Hilltop Holdings Inc. (NYSE:HTH) ("Hilltop") today announced financial results for the third quarter of 2021. Hilltop produced income from continuing operations to common stockholders of $92.9 million, or $1.15 per diluted share, for the third quarter of 2021, compared to $152.5 million, or $1.69 per diluted share, for the third quarter of 2020. Hilltop's financial results from continuing operations for the third quarter of 2021 included a decrease in year-over-year mortgage origination segment net gains from sales of loans and other mortgage production income as well as declines in net revenues within the broker-dealer segment's structured finance business and fixed income services lines, partially offset by improvements in the macroeconomic outlook and resulting beneficial impact on loan expected loss rates within the banking segment.

Including income from discontinued operations related to the former insurance business, income applicable to common stockholders was $92.9 million, or $1.15 per diluted share, for the third quarter of 2021, compared to $153.3 million, or $1.70 per diluted share, for the third quarter of 2020.

Hilltop also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per common share, payable on November 30, 2021, to all common stockholders of record as of the close of business on November 15, 2021. Additionally, during the third quarter of 2021, Hilltop paid approximately $74 million to repurchase an aggregate of 2,241,761 shares of its common stock at a weighted average price of $33.06 per share pursuant to the 2021 stock repurchase program. These shares were returned to the pool of authorized but unissued shares of common stock.

Furthermore, in October 2021, the Hilltop Board of Directors authorized, subject to regulatory review, an increase to the aggregate amount of common stock that Hilltop may repurchase under the aforementioned stock repurchase program to $200.0 million, an increase of $50.0 million. As a result of share repurchases during 2021 and giving effect to such increase, Hilltop has approximately $76 million of available share repurchase capacity through expiration of the stock repurchase program in January 2022.

The COVID-19 pandemic has adversely 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 the pandemic on our operational and financial performance for the remainder of 2021 and into 2022 is currently uncertain and will depend on certain developments outside of our control, including, among others, the ongoing distribution and effectiveness of vaccines, government stimulus, the ultimate impact of the pandemic on our customers and clients, and additional, or extended, federal, state and local government orders and regulations that might be imposed in response to the pandemic.

Jeremy B. Ford, President and CEO of Hilltop, said, "I am happy to announce strong operating results for all three businesses at Hilltop. We have seen continued improvement in our asset quality, which is a reflection of both the sound lending practices employed by PlainsCapital Bank and the improving economic environment. The trend of increasing deposits remained steady in the quarter, and we are working diligently to deploy that excess liquidity through relationship-based lending and prudent management of our securities portfolio. At PrimeLending and the mortgage-centric businesses at Hilltop Securities, continued strength in the housing market and solid execution from our teams resulted in strong profitability. In addition, Hilltop continued to return a portion of our excess capital to shareholders through approximately $10 million of dividends paid and $74 million of share repurchases during the third quarter."

Third Quarter 2021 Highlights for Hilltop:

The reversal of credit losses was $5.8 million during the third quarter of 2021, compared to a reversal of credit losses of $28.7 million in the second quarter of 2021;
- The reversal of credit losses during the third quarter of 2021 primarily reflected improvements in both macroeconomic forecast assumptions and credit quality metrics on COVID-19 impacted industry sector exposures;
For the third quarter of 2021, net gains from sale of loans and other mortgage production income and mortgage loan origination fees within our mortgage origination segment was $241.9 million, compared to $355.6 million in the third quarter of 2020, a 32.0% decrease;
- Mortgage loan origination production volume was $5.6 billion during the third quarter of 2021, compared to $6.5 billion in the third quarter of 2020;
- Net gains from mortgage loans sold to third parties declined to 359 basis points during the third quarter of 2021, compared to 376 basis points in the second quarter of 2021.
Hilltop's consolidated annualized return on average assets and return on average equity for the third quarter of 2021 were 2.13% and 14.96%, respectively, compared to 3.71% and 25.94%, respectively, for the third quarter of 2020;
Hilltop's book value per common share increased to $31.36 at September 30, 2021, compared to $30.44 at June 30, 2021;
Hilltop's total assets were $18.0 billion and $17.7 billion at September 30, 2021 and June 30, 2021, respectively;
Loans¹, net of allowance for credit losses, decreased to $6.8 billion at September 30, 2021 compared to $6.9 billion at June 30, 2021;
- Includes supporting our impacted banking clients through funding of over 4,100 loans through both rounds of the Paycheck Protection Program, or PPP, with a remaining balance of approximately $133 million as of September 30, 2021, compared to approximately $261 million as of June 30, 2021;
- Through October 22, 2021, the Small Business Administration, or SBA, had approved approximately 3,300 PPP forgiveness applications from the Bank totaling approximately $775 million, with PPP loans of approximately $12 million pending SBA review and approval.
Non-performing loans were $62.2 million, or 0.64% of total loans, at September 30, 2021, compared to $69.0 million, or 0.66% of total loans, at June 30, 2021;
We further supported our impacted banking clients during 2020 through the approval of COVID-19 related loan modifications of approximately $1.0 billion, and continued such support during 2021, resulting in a portfolio of active deferrals that have not reached the end of their deferral period of approximately $17 million as of September 30, 2021, compared to approximately $76 million in active deferment as of June 30, 2021;
- While the majority of the portfolio of COVID-19 related loan modifications no longer require deferral, such loans may continue to represent elevated risk; therefore, monitoring of these loans continues;
- The extent of these loans progressing into non-performing loans during future periods is uncertain.
Loans held for sale decreased by 26.9% from June 30, 2021 to $2.1 billion at September 30, 2021;
Total deposits were $12.1 billion and $11.7 billion at September 30, 2021 and June 30, 2021, respectively;
Hilltop maintained strong capital levels² with a Tier 1 Leverage Ratio³ of 12.64% and a Common Equity Tier 1 Capital Ratio of 21.28% at September 30, 2021;
We redeemed in full all of our outstanding junior subordinated debentures of $67.0 million, which resulted in the full redemption to the holders of the associated preferred securities and common securities during the third quarter of 2021;
Hilltop's consolidated net interest margin⁴decreased to 2.53% for the third quarter of 2021, compared to 2.62% in the second quarter of 2021;
- Includes previously deferred interest income of $4.6 million during the third quarter of 2021 related to PPP loan-related origination fees.

For the third quarter of 2021, noninterest income from continuing operations was $367.9 million, compared to $502.7 million in the third quarter of 2020, a 26.8% decrease;
For the third quarter of 2021, noninterest expense from continuing operations was $355.2 million, compared to $399.3 million in the third quarter of 2020, a 11.1% decrease; and
Hilltop's effective tax rate from continuing operations was 22.8% during the third quarter of 2021, compared to 22.7% during the same period in 2020.

Discontinued Operations

On June 30, 2020, Hilltop completed the sale of National Lloyds Corporation, or NLC, which comprised the operations of its former insurance segment, for cash proceeds of $154.1 million. During 2020, Hilltop recognized an aggregate gain associated with this transaction of $36.8 million, net of transaction costs. Accordingly, insurance segment results and its assets and liabilities have been presented as discontinued operations. The resulting book gain from this sale transaction was not recognized for tax purposes pursuant to the rules promulgated under the Internal Revenue Code.


Note: "Consolidated" refers to our consolidated financial position and consolidated results of operations, including discontinued operations and assets and liabilities of discontinued operations.
¹			"Loans" reflect loans held for investment excluding broker-dealer margin loans, net of allowance for credit losses, of $645.6 million and $628.3 million at September 30, 2021 and June 30, 2021, 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)	2021			2021			2021			2020			2020
Cash and due from banks	$	2,463,111		$	1,372,818		$	1,564,489		$	1,062,560		$	1,277,865
Federal funds sold		406			387			396			386			420
Assets segregated for regulatory purposes		269,506			207,284			273,393			290,357			221,621
Securities purchased under agreements to resell		155,908			202,638			106,342			80,319			90,103
Securities:
Trading, at fair value		609,813			682,483			528,712			694,255			667,751
Available for sale, at fair value, net		1,994,183			1,817,807			1,715,406			1,462,205			1,310,240
Held to maturity, at amortized cost, net		277,419			288,776			300,088			311,944			323,299
Equity, at fair value		221			193			189			140			117
		2,881,636			2,789,259			2,544,395			2,468,544			2,301,407
Loans held for sale		2,108,878			2,885,458			2,538,986			2,788,386			2,547,975
Loans held for investment, net of unearned income		7,552,926			7,645,227			7,810,657			7,693,141			7,945,560
Allowance for credit losses		(109,512	)		(115,269	)		(144,499	)		(149,044	)		(155,214	)
Loans held for investment, net		7,443,414			7,529,958			7,666,158			7,544,097			7,790,346

Broker-dealer and clearing organization receivables		1,419,652			1,403,447			1,596,817			1,404,727			1,363,478
Premises and equipment, net		210,026			212,402			213,304			211,595			208,078
Operating lease right-of-use assets		115,942			115,698			101,055			105,757			109,354
Mortgage servicing assets		110,931			124,497			142,125			143,742			127,712
Other assets		526,339			535,536			648,895			555,983			607,932
Goodwill		267,447			267,447			267,447			267,447			267,447
Other intangible assets, net		16,455			17,705			19,035			20,364			21,814
Total assets	$	17,989,651		$	17,664,534		$	17,682,837		$	16,944,264		$	16,935,552

Deposits:
Noninterest-bearing	$	4,433,148		$	4,231,082		$	4,031,181		$	3,612,384		$	3,557,603
Interest-bearing		7,699,014			7,502,703			7,701,598			7,629,935			7,704,312
Total deposits		12,132,162			11,733,785			11,732,779			11,242,319			11,261,915
Broker-dealer and clearing organization payables		1,496,923			1,439,620			1,546,227			1,368,373			1,310,835
Short-term borrowings		747,040			915,919			676,652			695,798			780,109
Securities sold, not yet purchased, at fair value		113,064			132,950			97,055			79,789			56,023
Notes payable		395,804			396,653			401,713			381,987			396,006
Operating lease liabilities		134,296			134,019			120,339			125,450			122,402
Junior subordinated debentures		—			67,012			67,012			67,012			67,012
Other liabilities		468,020			348,200			595,045			632,889			502,517
Total liabilities		15,487,309			15,168,158			15,236,822			14,593,617			14,496,819

Common stock		790			812			823			822			902
Additional paid-in capital		1,270,272			1,302,439			1,319,518			1,317,929			1,443,588
Accumulated other comprehensive income		367			7,093			3,486			17,763			23,790
Retained earnings		1,204,307			1,159,304			1,094,727			986,792			942,461
Deferred compensation employee stock trust, net		751			754			752			771			774
Employee stock trust		(116	)		(121	)		(121	)		(138	)		(143	)
Total Hilltop stockholders' equity		2,476,371			2,470,281			2,419,185			2,323,939			2,411,372
Noncontrolling interests		25,971			26,095			26,830			26,708			27,361
Total stockholders' equity		2,502,342			2,496,376			2,446,015			2,350,647			2,438,733
Total liabilities & stockholders' equity	$	17,989,651		$	17,664,534		$	17,682,837		$	16,944,264		$	16,935,552


	Three Months Ended
Consolidated Income Statements	September 30,			June 30,			March 31,			December 31,			September 30,
(in 000's, except per share data)	2021			2021			2021			2020			2020
Interest income:
Loans, including fees	$	99,769		$	104,162		$	104,277		$	109,328		$	104,955
Securities borrowed		8,585			15,586			28,972			14,445			10,705
Securities:
Taxable		12,341			11,125			10,251			9,845			11,035
Tax-exempt		2,687			2,338			2,102			1,862			1,687
Other		1,796			1,607			1,321			1,381			1,446
Total interest income		125,178			134,818			146,923			136,861			129,828

Interest expense:
Deposits		5,303			6,176			7,741			9,269			10,700
Securities loaned		6,519			12,345			25,486			12,014			8,729
Short-term borrowings		2,400			2,374			2,013			2,154			2,346
Notes payable		5,465			5,253			4,797			4,807			4,904
Junior subordinated debentures		419			577			562			609			608
Other		(18	)		177			642			636			641
Total interest expense		20,088			26,902			41,241			29,489			27,928

Net interest income		105,090			107,916			105,682			107,372			101,900
Provision for (reversal of) credit losses		(5,819	)		(28,720	)		(5,109	)		(3,482	)		(602	)
Net interest income after provision for (reversal of) credit losses		110,909			136,636			110,791			110,854			102,502

Noninterest income:
Net gains from sale of loans and other mortgage production income		203,152			199,625			267,080			247,360			307,896
Mortgage loan origination fees		38,780			42,146			43,155			50,193			47,681
Securities commissions and fees		34,412			38,300			38,314			35,921			32,496
Investment and securities advisory fees and commissions		49,646			32,268			27,695			42,161			36,866
Other		41,955			27,560			41,341			72,296			77,772
Total noninterest income		367,945			339,899			417,585			447,931			502,711

Noninterest expense:
Employees' compensation and benefits		258,679			248,486			270,353			291,489			294,907
Occupancy and equipment, net		25,428			25,004			24,429			27,596			26,124
Professional services		14,542			16,239			13,585			21,927			17,522
Other		56,525			53,639			58,295			61,336			60,792
Total noninterest expense		355,174			343,368			366,662			402,348			399,345

Income from continuing operations before income taxes		123,680			133,167			161,714			156,437			205,868
Income tax expense		28,257			31,234			37,770			39,295			46,820
Income from continuing operations		95,423			101,933			123,944			117,142			159,048
Income from discontinued operations, net of income taxes		—			—			—			3,734			736
Net income		95,423			101,933			123,944			120,876			159,784
Less: Net income attributable to noncontrolling interest		2,517			2,873			3,599			4,431			6,505
Income attributable to Hilltop	$	92,906		$	99,060		$	120,345		$	116,445		$	153,279

Earnings per common share:
Basic:
Earnings from continuing operations	$	1.16		$	1.21		$	1.46		$	1.31		$	1.69
Earnings from discontinued operations		—			—			—			0.04			0.01
	$	1.16		$	1.21		$	1.46		$	1.35		$	1.70
Diluted:
Earnings from continuing operations	$	1.15		$	1.21		$	1.46		$	1.30		$	1.69
Earnings from discontinued operations		—			—			—			0.05			0.01
	$	1.15		$	1.21		$	1.46		$	1.35		$	1.70

Cash dividends declared per common share	$	0.12		$	0.12		$	0.12		$	0.09		$	0.09

Weighted average shares outstanding:
Basic		80,109			81,663			82,169			86,269			90,200
Diluted		80,542			82,199			82,657			86,420			90,200


	Three Months Ended September 30, 2021
Segment Results							Mortgage						All Other and			Continuing
(in 000's)	Banking			Broker-Dealer			Origination			Corporate			Eliminations			Operations
Net interest income (expense)	$	99,978		$	10,427		$	(3,503	)	$	(4,341	)	$	2,529		$	105,090
Provision for (reversal of) credit losses		(5,775	)		(44	)		—			—			—			(5,819	)
Noninterest income		11,727			116,143			242,270			757			(2,952	)		367,945
Noninterest expense		54,567			109,193			176,587			15,355			(528	)		355,174
Income (loss) from continuing operations before taxes	$	62,913		$	17,421		$	62,180		$	(18,939	)	$	105		$	123,680

	Nine Months Ended September 30, 2021
Segment Results							Mortgage						All Other and			Continuing
(in 000's)	Banking			Broker-Dealer			Origination			Corporate			Eliminations			Operations
Net interest income (expense)	$	309,330		$	31,623		$	(16,554	)	$	(13,720	)	$	8,009		$	318,688
Provision for (reversal of) credit losses		(39,725	)		77			—			—			—			(39,648	)
Noninterest income		33,293			298,229			794,679			8,140			(8,912	)		1,125,429
Noninterest expense		167,869			287,831			573,884			37,015			(1,395	)		1,065,204
Income (loss) from continuing operations before taxes	$	214,479		$	41,944		$	204,241		$	(42,595	)	$	492		$	418,561


	Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,
Selected Financial Data	2021		2021		2021		2020		2020

Hilltop Consolidated ⁽¹⁾:
Return on average stockholders' equity	14.96	%	16.42	%	20.58	%	20.56	%	25.94	%
Return on average assets	2.13	%	2.29	%	2.90	%	2.83	%	3.71	%
Net interest margin ⁽²⁾	2.53	%	2.62	%	2.69	%	2.71	%	2.56	%
Net interest margin (taxable equivalent) ⁽³⁾:
As reported	2.54	%	2.63	%	2.69	%	2.72	%	2.57	%
Impact of purchase accounting	9 bps		16 bps		13 bps		15 bps		10 bps
Without purchase accounting impact	2.45	%	2.47	%	2.56	%	2.57	%	2.47	%
Book value per common share ($)	31.36		30.44		29.41		28.28		26.72
Shares outstanding, end of period (000's)	78,959		81,153		82,261		82,185		90,238
Dividend payout ratio ⁽⁴⁾	10.34	%	9.92	%	8.19	%	6.67	%	5.30	%

Banking Segment:
Net interest margin ⁽²⁾	2.99	%	3.19	%	3.30	%	3.37	%	3.03	%
Net interest margin (taxable equivalent)⁽³⁾:
As reported	3.00	%	3.20	%	3.31	%	3.38	%	3.03	%
Impact of purchase accounting	11 bps		20 bps		17 bps		20 bps		13 bps
Accretion of discount on loans ($000's)	3,221		6,001		4,851		5,629		3,346
Net recoveries (charge-offs) ($000's)	62		(510	)	564		(2,688	)	(567	)
Return on average assets	1.36	%	1.91	%	1.48	%	1.37	%	1.14	%
Fee income ratio	10.5	%	8.9	%	9.8	%	10.2	%	9.2	%
Efficiency ratio	48.8	%	49.7	%	48.4	%	53.0	%	52.7	%
Employees' compensation and benefits ($000's)	31,500		33,369		30,992		34,007		29,808

Broker-Dealer Segment:
Net revenue ($000's) ⁽⁵⁾	126,570		94,145		109,137		150,070		149,190
Employees' compensation and benefits ($000's) ⁽⁶⁾	82,429		62,289		66,157		87,622		88,211
Variable compensation expense ($000's)	53,505		34,409		37,412		60,295		60,774
Compensation as a % of net revenue ⁽⁶⁾	65.1	%	66.2	%	60.6	%	58.4	%	59.1	%
Pre-tax margin ⁽⁷⁾	13.8	%	7.3	%	16.2	%	22.8	%	23.7	%

Mortgage Origination Segment:
Mortgage loan originations - volume ($000's):
Home purchases	3,948,420		4,018,922		2,902,710		3,683,564		4,183,560
Refinancings	1,646,208		1,881,121		3,281,395		3,114,630		2,266,793
Total mortgage loan originations - volume	5,594,628		5,900,043		6,184,105		6,798,194		6,450,353
Mortgage loan sales - volume ($000's)	6,195,559		5,524,226		6,350,837		6,571,234		6,521,773
Net gains from mortgage loan sales (basis points):
Loans sold to third parties	359		376		398		451		441
Impact of loans retained by banking segment	(13	)	(12	)	(10	)	(3	)	(1	)
As reported	346		364		388		448		440
Mortgage servicing rights asset ($000's) ⁽⁸⁾	110,931		124,497		142,125		143,742		127,712
Employees' compensation and benefits ($000's)	134,814		145,401		166,248		163,822		161,738
Variable compensation expense ($000's)	88,153		97,081		115,486		116,736		116,275

(1)			Ratios and financial data presented on a consolidated basis. For all 2020 periods presented, information includes discontinued operations.
(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 $0.6 million, $0.4 million, $0.2 million, $0.3 million, and $0.3 million, respectively, for the periods presented and for the banking segment were $0.2 million, $0.2 million, $0.2 million, $0.2 million, and $0.2 million, respectively, for the periods presented.
(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 and total broker-dealer noninterest income.
(6)			Noted balances and ratios during all prior periods reflect certain reclassifications to conform to current period presentation.
(7)			Pre-tax margin is defined as income before income taxes divided by net revenue.
(8)			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	2021		2021		2021		2020		2020
Tier 1 capital (to average assets):
PlainsCapital	10.02	%	10.22	%	10.50	%	10.44	%	10.19	%
Hilltop	12.64	%	12.87	%	13.01	%	12.64	%	13.03	%
Common equity Tier 1 capital (to risk-weighted assets):
PlainsCapital	15.40	%	15.00	%	14.74	%	14.40	%	14.64	%
Hilltop	21.28	%	20.22	%	19.63	%	18.97	%	19.85	%
Tier 1 capital (to risk-weighted assets):
PlainsCapital	15.40	%	15.00	%	14.74	%	14.40	%	14.64	%
Hilltop	21.28	%	20.82	%	20.22	%	19.57	%	20.46	%
Total capital (to risk-weighted assets):
PlainsCapital	16.32	%	15.95	%	15.64	%	15.27	%	15.49	%
Hilltop	24.00	%	23.48	%	22.96	%	22.34	%	23.22	%


	September 30,		June 30,		March 31,		December 31,		September 30,
Non-Performing Assets Portfolio Data	2021		2021		2021		2020		2020
Loans accounted for on a non-accrual basis ($000's) (1):
Commercial real estate		5,705		7,211		10,668		11,133		14,079
Commercial and industrial		29,808		33,033		36,144		34,049		38,708
Construction and land development		366		474		501		507		528
1-4 family residential		25,255		27,100		30,937		32,263		28,707
Consumer		24		26		26		28		53
Broker-dealer		—		—		—		—		—
		61,158		67,844		78,276		77,980		82,075
Troubled debt restructurings included in accruing loans held for investment ($000's)		1,038		1,139		1,584		1,954		1,919
Non-performing loans ($000's)		62,196		68,983		79,860		79,934		83,994

Non-performing loans as a % of total loans		0.64%		0.66%		0.77%		0.76%		0.80%

Other real estate owned ($000's)		21,605		21,078		19,899		21,289		25,387

Other repossessed assets ($000's)		—		—		—		101		239

Non-performing assets ($000's)		83,801		90,061		99,759		101,324		109,620

Non-performing assets as a % of total assets		0.47%		0.51%		0.56%		0.60%		0.65%

Loans past due 90 days or more and still accruing ($000's) (2):		175,734		245,828		265,230		243,630		187,105


(1)			Loans accounted for on a non-accrual basis do not include COVID-19 related loan modifications. The Bank's COVID-19 payment deferral programs allow 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. Since the second quarter of 2020, the Bank's actions included approval of COVID-19 related loan modifications, resulting in active loan modifications of approximately $17 million as of September 30, 2021, down from approximately $76 million as of June 30, 2021. The extent to which these measures will impact the Bank is uncertain, and any progression of loans, whether receiving COVID-19 payment deferrals or not, into non-accrual status, during future periods is uncertain and will depend on future developments that cannot be predicted.
(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,
	2021							2020
	Average			Interest		Annualized		Average			Interest		Annualized
	Outstanding			Earned or		Yield or		Outstanding			Earned or		Yield or
Net Interest Margin (Taxable Equivalent) Details ⁽¹⁾	Balance			Paid		Rate		Balance			Paid		Rate
Assets
Interest-earning assets
Loans held for sale	$	2,300,939		$	17,696	3.08	%	$	2,530,805		$	20,108	3.18	%
Loans held for investment, gross ⁽²⁾		7,514,392			82,073	4.33	%		7,730,711			84,847	4.32	%
Investment securities - taxable		2,585,362			12,328	1.91	%		1,974,911			11,017	2.23	%
Investment securities - non-taxable ⁽³⁾		318,408			3,252	4.09	%		243,716			2,011	3.30	%
Federal funds sold and securities purchased under agreements to resell		161,577			207	—	%		154,588			10	0.03	%
Interest-bearing deposits in other financial institutions		2,197,478			788	0.14	%		1,794,652			626	0.14	%
Securities borrowed		1,364,726			8,585	2.46	%		1,297,112			10,705	3.23	%
Other		51,350			813	6.28	%		49,701			823	6.59	%
Interest-earning assets, gross ⁽³⁾		16,494,232			125,742	3.02	%		15,776,196			130,147	3.26	%
Allowance for credit losses		(115,688	)						(156,071	)
Interest-earning assets, net		16,378,544							15,620,125
Noninterest-earning assets		1,371,207							1,493,194
Total assets	$	17,749,751						$	17,113,319

Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	7,622,748		$	5,303	0.28	%	$	7,868,100		$	10,700	0.54	%
Securities loaned		1,306,314			6,519	1.98	%		1,193,497			8,729	2.91	%
Notes payable and other borrowings		1,231,545			8,266	2.66	%		1,259,559			8,500	2.69	%
Total interest-bearing liabilities		10,160,607			20,088	0.78	%		10,321,156			27,929	1.08	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		4,299,987							3,508,282
Other liabilities		800,225							903,571
Total liabilities		15,260,819							14,733,009
Stockholders' equity		2,463,821							2,350,900
Noncontrolling interest		25,111							29,410
Total liabilities and stockholders' equity	$	17,749,751						$	17,113,319

Net interest income ⁽³⁾				$	105,654						$	102,218
Net interest spread ⁽³⁾						2.24	%						2.18	%
Net interest margin ⁽³⁾						2.54	%						2.57	%


(1)			Information presented on a consolidated basis. For the three months ended September 30, 2020, information includes discontinued operations.
(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 rates for the periods presented. The adjustment to interest income was $0.6 million and $0.3 million for the three months ended September 30, 2021 and 2020, 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 29, 2021. Hilltop President and CEO Jeremy B. Ford and Hilltop CFO William B. Furr will review third quarter 2021 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 343796. 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, 2021, Hilltop employed approximately 5,000 people and operated approximately 410 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," "could," "estimates," "expects," "extent," "focus," "forecasts," "goal," "guidance," "intends," "may," "might," "outlook," "plan," "probable," "progressing," "projects," "seeks," "should," "target," "view," "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 COVID-19 pandemic and the response of governmental authorities to the pandemic, which have had and may continue to have an adverse impact on the global economy and our business operations and performance; (ii) 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; (iii) effectiveness of our data security controls in the face of cyber attacks; (iv) changes in general economic, market and business conditions in areas or markets where we compete, including changes in the price of crude oil; (v) risks associated with concentration in real estate related loans; and (vi) changes in the interest rate environment and transitions away from the London Interbank Offered Rate. 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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Hilltop Holdings Inc. Announces Financial Results for Third Quarter 2021