Details ⁽¹⁾	Balance			or Paid		Rate		Balance			or Paid		Rate
Assets
Interest-earning assets
Loans held for sale	$	1,166,265		$	14,414	4.94	%	$	2,300,939		$	17,696	3.08	%
Loans held for investment, gross ⁽²⁾		7,911,833			94,751	4.75	%		7,514,392			82,073	4.33	%
Investment securities - taxable		2,883,412			19,642	2.72	%		2,585,362			12,328	1.91	%
Investment securities - non-taxable ⁽³⁾		312,312			2,817	3.61	%		318,408			3,252	4.09	%
Federal funds sold and securities purchased under agreements to resell		137,728			1,309	3.77	%		161,577			207	—	%
Interest-bearing deposits in other financial institutions		1,780,220			9,542	2.13	%		2,197,478			788	0.14	%
Securities borrowed		1,116,837			10,938	3.83	%		1,364,726			8,585	2.46	%
Other		56,331			3,425	24.12	%		51,350			813	6.28	%
Interest-earning assets, gross ⁽³⁾		15,364,938			156,838	4.05	%		16,494,232			125,742	3.02	%
Allowance for credit losses		(95,083	)						(115,688	)
Interest-earning assets, net		15,269,855							16,378,544
Noninterest-earning assets		1,399,228							1,371,207
Total assets	$	16,669,083						$	17,749,751

Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	7,136,779		$	12,525	0.70	%	$	7,622,748		$	5,303	0.28	%
Securities loaned		980,530			9,407	3.81	%		1,306,314			6,519	1.98	%
Notes payable and other borrowings		1,262,985			11,054	3.47	%		1,231,545			8,266	2.66	%
Total interest-bearing liabilities		9,380,294			32,986	1.40	%		10,160,607			20,088	0.78	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		4,543,067							4,299,987
Other liabilities		685,843							800,225
Total liabilities		14,609,204							15,260,819
Stockholders’ equity		2,032,717							2,463,821
Noncontrolling interest		27,162							25,111
Total liabilities and stockholders' equity	$	16,669,083						$	17,749,751

Net interest income ⁽³⁾				$	123,852						$	105,654
Net interest spread ⁽³⁾						2.65	%						2.24	%
Net interest margin ⁽³⁾						3.20	%						2.54	%

___________________
(1)		Information presented on a consolidated basis.
(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 rate for the periods presented. The adjustment to interest income was $0.4 million and $0.6 million for the three months ended September 30, 2022 and 2021, respectively.

Conference Call Information

Hilltop will host a live webcast and conference call at 8:00 AM Central (9:00 AM Eastern) on Friday, October 21, 2022. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third quarter 2022 financial results. Interested parties can access the conference call by dialing 1-844-200-6205 (United States), 1-833-950-0062 (Canada) or 1-929-526-1599 (all other locations) and then using the access code 098668. 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 September 30, 2022, Hilltop employed approximately 4,385 people and operated approximately 370 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,” “continue,” “could,” “drive,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “probable,” “progressing,” “projects,” “seeks,” “should,” “target,” “view,” “well-tuned,” “will” or “would” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: (i) the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (ii) effectiveness of our data security controls in the face of cyber attacks; (iii) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (iv) 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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Contacts

Erik Yohe

214-525-4634

eyohe@hilltop-holdings.com