An Introduction To HilltopSecurities · An Introduction To HilltopSecurities April 2017. 2 History is Anchored in Tradition ... Wealth management services for individual investors

An Introduction

To HilltopSecurities

April 2017

2

History is Anchored in Tradition

FirstSouthwest was founded in 1946. Southwest Securities was founded in 1972.

FirstSouthwest + Southwest Securities = HilltopSecurities

HilltopSecurities represents the combination of two established and successful

broker-dealers – FirstSouthwest and Southwest Securities. These two firms

were combined in January 2016 as HilltopSecurities, launching a new chapter

as the principal broker-dealer subsidiary of Hilltop Holdings Inc. (NYSE: HTH)

3

Bold Vision for Every Client

Mission. To serve as trusted advocates for our clients by providing the expert

financial guidance, solutions and services that achieve their definition of success.

We do this in two critical ways:

Forthright advice.

As trusted advisors, we listen and respectfully

collaborate, pairing honesty with sound judgement,

allowing clients to make confident decisions.

Tailored solutions.

Our solutions and services are developed by

financial professionals who embrace our vision to

build noble relationships that can enrich the financial

future of individuals, businesses and communities.

4

Committed to Your Definition of Success

HilltopSecurities offers specialized knowledge and insight for our clients:

Municipal

Issuers

Institutional

Investors

Broker-Dealers and

Registered Investment

Advisers (RIAs)

Individual

Investors

Primary business lines:

• Capital Markets

• Public Finance

• Wealth Management

• Clearing Services

• Structured Finance

• Securities Lending

Integrity Collaboration Adaptability Respect Excellence

5

HilltopSecurities Overview

Key Highlights 2015 2016

Income Before Taxes ($000) 4 $ (266) $39,467

Public Finance Aggregate Amount of Offerings ($M) $70,021 $82,562

Capital Markets Volume ($M) $76,738 $76,483

Total FDIC Insured Balances ($M) $ 2,226 $ 2,518

Net revenue3 for 12 months ended 12/31/16 ($M)

3 Net revenue is total revenues less interest expense.4 2015 and 2016 Income Before Taxes includes $15.2 million and $5.9 million integration

charges related to the merger of the broker-dealers, respectively.

All information as of December 31.

Retail, 22%

Public Finance, 22%

Capital Markets, 19%

Structured Finance,

22%

Clearing, 10%

Securities Lending, 2% Other, 3%

• More than 115 years of combined

industry experience

• More than 900 employees

• Approximately 50 locations in 19 states

• Public Finance ranked #2 financial

advisor in 2016 by par amount and

number of new issues1

• Nation’s 3rd largest Clearing Services

firm by number of broker-dealer clients2

• Approximately $15 billion in Retail

assets under management

• More than $21 billion in Clearing

Services client assets

• $28 billion in Municipal Cash

Management assets under

management

1 Source: Ipreo MuniAnalytics2 Source: Investment News

HilltopSecurities — Our Businesses

6

Capital

MarketsIncludes:• Fixed Income Underwriting

• Municipal Sales & Trading

• Taxable Sales & Trading

• Portfolio & Equity Trading

• Bank Advisory Services

Locations:• California

• Colorado

• Florida

• Illinois

• New York

• Massachusetts

• Ohio

• Tennessee

• Texas

Public

FinanceIncludes:• Municipal Advisory

• Municipal Underwriting

• Continuing Disclosure

• PEBTrust

• Asset Management

• Arbitrage Rebate

Locations:• Alaska

• Arizona

• Arkansas

• California

• Colorado

• Connecticut

• Florida

• Georgia

• Illinois

• Massachusetts

• Michigan

• Missouri

• New York

• North Carolina

• Ohio

• Rhode Island

• Tennessee

• Texas

Extensive knowledge and experience in fixed income underwriting, trading and sales to

allow institutional investors to achieve specific liquidity and capital demands

Financial advisory services for all types of entities that issue debt for public purposes, as

well as private and nonprofit organizations


7

Wealth

Management

Clearing

Services

Includes:• Private Client Group

• Independent Network

• Advisory Services Group

• Insurance

Locations :Private Client Group:

• California

• Oklahoma

• Texas

Wealth management services for individual investors using a holistic approach to achieve

their definitions of success

Includes:• Traditional Brokerage

• Research & Market Insights

• Advisory Services

Locations:• Headquarters: Texas

• Correspondents located in 28 states

Provides securities clearing, carrying, custodial and settlement services for registered

broker-dealers and other market participants across the United States

Independent Network:

• Advisors in 26 states


8

Structured

Finance

Securities

Lending

Includes:• Structured Products

• Housing Advisory

• Mortgage Trading/

Securitization

Locations:• California

• New York

• Texas

Provides structured finance advisory solutions for municipal clients, represents more than

a dozen State Housing Finance Agencies and pioneered the development of a pipeline

management market rate TBA program that provides interest rate protection for housing

authorities

Includes:• Conduit, or matched book,

securities lending

• Specialize in hard-to-borrow

securities

Locations:• New Jersey

• Texas

Facilitates borrow and loan transactions on a full range of securities with broker-dealers

across the United States

HilltopSecurities Leadership

9

Hill A. Feinberg Robert W. Peterson

John R. Muschalek J. Michael Edge

Chairman & CEO

• Company tenure:

26 years

• Financial Services

Experience: 46 years

President & COO

• Company tenure:

3 years



Chief Administrative Officer

• Company tenure:

25 years



Chief Financial Officer

• Company tenure:

17 years



HilltopSecurities Department Leaders

10

Dan LelandCapital Markets

HTS tenure: 34 years

Financial Services: 34 years

Lisa PalmeriSecurities Lending



David MedanichPublic Finance



Bill VogelpohlMunicipal Capital Markets

HTS tenure: 6 years


Lana CaltonClearing Services



Mike MarzStructured Finance



Dave GeschkeWealth Management

HTS tenure: 3 years


Hilltop Holdings(NYSE: HTH)

Hilltop Holdings Overview

12

Notes: (1) Per SNL Financial

(2) Ranked by MarketTrac® for purchase units nationally for 2012-2016

(3) Per Ipreo MuniAnalytics

(4) Per Investment News

• Hilltop Holdings is a Dallas, Texas-based diversified financial holding company with a complementary set of

operating companies

• Hilltop Holdings provides banking, mortgage origination, financial advisory and insurance through its subsidiaries:

• PlainsCapital Bank is the 6th largest1 Texas-based bank with $7.1 billion in deposits and 63 operating

branches located in all major Texas markets.

• PrimeLending, a PlainsCapital Company, focuses on purchase mortgage originations. Since 2012,

PrimeLending has been listed as a top 10 mortgage lender in the nation in purchase units.2

• HilltopSecurities was ranked the 2nd largest municipal financial advisor 3 in the nation by number of new

issues and par amount in 2016 and the 3rd largest clearing services firm by number of broker-dealer clients.4

The firm’s other areas of focus include retail brokerage services, sales, underwriting and trading of taxable

and tax-exempt securities, structured finance and securities lending.

• National Lloyds is a niche insurance company that provides primarily fire and homeowners insurance for

low value dwellings in Texas and other southern states.

Hilltop Holdings: Combination of Franchises

13

Q4 ’16 HTH Key Statistics ($ mill.)

Total Assets $12,738

Common Equity $1,871

Employees (#) ~5,400

Locations (#) ~450

• 5 employee parent

company with $530

million in cash and

NYSE public listing

(“HTH”)

• $300 million asset

homeowners insurance

company generating

~$150 million in

premiums with approx.

150 employees

• $5.2 billion asset

commercial bank with

33 branches and

approx. 700 employees


mortgage company

originating ~$10 billion

in mortgages with

approx. 2,400

employees and 270

branches


broker-dealer with


and annual revenue of

$111 million

• Commercial bank with


and a significant South

Texas presence

through 51 branches

• Assumed $2.6 billion in

assets through FDIC

assisted transaction

• $3.1 billion asset

broker-dealer with


and annual revenue of

$240 million

• $1.3 billion asset bank

with approx. 170

employees and 13

locations in Texas and

New Mexico

Notes: HTH and NL statistics as of Q1 2012 (prior to PCC acquisition). PCC, FNB and SWS statistics each represent approximate numbers as of time period prior to respective

acquisition announcement.

Hilltop Holdings &

National Lloyds

PlainsCapital Bank

& PrimeLending &

FirstSouthwest

First National Bank

of Edinburg

Southwest

Securities, Inc. &

Southwest

Securities, FSB

Texas-Based with National Presence

14

* Locations as of Dec. 31, 2016

Experienced Leadership

Gerald J. Ford

Chairman of the Board and Largest Shareholder

• Company Tenure: 11 years

• Financial Services Experience: 41 years

Alan B. White

Co-CEO & Vice Chairman, HTH



Jeremy B. Ford

Co-CEO & President, HTH



William B. Furr

Chief Financial Officer, HTH

• Company Tenure: <1 year


Jerry L. Schaffner

President & CEO

PlainsCapital Bank

• Company Tenure:

28 years



Todd Salmans

CEO

PrimeLending

• Company Tenure:

10 years



Hill A. Feinberg

Chairman & CEO

HilltopSecurities

• Company Tenure:

26 years



Robert Otis

CEO

National Lloyds

• Company Tenure:

2 years



Darren E. Parmenter

Chief Administrative Officer, HTH



James R. Huffines

COO of Subsidiaries, HTH



John A. Martin

Chief Accounting Officer, HTH



Corey G. Prestidge

General Counsel, HTH



Hilltop Holdings (HTH)

Subsidiary CEOs

15

Other Hilltop Holdings

Company Summaries

PlainsCapital Bank - Overview

17

• State chartered, Federal Reserve member institution

with $9.5 billion in assets and $7.1 billion in deposits

• Provides commercial banking, retail banking, trust,

treasury management and wealth management

• Community banking business model provides

superior customer service and responsive decision-

making

• 63 branches in 11 MSAs, including Dallas / Fort

Worth (#9), Lubbock (#1), Austin (#11), San Antonio

(#24), Rio Grande Valley (#8 in McAllen) and

Houston

• Current PCB platform comprised of legacy

PlainsCapital Bank franchise, First National Bank

Edinburg and Southwest Securities, FSB

Branch Map (63 Branches)

Rank

Texas Headquartered

Banks & Thrifts Branches

Deposits

($mm)

Market Share

(%)

1 Cullen/Frost Bankers, Inc. 148 24,338 3.52

2 Texas Capital Bancshares, Inc. 12 16,758 2.42

3 Prosperity Bancshares, Inc. 252 15,420 2.23

4 Comerica Inc. 127 9,802 1.42

5 International Bancshares Corp. 149 7,272 1.05

6 PlainsCapital Bank 63 6,753 0.98

Source: SNL Financial

Deposit market share data as of June 30, 2016 and pro forma for acquisitions

Includes banks & thrifts headquartered in Texas

Texas Deposit Market Share


Income Before Taxes ($000) 175,411 130,274

ROAA (%) 1.36 0.94

NIM (%) 5.05 4.65

Efficiency (%) 56.5 58.9

Tier 1 Leverage (%) 13.22 12.35

• PrimeLending has grown from a staff of 20 producing $80

million in annual closed loan volume to a staff of approximately

3,000 producing $15.5 billion in 2016

• Quality franchise with a strong retail platform and focus on the

purchase mortgage business, which represented 73% of volume

in 2016 versus the US industry average of 52%

• Expeditious loan processing, underwriting and closing in-house

• Generates noninterest income (gain on sale) by selling

substantially all mortgage loans it originates to investors in the

secondary market (majority servicing released)

• Top 10 Purchase Lender in the nation as ranked by Marketrac®

2012-2016


Income Before Taxes ($000) 47,483 77,796

Volume ($M) 13,352 15,460

Volume (Units) 59,621 66,881

Volume (% Purchase) 74.1% 72.9%

Volume (% Conventional) 62.9% 64.0%

Servicing Asset ($M) 52.3 62.0

Estimated US

Market Share: 0.84%0.76%0.85%0.83%0.83% 0.81% 0.80% 0.83%

Note: Market share based on Mortgage Bankers Association forecast of industry volume

2,713 2,814

3,834 3,639

3,066 2,929

4,150 4,493

3,888

-

1,000

2,000

3,000

4,000

5,000

Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16

Vo

lum

e (

$M

)

0.87%

PrimeLending - Overview

18

National Lloyds is Texas-based niche P&C

underwriter that has specialized in low-value

homeowners and mobile home products for over 40

years

• Mainly in Texas, Oklahoma and Arizona, as well as

other southern states

• Typical to have underwriting losses in Q2 from

seasonal tornado and hail events in Texas

• Distribution via an established network of over 4,200

independent agencies

• Supported by conservative catastrophic reinsurance

program and investment portfolio

• A.M. Best “A” (Excellent) Rated

Key Highlights ($000) 2015 2016

Income Before Taxes 15,652 21,404

Direct Premiums Written 167,025 152,970

2016 Direct Premiums Written

11,569

9,136

(12,525)

12,006

7,034 6,169

(9,567)

11,471 13,331

44% 48%

102%

42%

53% 55%

96%

41%37%

-40%

-20%

0%

20%

40%

60%

80%

100%

(15,000)

(10,000)

(5,000)

-

5,000

10,000

15,000

Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16

Lo

ss a

nd

LA

E R

ati

o (

%)

Pre

-Tax I

nco

me (

$000)

Pre-Tax Income Loss and LAE Ratio

National Lloyds – Overview

19

Homeowners42%

Fire31%

Mobile Home25%

Commercial2%

HTH Consolidated

Results 2016

Hilltop Holdings – Summary Income Statement

21

* Fiscal Year 2015 results include operations of legacy SWS Group Inc., which were not included in Fiscal Year 2014, as well as an $81.3 million bargain purchase gain related to the

SWS Merger.

Source: Hilltop Holdings Inc. annual SEC filings

($000) FY 2014 FY 2015* FY 2016

Net interest income $ 361,141 $ 408,583 $ 397,531

Provision for loan losses 16,933 12,715 40,620

Noninterest income 799,311 1,227,642 1,286,965

Noninterest expense 965,353 1,340,016 1,412,471

Income before

income taxes $ 178,166 $ 283,494 $ 231,405

Strong History of Earnings

22

Source: Hilltop Holdings Inc. quarterly and annual SEC filings

• Hilltop is financially stable and has significant earnings power history

• Since Jan. 1, 2013, Hilltop has generated cumulative net income of $587 million

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16

Cu

mu

lati

ve

Net

Inc

om

e t

o C

om

mo

n G

en

era

ted

($

M)

23

HTH Market Performance

+258%

+117%

+75%

Market Update

Ticker HTH

Stock Price $28.32

Shares O/S 98.6mm

Market Cap. $2.8bn

• Over the last 5 years, Hilltop has outperformed the banking sector, as well as the broader market

Note: As of Mar. 7, 2017

(50.0)

0.0

50.0

100.0

150.0

200.0

250.0

300.0

03/07/12 03/07/13 03/07/14 03/07/15 03/07/16 03/07/17

Sto

ck P

erf

orm

an

ce (

%)

HTH KBW Bank Index S&P 500

Hilltop Securities Inc.

1201 Elm Street, Suite 3500, Dallas, TX 75270

1.800.973.7977 | HilltopSecurities.com

Documents

An Introduction To HilltopSecurities · An Introduction To HilltopSecurities April 2017. 2 History is Anchored in Tradition ... Wealth management services for individual investors