Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) today announced financial results for the fourth quarter and full year 2018. Hilltop produced income to common stockholders of $28.1 million, or $0.30 per diluted share, for the fourth quarter of 2018, compared to $13.4 million, or $0.14 per diluted share, for the fourth quarter of 2017. Income to common stockholders for the full year 2018 was $121.4 million, or $1.28 per diluted share, compared to $132.5 million, or $1.36 per diluted share, for the full year 2017. Hilltop’s financial results include the impact of the enactment of the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”), which significantly contributed to reductions in Hilltop’s effective tax rates during the fourth quarter and full year 2018, compared to the same periods in 2017.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.08 per common share, a 14.3% increase from the prior quarter, payable on February 28, 2019, to all common stockholders of record as of the close of business on February 15, 2019. Additionally, Hilltop paid $59.0 million to repurchase 2,729,568 shares at an average price of $21.61 during 2018 pursuant to its stock repurchase program. As this stock repurchase program expired in January 2019, the Hilltop Board of Directors authorized a new stock repurchase program through January 2020, under which Hilltop may repurchase, in the aggregate, up to $50.0 million of its outstanding common stock. Share repurchase amounts include the repurchase of common shares to offset issuances under the employee compensation plan.

Jeremy Ford, Co-CEO of Hilltop, said, “During 2018, Hilltop made significant progress on a number of key strategic priorities, including the acquisition and integration of The Bank of River Oaks, which continues to outperform our expectations. We also continued to execute on our enhanced capital program in which Hilltop distributed $86 million through a combination of share repurchases and dividends to our shareholders and began executing our platform for growth objectives through the deployment of shared services across the franchise. While our businesses experienced some headwinds throughout the year, we believe our focus on prudent diversified growth, sound capital management and efficient execution positions us well for 2019.”

Alan White, Co-CEO of Hilltop, added, “In 2018, our associates remained intensely focused on serving our clients, growing our businesses and managing risks. PlainsCapital delivered solid loan and deposit growth and improved credit quality versus 2017. The mortgage business remained pressured throughout 2018, but we believe that our client-focused purchase mortgage strategy positions us well to compete in the future as market capacity rationalizes. HilltopSecurities continues to focus on growing its Public Finance business and delivered solid results in its Retail and Clearing businesses during the year. National Lloyds was profitable in 2018 and showed improvement in its expense ratio.”

Fourth Quarter 2018 Highlights for Hilltop:

  • In October 2018, the Bank and the FDIC entered into a Termination Agreement pursuant to which all rights and obligations under each of the loss-share agreements were resolved and terminated1;
  • During the fourth quarter of 2018, Hilltop’s merchant bank subsidiary recognized a $5.3 million pre-tax gain from the sale of a $10.0 million investment made in December 2017, and recorded a $2.5 million charge associated with a legacy merchant bank equity investment in conjunction with its periodic fair value assessment;
  • Hilltop’s annualized return on average assets and return on average equity for the fourth quarter of 2018 were 0.86% and 5.76%, respectively, compared to 0.41% and 2.78%, respectively, for the fourth quarter of 2017;
  • Hilltop’s book value per common share increased to $20.83 at December 31, 2018, compared to $20.51 at September 30, 2018;
  • Hilltop’s total assets were $13.7 billion at December 31, 2018, compared to $13.8 billion at September 30, 2018;
  • Loans2, net of allowance for loan losses, remained stable at $6.3 billion compared to September 30, 2018;
  • Non-performing loans decreased to $34.0 million, or 0.41% of combined loans held for sale and investment at December 31, 2018, compared to $42.5 million, or 0.50%, at September 30, 2018;
  • Loans held for sale decreased by 8.6% from September 30, 2018 to $1.4 billion at December 31, 2018;
  • Total deposits were $8.5 billion at December 31, 2018, compared to $8.3 billion at September 30, 2018;
  • Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio3 of 12.53% and a Common Equity Tier 1 Capital Ratio of 16.58% at December 31, 2018;
  • Hilltop’s net interest margin4 increased to 3.75% for the fourth quarter of 2018, compared to 3.48% in the third quarter of 2018;
  • The provision (recovery) for loan losses was $6.9 million during the fourth quarter of 2018, compared to ($0.4) million in the third quarter of 2018;
  • For the fourth quarter of 2018, noninterest income was $238.5 million, compared to $290.5 million in the fourth quarter of 2017, a 17.9% decrease;
  • For the fourth quarter of 2018, noninterest expense was $310.8 million, compared to $328.7 million in the fourth quarter of 2017, a 5.4% decrease; and
  • Hilltop’s effective tax rates decreased to 23.2% and 21.8% during the fourth quarter and full year 2018, respectively, compared to 79.0% and 45.3% during the same periods in 2017, and included significant items related to the following:
    • Reduction of the corporate tax rate in 2018 from 35% to 21% pursuant to the enactment of the Tax Legislation; and
    • A non-cash, non-recurring charge of $28.4 million in the fourth quarter of 2017 primarily attributable to the revaluation of deferred tax assets as a result of the enactment of the Tax Legislation. Deferred tax asset amounts recorded in December 2017 were final as of September 30, 2018.

______________________________

1   As a result of the termination of the loss-share agreements, loans which were previously referred to as either “covered loans” if covered by the loss-share agreements or otherwise “non-covered loans” are collectively referred to as loans held for investment within the consolidated balance sheets. In addition, other real estate owned previously covered by the loss-share agreements and the FDIC indemnification asset are included in other assets within the consolidated balance sheets for all periods presented. The presentation of loan-related tables and the calculation of loan-related measures for all periods presented have been modified to reflect this change for purposes of comparability.
2 “Loans” reflect loans held for investment excluding broker-dealer loans, net of allowance for loan losses, of $578.2 million and $593.2 million at December 31, 2018 and September 30, 2018, respectively.
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 December 31, September 30, June 30, March 31, December 31,
(in 000's) 2018 2018 2018 2018 2017
Cash and due from banks $ 644,073 $ 405,682 $ 353,432 $ 470,127 $ 486,977
Federal funds sold 400 468 403 400 405
Assets segregated for regulatory purposes 133,993 220,115 128,417 198,170 186,578
Securities purchased under agreements to resell 61,611 164,656 229,172 244,978 186,537
Securities:
Trading, at fair value 745,466 660,314 634,197 756,151 730,685
Available for sale, at fair value 875,658 874,496 811,218 806,583 744,319
Held to maturity, at amortized cost 351,012 348,163 353,192 356,452 355,849
Equity, at fair value   19,679     21,555     21,218     20,876     21,241  
1,991,815 1,904,528 1,819,825 1,940,062 1,852,094
Loans held for sale 1,393,246 1,524,980 1,953,562 1,409,634 1,715,357
Loans held for investment, net of unearned income 6,930,458 6,940,306 6,545,630 6,387,413 6,455,798
Allowance for loan losses   (59,486 )   (60,152 )   (61,970 )   (63,194 )   (63,686 )
Loans held for investment, net 6,870,972 6,880,154 6,483,660 6,324,219 6,392,112
 
Broker-dealer and clearing organization receivables 1,440,287 1,491,507 1,614,951 1,660,720 1,464,378
Premises and equipment, net 237,373 236,172 172,911 173,637 177,577
Other assets 580,362 604,445 648,317 637,802 615,531
Goodwill 291,435 291,435 251,808 251,808 251,808
Other intangible assets, net   38,005     40,394     32,716     34,569     36,432  
Total assets $ 13,683,572   $ 13,764,536   $ 13,689,174   $ 13,346,126   $ 13,365,786  
 
Deposits:
Non interest-bearing $ 2,560,750 $ 2,525,677 $ 2,468,332 $ 2,565,825 $ 2,411,849
Interest-bearing   5,975,406     5,764,556     5,345,290     5,393,897     5,566,270  
Total deposits 8,536,156 8,290,233 7,813,622 7,959,722 7,978,119
Broker-dealer and clearing organization payables 1,294,925 1,396,401 1,409,904 1,504,172 1,287,563
Short-term borrowings 1,065,807 1,216,649 1,610,735 1,064,325 1,206,424
Securities sold, not yet purchased, at fair value 81,667 179,582 251,581 255,551 232,821
Notes payable 228,872 220,192 227,736 202,700 208,809
Junior subordinated debentures 67,012 67,012 67,012 67,012 67,012
Other liabilities   435,240     430,309     392,171     367,188     470,231  
Total liabilities 11,709,679 11,800,378 11,772,761 11,420,670 11,450,979
 
Common stock 936 946 946 960 960
Additional paid-in capital 1,489,816 1,504,467 1,502,105 1,526,867 1,526,369
Accumulated other comprehensive loss (8,627 ) (14,722 ) (11,846 ) (9,698 ) (394 )
Retained earnings 466,737 448,923 419,683 404,260 384,545
Deferred compensation employee stock trust, net 825 860 857 857 848
Employee stock trust   (217 )   (252 )   (252 )   (254 )   (247 )
Total Hilltop stockholders' equity 1,949,470 1,940,222 1,911,493 1,922,992 1,912,081
Noncontrolling interests   24,423     23,936     4,920     2,464     2,726  
Total stockholders' equity   1,973,893     1,964,158     1,916,413     1,925,456     1,914,807  
Total liabilities & stockholders' equity $ 13,683,572   $ 13,764,536   $ 13,689,174   $ 13,346,126   $ 13,365,786  
 
                     

 

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) 2018 2018 2017 2018 2017
Interest income:
Loans, including fees $ 119,322 $ 113,535 $ 105,658 $ 436,725 $ 411,988
Securities borrowed 16,782 16,346 11,994 66,914 41,048
Securities:
Taxable 15,512 11,994 10,824 50,975 36,472
Tax-exempt 1,648 1,717 1,717 6,834 5,807
Other   4,438   4,734     3,472   17,980   11,841
Total interest income 157,702 148,326 133,665 579,428 507,156
 
Interest expense:
Deposits 14,838 12,353 7,700 46,002 24,695
Securities loaned 13,935 13,984 9,581 56,733 32,337
Short-term borrowings 7,476 7,831 4,118 25,816 13,751
Notes payable 2,627 2,702 2,611 10,263 10,931
Junior subordinated debentures 968 955 787 3,663 3,016
Other   143   160     176   627   678
Total interest expense 39,987 37,985 24,973 143,104 85,408
 
Net interest income 117,715 110,341 108,692 436,324 421,748
Provision (recovery) for loan losses   6,926   (371 )   5,453   5,088   14,271
Net interest income after provision (recovery) for loan losses 110,789 110,712 103,239 431,236 407,477
 
Noninterest income:
Net gains from sale of loans and other mortgage production income 90,628 116,243 122,132 445,116 538,468
Mortgage loan origination fees 26,615 27,004 23,156 103,563 93,944
Securities commissions and fees 36,984 36,968 40,868 150,989 156,464
Investment and securities advisory fees and commissions 26,260 23,487 36,561 90,066 109,920
Net insurance premiums earned 34,146 34,185 35,645 136,751 142,298
Other   23,883   31,810     32,094   96,305   163,970
Total noninterest income 238,516 269,697 290,456 1,022,790 1,205,064
 
Noninterest expense:
Employees' compensation and benefits 179,881 205,575 205,642 768,688 816,994
Occupancy and equipment, net 30,512 29,015 29,658 115,207 113,943
Professional services 26,793 27,984 24,220 105,752 101,521
Loss and loss adjustment expenses 20,694 18,712 8,583 79,347 94,701
Other   52,939   54,425     60,567   224,255   242,096
Total noninterest expense 310,819 335,711 328,670 1,293,249 1,369,255
 
Income before income taxes 38,486 44,698 65,025 160,777 243,286
Income tax expense   8,928   7,600     51,350   35,050   110,142
Net income 29,558 37,098 13,675 125,727 133,144
Less: Net income attributable to noncontrolling interest   1,443   1,293     247   4,286   600
Income attributable to Hilltop $ 28,115 $ 35,805   $ 13,428 $ 121,441 $ 132,544
 
Earnings per common share:
Basic $ 0.30 $ 0.38 $ 0.14 $ 1.28 $ 1.36
Diluted $ 0.30 $ 0.38 $ 0.14 $ 1.28 $ 1.36
 
Cash dividends declared per common share $ 0.07 $ 0.07 $ 0.06 $ 0.28 $ 0.24
 
Weighted average shares outstanding:
Basic 94,092 94,554 95,903 94,969 97,137
Diluted 94,130 94,610 96,080 95,067 97,353
 
                             
Three Months Ended December 31, 2018
Segment Results Mortgage All Other and Hilltop
(in 000's) Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated
Net interest income (expense) $ 101,216 $ 13,005 $ (523 ) $ 712 $ (1,328 ) $ 4,633 $ 117,715
Provision for loan losses 6,850 76 — — — — 6,926
Noninterest income 11,400 76,745 117,598 34,278 3,646 (5,151 ) 238,516
Noninterest expense   63,951   78,785   119,738     35,389     13,229     (273 )   310,819
Income (loss) before income taxes $ 41,815 $ 10,889 $ (2,663 ) $ (399 ) $ (10,911 ) $ (245 ) $ 38,486
 
                             
Year Ended December 31, 2018
Mortgage All Other and Hilltop
(in 000's) Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated
Net interest income (expense) $ 370,732 $ 50,878 $ 1,485 $ 3,025 $ (9,176 ) $ 19,380 $ 436,324
Provision (recovery) for loan losses 5,319 (231 ) — — — — 5,088
Noninterest income 43,588 301,714 551,860 142,565 4,893 (21,830 ) 1,022,790
Noninterest expense   256,577   320,241     540,474   139,921   36,628     (592 )   1,293,249
Income (loss) before income taxes $ 152,424 $ 32,582   $ 12,871 $ 5,669 $ (40,911 ) $ (1,858 ) $ 160,777
 
                   
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
Selected Financial Data 2018 2018 2017 2018 2017
 

Hilltop Consolidated:

Return on average stockholders' equity (1) 5.76% 7.41% 2.78% 6.33% 7.00%
Return on average assets (1) 0.86% 1.07% 0.41% 0.93% 1.03%
Net interest margin (2) 3.75% 3.48% 3.57% 3.55% 3.61%
Net interest margin (taxable equivalent) (3):
As reported 3.76% 3.49% 3.59% 3.56% 3.63%
Impact of purchase accounting 43 bps 28 bps 43 bps 34 bps 53 bps
Book value per common share ($) 20.83 20.51 19.92 20.83 19.92
Shares outstanding, end of period (000's) 93,610 94,594 95,982 93,610 95,982
Dividend payout ratio (1) (4) 23.43% 18.48% 42.86% 21.90% 17.59%
 

Banking Segment:

Net interest margin (2) 4.50% 4.13% 4.23% 4.23% 4.31%
Net interest margin (taxable equivalent) (3):
As reported 4.51% 4.14% 4.24% 4.24% 4.33%
Impact of purchase accounting 61 bps 39 bps 60 bps 48 bps 72 bps
Accretion of discount on loans ($000's) 12,737 8,147 12,642 39,094 58,445
Net charge-offs ($000's) 7,592 1,447 2,687 9,288 5,184
Return on average assets (1) 1.31% 1.19% -0.08% 1.23% 0.85%
Fee income ratio 10.12% 10.69% 10.22% 10.52% 14.05%
Efficiency ratio 56.79% 63.71% 60.18% 61.93% 58.24%
Employees' compensation and benefits ($000's) 31,955 36,878 31,159 132,086 125,271
 

Broker-Dealer Segment:

Net revenue ($000's) (5) 89,750 95,266 114,326 352,592 412,156
Employees' compensation and benefits ($000's) 54,249 59,535 70,169 218,467 250,614
Variable compensation expense ($000's) 31,744 33,574 41,239 115,948 143,688
Compensation as a % of net revenue 60.4% 62.5% 61.4% 62.0% 60.8%
Pre-tax margin 12.13% 10.42% 16.73% 9.24% 15.68%
 

Mortgage Origination Segment:

Mortgage loan originations - volume ($000's):
Home purchases 2,586,677 3,237,444 2,870,864 11,798,804 11,974,571
Refinancings 384,990 416,201 732,129 1,893,680 2,483,342
Total mortgage loan originations - volume 2,971,667 3,653,645 3,602,993 13,692,484 14,457,913
Mortgage loan sales - volume ($000's) 3,008,793 4,015,051 3,791,638 13,735,885 14,454,260
Net gains from mortgage loan sales (basis points) 334 330 380 328 371
Mortgage servicing rights asset ($000's) (6) 66,102 68,804 54,714 66,102 54,714
Employees' compensation and benefits ($000's) 84,334 102,025 96,257 389,131 412,537
Variable compensation expense ($000's) (7) 44,529 58,686 57,434 216,038 236,676
 

Insurance Segment:

Loss and LAE ratio 60.6% 54.7% 24.1% 58.0% 66.6%
Expense ratio 37.9% 38.8% 41.0% 39.0% 39.9%
Combined ratio 98.5% 93.5% 65.1% 97.0% 106.5%
Employees' compensation and benefits ($000's) 2,670 2,595 3,418 11,474 11,562

______________________________

(1)   Noted measures during the three months ended December 31, 2017, include non-cash, non-recurring charges to Hilltop Consolidated and Banking Segment results of $28.4 million and $25.7 million, respectively, primarily attributable to the revaluation of deferred tax assets as a result of the enactment of the Tax Legislation. Deferred tax asset amounts recorded in December 2017 were final as of September 30, 2018.
(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 the 2018 periods presented and 35% federal income tax rate for 2017 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. For the periods presented, the taxable equivalent adjustments to interest income for Hilltop Consolidated were $0.3 million, $0.2 million, $0.2 million, $1.8 million, and $2.2 million, respectively, and for the Banking Segment were $0.2 million, $0.2 million, $0.2 million, $0.8 million, and $1.6 million, respectively.
(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) 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.
(7) Noted measure during the three months and year ended December 31, 2017, reflect certain category reclassifications that affect variable compensation expense to conform with the current period presentation.
 
                     
December 31, September 30, June 30, March 31, December 31,
Capital Ratios 2018 2018 2018 2018 2017
Tier 1 capital (to average assets):
PlainsCapital 12.47 % 11.86 % 12.80 % 13.01 % 12.32 %
Hilltop 12.53 % 12.40 % 12.90 % 13.26 % 12.94 %
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital 13.90 % 13.88 % 14.59 % 15.39 % 14.47 %
Hilltop 16.58 % 16.95 % 17.61 % 18.60 % 17.71 %
Tier 1 capital (to risk-weighted assets):
PlainsCapital 13.90 % 13.88 % 14.59 % 15.39 % 14.47 %
Hilltop 17.04 % 17.42 % 18.10 % 19.11 % 18.24 %
Total capital (to risk-weighted assets):
PlainsCapital 14.63 % 14.63 % 15.38 % 16.25 % 15.29 %
Hilltop 17.47 % 17.87 % 18.58 % 19.63 % 18.78 %
 
                     
December 31, September 30, June 30, March 31, December 31,
Non-Performing Loans Portfolio Data 2018 2018 2018 2018 2017
Loans accounted for on a non-accrual basis ($000's):
Commercial real estate 5,324 7,506 14,256 13,674 14,620
Commercial and industrial 14,870 21,323 22,815 20,768 20,878
Construction and land development 3,278 3,402 569 595 611
1-4 family residential 10,437 4,476 4,273 4,297 4,358
Mortgage warehouse — — — — —
Consumer 41 45 49 52 56
Broker-dealer — — — — —
Covered — 5,777 5,277 5,849 5,104
33,950 42,529 47,239 45,235 45,627
 
Non-performing loans as a % of total loans 0.41% 0.50% 0.56% 0.58% 0.56 %
 
Other real estate owned ($000's) 27,578 32,518 37,824 38,354 40,627
 
Other repossessed assets ($000's) 68 99 168 246 323
 
Non-performing assets ($000's) 61,596 75,146 85,231 83,835 86,577
 
Non-performing assets as a % of total assets 0.45% 0.55% 0.62% 0.63% 0.65 %
 
Non-PCI loans past due 90 days or more and still accruing ($000's) 83,131 80,664 74,060 77,590 85,396
 
Troubled debt restructurings included in accruing loans held for investment ($000's) 1,339 1,362 1,389 1,404 1,433
 
                         
Three Months Ended December 31,
2018 2017
Average Interest Annualized Average Interest Annualized
Outstanding Earned or Yield or Outstanding Earned or Yield or
Net Interest Margin (Taxable Equivalent) Details Balance Paid Rate Balance Paid Rate
Assets
Interest-earning assets
Loans held for sale $ 1,286,668 $ 15,273 4.75 % $ 1,548,744 $ 16,132 4.17 %
Loans held for investment, gross (1) 6,946,355 104,049 5.90 % 6,347,212 89,526 5.56 %
Investment securities - taxable 1,820,088 15,482 3.40 % 1,564,445 10,799 2.76 %
Investment securities - non-taxable (2) 229,533 1,861 3.24 % 257,779 2,323 3.60 %
Federal funds sold and securities purchased under agreements to resell 136,492 535 1.55 % 156,691 320 0.81 %
Interest-bearing deposits in other financial institutions 410,942 2,400 2.32 % 589,594 1,952 1.31 %
Securities borrowed 1,537,619 16,782 4.27 % 1,524,086 11,994 3.08 %
Other   68,646     1,514 8.77 %   82,471     1,225 5.91 %
Interest-earning assets, gross (2) 12,436,343 157,896 5.01 % 12,071,022 134,271 4.39 %
Allowance for loan losses   (59,912 )   (61,674 )
Interest-earning assets, net 12,376,431 12,009,348
Noninterest-earning assets   1,338,890     1,315,530  
Total assets $ 13,715,321   $ 13,324,878  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits $ 5,800,152 $ 14,838 1.01 % $ 5,446,430 $ 7,700 0.56 %
Securities loaned 1,419,680 13,935 3.89 % 1,365,153 9,581 2.78 %
Notes payable and other borrowings   1,401,984     11,214 3.17 %   1,516,192     7,692 2.01 %
Total interest-bearing liabilities 8,621,816 39,987 1.84 % 8,327,775 24,973 1.19 %
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,565,607 2,438,605
Other liabilities   565,897     641,302  
Total liabilities 11,753,320 11,407,682
Stockholders’ equity 1,939,010 1,915,184
Noncontrolling interest   22,991     2,012  
Total liabilities and stockholders' equity $ 13,715,321   $ 13,324,878  
   
Net interest income (2) $ 117,909 $ 109,298
Net interest spread (2) 3.17 % 3.21 %
Net interest margin (2) 3.76 % 3.59 %
 
                         
Year Ended December 31,
2018 2017
Average Interest Annualized Average Interest Annualized
Outstanding Earned or Yield or Outstanding Earned or Yield or
Net Interest Margin (Taxable Equivalent) Details Balance Paid Rate Balance Paid Rate
Assets
Interest-earning assets
Loans held for sale $ 1,472,772 $ 68,536 4.65 % $ 1,541,000 $ 64,344 4.18 %
Loans held for investment, gross (1) 6,601,453 368,189 5.58 % 6,177,933 347,644 5.63 %
Investment securities - taxable 1,680,976 50,860 3.03 % 1,399,379 36,378 2.60 %
Investment securities - non-taxable (2) 247,651 7,752 3.13 % 234,741 8,012 3.41 %
Federal funds sold and securities purchased under agreements to resell 189,183 2,831 1.50 % 140,337 923 0.66 %
Interest-bearing deposits in other financial institutions 459,628 8,683 1.89 % 572,829 6,114 1.07 %
Securities borrowed 1,542,539 66,914 4.34 % 1,518,041 41,048 2.70 %
Other   74,684     6,535 8.75 %   85,550     4,897 5.72 %
Interest-earning assets, gross (2) 12,268,886 580,300 4.73 % 11,669,810 509,360 4.36 %
Allowance for loan losses   (62,681 )   (59,153 )
Interest-earning assets, net 12,206,205 11,610,657
Noninterest-earning assets   1,288,718     1,345,174  
Total assets $ 13,494,923   $ 12,955,831  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits $ 5,568,473 $ 46,002 0.83 % $ 5,220,359 $ 24,695 0.47 %
Securities loaned 1,395,947 56,733 4.06 % 1,378,748 32,337 2.35 %
Notes payable and other borrowings   1,477,966     40,369 2.73 %   1,515,874     28,376 1.87 %
Total interest-bearing liabilities 8,442,386 86,371 1.70 % 8,114,981 85,408 1.05 %
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,504,599 2,309,776
Other liabilities   617,227     634,630  
Total liabilities 11,564,212 11,059,387
Stockholders’ equity 1,919,940 1,894,009
Noncontrolling interest   10,771     2,435  
Total liabilities and stockholders' equity $ 13,494,923   $ 12,955,831  
   
Net interest income (2) $ 493,929 $ 423,952
Net interest spread (2) 3.03 % 3.31 %
Net interest margin (2) 3.56 % 3.63 %

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(1)   Average balance includes non-accrual loans.
(2) Presented on a taxable equivalent basis with annualized taxable equivalent adjustments based on the applicable 21% federal income tax rate for 2018 periods presented and 35% for 2017 periods presented. The adjustment to interest income was $0.3 million and $0.6 million for the three months ended December 31, 2018 and 2017, respectively, and $1.8 million and $2.2 million for the year ended December 31, 2018 and 2017, 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 25, 2019. Hilltop Co-CEOs Jeremy B. Ford and Alan B. White and other key management members will review fourth quarter 2018 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, 2018, Hilltop employed approximately 5,200 people and operated approximately 450 locations in 44 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 plans, objectives, strategies, expectations, intentions, expected tax impacts, strategic acquisitions 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.