Hilltop Holdings Inc's Business Segments

Hilltop Holdings Inc. is a financial holding company registered under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”), headquartered in Dallas, Texas that endeavors to build and maintain a strong, diversified Texas-based financial services holding company through both acquisitions and organic growth. Following our acquisition of PlainsCapital Corporation in November 2012 (the “PlainsCapital Merger”), our primary line of business has been to provide business and consumer banking services from offices located throughout Texas through the Bank. We also provide an array of financial products and services through our broker-dealer, mortgage origination and insurance segments. We intend to make acquisitions with available cash, excess liquidity and, if necessary or appropriate, from additional equity or debt financing sources.

Our organizational structure is comprised of three primary operating business units: PlainsCapital (banking and mortgage origination); Securities Holdings (broker-dealer); and NLC (insurance). Within the PlainsCapital unit are two primary wholly owned operating subsidiaries: the Bank and PrimeLending.

The Bank provides traditional banking and wealth, investment and treasury management services The Bank has a presence in every major market in Texas and conducts substantially all of its banking operations in Texas.

Under accounting principles generally accepted in the United States (“GAAP”), our three business units are comprised of four reportable business segments organized primarily by the core products offered to the segments’ respective customers: banking, broker-dealer, mortgage origination and insurance. These segments reflect the manner in which operations are managed and the criteria used by our chief operating decision maker function to evaluate segment performance, develop strategy and allocate resources. Our chief operating decision maker function consists of the President and Chief Executive Officer of Hilltop and the Chief Executive Officer of PlainsCapital.

 

Hilltop Holdings Inc. is a diversified financial services holding company that operates through a range of segments that offer various products and services, primarily in banking, wealth management, broker-dealer services, capital markets, mortgage origination, and insurance. Below is an extensive description of the segments, products, and services provided by Hilltop Holdings Inc.

1. Banking

Business Banking
Hilltop Holdings Inc. caters to a diverse clientele in sectors such as agribusiness, energy, healthcare, higher education, real estate (including construction and land development), and wholesale/retail trade. The bank offers comprehensive banking services tailored to meet customer needs, including:

- Internet Banking: A user-friendly platform allowing for online transactions and account management.
- Business Check Cards: Provides clients with debit card access to their business accounts.
- Treasury Management Services: A suite of services designed to optimize cash flow and liquidity management, including cash collection, disbursement services, and reporting.
- Lending Solutions: This includes a variety of loan products such as:
- Lines of Credit
- Equipment Loans and Leases
- Letters of Credit
- Agricultural Loans
- Commercial Real Estate Loans

The commercial and industrial loans offered are primarily made within Texas, where underwriting is based on the borrowers ability to service the debt through operating cash flow. These loans involve higher risk due to the collateral secured, which commonly includes commercial real estate and working capital components.

Wealth and Investment Management
The wealth management division focuses on serving high-net-worth individuals and families. The services include:

- Private Banking: Personalized banking solutions including deposit accounts, credit products, and more.
- Investment Management: Comprehensive services that encompass portfolio management, investment strategy development, and ongoing advisory services.
- Trust Services: Administration and management of trust accounts and estates to assist clients in wealth transfer and estate planning.
- Employee Benefit Plan Administration: Handling of retirement and benefit plans for businesses, including Individual Retirement Accounts (IRAs).

Broker-Dealer Services
Through subsidiaries such as Hilltop Securities and HTS Independent Network, Hilltop Holdings offers a full suite of broker-dealer services:

- Securities Trading: Execution of trades in various financial instruments (stocks, bonds, options).
- Public Finance: Assistance to governmental entities in originating and managing public securities, including advisement for infrastructure projects and other municipal needs.
- Capital Markets: Specializes in underwriting, trading, and advisory services for U.S. government bonds, corporate bonds, municipal securities, and other structured financial products.
- Retail Investment Services: Facilitation of investments for retail clients through advisory programs and securities brokerage services, including margin lending and insurance product offerings.

Structured Finance
This group specializes in providing asset and liability management services, particularly to clients involved in public finance. Key offerings include:

- Balance Sheet Management: Consulting services to optimize asset-liability structure.
- Hedging Advisory Services: Assistance with commodity and interest rate risks.
- Forward Purchase Commitments: Engaging in structured agreements related to mortgage-backed securities aimed at non-profit housing entities.

Mortgage Origination
Hilltop Holdings, through its subsidiary PrimeLending, manages the entire mortgage loan process:

- In-House Processing: This includes loan processing, underwriting, and closing procedures.
- Warehouse Financing: PrimeLending utilizes lines of credit for funding mortgage loans prior to sale.
- Secondary Market Sales: The majority of the loans originated are sold in the secondary market, often with servicing released. They employ strategies to manage mortgage servicing rights (MSR), including the potential sale of these rights based on market conditions.

Insurance
The insurance segment is represented by National Lloyds Corporation (NLC), which specializes in providing limited homeowners insurance primarily for low-value dwellings and manufactured homes. Products include:

- Homeowners Insurance: Both standard and enhanced policies tailored for specific market needs.
- Targeting Underserved Markets: Distribution through a network of independent agents and select managing general agents (MGAs).

NLCs focus is on serving markets that are often overlooked by larger insurance carriers, ensuring accessibility and tailored solutions for its clientele.

Conclusion
Hilltop Holdings Inc. continues to leverage its diverse portfolio across banking, wealth management, broker-dealer services, capital markets, mortgage origination, and insurance. Each segment is designed to cater to a specific aspect of the financial services market, allowing them to effectively meet the needs of a broad range of customers, from individual clients to large institutional entities.