Exhibit 99.1

Investor Relations Contact:

Erik Yohe

214-525-4634

eyohe@hilltop-holdings.com

Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2020

DALLAS — (BUSINESS WIRE) October 22, 2020 — Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the third quarter of 2020. Hilltop produced income from continuing operations to common stockholders of $152.5 million, or $1.69 per diluted share, for the third quarter of 2020, compared to $74.2 million, or $0.81 per diluted share, for the third quarter of 2019. Hilltop’s financial results from continuing operations for the third quarter of 2020 reflect a significant increase in mortgage origination segment net gains from sale of loans and other mortgage production income. Including income from discontinued operations related to the insurance segment, income applicable to common stockholders was $153.3 million, or $1.70 per diluted share, for the third quarter of 2020, compared to $79.4 million, or $0.86 per diluted share, for the third quarter of 2019.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per common share, payable on November 30, 2020, to all common stockholders of record as of the close of business on November 16, 2020.

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, “Our results this quarter highlight the strength of our diversified operating model and the commitment of our team. I could not be more pleased with the performance of our businesses and our team for working tirelessly to serve customers in a safe and highly effective manner. Our focus on execution and delivering exceptional customer service will continue to provide the foundation for prudent growth in the future.

Hilltop’s results this quarter reflect record performance from our mortgage origination franchise, enhanced performance in our securities businesses and stable credit performance at the bank. The mortgage business generated $6.5 billion of mortgage originations and $146 million of pre-tax income, as PrimeLending leveraged recent investments in technology and superior teamwork. HilltopSecurities generated $149 million of net revenue and a 24% pre-tax margin from improved results in its fixed income capital markets, structured finance and public banking business lines. PlainsCapital Bank generated $50 million of pre-tax income, representing a return to profitability as credit trends remained stable after the significant build in the allowance for credit losses during the second quarter. During the third quarter, the bank continued to support our customers facing adversity in the pandemic, resulting in approximately $291 million of active loan payment deferrals.”

Third Quarter 2020 Highlights for Hilltop:

For the third quarter of 2020, net gains from sale of loans and other mortgage production income within our mortgage origination segment was $307.9 million, compared to $157.1 million in the third quarter of 2019, a 96.0% increase;
oMortgage loan origination production volume was $6.5 billion during the third quarter of 2020, compared to $4.8 billion in the third quarter of 2019.
The provision for (reversal of) credit losses was $(0.6) million during the third quarter of 2020, compared to $66.0 million in the second quarter of 2020;
oThe significant 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 through June 2020.
Graphic

oThe reversal of credit losses during the third quarter of 2020 primarily reflected changes in reserves on margin loans within the broker-dealer segment given that the changes in the provision for credit losses associated with the Bank’s loan portfolio composition and credit quality were offset by improvements in macroeconomic factor assumptions and qualitative factors from the prior quarter.
Hilltop’s consolidated annualized return on average assets and return on average equity for the third quarter of 2020 were 3.71% and 25.94%, respectively, compared to 2.26% and 15.55%, respectively, for the third quarter of 2019;
Hilltop’s book value per common share increased to $26.72 at September 30, 2020, compared to $25.08 at June 30, 2020;
Hilltop’s total assets were $16.9 billion at both September 30, 2020 and June 30, 2020;
Loans1, net of allowance for credit losses, were $7.3 billion at both September 30, 2020 and June 30, 2020;
oIncludes supporting our impacted banking clients through funding of over 2,800 loans through the Paycheck Protection Program, or PPP, which totaled approximately $671 million at September 30, 2020.
Non-performing loans were $82.1 million, or 0.78% of total loans, at September 30, 2020, compared to $68.3 million, or 0.65% of total loans, at June 30, 2020;
During the third quarter of 2020, we further supported our impacted banking clients through the approval of COVID-19 related loan modifications, resulting in active deferrals that have not reached the end of their deferral period of approximately $291 million as of September 30, 2020;
oAs of June 30, 2020, active COVID-19 related loan modifications totaled approximately $968 million;
oDuring the third quarter of 2020, COVID-19 related loan modifications of approximately $662 million have made at least one payment pursuant to agreed-upon contractual terms;
oExtent of progression of these loans into non-performing loans during future periods is uncertain.
Loans held for sale decreased by 1.7% from June 30, 2020 to $2.5 billion at September 30, 2020;
Total deposits were $11.3 billion at September 30, 2020, compared to $11.6 billion at June 30, 2020;
Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio2 of 13.03% and a Common Equity Tier 1 Capital Ratio of 19.85% at September 30, 2020;
oRatios 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 2.56% for the third quarter of 2020, compared to 2.80% in the second quarter of 2020;
For the third quarter of 2020, noninterest income from continuing operations was $502.7 million, compared to $306.5 million in the third quarter of 2019, a 64.0% increase;
For the third quarter of 2020, noninterest expense from continuing operations was $399.3 million, compared to $321.2 million in the third quarter of 2019, a 24.3% increase; and
Hilltop’s effective tax rate from continuing operations was 22.7% during the third quarter of 2020, compared to 21.9% 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 of corporate for the third quarter of 2020 is the recognition of a pre-tax post-closing adjustment gain of $0.7 million related to the finalization of the June 30, 2020 closing balance sheet, resulting in an aggregate gain on sale of NLC of $33.1 million. The resulting book gain from this sale transaction was not recognized for tax purposes pursuant to the rules under the Internal Revenue Code. Income from discontinued operations, net of income taxes, was $0.7 million, or $0.01 per diluted share, for the third quarter of 2020, compared to $5.3 million, or $0.05 per diluted share, for the third quarter of 2019.


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 margin loans, net of allowance for credit losses, of $502.1 million and $422.1 million at September 30, 2020 and June 30, 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.

Graphic


Consolidated Financial and Other Information

Consolidated Balance Sheets

September 30,

June 30,

March 31,

December 31,

September 30,

(in 000's)

    

2020

    

2020

    

2020

    

2019

    

2019

Cash and due from banks

$

1,277,865

$

1,655,492

$

524,370

$

433,626

$

281,445

Federal funds sold

420

385

401

394

423

Assets segregated for regulatory purposes

221,621

194,626

178,805

157,436

83,878

Securities purchased under agreements to resell

90,103

161,457

23,356

59,031

49,998

Securities:

 

Trading, at fair value

667,751

648,037

393,581

689,576

707,268

Available for sale, at fair value, net

1,310,240

1,091,348

972,318

911,493

915,334

Held to maturity, at amortized cost, net

323,299

343,198

355,110

386,326

371,361

Equity, at fair value

117

122

107

166

164

2,301,407

2,082,705

1,721,116

1,987,561

1,994,127

Loans held for sale

 

2,547,975

2,592,307

2,433,407

2,106,361

1,984,231

Loans held for investment, net of unearned income

7,945,560

7,849,904

7,345,250

7,381,400

7,321,208

Allowance for credit losses

 

(155,214)

(156,383)

(106,739)

(61,136)

(55,604)

Loans held for investment, net

7,790,346

7,693,521

7,238,511

7,320,264

7,265,604

Broker-dealer and clearing organization receivables

1,363,478

1,222,627

1,838,789

1,780,280

1,731,979

Premises and equipment, net

 

208,078

210,975

215,261

210,375

203,601

Operating lease right-of-use assets

 

109,354

119,954

113,395

114,320

119,035

Mortgage servicing assets

127,712

81,264

30,299

55,504

51,297

Other assets

607,932

627,982

846,316

404,754

527,125

Goodwill

267,447

267,447

267,447

267,447

267,447

Other intangible assets, net

21,814

23,374

25,019

26,666

28,432

Assets of discontinued operations

249,758

248,429

248,407

Total assets

$

16,935,552

$

16,934,116

$

15,706,250

$

15,172,448

$

14,837,029

Deposits:

Noninterest-bearing

$

3,557,603

$

3,467,500

$

2,865,192

$

2,769,556

$

2,732,325

Interest-bearing

 

7,704,312

8,182,098

7,082,297

6,262,658

5,998,547

Total deposits

11,261,915

11,649,598

9,947,489

9,032,214

8,730,872

Broker-dealer and clearing organization payables

 

1,310,835

1,158,628

1,259,181

1,605,518

1,546,163

Short-term borrowings

780,109

720,164

1,329,948

1,424,010

1,502,755

Securities sold, not yet purchased, at fair value

56,023

55,340

22,768

43,817

59,249

Notes payable

396,006

450,158

244,042

256,269

217,841

Operating lease liabilities

122,402

131,411

124,123

125,619

128,295

Junior subordinated debentures

67,012

67,012

67,012

67,012

67,012

Other liabilities

502,517

409,672

408,224

348,519

355,629

Liabilities of discontinued operations

139,730

140,674

145,786

Total liabilities

14,496,819

14,641,983

13,542,517

13,043,652

12,753,602

Common stock

902

902

901

906

906

Additional paid-in capital

1,443,588

1,439,686

1,437,301

1,445,233

1,441,604

Accumulated other comprehensive income

23,790

23,813

20,939

11,419

12,305

Retained earnings

942,461

797,331

676,946

644,860

602,835

Deferred compensation employee stock trust, net

774

778

774

776

789

Employee stock trust

(143)

(150)

(150)

(155)

(170)

Total Hilltop stockholders' equity

2,411,372

2,262,360

2,136,711

2,103,039

2,058,269

Noncontrolling interests

27,361

29,773

27,022

25,757

25,158

Total stockholders' equity

2,438,733

2,292,133

2,163,733

2,128,796

2,083,427

Total liabilities & stockholders' equity

$

16,935,552

$

16,934,116

$

15,706,250

$

15,172,448

$

14,837,029

Graphic


Three Months Ended

Consolidated Income Statements

September 30,

June 30,

March 31,

December 31,

September 30,

(in 000's, except per share data)

    

2020

    

2020

    

2020

    

2019

    

2019

    

Interest income:

Loans, including fees

$

104,955

$

107,860

$

111,168

$

115,696

$

119,580

Securities borrowed

10,705

12,883

13,327

16,196

21,010

Securities:

Taxable

11,035

11,698

15,695

15,174

14,885

Tax-exempt

1,687

1,539

1,610

1,572

1,576

Other

1,446

951

3,075

3,180

3,889

Total interest income

129,828

134,931

144,875

151,818

160,940

Interest expense:

 

Deposits

10,700

11,947

15,124

17,480

18,887

Securities loaned

8,729

10,796

11,277

13,989

17,889

Short-term borrowings

2,346

2,367

4,744

6,244

8,166

Notes payable

4,904

3,768

2,418

2,337

2,265

Junior subordinated debentures

608

705

850

909

955

Other

641

790

126

99

132

Total interest expense

27,928

30,373

34,539

41,058

48,294

Net interest income

101,900

104,558

110,336

110,760

112,646

Provision for (reversal of) credit losses

(602)

66,026

34,549

6,880

47

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

102,502

38,532

75,787

103,880

112,599

Noninterest income:

 

Net gains from sale of loans and other mortgage production income

307,896

295,317

150,486

120,573

157,050

Mortgage loan origination fees

47,681

45,341

28,554

36,939

37,782

Securities commissions and fees

32,496

34,234

40,069

33,205

34,426

Investment and securities advisory fees and commissions

36,866

29,120

23,180

32,083

28,685

Other

77,772

64,113

29,424

40,846

48,562

Total noninterest income

502,711

468,125

271,713

263,646

306,505

Noninterest expense:

 

Employees' compensation and benefits

294,907

276,893

196,356

212,498

232,449

Occupancy and equipment, net

26,124

26,174

19,522

30,617

27,002

Professional services

17,522

15,737

14,798

17,211

15,472

Other

60,792

51,405

51,225

47,542

46,263

Total noninterest expense

399,345

370,209

281,901

307,868

321,186

Income from continuing operations before income taxes

205,868

136,448

65,599

59,658

97,918

Income tax expense

 

46,820

31,808

15,148

13,579

21,472

Income from continuing operations

159,048

104,640

50,451

46,079

76,446

Income from discontinued operations, net of income taxes

736

30,775

3,151

5,623

5,261

Net income

159,784

135,415

53,602

51,702

81,707

Less: Net income attributable to noncontrolling interest

 

6,505

6,939

3,966

2,426

2,289

Income attributable to Hilltop

$

153,279

$

128,476

$

49,636

$

49,276

$

79,418

Earnings per common share:

Basic:

Earnings from continuing operations

$

1.69

$

1.08

$

0.51

$

0.48

$

0.81

Earnings from discontinued operations

0.01

0.34

0.04

0.06

0.06

$

1.70

$

1.42

$

0.55

$

0.54

$

0.87

Diluted:

Earnings from continuing operations

$

1.69

$

1.08

$

0.51

$

0.48

$

0.81

Earnings from discontinued operations

0.01

0.34

0.04

0.06

0.05

$

1.70

$

1.42

$

0.55

$

0.54

$

0.86

Cash dividends declared per common share

$

0.09

$

0.09

$

0.09

$

0.08

$

0.08

Weighted average shares outstanding:

Basic

90,200

90,164

90,509

90,606

91,745

Diluted

90,200

90,164

90,550

90,711

91,824

Graphic


Three Months Ended September 30, 2020

Segment Results

Mortgage

    

    

    

All Other and

    

Hilltop

(in 000's)

    

Banking

    

Broker-Dealer

    

Origination

    

Insurance

    

Corporate

    

Eliminations

    

Consolidated

Net interest income (expense)

$

96,416

$

8,168

$

(2,349)

$

$

(4,594)

$

4,259

$

101,900

Provision for (reversal of) credit losses

 

 

(602)

 

 

 

 

 

(602)

Noninterest income

 

9,819

 

141,022

 

355,471

 

 

477

 

(4,078)

 

502,711

Noninterest expense

 

55,980

 

114,393

 

207,176

 

 

21,999

 

(203)

 

399,345

Income (loss) from continuing operations before taxes

50,255

35,399

 

145,946

 

 

(26,116)

 

384

 

205,868

Income from discontinued operations before taxes

 

 

 

736

 

 

736

$

50,255

$

35,399

$

145,946

$

$

(25,380)

$

384

$

206,604

Nine Months Ended September 30, 2020

Segment Results

Mortgage

    

    

    

All Other and

    

Hilltop

(in 000's)

    

Banking

    

Broker-Dealer

    

Origination

    

Insurance

    

Corporate

    

Eliminations

    

Consolidated

Net interest income (expense)

$

284,440

$

31,005

$

(3,647)

$

$

(9,482)

$

14,478

$

316,794

Provision for credit losses

 

99,875

 

98

 

99,973

Noninterest income

 

29,246

 

350,192

874,926

3,315

(15,130)

 

1,242,549

Noninterest expense

 

169,569

 

299,743

547,222

35,741

(820)

 

1,051,455

Income (loss) from continuing operations before taxes

44,242

81,356

324,057

(41,908)

168

407,915

Income from discontinued operations before taxes

2,103

33,077

35,180

$

44,242

$

81,356

$

324,057

$

2,103

$

(8,831)

$

168

$

443,095

Three Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

Selected Financial Data

    

2020

    

2020

    

2020

    

2019

    

2019

Hilltop Consolidated (1):

 

Return on average stockholders' equity

25.94%

23.32%

9.38%

9.43%

15.55%

Return on average assets

3.71%

3.30%

1.47%

1.40%

2.26%

Net interest margin (2)

2.56%

2.80%

3.41%

3.30%

3.45%

Net interest margin (taxable equivalent) (3):

As reported

2.57%

 

2.81%

3.42%

3.31%

3.46%

Impact of purchase accounting

 

10 bps

10 bps

22 bps

19 bps

26 bps

Book value per common share ($)

26.72

25.08

23.71

23.20

22.71

Shares outstanding, end of period (000's)

90,238

90,222

90,108

90,641

90,629

Dividend payout ratio (4)

5.30%

 

6.32%

16.41%

14.71%

9.24%

Banking Segment:

Net interest margin (2)

3.03%

3.11%

3.81%

3.77%

3.97%

Net interest margin (taxable equivalent) (3):

As reported

3.03%

3.12%

3.82%

3.78%

3.98%

Impact of purchase accounting

13 bps

12 bps

30 bps

25 bps

35 bps

Accretion of discount on loans ($000's)

3,346

3,217

6,639

5,698

7,868

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

567

16,382

1,508

1,348

(380)

Return on average assets

1.14%

-0.42%

0.33%

1.17%

1.51%

Fee income ratio

9.2%

10.2%

8.5%

10.8%

8.3%

Efficiency ratio

52.7%

54.1%

55.5%

54.9%

50.5%

Employees' compensation and benefits ($000's)

29,808

31,583

32,347

31,455

31,309

Broker-Dealer Segment:

Net revenue ($000's) (5)

149,190

132,624

99,382

113,128

121,466

Employees' compensation and benefits ($000's)

88,063

79,697

56,550

64,301

69,954

Variable compensation expense ($000's)

60,774

52,372

32,024

39,505

44,921

Compensation as a % of net revenue

59.0%

60.1%

56.9%

56.8%

57.6%

Pre-tax margin (6)

23.7%

21.0%

18.3%

21.4%

22.2%

Mortgage Origination Segment:

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

Home purchases

4,183,560

3,204,573

2,341,847

2,958,176

3,380,812

Refinancings

2,266,793

2,894,486

1,280,741

1,442,329

1,390,989

Total mortgage loan originations - volume

6,450,353

6,099,059

3,622,588

4,400,505

4,771,801

Mortgage loan sales - volume ($000's)

6,521,773

5,934,914

3,486,249

4,226,425

4,316,118

Net gains from mortgage loan sales (basis points):

As reported

440

368

325

304

335

Impact of sales to banking segment

(1)

(1)

(13)

(8)

(1)

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

127,712

81,263

30,299

55,504

51,297

Employees' compensation and benefits ($000's)

161,738

160,824

100,328

109,753

123,890

Variable compensation expense ($000's)

116,275

113,826

58,280

67,224

81,287


(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, $0.3 million, $0.1 million, and $0.1 million, respectively, for the periods presented and for the banking segment were $0.2 million, $0.2 million, $0.2 million, $0.1 million, and $0.1 million, respectively, for the periods presented.

Graphic


(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.

September 30,

June 30,

March 31,

December 31,

September 30,

Capital Ratios

   

2020

   

2020

    

2020

    

2019

    

2019

Tier 1 capital (to average assets):

PlainsCapital

 

10.19%

 

10.37%

12.06%

11.61%

11.79%

Hilltop

13.03%

 

12.60%

13.03%

12.71%

12.67%

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

PlainsCapital

14.64%

 

14.03%

13.33%

13.45%

13.25%

Hilltop

 

19.85%

 

18.46%

15.96%

16.70%

16.15%

Tier 1 capital (to risk-weighted assets):

 

 

PlainsCapital

14.64%

 

14.03%

13.33%

13.45%

13.25%

Hilltop

 

20.46%

 

19.06%

16.38%

17.13%

16.58%

Total capital (to risk-weighted assets):

PlainsCapital

 

15.49%

 

14.88%

14.26%

14.13%

13.87%

Hilltop

23.22%

 

21.82%

17.00%

17.55%

16.95%

September 30,

June 30,

March 31,

December 31,

September 30,

Non-Performing Assets Portfolio Data

    

2020

   

2020

    

2020

    

2019

    

2019

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

 

Commercial real estate

14,079

13,743

23,352

7,308

8,727

Commercial and industrial

38,708

32,259

47,121

15,262

13,313

Construction and land development

528

1,404

1,402

1,316

1,358

1-4 family residential

28,707

20,552

15,237

12,204

12,103

Consumer

53

308

310

26

30

Broker-dealer

82,075

68,266

87,422

36,116

35,531

Non-performing loans as a % of total loans

 

0.78%

 

0.65%

0.89%

0.38%

0.38%

Other real estate owned ($000's)

25,387

26,602

15,429

18,202

18,738