AN INTRODUCTION TO - HilltopSecurities · HilltopSecurities offers specialized knowledge and insight for our clients: 2 Municipal Issuers Broker-Dealers and Registered Investment

AN INTRODUCTION TO

HilltopSecurities

HilltopSecurities delivers the forthright advice and tailored solutions necessary for municipal issuers, institutions, broker-dealers and individuals to thrive. Leveraging our bold, adaptive firm culture and deep municipal market experience, HilltopSecurities blends honesty with sound judgment, serving as our clients’ strongest ally and fiercest advocate. Creating and sustaining relationship capital enables us to understand our clients’ definitions of success—from personal security and freedom to institutional growth and community expansion—in a way that is both meaningful and rewarding.

A History Anchored in Tradition

A Bold Vision for Every Client

HILLTOPSECURITIES

HilltopSecurities represents the combination of two established and successful broker-dealers—FirstSouthwest and Southwest Securities. These two firms were combined in January 2016 to form HilltopSecurities, launching a new chapter as the principal broker-dealer subsidiary of Hilltop Holdings Inc. (NYSE: HTH)

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FirstSouthwest was founded in 1946

Southwest Securities wasfounded in 1972

POINTS OF

DIFFERENCEVALUE

MESSAGES

National Network

Anchored in the

Municipal Market

Corporate Boldness

and Adaptive Culture

Forthright Advice

from Financial Experts

Tailored Solutions

for Speci�c Needs

Create and

Sustain

Relationship

Capital

Our Mission. HilltopSecurities is committed to improving lives — for our customers and our employees. We seek to serve as your trusted advocate by providing the expertise, financial guidance, solutions and services that achieve your definition of success.

We do this in two critical ways:

Forthright adviceAs trusted advisors, we listen and respectfully collaborate, pairing honesty with sound judgement and allowing our clients to make confident decisions.

Tailored solutionsOur 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.

Committed to Your Definition of Success

HILLTOPSECURITIES

HilltopSecurities offers specialized knowledge and insight for our clients:

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Municipal Issuers

Broker-Dealers and Registered Investment Advisors (RIAs)

Institutional Investors

IndividualInvestors

Primary Business Lines

▶ Capital Markets

▶ Public Finance

▶ Wealth Management

▶ Clearing Services

▶ Structured Finance

▶ Securities Lending

HilltopSecurities Overview

More than 115 years of combined industry experience

More than 900 employees

Approximately 48 locations in 19 states

Public Finance ranked No. 1 financial advisor nationally in 2017 by number of new issues and No. 3 by par amount1

Top 5 largest Clearing Services firm in the nation by number of broker-dealer clients2

Approximately $17 billion in Wealth Management client assets under management

More than $23 billion in Clearing Services client assets

$31 billion in Municipal Cash Management client assets under management

1. Source: Ipreo MuniAnalytics2. Source: Investment News

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HILLTOPSECURITIES

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2. 2016 Income Before Taxes includes $5.9 million integration charges related to the merger of the broker-dealers.All information as of December 31, 2017.

Key Highlights 2016 2017

Public Finance Aggregate Amount of Offerings ($MM) $82,562 $83,907

Capital Markets Volume ($MM) $76,483 $65,560

Total FDIC Insured Balances ($MM) $ 2,518 $ 2,395

Net Revenue1 for 12 Months Ended 12/31/17

Securities Lending2%

Other7%

Wealth Management24%

Public Finance21%

Capital Markets17%

Structured Finance20%

Clearing 9%

1. Net revenue is total revenues less interest expense.

HilltopSecurities — Our Businesses

HILLTOPSECURITIES

Extensive knowledge and experience in fixed income syndication, trading and sales allow institutional investors to achieve specific liquidity and capital demands

Includes• Fixed-Income Syndication• Municipal Securities Sales & Trading• MBS Sales & Trading• Investment Grade and High Yield Credit Sales &

Trading• Hilltop Bank Systems Advisory Services

HilltopSecurities helps individuals, businesses and communities pursue their definitions of success. Whether success is personal security and freedom or institutional growth and community expansion, our operating divisions engage all of the firm’s resources to offer the forthright advice and tailored solutions our clients deserve. HilltopSecurities’ diverse business lines—coupled with the capital commitment and financial strength of Hilltop Holdings—provide the firm with the stability and agility to pursue organic growth, gainful business partnerships and strategic opportunities.

Financial advisory services for all types of entities that issue debt for public purposes, as well as private and nonprofit organizations

Includes• Municipal Advisory• Municipal Underwriting• Continuing Disclosure• PEBTrust• Asset Management• Arbitrage Rebate

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Capital Markets Public Finance

Los Angeles, CaliforniaSan Francisco, CaliforniaDenver, ColoradoMiami, FloridaAtlanta, GeorgiaChicago, IllinoisNew York City, New YorkBoston, MassachusettsCharlotte, North CarolinaCincinnati, OhioMemphis, TennesseeAustin, TexasDallas, TexasFort Worth, TexasHouston, TexasSan Antonio, Texas

Anchorage, AlaskaPhoenix, ArizonaLos Angeles, CaliforniaSan Francisco, CaliforniaDenver, ColoradoHartford, ConnecticutMiami, FloridaOrlando, FloridaAtlanta, GeorgiaBoston, MassachusettsEast Lansing, MichiganGrand Rapids, Michigan St Louis, MissouriNew York City, New YorkCharlotte, North Carolina

Cincinatti, OhioLincoln, Rhode IslandAustin, TexasClifton, TexasDallas, TexasFort Worth, TexasHouston, TexasMcAllen, TexasSan Antonio, Texas

Public Finance LocationsCapital Markets Locations

HILLTOPSECURITIES

Wealth Management services for individual investors using a holistic approach to achieve their definitions of success

Includes• Private Client Group• Independent Network• Futures & Commodities• Insurance

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Provides structured finance advisory solutions for municipal clients, representing more than a dozen State Housing Finance Agencies and pioneering the development of a pipeline management market rate TBA program that provides interest rate protection for housing authorities

Includes• Structured Products• Housing Advisory• Mortgage Trading/Securitization

INDEPENDENT NETWORKAdvisors in 26 states

Facilitates borrow and loan transactions on a full range of securities for our clients and with broker-dealers across the United States

Includes• Conduit or Matched Book• Securities Lending• Specialize in Hard-To-Borrow Securities

Wealth Management Clearing Services

Structured Finance Securities Lending

Wealth Management LocationsPRIVATE CLIENT GROUPCaliforniaOklahomaTexas

Provides securities clearing, custody and settlement services for registered broker-dealers, affiliated RIAs, and other market participants across the United States

Includes• Traditional Retail Brokerage• Institutional Trading• Advisory Services• Underwriting

Clearing Services LocationsHeadquarters: Dallas, TexasCorrespondents located in 28 states

Structured Finance LocationsCaliforniaNew YorkTexas

Securities Lending LocationsNew JerseyTexas

Company tenure27 yearsFinancial services experience 47 years


Company tenure1 yearFinancial services experience 31 years







Hill A. Feinberg

John R. Muschalek

Ken Friedrich

Dave Geschke

Michael Marz

J. Michael Edge

David Medanich

Lana Calton

Lisa Palmeri

HilltopSecurities Leadership

HILLTOPSECURITIES

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Chairman, President & CEO

Chief Administrative Officer

Capital Markets

Wealth Management

Structured Finance

Chief Financial Officer

Public Finance

Clearing Services

Securities Lending

Hilltop Holdings(NYSE: HTH)

Hilltop Holdings Overview

HILLTOP HOLDINGS

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 $7.5 billion in deposits as of March 31, 2018 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 No. 1 municipal financial advisor3 in the nation by number of new issues and No. 3 by par amount in 2017 and the third 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 property and casualty insurance through two insurance companies, National Lloyds Insurance Company and American Summit Insurance Company.

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1. Per SNL Financial2. Ranked by MarketTrac® for purchase units nationally for 2012-20173. Per Ipreo MuniAnalytics4. Per Investment News

HILLTOP HOLDINGS

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Q4 ’17 HTH Key Statistics

Total Assets ($ mill.) $13,366

Common Equity ($ mill.) $1,912

Employees ~5,400

Locations ~475

The Hilltop Holdings Story

2 0 0 4 Operated as Affordable Residential Communities (“ARC”) and completed IPO on NYSE

2 0 0 5 Gerald J. Ford invested in ARC and joined the Board of Directors

2 0 0 6 Announced the acquisition of National Lloyds Corporation

(completed in 2007)

2 0 0 7 Sold all assets of manufactured home communities business for $1.8

billion, resulting in net cash balance of $550 million

2 0 0 7 Changed name to Hilltop Holdings and began pursuit of bank

acquisitions, including five FDIC failures

2 0 1 1 Made a $50 million loan, with warrants, to SWS Group, Inc.

2 0 1 2 Acquired PlainsCapital Corporation for ~$700 million

2 0 1 3 Completed purchase and assumption transaction of First National Bank,

Edinburg, Texas from FDIC, as receiver

2 0 1 4 Acquired SWS Group Inc. for $320 million

A C Q U I S I T I O N T I M E L I N EHilltop Holdings was founded in 1998 as Affordable Residential Communities Inc., a real estate investment trust, before going public in 2004. The company changed its name and business model in 2007 to begin focusing on bank acquisitions and the creation of a diversified financial services holding company positioned for long-

term growth.

Texas-Based with a National Presence

HILLTOP HOLDINGS

The Hilltop Holdings family of companies has a significant national footprint with approximately 475 branch and office locations in 45 states. Hilltop Holdings also has a substantial presence in Texas with approximately 120 branches and office locations across the state.Hilltop Holdings’ concentration of locations and

customers in Texas gives it strong roots from which to grow its operating subsidiaries–PlainsCapital Bank, PrimeLending, HilltopSecurities and National Lloyds. Likewise, Hilltop’s nationwide presence provides diversification and a broader platform for growth outside its core Texas market.

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HilltopSecuritiesPrimeLendingPlainsCapital Bank National Lloyds

As of May, 2018










Gerald J. Ford

Jeremy B. Ford

William B. Furr

Jerry L. Schaffner

Hill A. Feinberg

Alan B. White

Darren E. Parmenter

Corey G. Prestidge

Todd Salmans

Hilltop Holdings Leadership

HILLTOP HOLDINGS

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Chairman of the Board and Largest Shareholder, Hilltop Holdings

Co-CEO & PresidentHilltop Holdings

Chief Financial OfficerHilltop Holdings

President & CEOPlainsCapital Bank

Chairman, President & CEOHilltopSecurities

Co-CEO & Vice ChairmanHilltop Holdings

Chief Administrative OfficerHilltop Holdings

General CounselHilltop Holdings

CEOPrimeLending

Hilltop Holdings – Summary Income

Strong History of Earnings

HILLTOP HOLDINGS RESULTS

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($000) FY 2015* FY 2016 FY 2017

Net interest income 408,583 397,531 421,748

Provision for loan losses 12,715 40,620 14,271

Noninterest income 1,227,642 1,286,965 1,205,064

Noninterest expense 1,340,016 1,412,471 1,369,255

Income before income taxes 283,494 231,405 243,286

* Fiscal Year 2015 results include operations of legacy SWS Group Inc., as well as an $81.3 million bargain purchase gain related to the SWS Merger.Source: Hilltop Holdings Inc. annual SEC filings

Source: Hilltop Holdings Inc. quarterly and annual SEC filings

▶ Hilltop Holdings is financially stable and has significant earnings power history

▶ Since Jan. 1, 2013, Hilltop has generated cumulative net income of approximately $716 million

HTH Market Performance Statement

HILLTOP HOLDINGS RESULTS

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Market Update

Ticker HTH

Stock Price $24.00

Market Cap. $2.2 bn

Note: As of Mar. 27, 2018

▶ Over the last seven years, Hilltop has outperformed the banking sector, as well as the broader market

131%103%

99%

Other Hilltop HoldingsSubsidiaries

PlainsCapital Bank - Overview

PLAINSCAPITAL BANK

▶ State chartered, Federal Reserve member institution with $9.6 billion in assets and $7.5 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 (#11), Lubbock (#1), Austin (#12), San Antonio (#24), Rio Grande Valley (#9 in McAllen) and Houston

▶ Profitable every year since inception without taking unnecessary balance sheet risk

▶ Highly experienced management team that has worked together for more than 20 years

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Lubbock Weatherford

Fort WorthDallas

Austin

HoustonSan Antonio

Corpus Christi

BrownsvilleMcAllen

Texas Deposit Market Share

PLAINSCAPITAL BANK

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Income Before Taxes ($000) 130,274 164,008

ROAA (%) 0.94 0.85

NIM (%) 4.65 4.31

Efficiency (%) 58.9 58.2

Tier 1 Leverage (%) 12.35 12.32

Rank Texas HeadquarteredBanks & Thrifts

Branches Deposits($B)

MarketShare %

1 Cullen/Frost Bankers Inc. 145 25.7 3.5

2 Texas Capital Bancshares Inc. 13 17.5 2.4

3 Prosperity Bancshares Inc. 247 15.3 2.1

4 Comerica Inc. 122 9.5 1.3

5 International Bancshares Corp. 150 7.6 1.0

6 PlainsCapital Bank 63 7.2 1.0

Source: SNL Financial. Deposit market share data as of 6/30/17.

PrimeLending - Overview

PRIMELENDING

▶ PrimeLending has grown from a staff of 20 producing $80 million in annual closed loan volume to a staff of approximately 3,000 producing $14.5 billion in 2017

▶ Quality franchise with a strong retail platform and focus on the purchase mortgage business, which represented 83% of volume in 2017 versus the US industry average of 65%

▶ 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® 2012-2017

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Income Before Taxes ($000) 77,796 49,574

Volume ($MM) 15,460 14,458

Volume (Units) 66,881 62,058

Volume (% Purchase) 72.9% 82.8%

Volume (% Conventional) 64.0% 60.0%

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

$3.1 $2.9

$4.2$4.5

$3.9

$2.8

$4.1 $4.0$3.6

Estimated US Market

Share

Total 0.83% 0.73% 0.84% 0.81% 0.80% 0.83% 0.78% 0.88% 0.84% 0.87%

Mortgage market share per Mortgage Bankers Association as of February 2018

National Lloyds – Overview

NATIONAL LLOYDS

▶ National Lloyds is a Texas-based property insurer with over 50 years of experience focused on the personal lines, niche market serving owners of lower value homes, rental dwellings and manufactured homes

▶ Specialized products, pricing and underwriting focus on working class customers who seek competitive pricing and accept more limited coverage, with high deductibles and customizable service and underwriting options that are primarily limited to Actual Cash Value (“ACV”) loss settlement

▶ Writes mainly in Texas (69%) and Arizona (11%), as well as other southern states

▶ Expect underwriting losses in Q2 from seasonal tornado and hail events in Texas

▶ Distribution via an established network of ~5,000 agents

▶ Supported by robust catastrophic reinsurance program with highly rated and sophisticated reinsurers and a conservative investment portfolio; Willis Towers Watson serves as NLC’s reinsurance brokerage firm

▶ A.M. Best “A” Rated

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Key Highlights ($000) 2016 2017

Income Before Taxes 21,404 (4,111)

Direct Premiums Written 152,970 137,091

2017 Direct Premiums Written

Commercial and Other 2%

Homeowners 40%

Fire 31%

Mobile Home 27%

1201 Elm Street, Suite 3500Dallas, TX 75270

214.953.4000 800.678.3792

© 2018 Hilltop Securities Inc., a Hilltop Holdings company. All rights reserved. Member: NYSE, FINRA, SIPC.

Documents

AN INTRODUCTION TO - HilltopSecurities · HilltopSecurities offers specialized knowledge and insight for our clients: 2 Municipal Issuers Broker-Dealers and Registered Investment