United States

Profile: Hilltop Holdings Inc (HTH.N)

HTH.N on New York Stock Exchange

26 May 2017
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Hilltop Holdings Inc., incorporated on July 1, 1998, is a financial holding Company. The Company provides business and consumer banking services from offices located throughout Texas through PlainsCapital Bank (the Bank). It has three operating business units, which include PlainsCapital Corporation (PCC) (banking and mortgage origination), Hilltop Securities Holdings LLC (Securities Holdings) (broker-dealer) and PlainsCapital Company (NLC) (insurance). The PCC unit includes the Bank, and its subsidiary, PrimeLending (collectively referred to herein as PlainsCapital), while the Securities Holdings unit includes its broker-dealer operations transferred from the PCC unit, and two entities acquired in the SWS Group, Inc. (SWS) Merger, Hilltop Securities Inc. (Hilltop Securities) and Hilltop Securities Independent Network Inc. (HTS Independent Network). Its segments include Banking, Broker-Dealer, mortgage origination, insurance and Corporate.

The Company offers financial products and services through its broker-dealer, mortgage origination and insurance segments. PCC is a financial holding company that provides, through its subsidiaries, traditional banking, wealth and investment management and treasury management services primarily in Texas and residential mortgage lending throughout the United States. Securities Holdings is a holding company that provides, through its subsidiaries, investment banking and other related financial services, including municipal advisory, sales, trading and underwriting of taxable and tax-exempt fixed income securities, equity trading, clearing, securities lending, structured finance and retail brokerage services throughout the United States. NLC is a property and casualty insurance holding company that provides, through its subsidiaries, fire and homeowners insurance to low value dwellings and manufactured homes primarily in Texas and other areas of the southern United States.

Banking Segment

The Company's banking segment includes the operations of the Bank. As of December 31, 2016, its banking segment had $9.5 billion in assets and total deposits of $6.8 billion. The primary sources of its deposits are residents and businesses located in Texas. The Bank's business banking customers primarily consist of agribusiness, energy, healthcare, institutions of higher education, real estate (including construction and land development) and wholesale/retail trade companies. It provides banking services, such as Internet banking, business check cards and other add-on services. The Bank also offers term financing on commercial real estate properties that include retail, office, multi-family, industrial, warehouse and non-owner occupied single family residences. The Bank offers construction financing for commercial, retail, office, industrial, warehouse and multi-family developments; residential developments, and single family residential properties. A portion of the Bank's real estate portfolio consists of single family residential mortgage loans collateralized by owner occupied properties located in its market areas. As of December 31, 2016, the Bank had $641.7 million in one- to four-family residential loans, which represented 11.5% of its total loans held for investment.

The Bank offers a range of personal banking products and services for individuals. It also provides personal banking customers with a range of add-on features, such as check cards, safe deposit boxes, Internet banking, bill pay, overdraft privilege services, gift cards and access to automated teller machine (ATM) facilities throughout the United States. In addition, the Bank offers a range of deposit accounts to personal banking customers, including savings, checking, interest-bearing checking, money market and certificates of deposit. The Bank offers loans to individuals for personal, family and household purposes, including lines of credit, home improvement loans, home equity loans, and loans for purchasing and carrying securities. The Bank offers wealth and investment management services to high net worth individuals and their families, including depository, credit, and trust and estate services. It also offers trust and asset management services. The Bank's wealth management services provide personal trust, investment management and employee benefit plan administration services, including estate planning, management and administration, investment portfolio management, employee benefit accounts and individual retirement accounts. It also offers business customers lines of credit, equipment loans and leases, letters of credit, agricultural loans, commercial real estate loans and other loan products.

Broker-Dealer Segment

The Company's broker-dealer segment's operations are conducted through Hilltop Securities and HTS Independent Network. The broker-dealer segment has over six primary lines of business, such as public finance, capital markets, retail, structured finance, clearing and securities lending. The public finance group assists public bodies nationwide, including cities, counties, school districts, utility districts, tax increment zones, special districts, state agencies and other governmental entities, in originating, syndicating and distributing securities of municipalities and political subdivisions. In addition, the group provides advisory and investment banking services for airports, convention centers, healthcare institutions, institutions of higher education, housing, industrial development agencies, toll road authorities, and public power and utility providers. The capital markets group specializes in trading and underwriting the United States Government and government agency bonds, corporate bonds, municipal bonds, mortgage-backed, asset-backed and commercial mortgage-backed securities and structured products to support sales and other customer activities, and trades equities and option orders on an agency basis on behalf of its retail and institutional clients, including corporations, insurance companies, banks, mutual funds, money managers and other clients. In addition, the capital markets group provides asset and liability management advisory services to community banks. The retail group acts as a securities broker for retail investors in the purchase and sale of securities, options, commodities and futures contracts that are traded on various exchanges or in the over-the-counter market through its employee-registered representatives or independent contractor arrangements. In addition, through its investment management group, the retail group provides a number of advisory programs that offer advisors an array of products and services for their advisory businesses. The structured finance group provides structured asset and liability services and commodity hedging advisory services to facilitate balance sheet management primarily to public finance clients. In addition, the structured finance group participates in programs in which it issues forward purchase commitments of mortgage-backed securities to certain non-profit housing clients and sells the United States Agency to-be-announced (TBA) mortgage-backed securities. The clearing services group offers fully disclosed clearing services to Financial Industry Regulatory Authority (FINRA)- and Securities and Exchange Commission (SEC)-registered member firms for trade execution and clearance, as well as back office services, such as record keeping, trade reporting, accounting, general back-office support, securities and margin lending, reorganization assistance and custody of securities. As of December 31, 2016, it provided services to 175 financial organizations, including correspondent firms, correspondent broker-dealers, registered investment advisors, discount and full-service brokerage firms, and institutional firms. The securities lending group performs activities that include borrowing and lending securities for other broker-dealers, lending institutions, and internal clearing and retail operations.

Mortgage Origination Segment

The Company's mortgage origination segment operates through a subsidiary of the Bank, PrimeLending, a residential mortgage banker licensed to originate and close loans in all 50 states and the District of Columbia. As of December 31, 2016, its mortgage origination segment operated from over 310 locations in 42 states, originating 21.7% and 14.4%, respectively, of its mortgage loans (by dollar volume) from its Texas and California locations. PrimeLending handles loan processing, underwriting and closings in-house. Mortgage loans originated by PrimeLending are funded through a warehouse line of credit maintained with the Bank. PrimeLending sells mortgage loans it originates to various investors in the secondary market. PrimeLending offers a range of loan products catering to the specific needs of borrowers seeking purchase or refinancing options, including 30-year and 15-year fixed rate conventional mortgages, adjustable rate mortgages, jumbo loans, and Federal Housing Administration (FHA) and Veteran Affairs (VA) loans. Mortgage loans originated by PrimeLending are secured by a first lien on the underlying property.

Insurance Segment

The Company operates its insurance segment through NLC, which is engaged in providing fire and limited homeowners insurance for low value dwellings and manufactured homes primarily in Texas and other areas of the south, southeastern and southwestern United States. NLC conducts its operations through the subsidiaries, such as National Lloyds Insurance Company (NLIC) and American Summit Insurance Company (ASIC). NLC's product lines also include homeowners' products offering higher coverage limits with distribution restricted to select agents. NLC conducts its business in two product lines: personal lines and commercial lines. The personal lines include homeowners, dwelling fire, manufactured home, flood and vacant policies. The commercial lines include commercial multi-peril, builders risk, builders risk renovation, sports liability and inland marine policies. It writes fire and homeowners insurance coverage for low value dwellings and manufactured homes. NLC's underwriting process involves securing an adequate level of underwriting information from its independent agents, identifying and evaluating risk exposures and then pricing the risks it chooses to accept. NLC purchases reinsurance to reduce its exposure to liability on individual risks and claims and to protect against catastrophe losses.

Company Address

Hilltop Holdings Inc

200 Crescent Ct Ste 1330
DALLAS   TX   75201-6920
P: +1214.8552177

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