Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 15, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | Hilltop Holdings Inc. | ||
Entity Central Index Key | 1,265,131 | ||
Trading Symbol | hth | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,950 | ||
Entity Common Stock, Shares Outstanding | 95,987,840 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and due from banks | $ 486,977 | $ 669,357 |
Federal funds sold | 405 | 21,407 |
Securities purchased under agreements to resell | 186,537 | 89,430 |
Assets segregated for regulatory purposes | 186,578 | 180,993 |
Securities: | ||
Trading, at fair value | 730,685 | 265,534 |
Available for sale, at fair value (amortized cost of $767,946 and $598,198, respectively) | 765,560 | 598,007 |
Held to maturity, at amortized cost (fair value of $349,939 and $345,088, respectively) | 355,849 | 351,831 |
Total securities | 1,852,094 | 1,215,372 |
Loans held for sale | 1,715,357 | 1,795,463 |
Non-covered loans, net of unearned income | 6,273,669 | 5,843,499 |
Allowance for non-covered loan losses | (60,957) | (54,186) |
Non-covered loans, net | 6,212,712 | 5,789,313 |
Covered loans, net of allowance of $2,729 and $413, respectively | 179,400 | 255,714 |
Broker-dealer and clearing organization receivables | 1,464,378 | 1,497,741 |
Premises and equipment, net | 177,577 | 190,361 |
FDIC indemnification asset | 29,340 | 71,313 |
Covered other real estate owned | 36,744 | 51,642 |
Other assets | 549,447 | 613,453 |
Goodwill | 251,808 | 251,808 |
Other intangible assets, net | 36,432 | 44,695 |
Total assets | 13,365,786 | 12,738,062 |
Deposits: | ||
Noninterest-bearing | 2,411,849 | 2,199,483 |
Interest-bearing | 5,566,270 | 4,864,328 |
Total deposits | 7,978,119 | 7,063,811 |
Broker-dealer and clearing organization payables | 1,287,563 | 1,347,128 |
Short-term borrowings | 1,206,424 | 1,417,289 |
Securities sold, not yet purchased, at fair value | 232,821 | 153,889 |
Notes payable | 208,809 | 317,912 |
Junior subordinated debentures | 67,012 | 67,012 |
Other liabilities | 470,231 | 496,501 |
Total liabilities | 11,450,979 | 10,863,542 |
Commitments and contingencies (see Notes 18 and 19) | ||
Hilltop stockholders' equity: | ||
Common stock, $0.01 par value, 125,000,000 shares authorized; 95,982,184 and 98,543,774 shares issued and outstanding at December 31, 2017 and 2016, respectively | 960 | 985 |
Additional paid-in capital | 1,526,369 | 1,572,877 |
Accumulated other comprehensive income (loss) | (394) | 485 |
Retained earnings | 384,545 | 295,568 |
Deferred compensation employee stock trust, net | 848 | 903 |
Employee stock trust (11,672 and 15,492 shares, at cost, respectively) | (247) | (309) |
Total Hilltop stockholders' equity | 1,912,081 | 1,870,509 |
Noncontrolling interests | 2,726 | 4,011 |
Total stockholders' equity | 1,914,807 | 1,874,520 |
Total liabilities and stockholders' equity | $ 13,365,786 | $ 12,738,062 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS | ||
Available for sale, amortized cost | $ 767,946 | $ 598,198 |
Held to maturity, fair value | 349,939 | 345,088 |
Covered loans, allowance | $ 2,729 | $ 413 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 95,982,184 | 98,543,774 |
Common stock, shares outstanding | 95,982,184 | 98,543,774 |
Employee stock trust, shares | 11,672 | 15,492 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Interest income: | |||
Loans, including fees | $ 411,988 | $ 389,637 | $ 390,359 |
Securities borrowed | 41,048 | 29,518 | 41,051 |
Securities: | |||
Taxable | 36,472 | 26,233 | 26,584 |
Tax-exempt | 5,807 | 6,222 | 6,628 |
Other | 11,841 | 4,344 | 5,216 |
Total interest income | 507,156 | 455,954 | 469,838 |
Interest expense: | |||
Deposits | 24,695 | 15,843 | 15,523 |
Securities loaned | 32,337 | 22,510 | 29,893 |
Short-term borrowings | 13,751 | 5,803 | 4,574 |
Notes payable | 10,931 | 10,849 | 8,143 |
Junior subordinated debentures | 3,016 | 2,676 | 2,401 |
Other | 678 | 742 | 721 |
Total interest expense | 85,408 | 58,423 | 61,255 |
Net interest income | 421,748 | 397,531 | 408,583 |
Provision for loan losses | 14,271 | 40,620 | 12,715 |
Net interest income after provision for loan losses | 407,477 | 356,911 | 395,868 |
Noninterest income: | |||
Net gains from sale of loans and other mortgage production income | 538,468 | 606,991 | 519,103 |
Mortgage loan origination fees | 93,944 | 96,267 | 77,708 |
Securities commissions and fees | 156,464 | 157,906 | 160,660 |
Investment and securities advisory fees and commissions | 109,920 | 115,992 | 115,932 |
Net insurance premiums earned | 142,298 | 155,545 | 162,082 |
Bargain purchase gain | 81,289 | ||
Other | 163,970 | 154,264 | 110,868 |
Total noninterest income | 1,205,064 | 1,286,965 | 1,227,642 |
Noninterest expense: | |||
Employees' compensation and benefits | 816,994 | 834,113 | 765,887 |
Occupancy and equipment, net | 113,943 | 109,418 | 119,653 |
Professional services | 101,521 | 128,176 | 107,107 |
Loss and loss adjustment expenses | 94,701 | 89,243 | 99,066 |
Other | 242,096 | 251,521 | 248,303 |
Total noninterest expense | 1,369,255 | 1,412,471 | 1,340,016 |
Income before income taxes | 243,286 | 231,405 | 283,494 |
Income tax expense | 110,142 | 83,461 | 70,915 |
Net income | 133,144 | 147,944 | 212,579 |
Less: Net income attributable to noncontrolling interest | 600 | 2,050 | 1,606 |
Income attributable to Hilltop | 132,544 | 145,894 | 210,973 |
Dividends on preferred stock | 1,854 | ||
Income applicable to Hilltop common stockholders | $ 132,544 | $ 145,894 | $ 209,119 |
Earnings per common share: | |||
Basic (in dollars per share) | $ 1.36 | $ 1.48 | $ 2.10 |
Diluted (in dollars per share) | 1.36 | 1.48 | $ 2.09 |
Cash dividends declared per common share | $ 0.24 | $ 0.06 | |
Weighted average share information: | |||
Basic (in shares) | 97,137 | 98,404 | 99,074 |
Diluted (in shares) | 97,353 | 98,629 | 99,962 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 133,144 | $ 147,944 | $ 212,579 |
Other comprehensive income: | |||
Net unrealized gains (losses) on securities available for sale, net of tax of $(565), $1,264 and $2,761, respectively | (869) | (2,144) | 4,792 |
Reclassification adjustment for gains (losses) included in net income, net of tax of $(6), $0 and $(1,589), respectively | (10) | (2,814) | |
Comprehensive income | 132,265 | 145,800 | 214,557 |
Less: comprehensive income attributable to noncontrolling interest | 600 | 2,050 | 1,606 |
Comprehensive income applicable to Hilltop | $ 131,665 | $ 143,750 | $ 212,951 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net unrealized gains on securities available for sale and other, tax | $ (565) | $ 1,264 | $ 2,761 |
Other comprehensive income reclassification adjustment, tax | $ (6) | $ 0 | $ (1,589) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Hilltop. | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit). | Deferred Compensation Employee Stock Trust, Net | Employee Stock Trust | Noncontrolling Interest | Total |
Balance at Dec. 31, 2014 | $ 1,460,452 | $ 114,068 | $ 902 | $ 1,390,788 | $ 651 | $ (45,957) | $ 787 | $ 1,461,239 | ||
Balance (in shares) at Dec. 31, 2014 | 114,000 | 90,182,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 210,973 | 210,973 | 1,606 | 212,579 | ||||||
Other comprehensive income | 1,978 | 1,978 | 1,978 | |||||||
Issuance of common stock | 200,033 | $ 101 | 199,932 | 200,033 | ||||||
Issuance of common stock (in shares) | 10,113,000 | |||||||||
Stock-based compensation expense | 8,309 | 8,309 | 8,309 | |||||||
Common stock issued to board members | 281 | 281 | 281 | |||||||
Common stock issued to board members (in shares) | 14,000 | |||||||||
Issuance of common stock related to share-based awards, net | 287 | 287 | 287 | |||||||
Issuance of common stock related to share-based awards, net (in shares) | (22,000) | |||||||||
Dividends on preferred stock | (1,854) | (1,854) | (1,854) | |||||||
Redemption of preferred stock | (114,068) | $ (114,068) | (114,068) | |||||||
Redemption of preferred stock (in shares) | (114,000) | |||||||||
Repurchase of common stock | (30,028) | $ (14) | (22,327) | (7,687) | $ (30,028) | |||||
Repurchase of common stock (in shares) | (1,391,000) | (1,390,977) | ||||||||
Deferred compensation plan | 591 | $ 1,034 | $ (443) | $ 591 | ||||||
Deferred compensation plan (in shares) | 22,000 | |||||||||
Net cash distributed to noncontrolling interest | (1,222) | (1,222) | ||||||||
Balance at Dec. 31, 2015 | 1,736,954 | $ 989 | 1,577,270 | 2,629 | 155,475 | 1,034 | $ (443) | 1,171 | 1,738,125 | |
Balance (in shares) at Dec. 31, 2015 | 98,896,000 | 22,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 145,894 | 145,894 | 2,050 | 147,944 | ||||||
Other comprehensive income | (2,144) | (2,144) | (2,144) | |||||||
Issuance of common stock | 4,139 | $ 5 | 4,134 | 4,139 | ||||||
Issuance of common stock (in shares) | 538,000 | |||||||||
Stock-based compensation expense | 10,058 | 10,058 | 10,058 | |||||||
Common stock issued to board members | 429 | 429 | 429 | |||||||
Common stock issued to board members (in shares) | 22,000 | |||||||||
Issuance of common stock related to share-based awards, net | (2,747) | $ (1) | (2,746) | (2,747) | ||||||
Issuance of common stock related to share-based awards, net (in shares) | (96,000) | |||||||||
Repurchase of common stock | (16,276) | $ (8) | (16,268) | (16,276) | ||||||
Repurchase of common stock (in shares) | (816,000) | |||||||||
Dividends on common stock | (5,801) | (5,801) | (5,801) | |||||||
Deferred compensation plan | 3 | (131) | $ 134 | 3 | ||||||
Deferred compensation plan (in shares) | (7,000) | |||||||||
Net cash distributed from noncontrolling interest | 790 | 790 | ||||||||
Balance at Dec. 31, 2016 | 1,870,509 | $ 985 | 1,572,877 | 485 | 295,568 | 903 | $ (309) | 4,011 | 1,874,520 | |
Balance (in shares) at Dec. 31, 2016 | 98,544,000 | 15,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 132,544 | 132,544 | 600 | 133,144 | ||||||
Other comprehensive income | (879) | (879) | (879) | |||||||
Stock-based compensation expense | 10,307 | 10,307 | 10,307 | |||||||
Common stock issued to board members | 451 | 451 | 451 | |||||||
Common stock issued to board members (in shares) | 17,000 | |||||||||
Issuance of common stock related to share-based awards, net | (3,264) | $ 4 | (3,268) | (3,264) | ||||||
Issuance of common stock related to share-based awards, net (in shares) | 337,000 | |||||||||
Repurchase of common stock | (74,454) | $ (29) | (53,998) | (20,427) | $ (74,454) | |||||
Repurchase of common stock (in shares) | (2,916,000) | (1,057,656) | ||||||||
Dividends on common stock | (23,140) | (23,140) | $ (23,140) | |||||||
Deferred compensation plan | 7 | (55) | $ 62 | 7 | ||||||
Deferred compensation plan (in shares) | (3,000) | |||||||||
Net cash distributed to noncontrolling interest | (1,885) | (1,885) | ||||||||
Balance at Dec. 31, 2017 | $ 1,912,081 | $ 960 | $ 1,526,369 | $ (394) | $ 384,545 | $ 848 | $ (247) | $ 2,726 | $ 1,914,807 | |
Balance (in shares) at Dec. 31, 2017 | 95,982,000 | 12,000 |
CONSOLIDATED STATEMENTS OF STO8
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||
Cash dividends declared per common share | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.24 | $ 0.06 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Activities | |||
Net income | $ 133,144 | $ 147,944 | $ 212,579 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Provision for loan losses | 14,271 | 40,620 | 12,715 |
Depreciation, amortization and accretion, net | (13,869) | (49,765) | (83,360) |
Net realized gains on securities | (16) | (4,403) | |
Bargain purchase gain | (81,289) | ||
Deferred income taxes | 40,933 | (9,690) | 17,376 |
Other, net | 12,085 | 16,564 | 7,995 |
Net change in securities purchased under agreements to resell | (97,107) | 16,230 | (60,919) |
Net change in assets segregated for regulatory purposes | (5,585) | (22,380) | 99,010 |
Net change in trading securities | (465,151) | (51,388) | 117,639 |
Net change in broker-dealer and clearing organization receivables | (42,449) | (46,775) | 73,344 |
Net change in FDIC indemnification asset | 24,890 | 20,577 | 39,936 |
Net change in other assets | (47,352) | 41,315 | (59,142) |
Net change in broker-dealer and clearing organization payables | (2,412) | (33,180) | (54,048) |
Net change in other liabilities | (55,557) | 11,752 | (104,897) |
Net change in securities sold, not yet purchased | 78,932 | 23,845 | 129,996 |
Proceeds from sale of mortgage servicing rights asset | 17,499 | 7,586 | |
Net gains from sales of loans | (538,468) | (606,991) | (519,103) |
Loans originated for sale | (15,014,118) | (16,026,911) | (13,871,473) |
Proceeds from loans sold | 15,634,027 | 16,337,299 | 14,163,781 |
Net cash provided by (used in) operating activities | (326,303) | (183,348) | 35,737 |
Investing Activities | |||
Proceeds from maturities and principal reductions of securities held to maturity | 56,359 | 166,522 | 88,070 |
Proceeds from sales, maturities and principal reductions of securities available for sale | 298,737 | 396,572 | 673,950 |
Purchases of securities held to maturity | (60,939) | (186,875) | (230,404) |
Purchases of securities available for sale | (471,047) | (326,810) | (48,121) |
Net change in loans | (216,562) | (555,040) | (150,605) |
Purchases of premises and equipment and other assets | (31,152) | (41,941) | (31,270) |
Proceeds from sales of premises and equipment and other real estate owned | 32,297 | 73,032 | 110,922 |
Proceeds from redemption of bank owned life insurance | 822 | ||
Net cash received from (paid for) Federal Home Loan Bank and Federal Reserve Bank stock | 34,346 | (19,021) | (12,172) |
Net cash from acquisition | 41,097 | ||
Net cash provided by (used in) investing activities | (357,961) | (493,561) | 442,289 |
Financing Activities | |||
Net change in deposits | 857,155 | 153,131 | (601,386) |
Net change in short-term borrowings | (210,865) | 469,916 | 20,437 |
Proceeds from notes payable | 403,136 | 296,993 | 150,078 |
Payments on notes payable | (512,193) | (217,630) | (42,571) |
Redemption of preferred stock | (114,068) | ||
Proceeds from issuance of common stock | 4,139 | ||
Payments to repurchase common stock | (27,388) | (30,028) | |
Dividends paid on common stock | (23,140) | (5,801) | |
Dividends paid on preferred stock | (3,539) | ||
Net cash distributed (to) from noncontrolling interest | (1,885) | 790 | (1,222) |
Taxes paid on employee stock awards netting activity | (3,264) | (2,442) | (75) |
Other, net | (674) | (868) | 718 |
Net cash provided by (used in) financing activities | 480,882 | 698,228 | (621,656) |
Net change in cash and cash equivalents | (203,382) | 21,319 | (143,630) |
Cash and cash equivalents, beginning of year | 690,764 | 669,445 | 813,075 |
Cash and cash equivalents, end of year | 487,382 | 690,764 | 669,445 |
Supplemental Disclosures of Cash Flow Information | |||
Cash paid for interest | 84,309 | 58,429 | 59,700 |
Cash paid for income taxes, net of refunds | 85,840 | 88,899 | 112,459 |
Supplemental Schedule of Non-Cash Activities | |||
Conversion of loans to other real estate owned | 8,853 | 20,184 | $ 57,838 |
Common stock issued in acquisition | 200,626 | ||
Additions to mortgage servicing rights | $ 16,401 | $ 23,381 | $ 24,974 |
Summary of Significant Accounti
Summary of Significant Accounting and Reporting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting and Reporting Policies | |
Summary of Significant Accounting and Reporting Policies | 1. Summary of Significant Accounting and Reporting Policies Nature of Operations Hilltop Holdings Inc. (“Hilltop” and, collectively with its subsidiaries, the “Company”) is a financial holding company registered under the Bank Holding Company Act of 1956. The Company’s primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank (the “Bank”). In addition, the Company provides an array of financial products and services through its broker-dealer, mortgage origination and insurance subsidiaries. The Company, headquartered in Dallas, Texas, provides its products and services through three primary business units, PlainsCapital Corporation (“PCC”), Hilltop Securities Holdings LLC (“Securities Holdings”) and National Lloyds Corporation (“NLC”). 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. On January 1, 2015, Hilltop completed its acquisition of SWS Group, Inc. (“SWS”) in a stock and cash transaction (the "SWS Merger"), whereby SWS’s broker-dealer subsidiaries, Southwest Securities, Inc. and SWS Financial Services, Inc., became subsidiaries of Securities Holdings, and SWS’s banking subsidiary, Southwest Securities, FSB (“SWS FSB”), was merged into the Bank. On October 5, 2015, Southwest Securities, Inc. and SWS Financial Services, Inc. were renamed “Hilltop Securities Inc.” (“Hilltop Securities”) and “Hilltop Securities Independent Network Inc.” (“HTS Independent Network”), respectively. On October 22, 2015, the Financial Industry Regulatory Authority (“FINRA”) granted approval to combine First Southwest Company, LLC (“FSC”) and Hilltop Securities, subject to customary conditions. FSC, Hilltop Securities and HTS Independent Network operated as separate broker-dealers, under coordinated leadership from the date of the SWS Merger until January 22, 2016, when FSC was merged into Hilltop Securities to form a combined firm operating under the “Hilltop Securities” name. The term “Hilltop Broker-Dealers” is used to refer to FSC, Hilltop Securities and HTS Independent Network prior to January 22, 2016 and Hilltop Securities and HTS Independent Network after such date. Basis of Presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates regarding the allowance for loan losses, the fair values of financial instruments, the amounts receivable from the Federal Deposit Insurance Corporation (the “FDIC”) under loss-share agreements (the “FDIC Indemnification Asset”), reserves for losses and loss adjustment expenses (“LAE”), the mortgage loan indemnification liability, and the potential impairment of assets are particularly subject to change. The Company has applied its critical accounting policies and estimation methods consistently in all periods presented in these consolidated financial statements. Hilltop owns 100% of the outstanding stock of PCC. PCC owns 100% of the outstanding stock of the Bank and 100% of the membership interest in PlainsCapital Equity, LLC, a merchant bank utilized to facilitate investments in companies engaged in non-financial activities. The Bank owns 100% of the outstanding stock of PrimeLending, a PlainsCapital Company (“PrimeLending”). PrimeLending owns a 100% membership interest in PrimeLending Ventures Management, LLC (“Ventures Management”), which holds an ownership interest in and is the managing member of certain affiliated business arrangements (“ABAs”). PCC also owns 100% of the outstanding common securities of PCC Statutory Trusts I, II, III and IV (the “Trusts”), which are not included in the consolidated financial statements under the requirements of the Variable Interest Entities Subsections of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), because the primary beneficiaries of the Trusts are not within the consolidated group. Hilltop has a 100% membership interest in Securities Holdings, which operates through its wholly-owned subsidiaries, Hilltop Securities, HTS Independent Network and First Southwest Asset Management, LLC. Hilltop Securities is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and FINRA and a member of the New York Stock Exchange (“NYSE”), HTS Independent Network is an introducing broker-dealer that is also registered with the SEC and FINRA, and First Southwest Asset Management, LLC, a wholly-owned subsidiary of First Southwest Holdings, LLC (“First Southwest”), is a registered investment adviser under the Investment Advisers Act of 1940. As discussed above, prior to January 22, 2016, Securities Holdings’ subsidiaries also included FSC, First Southwest’s principal subsidiary and formerly a broker-dealer registered with the SEC and FINRA and a member of the NYSE. Hilltop also owns 100% of NLC, which operates through its wholly owned subsidiaries, National Lloyds Insurance Company (“NLIC”) and American Summit Insurance Company (“ASIC”). The consolidated financial statements include the accounts of the above-named entities. Intercompany transactions and balances have been eliminated. Noncontrolling interests have been recorded for minority ownership in entities that are not wholly owned and are presented in compliance with the provisions of Noncontrolling Interest in Subsidiary Subsections of the ASC. Certain reclassifications have been made to the prior period consolidated financial statements to conform with the current period presentation. In preparing these consolidated financial statements, subsequent events were evaluated through the time the financial statements were issued. Financial statements are considered issued when they are widely distributed to all stockholders and other financial statement users, or filed with the SEC. Acquisition Accounting Acquisitions are accounted for under the acquisition method of accounting. Purchased assets, including identifiable intangible assets, and assumed liabilities are recorded at their respective acquisition date fair values. If the fair value of net assets purchased exceeds the consideration given, a bargain purchase gain is recognized. If the consideration given exceeds the fair value of the net assets received, goodwill is recognized. Securities Purchased Under Agreements to Resell Securities purchased under agreements to resell (reverse repurchase agreements or reverse repos) are treated as collateralized financings and are carried at the amounts at which the securities will subsequently be resold as specified in the agreements. The Company is in possession of collateral with a fair value equal to or in excess of the contract amounts. Securities Management classifies securities at the time of purchase and reassesses such designation at each balance sheet date. Securities held for resale to facilitate principal transactions with customers are classified as trading, and are carried at fair value, with changes in fair value reflected in the consolidated statements of operations. Hilltop reports interest income on trading securities as interest income on securities and other changes in fair value as other noninterest income. Securities held but not intended to be held to maturity or on a long-term basis are classified as available for sale. Securities included in this category are those that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk, and other factors related to interest rate and resultant prepayment risk changes. Securities available for sale are carried at fair value. Unrealized holding gains and losses on securities available for sale, net of taxes, are reported in other comprehensive income (loss) until realized. Premiums and discounts are recognized in interest income using the effective interest method and consider any optionality that may be embedded in the security. Purchases and sales (and related gain or loss) of securities are recorded on the trade date, based on specific identification. Declines in the fair value of available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the other-than-temporary impairment (“OTTI”) is related to credit losses. The amount of the OTTI related to other factors is recognized in other comprehensive income (loss). In estimating OTTI, management considers in developing its best estimate of cash flows, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the historic and implied volatility of the security, (iv) failure of the issuer to make scheduled interest payments and (v) changes to the rating of the security by a rating agency. Loans Held for Sale Loans held for sale consist primarily of single-family residential mortgages funded through PrimeLending. These loans are generally on the consolidated balance sheet between 30 and 45 days. Substantially all mortgage loans originated by PrimeLending are sold to various investors in the secondary market, the majority with servicing released. Mortgage loans held for sale are carried at fair value in accordance with the provisions of the Fair Value Option Subsections of the ASC (the “Fair Value Option”). Changes in the fair value of the loans held for sale are recognized in earnings and fees and costs associated with origination are recognized as incurred. The specific identification method is used to determine realized gains and losses on sales of loans, which are reported as net gains (losses) in noninterest income. Loans sold are subject to certain indemnification provisions with investors, including the repurchase of loans sold and repayment of certain sales proceeds to investors under certain conditions. In addition, certain mortgage loans guaranteed by U.S. Government agencies and sold into Government National Mortgage Association (“GNMA”) pools may, under certain conditions specified in the government programs, become subject to repurchase by PrimeLending. Such loans subject to repurchase no longer qualify for sale accounting and are reported as loans held for sale in the consolidated balance sheets. Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the amount of unpaid principal reduced by unearned income, net unamortized deferred fees and an allowance for loan losses. Unearned income on installment loans and interest on other loans is recognized using the effective interest method. Net fees received for providing loan commitments and letters of credit that result in loans are deferred and amortized to interest income over the life of the related loan, beginning with the initial borrowing. Net fees on commitments and letters of credit that are not expected to be funded are amortized to noninterest income over the commitment period. Income on direct financing leases is recognized on a basis that achieves a constant periodic rate of return on the outstanding investment. Impaired loans include non-accrual loans, troubled debt restructurings, purchased credit impaired (“PCI”) loans and partially charged-off loans. The accrual of interest on impaired loans is discontinued when, in management’s opinion, there is a clear indication that the borrower’s cash flow may not be sufficient to meet principal and interest payments, which is generally when a loan is 90 days past due unless the asset is both well secured and in the process of collection. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is charged against income. If the ultimate collectability of principal, wholly or partially, is in doubt, any payment received on a loan on which the accrual of interest has been suspended is applied to reduce principal to the extent necessary to eliminate such doubt. Once the collection of the remaining recorded loan balance is fully expected, interest income is recognized on a cash basis. The Bank originates loans to customers primarily in Texas. Although the Bank has diversified loan and leasing portfolios and, generally, holds collateral against amounts advanced to customers, its debtors’ ability to honor their contracts is substantially dependent upon the general economic conditions of the region and of the industries in which its debtors operate, which consist primarily of agribusiness, construction, energy, real estate and wholesale/retail trade. PrimeLending originates mortgage loans to customers in its offices, which are located throughout the United States. Substantially all mortgage loans originated by PrimeLending are sold to various investors in the secondary market, the majority with servicing released, although PrimeLending does retain servicing in certain circumstances. The Hilltop Broker-Dealers make loans to customers and correspondents through margin transactions originated by both employees and independent retail representatives throughout the United States. The Hilltop Broker-Dealers control or controlled risk by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines, which may vary based upon market conditions. Securities owned by customers and held as collateral for margin loans are not included in the consolidated financial statements. Management has defined the loans acquired in a business combination as acquired loans. Acquired loans are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan losses. At acquisition, acquired loans are segregated between those considered to be credit impaired and those without credit impairment at acquisition. To make this determination, management considered such factors as past due status, non-accrual status and credit risk ratings. The fair value of acquired performing loans was determined by discounting expected cash flows, both principal and interest, at prevailing market interest rates. The difference between the fair value and principal balances due at acquisition date, the fair value discount, is accreted into income over the estimated life of each loan. Loans acquired in the FDIC-assisted transaction whereby the Bank acquired certain assets and assumed certain liabilities of Edinburg, Texas-based First National Bank (“FNB”) on September 13, 2013 (the “FNB Transaction”) that are subject to a loss-share agreement are referred to as “covered loans” and reported separately in the consolidated balance sheets. Covered loans are reported exclusive of the cash flow reimbursements that may be received from the FDIC. Covered loans are discussed in more detail within Note 6 to the consolidated financial statements. PCI loans acquired by the Company upon completion of the merger with PCC (the “PlainsCapital Merger”) are accounted for on an individual loan basis, while PCI loans acquired in each of the FNB Transaction and SWS Merger are accounted for in pools as well as on an individual loan basis. The Company has established under its PCI accounting policy a framework to aggregate certain acquired loans into various loan pools based on a minimum of two layers of similar risk characteristics for the purpose of determining their respective fair values as of their acquisition dates, and for applying the subsequent recognition and measurement provisions for income accretion and impairment testing. The similar risk characteristics used for the pooling of the FNB and SWS PCI loans are risk grade and loan collateral type. PCI loans showed evidence of credit deterioration that makes it probable that all contractually required principal and interest payments will not be collected. Their fair value was initially based on an estimate of cash flows, both principal and interest, expected to be collected, discounted at prevailing market rates of interest. Management estimated cash flows using key assumptions such as default rates, loss severity rates assuming default, prepayment speeds and estimated collateral values. The excess of cash flows expected to be collected from a loan or pool over its estimated fair value at acquisition is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan or pool. The excess of total contractual cash flows over the cash flows expected to be received at acquisition is referred to as the nonaccretable difference. Subsequent to acquisition, management must update these estimates of cash flows expected to be collected at each reporting date. These updates require the continued use of key assumptions and estimates, similar to those used in the initial estimate of fair value. The Bank accretes the discount for PCI loans for which it can predict the timing and amount of cash flows. PCI loans for which a discount is accreted are reported as performing loans. Allowance for Loan Losses The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses inherent in the existing portfolio of loans at the balance sheet date. The allowance for loan losses includes allowance allocations calculated in accordance with the regulatory Interagency Policy Statement on the Allowance for Loan and Lease Losses and the Receivables and Contingencies Topics of the ASC. The level of the allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions, and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Bank’s control, including the performance of the Bank’s loan portfolio, the economy and changes in interest rates. The Bank’s allowance for loan losses consists of three elements: (i) specific valuation allowances established for probable losses on individually impaired loans; (ii) general historical valuation allowances calculated based on historical loan loss experience for homogenous loans with similar collateral; and (iii) valuation allowances to adjust general reserves based on current economic conditions and other qualitative risk factors both internal and external to the Bank. The Bank’s methodology regarding the calculation of the allowance for loan losses is discussed in more detail within Note 5 to the consolidated financial statements. Broker-Dealer and Clearing Organization Transactions Amounts recorded in broker-dealer and clearing organization receivables and payables include securities lending activities, as well as amounts related to securities transactions for either customers of the Hilltop Broker-Dealers or for the accounts of the Hilltop Broker-Dealers. Securities-borrowed and securities-loaned transactions are generally reported as collateralized financings. Securities-borrowed transactions require the Hilltop Broker-Dealers to deposit cash, letters of credit, or other collateral with the lender. With respect to securities loaned, the Hilltop Broker-Dealers receive collateral in the form of cash or other assets in an amount generally in excess of the market value of securities loaned. The Hilltop Broker-Dealers monitor the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as necessary. Interest income and interest expense associated with collateralized financings is included in the accompanying consolidated statements of operations. Insurance Premiums Receivable Insurance premiums receivable include premiums written and not yet collected. NLC routinely evaluates the receivable balance to determine if an allowance for uncollectible amounts is necessary. At December 31, 2017 and 2016, NLC determined that no valuation allowance was necessary. Deferred Policy Acquisition Costs Costs of acquiring insurance vary with, and are primarily related to, the successful acquisition of new and renewal business, primarily consisting of commissions, premium taxes and underwriting expenses, and are deferred and amortized over the terms of the policies or reinsurance treaties to which they relate. Proceeds from reinsurance transactions that represent recovery of acquisition costs reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense in proportion to net revenue recognized. Future investment income is considered in determining the recoverability of deferred policy acquisition costs. NLC regularly reviews the categories of acquisition costs that are deferred and assesses the recoverability of this asset. A premium deficiency and a corresponding charge to income is recognized if the sum of the expected loss and LAE, unamortized policy acquisition costs, and maintenance costs exceed related unearned insurance premiums and anticipated investment income. At December 31, 2017 and 2016, there was no premium deficiency. Reinsurance In the normal course of business, NLC seeks to reduce the loss that may arise from catastrophes or other events that could cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers. Amounts recoverable from reinsurers are estimated in a manner consistent with the reinsured policy. NLC routinely evaluates the receivable balance to determine if any uncollectible balances exist. Net insurance premiums earned, losses and LAE, and policy acquisition and other underwriting expenses are reported net of the amounts related to reinsurance ceded to other companies. Amounts recoverable from reinsurers related to the portions of the liability for losses and LAE and unearned insurance premiums ceded to them are included in other assets within the consolidated balance sheets. Reinsurance assumed from other companies, including assumed premiums written and earned, and losses and LAE, is accounted for in the same manner as direct insurance written. Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation and amortization computed principally on the straight-line method over the estimated useful lives of the assets, which range between 3 and 40 years. Gains or losses on disposals of premises and equipment are included in results of operations. Other Real Estate Owned Real estate acquired through foreclosure (“OREO”) is included in other assets within the consolidated balance sheets and is carried at management’s estimate of fair value, less estimated cost to sell. Any excess of recorded investment over fair value, less cost to sell, is charged against either the allowance for loan losses or the related PCI pool discount when property is initially transferred to OREO. Subsequent to the initial transfer to OREO, downward valuation adjustments are charged against earnings. Valuation adjustments, revenue and expenses from operations of the properties and resulting gains or losses on sale are included within the consolidated statements of operations in other noninterest income or expense, as appropriate. Acquired OREO subject to FDIC loss-share agreements is referred to as “covered OREO” and reported separately in the consolidated balance sheets. Covered OREO is reported exclusive of expected reimbursement cash flows from the FDIC. Foreclosed covered loan collateral is transferred into covered OREO at the collateral’s fair value, less selling costs. Covered OREO was initially recorded at its estimated fair value based on similar market comparable valuations, less estimated selling costs. Subsequently, loan collateral transferred to OREO is recorded at its net realizable value. Any subsequent valuation adjustments due to declines in fair value of the covered OREO will be charged to noninterest expense, while any recoveries of previous valuation decreases will be credited to noninterest expense. FDIC Indemnification Asset The Company has elected to account for the FDIC Indemnification Asset in accordance with the Business Combination Topic of the ASC. The FDIC Indemnification Asset is initially recorded at fair value, based on the discounted value of expected future cash flows under the loss-share agreements. The difference between the present value and the undiscounted cash flows the Bank expects to collect from the FDIC will be accreted into noninterest income or amortized into noninterest expense within the consolidated statements of operations over the life of the FDIC Indemnification Asset. The FDIC Indemnification Asset is reviewed quarterly and the accretion rate is adjusted for changes in the timing of cash flows expected to be collected from the FDIC. Cumulative net losses over the life of the loss-share agreements of less than $240.4 million will reduce the value of the FDIC Indemnification Asset. Any amortization of changes in value of the FDIC Indemnification Asset is limited to the contractual term of the loss-share agreements. Changes to the FDIC Indemnification Asset are recorded as adjustments to other noninterest income or expense, as appropriate, within the consolidated statements of operations over the life of the loss-share agreements. Debt Issuance Costs The Company capitalizes debt issuance costs associated with financing of debt. These costs are amortized using the effective interest method over the repayment term of the debt. Unamortized debt issuance costs are presented in the consolidated balance sheets as a direct reduction from the associated debt liability. Debt issuance costs of $0.1 million, $0.1 million, and $0.4 million during 2017, 2016 and 2015, respectively, were amortized and included in interest expense within the consolidated statements of operations. In April 2015, debt issuance costs of $1.9 million were capitalized in connection with Hilltop’s issuance of the 5% senior notes due 2025. Goodwill Goodwill, which represents the excess of cost over the fair value of the net assets acquired, is allocated to reporting units and tested for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount should be assessed. The Company performs required annual impairment tests of its goodwill as of October 1 st for each of its reporting units, which is one level below an operating segment. Goodwill is assigned to reporting units at the date the goodwill is initially recorded. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or internally generated, are available to support the value of the goodwill. As of January 1, 2017, the Company adopted the provisions of ASU 2017-04 which removes Step 2 from the goodwill impairment test and eliminates the determination of goodwill impairment through calculation of the implied fair value when the carrying amount of a reporting unit exceeds its fair value. The goodwill impairment test requires the Company to make judgments in determining what assumptions to use in the calculation. The process consists of estimating the fair value of each reporting unit based on valuation techniques, including a discounted cash flow model using revenue and profit forecasts and recent industry transaction and trading multiples of peers, and comparing those estimated fair values with the carrying values of the assets and liabilities of the reporting unit, which includes the allocated goodwill. If the estimated fair value is less than the carrying value, the Company will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the total amount of goodwill allocated to that reporting unit. Additional information concerning the results of the Company’s impairment test of goodwill is included in Note 9 to the consolidated financial statements. Intangibles and Other Long-Lived Assets Intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability. The Company’s intangible assets primarily consist of core deposits, trade names and customer relationships. Intangible assets with definite useful lives are generally amortized on the straight-line method over their estimated lives, although certain intangibles, including core deposits, and customer and agent relationships, are amortized on an accelerated basis. Amortization of intangible assets is recorded in other noninterest expense within the consolidated statements of operations. Intangible assets with indefinite useful lives are tested for impairment annually as of October 1 st , or more often if events or circumstances indicate there may be impairment, and not amortized until their lives are determined to be definite. Intangible assets with definite useful lives, premises and equipment, and other long-lived assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. Mortgage Servicing Rights The Company determines its classes of residential mortgage servicing assets based on the asset type being serviced along with the methods used to manage the risk inherent in the servicing assets, which includes the market inputs used to value the servicing assets. The Company measures its servicing assets at fair value and reports changes in fair value through earnings. The retained mortgage servicing rights (“MSR”) asset is measured at fair value as of the date of sale of the related mortgage loan. Subsequent fair value measurements of the MSR asset are determined by valuing the projected net servicing cash flows, which are then discounted to estimate fair value using a discounted cash flow model. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income. The model assumptions and the MSR asset fair value estimates are compared to observable trades of similar portfolios as well as to MSR asset broker valuations and industry surveys, as available. The expected life of the loan can vary from management’s estimates due to prepayments by borrowers, especially when rates fall. Prepayments in excess of management’s estimates would negatively impact the recorded value of the MSR asset. The value of the MSR asset is also dependent upon the discount rate used in the model, which is based on current market rates that are reviewed by management on an ongoing basis. A significant increase in the discount rate would reduce the value of the MSR asset. Derivative Financial Instruments The Company’s hedging policies permit the use of va |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2017 | |
Acquisition | |
Acquisition | 2. Acquisition SWS Merger On January 1, 2015, Hilltop completed its acquisition of SWS in a stock and cash transaction, whereby each outstanding share of SWS common stock was converted into the right to receive 0.2496 shares of Hilltop common stock and $1.94 in cash, equating to $6.92 per share based on Hilltop’s closing price on December 31, 2014 and resulting in an aggregate purchase price of $349.1 million, consisting of 10.1 million shares of common stock, $78.2 million in cash and $70.3 million associated with Hilltop’s existing investment in SWS common stock. The operations acquired in the SWS Merger are included in the Company’s operating results beginning January 1, 2015. Such operating results include a bargain purchase gain of $81.3 million and are not necessarily indicative of future operating results. The SWS Merger was accounted for using the acquisition method of accounting, and accordingly, purchased assets, including identifiable intangible assets, and assumed liabilities were recorded at their respective acquisition date fair values. The components of the consideration paid are shown in the following table (in thousands). Fair value of consideration paid: Common stock issued $ Cash Fair value of Hilltop’s existing investment in SWS Total consideration paid $ The resulting fair values of the identifiable assets acquired, and liabilities assumed, in the SWS Merger at January 1, 2015 are summarized in the following table (in thousands). Cash and due from banks $ 119,314 Federal funds sold and securities purchased under agreements to resell 44,741 Assets segregated for regulatory purposes 181,610 Securities 707,476 Non-covered loans, net 863,819 Broker-dealer and clearing organization receivables 1,221,793 Other assets 159,906 Total identifiable assets acquired 3,298,659 Deposits (1,287,509) Broker-dealer and clearing organization payables (1,109,978) Short-term borrowings (164,240) Securities sold, not yet purchased, at fair value (140,409) Notes payable (76,643) Other liabilities (89,466) Total liabilities assumed (2,868,245) Bargain purchase gain (81,289) 349,125 Less Hilltop existing investment in SWS (70,282) Net identifiable assets acquired $ 278,843 The bargain purchase gain represents the excess of the estimated fair value of the underlying net tangible assets and intangible assets over the merger consideration. The SWS Merger was a tax-free reorganization under Section 368(a) of the Internal Revenue Code, therefore no income taxes were recorded in connection with the bargain purchase gain. The Company used significant estimates and assumptions to value certain identifiable assets acquired and liabilities assumed. The bargain purchase gain was primarily driven by the Company’s ability to realize acquired deferred tax assets through its consolidated core earnings and the decline in the price of the Company’s common stock between the date the fixed conversion ratio was agreed upon and the closing date. Included within the fair value of other assets in the table above are identifiable intangible assets recorded in connection with the SWS Merger. The allocation to intangible assets is as follows (in thousands). Estimated Useful Gross Intangible Life (Years) Assets Customer relationships 14 $ 7,300 Core deposits 4 160 $ 7,460 In connection with the SWS Merger, Hilltop acquired loans both with and without evidence of credit quality deterioration since origination. The acquired loans were initially recorded at fair value with no carryover of any allowance for loan losses. Acquired loans were segregated between those considered to be PCI loans and those without credit impairment at acquisition. The following table presents details on acquired loans at the acquisition date (in thousands). Loans, excluding PCI Total PCI Loans Loans Loans Commercial and industrial $ 178,603 $ 9,850 $ 188,453 Real estate 324,477 62,218 386,695 Construction and land development 14,708 1,391 16,099 Consumer 3,216 — 3,216 Broker-dealer (1) 269,356 — 269,356 Total $ 790,360 $ 73,459 $ 863,819 (1) Acquired loans include margin loans to customers and correspondents of $269.4 million associated with acquired broker-dealer operations, none of which are PCI loans. The following table presents information about the PCI loans at acquisition (in thousands). Contractually required principal and interest payments $ 120,078 Nonaccretable difference 32,040 Cash flows expected to be collected 88,038 Accretable difference 14,579 Fair value of loans acquired with a deterioration of credit quality $ 73,459 The following table presents information about the acquired loans without credit impairment at acquisition (in thousands). Contractually required principal and interest payments $ 901,672 Contractual cash flows not expected to be collected 39,721 Fair value at acquisition 790,360 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements Fair Value Measurements and Disclosures The Company determines fair values in compliance with The Fair Value Measurements and Disclosures Topic of the ASC (the “Fair Value Topic”). The Fair Value Topic defines fair value and establishes a framework for measuring fair value in GAAP. The Fair Value Topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Fair Value Topic assumes that transactions upon which fair value measurements are based occur in the principal market for the asset or liability being measured. Further, fair value measurements made under the Fair Value Topic exclude transaction costs and are not the result of forced transactions. The Fair Value Topic includes a fair value hierarchy that classifies fair value measurements based upon the inputs used in valuing the assets or liabilities that are the subject of fair value measurements. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs, as indicated below. · Level 1 Inputs : Unadjusted quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date. · Level 2 Inputs : Observable inputs other than Level 1 prices. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, yield curves, prepayment speeds, default rates, credit risks and loss severities), and inputs that are derived from or corroborated by market data, among others. · Level 3 Inputs : Unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. Level 3 inputs include pricing models and discounted cash flow techniques, among others . Fair Value Option The Company has elected to measure substantially all of PrimeLending’s mortgage loans held for sale and the retained MSR asset at fair value, under the provisions of the Fair Value Option. The Company elected to apply the provisions of the Fair Value Option to these items so that it would have the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. At December 31, 2017 and 2016, the aggregate fair value of PrimeLending’s mortgage loans held for sale accounted for under the Fair Value Option was $1.58 billion and $1.75 billion, respectively, and the unpaid principal balance of those loans was $1.53 billion and $1.71 billion, respectively. The interest component of fair value is reported as interest income on loans in the accompanying consolidated statements of operations. The Company holds a number of financial instruments that are measured at fair value on a recurring basis, either by the application of the Fair Value Option or other authoritative pronouncements. The fair values of those instruments are determined primarily using Level 2 inputs, as further described below. Trading Securities — Trading securities are reported at fair value primarily using either Level 1 or Level 2 inputs in the same manner as discussed below for available for sale securities. Available For Sale Securities — Most securities available for sale are reported at fair value using Level 2 inputs. The Company obtains fair value measurements from independent pricing services. As the Company is responsible for the determination of fair value, control processes are designed to ensure that the fair values received from independent pricing services are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the financial instruments’ terms and conditions, among other things. For public common and preferred equity stocks, the determination of fair value uses Level 1 inputs based on observable market transactions. Loans Held for Sale — Mortgage loans held for sale are reported at fair value, as discussed above, using Level 2 inputs that consist of commitments on hand from investors or prevailing market prices. These instruments are held for relatively short periods, typically no more than 30 days. As a result, changes in instrument-specific credit risk are not a significant component of the change in fair value. The fair value of certain loans held for sale that cannot be sold through normal sale channels or are non-performing is measured using Level 3, or unobservable, inputs. The fair value of such loans is generally based upon estimates of expected cash flows using unobservable inputs, including listing prices of comparable assets, uncorroborated expert opinions, and/or management’s knowledge of underlying collateral. Derivatives — Derivatives, which are included in other assets and liabilities within the Company’s consolidated balance sheets, are reported at fair value using either Level 2 or Level 3 inputs. PrimeLending and the Hilltop Broker-Dealers use dealer quotes to value forward purchase commitments and forward sale commitments, respectively, executed for both hedging and non-hedging purposes. PrimeLending also issues IRLCs to its customers and the Hilltop Broker-Dealers issue forward purchase commitments to its clients that are valued based on the change in the fair value of the underlying mortgage loan from inception of the IRLC or purchase commitment to the balance sheet date, adjusted for projected loan closing rates. PrimeLending determines the value of the underlying mortgage loan as discussed in “Loans Held for Sale”, above. The Hilltop Broker-Dealers determine the value of the underlying mortgage loan from prices of comparable securities used to value forward sale commitments. Additionally, PrimeLending uses dealer quotes to value interest rate swaps and swaptions executed to hedge its MSR asset. MSR Asset — The MSR asset, which is included in other assets within the Company’s consolidated balance sheets, is reported at fair value using Level 3 inputs. The MSR asset is valued by projecting net servicing cash flows, which are then discounted to estimate the fair value. The fair value of the MSR asset is impacted by a variety of factors. Prepayment rates and discount rates, the most significant unobservable inputs, are discussed further in Note 10 to the consolidated financial statements. Securities Sold, Not Yet Purchased — Securities sold, not yet purchased are reported at fair value primarily using either Level 1 or Level 2 inputs in the same manner as discussed above for trading and available for sale securities. The following tables present information regarding financial assets and liabilities measured at fair value on a recurring basis (in thousands). Level 1 Level 2 Level 3 Total December 31, 2017 Inputs Inputs Inputs Fair Value Trading securities $ 3,329 $ 727,356 $ — $ 730,685 Available for sale securities 21,241 744,318 — 765,559 Loans held for sale — 1,544,631 36,972 1,581,603 Derivative assets — 34,150 — 34,150 MSR asset — — 54,714 54,714 Securities sold, not yet purchased 156,586 76,235 — 232,821 Derivative liabilities — 13,197 — 13,197 Level 1 Level 2 Level 3 Total December 31, 2016 Inputs Inputs Inputs Fair Value Trading securities $ 9,481 $ 256,053 $ — $ 265,534 Available for sale securities 19,840 578,167 — 598,007 Loans held for sale — 1,712,697 35,801 1,748,498 Derivative assets — 57,036 — 57,036 MSR asset — — 61,968 61,968 Securities sold, not yet purchased 60,715 93,174 — 153,889 Derivative liabilities — 35,737 — 35,737 The following table includes a rollforward for those financial instruments measured at fair value using Level 3 inputs (in thousands). Total Gains or Losses (Realized or Unrealized) Balance at Included in Other Beginning of Purchases/ Sales/ Included in Comprehensive Balance at Year Additions Reductions Net Income Income (Loss) End of Year Year ended December 31, 2017 Loans held for sale $ 35,801 $ 36,891 $ (26,773) $ (8,947) $ — $ 36,972 MSR asset 61,968 16,401 (17,499) (6,156) — 54,714 Total $ 97,769 $ 53,292 $ (44,272) $ (15,103) $ — $ 91,686 Year ended December 31, 2016 Trading securities $ 1 $ — $ — $ (1) $ — $ — Loans held for sale 25,880 60,999 (39,637) (11,441) — 35,801 MSR asset 52,285 23,381 (7,586) (6,112) — 61,968 Total $ 78,166 $ 84,380 $ (47,223) $ (17,554) $ — $ 97,769 Year ended December 31, 2015 Trading securities $ — $ 7,301 $ (3,397) $ (3,903) $ — $ 1 Loans held for sale 9,017 52,800 (25,514) (10,423) — 25,880 MSR asset 36,155 24,974 — (8,844) — 52,285 Total $ 45,172 $ 85,075 $ (28,911) $ (23,170) $ — $ 78,166 All net realized and unrealized gains (losses) in the table above are reflected in the accompanying consolidated financial statements. Excluding the trading securities activity noted above, the unrealized gains (losses) relate to financial instruments still held at December 31, 2017. For Level 3 financial instruments measured at fair value on a recurring basis at December 31, 2017, the significant unobservable inputs used in the fair value measurements were as follows. Range Financial instrument Valuation Technique Unobservable Inputs (Weighted-Average) Loans held for sale Discounted cash flows / Market comparable Projected price 90 - 95 % ( 95 %) MSR asset Discounted cash flows Constant prepayment rate 10.93 % Discount rate 11.03 % The Company had no transfers between Levels 1 and 2 during the periods presented. The following table presents those changes in fair value of instruments recognized in the consolidated statements of operations that are accounted for under the Fair Value Option (in thousands). Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 Other Total Other Total Other Total Net Noninterest Changes in Net Noninterest Changes in Net Noninterest Changes in Gains (Losses) Income Fair Value Gains (Losses) Income Fair Value Gains (Losses) Income Fair Value Loans held for sale $ 10,655 $ — $ 10,655 $ (8,275) $ — $ (8,275) $ (2,970) $ — $ (2,970) MSR asset (6,156) — (6,156) (6,112) — (6,112) (8,844) — (8,844) The Company also determines the fair value of certain assets and liabilities on a non-recurring basis. In particular, the fair value of all assets acquired and liabilities assumed in an acquisition of a business are determined at their respective acquisition date fair values. In addition, facts and circumstances may dictate a fair value measurement when there is evidence of impairment. Assets and liabilities measured on a non-recurring basis include the items discussed below. Impaired Loans — The Company reports individually impaired loans based on the underlying fair value of the collateral through specific allowances within the allowance for loan losses. PCI loans with a fair value of $172.9 million, $822.8 million and $73.5 million were acquired by the Company upon completion of the PlainsCapital Merger, the FNB Transaction and the SWS Merger, respectively (collectively, the “Bank Transactions”). Substantially all PCI loans acquired in the FNB Transaction are covered by FDIC loss-share agreements. The fair value of PCI loans was determined using Level 3 inputs, including estimates of expected cash flows that incorporated significant unobservable inputs regarding default rates, loss severity rates assuming default, prepayment speeds on acquired loans accounted for in pools (“Pooled Loans”), and estimated collateral values. At December 31, 2017, estimates for these significant unobservable inputs were as follows. PCI Loans PlainsCapital FNB SWS Merger Transaction Merger Weighted average default rate % % % Weighted average loss severity rate % % % Weighted average prepayment speed % % % At December 31, 2017, the resulting weighted average expected loss on PCI loans associated with the PlainsCapital Merger, FNB Transaction and SWS Merger was 42%, 7% and 17%, respectively. The Company obtains updated appraisals of the fair value of collateral securing impaired collateral dependent loans at least annually, in accordance with regulatory guidelines. The Company also reviews the fair value of such collateral on a quarterly basis. If the quarterly review indicates that the fair value of the collateral may have deteriorated, the Company orders an updated appraisal of the fair value of the collateral. Because the Company obtains updated appraisals when evidence of a decline in the fair value of collateral exists, it typically does not adjust appraised values. Other Real Estate Owned — The Company determines fair value primarily using independent appraisals of OREO properties. The resulting fair value measurements are classified as Level 2 inputs. In the FNB Transaction, the Bank acquired OREO of $135.2 million, all of which is covered by FDIC loss-share agreements. At December 31, 2017 and 2016, the estimated fair value of covered OREO was $36.7 million and $51.6 million, respectively, and the underlying fair value measurements utilize Level 2 inputs. The fair value of non-covered OREO at December 31, 2017 and 2016 was $3.9 million and $4.5 million, respectively, and is included in other assets within the consolidated balance sheets. During the reported periods, all fair value measurements for non-covered OREO subsequent to initial recognition utilized Level 2 inputs. The following table presents information regarding certain assets and liabilities measured at fair value on a non-recurring basis for which a change in fair value has been recorded during reporting periods subsequent to initial recognition (in thousands). Total Gains (Losses) for the Level 1 Level 2 Level 3 Total Year Ended December 31, December 31, 2017 Inputs Inputs Inputs Fair Value 2017 2016 2015 Non-covered impaired loans $ — $ — $ 29,063 $ 29,063 $ (49) $ 2,487 $ (126) Covered impaired loans — — 83,849 83,849 (2,353) 1,156 3,034 Non-covered other real estate owned — 3,883 — 3,883 (704) (555) (28) Covered other real estate owned — 10,187 — 10,187 (3,732) (18,481) (16,555) The Fair Value of Financial Instruments Subsection of the ASC requires disclosure of the fair value of financial assets and liabilities, including the financial assets and liabilities previously discussed. The methods for determining estimated fair value for financial assets and liabilities measured at fair value on a recurring or non-recurring basis are discussed above. For other financial assets and liabilities, the Company utilizes quoted market prices, if available, to estimate the fair value of financial instruments. Because no quoted market prices exist for a significant portion of the Company’s financial instruments, the fair value of such instruments has been derived based on management’s assumptions with respect to future economic conditions, the amount and timing of future cash flows, and estimated discount rates. Different assumptions could significantly affect these estimates. Accordingly, the estimates provided herein do not necessarily indicate amounts which could be realized in a current transaction. Further, as it is management’s intent to hold a significant portion of its financial instruments to maturity, it is not probable that the fair values shown below will be realized in a current transaction. Because of the wide range of permissible valuation techniques and the numerous estimates which must be made, it may be difficult to make reasonable comparisons of the Company’s fair value information to that of other financial institutions. The aggregate estimated fair value amount should in no way be construed as representative of the underlying value of Hilltop and its subsidiaries. The following methods and assumptions are typically used in estimating the fair value disclosures for financial instruments: Cash and Cash Equivalents — For cash and due from banks and federal funds sold, the carrying amount is a reasonable estimate of fair value. Securities Purchased Under Agreements to Resell — Securities purchased under agreements to resell are carried at the amounts at which the securities will subsequently be resold as specified in the agreements. The carrying amounts approximate fair value due to their short-term nature. Assets Segregated for Regulatory Purposes — Assets segregated for regulatory purposes may consist of cash and securities with carrying amounts that approximate fair value. Held to Maturity Securities — For securities held to maturity, estimated fair value equals quoted market price, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Loans Held for Sale — Loans held for sale consist primarily of certain mortgage loans held for sale that are subject to purchase by related parties. Such loans are reported at fair value, as discussed above, using Level 2 inputs that consist of commitments on hand from investors or prevailing market prices. Loans — The fair value of non-covered and covered loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Broker-Dealer and Clearing Organization Receivables and Payables — The carrying amount approximates their fair value. FDIC Indemnification Asset — The fair value of the FDIC Indemnification Asset is based on Level 3 inputs, including the discounted value of expected future cash flows under the loss-share agreements. The discount rate contemplates the credit worthiness of the FDIC as counterparty to this asset, and considers an incremental discount rate risk premium reflective of the inherent uncertainty associated with the timing of the cash flows. Deposits — The estimated fair value of demand deposits, savings accounts and NOW accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. The carrying amount for variable-rate certificates of deposit approximates their fair values. Short-Term Borrowings — The carrying amounts of federal funds purchased, borrowings under repurchase agreements, Federal Home Loan Bank (“FHLB”) and other short-term borrowings approximate their fair values. Debt — The fair values are estimated using discounted cash flow analysis based on current incremental borrowing rates for similar types of borrowing arrangements. Other Assets and Liabilities — Other assets and liabilities primarily consists of cash surrender value of life insurance policies and accrued interest receivable and payable with carrying amounts that approximate their fair values using Level 2 inputs. The fair value of certain other receivables and investments is based on Level 3 inputs. The following tables present the carrying values and estimated fair values of financial instruments not measured at fair value on either a recurring or non-recurring basis (in thousands). Estimated Fair Value Carrying Level 1 Level 2 Level 3 December 31, 2017 Amount Inputs Inputs Inputs Total Financial assets: Cash and cash equivalents $ 487,382 $ 487,382 $ — $ — $ 487,382 Securities purchased under agreements to resell 186,537 — 186,537 — 186,537 Assets segregated for regulatory purposes 186,578 186,578 — — 186,578 Held to maturity securities 355,849 — 349,939 — 349,939 Loans held for sale 133,754 — 133,754 — 133,754 Non-covered loans, net 6,212,712 — 577,889 5,828,868 6,406,757 Covered loans, net 179,400 — — 269,386 269,386 Broker-dealer and clearing organization receivables 1,464,378 — 1,464,378 — 1,464,378 FDIC indemnification asset 29,340 — — 20,122 20,122 Other assets 64,862 — 59,053 5,809 64,862 Financial liabilities: Deposits 7,978,119 — 7,973,101 — 7,973,101 Broker-dealer and clearing organization payables 1,287,563 — 1,287,563 — 1,287,563 Short-term borrowings 1,206,424 — 1,206,424 — 1,206,424 Debt 275,821 — 289,719 — 289,719 Other liabilities 4,795 — 4,795 — 4,795 Estimated Fair Value Carrying Level 1 Level 2 Level 3 December 31, 2016 Amount Inputs Inputs Inputs Total Financial assets: Cash and cash equivalents $ 690,764 $ 690,764 $ — $ — $ 690,764 Securities purchased under agreements to resell 89,430 — 89,430 — 89,430 Assets segregated for regulatory purposes 180,993 180,993 — — 180,993 Held to maturity securities 351,831 — 345,088 — 345,088 Loans held for sale 46,965 — 46,965 — 46,965 Non-covered loans, net 5,789,313 — 502,077 5,459,975 5,962,052 Covered loans, net 255,714 — — 367,444 367,444 Broker-dealer and clearing organization receivables 1,497,741 — 1,497,741 — 1,497,741 FDIC indemnification asset 71,313 — — 60,173 60,173 Other assets 62,904 — 58,697 4,207 62,904 Financial liabilities: Deposits 7,063,811 — 7,058,837 — 7,058,837 Broker-dealer and clearing organization payables 1,347,128 — 1,347,128 — 1,347,128 Short-term borrowings 1,417,289 — 1,417,289 — 1,417,289 Debt 384,924 — 378,822 — 378,822 Other liabilities 3,708 — 3,708 — 3,708 |
Securities
Securities | 12 Months Ended |
Dec. 31, 2017 | |
Securities | |
Securities | 4. Securities The fair value of trading securities are summarized as follows (in thousands). December 31, 2017 2016 U.S. Treasury securities $ — $ 5,940 U.S. government agencies: Bonds 52,078 36,303 Residential mortgage-backed securities 372,817 2,539 Commercial mortgage-backed securities 6,125 15,171 Collateralized mortgage obligations 5,122 5,607 Corporate debt securities 96,182 60,699 States and political subdivisions 170,413 89,946 Unit investment trusts 22,612 41,409 Private-label securitized product 1,631 4,292 Other 3,705 3,628 Totals $ 730,685 $ 265,534 The Hilltop Broker-Dealers enter into transactions that represent commitments to purchase and deliver securities at prevailing future market prices to facilitate customer transactions and satisfy such commitments. Accordingly, the Hilltop Broker-Dealers’ ultimate obligation may exceed the amount recognized in the financial statements. These securities, which are carried at fair value and reported as securities sold, not yet purchased in the consolidated balance sheets, had a value of $232.8 million and $153.9 million at December 31, 2017 and 2016, respectively. The amortized cost and fair value of available for sale and held to maturity securities are summarized as follows (in thousands). Available for Sale Amortized Unrealized Unrealized December 31, 2017 Cost Gains Losses Fair Value U.S. Treasury securities $ 24,665 $ 107 $ (103) $ 24,669 U.S. government agencies: Bonds 96,177 829 (366) 96,640 Residential mortgage-backed securities 246,707 538 (3,740) 243,505 Commercial mortgage-backed securities 11,966 105 (48) 12,023 Collateralized mortgage obligations 237,848 106 (4,142) 233,812 Corporate debt securities 66,868 1,819 (25) 68,662 States and political subdivisions 64,024 1,099 (115) 65,008 Commercial mortgage-backed securities — — — — Equity securities 19,691 1,666 (116) 21,241 Totals $ 767,946 $ 6,269 $ (8,655) $ 765,560 Available for Sale Amortized Unrealized Unrealized December 31, 2016 Cost Gains Losses Fair Value U.S. Treasury securities $ 31,701 $ 144 $ (44) $ 31,801 U.S. government agencies: Bonds 121,838 881 (67) 122,652 Residential mortgage-backed securities 135,371 708 (2,941) 133,138 Commercial mortgage-backed securities 8,771 2 (58) 8,715 Collateralized mortgage obligations 117,879 29 (3,206) 114,702 Corporate debt securities 76,866 2,354 (91) 79,129 States and political subdivisions 86,353 1,498 (336) 87,515 Commercial mortgage-backed securities 499 16 — 515 Equity securities 18,920 1,263 (343) 19,840 Totals $ 598,198 $ 6,895 $ (7,086) $ 598,007 Held to Maturity Amortized Unrealized Unrealized December 31, 2017 Cost Gains Losses Fair Value U.S. government agencies: Bonds $ 39,015 $ — $ (1,188) $ 37,827 Residential mortgage-backed securities 16,130 44 — 16,174 Commercial mortgage-backed securities 71,373 241 (735) 70,879 Collateralized mortgage obligations 173,928 19 (3,969) 169,978 States and political subdivisions 55,403 437 (759) 55,081 Totals $ 355,849 $ 741 $ (6,651) $ 349,939 Held to Maturity Amortized Unrealized Unrealized December 31, 2016 Cost Gains Losses Fair Value U.S. government agencies: Bonds $ 40,513 $ — $ (1,287) $ 39,226 Residential mortgage-backed securities 19,606 13 (6) 19,613 Commercial mortgage-backed securities 31,767 102 (593) 31,276 Collateralized mortgage obligations 217,954 128 (3,372) 214,710 States and political subdivisions 41,991 70 (1,798) 40,263 Totals $ 351,831 $ 313 $ (7,056) $ 345,088 Information regarding available for sale and held to maturities securities that were in an unrealized loss position is shown in the following tables (dollars in thousands). December 31, 2017 December 31, 2016 Number of Unrealized Number of Unrealized Securities Fair Value Losses Securities Fair Value Losses Available for Sale U.S. treasury securities: Unrealized loss for less than twelve months 6 $ 15,449 $ 69 7 $ 21,694 $ 44 Unrealized loss for twelve months or longer 1 4,150 34 — — — 7 19,599 103 7 21,694 44 U.S. government agencies: Bonds: Unrealized loss for less than twelve months 10 83,476 367 1 14,908 67 Unrealized loss for twelve months or longer — — — — — — 10 83,476 367 1 14,908 67 Residential mortgage-backed securities: Unrealized loss for less than twelve months 15 121,968 820 12 109,398 2,941 Unrealized loss for twelve months or longer 11 93,358 2,920 — — — 26 215,326 3,740 12 109,398 2,941 Commercial mortgage-backed securities: Unrealized loss for less than twelve months 1 5,048 48 2 7,127 58 Unrealized loss for twelve months or longer — — — — — — 1 5,048 48 2 7,127 58 Collateralized mortgage obligations: Unrealized loss for less than twelve months 16 90,886 819 11 91,144 2,340 Unrealized loss for twelve months or longer 17 80,492 3,323 8 19,320 866 33 171,378 4,142 19 110,464 3,206 Corporate debt securities: Unrealized loss for less than twelve months 1 5,073 25 3 5,899 91 Unrealized loss for twelve months or longer — — — — — — 1 5,073 25 3 5,899 91 States and political subdivisions: Unrealized loss for less than twelve months 9 6,981 97 32 17,549 322 Unrealized loss for twelve months or longer 9 2,876 18 1 450 14 18 9,857 115 33 17,999 336 Equity securities: Unrealized loss for less than twelve months 1 944 13 — — — Unrealized loss for twelve months or longer 1 6,800 102 2 11,107 343 2 7,744 115 2 11,107 343 Total available for sale: Unrealized loss for less than twelve months 59 329,825 2,258 68 267,719 5,863 Unrealized loss for twelve months or longer 39 187,676 6,397 11 30,877 1,223 98 $ 517,501 $ 8,655 79 $ 298,596 $ 7,086 December 31, 2017 December 31, 2016 Number of Unrealized Number of Unrealized Securities Fair Value Losses Securities Fair Value Losses Held to Maturity U.S. government agencies: Bonds: Unrealized loss for less than twelve months 1 $ 5,950 $ 50 4 $ 33,225 $ 1,287 Unrealized loss for twelve months or longer 3 31,877 1,138 — — — 4 37,827 1,188 4 33,225 1,287 Residential mortgage-backed securities: Unrealized loss for less than twelve months — — — 2 13,178 6 Unrealized loss for twelve months or longer — — — — — — — — — 2 13,178 6 Commercial mortgage-backed securities: Unrealized loss for less than twelve months 7 39,396 271 5 18,891 588 Unrealized loss for twelve months or longer 2 12,659 464 1 1,401 5 9 52,055 735 6 20,292 593 Collateralized mortgage obligations: Unrealized loss for less than twelve months 10 37,064 264 19 187,669 3,372 Unrealized loss for twelve months or longer 12 128,270 3,705 — — — 22 165,334 3,969 19 187,669 3,372 States and political subdivisions: Unrealized loss for less than twelve months 22 11,079 71 71 29,862 1,790 Unrealized loss for twelve months or longer 46 18,598 688 1 462 8 68 29,677 759 72 30,324 1,798 Total held to maturity: Unrealized loss for less than twelve months 40 93,489 656 101 282,825 7,043 Unrealized loss for twelve months or longer 63 191,404 5,995 2 1,863 13 103 $ 284,893 $ 6,651 103 $ 284,688 $ 7,056 During 2017, 2016 and 2015, the Company did not record any OTTI. While some of the securities held in the investment portfolio have decreased in value since the date of acquisition, the severity of loss and the duration of the loss position are not believed to be significant enough to warrant OTTI of the securities. Factors considered in the Company’s analysis include the reasons for the unrealized loss position, the severity and duration of the unrealized loss position, credit worthiness, and forecasted performance of the investee. The Company does not intend, nor is it likely that the Company will be required to sell, these securities before the recovery of the cost basis. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. The amortized cost and fair value of securities, excluding trading and available for sale equity securities, at December 31, 2017 are shown by contractual maturity below (in thousands). Available for Sale Held to Maturity Amortized Amortized Cost Fair Value Cost Fair Value Due in one year or less $ 101,815 $ 101,922 $ 3,245 $ 3,242 Due after one year through five years 95,284 96,442 2,847 2,843 Due after five years through ten years 30,893 32,064 27,051 26,289 Due after ten years 23,742 24,551 61,275 60,534 251,734 254,979 94,418 92,908 Residential mortgage-backed securities 246,707 243,505 16,130 16,174 Collateralized mortgage obligations 237,848 233,812 173,928 169,978 Commercial mortgage-backed securities 11,966 12,023 71,373 70,879 $ 748,255 $ 744,319 $ 355,849 $ 349,939 During 2017, 2016 and 2015, the Company realized net gains from its trading portfolio of $20.2 million, $15.9 million and $12.8 million, respectively. In addition, the Hilltop Broker-Dealers realized net gains from structured product trading activities of $62.8 million, $109.8 million and $0.3 million during 2017, 2016 and 2015, respectively. During 2017 and 2015, the Company had other net realized gains on securities of $16 thousand and $4.4 million, respectively. There were no other net realized gains on securities during 2016. All such realized net gains (losses) are recorded as a component of other noninterest income within the consolidated statements of operations. Securities with a carrying amount of $738.5 million and $695.1 million (with a fair value of $730.1 million and $688.1 million, respectively) at December 31, 2017 and 2016, respectively, were pledged to secure public and trust deposits, federal funds purchased and securities sold under agreements to repurchase, and for other purposes as required or permitted by law. Substantially all of these pledged securities were included in the Company’s available for sale and held to maturity securities portfolios at December 31, 2017 and 2016. Mortgage-backed securities and collateralized mortgage obligations consist principally of GNMA, Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”) pass-through and participation certificates. GNMA securities are guaranteed by the full faith and credit of the United States, while FNMA and FHLMC securities are fully guaranteed by those respective United States government-sponsored agencies, and conditionally guaranteed by the full faith and credit of the United States. At December 31, 2017 and 2016, NLC had investments on deposit in custody for various state insurance departments with carrying values of $9.3 million and $9.2 million, respectively. |
Non-Covered Loans and Allowance
Non-Covered Loans and Allowance for Non-Covered Loan Losses | 12 Months Ended |
Dec. 31, 2017 | |
Non-Covered Loans and Allowance for Non-Covered Loan Losses | |
Non-Covered Loans and Allowance for Non-Covered Loan Losses | 5. Non-Covered Loans and Allowance for Non-Covered Loan Losses Non-covered loans refer to loans not covered by the FDIC loss-share agreements. Covered loans are discussed in Note 6 to the consolidated financial statements. Non-covered loans summarized by portfolio segment are as follows (in thousands). December 31, 2017 2016 Commercial and industrial $ 1,681,205 $ 1,696,453 Real estate 3,011,524 2,816,767 Construction and land development 962,605 786,850 Consumer 40,446 41,352 Broker-dealer (1) 577,889 502,077 6,273,669 5,843,499 Allowance for non-covered loan losses (60,957) (54,186) Total non-covered loans, net of allowance $ 6,212,712 $ 5,789,313 (1) The Bank has lending policies in place with the goal of establishing an asset portfolio that will provide a return on stockholders’ equity sufficient to maintain capital to assets ratios that meet or exceed established regulations. Loans are underwritten with careful consideration of the borrower’s financial condition, the specific purpose of the loan, the primary sources of repayment and any collateral pledged to secure the loan. Underwriting procedures address financial components based on the size and complexity of the credit. The financial components include, but are not limited to, current and projected cash flows, shock analysis and/or stress testing, and trends in appropriate balance sheet and statement of operations ratios. The Bank’s loan policy provides specific underwriting guidelines by portfolio segment, including commercial and industrial, real estate, construction and land development, and consumer loans. The guidelines for each individual portfolio segment set forth permissible and impermissible loan types. With respect to each loan type, the guidelines within the Bank’s loan policy provide minimum requirements for the underwriting factors listed above. The Bank’s underwriting procedures also include an analysis of any collateral and guarantor. Collateral analysis includes a complete description of the collateral, as well as determined values, monitoring requirements, loan to value ratios, concentration risk, appraisal requirements and other information relevant to the collateral being pledged. Guarantor analysis includes liquidity and cash flow evaluation based on the significance with which the guarantors are expected to serve as secondary repayment sources. The Bank maintains a loan review department that reviews credit risk in response to both external and internal factors that potentially impact the performance of either individual loans or the overall loan portfolio. The loan review process reviews the creditworthiness of borrowers and determines compliance with the loan policy. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel. Results of these reviews are presented to management and the Bank’s board of directors. In connection with the Bank Transactions, the Company acquired non-covered loans both with and without evidence of credit quality deterioration since origination. The following table presents the carrying values and the outstanding balances of the non-covered PCI loans (in thousands). December 31, 2017 2016 Carrying amount $ 37,204 $ 51,432 Outstanding balance 51,064 67,988 Changes in the accretable yield for the non-covered PCI loans were as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of period $ 13,116 $ 17,744 $ 12,814 Additions — — 14,579 Reclassifications from nonaccretable difference, net (1) 3,836 6,168 19,759 Disposals of loans (664) — (2,371) Accretion (9,275) (10,796) (27,037) Balance, end of period $ 7,013 $ 13,116 $ 17,744 (1) Reclassifications from nonaccretable difference are primarily due to net increases in expected cash flows in the quarterly recasts. Reclassifications to nonaccretable difference occur when accruing loans are moved to non-accrual and expected cash flows are no longer predictable and the accretable yield is eliminated. The remaining nonaccretable difference for non-covered PCI loans was $19.2 million and $22.8 million at December 31, 2017 and 2016, respectively. Impaired loans exhibit a clear indication that the borrower’s cash flow may not be sufficient to meet principal and interest payments, which is generally when a loan is 90 days past due unless the asset is both well secured and in the process of collection. Non-covered impaired loans include non-accrual loans, troubled debt restructurings (“TDRs”), PCI loans and partially charged-off loans. The amounts shown in following tables include loans accounted for on an individual basis, as well as acquired Pooled Loans. For Pooled Loans, the recorded investment with allowance and the related allowance consider impairment measured at the pool level. Non-covered impaired loans, segregated between those considered to be PCI loans and those without credit impairment at acquisition, are summarized by class in the following tables (in thousands). Unpaid Recorded Recorded Total Contractual Investment with Investment with Recorded Related December 31, 2017 Principal Balance No Allowance Allowance Investment Allowance PCI Commercial and industrial: Secured $ 19,752 $ 3,610 $ 2,489 $ 6,099 $ 89 Unsecured — — — — — Real estate: Secured by commercial properties 34,598 7,583 12,092 19,675 1,391 Secured by residential properties 12,600 5,307 4,558 9,865 325 Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 2,001 428 1,010 1,438 215 Consumer 2,377 12 115 127 18 Broker-dealer — — — — — 71,328 16,940 20,264 37,204 2,038 Non-PCI Commercial and industrial: Secured 23,666 15,308 2,072 17,380 365 Unsecured 761 616 — 616 — Real estate: Secured by commercial properties 15,504 10,934 3,686 14,620 932 Secured by residential properties 1,596 1,177 — 1,177 — Construction and land development: Residential construction loans 15 — — — — Commercial construction loans and land development 653 — 611 611 93 Consumer 162 56 — 56 — Broker-dealer — — — — — 42,357 28,091 6,369 34,460 1,390 $ 113,685 $ 45,031 $ 26,633 $ 71,664 $ 3,428 Unpaid Recorded Recorded Total Contractual Investment with Investment with Recorded Related December 31, 2016 Principal Balance No Allowance Allowance Investment Allowance PCI Commercial and industrial: Secured $ 25,354 $ 3,234 $ 5,438 $ 8,672 $ 557 Unsecured — — — — — Real estate: Secured by commercial properties 38,005 11,097 17,413 28,510 1,907 Secured by residential properties 13,606 7,401 3,088 10,489 200 Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 5,780 1,391 2,076 3,467 377 Consumer 3,223 237 57 294 56 Broker-dealer — — — — — 85,968 23,360 28,072 51,432 3,097 Non-PCI Commercial and industrial: Secured 6,311 3,313 1,372 4,685 115 Unsecured 946 925 — 925 — Real estate: Secured by commercial properties 10,134 10,000 — 10,000 — Secured by residential properties 1,344 1,116 — 1,116 — Construction and land development: Residential construction loans 28 28 — 28 — Commercial construction loans and land development 738 48 679 727 167 Consumer 246 244 — 244 — Broker-dealer — — — — — 19,747 15,674 2,051 17,725 282 $ 105,715 $ 39,034 $ 30,123 $ 69,157 $ 3,379 Average investment in non-covered impaired loans is summarized by class in the following table (in thousands). Year Ended December 31, 2017 2016 2015 Commercial and industrial: Secured $ 18,418 $ 19,730 $ 25,991 Unsecured 771 486 104 Real estate: Secured by commercial properties 36,403 40,014 32,149 Secured by residential properties 11,324 12,085 7,769 Construction and land development: Residential construction loans 14 125 111 Commercial construction loans and land development 3,122 4,619 7,462 Consumer 361 659 1,459 Broker-dealer — — — $ 70,413 $ 77,718 $ 75,045 Non-covered non-accrual loans, excluding those classified as held for sale, are summarized by class in the following table (in thousands). December 31, December 31, 2017 2016 Commercial and industrial: Secured $ 20,262 $ 8,590 Unsecured 616 925 Real estate: Secured by commercial properties 14,620 11,034 Secured by residential properties 1,614 1,197 Construction and land development: Residential construction loans — 28 Commercial construction loans and land development 611 727 Consumer 56 244 Broker-dealer — — $ 37,779 $ 22,745 At December 31, 2017 and 2016, non-covered non-accrual loans included non-covered PCI loans of $3.3 million and $5.0 million, respectively, for which discount accretion has been suspended because the extent and timing of cash flows from these non-covered PCI loans can no longer be reasonably estimated. In addition to the non-covered non-accrual loans in the table above, $2.7 million and $1.7 million of real estate loans secured by residential properties and classified as held for sale were in non-accrual status at December 31, 2017 and 2016, respectively. Interest income, including recoveries and cash payments, recorded on non-covered impaired loans was $0.5 million, $0.2 million and $8.9 million during 2017, 2016 and 2015, respectively. Except as noted above, non-covered PCI loans are considered to be performing due to the application of the accretion method. The Bank classifies loan modifications as TDRs when it concludes that it has both granted a concession to a debtor and that the debtor is experiencing financial difficulties. Loan modifications are typically structured to create affordable payments for the debtor and can be achieved in a variety of ways. The Bank modifies loans by reducing interest rates and/or lengthening loan amortization schedules. The Bank may also reconfigure a single loan into two or more loans (“A/B Note”). The typical A/B Note restructure results in a “bad” loan which is charged off and a “good” loan or loans, the terms of which comply with the Bank’s customary underwriting policies. The debt charged off on the “bad” loan is not forgiven to the debtor. Information regarding TDRs granted during 2017, 2016 and 2015, respectively, is shown in the following table (in thousands). At December 31, 2017 and 2016, the Bank had nominal unadvanced commitments to borrowers whose loans have been restructured in TDRs. Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 Number of Balance at Balance at Number of Balance at Balance at Number of Balance at Balance at Loans Extension End of Period Loans Extension End of Period Loans Extension End of Period Commercial and industrial: Secured 1 $ 1,357 $ 1,186 1 $ 1,196 $ 944 1 $ 89 $ 82 Unsecured — — — — — — — — — Real estate: Secured by commercial properties 2 4,775 4,629 — — — 1 1,083 1,040 Secured by residential properties — — — — — — — — — Construction and land development: Residential construction loans — — — — — — — — — Commercial construction loans and land development 1 655 611 — — — 1 76 — Consumer — — — — — — — — — Broker-dealer — — — — — — — — — 4 $ 6,787 $ 6,426 1 $ 1,196 $ 944 3 $ 1,248 $ 1,122 All of the non-covered loan modifications included in the table above involved payment term extensions. The Bank did not grant principal reductions on any restructured non-covered loans during 2017, 2016 or 2015. The following table presents information regarding TDRs granted during the twelve months preceding December 31, 2017 and 2016, respectively, for which a payment was at least 30 days past due (dollars in thousands). Twelve Months Preceding December 31, 2017 Twelve Months Preceding December 31, 2016 Number of Balance at Balance at Number of Balance at Balance at Loans Extension End of Period Loans Extension End of Period Commercial and industrial: Secured — $ — $ — 1 $ 1,196 $ 944 Unsecured — — — — — — Real estate: Secured by commercial properties 1 1,481 1,352 — — — Secured by residential properties — — — — — — Construction and land development: Residential construction loans — — — — — — Commercial construction loans and land development 1 655 611 — — — Consumer — — — — — — Broker-dealer — — — — — — 2 $ 2,136 $ 1,963 1 $ 1,196 $ 944 An analysis of the aging of the Company’s non-covered loan portfolio is shown in the following tables (in thousands). Accruing Loans Loans Past Due Loans Past Due Loans Past Due Total Current PCI Total Past Due December 31, 2017 30-59 Days 60-89 Days 90 Days or More Past Due Loans Loans Loans Loans 90 Days or More Commercial and industrial: Secured $ 2,060 $ 312 $ 5,714 $ 8,086 $ 1,544,131 $ 6,099 $ 1,558,316 $ 640 Unsecured 642 — — 642 122,247 — 122,889 — Real estate: Secured by commercial properties 442 — 2,195 2,637 2,213,331 19,675 2,235,643 — Secured by residential properties 1,490 1,290 418 3,198 762,818 9,865 775,881 — Construction and land development: Residential construction loans 315 — — 315 176,937 — 177,252 — Commercial construction loans and land development 1,370 101 — 1,471 782,444 1,438 785,353 — Consumer 194 20 — 214 40,105 127 40,446 — Broker-dealer — — — — 577,889 — 577,889 — $ 6,513 $ 1,723 $ 8,327 $ 16,563 $ 6,219,902 $ 37,204 $ 6,273,669 $ 640 Accruing Loans Loans Past Due Loans Past Due Loans Past Due Total Current PCI Total Past Due December 31, 2016 30-59 Days 60-89 Days 90 Days or More Past Due Loans Loans Loans Loans 90 Days or More Commercial and industrial: Secured $ 4,727 $ 704 $ 6,770 $ 12,201 $ 1,576,239 $ 8,672 $ 1,597,112 $ 3,095 Unsecured 596 1 909 1,506 97,835 — 99,341 1 Real estate: Secured by commercial properties 550 9,417 1,492 11,459 1,915,126 28,510 1,955,095 — Secured by residential properties 506 361 369 1,236 849,947 10,489 861,672 — Construction and land development: Residential construction loans — 28 — 28 128,624 — 128,652 — Commercial construction loans and land development 2,500 1,784 48 4,332 650,399 3,467 658,198 — Consumer 176 31 — 207 40,851 294 41,352 — Broker-dealer — — — — 502,077 — 502,077 — $ 9,055 $ 12,326 $ 9,588 $ 30,969 $ 5,761,098 $ 51,432 $ 5,843,499 $ 3,096 In addition to the non-covered loans shown in the table above, PrimeLending had $84.5 million and $44.4 million of loans included in loans held for sale (with an unpaid principal balance of $85.2 million and $44.9 million, respectively) that were 90 days past due and accruing interest at December 31, 2017 and 2016, respectively. These loans are guaranteed by U.S. government agencies and include loans that are subject to repurchase, or have been repurchased, by PrimeLending. Management tracks credit quality trends on a quarterly basis related to: (i) past due levels, (ii) non-performing asset levels, (iii) classified loan levels, (iv) net charge-offs, and (v) general economic conditions in the state and local markets. The Company utilizes a risk grading matrix to assign a risk grade to each of the loans in its portfolio with the exception of broker-dealer margin loans. A risk rating is assigned based on an assessment of the borrower’s management, collateral position, financial capacity, and economic factors. The general characteristics of the various risk grades are described below. Pass — “Pass” loans present a range of acceptable risks to the Company. Loans that would be considered virtually risk-free are rated Pass — low risk. Loans that exhibit sound standards based on the grading factors above and present a reasonable risk to the Company are rated Pass — normal risk. Loans that exhibit a minor weakness in one or more of the grading criteria but still present an acceptable risk to the Company are rated Pass — high risk. Special Mention — “Special Mention” loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in a deterioration of the repayment prospects for the loans and weaken the Company’s credit position at some future date. Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to require adverse classification. Substandard — “Substandard” loans are inadequately protected by the current sound worth and paying capacity of the obligor or the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Many substandard loans are considered impaired. PCI — “PCI” loans exhibited evidence of credit deterioration at acquisition that made it probable that all contractually required principal payments would not be collected. The following tables present the internal risk grades of non-covered loans, as previously described, in the portfolio by class (in thousands). December 31, 2017 Pass Special Mention Substandard PCI Total Commercial and industrial: Secured $ 1,483,502 $ 17,354 $ 51,361 $ 6,099 $ 1,558,316 Unsecured 121,774 — 1,115 — 122,889 Real estate: Secured by commercial properties 2,154,595 7,647 53,726 19,675 2,235,643 Secured by residential properties 756,091 — 9,925 9,865 775,881 Construction and land development: Residential construction loans 177,252 — — — 177,252 Commercial construction loans and land development 780,905 2,259 751 1,438 785,353 Consumer 40,211 — 108 127 40,446 Broker-dealer 577,889 — — — 577,889 $ 6,092,219 $ 27,260 $ 116,986 $ 37,204 $ 6,273,669 December 31, 2016 Pass Special Mention Substandard PCI Total Commercial and industrial: Secured $ 1,531,895 $ 72 $ 56,473 $ 8,672 $ 1,597,112 Unsecured 97,646 — 1,695 — 99,341 Real estate: Secured by commercial properties 1,888,231 3,693 34,661 28,510 1,955,095 Secured by residential properties 846,420 — 4,763 10,489 861,672 Construction and land development: Residential construction loans 128,624 — 28 — 128,652 Commercial construction loans and land development 653,808 — 923 3,467 658,198 Consumer 40,789 6 263 294 41,352 Broker-dealer 502,077 — — — 502,077 $ 5,689,490 $ 3,771 $ 98,806 $ 51,432 $ 5,843,499 Allowance for Loan Losses It is management’s responsibility to, at the end of each quarter, or more frequently as deemed necessary, analyze the level of the allowance for loan losses to ensure that it is appropriate for the estimated credit losses in the portfolio. Estimated credit losses are the probable current amount of loans that the Company will be unable to collect given facts and circumstances as of the evaluation date. When management determines that a loan, or portion thereof is uncollectible, the loan, or portion thereof, is charged-off against the allowance for loan losses, or for acquired loans accounted for in pools, charged against either the pool discount or the post-acquisition allowance. Recoveries on charge-offs of loans acquired in the Bank Transactions that occurred prior to their acquisition represent contractual cash flows not expected to be collected and are recorded as accretion income. Recoveries on acquired loans charged-off subsequent to their acquisition are credited to the allowance for loan loss, except for recoveries on loans accounted for in pools, which are credited to the pool discount. The Company has developed a methodology that seeks to determine an allowance within the scope of the Receivables and Contingencies Topics of the ASC. Each of the loans that has been determined to be impaired is within the scope of the Receivables Topic. Impaired loans that are equal to or greater than $0.5 million are individually evaluated using one of three impairment measurement methods as of the evaluation date: (1) the present value of expected future cash flows discounted at the loan’s effective rate, (2) the loan’s observable market price, or (3) the fair value of the collateral if the loan is collateral dependent. Specific reserves are provided in the estimate of the allowance based on the measurement of impairment under these three methods, except for collateral dependent loans, which require the fair value method. All non-impaired loans are within the scope of the Contingencies Topic. Estimates of loss for the Contingencies Topic are calculated based on historical loss, adjusted for qualitative or environmental factors. The Bank uses a rolling three year average net loss rate to calculate historical loss factors. The analysis is conducted by call report loan category, and further disaggregates commercial and industrial loans by collateral type. The analysis uses net charge-off experience by considering charge-offs and recoveries in determining the loss rate. The historical loss calculation for the quarter is calculated by dividing the current quarter net charge-offs for each loan category by the quarter ended loan category balance. The Bank utilizes a weighted average loss rate to better represent recent trends. While historical loss experience provides a reasonable starting point for the analysis, historical losses are not the sole basis upon which the Company determines the appropriate level for the allowance for loan losses. Management considers recent qualitative or environmental factors that are likely to cause estimated credit losses associated with the existing portfolio to differ from historical loss experience, including but not limited to: changes in the volume and severity of past due, non-accrual and classified loans; changes in the nature, volume and terms of loans in the portfolio; changes in lending policies and procedures; changes in economic and business conditions and developments that affect the collectability of the portfolio; changes in lending management and staff; changes in the loan review system and the degree of oversight by the Bank’s board of directors; and any concentrations of credit and changes in the level of such concentrations. Changes in the volume and severity of past due, non-accrual and classified loans, as well as changes in the nature, volume and terms of loans in the portfolio are key indicators of changes that could indicate a necessary adjustment to the historical loss factors. The magnitude of the impact of these factors on the qualitative assessment of the allowance for loan loss changes from quarter to quarter. The loan review program is designed to identify and monitor problem loans by maintaining a credit grading process, requiring that timely and appropriate changes be made to reviewed loans and coordinating the delivery of the information necessary to assess the appropriateness of the allowance for loan losses. Loans are evaluated for impaired status when: (i) payments on the loan are delayed, typically by 90 days or more (unless the loan is both well secured and in the process of collection), (ii) the loan becomes classified, (iii) the loan is being reviewed in the normal course of the loan review scope, or (iv) the loan is identified by the servicing officer as a problem. In connection with the Bank Transactions, the Bank acquired loans both with and without evidence of credit quality deterioration since origination. PCI loans acquired in the PlainsCapital Merger are accounted for on an individual loan basis, while PCI loans acquired in each of the FNB Transaction and SWS Merger are accounted for in pools as well as on an individual loan basis. Cash flows expected to be collected are recast quarterly for each loan or pool. These evaluations require the continued use and updating of key assumptions and estimates such as default rates, loss severity given default and prepayment speed assumptions (similar to those used for the initial fair value estimate). Management judgment must be applied in developing these assumptions. If expected cash flows for a loan or pool decreases, an increase in the allowance for loan losses is made through a charge to the provision for loan losses. If expected cash flows for a loan or pool increase, any previously established allowance for loan losses is reversed and any remaining difference increases the accretable yield. This increase in accretable yield is taken into income over the remaining life of the loan. Loans without evidence of credit impairment at acquisition are subsequently evaluated for any required allowance at each reporting date. An allowance for loan losses is calculated using a methodology similar to that described above for originated loans. The allowance as determined for each loan collateral type is compared to the remaining fair value discount for that loan collateral type. If greater, the excess is recognized as an addition to the allowance through a provision for loan losses. If less than the discount, no additional allowance is recorded. Charge-offs and losses first reduce any remaining fair value discount for the loan and once the discount is depleted, losses are applied against the allowance established for that loan. The allowance for loan losses is subject to regulatory examinations and determinations as to adequacy, which may take into account such factors as the methodology used to calculate the allowance and the size of the allowance. While the Company believes it has an appropriate allowance for the existing non-covered and covered portfolios at December 31, 2017, additional provisions for losses on existing loans may be necessary in the future. During 2016, the Bank discovered irregularities in connection with a single loan that was in default. As a result, the Bank increased its provision for loan losses and recorded a $24.5 million charge-off during the second quarter of 2016, representing the entire outstanding principal balance of the loan. During the second quarter of 2017, the Bank recorded other noninterest income of $15.0 million from coverage provided by an insurance policy for forgery of a document delivered in connection with this loan. Changes in the allowance for non-covered loan losses, distributed by portfolio segment, are shown below (in thousands). Commercial and Construction and Year Ended December 31, 2017 Industrial Real Estate Land Development Consumer Broker-Dealer Total Balance, beginning of year $ 21,369 $ 25,236 $ 7,002 $ 424 $ 155 $ 54,186 Provision charged to operations 6,725 3,619 848 16 198 11,406 Loans charged off (6,253) (305) (13) (208) — (6,779) Recoveries on charged off loans 1,833 225 7 79 — 2,144 Balance, end of year $ 23,674 $ 28,775 $ 7,844 $ 311 $ 353 $ 60,957 Commercial and Construction and Year Ended December 31, 2016 Industrial Real Estate Land Development Consumer Broker-Dealer Total Balance, beginning of year $ 19,845 $ 18,983 $ 6,064 $ 314 $ 209 $ 45,415 Provision charged to (recapture from) operations 33,369 7,297 938 190 (53) 41,741 Loans charged off (33,776) (1,439) — (203) (1) (35,419) Recoveries on charged off loans 1,931 395 — 123 — 2,449 Balance, end of year $ 21,369 $ 25,236 $ 7,002 $ 424 $ 155 $ 54,186 Commercial and Construction and Year Ended December 31, 2015 Industrial Real Estate Land Development Consumer Broker-Dealer Total Balance, beginning of year $ 18,833 $ 11,131 $ 6,450 $ 461 $ 166 $ 37,041 Provision charged to (recapture from) operations 4,598 7,937 (386) 104 (80) 12,173 Loans charged off (7,144) (605) — (378) — (8,127) Recoveries on charged off loans 3,558 520 — 127 123 4,328 Balance, end of year $ 19,845 $ 18,983 $ 6,064 $ 314 $ 209 $ 45,415 The non-covered loan portfolio was distributed by portfolio segment and impairment methodology as shown below (in thousands). Commercial and Construction and December 31, 2017 Industrial Real Estate Land Development Consumer Broker-Dealer Total Loans individually evaluated for impairment $ 16,819 $ 13,782 $ 611 $ — $ — $ 31,212 Loans collectively evaluated for impairment 1,658,287 2,968,202 960,556 40,319 577,889 6,205,253 PCI Loans 6,099 29,540 1,438 127 — 37,204 $ 1,681,205 $ 3,011,524 $ 962,605 $ 40,446 $ 577,889 $ 6,273,669 Commercial and Construction and December 31, 2016 Industrial Real Estate Land Development Consumer Broker-Dealer Total Loans individually evaluated for impairment $ 4,508 $ 9,704 $ 727 $ 205 $ — $ 15,144 Loans collectively evaluated for impairment 1,683,273 2,768,064 782,656 40,853 502,077 5,776,923 PCI Loans 8,672 38,999 3,467 294 — 51,432 $ 1,696,453 $ 2,816,767 $ 786,850 $ 41,352 $ 502,077 $ 5,843,499 The allowance for non-covered loan losses was distributed by portfolio segment and impairment methodology as shown below (in thousands). Commercial and Construction and December 31, 2017 Industrial Real Estate Land Development Consumer Broker-Dealer Total Loans individually evaluated for impairment $ 365 $ 932 $ 93 $ — $ — $ 1,390 Loans collectively evaluated for impairment 23,220 26,127 7,536 293 353 57,529 PCI Loans 89 1,716 215 18 — 2,038 $ 23,674 $ 28,775 $ 7,844 $ 311 $ 353 $ 60,957 Commercial and Construction and December 31, 2016 Industrial Real Estate Land Development Consumer Broker-Dealer Total Loans individually evaluated for impairment $ 115 $ — $ 167 $ — $ — $ 282 Loans collectively evaluated for impairment 20,697 23,129 6,458 368 155 50,807 PCI Loans 557 2,107 377 56 — 3,097 $ 21,369 $ 25,236 $ 7,002 $ 424 $ 155 $ 54,186 |
Covered Assets and Indemnificat
Covered Assets and Indemnification Asset | 12 Months Ended |
Dec. 31, 2017 | |
Covered Assets and Indemnification Asset | |
Covered Assets and Indemnification Asset. | 6. Covered Assets and Indemnification Asset The Bank acquired certain assets and assumed certain liabilities of FNB in connection with an FDIC-assisted transaction on September 13, 2013 (the “Bank Closing Date”). As part of the Purchase and Assumption Agreement by and among the FDIC (as receiver of FNB), the Bank and the FDIC (the “P&A Agreement”), the Bank and the FDIC entered into loss-share agreements covering future losses incurred on certain acquired loans and OREO. The Company refers to acquired commercial and single family residential loan portfolios and OREO that are subject to the loss-share agreements as “covered loans” and “covered OREO”, respectively, and these assets are presented as separate line items in the Company’s consolidated balance sheets. Collectively, covered loans and covered OREO are referred to as “covered assets”. Pursuant to the loss-share agreements, the FDIC has agreed to reimburse the Bank the following amounts with respect to the covered assets: (i) 80% of net losses on the first $240.4 million of net losses incurred; (ii) 0% of net losses in excess of $240.4 million up to and including $365.7 million of net losses incurred; and (iii) 80% of net losses in excess of $365.7 million of net losses incurred. Net losses are defined as book value losses plus certain defined expenses incurred in the resolution of assets, less subsequent recoveries. Under the loss-share agreement for commercial assets, the amount of subsequent recoveries that are reimbursable to the FDIC for a particular asset is limited to book value losses and expenses actually billed plus any book value charge-offs incurred prior to the Bank Closing Date. There is no limit on the amount of subsequent recoveries reimbursable to the FDIC under the loss-share agreement for single family residential assets. The loss-share agreements for commercial and single family residential assets are in effect for five years and ten years, respectively, from the Bank Closing Date, and the loss recovery provisions to the FDIC are in effect for eight years and ten years, respectively, from the Bank Closing Date. The asset arising from the loss-share agreements, referred to as the “FDIC Indemnification Asset,” is measured separately from the covered loan portfolio because the agreements are not contractually embedded in the covered loans and are not transferable should the Bank choose to dispose of the covered loans. In accordance with the loss-share agreements, the Bank may be required to make a “true-up” payment to the FDIC approximately ten years following the Bank Closing Date if its actual net realized losses over the life of the loss-share agreements are less than the FDIC’s initial estimate of losses on covered assets. The “true-up” payment is calculated using a defined formula set forth in the P&A Agreement. At December 31, 2017, the Bank has recorded a related “true-up” payment accrual of $16.3 million based on the current estimate of aggregate realized losses on covered assets over the life of the loss-share agreements. Covered Loans and Allowance for Covered Loan Losses Loans acquired in the FNB Transaction that are subject to a loss-share agreement are referred to as “covered loans” and reported separately in the consolidated balance sheets. Covered loans are reported exclusive of the cash flow reimbursements that may be received from the FDIC. The Bank’s portfolio of acquired covered loans had a fair value of $1.1 billion as of the Bank Closing Date, with no carryover of any allowance for loan losses. Acquired covered loans were preliminarily segregated between those considered to be PCI loans and those without credit impairment at acquisition. In connection with the FNB Transaction, the Bank acquired loans both with and without evidence of credit quality deterioration since origination. The Company’s accounting policies for acquired covered loans, including covered PCI loans, are consistent with the accounting policies for acquired non-covered loans, as described in Note 5 to the consolidated financial statements. The Company has established under its PCI accounting policy a framework to aggregate certain acquired covered loans into various loan pools based on a minimum of two layers of similar risk characteristics for the purpose of determining their respective fair values as of their acquisition dates, and for applying the subsequent recognition and measurement provisions for income accretion and impairment testing. The following table presents the carrying value of the covered loans summarized by portfolio segment (in thousands). December 31, 2017 2016 Commercial and industrial $ 1,055 $ 2,697 Real estate 179,359 244,469 Construction and land development 1,715 8,961 182,129 256,127 Allowance for covered loans (2,729) Total covered loans, net of allowance $ 179,400 $ 255,714 The following table presents the carrying value and the outstanding contractual balance of the covered PCI loans (in thousands). December 31, 2017 2016 Carrying amount $ 87,113 $ 133,754 Outstanding balance 179,019 266,098 Changes in the accretable yield for the covered PCI loans were as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of period $ 143,731 $ 176,719 $ 193,493 Reclassifications from nonaccretable difference, net (1) 9,110 41,239 70,884 Transfer of loans to covered OREO (2) (999) (487) (1,309) Accretion (60,009) (73,740) (86,349) Balance, end of period $ 91,833 $ 143,731 $ 176,719 (1) Reclassifications from nonaccretable difference are primarily due to net increases in expected cash flows in the quarterly recasts, but may also include the reclassification and immediate income recognition of nonaccretable difference due to the favorable resolution of loans accounted for individually. Reclassifications to nonaccretable difference occur when accruing loans are moved to non-accrual and expected cash flows are no longer predictable and the accretable yield is eliminated. (2) Transfer of loans to covered OREO is the difference between the value removed from the pool and the expected cash flows for the loan. The remaining nonaccretable difference for covered PCI loans was $72.7 million and $94.5 million at December 31, 2017 and 2016, respectively. During 2017, 2016 and 2015, a combination of factors affecting the inputs to the Bank’s quarterly recast process led to the reclassifications from nonaccretable difference to accretable yield. These transfers resulted from revised cash flows that reflect better-than-expected performance of the covered PCI loan portfolio as a result of the Bank’s strategic decision to dedicate resources to the liquidation of covered loans during the noted periods. Covered impaired loans include non-accrual loans, TDRs, PCI loans and partially charged-off loans. The amounts shown in the following tables include Pooled Loans, as well as loans accounted for on an individual basis. For Pooled Loans, the recorded investment with allowance and the related allowance consider impairment measured at the pool level. Covered impaired loans, segregated between those considered to be PCI loans and those without credit impairment at acquisition, are summarized by class in the following tables (in thousands). Unpaid Recorded Recorded Total Contractual Investment with Investment with Recorded Related December 31, 2017 Principal Balance No Allowance Allowance Investment Allowance PCI Commercial and industrial: Secured $ 3,783 $ — $ 194 $ 194 $ 19 Unsecured 5,732 — — — — Real estate: Secured by commercial properties 80,223 2,388 21,171 23,559 1,817 Secured by residential properties 125,361 249 63,107 63,356 861 Construction and land development: Residential construction loans 672 — — — — Commercial construction loans and land development 11,118 4 — 4 — 226,889 2,641 84,472 87,113 2,697 Non-PCI Commercial and industrial: Secured 44 — — — — Unsecured — — — — — Real estate: Secured by commercial properties — — — — — Secured by residential properties 6,279 5,370 — 5,370 — Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 18 12 — 12 — 6,341 5,382 — 5,382 — $ 233,230 $ 8,023 $ 84,472 $ 92,495 $ 2,697 Unpaid Recorded Recorded Total Contractual Investment with Investment with Recorded Related December 31, 2016 Principal Balance No Allowance Allowance Investment Allowance PCI Commercial and industrial: Secured $ 10,579 $ 1,024 $ 189 $ 1,213 $ 13 Unsecured 3,259 299 — 299 — Real estate: Secured by commercial properties 143,934 26,415 26,222 52,637 271 Secured by residential properties 148,384 73,240 1,161 74,401 60 Construction and land development: Residential construction loans 766 — — — — Commercial construction loans and land development 23,522 5,204 — 5,204 — 330,444 106,182 27,572 133,754 344 Non-PCI Commercial and industrial: Secured 52 52 — 52 — Unsecured — — — — — Real estate: Secured by commercial properties 396 310 — 310 — Secured by residential properties 4,175 3,537 — 3,537 — Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 24 20 — 20 — 4,647 3,919 — 3,919 — $ 335,091 $ 110,101 $ 27,572 $ 137,673 $ 344 Average investment in covered impaired loans is summarized by class in the following table (in thousands). Year Ended December 31, 2017 2016 2015 Commercial and industrial: Secured $ 730 $ 3,530 $ 9,934 Unsecured 150 1,040 4,293 Real estate: Secured by commercial properties 38,253 75,159 162,812 Secured by residential properties 73,332 88,794 121,069 Construction and land development: Residential construction loans — 331 1,017 Commercial construction loans and land development 2,620 13,067 33,278 $ 115,085 $ 181,921 $ 332,403 Covered non-accrual loans are summarized by class in the following table (in thousands). December 31, 2017 2016 Commercial and industrial: Secured $ — $ 52 Unsecured — — Real estate: Secured by commercial properties — 730 Secured by residential properties 5,087 3,035 Construction and land development: Residential construction loans — — Commercial construction loans and land development 17 19 $ 5,104 $ 3,836 At December 31, 2016, covered non-accrual loans included covered PCI loans of $0.4 million for which discount accretion has been suspended because the extent and timing of cash flows from these covered PCI loans can no longer be reasonably estimated. The amount of such loans included in covered non-accrual loans at December 31, 2017 was nominal. Interest income, including recoveries and cash payments, recorded on covered impaired loans was $1.3 million, $1.1 million, and $17.2 million during 2017, 2016 and 2015, respectively. Except as noted above, covered PCI loans are considered to be performing due to the application of the accretion method. The Bank classifies loan modifications of covered loans as TDRs in a manner consistent with that of non-covered loans as discussed in Note 5 to the consolidated financial statements. Information regarding TDRs granted in 2015 is shown in the following table (in thousands). There were no TDRs granted during 2017 or 2016. Pooled Loans are not in the scope of the disclosure requirements for TDRs. At December 31, 2017 and 2016, the Bank had nominal unadvanced commitments to borrowers whose loans have been restructured in TDRs. Year Ended December 31, 2015 Number of Balance at Balance at Loans Extension End of Period Commercial and industrial: Secured — $ — $ — Unsecured — — — Real estate: Secured by commercial properties 1 573 — Secured by residential properties 7 860 824 Construction and land development: Residential construction loans — — — Commercial construction loans and land development — — — 8 $ 1,433 $ 824 During 2015, the covered loan modifications included in the table above included two loans involving payment term extensions, six loans that involved an A/B Note restructure, and six loans that included interest rate adjustments. The Bank did not grant principal reductions on any restructured covered loans. There were no TDRs granted during the twelve months preceding December 31, 2017 or 2016 for which a payment was at least 30 days past due. An analysis of the aging of the Bank’s covered loan portfolio is shown in the following tables (in thousands). Accruing Loans Loans Past Due Loans Past Due Loans Past Due Total Current PCI Total (Non ‑ PCI) Past Due December 31, 2017 30 ‑ 59 Days 60 ‑ 89 Days 90 Days or More Past Due Loans Loans Loans Loans 90 Days or More Commercial and industrial: Secured $ — $ — $ — $ — $ 861 $ 194 $ 1,055 $ — Unsecured — — — — — — — — Real estate: Secured by commercial properties 209 113 — 322 11,472 23,559 35,353 — Secured by residential properties 5,624 1,211 3,226 10,061 70,589 63,356 144,006 283 Construction and land development: Residential construction loans — — — — — — — — Commercial construction loans and land development 38 — — 38 1,673 4 1,715 — $ 5,871 $ 1,324 $ 3,226 $ 10,421 $ 84,595 $ 87,113 $ 182,129 $ 283 Accruing Loans Loans Past Due Loans Past Due Loans Past Due Total Current PCI Total (Non ‑ PCI) Past Due December 31, 2016 30 ‑ 59 Days 60 ‑ 89 Days 90 Days or More Past Due Loans Loans Loans Loans 90 Days or More Commercial and industrial: Secured $ — $ 6 $ 96 $ 102 $ 1,083 $ 1,213 $ 2,398 $ 44 Unsecured — — — — — 299 299 — Real estate: Secured by commercial properties 96 229 — 325 19,132 52,637 72,094 — Secured by residential properties 3,511 1,345 1,479 6,335 91,639 74,401 172,375 129 Construction and land development: Residential construction loans — — — — — — — — Commercial construction loans and land development 15 — — 15 3,742 5,204 8,961 — $ 3,622 $ 1,580 $ 1,575 $ 6,777 $ 115,596 $ 133,754 $ 256,127 $ 173 The Bank assigns a risk grade to each of its covered loans in a manner consistent with the existing loan review program and risk grading matrix used for non-covered loans, as described in Note 5 to the consolidated financial statements. The following tables present the internal risk grades of covered loans in the portfolio by class (in thousands). December 31, 2017 Pass Special Mention Substandard PCI Total Commercial and industrial: Secured $ 429 $ — $ 432 $ 194 $ 1,055 Unsecured — — — — — Real estate: Secured by commercial properties 10,961 — 833 23,559 35,353 Secured by residential properties 68,544 356 11,750 63,356 144,006 Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 1,649 — 62 4 1,715 $ 81,583 $ 356 $ 13,077 $ 87,113 $ 182,129 December 31, 2016 Pass Special Mention Substandard PCI Total Commercial and industrial: Secured $ 592 $ — $ 593 $ 1,213 $ 2,398 Unsecured — — — 299 299 Real estate: Secured by commercial properties 17,996 — 1,461 52,637 72,094 Secured by residential properties 90,563 461 6,950 74,401 172,375 Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 2,281 — 1,476 5,204 8,961 $ 111,432 $ 461 $ 10,480 $ 133,754 $ 256,127 The Bank’s impairment methodology for the covered loans is consistent with that of non-covered loans as discussed in Note 5 to the consolidated financial statements. To the extent there is experienced or projected credit deterioration on the acquired covered loan pools subsequent to amounts estimated at the previous quarterly recast date and expected cash flows for a loan or pool decreases, an increase in the allowance for loan losses is made through a charge to the provision for loan losses. If expected cash flows for a loan or pool increase, any previously established allowance for loan losses is reversed and any remaining difference increases the accretable yield. This increase in accretable yield is taken into income over the remaining life of the loan. Additionally, provision for credit losses will be recorded on advances on covered loans subsequent to the acquisition date in a manner consistent with the allowance for non-covered loan losses. Changes in the allowance for covered loan losses, distributed by portfolio segment, are shown below (in thousands). Commercial and Construction and Year Ended December 31, 2017 Industrial Real Estate Land Development Total Balance, beginning of year $ 35 $ 378 $ — $ 413 Provision charged to (recaptured from) operations 32 2,840 (7) 2,865 Loans charged off (49) (522) — (571) Recoveries on charged off loans 6 6 10 22 Balance, end of year $ 24 $ 2,702 $ 3 $ 2,729 Commercial and Construction and Year Ended December 31, 2016 Industrial Real Estate Land Development Total Balance, beginning of year $ 758 $ 774 $ — $ 1,532 Provision recaptured from operations (717) (351) (53) (1,121) Loans charged off (6) (62) (51) (119) Recoveries on charged off loans — 17 104 121 Balance, end of year $ 35 $ 378 $ — $ 413 Commercial and Construction and Year Ended December 31, 2015 Industrial Real Estate Land Development Total Balance, beginning of year $ 1,193 $ 3,334 $ 84 $ 4,611 Provision charged to operations 258 189 95 542 Loans charged off (915) (2,869) (179) (3,963) Recoveries on charged off loans 222 120 — 342 Balance, end of year $ 758 $ 774 $ — $ 1,532 The covered loan portfolio was distributed by portfolio segment and impairment methodology as shown below (in thousands). Commercial and Construction and December 31, 2017 Industrial Real Estate Land Development Total Loans individually evaluated for impairment $ — $ — $ — $ — Loans collectively evaluated for impairment 861 92,444 1,711 95,016 PCI Loans 194 86,915 4 87,113 $ 1,055 $ 179,359 $ 1,715 $ 182,129 Commercial and Construction and December 31, 2016 Industrial Real Estate Land Development Total Loans individually evaluated for impairment $ — $ — $ — $ — Loans collectively evaluated for impairment 1,185 117,431 3,757 122,373 PCI Loans 1,512 127,038 5,204 133,754 $ 2,697 $ 244,469 $ 8,961 $ 256,127 The allowance for covered loan losses was distributed by portfolio segment and impairment methodology as shown below (in thousands). Commercial and Construction and December 31, 2017 Industrial Real Estate Land Development Total Loans individually evaluated for impairment $ — $ — $ — $ — Loans collectively evaluated for impairment 5 24 3 32 PCI Loans 19 2,678 — 2,697 $ 24 $ 2,702 $ 3 $ 2,729 Commercial and Construction and December 31, 2016 Industrial Real Estate Land Development Total Loans individually evaluated for impairment $ — $ — $ — $ — Loans collectively evaluated for impairment 22 47 — 69 PCI Loans 13 331 — 344 $ 35 $ 378 $ — $ 413 Covered Other Real Estate Owned A summary of the activity in covered OREO is as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 51,642 $ 99,090 $ 136,945 Additions to covered OREO 6,700 13,876 50,465 Dispositions of covered OREO (17,866) (42,843) (71,765) Valuation adjustments in the period (3,732) (18,481) (16,555) Balance, end of year $ 36,744 $ 51,642 $ 99,090 During 2017, 2016 and 2015, the Bank wrote down certain covered OREO assets to fair value to reflect new appraisals on certain OREO acquired in the FNB Transaction and OREO acquired from the foreclosure on certain FNB loans acquired in the FNB Transaction. Although the Bank recorded a fair value discount on the acquired assets upon acquisition, in some cases additional downward valuations were required. The downward valuations recorded during the periods presented above were related to covered assets subject to the loss-share agreements with the FDIC. These additional downward valuation adjustments reflect changes to the assumptions regarding the fair value of the OREO, including in some cases the intended use of the OREO, due to the availability of more information as well as the passage of time. The process of determining fair value is subjective in nature and requires the use of significant estimates and assumptions. Although the Bank makes market-based assumptions when valuing acquired assets, new information may come to light that causes estimates to increase or decrease. When the Bank determines, based on subsequent information, that its estimates require adjustment, the Bank records the adjustment. The accounting for such adjustments requires that the decreases to fair value be recorded at the time such new information is received, while increases to fair value are recorded when the asset is subsequently sold. FDIC Indemnification Asset A summary of the activity in the FDIC Indemnification Asset is as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 71,313 $ 91,648 $ 130,437 FDIC Indemnification Asset accretion (amortization) (17,083) 242 1,147 Transfers to due from FDIC and other (24,890) (20,577) (39,936) Balance, end of year $ 29,340 $ 71,313 $ 91,648 As of December 31, 2017, the Bank had billed $147.8 million to and collected $145.8 million from the FDIC, which represented reimbursable covered losses and expenses through September 30, 2017. During 2017, the Bank recorded $17.1 million of amortization related to the FDIC Indemnification Asset due to lower than projected collections from the FDIC than originally estimated at the Bank Closing Date. |
Cash and Due from Banks
Cash and Due from Banks | 12 Months Ended |
Dec. 31, 2017 | |
Cash and Due from Banks | |
Cash and Due from Banks | 7. Cash and Due from Banks Cash and due from banks consisted of the following (in thousands). December 31, 2017 2016 Cash on hand $ 44,765 $ 49,152 Clearings and collection items 92,271 78,328 Deposits at Federal Reserve Bank 248,442 354,948 Deposits at Federal Home Loan Bank 1,501 4,237 Deposits in FDIC-insured institutions 99,998 182,692 $ 486,977 $ 669,357 The amounts above include interest-bearing deposits of $302.2 million and $479.3 million at December 31, 2017 and 2016, respectively. Cash on hand and deposits at the Federal Reserve Bank satisfy regulatory reserve requirements at December 31, 2017. |
Premises and Equipment
Premises and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Premises and Equipment | |
Premises and Equipment | 8. Premises and Equipment The components of premises and equipment are summarized as follows (in thousands). December 31, 2017 2016 Land and premises $ 111,203 $ 111,295 Furniture and equipment 207,552 190,914 318,755 302,209 Less accumulated depreciation and amortization (141,178) (111,848) $ 177,577 $ 190,361 The amounts shown above include gross assets recorded under capital leases of $8.4 million and $8.4 million, with accumulated amortization of $3.3 million and $2.5 million at December 31, 2017 and 2016, respectively. Occupancy expense was reduced by rental income of $1.8 million, $2.0 million and $2.2 million during 2017, 2016 and 2015, respectively. Depreciation and amortization expense on premises and equipment, which includes amortization of capital leases, amounted to $34.6 million, $35.4 million and $37.2 million during 2017, 2016 and 2015, respectively. |
Goodwill and Other Intangible
Goodwill and Other Intangible | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 9. Goodwill and Other Intangible Assets At both December 31, 2017 and 2016, the carrying amount of goodwill of $251.8 million was comprised of $24.0 million recorded in connection with the acquisition of NLC and $227.8 million recorded in connection with the PlainsCapital Merger. Other intangible assets of $36.4 million and $44.7 million at December 31, 2017 and 2016, respectively, include an indefinite lived intangible asset with an estimated fair value of $3.0 million related to state licenses acquired as a part of the NLC acquisition in January 2007. The Company performed required annual impairment tests of its goodwill and other intangible assets having an indefinite useful life as of October 1 st for each of its reporting units. At October 1, 2017, the Company determined that the estimated fair value of each of its reporting units exceeded its carrying value. The Company estimated the fair values of its reporting units based on both a market and income approach using historical, normalized actual and forecasted results. Based on this evaluation, the Company concluded that the goodwill and other identifiable intangible assets were fully realizable. The Company’s evaluation includes multiple assumptions, including estimated discounted cash flows and other estimates that may change over time. If future discounted cash flows become less than those projected by the Company, future impairment charges may become necessary that could have a materially adverse impact on the Company’s results of operations and financial condition. As quoted market prices in active stock markets are relevant evidence of fair value, a significant decline in the Company’s common stock trading price may indicate an impairment of goodwill. Based on the results of the previously noted annual quantitative analysis as of October 1, 2017, the fair values of each of the Company’s reporting units indicated no impairment of goodwill. This analysis and the resulting estimated fair value of the insurance reporting unit exceeded the carrying value by approximately 12%, which represented a decline in the estimated excess fair value over carrying value from recent annual goodwill assessments. This decrease in the excess fair value over carrying value from the 2016 assessment to the 2017 assessment was primarily a result of a reduction in projected discounted cash flows driven by the insurance reporting unit’s current operating performance being below expectations, which was primarily attributable to catastrophic and sub-catastrophic weather-related events which occurred in 2017. In the event future operating performance is below management’s forecasted projections, there are negative changes to long-term growth rates or discount rates increase, the fair value of the insurance reporting unit may decline and the Company may be required to record a goodwill impairment charge. The carrying value of intangible assets subject to amortization was as follows (in thousands). Estimated Gross Net Useful Life Intangible Accumulated Intangible December 31, 2017 (Years) Assets Amortization Assets Core deposits 4 - 12 $ 38,930 $ (26,381) $ 12,549 Trademarks and trade names 15 - 20 20,000 (7,860) 12,140 Noncompete agreements 4 - 6 11,650 (10,529) 1,121 Customer contracts and relationships 12 - 14 21,400 (13,906) 7,494 Agent relationships 13 3,600 (3,472) 128 $ 95,580 $ (62,148) $ 33,432 Estimated Gross Net Useful Life Intangible Accumulated Intangible December 31, 2016 (Years) Assets Amortization Assets Core deposits 4 - 12 $ 38,930 $ (22,255) $ 16,675 Trademarks and trade names 15 - 20 20,000 (6,877) 13,123 Noncompete agreements 4 - 6 11,650 (9,306) 2,344 Customer contracts and relationships 12 - 14 21,400 (12,097) 9,303 Agent relationships 13 3,600 (3,350) 250 $ 95,580 $ (53,885) $ 41,695 Amortization expense related to intangible assets during 2017, 2016 and 2015 was $8.3 million, $10.2 million and $12.4 million, respectively. The estimated aggregate future amortization expense for intangible assets at December 31, 2017 is as follows (in thousands). 2018 $ 7,289 2019 5,142 2020 4,352 2021 3,607 2022 3,222 Thereafter 9,820 $ 33,432 |
Mortgage Servicing Rights
Mortgage Servicing Rights | 12 Months Ended |
Dec. 31, 2017 | |
Mortgage Servicing Rights | |
Mortgage Servicing Rights | 10. Mortgage Servicing Rights The following tables present the changes in fair value of the Company’s MSR asset, as included in other assets within the consolidated balance sheets, and other information related to the serviced portfolio (dollars in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 61,968 $ 52,285 $ 36,155 Additions 16,401 23,381 24,974 Sales (17,499) (7,586) — Changes in fair value: Due to changes in model inputs or assumptions (1) (1,722) (153) (2,150) Due to customer payoffs (4,434) (5,959) (6,694) Balance, end of year $ 54,714 $ 61,968 $ 52,285 December 31, 2017 2016 Mortgage loans serviced for others $ 4,762,042 $ 5,480,943 MSR asset as a percentage of serviced mortgage loans 1.15 % 1.13 % (1) Primarily represents normal customer payments, changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates and the refinement of other MSR model assumptions. The key assumptions used in measuring the fair value of the Company’s MSR asset were as follows. December 31, 2017 2016 Weighted average constant prepayment rate 10.93 % 10.47 % Weighted average discount rate 11.03 % 10.95 % Weighted average life (in years) 6.9 6.9 A sensitivity analysis of the fair value of the Company’s MSR asset to certain key assumptions is presented in the following table (in thousands). December 31, 2017 2016 Constant prepayment rate: Impact of 10% adverse change $ (1,948) $ (2,297) Impact of 20% adverse change (3,839) (4,471) Discount rate: Impact of 10% adverse change (2,135) (2,539) Impact of 20% adverse change (4,103) (4,882) This sensitivity analysis presents the effect of hypothetical changes in key assumptions on the fair value of the MSR asset. The effect of such hypothetical change in assumptions generally cannot be extrapolated because the relationship of the change in one key assumption to the change in the fair value of the MSR asset is not linear. In addition, in the analysis, the impact of an adverse change in one key assumption is calculated independent of any impact on other assumptions. In reality, changes in one assumption may change another assumption. Contractually specified servicing fees, late fees and ancillary fees earned of $20.7 million, $23.8 million and $19.6 million during 2017, 2016 and 2015, respectively, were included in other noninterest income within the consolidated statements of operations. |
Deposits
Deposits | 12 Months Ended |
Dec. 31, 2017 | |
Deposits | |
Deposits | 11. Deposits Deposits are summarized as follows (in thousands). December 31, 2017 2016 Noninterest-bearing demand $ 2,411,849 $ 2,199,483 Interest-bearing: NOW accounts 1,202,752 1,252,832 Money market 2,222,555 1,626,218 Brokered - money market 101,624 125,272 Demand 411,771 384,847 Savings 218,812 279,911 Time 1,313,482 1,145,859 Brokered - time 95,274 49,389 $ 7,978,119 $ 7,063,811 At December 31, 2017, deposits include $778.8 million of time deposit accounts that meet or exceed the FDIC insurance limit of $250,000. Scheduled maturities of interest-bearing time deposits at December 31, 2017 are as follows (in thousands). 2018 $ 791,721 2019 509,244 2020 82,839 2021 15,155 2022 and thereafter 9,797 $ 1,408,756 |
Short-term Borrowings
Short-term Borrowings | 12 Months Ended |
Dec. 31, 2017 | |
Short-term Borrowings | |
Short-term Borrowings | 12. Short-term Borrowings Short-term borrowings are summarized as follows (in thousands). December 31, 2017 2016 Federal funds purchased $ 101,775 $ 87,125 Securities sold under agreements to repurchase 539,149 195,164 Federal Home Loan Bank 250,000 1,000,000 Short-term bank loans 315,500 135,000 $ 1,206,424 $ 1,417,289 Federal funds purchased and securities sold under agreements to repurchase generally mature daily, on demand, or on some other short-term basis. The Bank and the Hilltop Broker-Dealers execute transactions to sell securities under agreements to repurchase with both customers and other broker-dealers. Securities involved in these transactions are held by the Bank, the Hilltop Broker-Dealers or a third-party dealer. Information concerning federal funds purchased and securities sold under agreements to repurchase is shown in the following tables (dollars in thousands). Year Ended December 31, 2017 2016 2015 Average balance during the year $ 588,847 $ 368,102 $ 315,904 Average interest rate during the year 1.06 % 0.58 % 0.33 % Maximum month-end balance during the year 904,704 520,715 514,776 December 31, 2017 2016 Average interest rate at end of year 1.21 % 0.42 % Securities underlying the agreements at end of year: Carrying value $ 581,636 $ 209,877 Estimated fair value $ 598,300 $ 206,641 FHLB short-term borrowings mature over terms not exceeding 365 days and are collateralized by FHLB Dallas stock, nonspecified real estate loans and certain specific commercial real estate loans. At December 31, 2017, the Bank had available collateral of $3.3 billion, substantially all of which was blanket collateral. Other information regarding FHLB short-term borrowings is shown in the following tables (dollars in thousands). Year Ended December 31, 2017 2016 2015 Average balance during the year $ 390,616 $ 361,475 $ 294,959 Average interest rate during the year 1.08 % 0.46 % 0.27 % Maximum month-end balance during the year $ 850,000 $ 1,000,000 $ 600,000 December 31, 2017 2016 Average interest rate at end of year % % The Hilltop Broker-Dealers use short-term bank loans periodically to finance securities owned, margin loans to customers and correspondents, and underwriting activities. Interest on the borrowings varies with the federal funds rate. The weighted average interest rate on the borrowings at December 31, 2017 and 2016 was 2.27% and 1.59%, respectively. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable | |
Notes Payable | 13. Notes Payable Notes payable consisted of the following (in thousands). December 31, 2017 2016 Senior Notes due April 2025, net of discount of $1,545 and $1,689, respectively $ 148,455 $ 148,311 FHLB notes, net of premium of $436 and $948, respectively, with maturities ranging from February 2018 to June 2030 and interest payable monthly 19,402 102,596 Insurance company note payable due March 2035, paid off in June 2017 — 20,000 NLIC note payable due May 2033, three-month LIBOR plus 4.10% (5.71% at December 31, 2017) with interest payable quarterly 10,000 10,000 NLIC note payable due September 2033, three-month LIBOR plus 4.05% (5.66% at December 31, 2017) with interest payable quarterly 10,000 10,000 ASIC note payable due April 2034, three-month LIBOR plus 4.05% (5.66% at December 31, 2017) with interest payable quarterly 7,500 7,500 Insurance company line of credit due December 30, 2018, 3.25% plus a calculated index rate (4.00% at December 31, 2017) with interest payable quarterly 1,000 3,000 Ventures Management lines of credit, with interest payable monthly 12,452 16,505 $ 208,809 $ 317,912 Senior Notes On April 9, 2015, Hilltop completed an offering of $150.0 million aggregate principal amount of its 5% senior notes due 2025 (“Senior Unregistered Notes”) in a private offering that was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Senior Unregistered Notes were offered within the United States only to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to persons outside of the United States under Regulation S under the Securities Act. The Senior Unregistered Notes were issued pursuant to an indenture, dated as of April 9, 2015, by and between Hilltop and U.S. Bank National Association, as trustee. The net proceeds from the offering, after deducting estimated fees and expenses and the initial purchasers’ discounts, were approximately $148 million. Hilltop used the net proceeds of the offering to redeem all of Hilltop’s outstanding Non-Cumulative Perpetual Preferred Stock, Series B at an aggregate liquidation value of $114.1 million, plus accrued but unpaid dividends of $0.4 million, and Hilltop utilized the remainder for general corporate purposes. Unamortized debt issuance costs presented as a reduction from the Senior Notes are discussed further in Note 1 to the consolidated financial statements. In connection with the issuance of the Senior Unregistered Notes, on April 9, 2015, the Company entered into a registration rights agreement with the initial purchasers of the Senior Unregistered Notes. Under the terms of the registration rights agreement, the Company agreed to offer to exchange the Senior Unregistered Notes for notes registered under the Securities Act (the “Senior Registered Notes”). The terms of the Senior Registered Notes are substantially identical to the Senior Unregistered Notes for which they were exchanged (including principal amount, interest rate, maturity and redemption rights), except that the Senior Registered Notes generally are not subject to transfer restrictions. On May 22, 2015 and subject to the terms and conditions set forth in the Senior Registered Notes prospectus, the Company commenced an offer to exchange the Senior Unregistered Notes for Senior Registered Notes. Substantially all of the Senior Unregistered Notes were tendered in the exchange offer, and on June 22, 2015, the Company fulfilled its requirements under the registration rights agreement for the Senior Unregistered Notes by issuing Senior Registered Notes in exchange for the tendered Senior Unregistered Notes. The Senior Registered Notes and the Senior Unregistered Notes that remain outstanding are collectively referred to as the “Senior Notes.” The Senior Notes bear interest at a rate of 5% per year, payable semi-annually in arrears in cash on April 15 and October 15 of each year. The Senior Notes will mature on April 15, 2025, unless Hilltop redeems the Senior Notes, in whole at any time or in part from time to time, on or after January 15, 2025 (three months prior to the maturity date of the Senior Notes) at its election at a redemption price equal to 100% of the principal amount of the Senior Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. The indenture contains covenants that limit the Company’s ability to, among other things and subject to certain significant exceptions: (i) dispose of or issue voting stock of certain of the Company’s bank subsidiaries or subsidiaries that own voting stock of the Company’s bank subsidiaries, (ii) incur or permit to exist any mortgage, pledge, encumbrance or lien or charge on the capital stock of certain of the Company’s bank subsidiaries or subsidiaries that own capital stock of the Company’s bank subsidiaries and (iii) sell all or substantially all of the Company’s assets or merge or consolidate with or into other companies. The indenture also provides for certain events of default, which, if any of them occurs, would permit or require the principal amount, premium, if any, and accrued and unpaid interest on the then outstanding Senior Notes to be declared immediately due and payable. Federal Home Loan Bank notes The FHLB notes, assumed by the Bank in the SWS Merger, have interest rates ranging from 1.19% to 5.70%, with a weighted average interest rate of 2.10% at December 31, 2017. The FHLB notes, as well as other borrowings from the FHLB, are collateralized by FHLB stock, a blanket lien on commercial and real estate loans, as well as by the amount of securities that are in safekeeping at the FHLB, the value of which was $3.3 billion at December 31, 2017. NLIC, ASIC and Insurance Company Notes Payable On June 14, 2017, NLC paid off the $20.0 million insurance company note payable due March 2035. The NLIC and ASIC notes payable to unaffiliated companies are each subordinated in right of payment to all policy claims and other indebtedness of NLIC and ASIC, respectively. Further, all payments of principal and interest require the prior approval of the Insurance Commissioner of the State of Texas and are only payable to the extent that the statutory surplus of NLIC exceeds $30 million and ASIC exceeds $15 million. The NLIC and ASIC loan agreements relating to the notes payable contain various covenants pertaining to limitations on additional debt, dividends, officer and director compensation, and minimum capital requirements. The Company was in compliance with the covenants at December 31, 2017. NLC has entered into an indenture relating to the NLIC and ASIC notes payable which provides that (i) if a person or group becomes the beneficial owner directly or indirectly of 50% or more of its equity securities and (ii) if NLC’s ratings are downgraded by a nationally recognized statistical rating organization (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), then each holder of the notes governed by such indenture has the right to require that NLC purchase such holder’s notes in whole or in part at a price equal to 100% of the outstanding principal amount. Insurance Company Line of Credit The Company’s insurance subsidiary has a line of credit with a financial institution which allows for borrowings by NLC of up to $7.5 million and is collateralized by substantially all of NLC’s assets. The loan agreements relating to the line of credit contain various financial and other covenants which must be maintained until all indebtedness to the financial institution is repaid. The Company was in compliance with the covenants at December 31, 2017. Ventures Management Lines of Credit At December 31, 2017, Ventures Management’s ABAs had combined available lines of credit totaling $70.0 million, $30.0 million of which was with a single unaffiliated bank, while $40.0 million was with the Bank. At December 31, 2017, the outstanding balance of $12.5 million was related to a single line of credit with an unaffiliated bank with a stated interest rate of the greater of a calculated index rate on mortgage notes or 2.75%. The calculated index rate on mortgage notes held at December 31, 2017 was 3.09%. The Ventures Management lines of credit are collateralized by mortgage notes, and the loan agreements relating to the lines of credit contain various financial and other covenants which must be maintained until all indebtedness to the financial institution is repaid. The Company was in compliance with the covenants at December 31, 2017. Scheduled Maturities Scheduled maturities for notes payable outstanding at December 31, 2017 are as follows (in thousands). 2018 $ 25,791 2019 — 2020 3,425 2021 508 2022 203 Thereafter 179,991 $ 209,918 |
Junior Subordinated Debentures
Junior Subordinated Debentures and Trust Preferred Securities | 12 Months Ended |
Dec. 31, 2017 | |
Junior Subordinated Debentures and Trust Preferred Securities | |
Junior Subordinated Debentures and Trust Preferred Securities | 14. Junior Subordinated Debentures and Trust Preferred Securities PCC has four statutory Trusts, three of which were formed under the laws of the state of Connecticut and one of which, PCC Statutory Trust IV, was formed under the laws of the state of Delaware. The Trusts were created for the sole purpose of issuing and selling preferred securities and common securities, using the resulting proceeds to acquire junior subordinated debentures issued by PCC (the “Debentures”). Accordingly, the Debentures are the sole assets of the Trusts, and payments under the Debentures are the sole revenue of the Trusts. All of the common securities are owned by PCC; however, PCC is not the primary beneficiary of the Trusts. Accordingly, the Trusts are not included in the Company’s consolidated financial statements. The Trusts have issued $65,000,000 of floating rate preferred securities and $2,012,000 of common securities and have invested the proceeds from the securities in floating rate Debentures of PCC. Information regarding the PCC Debentures is shown in the following table (in thousands). Investor Issue Date Amount PCC Statutory Trust I July 31, 2001 $ 18,042 PCC Statutory Trust II March 26, 2003 $ 18,042 PCC Statutory Trust III September 17, 2003 $ 15,464 PCC Statutory Trust IV February 22, 2008 $ 15,464 The stated term of the Debentures is 30 years with interest payable quarterly. The rate on the Debentures, which resets quarterly, is 3-month LIBOR plus an average spread of 3.22%. The total average interest rate at December 31, 2017 was 4.72%. The term, rate and other features of the preferred securities are the same as the Debentures. PCC’s obligations under the Debentures and related documents, taken together, constitute a full and unconditional guarantee of the Trust’s obligations under the preferred securities. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | 15. Income Taxes The significant components of the income tax provision are as follows (in thousands). Year Ended December 31, 2017 2016 2015 Current: Federal $ 63,769 $ 82,970 $ 49,570 State 5,440 10,181 3,969 69,209 93,151 53,539 Deferred: Federal 40,176 (6,732) 17,295 State 757 (2,958) 81 40,933 (9,690) 17,376 $ 110,142 $ 83,461 $ 70,915 The income tax provision differs from the amount that would be computed by applying the statutory Federal income tax rate of 35% to income before income taxes as a result of the following (in thousands). Year Ended December 31, 2017 2016 2015 Computed tax at federal statutory rate $ 85,150 $ 80,992 $ 99,223 Tax effect of: Tax Legislation 28,363 — — Non-taxable acquisition gain (6,682) — (33,426) Nondeductible transaction costs 774 2,608 3,969 Nondeductible expenses 3,089 3,301 3,215 State income taxes 4,028 4,708 2,632 Tax-exempt income, net (2,758) (2,850) (2,563) Valuation allowance — (2,094) (1,889) Share-based compensation benefit (412) (2,391) — Other (1,410) (813) (246) $ 110,142 $ 83,461 $ 70,915 The components of the tax effects of temporary differences that give rise to the net deferred tax asset included in other assets within the consolidated balance sheets are as follows (in thousands). December 31, 2017 2016 Deferred tax assets: Net operating and built-in loss carryforward $ 11,697 $ 21,381 Covered loans 20,024 43,512 Purchase accounting adjustment - loans 4,859 10,682 Allowance for loan losses 15,105 20,703 Compensation and benefits 15,860 44,368 Legal and other reserves 4,359 15,985 Foreclosed property 6,400 16,486 Other 11,961 19,297 90,265 192,414 Deferred tax liabilities: Premises and equipment 10,288 21,013 FDIC Indemnification Asset 3,502 21,600 Intangible assets 8,994 17,392 Derivatives 4,527 8,581 Loan servicing 13,184 23,187 Other 8,156 18,868 48,651 110,641 Net deferred tax asset $ 41,614 $ 81,773 The Tax Legislation enacted on December 22, 2017 significantly revises the U.S. corporate income tax by lowering corporate income tax rates. The Company’s results during the fourth quarter and full year of 2017 include the estimated impact of a non-recurring, non-cash charge of $28.4 million as a result of the enactment of the Tax Legislation. The charge was primarily due to the revaluation of deferred tax assets as a result of the reduction in the corporate tax rate from 35% to 21%, and other anticipated impacts associated with the Tax Legislation. Certain Tax Legislation amounts are considered reasonable estimates as of December 31, 2017 and could be adjusted during the measurement period, which will end in December 2018, as a result of further refinement of calculations, changes in interpretations and assumptions made, guidance that may be issued and actions the Company may take as a result of the Tax Legislation. The Company’s effective tax rate was 45.3%, 36.1% and 25.0% during 2017, 2016 and 2015, respectively. The effective tax rate during 2017 was higher than the statutory rate primarily due to the revaluation of deferred tax assets as a result of the Tax Legislation, partially offset by a non-taxable gain recorded in the resolution of the SWS appraisal proceedings as the SWS Merger was a tax-free reorganization. The effective tax rate during 2016 was relatively consistent with the statutory rate, but did include effects related to non-deductible transaction costs associated with the SWS Merger, offset by the reversal of a valuation allowance of $2.2 million previously established on a deferred tax asset associated with the SWS Merger and the recognition of excess tax benefits on share-based payment awards as a result of the Company’s adoption of the provisions of Accounting Standards Update (“ASU”) 2016-09 as of January 1, 2016 as discussed in Note 33 to the consolidated financial statements. The lower effective tax rate during 2015 was primarily due to no income taxes being recorded during 2015 in connection with the bargain purchase gain of $81.3 million associated with the SWS Merger. In addition, during 2015, the Company recorded an income tax benefit of $2.1 million as a result of the SWS Merger to reverse the deferred tax liability for the difference between book and tax basis on Hilltop’s investment in SWS common stock and also reversed a valuation allowance of $1.9 million previously established on a deferred tax asset for a capital loss carryforward. At December 31, 2017 and 2016, the Company had net operating loss carryforwards for Federal income tax purposes of $29.9 million and $37.8 million, respectively (or $6.3 million and $13.2 million, respectively, on a tax effected basis at applicable rates for respective tax years). The net operating loss carryforwards are subject to an annual Section 382 limitation on their usage. These net operating loss carryforwards expire in starting in 2032. The Company expects to realize its current deferred tax asset for these net operating loss carryforwards through the implementation of certain tax planning strategies, core earnings, and reversal of timing differences. At December 31, 2017, the Company also had a recognized built-in loss (“RBIL”) carryover of $20.5 million from the ownership change resulting from the SWS Merger. These RBILs, if recognized during a five year recognition period before January 1, 2020, are subject to the annual Section 382 limitation rules similar to the Company’s net operating loss carryforwards. The RBIL’s are expected to be fully realized prior to any expiration. The Company’s remaining net unrealized built-in loss of $9.8 million, if recognized during a five year recognition period before January 1, 2020, would also be subject to the Section 382 limitation. Based on the Company’s evaluation of its deferred tax assets, management determined that no valuation allowance against its gross deferred tax assets was necessary at December 31, 2017 or 2016. GAAP requires the measurement of uncertain tax positions. Uncertain tax positions are the difference between a tax position taken, or expected to be taken in a tax return, and the benefit recognized for accounting purposes. At December 31, 2017 and 2016, the total amount of gross unrecognized tax benefits was $1.6 million and $1.7 million, respectively, of which $1.2 million and $1.1 million, respectively, if recognized, would favorably impact the Company’s effective tax rate. The aggregate changes in gross unrecognized tax benefits, which excludes interest and penalties, are as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 1,704 $ 644 $ 644 Increases related to tax positions taken during a prior year 476 844 — Decreases related to tax positions taken during a prior year (1,273) — — Increases related to tax positions taken during the current year 667 216 — Balance, end of year $ 1,574 $ 1,704 $ 644 The Company believes that it is reasonably possible that certain state matters may be concluded in the next twelve months. Specific positions that may be resolved include issues involving apportionment and various other matters. At December 31, 2017, the unrecognized tax benefit is recorded as taxes receivable, which is included in other assets within the consolidated balance sheet. The Company files income tax returns in U.S. federal and numerous state jurisdictions. The Company is subject to tax audits in numerous jurisdictions in the United States until the applicable statute of limitations expires. The Company is no longer subject to U.S. federal tax examinations for tax years prior to 2014. The Company is open for various state tax audits for tax years 2013 and later. The Company is currently under income tax examination by a state authority for tax years 2013 through 2015. As of December 31, 2017, the state authority has not proposed any significant adjustments to the Company’s tax positions for which the Company does not have adequate reserves. |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefits | |
Employee Benefits | 16. Employee Benefits Hilltop and its subsidiaries have benefit plans that provide for elective deferrals by employees under Section 401(k) of the Internal Revenue Code. Employee contributions are determined by the level of employee participation and related salary levels per Internal Revenue Service regulations. Hilltop and its subsidiaries match a portion of employee contributions based on the amount of eligible employees’ contributions and salaries. In addition, Hilltop, PCC and the Bank made additional contributions to employees’ 401(k) accounts based on achievement of certain corporate objectives through December 31, 2015. The amount charged to operating expense for these matching contributions totaled $13.9 million, $15.1 million and $12.6 million during 2017, 2016 and 2015, respectively. Effective upon the completion of the PlainsCapital Merger, the Company recorded a liability of $8.9 million associated with separate retention agreements entered into between Hilltop and two executive officers. At December 31, 2017 and 2016, the recorded liability, including interest, was $9.1 million and $9.0 million, respectively. The Bank purchased $15.0 million of flexible premium universal life insurance in 2001 to help finance the annual expense incurred in providing various employee benefits. At December 31, 2017 and 2016, the carrying value of the policies included in other assets was $25.8 million and $24.8 million, respectively. During 2017, 2016 and 2015, the Bank recorded income of $0.6 million, $0.6 million and $0.8 million, respectively, related to the policies that was reported in other noninterest income within the consolidated statement of operations. Deferred Compensation Plan As a result of the SWS Merger, the Company assumed a deferred compensation plan (the “SWS Plan”) that allows former SWS eligible officers and employees to defer a portion of their bonus compensation and commissions. The SWS Plan matched 15% of the deferrals made by participants up to a predetermined limit through matching contributions that vest ratably over four years. Pursuant to the terms of the SWS Plan, the trustee periodically purchased the former SWS common stock in the open market. As a result of the SWS Merger, the former SWS common shares were converted into Hilltop common stock based on the terms of the merger agreement. No further contributions can be made to this plan. The assets of the SWS Plan are held in a rabbi trust and primarily include investments in company-owned life insurance (“COLI”) and Hilltop common stock. These assets are consolidated with those of the Company. Investments in COLI are carried at the cash surrender value of the insurance policies and recorded in other assets within the consolidated balance sheet at December 31, 2017 and 2016, respectively. Investments in Hilltop common stock, which are carried at cost, and the corresponding liability related to the deferred compensation plan are presented as components of stockholders’ equity as employee stock trust and deferred compensation employee stock trust, net, respectively, at December 31, 2017 and 2016, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions | |
Related Party Transactions | 17. Related Party Transactions Pursuant to a Sublease Agreement, Diamond A Administration Company LLC (“Diamond A Admin”), an affiliate of Gerald J. Ford, the current Chairman of the Board of Hilltop and the beneficial owner of 16.2% of Hilltop common stock at December 31, 2017, currently provides office space to Hilltop at a cost of $24 thousand per month. This Sublease Agreement continues in effect until July 31, 2018 or such earlier date that the base lease expires. Jeremy B. Ford, a director and the President and Co-Chief Executive Officer of Hilltop, is the beneficiary of a trust that owns a 49% limited partnership interest in Diamond A Financial, L.P. Diamond A Financial, L.P. owned 16.2% of the outstanding Hilltop common stock at December 31, 2017. He also is a director and the Secretary of Diamond A Admin, which provides office space to Hilltop as described in the preceding paragraph. Diamond A Admin is owned by Hunter’s Glen/Ford, Ltd., a limited partnership in which a trust for the benefit of Jeremy B. Ford is a 46% limited partner. Jeremy B. Ford is the son of Gerald J. Ford. Corey G. Prestidge, Hilltop’s General Counsel and Secretary, is the son-in-law of Gerald J. Ford. Accordingly, Messrs. Jeremy Ford and Corey Prestidge are brothers-in-law. In the ordinary course of business, the Bank has granted loans to certain directors, executive officers and their affiliates (collectively referred to as related parties) totaling $34.6 million and $27.3 million at December 31, 2017 and 2016, respectively. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other unaffiliated persons and do not involve more than normal risk of collectability. For such loans during 2017, total principal additions were $12.0 million and total principal payments were $4.7 million. At December 31, 2017 and 2016, the Bank held deposits of related parties of $151.0 million and $154.8 million, respectively. A related party is the lessor in an operating lease with the Bank. The Bank’s minimum payment under the lease is $0.5 million annually through 2028, for an aggregate remaining obligation of $5.5 million at December 31, 2017. The Bank purchases loans from a company for which a related party serves as a director, president and chief executive officer. At December 31, 2017 and 2016, the outstanding balance of the purchased loans was $2.1 million and $3.0 million, respectively. The loans were purchased with recourse to the Company in the ordinary course of business and the related party had no direct financial interest in the transaction. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | 18. Commitments and Contingencies The Bank acts as agent on behalf of certain correspondent banks in the purchase and sale of federal funds that aggregated $3.0 million and $19.0 million at December 31, 2017 and 2016, respectively. Legal Matters The Company is subject to loss contingencies related to litigation, claims, investigations and legal and administrative cases and proceedings arising in the ordinary course of business. The Company evaluates these contingencies based on information currently available, including advice of counsel. The Company establishes accruals for those matters when a loss contingency is considered probable and the related amount is reasonably estimable. Any accruals are periodically reviewed and may be adjusted as circumstances change. A portion of the Company’s exposure with respect to loss contingencies may be offset by applicable insurance coverage. In determining the amounts of any accruals or estimates of possible loss contingencies, the Company does not take into account the availability of insurance coverage, other than that provided by reinsurers in the insurance segment. When it is practicable, the Company estimates loss contingencies for possible litigation and claims, whether or not there is an accrued probable loss. When the Company is able to estimate such possible losses, and when it estimates that it is reasonably possible it could incur losses, in excess of amounts accrued, the Company is required to make a disclosure of the aggregate estimation. As available information changes, however, the matters for which the Company is able to estimate, as well as the estimates themselves will be adjusted, accordingly. Assessments of litigation and claims exposures are difficult due to many factors that involve inherent unpredictability. Those factors include the following: the varying stages of the proceedings, particularly in the early stages; unspecified, unsupported, or uncertain damages; damages other than compensatory, such as punitive damages; a matter presenting meaningful legal uncertainties, including novel issues of law; multiple defendants and jurisdictions; whether discovery has begun or is complete; whether meaningful settlement discussions have commenced; and whether the claim involves a class action and if so, how the class is defined. As a result of some of these factors, the Company may be unable to estimate reasonably possible losses with respect to some or all of the pending and threatened litigation and claims asserted against the Company. Following completion of Hilltop’s acquisition of SWS, several purported holders of shares of SWS common stock (the “Petitioners”) filed petitions in the Court of Chancery of the State of Delaware (the “Court”) seeking appraisal for their shares pursuant to Section 262 of the Delaware General Corporation Law. These petitions were consolidated as In re SWS Group, Inc. , C.A. No. 10554-VCG. On May 30, 2017, the Court issued its Memorandum Opinion in the matter. The Court found the “fair value” of the shares of SWS common stock as of the date of the transaction was $6.38 per share. Accordingly, Hilltop paid cash of $6.38 per share, plus statutory interest from the effective date of the merger until the date of payment, to the Petitioners and the other stockholders of SWS who properly demanded appraisal rights under Delaware law, collectively representing 7,438,453 shares. Each outstanding share of SWS common stock, other than shares held by Hilltop, in treasury by SWS or by stockholders who properly demanded appraisal rights under Delaware law, was converted into the right to receive 0.2496 shares of Hilltop common stock and $1.94 in cash, the aggregate value of which was $6.92 per share of SWS common stock as of the effective date of the merger. The resolution of this matter resulted in 1,856,638 shares of HTH common stock, which had been held in escrow during the pendency of the proceeding, being returned to the Company’s pool of authorized but unissued shares of common stock and a pre-tax net increase to other noninterest income of $11.6 million during the second quarter of 2017. This change in common stock is reflected in repurchases of common stock within the consolidated statements of stockholders’ equity. Petitioners filed an appeal to the Court’s Memorandum Opinion. The Company also filed a cross-appeal in the matter and intends to vigorously defend the Petitioners’ appeal. The Company is involved in information-gathering requests and investigations (both formal and informal), as well as reviews, examinations and proceedings (collectively, “Inquiries”) by various governmental regulatory agencies, law enforcement authorities and self-regulatory bodies regarding certain of its businesses, business practices and policies, as well as the conduct of persons with whom it does business. Additional Inquiries will arise from time to time. In connection with those Inquiries, the Company receives document requests, subpoenas and other requests for information. The Inquiries, including the Inquiry described below, could develop into administrative, civil or criminal proceedings or enforcement actions that could result in consequences that have a material effect on the Company's consolidated financial position, results of operations or cash flows as a whole. Such consequences could include adverse judgments, findings, settlements, penalties, fines, orders, injunctions, restitution, or alterations in the Company’s business practices, and could result in additional expenses and collateral costs, including reputational damage. As a part of an industry-wide Inquiry, PrimeLending received a subpoena from the Office of Inspector General of the U.S. Department of Housing and Urban Development (“HUD”) regarding mortgage-related practices, including those relating to origination practices for loans insured by the Federal Housing Administration (the “FHA”). On August 20, 2014, PrimeLending received a Civil Investigative Demand from the United States Department of Justice (the “DOJ”) related to this Inquiry. According to the Civil Investigative Demand, the DOJ is conducting an investigation to determine whether PrimeLending has violated the False Claims Act in connection with originating and underwriting single-family residential mortgage loans insured by the FHA. The DOJ has advised PrimeLending that, based upon its review of a sample of loans for which an FHA insurance claim was paid by HUD, some of the loans do not meet FHA underwriting guidelines. PrimeLending, based upon its own review of the loan sample, does not agree with the sampling methodology and loan analysis employed by the DOJ. Remedies in these proceedings or settlements may include statutory damages, indemnification, fines and/or penalties. Many institutions have settled these matters on terms that included large monetary penalties. PrimeLending has fully cooperated with this Inquiry, continues to discuss this matter with the DOJ and adjusts its indemnification reserve based upon such discussions. While the final outcome of litigation and claims exposures or of any Inquiries is inherently unpredictable, management is currently of the opinion that the outcome of pending and threatened litigation and Inquiries will not have a material effect on the Company’s business, consolidated financial position, results of operations or cash flows as a whole. However, in the event of unexpected future developments, it is reasonably possible that an adverse outcome in any of the matters discussed above could be material to the Company’s business, consolidated financial position, results of operations or cash flows for any particular reporting period of occurrence. Indemnification Liability Reserve The mortgage origination segment may be responsible to agencies, investors, or other parties for errors or omissions relating to its representations and warranties that each loan sold meets certain requirements, including representations as to underwriting standards and the validity of certain borrower representations in connection with the loan. If determined to be at fault, the mortgage origination segment either repurchases the affected loan from or indemnifies the claimant against loss. The mortgage origination segment has established an indemnification liability reserve for such probable losses. Generally, the mortgage origination segment first becomes aware that an agency, investor, or other party believes a loss has been incurred on a sold loan when it receives a written request from the claimant to repurchase the loan or reimburse the claimant’s losses. Upon completing its review of the claimant’s request, the mortgage origination segment establishes a specific claims reserve for the loan if it concludes its obligation to the claimant is both probable and reasonably estimable. An additional reserve has been established for probable agency, investor or other party losses that may have been incurred, but not yet reported to the mortgage origination segment based upon a reasonable estimate of such losses. Factors considered in the calculation of this reserve include, but are not limited to, the total volume of loans sold exclusive of specific claimant requests, actual claim settlements and the severity of estimated losses resulting from future claims, and the mortgage origination segment’s history of successfully curing defects identified in claim requests. While the mortgage origination segment’s sales contracts typically include borrower early payment default repurchase provisions, these provisions have not been a primary driver of claims to date, and therefore, are not a primary factor considered in the calculation of this reserve. At December 31, 2017 and 2016, the mortgage origination segment’s indemnification liability reserve totaled $23.5 million and $18.2 million, respectively. The provision for indemnification losses was $4.0 million, $4.6 million and $4.0 million during 2017, 2016 and 2015, respectively. The following tables provide for a roll-forward of claims activity for loans put-back to the mortgage origination segment based upon an alleged breach of a representation or warranty with respect to a loan sold and related indemnification liability reserve activity (in thousands). Representation and Warranty Specific Claims Activity - Origination Loan Balance Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 40,669 $ 57,298 $ 53,906 Claims made 42,330 21,410 71,783 Claims resolved with no payment (37,439) (19,696) (38,862) Repurchases (6,490) (4,164) (14,884) Indemnification payments (5,368) (14,179) (14,645) Balance, end of year $ 33,702 $ 40,669 $ 57,298 Indemnification Liability Reserve Activity Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 18,239 $ 16,640 $ 17,619 Additions for new sales 3,962 4,638 4,006 Repurchases (466) (392) (1,420) Early payment defaults (228) (241) (64) Indemnification payments (713) (2,482) (3,027) Change in reserves for loans sold in prior years 2,678 76 (474) Balance, end of year $ 23,472 $ 18,239 $ 16,640 December 31, 2017 2016 Reserve for Indemnification Liability: Specific claims $ 646 $ 1,661 Incurred but not reported claims 22,826 16,578 Total $ 23,472 $ 18,239 Although management considers the total indemnification liability reserve to be appropriate, there may be changes in the reserve over time to address incurred losses, due to unanticipated adverse changes in the economy and historical loss patterns, discrete events adversely affecting specific borrowers or industries, and/or actions taken by institutions or investors. The impact of such matters is considered in the reserving process when probable and estimable. Other Contingencies In connection with the FNB Transaction, the Bank entered into two loss-share agreements with the FDIC that collectively cover $1.2 billion of loans and OREO acquired in the FNB Transaction. Pursuant to the loss-share agreements, the FDIC has agreed to reimburse the Bank the following amounts with respect to the covered assets: (i) 80% of net losses on the first $240.4 million of net losses incurred; (ii) 0% of net losses in excess of $240.4 million up to and including $365.7 million of net losses incurred; and (iii) 80% of net losses in excess of $365.7 million of net losses incurred. Net losses are defined as book value losses plus certain defined expenses incurred in the resolution of assets, less subsequent recoveries. Under the loss-share agreement for commercial assets, the amount of subsequent recoveries that are reimbursable to the FDIC for a particular asset is limited to book value losses and expenses actually billed plus any book value charge-offs incurred prior to the Bank Closing Date. There is no limit on the amount of subsequent recoveries reimbursable to the FDIC under the loss-share agreement for single family residential assets. The loss-share agreements for commercial and single family residential assets are in effect for five years and ten years, respectively, from the Bank Closing Date and the loss recovery provisions to the FDIC are in effect for eight years and ten years, respectively, from the Bank Closing Date. As part of the loss-share agreements, the Bank is subject to annual FDIC compliance audits. As discussed in Note 6 to the consolidated financial statements, and in accordance with the loss-share agreements, the Bank may be required to make a “true-up” payment to the FDIC approximately ten years following the Bank Closing Date if its actual net realized losses over the life of the loss-share agreements are less than the FDIC’s initial estimate of losses on covered assets. The “true-up” payment is calculated using a defined formula set forth in the P&A Agreement. While the ultimate amount of any “true-up” payment is unknown at this time and will vary based upon the amount of future losses or recoveries within the covered loan portfolio, the Bank has recorded a related “true-up” payment accrual of $16.3 million at December 31, 2017 based on the current estimate of aggregate realized losses on covered assets over the life of the loss-share agreements. The initial estimate of the FDIC Indemnification Asset at the Bank Closing Date was recorded at the present value of 80% of $240.4 million. As of December 31, 2017, the Bank projects that the sum of actual plus projected covered losses and reimbursable expenses subject to the loss-share agreements will be less than $240.4 million. As of December 31, 2017, the Bank had billed $184.7 million of covered net losses to the FDIC, of which 80%, or $147.8 million, were reimbursable under the loss-share agreements. As of December 31, 2017, the Bank had received aggregate reimbursements of $145.8 million from the FDIC, which represented reimbursable covered losses and expenses through September 30, 2017. As discussed in Note 16 to the consolidated financial statements, effective upon completion of the PlainsCapital Merger, Hilltop entered into separate retention agreements with two executive officers, one having an initial term of three years (with automatic one-year renewals at the end of two years and each anniversary thereof) and the other having an initial term of two years (with automatic one-year renewals at the end of the first year and each anniversary thereof). Each of these retention agreements provides for severance pay benefits if the executive officer’s employment is terminated without “cause”. In addition to these retention agreements, Hilltop and its subsidiaries maintain employment contracts with certain officers that provide for benefits in the event of a “change in control” as defined in these agreements. Hilltop and its subsidiaries lease space, primarily for branch facilities and automated teller machines, under noncancelable operating leases with remaining terms, including renewal options, of 1 to 11 years and under capital leases with remaining terms of 4 to 11 years. Rental expense under the operating leases was $43.5 million, $41.9 million and $40.3 million in 2017, 2016 and 2015, respectively. Future minimum lease payments under these agreements follow (in thousands). Operating Leases Capital Leases 2018 $ 36,602 $ 1,444 2019 30,127 1,491 2020 24,461 1,528 2021 16,429 1,451 2022 14,306 1,127 Thereafter 31,422 4,125 Total minimum lease payments $ 153,347 11,166 Amount representing interest (3,497) Present value of minimum lease payments $ 7,669 |
Financial Instruments with Off-
Financial Instruments with Off-Balance Sheet Risk | 12 Months Ended |
Dec. 31, 2017 | |
Financial Instruments with Off-Balance Sheet Risk | |
Financial Instruments with Off-Balance Sheet Risk | 19. Financial Instruments with Off-Balance Sheet Risk The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit that involve varying degrees of credit and interest rate risk in excess of the amount recognized in the consolidated financial statements. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received. The contract amounts of those instruments reflect the extent of involvement (and therefore the exposure to credit loss) the Bank has in particular classes of financial instruments. Commitments to extend credit are agreements to lend to a customer provided that the terms established in the contract are met. Commitments generally have fixed expiration dates and may require payment of fees. Because some commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. These letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan commitments to customers. In the aggregate, the Bank had outstanding unused commitments to extend credit of $1.9 billion at December 31, 2017 and outstanding financial and performance standby letters of credit of $24.4 million at December 31, 2017. The Bank uses the same credit policies in making commitments and standby letters of credit as it does for on-balance sheet instruments. The amount of collateral obtained, if deemed necessary, in these transactions is based on management’s credit evaluation of the borrower. Collateral held varies but may include real estate, accounts receivable, marketable securities, interest-bearing deposit accounts, inventory, and property, plant and equipment. In the normal course of business, the Hilltop Broker-Dealers execute, settle, and finance various securities transactions that may expose the Hilltop Broker-Dealers to off-balance sheet risk in the event that a customer or counterparty does not fulfill its contractual obligations. Examples of such transactions include the sale of securities not yet purchased by customers or for the accounts of the Hilltop Broker-Dealers, use of derivatives to support certain non-profit housing organization clients, clearing agreements between the Hilltop Broker-Dealers and various clearinghouses and broker-dealers, secured financing arrangements that involve pledged securities, and when-issued underwriting and purchase commitments. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | 20. Stock-Based Compensation Pursuant to the Hilltop Holdings Inc. 2012 Equity Incentive Plan (the “2012 Plan”), the Company may grant nonqualified stock options, stock appreciation rights, restricted stock, RSUs, performance awards, dividend equivalent rights and other awards to employees of the Company, its subsidiaries and outside directors of the Company. In the aggregate, 4,000,000 shares of common stock may be delivered pursuant to awards granted under the 2012 Plan. At December 31, 2017, 1,634,804 shares of common stock remain available for issuance pursuant to the 2012 Plan, including shares that may be delivered pursuant to outstanding awards. Compensation expense related to the 2012 Plan was $10.8 million, $10.5 million and $8.6 million during 2017, 2016 and 2015, respectively. During 2017, 2016 and 2015, Hilltop granted 16,859, 21,224 and 13,631 shares of common stock, respectively, to certain non-employee members of the Company’s board of directors for services rendered to the Company pursuant to the 2012 Plan. Restricted Stock Awards and RSUs The Compensation Committee of the board of directors of the Company issued restricted shares of Hilltop common stock (“Restricted Stock Awards”) and RSUs pursuant to the 2012 Plan. The Restricted Stock Awards generally cliff vested on the third anniversary of the grant date and were subject to service conditions set forth in the award agreements, with associated costs recognized on a straight-line basis over the respective vesting periods. The award agreements governing the Restricted Stock Awards provided for accelerated vesting under certain conditions. As of September 30, 2017, all remaining Restricted Stock Awards had vested and none were outstanding. Certain RSUs are subject to time-based vesting conditions and generally provided for a cliff vest on the third anniversary of the grant date, while other RSUs provided for vesting based upon the achievement of certain performance goals over a three-year period subject to service conditions set forth in the award agreements, with associated costs generally recognized on a straight-line basis over the respective vesting periods. The RSUs are not transferable, and the shares of common stock issuable upon conversion of vested RSUs may be subject to transfer restrictions for a period of one year following conversion, subject to certain exceptions. In addition, the applicable RSU award agreements provide for accelerated vesting under certain conditions. The following table summarizes information about Restricted Stock Award and RSU activity for the noted periods (shares in thousands). Restricted Stock Awards RSUs Weighted Weighted Average Average Grant Date Grant Date Outstanding Fair Value Outstanding Fair Value Balance, December 31, 2014 466 $ 13.32 435 $ 23.14 Granted 63 $ 19.95 491 $ 19.61 Vested/Released (54) $ 19.58 (12) $ 22.45 Forfeited (22) $ 13.25 (39) $ 21.93 Balance, December 31, 2015 453 $ 13.50 875 $ 21.22 Granted - $ - 598 $ 17.78 Vested/Released (447) $ 13.41 (7) $ 22.22 Forfeited (2) $ 19.72 (10) $ 20.70 Balance, December 31, 2016 4 $ 19.95 1,456 $ 19.83 Granted - $ - 450 $ 26.37 Vested/Released (4) $ 19.95 (451) $ 22.48 Forfeited - $ - (137) $ 22.41 Balance, December 31, 2017 - $ - 1,318 $ 20.89 Vested/Released Restricted Stock Awards and RSUs include an aggregate of 252,133 shares withheld to satisfy employee statutory tax obligations during 2017, 2016 and 2015. Pursuant to certain RSU award agreements, an aggregate of 35,685 vested RSUs at December 31, 2017 require deferral of the settlement in shares and statutory tax obligations to a future date. During 2017, the Compensation Committee of the board of directors of the Company awarded certain executives and key employees an aggregate of 392,877 RSUs pursuant to the 2012 Plan. At December 31, 2017, 313,301 of these outstanding RSUs are subject to time-based vesting conditions and generally cliff vest on the third anniversary of the grant date, and 79,576 of these outstanding RSUs will cliff vest based upon the achievement of certain performance goals over a three-year period. At December 31, 2017, in the aggregate, 1,035,199 of the outstanding RSUs are subject to time-based vesting conditions and generally cliff vest on the third anniversary of the grant date, and 282,329 outstanding RSUs cliff vest based upon the achievement of certain performance goals over a three-year period. At December 31, 2017, unrecognized compensation expense related to outstanding RSUs of $12.6 million is expected to be recognized over a weighted average period of 1.24 years. |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Matters | |
Regulatory Matters | 21. Regulatory Matters Banking and Hilltop PlainsCapital and Hilltop are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct, material effect on the consolidated financial statements. The regulations require PlainsCapital and Hilltop to meet specific capital adequacy guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. In January 2015, the comprehensive capital framework (“Basel III”) for U.S. banking organizations became effective for PlainsCapital and Hilltop for reporting periods beginning after January 1, 2015 (subject to a phase-in period through January 2019). Under Basel III, total capital consists of two tiers of capital, Tier 1 and Tier 2. Tier 1 capital is further composed of common equity Tier 1 capital and additional Tier 1 capital. Total capital is the sum of Tier 1 capital and Tier 2 capital. The Company performs reviews of the classification and calculation of risk-weighted assets to ensure accuracy and compliance with the Basel III regulatory capital requirements. The capital classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the companies to maintain minimum amounts and ratios (set forth in the following table) of Tier 1 capital (as defined in the regulations) to total average assets (as defined), and minimum ratios of common equity Tier 1, Tier 1 and total capital (as defined) to risk-weighted assets (as defined). In order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers, Basel III also implemented a capital conservation buffer, which requires a banking organization to hold a buffer above its minimum risk-based capital requirements. This buffer will help to ensure that banking organizations conserve capital when it is most needed, allowing them to better weather periods of economic stress. The buffer is measured relative to risk-weighted assets. The phase-in of the capital conservation buffer requirements began on January 1, 2016 for Hilltop and the Bank. Based on the actual ratios as shown in the table below, Hilltop and the Bank exceed each of the capital conservation buffer requirements in effect as of December 31, 2017, as well as the fully phased-in requirements through 2019. In addition, under the final rules, bank holding companies with less than $15 billion in assets as of December 31, 2009 are allowed to continue to include junior subordinated debentures in Tier 1 capital, subject to certain restrictions. However, if an institution grows to above $15 billion in assets as a result of an acquisition, or organically grows to above $15 billion in assets and then makes an acquisition, the combined trust preferred issuances must be phased out of Tier 1 and into Tier 2 capital (75% in 2015 and 100% in 2016). All of the debentures issued to the Trusts, less the common stock of the Trusts, qualified as Tier 1 capital as of December 31, 2017, under guidance issued by the Board of Governors of the Federal Reserve System. The following tables show PlainsCapital’s and Hilltop’s actual capital amounts and ratios in accordance with Basel III compared to the regulatory minimum capital requirements including conservation buffer in effect at the end of the period and on a fully phased-in basis as if such requirements were currently in effect as measured at December 31, 2017 and 2016, respectively (dollars in thousands). Based on the actual capital amounts and ratios shown in the following table, PlainsCapital’s ratios place it in the “well capitalized” (as defined) capital category under regulatory requirements. Minimum Capital Requirements Including Conservation Buffer In Effect at Fully To Be Well Actual End of Period Phased In Capitalized Amount Ratio Ratio Ratio Ratio December 31, 2017 Tier 1 capital (to average assets): PlainsCapital $ 1,147,527 12.32 % 4.0 % 4.0 % 5.0 % Hilltop 1,688,358 12.94 % 4.0 % 4.0 % N/A Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 1,147,527 14.47 % 5.75 % 7.0 % 6.5 % Hilltop 1,639,009 17.71 % 5.75 % 7.0 % N/A Tier 1 capital (to risk-weighted assets): PlainsCapital 1,147,527 14.47 % 7.25 % 8.5 % 8.0 % Hilltop 1,688,358 18.24 % 7.25 % 8.5 % N/A Total capital (to risk-weighted assets): PlainsCapital 1,212,793 15.29 % 9.25 % 10.5 % 10.0 % Hilltop 1,738,325 18.78 % 9.25 % 10.5 % N/A Minimum Capital Requirements Including Conservation Buffer In Effect at Fully To Be Well Actual End of Period Phased In Capitalized Amount Ratio Ratio Ratio Ratio December 31, 2016 Tier 1 capital (to average assets): PlainsCapital $ 1,108,484 12.35 % 4.0 % 4.0 % 5.0 % Hilltop 1,652,101 13.51 % 4.0 % 4.0 % N/A Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 1,108,484 14.64 % 5.125 % 7.0 % 6.5 % Hilltop 1,602,400 18.30 % 5.125 % 7.0 % N/A Tier 1 capital (to risk-weighted assets): PlainsCapital 1,108,484 14.64 % 6.625 % 8.5 % 8.0 % Hilltop 1,652,101 18.87 % 6.625 % 8.5 % N/A Total capital (to risk-weighted assets): PlainsCapital 1,164,767 15.38 % 8.625 % 10.5 % 10.0 % Hilltop 1,693,240 19.34 % 8.625 % 10.5 % N/A A reconciliation of equity capital to common equity Tier 1, Tier 1 and total capital (as defined) is as follows (in thousands). December 31, 2017 December 31, 2016 PlainsCapital Hilltop PlainsCapital Hilltop Total equity capital $ 1,379,402 $ 1,912,081 $ 1,337,746 $ 1,870,509 Add: Net unrealized holding losses (gains) on securities available for sale and held in trust 3,520 394 2,303 (485) Deduct: Goodwill and other disallowed intangible assets (235,395) (273,466) (231,565) (267,624) Common equity Tier 1 capital (as defined) 1,147,527 1,639,009 1,108,484 1,602,400 Add: Tier 1 capital Trust preferred securities — 65,000 — 65,000 Deduct: Additional Tier 1 capital deductions — (15,651) — (15,299) Tier 1 capital (as defined) 1,147,527 1,688,358 1,108,484 1,652,101 Add: Allowable Tier 2 capital Allowance for loan losses 65,266 65,618 56,283 56,438 Deduct: Additional Tier 2 capital deductions — (15,651) — (15,299) Total capital (as defined) $ 1,212,793 $ 1,738,325 $ 1,164,767 $ 1,693,240 Broker-Dealer Pursuant to the net capital requirements of the Exchange Act, Hilltop Securities elected to determine its net capital requirement using the alternative method. Accordingly, Hilltop Securities is required to maintain minimum net capital, as defined in Rule 15c3-1 promulgated under the Exchange Act, equal to the greater of $250,000 and $1,000,000, respectively, or 2% of aggregate debit balances, as defined in Rule 15c3-3 promulgated under the Exchange Act. Additionally, the net capital rule of the NYSE provides that equity capital may not be withdrawn or cash dividends paid if resulting net capital would be less than 5% of the aggregate debit items. HTS Independent Network follows the primary (aggregate indebtedness) method, as defined in Rule 15c3-1 promulgated under the Exchange Act, which requires the maintenance of the larger of minimum net capital of $250,000 or 1/15 of aggregate indebtedness. At December 31, 2017, the net capital position of each of the Hilltop Broker-Dealers was as follows (in thousands). HTS Hilltop Independent Securities Network Net capital $ 186,770 $ 3,278 Less: required net capital 10,513 250 Excess net capital $ 176,257 $ 3,028 Net capital as a percentage of aggregate debit items 35.5 % Net capital in excess of 5% aggregate debit items $ 160,487 Under certain conditions, Hilltop Securities may be required to segregate cash and securities in a special reserve account for the benefit of customers under Rule 15c3-3 promulgated under the Exchange Act. Assets segregated under the provisions of the Exchange Act are not available for general corporate purposes. At December 31, 2017 and 2016, the Hilltop Broker-Dealers held cash of $186.6 million and $181.0 million, respectively, segregated in special reserve bank accounts for the benefit of customers. The Hilltop Broker-Dealers were not required to segregate cash or securities in special reserve accounts for the benefit of proprietary accounts of introducing broker-dealers at December 31, 2017 and 2016. Mortgage Origination As a mortgage originator, PrimeLending and its subsidiaries are subject to minimum net worth and liquidity requirements established by HUD and GNMA, as applicable. On an annual basis, PrimeLending and its subsidiaries submit audited financial statements to HUD and GNMA, as applicable, documenting their respective compliance with minimum net worth and liquidity requirements. As of December 31, 2017, PrimeLending and its subsidiaries’ net worth and liquidity exceeded the amounts required by both HUD and GNMA, as applicable. Insurance The statutory financial statements of the Company’s insurance subsidiaries, which are domiciled in the State of Texas, are presented on the basis of accounting practices prescribed or permitted by the Texas Department of Insurance. Texas has adopted the statutory accounting practices of the National Association of Insurance Commissioners (“NAIC”) as the basis of its statutory accounting practices with certain differences that are not significant to the insurance company subsidiaries’ statutory equity. A summary of statutory capital and surplus and statutory net income of each insurance subsidiary is as follows (in thousands). December 31, 2017 2016 Capital and surplus: National Lloyds Insurance Company $ 93,812 $ 131,328 American Summit Insurance Company 22,778 30,462 Year Ended December 31, 2017 2016 2015 Statutory net income (loss): National Lloyds Insurance Company $ (1,785) $ 13,043 $ 9,000 American Summit Insurance Company 742 2,124 1,611 Regulations of the Texas Department of Insurance require insurance companies to maintain minimum levels of statutory surplus to ensure their ability to meet their obligations to policyholders. At December 31, 2017, the Company’s insurance subsidiaries had statutory surplus in excess of the minimum required. The NAIC has adopted a risk based capital (“RBC”) formula for insurance companies that establishes minimum capital requirements indicating various levels of available regulatory action on an annual basis relating to insurance risk, asset credit risk, interest rate risk and business risk. The RBC formula is used by the NAIC and certain state insurance regulators as an early warning tool to identify companies that require additional scrutiny or regulatory action. At December 31, 2017, the Company’s insurance subsidiaries’ RBC ratio exceeded the level at which regulatory action would be required. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity | |
Stockholders' Equity | 22. Stockholders’ Equity The Bank is subject to certain restrictions on the amount of dividends it may declare without prior regulatory approval. At December 31, 2017, $181.7 million of its earnings was available for dividend declaration without prior regulatory approval. At December 31, 2017, the maximum aggregate dividend that may be paid to NLC from its insurance company subsidiaries without regulatory approval was $16.2 million. Dividends During 2017, the Company declared and paid cash dividends of $0.24 per common share, or $23.1 million. During 2016, the Company declared and paid cash dividends of $0.06 per common share, or $5.8 million. On January 25, 2018, the Company announced that its board of directors declared a quarterly cash dividend of $0.07 per common share, payable on February 28, 2018, to all common stockholders of record as of the close of business on February 15, 2018. Stock Repurchase Programs The Company’s board of directors has periodically approved stock repurchase programs under which it authorized the Company to repurchase its outstanding common stock. Under the respective stock repurchase program authorized, the Company could repurchase shares in open-market purchases or through privately negotiated transactions as permitted under Rule 10b-18 promulgated under the Exchange Act. The extent to which the Company repurchased its shares and the timing of such repurchases depended upon market conditions and other corporate considerations, as determined by Hilltop’s management team. Repurchased shares will be returned to the Company’s pool of authorized but unissued shares of common stock. During 2015, the Company paid $30.0 million to repurchase and retire an aggregate of 1,390,977 shares of common stock at an average price of $21.56 per share. This stock repurchase program terminated effective December 2015. In January 2017, the Company’s board of directors reauthorized the stock repurchase program originally approved during the second quarter of 2016 through January 2018. During 2017, the Company paid $27.4 million to repurchase an aggregate of 1,057,656 shares of common stock at an average price of $25.87 per share. This stock repurchase program expired in January 2018. All purchases were funded from available cash balances. In January 2018, the Company’s board of directors authorized a stock repurchase program through January 2019, under which the Company may repurchase, in the aggregate, up to $50.0 million of its outstanding common stock. Series B Preferred Stock As a result of the PlainsCapital Merger, the outstanding shares of PCC’s Non-Cumulative Perpetual Preferred Stock, Series C, all of which were held by the U.S. Treasury, were converted on a one-for-one basis into 114,068 shares of Hilltop Non-Cumulative Perpetual Preferred Stock, Series B (“Hilltop Series B Preferred Stock”). The terms of the Hilltop Series B Preferred Stock provided for the payment of non-cumulative dividends on a quarterly basis. The dividend rate, as a percentage of the liquidation amount, fluctuated until December 31, 2013 based upon changes in the level of “qualified small business lending” (“QSBL”) by the Bank. The shares of Hilltop Series B Preferred Stock were senior to shares of Hilltop common stock with respect to dividends and liquidation preference, and qualified as Tier 1 Capital for regulatory purposes. The dividend rate on the Hilltop Series B Preferred Stock had been fixed at 5.0% since January 1, 2014, based upon the level of QSBL at September 30, 2013. On April 28, 2015, as discussed in Note 13 to the consolidated financial statements, Hilltop used the net proceeds of the offering of Senior Notes to redeem all shares of Hilltop Series B Preferred Stock at an aggregate liquidation value of $114.1 million, plus accrued but unpaid dividends of $0.4 million. |
Other Noninterest Income and Ex
Other Noninterest Income and Expense | 12 Months Ended |
Dec. 31, 2017 | |
Other Noninterest Income and Expense | |
Other Noninterest Income and Expense | 23. Other Noninterest Income and Expense The following table shows the components of other noninterest income and expense (in thousands). Year Ended December 31, 2017 2016 2015 Other noninterest income: Net gains from Hilltop Broker-Dealer trading activities $ 70,922 $ 86,383 $ 44,042 Net gains from trading securities portfolio 20,210 15,926 12,796 Service charges on depositor accounts 14,429 14,162 15,169 SWS Merger appraisal proceeding 11,757 — — Trust fees 7,485 6,782 7,113 Insurance commissions 4,819 4,206 3,819 Insurance direct billing and other policy fees 4,353 4,818 5,329 Revenue from check and stored value cards 3,169 5,036 7,099 Rent and other income from other real estate owned 1,280 1,461 3,559 FDIC Indemnification Asset accretion — 242 1,147 Other 25,546 15,248 10,795 $ 163,970 $ 154,264 $ 110,868 Other noninterest expense: Software and information technology $ 45,891 $ 38,421 $ 39,250 Brokerage commissions and fees 22,884 24,654 16,637 Mortgage origination and servicing 22,353 25,736 19,375 Unreimbursed loan closing costs 20,428 31,234 35,253 Business development 18,619 19,738 18,291 FDIC Indemnification Asset amortization 17,083 — — Travel, meals and entertainment 12,839 13,683 12,748 Funding fees 8,464 7,451 5,865 Amortization of intangible assets 8,263 10,174 12,375 Office supplies 7,806 8,719 8,247 OREO and repossessed assets 4,004 13,438 12,570 FDIC "true-up" 2,100 8,750 5,475 Other 51,362 49,523 62,217 $ 242,096 $ 251,521 $ 248,303 |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 24. Derivative Financial Instruments The Company uses various derivative financial instruments to mitigate interest rate risk. The Bank’s interest rate risk management strategy involves effectively managing the re-pricing characteristics of certain assets and liabilities to mitigate potential adverse impacts from changes in interest rates on the net interest margin. PrimeLending has interest rate risk relative to IRLCs and its inventory of mortgage loans held for sale. PrimeLending is exposed to such interest rate risk from the time an IRLC is made to an applicant to the time the related mortgage loan is sold. To mitigate interest rate risk, PrimeLending executes forward commitments to sell mortgage-backed securities (“MBSs”). Additionally, PrimeLending has interest rate risk relative to its MSR asset and uses derivative instruments, including interest rate swaps, swaptions, and U.S. Treasury bond futures and options to hedge this risk. The Hilltop Broker-Dealers use forward commitments to both purchase and sell MBSs to facilitate customer transactions and as a means to hedge related exposure to interest rate risk in certain inventory positions. Non-Hedging Derivative Instruments and the Fair Value Option As discussed in Note 3 to the consolidated financial statements, the Company has elected to measure substantially all mortgage loans held for sale at fair value under the provisions of the Fair Value Option. The election provides the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without applying complex hedge accounting provisions. The fair values of PrimeLending’s IRLCs, forward commitments, and interest rate swaps and swaptions, and U.S. Treasury bond futures and options are recorded in other assets or other liabilities, as appropriate, and changes in the fair values of these derivative instruments are recorded as a component of net gains from sale of loans and other mortgage production income. The fair value of PrimeLending’s derivative instruments decreased $13.1 million during 2017 and increased $8.0 million and $17.3 million during 2016 and 2015, respectively. Changes in fair value are attributable to changes in the volume of IRLCs, mortgage loans held for sale, commitments to purchase and sell MBSs and MSR assets, and changes in market interest rates. Changes in market interest rates also conversely affect the value of PrimeLending’s mortgage loans held for sale and its MSR asset, which are measured at fair value under the Fair Value Option. The effect of the change in market interest rates on PrimeLending’s loans held for sale and MSR asset is discussed in Note 3 to the consolidated financial statements. The fair values of the Hilltop Broker-Dealers’ and the Bank’s derivative instruments are recorded in other assets or other liabilities, as appropriate. The fair values of the Hilltop Broker-Dealers’ derivatives increased $8.1 million during 2017, compared with a decrease of $23.4 million during 2016 and an increase of $43.7 million during 2015. The fair values of the Bank’s derivatives increased $0.3 million during 2017 and $0.4 million during 2016, compared with a decrease of $0.2 million during 2015. The changes in fair value were recorded as a component of other noninterest income. Derivative positions are presented in the following table (in thousands). December 31, 2017 December 31, 2016 Notional Estimated Notional Estimated Amount Fair Value Amount Fair Value Derivative instruments: IRLCs $ 850,850 $ 18,851 $ 944,550 $ 23,269 Customer-based written options 21,637 38 — — Customer-based purchased options 21,637 (38) — — Commitments to purchase MBSs 2,831,635 (921) 3,616,922 (1,155) Commitments to sell MBSs 4,963,498 2,972 5,609,250 (532) Interest rate swaps and swaptions 25,971 51 32,452 (283) U.S. Treasury bond futures and options (1) 214,500 — 297,000 — (1) PrimeLending has cash collateral advances totaling $0.8 million to offset net liability derivative positions on its commitments to sell MBSs at December 31, 2017, compared to a payable totaling $19.1 million on its net liability derivative position on its commitments to sell MBSs at December 31, 2016. In addition, PrimeLending advanced cash collateral totaling $3.2 million and $3.2 million on its U.S. Treasury bond futures and options at December 31, 2017 and 2016, respectively. These amounts are included in other assets within the consolidated balance sheets. |
Balance Sheet Offsetting
Balance Sheet Offsetting | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Offsetting | |
Balance Sheet Offsetting | 25. Balance Sheet Offsetting Certain financial instruments, including resale and repurchase agreements, securities lending arrangements and derivatives, may be eligible for offset in the consolidated balance sheets and/or subject to master netting arrangements or similar agreements. The following tables present the assets and liabilities subject to enforceable master netting arrangements, repurchase agreements, or similar agreements with offsetting rights (in thousands). Gross Amounts Not Offset in Net Amounts the Balance Sheet Gross Amounts Gross Amounts of Assets Cash of Recognized Offset in the Presented in the Financial Collateral Net Assets Balance Sheet Balance Sheet Instruments Pledged Amount December 31, 2017 Securities borrowed: Institutional counterparties $ 1,386,821 $ — $ 1,386,821 $ (1,327,536) $ — $ 59,285 Interest rate options: Customer counterparties 38 — 38 — — 38 Reverse repurchase agreements: Institutional counterparties 186,537 — 186,537 (186,026) — 511 Forward MBS derivatives: Institutional counterparties 3,576 — 3,576 (3,576) — — $ 1,576,972 $ — $ 1,576,972 $ (1,517,138) $ — $ 59,834 December 31, 2016 Securities borrowed: Institutional counterparties $ 1,436,069 $ — $ 1,436,069 $ (1,385,664) $ — $ 50,405 Reverse repurchase agreements: Institutional counterparties 89,430 — 89,430 (89,369) — 61 Forward MBS derivatives: Institutional counterparties 21,366 (3,893) 17,473 (9,012) — 8,461 $ 1,546,865 $ (3,893) $ 1,542,972 $ (1,484,045) $ — $ 58,927 Gross Amounts Not Offset in Net Amounts the Balance Sheet Gross Amounts Gross Amounts of Liabilities Cash of Recognized Offset in the Presented in the Financial Collateral Net Liabilities Balance Sheet Balance Sheet Instruments Pledged Amount December 31, 2017 Securities loaned: Institutional counterparties $ 1,215,093 $ — $ 1,215,093 $ (1,157,198) $ — $ 57,895 Interest rate options: Institutional counterparties 38 — 38 — — 38 Interest rate swaps and swaptions: Institutional counterparties 35 (86) (51) (1,059) — (1,110) Repurchase agreements: Institutional counterparties 409,058 — 409,058 (409,058) — — Customer counterparties 130,091 — 130,091 (130,091) — — Forward MBS derivatives: Institutional counterparties 2,696 (1,171) 1,525 (1,295) — 230 $ 1,757,011 $ (1,257) $ 1,755,754 $ (1,698,701) $ — $ 57,053 December 31, 2016 Securities loaned: Institutional counterparties $ 1,283,676 $ — $ 1,283,676 $ (1,237,868) $ — $ 45,808 Interest rate swaps and swaptions: Institutional counterparties 297 (14) 283 (3,000) — (2,717) Repurchase agreements: Institutional counterparties 39,970 — 39,970 (39,970) — — Customer counterparties 155,194 — 155,194 (155,194) — — Forward MBS derivatives: Institutional counterparties 19,159 — 19,159 (19,159) — — $ 1,498,296 $ (14) $ 1,498,282 $ (1,455,191) $ — $ 43,091 Secured Borrowing Arrangements Secured Borrowings (Repurchase Agreements) — The Company participates in transactions involving securities sold under repurchase agreements, which are secured borrowings and generally mature one day from the transaction date or involve arrangements with no definite termination date. Securities sold under repurchase agreements are reflected at the amount of cash received in connection with the transactions. The Company may be required to provide additional collateral based on the fair value of the underlying securities, which is monitored on a daily basis. Securities Lending Activities — The Company’s securities lending activities include lending securities for other broker-dealers, lending institutions and its own clearing and retail operations. These activities involve lending securities to other broker-dealers to cover short sales, to complete transactions in which there has been a failure to deliver securities by the required settlement date and as a conduit for financing activities. When lending securities, the Company receives cash or similar collateral and generally pays interest (based on the amount of cash deposited) to the other party to the transaction. Securities lending transactions are executed pursuant to written agreements with counterparties that generally require securities loaned to be marked-to-market on a daily basis. The Company receives collateral in the form of cash in an amount generally in excess of the fair value of securities loaned. The Company monitors the fair value of securities loaned on a daily basis, with additional collateral obtained or refunded, as necessary. Collateral adjustments are made on a daily basis through the facilities of various clearinghouses. The Company is a principal in these securities lending transactions and is liable for losses in the event of a failure of any other party to honor its contractual obligation. Management sets credit limits with each counterparty and reviews these limits regularly to monitor the risk level with each counterparty. The Company is subject to credit risk through its securities lending activities if securities prices decline rapidly because the value of the Company’s collateral could fall below the amount of the indebtedness it secures. In rapidly appreciating markets, credit risk increases due to short positions. The Company’s securities lending business subjects the Company to credit risk if a counterparty fails to perform or if collateral securing its obligations is insufficient. In securities transactions, the Company is subject to credit risk during the period between the execution of a trade and the settlement by the customer. The following tables present the remaining contractual maturities of repurchase agreement and securities lending transactions accounted for as secured borrowings (in thousands). The Company had no repurchase-to-maturity transactions outstanding at both December 31, 2017 and 2016. Remaining Contractual Maturities Overnight and Greater Than December 31, 2017 Continuous Up to 30 Days 30-90 Days 90 Days Total Repurchase agreement transactions: U.S. Treasury and agency securities $ 181,915 $ — $ — $ — $ 181,915 Asset-backed securities 357,234 — — — 357,234 Securities lending transactions: Corporate securities 11,499 — — — 11,499 Equity securities 1,203,594 — — — 1,203,594 Total $ 1,754,242 $ — $ — $ — $ 1,754,242 Gross amount of recognized liabilities for repurchase agreement and securities lending transactions in offsetting disclosure above $ 1,754,242 Amount related to agreements not included in offsetting disclosure above $ — Remaining Contractual Maturities Overnight and Greater Than December 31, 2016 Continuous Up to 30 Days 30-90 Days 90 Days Total Repurchase agreement transactions: U.S. Treasury and agency securities $ 195,164 $ — $ — $ — $ 195,164 Securities lending transactions: Corporate securities 14,816 — — — 14,816 Equity securities 1,268,860 — — — 1,268,860 Total $ 1,478,840 $ — $ — $ — $ 1,478,840 Gross amount of recognized liabilities for repurchase agreement and securities lending transactions in offsetting disclosure above $ 1,478,840 Amount related to agreements not included in offsetting disclosure above $ — |
Broker-Dealer and Clearing Orga
Broker-Dealer and Clearing Organization Receivables and Payables | 12 Months Ended |
Dec. 31, 2017 | |
Broker-Dealer and Clearing Organization Receivables and Payables | |
Broker-Dealer and Clearing Organization Receivables and Payables | 26. Broker-Dealer and Clearing Organization Receivables and Payables Broker-dealer and clearing organization receivables and payables consisted of the following (in thousands). December 31, 2017 2016 Receivables: Securities borrowed $ 1,386,821 $ 1,436,069 Securities failed to deliver 25,491 33,834 Trades in process of settlement 29,412 10,223 Other 22,654 17,615 $ 1,464,378 $ 1,497,741 Payables: Securities loaned $ 1,215,093 $ 1,283,676 Correspondents 30,160 31,040 Securities failed to receive 37,864 31,724 Other 4,446 688 $ 1,287,563 $ 1,347,128 |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Policy Acquisition Costs. | |
Deferred Policy Acquisition Costs | 27. Deferred Policy Acquisition Costs Policy acquisition expenses, primarily commissions, premium taxes and underwriting expenses related to the successful issuance of a new or renewal policy incurred by NLC are deferred and charged against income ratably over the terms of the related policies. A summary of the activity in deferred policy acquisition costs is as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 18,603 $ 19,874 $ 20,416 Acquisition expenses capitalized 34,934 37,231 39,716 Amortization charged to income (36,549) (38,502) (40,258) Balance, end of year $ 16,988 $ 18,603 $ 19,874 Amortization is included in policy acquisition and other underwriting expenses in the accompanying consolidated statements of operations. |
Reserves for Losses and Loss Ad
Reserves for Losses and Loss Adjustment Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Reserves for Losses and Loss Adjustment Expenses | |
Reserve for Losses and Loss Adjustment Expenses | 28. Reserve for Losses and Loss Adjustment Expenses A summary of NLC’s reserve for unpaid losses and LAE, as included in other liabilities within the consolidated balance sheets, is as follows (in thousands). December 31, 2017 2016 Reserve for unpaid losses and allocated LAE balance, net $ 17,470 $ 25,203 Reinsurance recoverables on unpaid losses 11,495 9,434 Unallocated LAE 1,248 1,189 Reserve for unpaid losses and LAE balance, gross $ 30,213 $ 35,826 A summary of claims loss reserve development activity is presented in the following table (in thousands). December 31, 2017 Total of IBNR Reserves Plus Expected Cumulative Accident Year Ended December 31, 2017 Development on Number of Year Paid Incurred Reported Claims Reported Claims 2013 110,813 111,121 8 15,687 2014 83,346 84,074 119 13,099 2015 85,507 87,262 591 15,016 2016 81,682 85,189 2,622 21,277 2017 77,855 88,079 4,282 20,927 Total 439,203 $ 455,725 948 All outstanding reserves prior to 2013, net of reinsurance $ 17,470 Reserve for unpaid losses and allocated LAE, net of reinsurance |
Reinsurance Activity
Reinsurance Activity | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Activity | |
Reinsurance Activity | 29. Reinsurance Activity NLC limits the maximum net loss that can arise from large risks or risks in concentrated areas of exposure by reinsuring (ceding) certain levels of risk. Substantial amounts of business are ceded, and these reinsurance contracts do not relieve NLC from its obligations to policyholders. Such reinsurance includes quota share, excess of loss, catastrophe, and other forms of reinsurance on essentially all property and casualty lines of insurance. Net insurance premiums earned, losses and LAE and policy acquisition and other underwriting expenses are reported net of the amounts related to reinsurance ceded to other companies. Amounts recoverable from reinsurers related to the portions of the liability for losses and LAE and unearned insurance premiums ceded to them are reported as assets. Failure of reinsurers to honor their obligations could result in losses to NLC; consequently, allowances are established for amounts deemed uncollectible as NLC evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. At December 31, 2017, total reinsurance recoverables and receivables had a carrying value of $13.1 million, which is included in other assets within the consolidated balance sheet. There was no allowance for uncollectible accounts at December 31, 2017, based on NLC’s quality requirements. Reinsurers with a balance in excess of 5% of the Company’s outstanding reinsurance receivables at December 31, 2017 are listed below (in thousands). Balances Due From A.M. Best Reinsurers Rating Arch Reinsurance Co. $ 1,115 N/A Partner Reinsurance Co. 1,947 A Aspen Bermuda 865 A R&V Versicherung AG 1,927 N/A Everest Re 767 A+ Lloyd's Syndicate #2001 729 A+ $ 7,350 The effects of reinsurance on premiums written and earned are summarized as follows (in thousands). Year Ended December 31, 2017 2016 2015 Written Earned Written Earned Written Earned Premiums from direct business $ 137,091 $ 144,990 $ 152,970 $ 159,884 $ 167,025 $ 169,334 Reinsurance assumed 12,150 11,767 11,338 11,024 10,714 10,283 Reinsurance ceded (12,280) (14,459) (14,962) (15,363) (17,170) (17,535) Net premiums $ 136,961 $ 142,298 $ 149,346 $ 155,545 $ 160,569 $ 162,082 The effects of reinsurance on incurred losses are as follows (in thousands). Year Ended December 31, 2017 2016 2015 Losses and LAE incurred $ 138,358 $ 113,494 $ 123,017 Reinsurance recoverables (43,657) (24,251) (23,951) Net loss and LAE incurred $ 94,701 $ 89,243 $ 99,066 Catastrophic coverage NLC’s liabilities for losses and LAE include liabilities for reported losses, liabilities for IBNR losses and liabilities for LAE less a reduction for reinsurance recoverables related to those liabilities. The amount of liabilities for reported claims is based primarily on a claim-by-claim evaluation of coverage, liability, injury severity or scope of property damage, and any other information considered relevant to estimating exposure presented by the claim. The amounts of liabilities for IBNR losses and LAE are estimated on the basis of historical trends, adjusted for changes in loss costs, underwriting standards, policy provisions, product mix and other factors. Estimating the liability for unpaid losses and LAE is inherently judgmental and is influenced by factors that are subject to significant variation. Liabilities for LAE are intended to cover the ultimate cost of settling claims, including investigation and defense of lawsuits resulting from such claims. Based upon the contractual terms of the reinsurance agreements, reinsurance recoverables offset, in part, NLC’s gross liabilities. Effective July 1, 2017, NLC renewed its catastrophic excess of loss reinsurance coverage for a two year period. At December 31, 2017, NLC had catastrophic excess of loss reinsurance coverage of losses per event in excess of $8 million retention by NLIC and $1.5 million retention by ASIC. ASIC maintained an underlying layer of coverage, providing $6.5 million in excess of its $1.5 million retention to bridge to the primary program. The reinsurance in excess of $8 million is comprised of three layers of protection: $17 million in excess of $8 million retention and/or loss; $30 million in excess of $25 million loss; and $50 million in excess of $55 million loss. NLIC and ASIC retain no participation in any of the layers, beyond the first $8 million and $1.5 million, respectively. At December 31, 2017, total retention for any one catastrophe that affects both NLIC and ASIC was limited to $8 million in the aggregate. Effective January 1, 2018, NLC renewed its underlying excess of loss contract that provides $10.0 million aggregate coverage in excess of NLC’s per event retention of $1.0 million and aggregate retention of $17.5 million for sub-catastrophic events. As of January 1, 2018, NLC retains 17.5% participation in this coverage, up from no participation during 2017. During August and September 2017, NLC experienced losses related to Hurricane Harvey in excess of retention. As of December 31, 2017, the total gross losses and LAE incurred associated with Hurricane Harvey was $18.2 million. However, because the losses exceeded retention, net exposure to NLC was $3.4 million retention and $1.4 million in reinstatement premiums. During 2016 and 2015, NLC experienced no significant catastrophes that resulted in losses in excess of retention at NLIC or ASIC. There were 16 tornado, hail and wind storms during 2017 that fit the coverage criteria for the underlying excess of loss contract providing aggregate coverage for sub-catastrophic events. These events had a gross incurred loss total of $38.1 million, which developed a reinsured recoverable of $4.6 million at the 100% subscription level. During 2016, the 15 tornado, hail and wind storms that exceeded retention had incurred losses of $44.0 million, which developed a reinsured recoverable of $10.0 million at the 100% subscription level. During 2015, the 12 tornado, hail and wind storms that exceeded retention had incurred losses of $35.3 million, which developed a reinsured recoverable of $9.1 million at the 91% subscription level. These losses have no effect on net loss and LAE incurred beyond retention because the catastrophic events exceeded retention levels and are fully recoverable. Any losses beyond the reinsurance coverage limits of $10.0 million for 2016 and $9.1 million for 2015 are retained by the Company and have an effect on the net loss and LAE incurred. The primary financial effect beyond the reinsurance retention is additional reinstatement premium payable to the affected reinsurers. In addition to the $1.4 million in reinstatement premiums noted above related to Hurricane Harvey in 2017, reinstatement premiums during 2017, 2016 and 2015 of $1.4 million, $0.6 million and $0.2 million, respectively, were recorded as ceded premiums. |
Segment and Related Information
Segment and Related Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment and Related Information | |
Segment and Related Information | 30. Segment and Related Information The Company currently has four reportable business segments that are organized primarily by the core products offered to the segments’ respective customers. These segments reflect the manner in which operations are managed and the criteria used by the Company’s chief operating decision maker function to evaluate segment performance, develop strategy and allocate resources. The chief operating decision maker function consists of the Company’s President and Co-Chief Executive Officer and the Company’s Vice Chairman and Co-Chief Executive Officer. The banking segment includes the operations of the Bank, the broker-dealer segment includes the operations of Securities Holdings, the mortgage origination segment is composed of PrimeLending, and the insurance segment is composed of NLC. Corporate includes certain activities not allocated to specific business segments. These activities include holding company financing and investing activities, merchant banking investment opportunities, and management and administrative services to support the overall operations of the Company including, but not limited to, certain executive management, corporate relations, legal, finance and acquisition costs. Balance sheet amounts not discussed previously and the elimination of intercompany transactions are included in “All Other and Eliminations.” The following tables present certain information about reportable business segment revenues, operating results, goodwill and assets (in thousands). Mortgage All Other and Hilltop Year Ended December 31, 2017 Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated Net interest income (expense) $ 366,581 $ 43,735 $ (915) $ 2,861 $ (10,069) $ 19,555 $ 421,748 Provision for loan losses 14,073 198 — — — — 14,271 Noninterest income 59,904 368,421 632,388 151,382 12,798 (19,829) 1,205,064 Noninterest expense 248,404 347,314 581,899 158,354 33,983 (699) 1,369,255 Income (loss) before income taxes $ 164,008 $ 64,644 $ 49,574 $ (4,111) $ (31,254) $ 425 $ 243,286 Mortgage All Other and Hilltop Year Ended December 31, 2016 Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated Net interest income (expense) $ 363,083 $ 31,172 $ (11,589) $ 3,164 $ (7,257) $ 18,958 $ 397,531 Provision for loan losses 40,673 (53) — — — — 40,620 Noninterest income 52,579 385,766 704,126 164,841 2 (20,349) 1,286,965 Noninterest expense 244,715 377,524 614,741 146,601 29,938 (1,048) 1,412,471 Income (loss) before income taxes $ 130,274 $ 39,467 $ 77,796 $ 21,404 $ (37,193) $ (343) $ 231,405 Mortgage All Other and Hilltop Year Ended December 31, 2015 Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated Net interest income (expense) $ 369,493 $ 32,971 $ (10,423) $ 3,187 $ (5,109) $ 18,464 $ 408,583 Provision for loan losses 12,795 (80) — — — — 12,715 Noninterest income 62,639 334,495 597,163 171,185 81,289 (19,129) 1,227,642 Noninterest expense 243,926 367,812 539,257 158,720 31,926 (1,625) 1,340,016 Income (loss) before income taxes $ 175,411 $ (266) $ 47,483 $ 15,652 $ 44,254 $ 960 $ 283,494 Mortgage All Other and Hilltop Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated December 31, 2017 Goodwill $ 207,741 $ 7,008 $ 13,071 $ 23,988 $ — $ — $ 251,808 Total assets $ 9,558,718 $ 3,394,911 $ 1,937,327 $ 291,639 $ 2,106,978 $ (3,923,787) $ 13,365,786 December 31, 2016 Goodwill $ 207,741 $ 7,008 $ 13,071 $ 23,988 $ — $ — $ 251,808 Total assets $ 9,527,518 $ 2,777,849 $ 2,042,458 $ 347,252 $ 2,032,749 $ (3,989,764) $ 12,738,062 |
Earnings per Common Share
Earnings per Common Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings per Common Share | |
Earnings per Common Share | 31. Earnings per Common Share The following table presents the computation of basic and diluted earnings per common share (in thousands, except per share data). Year Ended December 31, 2017 2016 2015 Basic earnings per share: Income attributable to Hilltop $ 132,544 $ 145,894 $ 209,119 Less: income applicable to participating shares — (6) (952) Net earnings available to Hilltop common stockholders $ 132,544 $ 145,888 $ 208,167 Weighted average shares outstanding - basic 97,137 98,404 99,074 Basic earnings per common share $ 1.36 $ 1.48 $ 2.10 Diluted earnings per share: Income attributable to Hilltop $ 132,544 $ 145,894 $ 209,119 Weighted average shares outstanding - basic 97,137 98,404 99,074 Effect of potentially dilutive securities 216 225 888 Weighted average shares outstanding - diluted 97,353 98,629 99,962 Diluted earnings per common share $ 1.36 $ 1.48 $ 2.09 |
Condensed Financial Statements
Condensed Financial Statements of Parent | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Statements of Parent | |
Condensed Financial Statements of Parent | 32. Condensed Financial Statements of Parent Condensed financial statements of Hilltop (parent only) follow (in thousands). Investments in subsidiaries are determined using the equity method of accounting. Condensed Statements of Operations and Comprehensive Income Year Ended December 31, 2017 2016 2015 Dividends from bank and bank holding company subsidiaries $ 53,000 $ 87,826 $ — Dividends from nonbank subsidiaries 41,500 — — Investment income 312 382 445 Interest expense 10,381 7,639 5,554 Bargain purchase gain — — 81,289 Other income 12,798 2 — General and administrative expense 33,983 29,938 31,926 Income before income taxes, equity in undistributed earnings of subsidiaries and preferred stock activity 63,246 50,633 44,254 Income tax benefit (15,577) (10,077) (9,562) Equity in undistributed earnings of subsidiaries 54,321 87,234 158,763 Net income $ 133,144 $ 147,944 $ 212,579 Other comprehensive income (loss), net (879) (2,144) 1,978 Comprehensive income $ 132,265 $ 145,800 $ 214,557 Condensed Balance Sheets December 31, 2017 2016 2015 Assets: Cash and cash equivalents $ 96,764 $ 118,290 $ 55,542 Investment in subsidiaries: Bank and bank holding company subsidiaries 1,340,093 1,304,917 1,271,581 Nonbank subsidiaries 603,631 609,539 545,502 Other assets 66,490 3 32,922 Total assets $ 2,106,978 $ 2,032,749 $ 1,905,547 Liabilities and Stockholders’ Equity: Accounts payable and accrued expenses $ 46,442 $ 13,929 $ 20,419 Notes payable 148,455 148,311 148,174 Stockholders’ equity 1,912,081 1,870,509 1,736,954 Total liabilities and stockholders’ equity $ 2,106,978 $ 2,032,749 $ 1,905,547 Condensed Statements of Cash Flows Year Ended December 31, 2017 2016 2015 Operating Activities: Net income $ 133,144 $ 147,944 $ 212,579 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in undistributed earnings of subsidiaries (54,321) (87,234) (158,763) Bargain purchase gain — — (81,289) Deferred income taxes 2,511 (2,063) 12,429 Other, net (57,380) 20,812 2,443 Net cash provided by (used in) operating activities 23,954 79,459 (12,601) Investing Activities: Reimbursement from nonbank subsidiaries — 6,000 — Capital contribution to bank and bank holding company subsidiaries (10,000) — — Capital contribution to nonbank subsidiaries — (20,000) — Cash paid for acquisition — — (78,217) Other, net (4,241) (98) (31) Net cash used in investing activities (14,241) (14,098) (78,248) Financing Activities: Proceeds from issuance of common stock — 4,139 — Payments to repurchase common stock (27,388) — (30,028) Proceeds from issuance of notes payable — — 148,078 Dividends paid on common stock (23,140) (5,801) — Dividends paid on preferred stock — — (3,539) Redemption of preferred stock — — (114,068) Other, net 19,289 (951) — Net cash provided by (used in) financing activities (31,239) (2,613) 443 Net change in cash and cash equivalents (21,526) 62,748 (90,406) Cash and cash equivalents, beginning of year 118,290 55,542 145,948 Cash and cash equivalents, end of year $ 96,764 $ 118,290 $ 55,542 Supplemental Schedule of Non-Cash Activities: Common stock issued in acquisition $ — $ — $ 200,626 During 2017, Hilltop used $47.1 million in cash to repurchase common stock associated with the resolution of the contingency on appraisal proceedings from the SWS Merger. This activity is reflected in the other line item within operating activities in the above condensed statement of cash flows of Hilltop. Additionally, certain assets and liabilities, including $20.6 million of cash, were transferred from PCC to Hilltop in 2017 due to organizational changes. This activity is reflected in the other line item within financing activities in the above condensed statement of cash flows of Hilltop. During 2015, as further discussed in Note 13 to the consolidated financial statements, Hilltop completed an offering of $150.0 million aggregate principal amount of its 5% Senior Notes due 2025 and used the net proceeds of the offering to redeem all Hilltop’s outstanding Series B Preferred Stock at an aggregate liquidation value of $114.1 million, plus accrued but unpaid dividends of $0.4 million, and utilized the remainder for general corporate purposes. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 2017 | |
Recently Issued Accounting Standards | |
Recently Issued Accounting Standards | 33. Recently Issued Accounting Standards In February 2018, FASB issued Accounting Standards Update (“ASU”) 2018-02 to help organizations address certain stranded income tax effects in accumulated other comprehensive income (“AOCI”) resulting from the Tax Legislation. The amendment provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the changes in the U.S. federal corporate income tax rate in the Tax Legislation (or portion thereof) is recorded. The amendment also includes disclosure requirements regarding the issuer’s accounting policy for releasing income tax effects from AOCI. The amendment is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted, and organizations should apply the provisions of the amendment either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Legislation is recognized. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements. In May 2017, FASB issued ASU 2017-09 which provides clarity and reduces both diversity in practice and cost and complexity associated with changes to the terms or conditions of a share-based payment award and, specifically, which changes require an entity to apply modification accounting. The amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company has adopted the amendments as of January 1, 2018, which are expected to have a significant effect on the Company’s consolidated financial statements. In April 2017, FASB issued ASU 2017-08 which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The amendment is effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2018, using the modified retrospective transition method. As permitted within the amendment, the Company elected to early adopt and apply the provisions of this amendment as of January 1, 2017. This adoption had no effect on the Company’s consolidated financial statements. In January 2017, FASB issued ASU 2017-01 which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment is effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017, using the prospective method. The Company has adopted the amendments as of January 1, 2018, and will prospectively apply its provisions. In October 2016, FASB issued ASU No. 2016-16 which addresses improvement in accounting for income tax consequences of intra-equity transfers of assets other than inventory. The amendment requires that an entity recognize the income tax consequences of the intra-equity transfer of an asset other than inventory when the transfer occurs. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017, using the modified retrospective transition method. The Company has adopted the amendments as of January 1, 2018, which are not expected to have a significant effect on the Company’s consolidated financial statements. In August 2016, FASB issued ASU 2016-15 to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017 using a retrospective transition method. The Company has adopted the amendments as of January 1, 2018, which are not expected to have a significant effect on the Company’s consolidated financial statements. In June 2016, FASB issued ASU 2016-13 which sets forth a “current expected credit loss” (CECL) model which requires entities to measure all credit losses expected over the life of an exposure (or pool of exposures) for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. The amendment also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2019 with a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption. The Company does not intend to adopt the provisions of the amendment early. The Company has formed a cross-functional implementation team to evaluate the provisions of the amendment and the impact on its future consolidated financial statements through the identification of data requirements and determination of necessary modifications to its existing credit loss estimation methodologies, systems and processes. The magnitude of the change in allowance for loan losses will depend on, among other things, the portfolio composition and quality at the adoption date, as well as economic conditions and forecasts at that time. In February 2016, FASB issued ASU 2016-02 related to leases. The new standard is intended to increase transparency and comparability among organizations and require lessees to record a right-to-use asset and liability representing the obligation to make lease payments for long-term leases. Accounting by lessors will remain largely unchanged. The amendments are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Adoption will require a modified retrospective transition where the lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented. Early adoption is permitted, however, the Company does not intend to adopt the provisions of the amendment early. The Company’s implementation efforts are on-going, including the installation of a software solution, which will aid in determining the magnitude of the increases in assets and liabilities and their impact on the consolidated financial statements. The Company expects to recognize lease liabilities and corresponding right-of-use assets (at their present value) related to predominantly all of the future minimum lease payments required under operating leases as disclosed in Note 18 to the consolidated financial statements. However, the population of contracts subject to balance sheet recognition and their initial measurement remains under evaluation. In January 2016, FASB issued ASU 2016-01 related to financial instruments. This amendment requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The amendment also impacts financial liabilities under the Fair Value Option and the presentation and disclosure requirements for financial instruments and modifies the required process used to evaluate deferred tax assets on available for sale securities. The amendment is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company has adopted the amendment as of January 1, 2018, which resulted in $21.2 million of available for sale equity securities being reclassified within the consolidated balance sheet consistent with the provisions of the new amendment, while certain other equity investments of approximately $40 million will continue to be included in other assets within the consolidated balance sheet. The adoption of the amendment resulted in approximately $3 million being reclassified from accumulated other comprehensive income to retained earnings, representing an increase to retained earnings as of January 1, 2018. All subsequent changes in fair value related to these equity investments will be recognized in net income. Additionally, the enhanced disclosures required by the new standard will be included in subsequent filings, including the disclosure of the fair value of the loan portfolio using and exit price method instead of the current discounted cash flow method. These disclosure changes are not expected to have a significant effect on the Company’s consolidated financial statements. In July 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 by one year, to clarify the principles for recognizing revenue from contracts with customers. The FASB has subsequently issued several amendments to the standard, including clarification of principal versus agent considerations, narrow scope improvements and other technical corrections. The amendments outline a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendments also require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017 and may be adopted using either a full retrospective transition method or a modified, cumulative-effect approach wherein the guidance is applied only to existing contracts as of the date of initial application and to new contracts entered into thereafter. The Company has adopted the amendments as of January 1, 2018 using the cumulative-effect approach. The Company gathered an inventory of contracts with customers and performed an in-depth assessment of these contracts for evaluation under the amendments. A majority of the Company’s revenues are not subject to the new guidance. The revenue recognition policies within the Company’s broker-dealer segment were the most affected upon adoption. Specifically, the new guidance required changes to the principal versus agent conclusion for certain advisory and underwriting revenues and expenses which, as of January 1, 2018, are recorded on a gross basis while legacy guidance required recognizing these revenues net of the related expenses. Conversely, certain contract costs related to clearing and retail operations are now netted against the revenues while the legacy guidance required recognizing these revenues and expenses on a gross basis. As the measurement and timing of revenue recognition was not affected for any of the Company’s revenue streams, the implementation of the new guidance had no impact on opening retained earnings as of January 1, 2018. The enhanced disclosures required by the new standard are being developed and will be included in subsequent filings in accordance with the new standard, but are not expected to have a significant effect on the Company’s consolidated financial statements. |
Selected Quarterly Financial In
Selected Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Selected Quarterly Financial Information (Unaudited) | |
Selected Quarterly Financial Information (Unaudited) | 34 . Selected Quarterly Financial Information (Unaudited) Selected quarterly financial information is summarized as follows (in thousands, except per share data). Year Ended December 31, 2017 Fourth Third Second First Full Quarter Quarter Quarter Quarter Year Interest income $ 133,665 $ 128,944 $ 136,306 $ 108,241 $ 507,156 Interest expense 24,973 23,964 20,330 16,141 85,408 Net interest income 108,692 104,980 115,976 92,100 421,748 Provision for loan losses 5,453 1,260 5,853 1,705 14,271 Noninterest income 290,456 298,477 344,692 271,439 1,205,064 Noninterest expense 328,670 353,842 366,251 320,492 1,369,255 Income before income taxes 65,025 48,355 88,564 41,342 243,286 Income tax expense 51,350 18,003 25,754 15,035 110,142 Net income 13,675 30,352 62,810 26,307 133,144 Less: Net income attributable to noncontrolling interest 247 146 334 (127) 600 Income attributable to Hilltop $ 13,428 $ 30,206 $ 62,476 $ 26,434 $ 132,544 Earnings per common share: Basic $ 0.14 $ 0.31 $ 0.64 $ 0.27 $ 1.36 Diluted $ 0.14 $ 0.31 $ 0.63 $ 0.27 $ 1.36 Cash dividends declared per common share $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.24 Year Ended December 31, 2016 Fourth Third Second First Full Quarter Quarter Quarter Quarter Year Interest income $ 118,335 $ $ $ 108,154 $ 455,954 Interest expense 14,211 16,093 13,805 14,314 58,423 Net interest income 104,124 99,170 93,840 397,531 Provision for loan losses 4,347 3,990 28,876 3,407 40,620 Noninterest income 309,127 277,375 Noninterest expense 355,784 325,189 Income before income taxes 53,120 85,505 50,161 42,619 231,405 Income tax expense 17,582 33,017 18,439 14,423 83,461 Net income 35,538 52,488 31,722 28,196 147,944 Less: Net income attributable to noncontrolling interest 217 556 648 629 2,050 Income attributable to Hilltop $ 35,321 $ 51,932 $ 31,074 $ 27,567 $ 145,894 Earnings per common share: Basic $ 0.36 $ 0.53 $ 0.32 $ 0.28 $ 1.48 Diluted $ 0.36 $ 0.53 $ 0.32 $ 0.28 $ 1.48 Cash dividends declared per common share $ 0.06 $ — $ — $ — $ 0.06 |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Event. | |
Subsequent Event | 35. Subsequent Event On February 13, 2018, the Company entered into a definitive agreement to acquire privately-held, Houston-based The Bank of River Oaks (“BORO”) in an all-cash transaction. Under the terms of the definitive agreement, the Company has agreed to pay cash in the aggregate amount of $85 million to the shareholders and option holders of BORO. As of December 31, 2017, BORO had unaudited total assets, gross loans and deposits of approximately $454 million, $344 million and $406 million, respectively. The transaction is subject to customary closing conditions, including regulatory approvals and approval by shareholders of BORO, and is expected to close during the third quarter of 2018. |
Schedule I - Insurance Incurred
Schedule I - Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 12 Months Ended |
Dec. 31, 2017 | |
Schedule Of Insurance Incurred And Cumulative Paid Losses And Allocated Loss Adjustment Expenses, Net Of Reinsurance | |
Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses | Schedule I – Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (in thousands) Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance December 31, 2017 Total of Incurred But Not Reported Reserves Plus Cumulative December 31, 2017 Development Number of Accident 2013 2014 2015 2016 2017 On Reported Reported Year Unaudited Unaudited Unaudited Unaudited Unaudited Claims Claims 2013 $ 107,793 $ 108,951 $ 111,006 $ 111,011 $ 111,121 $ 8 15,687 2014 83,784 85,037 84,221 84,074 119 13,099 2015 89,646 88,477 87,262 591 15,016 2016 84,771 85,189 2,622 21,277 2017 88,079 4,282 20,927 $ 455,725 Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance December 31, 2017 Accident 2013 2014 2015 2016 2017 Year Unaudited Unaudited Unaudited Unaudited Unaudited 2013 $ 94,238 $ 104,938 $ 108,099 $ 109,662 $ 110,813 2014 70,831 79,713 81,684 83,346 2015 71,820 82,940 85,507 2016 71,543 81,682 2017 77,855 Total $ 439,203 All outstanding reserves prior to 2013, net of reinsurance 948 Reserve for unpaid losses and allocated loss adjustment expenses, net of reinsurance $ 17,470 |
Summary of Significant Accoun46
Summary of Significant Accounting and Reporting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting and Reporting Policies | |
Nature of Operations | Nature of Operations Hilltop Holdings Inc. (“Hilltop” and, collectively with its subsidiaries, the “Company”) is a financial holding company registered under the Bank Holding Company Act of 1956. The Company’s primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank (the “Bank”). In addition, the Company provides an array of financial products and services through its broker-dealer, mortgage origination and insurance subsidiaries. The Company, headquartered in Dallas, Texas, provides its products and services through three primary business units, PlainsCapital Corporation (“PCC”), Hilltop Securities Holdings LLC (“Securities Holdings”) and National Lloyds Corporation (“NLC”). 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. On January 1, 2015, Hilltop completed its acquisition of SWS Group, Inc. (“SWS”) in a stock and cash transaction (the "SWS Merger"), whereby SWS’s broker-dealer subsidiaries, Southwest Securities, Inc. and SWS Financial Services, Inc., became subsidiaries of Securities Holdings, and SWS’s banking subsidiary, Southwest Securities, FSB (“SWS FSB”), was merged into the Bank. On October 5, 2015, Southwest Securities, Inc. and SWS Financial Services, Inc. were renamed “Hilltop Securities Inc.” (“Hilltop Securities”) and “Hilltop Securities Independent Network Inc.” (“HTS Independent Network”), respectively. On October 22, 2015, the Financial Industry Regulatory Authority (“FINRA”) granted approval to combine First Southwest Company, LLC (“FSC”) and Hilltop Securities, subject to customary conditions. FSC, Hilltop Securities and HTS Independent Network operated as separate broker-dealers, under coordinated leadership from the date of the SWS Merger until January 22, 2016, when FSC was merged into Hilltop Securities to form a combined firm operating under the “Hilltop Securities” name. The term “Hilltop Broker-Dealers” is used to refer to FSC, Hilltop Securities and HTS Independent Network prior to January 22, 2016 and Hilltop Securities and HTS Independent Network after such date. |
Basis of Presentation | Basis of Presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates regarding the allowance for loan losses, the fair values of financial instruments, the amounts receivable from the Federal Deposit Insurance Corporation (the “FDIC”) under loss-share agreements (the “FDIC Indemnification Asset”), reserves for losses and loss adjustment expenses (“LAE”), the mortgage loan indemnification liability, and the potential impairment of assets are particularly subject to change. The Company has applied its critical accounting policies and estimation methods consistently in all periods presented in these consolidated financial statements. Hilltop owns 100% of the outstanding stock of PCC. PCC owns 100% of the outstanding stock of the Bank and 100% of the membership interest in PlainsCapital Equity, LLC, a merchant bank utilized to facilitate investments in companies engaged in non-financial activities. The Bank owns 100% of the outstanding stock of PrimeLending, a PlainsCapital Company (“PrimeLending”). PrimeLending owns a 100% membership interest in PrimeLending Ventures Management, LLC (“Ventures Management”), which holds an ownership interest in and is the managing member of certain affiliated business arrangements (“ABAs”). PCC also owns 100% of the outstanding common securities of PCC Statutory Trusts I, II, III and IV (the “Trusts”), which are not included in the consolidated financial statements under the requirements of the Variable Interest Entities Subsections of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), because the primary beneficiaries of the Trusts are not within the consolidated group. Hilltop has a 100% membership interest in Securities Holdings, which operates through its wholly-owned subsidiaries, Hilltop Securities, HTS Independent Network and First Southwest Asset Management, LLC. Hilltop Securities is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and FINRA and a member of the New York Stock Exchange (“NYSE”), HTS Independent Network is an introducing broker-dealer that is also registered with the SEC and FINRA, and First Southwest Asset Management, LLC, a wholly-owned subsidiary of First Southwest Holdings, LLC (“First Southwest”), is a registered investment adviser under the Investment Advisers Act of 1940. As discussed above, prior to January 22, 2016, Securities Holdings’ subsidiaries also included FSC, First Southwest’s principal subsidiary and formerly a broker-dealer registered with the SEC and FINRA and a member of the NYSE. Hilltop also owns 100% of NLC, which operates through its wholly owned subsidiaries, National Lloyds Insurance Company (“NLIC”) and American Summit Insurance Company (“ASIC”). The consolidated financial statements include the accounts of the above-named entities. Intercompany transactions and balances have been eliminated. Noncontrolling interests have been recorded for minority ownership in entities that are not wholly owned and are presented in compliance with the provisions of Noncontrolling Interest in Subsidiary Subsections of the ASC. Certain reclassifications have been made to the prior period consolidated financial statements to conform with the current period presentation. In preparing these consolidated financial statements, subsequent events were evaluated through the time the financial statements were issued. Financial statements are considered issued when they are widely distributed to all stockholders and other financial statement users, or filed with the SEC |
Acquisition Accounting | Acquisition Accounting Acquisitions are accounted for under the acquisition method of accounting. Purchased assets, including identifiable intangible assets, and assumed liabilities are recorded at their respective acquisition date fair values. If the fair value of net assets purchased exceeds the consideration given, a bargain purchase gain is recognized. If the consideration given exceeds the fair value of the net assets received, goodwill is recognized. |
Securities Purchased Under Agreements to Resell | Securities Purchased Under Agreements to Resell Securities purchased under agreements to resell (reverse repurchase agreements or reverse repos) are treated as collateralized financings and are carried at the amounts at which the securities will subsequently be resold as specified in the agreements. The Company is in possession of collateral with a fair value equal to or in excess of the contract amounts. |
Securities | Securities Management classifies securities at the time of purchase and reassesses such designation at each balance sheet date. Securities held for resale to facilitate principal transactions with customers are classified as trading, and are carried at fair value, with changes in fair value reflected in the consolidated statements of operations. Hilltop reports interest income on trading securities as interest income on securities and other changes in fair value as other noninterest income. Securities held but not intended to be held to maturity or on a long-term basis are classified as available for sale. Securities included in this category are those that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk, and other factors related to interest rate and resultant prepayment risk changes. Securities available for sale are carried at fair value. Unrealized holding gains and losses on securities available for sale, net of taxes, are reported in other comprehensive income (loss) until realized. Premiums and discounts are recognized in interest income using the effective interest method and consider any optionality that may be embedded in the security. Purchases and sales (and related gain or loss) of securities are recorded on the trade date, based on specific identification. Declines in the fair value of available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the other-than-temporary impairment (“OTTI”) is related to credit losses. The amount of the OTTI related to other factors is recognized in other comprehensive income (loss). In estimating OTTI, management considers in developing its best estimate of cash flows, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the historic and implied volatility of the security, (iv) failure of the issuer to make scheduled interest payments and (v) changes to the rating of the security by a rating agency. |
Loans Held for Sale | Loans Held for Sale Loans held for sale consist primarily of single-family residential mortgages funded through PrimeLending. These loans are generally on the consolidated balance sheet between 30 and 45 days. Substantially all mortgage loans originated by PrimeLending are sold to various investors in the secondary market, the majority with servicing released. Mortgage loans held for sale are carried at fair value in accordance with the provisions of the Fair Value Option Subsections of the ASC (the “Fair Value Option”). Changes in the fair value of the loans held for sale are recognized in earnings and fees and costs associated with origination are recognized as incurred. The specific identification method is used to determine realized gains and losses on sales of loans, which are reported as net gains (losses) in noninterest income. Loans sold are subject to certain indemnification provisions with investors, including the repurchase of loans sold and repayment of certain sales proceeds to investors under certain conditions. In addition, certain mortgage loans guaranteed by U.S. Government agencies and sold into Government National Mortgage Association (“GNMA”) pools may, under certain conditions specified in the government programs, become subject to repurchase by PrimeLending. Such loans subject to repurchase no longer qualify for sale accounting and are reported as loans held for sale in the consolidated balance sheets. |
Loans | Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the amount of unpaid principal reduced by unearned income, net unamortized deferred fees and an allowance for loan losses. Unearned income on installment loans and interest on other loans is recognized using the effective interest method. Net fees received for providing loan commitments and letters of credit that result in loans are deferred and amortized to interest income over the life of the related loan, beginning with the initial borrowing. Net fees on commitments and letters of credit that are not expected to be funded are amortized to noninterest income over the commitment period. Income on direct financing leases is recognized on a basis that achieves a constant periodic rate of return on the outstanding investment. Impaired loans include non-accrual loans, troubled debt restructurings, purchased credit impaired (“PCI”) loans and partially charged-off loans. The accrual of interest on impaired loans is discontinued when, in management’s opinion, there is a clear indication that the borrower’s cash flow may not be sufficient to meet principal and interest payments, which is generally when a loan is 90 days past due unless the asset is both well secured and in the process of collection. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is charged against income. If the ultimate collectability of principal, wholly or partially, is in doubt, any payment received on a loan on which the accrual of interest has been suspended is applied to reduce principal to the extent necessary to eliminate such doubt. Once the collection of the remaining recorded loan balance is fully expected, interest income is recognized on a cash basis. The Bank originates loans to customers primarily in Texas. Although the Bank has diversified loan and leasing portfolios and, generally, holds collateral against amounts advanced to customers, its debtors’ ability to honor their contracts is substantially dependent upon the general economic conditions of the region and of the industries in which its debtors operate, which consist primarily of agribusiness, construction, energy, real estate and wholesale/retail trade. PrimeLending originates mortgage loans to customers in its offices, which are located throughout the United States. Substantially all mortgage loans originated by PrimeLending are sold to various investors in the secondary market, the majority with servicing released, although PrimeLending does retain servicing in certain circumstances. The Hilltop Broker-Dealers make loans to customers and correspondents through margin transactions originated by both employees and independent retail representatives throughout the United States. The Hilltop Broker-Dealers control or controlled risk by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines, which may vary based upon market conditions. Securities owned by customers and held as collateral for margin loans are not included in the consolidated financial statements. Management has defined the loans acquired in a business combination as acquired loans. Acquired loans are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan losses. At acquisition, acquired loans are segregated between those considered to be credit impaired and those without credit impairment at acquisition. To make this determination, management considered such factors as past due status, non-accrual status and credit risk ratings. The fair value of acquired performing loans was determined by discounting expected cash flows, both principal and interest, at prevailing market interest rates. The difference between the fair value and principal balances due at acquisition date, the fair value discount, is accreted into income over the estimated life of each loan. Loans acquired in the FDIC-assisted transaction whereby the Bank acquired certain assets and assumed certain liabilities of Edinburg, Texas-based First National Bank (“FNB”) on September 13, 2013 (the “FNB Transaction”) that are subject to a loss-share agreement are referred to as “covered loans” and reported separately in the consolidated balance sheets. Covered loans are reported exclusive of the cash flow reimbursements that may be received from the FDIC. Covered loans are discussed in more detail within Note 6 to the consolidated financial statements. PCI loans acquired by the Company upon completion of the merger with PCC (the “PlainsCapital Merger”) are accounted for on an individual loan basis, while PCI loans acquired in each of the FNB Transaction and SWS Merger are accounted for in pools as well as on an individual loan basis. The Company has established under its PCI accounting policy a framework to aggregate certain acquired loans into various loan pools based on a minimum of two layers of similar risk characteristics for the purpose of determining their respective fair values as of their acquisition dates, and for applying the subsequent recognition and measurement provisions for income accretion and impairment testing. The similar risk characteristics used for the pooling of the FNB and SWS PCI loans are risk grade and loan collateral type. PCI loans showed evidence of credit deterioration that makes it probable that all contractually required principal and interest payments will not be collected. Their fair value was initially based on an estimate of cash flows, both principal and interest, expected to be collected, discounted at prevailing market rates of interest. Management estimated cash flows using key assumptions such as default rates, loss severity rates assuming default, prepayment speeds and estimated collateral values. The excess of cash flows expected to be collected from a loan or pool over its estimated fair value at acquisition is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan or pool. The excess of total contractual cash flows over the cash flows expected to be received at acquisition is referred to as the nonaccretable difference. Subsequent to acquisition, management must update these estimates of cash flows expected to be collected at each reporting date. These updates require the continued use of key assumptions and estimates, similar to those used in the initial estimate of fair value. The Bank accretes the discount for PCI loans for which it can predict the timing and amount of cash flows. PCI loans for which a discount is accreted are reported as performing loans. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses inherent in the existing portfolio of loans at the balance sheet date. The allowance for loan losses includes allowance allocations calculated in accordance with the regulatory Interagency Policy Statement on the Allowance for Loan and Lease Losses and the Receivables and Contingencies Topics of the ASC. The level of the allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions, and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Bank’s control, including the performance of the Bank’s loan portfolio, the economy and changes in interest rates. The Bank’s allowance for loan losses consists of three elements: (i) specific valuation allowances established for probable losses on individually impaired loans; (ii) general historical valuation allowances calculated based on historical loan loss experience for homogenous loans with similar collateral; and (iii) valuation allowances to adjust general reserves based on current economic conditions and other qualitative risk factors both internal and external to the Bank. The Bank’s methodology regarding the calculation of the allowance for loan losses is discussed in more detail within Note 5 to the consolidated financial statements. |
Broker-Dealer and Clearing Organization Transactions | Broker-Dealer and Clearing Organization Transactions Amounts recorded in broker-dealer and clearing organization receivables and payables include securities lending activities, as well as amounts related to securities transactions for either customers of the Hilltop Broker-Dealers or for the accounts of the Hilltop Broker-Dealers. Securities-borrowed and securities-loaned transactions are generally reported as collateralized financings. Securities-borrowed transactions require the Hilltop Broker-Dealers to deposit cash, letters of credit, or other collateral with the lender. With respect to securities loaned, the Hilltop Broker-Dealers receive collateral in the form of cash or other assets in an amount generally in excess of the market value of securities loaned. The Hilltop Broker-Dealers monitor the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as necessary. Interest income and interest expense associated with collateralized financings is included in the accompanying consolidated statements of operations. |
Insurance Premiums Receivable | Insurance Premiums Receivable Insurance premiums receivable include premiums written and not yet collected. NLC routinely evaluates the receivable balance to determine if an allowance for uncollectible amounts is necessary. At December 31, 2017 and 2016, NLC determined that no valuation allowance was necessary. |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs Costs of acquiring insurance vary with, and are primarily related to, the successful acquisition of new and renewal business, primarily consisting of commissions, premium taxes and underwriting expenses, and are deferred and amortized over the terms of the policies or reinsurance treaties to which they relate. Proceeds from reinsurance transactions that represent recovery of acquisition costs reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense in proportion to net revenue recognized. Future investment income is considered in determining the recoverability of deferred policy acquisition costs. NLC regularly reviews the categories of acquisition costs that are deferred and assesses the recoverability of this asset. A premium deficiency and a corresponding charge to income is recognized if the sum of the expected loss and LAE, unamortized policy acquisition costs, and maintenance costs exceed related unearned insurance premiums and anticipated investment income. At December 31, 2017 and 2016, there was no premium deficiency. |
Reinsurance | Reinsurance In the normal course of business, NLC seeks to reduce the loss that may arise from catastrophes or other events that could cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers. Amounts recoverable from reinsurers are estimated in a manner consistent with the reinsured policy. NLC routinely evaluates the receivable balance to determine if any uncollectible balances exist. Net insurance premiums earned, losses and LAE, and policy acquisition and other underwriting expenses are reported net of the amounts related to reinsurance ceded to other companies. Amounts recoverable from reinsurers related to the portions of the liability for losses and LAE and unearned insurance premiums ceded to them are included in other assets within the consolidated balance sheets. Reinsurance assumed from other companies, including assumed premiums written and earned, and losses and LAE, is accounted for in the same manner as direct insurance written. |
Premises and Equipment | Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation and amortization computed principally on the straight-line method over the estimated useful lives of the assets, which range between 3 and 40 years. Gains or losses on disposals of premises and equipment are included in results of operations. |
Other Real Estate Owned | Other Real Estate Owned Real estate acquired through foreclosure (“OREO”) is included in other assets within the consolidated balance sheets and is carried at management’s estimate of fair value, less estimated cost to sell. Any excess of recorded investment over fair value, less cost to sell, is charged against either the allowance for loan losses or the related PCI pool discount when property is initially transferred to OREO. Subsequent to the initial transfer to OREO, downward valuation adjustments are charged against earnings. Valuation adjustments, revenue and expenses from operations of the properties and resulting gains or losses on sale are included within the consolidated statements of operations in other noninterest income or expense, as appropriate. Acquired OREO subject to FDIC loss-share agreements is referred to as “covered OREO” and reported separately in the consolidated balance sheets. Covered OREO is reported exclusive of expected reimbursement cash flows from the FDIC. Foreclosed covered loan collateral is transferred into covered OREO at the collateral’s fair value, less selling costs. Covered OREO was initially recorded at its estimated fair value based on similar market comparable valuations, less estimated selling costs. Subsequently, loan collateral transferred to OREO is recorded at its net realizable value. Any subsequent valuation adjustments due to declines in fair value of the covered OREO will be charged to noninterest expense, while any recoveries of previous valuation decreases will be credited to noninterest expense. |
FDIC Indemnification Asset | FDIC Indemnification Asset The Company has elected to account for the FDIC Indemnification Asset in accordance with the Business Combination Topic of the ASC. The FDIC Indemnification Asset is initially recorded at fair value, based on the discounted value of expected future cash flows under the loss-share agreements. The difference between the present value and the undiscounted cash flows the Bank expects to collect from the FDIC will be accreted into noninterest income or amortized into noninterest expense within the consolidated statements of operations over the life of the FDIC Indemnification Asset. The FDIC Indemnification Asset is reviewed quarterly and the accretion rate is adjusted for changes in the timing of cash flows expected to be collected from the FDIC. Cumulative net losses over the life of the loss-share agreements of less than $240.4 million will reduce the value of the FDIC Indemnification Asset. Any amortization of changes in value of the FDIC Indemnification Asset is limited to the contractual term of the loss-share agreements. Changes to the FDIC Indemnification Asset are recorded as adjustments to other noninterest income or expense, as appropriate, within the consolidated statements of operations over the life of the loss-share agreements. |
Debt Issuance Costs | Debt Issuance Costs The Company capitalizes debt issuance costs associated with financing of debt. These costs are amortized using the effective interest method over the repayment term of the debt. Unamortized debt issuance costs are presented in the consolidated balance sheets as a direct reduction from the associated debt liability. Debt issuance costs of $0.1 million, $0.1 million, and $0.4 million during 2017, 2016 and 2015, respectively, were amortized and included in interest expense within the consolidated statements of operations. In April 2015, debt issuance costs of $1.9 million were capitalized in connection with Hilltop’s issuance of the 5% senior notes due 2025. |
Goodwill | Goodwill Goodwill, which represents the excess of cost over the fair value of the net assets acquired, is allocated to reporting units and tested for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount should be assessed. The Company performs required annual impairment tests of its goodwill as of October 1 st for each of its reporting units, which is one level below an operating segment. Goodwill is assigned to reporting units at the date the goodwill is initially recorded. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or internally generated, are available to support the value of the goodwill. As of January 1, 2017, the Company adopted the provisions of ASU 2017-04 which removes Step 2 from the goodwill impairment test and eliminates the determination of goodwill impairment through calculation of the implied fair value when the carrying amount of a reporting unit exceeds its fair value. The goodwill impairment test requires the Company to make judgments in determining what assumptions to use in the calculation. The process consists of estimating the fair value of each reporting unit based on valuation techniques, including a discounted cash flow model using revenue and profit forecasts and recent industry transaction and trading multiples of peers, and comparing those estimated fair values with the carrying values of the assets and liabilities of the reporting unit, which includes the allocated goodwill. If the estimated fair value is less than the carrying value, the Company will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the total amount of goodwill allocated to that reporting unit. Additional information concerning the results of the Company’s impairment test of goodwill is included in Note 9 to the consolidated financial statements. |
Intangibles and Other Long-Lived Assets | Intangibles and Other Long-Lived Assets Intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability. The Company’s intangible assets primarily consist of core deposits, trade names and customer relationships. Intangible assets with definite useful lives are generally amortized on the straight-line method over their estimated lives, although certain intangibles, including core deposits, and customer and agent relationships, are amortized on an accelerated basis. Amortization of intangible assets is recorded in other noninterest expense within the consolidated statements of operations. Intangible assets with indefinite useful lives are tested for impairment annually as of October 1 st , or more often if events or circumstances indicate there may be impairment, and not amortized until their lives are determined to be definite. Intangible assets with definite useful lives, premises and equipment, and other long-lived assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. |
Mortgage Servicing Rights | Mortgage Servicing Rights The Company determines its classes of residential mortgage servicing assets based on the asset type being serviced along with the methods used to manage the risk inherent in the servicing assets, which includes the market inputs used to value the servicing assets. The Company measures its servicing assets at fair value and reports changes in fair value through earnings. The retained mortgage servicing rights (“MSR”) asset is measured at fair value as of the date of sale of the related mortgage loan. Subsequent fair value measurements of the MSR asset are determined by valuing the projected net servicing cash flows, which are then discounted to estimate fair value using a discounted cash flow model. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income. The model assumptions and the MSR asset fair value estimates are compared to observable trades of similar portfolios as well as to MSR asset broker valuations and industry surveys, as available. The expected life of the loan can vary from management’s estimates due to prepayments by borrowers, especially when rates fall. Prepayments in excess of management’s estimates would negatively impact the recorded value of the MSR asset. The value of the MSR asset is also dependent upon the discount rate used in the model, which is based on current market rates that are reviewed by management on an ongoing basis. A significant increase in the discount rate would reduce the value of the MSR asset. |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s hedging policies permit the use of various derivative financial instruments, including forward commitments, interest rate swaps and swaptions, and U.S. Treasury bond futures and options to manage interest rate risk or to hedge specified assets and liabilities. The Company’s derivative financial instruments also include interest rate lock commitments (“IRLCs”) executed with its customers that allow those customers to obtain a mortgage loan on a future date at an agreed-upon interest rate. The IRLCs, forward commitments, interest rate swaps and swaptions, and U.S. Treasury bond futures and options meet the definition of a derivative under the provisions of the Derivatives and Hedging Topic of the ASC. Derivatives are recorded at fair value in the consolidated balance sheets. To qualify for hedge accounting, derivatives must be highly effective at reducing the risk associated with the exposure being hedged and must be designated as a hedge at the inception of the derivative contract. If derivative instruments are designated as hedges of fair values, the change in the fair value of both the derivative instrument and the hedged item are included in current earnings. Changes in the fair value of derivatives designated as hedges of cash flows are recorded in other comprehensive income (loss). Actual cash receipts and/or payments and related accruals on derivatives related to hedges are recorded as adjustments to the line item where the hedged item’s effect on earnings is recorded. |
Reserve for Losses and Loss Adjustment Expenses | Reserve for Losses and Loss Adjustment Expenses The liability for losses and LAE includes an amount determined from loss reports and individual cases and an amount, based on past experience, for losses incurred but not reported (“IBNR”). Such liabilities are based on estimates and, while management believes that the amount is adequate, the ultimate liability may be in excess of or less than the amounts provided. The methods for making such estimates and for establishing the resulting liability are continually reviewed, and any adjustments are reflected in earnings currently. The liability for losses and LAE has not been reduced for reinsurance recoverable. |
Loss Contingencies | Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense for all share-based awards granted is based on the grant date fair value estimated in accordance with the provisions of the Stock Compensation Topic of the ASC. The Company recognizes these compensation costs for only those awards expected to vest over the service period of the award. |
Advertising | Advertising Advertising costs are expensed as incurred. Advertising expense totaled $4.7 million, $5.3 million and $4.6 million during 2017, 2016 and 2015, respectively. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recorded for the estimated future tax effects of the temporary difference between the tax basis and book basis of assets and liabilities reported in the accompanying consolidated balance sheets. The provision for income tax expense or benefit differs from the amounts of income taxes currently payable because certain items of income and expense included in the consolidated financial statements are recognized in different time periods by taxing authorities. Interest and penalties incurred related to tax matters are charged to other interest expense or other noninterest expense, respectively. The revaluation of deferred tax assets as a result of enacted tax rate changes, such as those found in the Tax Cuts and Jobs Act (“Tax Legislation”), is recognized within income tax expense in continuing operations in the period of enactment. Benefits from uncertain tax positions are recognized in the consolidated financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority having full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of cumulative benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold are recognized in the reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold are derecognized in the reporting period in which that threshold is no longer met. If the Company were to prevail on all uncertain tax positions, the effect would be a benefit to the Company’s effective tax rate. Due to uncertainties in any tax audit outcome, estimates of the ultimate settlement of unrecognized tax positions may change and the actual tax benefits may differ significantly from the estimate. Deferred tax assets, including net operating loss and tax credit carry forwards, are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that any portion of these tax attributes will not be realized. Periodic reviews of the carrying amount of deferred tax assets are made when it is more likely than not that all or a portion of a deferred tax asset will not be realized. |
Cash Flow Reporting | Cash Flow Reporting For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as the amount included in the consolidated balance sheet captions “Cash and due from banks” and “Federal funds sold”. Cash equivalents have original maturities of three months or less. |
Repurchases of Common Stock | Repurchases of Common Stock In accordance with Maryland law, the Company uses the par value method of accounting for its stock repurchases, whereby the par value of the shares is deducted from common stock. The excess of the cost of shares acquired over the par value is allocated to additional paid-in capital based on an estimated average sales price per issued share with the excess amounts charged to retained earnings. |
Basic and Diluted Net Income Per Share | Basic and Diluted Net Income Per Share Nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of earnings per share pursuant to the two-class method prescribed by the Earnings Per Share Topic of the ASC. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Restricted Stock Awards, all of which were vested as of September 30, 2017, were the only instruments issued by Hilltop which qualified as participating securities. Net earnings, less any preferred dividends accumulated for the period (whether or not declared), is allocated between the common stock and participating securities pursuant to the two-class method. Basic earnings per common share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during the period, excluding participating nonvested restricted shares. Diluted earnings per common share is computed in a similar manner, except that first the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares, excluding the participating securities, were issued using the treasury stock method. During 2017, restricted stock units (“RSUs”) were the only potentially dilutive non-participating instruments issued by Hilltop, while during 2016 and 2015, stock options and RSUs were the only potentially dilutive non-participating instruments. Next, the Company determines and includes in the diluted earnings per common share calculation the more dilutive effect of the participating securities using the treasury stock method or the two-class method. Undistributed losses are not allocated to the nonvested share-based payment awards (the participating securities) under the two-class method as the holders are not contractually obligated to share in the losses of the Company. |
Acquisition (Tables)
Acquisition (Tables) - SWS | 12 Months Ended |
Dec. 31, 2017 | |
Acquisitions | |
Schedule of components of the consideration paid | The components of the consideration paid are shown in the following table (in thousands). Fair value of consideration paid: Common stock issued $ Cash Fair value of Hilltop’s existing investment in SWS Total consideration paid $ |
Summary of fair values of the identifiable assets acquired, and liabilities assumed | The resulting fair values of the identifiable assets acquired, and liabilities assumed, in the SWS Merger at January 1, 2015 are summarized in the following table (in thousands). Cash and due from banks $ 119,314 Federal funds sold and securities purchased under agreements to resell 44,741 Assets segregated for regulatory purposes 181,610 Securities 707,476 Non-covered loans, net 863,819 Broker-dealer and clearing organization receivables 1,221,793 Other assets 159,906 Total identifiable assets acquired 3,298,659 Deposits (1,287,509) Broker-dealer and clearing organization payables (1,109,978) Short-term borrowings (164,240) Securities sold, not yet purchased, at fair value (140,409) Notes payable (76,643) Other liabilities (89,466) Total liabilities assumed (2,868,245) Bargain purchase gain (81,289) 349,125 Less Hilltop existing investment in SWS (70,282) Net identifiable assets acquired $ 278,843 |
Schedule of allocation to intangible assets | The allocation to intangible assets is as follows (in thousands). Estimated Useful Gross Intangible Life (Years) Assets Customer relationships 14 $ 7,300 Core deposits 4 160 $ 7,460 |
Schedule of loans acquired in business combination | The following table presents details on acquired loans at the acquisition date (in thousands). Loans, excluding PCI Total PCI Loans Loans Loans Commercial and industrial $ 178,603 $ 9,850 $ 188,453 Real estate 324,477 62,218 386,695 Construction and land development 14,708 1,391 16,099 Consumer 3,216 — 3,216 Broker-dealer (1) 269,356 — 269,356 Total $ 790,360 $ 73,459 $ 863,819 (1) Acquired loans include margin loans to customers and correspondents of $269.4 million associated with acquired broker-dealer operations, none of which are PCI loans. |
PCI loans | |
Acquisitions | |
Schedule of PCI Loans at acquisition | The following table presents information about the PCI loans at acquisition (in thousands). Contractually required principal and interest payments $ 120,078 Nonaccretable difference 32,040 Cash flows expected to be collected 88,038 Accretable difference 14,579 Fair value of loans acquired with a deterioration of credit quality $ 73,459 |
Loans excluding PCI Loans | |
Acquisitions | |
Schedule of acquired loans without credit impairment | The following table presents information about the acquired loans without credit impairment at acquisition (in thousands). Contractually required principal and interest payments $ 901,672 Contractual cash flows not expected to be collected 39,721 Fair value at acquisition 790,360 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | |
Schedule of information regarding financial assets and liabilities measured at fair value on a recurring basis | The following tables present information regarding financial assets and liabilities measured at fair value on a recurring basis (in thousands). Level 1 Level 2 Level 3 Total December 31, 2017 Inputs Inputs Inputs Fair Value Trading securities $ 3,329 $ 727,356 $ — $ 730,685 Available for sale securities 21,241 744,318 — 765,559 Loans held for sale — 1,544,631 36,972 1,581,603 Derivative assets — 34,150 — 34,150 MSR asset — — 54,714 54,714 Securities sold, not yet purchased 156,586 76,235 — 232,821 Derivative liabilities — 13,197 — 13,197 Level 1 Level 2 Level 3 Total December 31, 2016 Inputs Inputs Inputs Fair Value Trading securities $ 9,481 $ 256,053 $ — $ 265,534 Available for sale securities 19,840 578,167 — 598,007 Loans held for sale — 1,712,697 35,801 1,748,498 Derivative assets — 57,036 — 57,036 MSR asset — — 61,968 61,968 Securities sold, not yet purchased 60,715 93,174 — 153,889 Derivative liabilities — 35,737 — 35,737 |
Rollforward for financial instruments measured at fair value using Level 3 inputs | The following table includes a rollforward for those financial instruments measured at fair value using Level 3 inputs (in thousands). Total Gains or Losses (Realized or Unrealized) Balance at Included in Other Beginning of Purchases/ Sales/ Included in Comprehensive Balance at Year Additions Reductions Net Income Income (Loss) End of Year Year ended December 31, 2017 Loans held for sale $ 35,801 $ 36,891 $ (26,773) $ (8,947) $ — $ 36,972 MSR asset 61,968 16,401 (17,499) (6,156) — 54,714 Total $ 97,769 $ 53,292 $ (44,272) $ (15,103) $ — $ 91,686 Year ended December 31, 2016 Trading securities $ 1 $ — $ — $ (1) $ — $ — Loans held for sale 25,880 60,999 (39,637) (11,441) — 35,801 MSR asset 52,285 23,381 (7,586) (6,112) — 61,968 Total $ 78,166 $ 84,380 $ (47,223) $ (17,554) $ — $ 97,769 Year ended December 31, 2015 Trading securities $ — $ 7,301 $ (3,397) $ (3,903) $ — $ 1 Loans held for sale 9,017 52,800 (25,514) (10,423) — 25,880 MSR asset 36,155 24,974 — (8,844) — 52,285 Total $ 45,172 $ 85,075 $ (28,911) $ (23,170) $ — $ 78,166 |
Schedule of significant unobservable inputs used in the fair value measurements | For Level 3 financial instruments measured at fair value on a recurring basis at December 31, 2017, the significant unobservable inputs used in the fair value measurements were as follows. Range Financial instrument Valuation Technique Unobservable Inputs (Weighted-Average) Loans held for sale Discounted cash flows / Market comparable Projected price 90 - 95 % ( 95 %) MSR asset Discounted cash flows Constant prepayment rate 10.93 % Discount rate 11.03 % |
Schedule of changes in fair value for instruments reported at fair value under the Fair Value Option | The following table presents those changes in fair value of instruments recognized in the consolidated statements of operations that are accounted for under the Fair Value Option (in thousands). Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 Other Total Other Total Other Total Net Noninterest Changes in Net Noninterest Changes in Net Noninterest Changes in Gains (Losses) Income Fair Value Gains (Losses) Income Fair Value Gains (Losses) Income Fair Value Loans held for sale $ 10,655 $ — $ 10,655 $ (8,275) $ — $ (8,275) $ (2,970) $ — $ (2,970) MSR asset (6,156) — (6,156) (6,112) — (6,112) (8,844) — (8,844) |
Schedule of significant unobservable inputs weighted average rates on Impaired Loans | At December 31, 2017, estimates for these significant unobservable inputs were as follows. PCI Loans PlainsCapital FNB SWS Merger Transaction Merger Weighted average default rate % % % Weighted average loss severity rate % % % Weighted average prepayment speed % % % |
Schedule of information regarding certain assets and liabilities measured at fair value on a non-recurring basis for which a change in fair value has been recorded during reporting periods subsequent to initial recognition | The following table presents information regarding certain assets and liabilities measured at fair value on a non-recurring basis for which a change in fair value has been recorded during reporting periods subsequent to initial recognition (in thousands). Total Gains (Losses) for the Level 1 Level 2 Level 3 Total Year Ended December 31, December 31, 2017 Inputs Inputs Inputs Fair Value 2017 2016 2015 Non-covered impaired loans $ — $ — $ 29,063 $ 29,063 $ (49) $ 2,487 $ (126) Covered impaired loans — — 83,849 83,849 (2,353) 1,156 3,034 Non-covered other real estate owned — 3,883 — 3,883 (704) (555) (28) Covered other real estate owned — 10,187 — 10,187 (3,732) (18,481) (16,555) |
Schedule of carrying values and estimated fair values of financial instruments | The following tables present the carrying values and estimated fair values of financial instruments not measured at fair value on either a recurring or non-recurring basis (in thousands). Estimated Fair Value Carrying Level 1 Level 2 Level 3 December 31, 2017 Amount Inputs Inputs Inputs Total Financial assets: Cash and cash equivalents $ 487,382 $ 487,382 $ — $ — $ 487,382 Securities purchased under agreements to resell 186,537 — 186,537 — 186,537 Assets segregated for regulatory purposes 186,578 186,578 — — 186,578 Held to maturity securities 355,849 — 349,939 — 349,939 Loans held for sale 133,754 — 133,754 — 133,754 Non-covered loans, net 6,212,712 — 577,889 5,828,868 6,406,757 Covered loans, net 179,400 — — 269,386 269,386 Broker-dealer and clearing organization receivables 1,464,378 — 1,464,378 — 1,464,378 FDIC indemnification asset 29,340 — — 20,122 20,122 Other assets 64,862 — 59,053 5,809 64,862 Financial liabilities: Deposits 7,978,119 — 7,973,101 — 7,973,101 Broker-dealer and clearing organization payables 1,287,563 — 1,287,563 — 1,287,563 Short-term borrowings 1,206,424 — 1,206,424 — 1,206,424 Debt 275,821 — 289,719 — 289,719 Other liabilities 4,795 — 4,795 — 4,795 Estimated Fair Value Carrying Level 1 Level 2 Level 3 December 31, 2016 Amount Inputs Inputs Inputs Total Financial assets: Cash and cash equivalents $ 690,764 $ 690,764 $ — $ — $ 690,764 Securities purchased under agreements to resell 89,430 — 89,430 — 89,430 Assets segregated for regulatory purposes 180,993 180,993 — — 180,993 Held to maturity securities 351,831 — 345,088 — 345,088 Loans held for sale 46,965 — 46,965 — 46,965 Non-covered loans, net 5,789,313 — 502,077 5,459,975 5,962,052 Covered loans, net 255,714 — — 367,444 367,444 Broker-dealer and clearing organization receivables 1,497,741 — 1,497,741 — 1,497,741 FDIC indemnification asset 71,313 — — 60,173 60,173 Other assets 62,904 — 58,697 4,207 62,904 Financial liabilities: Deposits 7,063,811 — 7,058,837 — 7,058,837 Broker-dealer and clearing organization payables 1,347,128 — 1,347,128 — 1,347,128 Short-term borrowings 1,417,289 — 1,417,289 — 1,417,289 Debt 384,924 — 378,822 — 378,822 Other liabilities 3,708 — 3,708 — 3,708 |
Securities (Tables)
Securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Securities | |
Summary of trading securities | The fair value of trading securities are summarized as follows (in thousands). December 31, 2017 2016 U.S. Treasury securities $ — $ 5,940 U.S. government agencies: Bonds 52,078 36,303 Residential mortgage-backed securities 372,817 2,539 Commercial mortgage-backed securities 6,125 15,171 Collateralized mortgage obligations 5,122 5,607 Corporate debt securities 96,182 60,699 States and political subdivisions 170,413 89,946 Unit investment trusts 22,612 41,409 Private-label securitized product 1,631 4,292 Other 3,705 3,628 Totals $ 730,685 $ 265,534 |
Summary of amortized cost and fair value of available for sale securities | The amortized cost and fair value of available for sale and held to maturity securities are summarized as follows (in thousands). Available for Sale Amortized Unrealized Unrealized December 31, 2017 Cost Gains Losses Fair Value U.S. Treasury securities $ 24,665 $ 107 $ (103) $ 24,669 U.S. government agencies: Bonds 96,177 829 (366) 96,640 Residential mortgage-backed securities 246,707 538 (3,740) 243,505 Commercial mortgage-backed securities 11,966 105 (48) 12,023 Collateralized mortgage obligations 237,848 106 (4,142) 233,812 Corporate debt securities 66,868 1,819 (25) 68,662 States and political subdivisions 64,024 1,099 (115) 65,008 Commercial mortgage-backed securities — — — — Equity securities 19,691 1,666 (116) 21,241 Totals $ 767,946 $ 6,269 $ (8,655) $ 765,560 Available for Sale Amortized Unrealized Unrealized December 31, 2016 Cost Gains Losses Fair Value U.S. Treasury securities $ 31,701 $ 144 $ (44) $ 31,801 U.S. government agencies: Bonds 121,838 881 (67) 122,652 Residential mortgage-backed securities 135,371 708 (2,941) 133,138 Commercial mortgage-backed securities 8,771 2 (58) 8,715 Collateralized mortgage obligations 117,879 29 (3,206) 114,702 Corporate debt securities 76,866 2,354 (91) 79,129 States and political subdivisions 86,353 1,498 (336) 87,515 Commercial mortgage-backed securities 499 16 — 515 Equity securities 18,920 1,263 (343) 19,840 Totals $ 598,198 $ 6,895 $ (7,086) $ 598,007 |
Summary of amortized cost and fair value of held to maturity securities | Held to Maturity Amortized Unrealized Unrealized December 31, 2017 Cost Gains Losses Fair Value U.S. government agencies: Bonds $ 39,015 $ — $ (1,188) $ 37,827 Residential mortgage-backed securities 16,130 44 — 16,174 Commercial mortgage-backed securities 71,373 241 (735) 70,879 Collateralized mortgage obligations 173,928 19 (3,969) 169,978 States and political subdivisions 55,403 437 (759) 55,081 Totals $ 355,849 $ 741 $ (6,651) $ 349,939 Held to Maturity Amortized Unrealized Unrealized December 31, 2016 Cost Gains Losses Fair Value U.S. government agencies: Bonds $ 40,513 $ — $ (1,287) $ 39,226 Residential mortgage-backed securities 19,606 13 (6) 19,613 Commercial mortgage-backed securities 31,767 102 (593) 31,276 Collateralized mortgage obligations 217,954 128 (3,372) 214,710 States and political subdivisions 41,991 70 (1,798) 40,263 Totals $ 351,831 $ 313 $ (7,056) $ 345,088 |
Schedule of information regarding available for sale securities that were in an unrealized loss position | Information regarding available for sale and held to maturities securities that were in an unrealized loss position is shown in the following tables (dollars in thousands). December 31, 2017 December 31, 2016 Number of Unrealized Number of Unrealized Securities Fair Value Losses Securities Fair Value Losses Available for Sale U.S. treasury securities: Unrealized loss for less than twelve months 6 $ 15,449 $ 69 7 $ 21,694 $ 44 Unrealized loss for twelve months or longer 1 4,150 34 — — — 7 19,599 103 7 21,694 44 U.S. government agencies: Bonds: Unrealized loss for less than twelve months 10 83,476 367 1 14,908 67 Unrealized loss for twelve months or longer — — — — — — 10 83,476 367 1 14,908 67 Residential mortgage-backed securities: Unrealized loss for less than twelve months 15 121,968 820 12 109,398 2,941 Unrealized loss for twelve months or longer 11 93,358 2,920 — — — 26 215,326 3,740 12 109,398 2,941 Commercial mortgage-backed securities: Unrealized loss for less than twelve months 1 5,048 48 2 7,127 58 Unrealized loss for twelve months or longer — — — — — — 1 5,048 48 2 7,127 58 Collateralized mortgage obligations: Unrealized loss for less than twelve months 16 90,886 819 11 91,144 2,340 Unrealized loss for twelve months or longer 17 80,492 3,323 8 19,320 866 33 171,378 4,142 19 110,464 3,206 Corporate debt securities: Unrealized loss for less than twelve months 1 5,073 25 3 5,899 91 Unrealized loss for twelve months or longer — — — — — — 1 5,073 25 3 5,899 91 States and political subdivisions: Unrealized loss for less than twelve months 9 6,981 97 32 17,549 322 Unrealized loss for twelve months or longer 9 2,876 18 1 450 14 18 9,857 115 33 17,999 336 Equity securities: Unrealized loss for less than twelve months 1 944 13 — — — Unrealized loss for twelve months or longer 1 6,800 102 2 11,107 343 2 7,744 115 2 11,107 343 Total available for sale: Unrealized loss for less than twelve months 59 329,825 2,258 68 267,719 5,863 Unrealized loss for twelve months or longer 39 187,676 6,397 11 30,877 1,223 98 $ 517,501 $ 8,655 79 $ 298,596 $ 7,086 |
Schedule of information regarding held to maturity securities that were in an unrealized loss position | December 31, 2017 December 31, 2016 Number of Unrealized Number of Unrealized Securities Fair Value Losses Securities Fair Value Losses Held to Maturity U.S. government agencies: Bonds: Unrealized loss for less than twelve months 1 $ 5,950 $ 50 4 $ 33,225 $ 1,287 Unrealized loss for twelve months or longer 3 31,877 1,138 — — — 4 37,827 1,188 4 33,225 1,287 Residential mortgage-backed securities: Unrealized loss for less than twelve months — — — 2 13,178 6 Unrealized loss for twelve months or longer — — — — — — — — — 2 13,178 6 Commercial mortgage-backed securities: Unrealized loss for less than twelve months 7 39,396 271 5 18,891 588 Unrealized loss for twelve months or longer 2 12,659 464 1 1,401 5 9 52,055 735 6 20,292 593 Collateralized mortgage obligations: Unrealized loss for less than twelve months 10 37,064 264 19 187,669 3,372 Unrealized loss for twelve months or longer 12 128,270 3,705 — — — 22 165,334 3,969 19 187,669 3,372 States and political subdivisions: Unrealized loss for less than twelve months 22 11,079 71 71 29,862 1,790 Unrealized loss for twelve months or longer 46 18,598 688 1 462 8 68 29,677 759 72 30,324 1,798 Total held to maturity: Unrealized loss for less than twelve months 40 93,489 656 101 282,825 7,043 Unrealized loss for twelve months or longer 63 191,404 5,995 2 1,863 13 103 $ 284,893 $ 6,651 103 $ 284,688 $ 7,056 |
Schedule of amortized cost and fair value of securities, excluding trading and equity available for sale securities, by contractual maturity | The amortized cost and fair value of securities, excluding trading and available for sale equity securities, at December 31, 2017 are shown by contractual maturity below (in thousands). Available for Sale Held to Maturity Amortized Amortized Cost Fair Value Cost Fair Value Due in one year or less $ 101,815 $ 101,922 $ 3,245 $ 3,242 Due after one year through five years 95,284 96,442 2,847 2,843 Due after five years through ten years 30,893 32,064 27,051 26,289 Due after ten years 23,742 24,551 61,275 60,534 251,734 254,979 94,418 92,908 Residential mortgage-backed securities 246,707 243,505 16,130 16,174 Collateralized mortgage obligations 237,848 233,812 173,928 169,978 Commercial mortgage-backed securities 11,966 12,023 71,373 70,879 $ 748,255 $ 744,319 $ 355,849 $ 349,939 |
Non-Covered Loans and Allowan50
Non-Covered Loans and Allowance for Non-Covered Loan Losses (Tables) - Noncovered | 12 Months Ended |
Dec. 31, 2017 | |
Loans | |
Summary of non-covered loans by portfolio segment | Non-covered loans summarized by portfolio segment are as follows (in thousands). December 31, 2017 2016 Commercial and industrial $ 1,681,205 $ 1,696,453 Real estate 3,011,524 2,816,767 Construction and land development 962,605 786,850 Consumer 40,446 41,352 Broker-dealer (1) 577,889 502,077 6,273,669 5,843,499 Allowance for non-covered loan losses (60,957) (54,186) Total non-covered loans, net of allowance $ 6,212,712 $ 5,789,313 (1) |
Schedule of carrying values and the outstanding balances of the PCI loans | The following table presents the carrying values and the outstanding balances of the non-covered PCI loans (in thousands). December 31, 2017 2016 Carrying amount $ 37,204 $ 51,432 Outstanding balance 51,064 67,988 |
Schedule of changes in the accretable yield for the PCI loans | Changes in the accretable yield for the non-covered PCI loans were as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of period $ 13,116 $ 17,744 $ 12,814 Additions — — 14,579 Reclassifications from nonaccretable difference, net (1) 3,836 6,168 19,759 Disposals of loans (664) — (2,371) Accretion (9,275) (10,796) (27,037) Balance, end of period $ 7,013 $ 13,116 $ 17,744 (1) Reclassifications from nonaccretable difference are primarily due to net increases in expected cash flows in the quarterly recasts. Reclassifications to nonaccretable difference occur when accruing loans are moved to non-accrual and expected cash flows are no longer predictable and the accretable yield is eliminated. |
Summary of impaired loans by class | Non-covered impaired loans, segregated between those considered to be PCI loans and those without credit impairment at acquisition, are summarized by class in the following tables (in thousands). Unpaid Recorded Recorded Total Contractual Investment with Investment with Recorded Related December 31, 2017 Principal Balance No Allowance Allowance Investment Allowance PCI Commercial and industrial: Secured $ 19,752 $ 3,610 $ 2,489 $ 6,099 $ 89 Unsecured — — — — — Real estate: Secured by commercial properties 34,598 7,583 12,092 19,675 1,391 Secured by residential properties 12,600 5,307 4,558 9,865 325 Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 2,001 428 1,010 1,438 215 Consumer 2,377 12 115 127 18 Broker-dealer — — — — — 71,328 16,940 20,264 37,204 2,038 Non-PCI Commercial and industrial: Secured 23,666 15,308 2,072 17,380 365 Unsecured 761 616 — 616 — Real estate: Secured by commercial properties 15,504 10,934 3,686 14,620 932 Secured by residential properties 1,596 1,177 — 1,177 — Construction and land development: Residential construction loans 15 — — — — Commercial construction loans and land development 653 — 611 611 93 Consumer 162 56 — 56 — Broker-dealer — — — — — 42,357 28,091 6,369 34,460 1,390 $ 113,685 $ 45,031 $ 26,633 $ 71,664 $ 3,428 Unpaid Recorded Recorded Total Contractual Investment with Investment with Recorded Related December 31, 2016 Principal Balance No Allowance Allowance Investment Allowance PCI Commercial and industrial: Secured $ 25,354 $ 3,234 $ 5,438 $ 8,672 $ 557 Unsecured — — — — — Real estate: Secured by commercial properties 38,005 11,097 17,413 28,510 1,907 Secured by residential properties 13,606 7,401 3,088 10,489 200 Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 5,780 1,391 2,076 3,467 377 Consumer 3,223 237 57 294 56 Broker-dealer — — — — — 85,968 23,360 28,072 51,432 3,097 Non-PCI Commercial and industrial: Secured 6,311 3,313 1,372 4,685 115 Unsecured 946 925 — 925 — Real estate: Secured by commercial properties 10,134 10,000 — 10,000 — Secured by residential properties 1,344 1,116 — 1,116 — Construction and land development: Residential construction loans 28 28 — 28 — Commercial construction loans and land development 738 48 679 727 167 Consumer 246 244 — 244 — Broker-dealer — — — — — 19,747 15,674 2,051 17,725 282 $ 105,715 $ 39,034 $ 30,123 $ 69,157 $ 3,379 |
Summary of average investment in impaired loans by class | Average investment in non-covered impaired loans is summarized by class in the following table (in thousands). Year Ended December 31, 2017 2016 2015 Commercial and industrial: Secured $ 18,418 $ 19,730 $ 25,991 Unsecured 771 486 104 Real estate: Secured by commercial properties 36,403 40,014 32,149 Secured by residential properties 11,324 12,085 7,769 Construction and land development: Residential construction loans 14 125 111 Commercial construction loans and land development 3,122 4,619 7,462 Consumer 361 659 1,459 Broker-dealer — — — $ 70,413 $ 77,718 $ 75,045 |
Summary of non-accrual loans by class | Non-covered non-accrual loans, excluding those classified as held for sale, are summarized by class in the following table (in thousands). December 31, December 31, 2017 2016 Commercial and industrial: Secured $ 20,262 $ 8,590 Unsecured 616 925 Real estate: Secured by commercial properties 14,620 11,034 Secured by residential properties 1,614 1,197 Construction and land development: Residential construction loans — 28 Commercial construction loans and land development 611 727 Consumer 56 244 Broker-dealer — — $ 37,779 $ 22,745 |
Schedule of information regarding TDRs granted | Information regarding TDRs granted during 2017, 2016 and 2015, respectively, is shown in the following table (in thousands). At December 31, 2017 and 2016, the Bank had nominal unadvanced commitments to borrowers whose loans have been restructured in TDRs. Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 Number of Balance at Balance at Number of Balance at Balance at Number of Balance at Balance at Loans Extension End of Period Loans Extension End of Period Loans Extension End of Period Commercial and industrial: Secured 1 $ 1,357 $ 1,186 1 $ 1,196 $ 944 1 $ 89 $ 82 Unsecured — — — — — — — — — Real estate: Secured by commercial properties 2 4,775 4,629 — — — 1 1,083 1,040 Secured by residential properties — — — — — — — — — Construction and land development: Residential construction loans — — — — — — — — — Commercial construction loans and land development 1 655 611 — — — 1 76 — Consumer — — — — — — — — — Broker-dealer — — — — — — — — — 4 $ 6,787 $ 6,426 1 $ 1,196 $ 944 3 $ 1,248 $ 1,122 All of the non-covered loan modifications included in the table above involved payment term extensions. The Bank did not grant principal reductions on any restructured non-covered loans during 2017, 2016 or 2015. The following table presents information regarding TDRs granted during the twelve months preceding December 31, 2017 and 2016, respectively, for which a payment was at least 30 days past due (dollars in thousands). Twelve Months Preceding December 31, 2017 Twelve Months Preceding December 31, 2016 Number of Balance at Balance at Number of Balance at Balance at Loans Extension End of Period Loans Extension End of Period Commercial and industrial: Secured — $ — $ — 1 $ 1,196 $ 944 Unsecured — — — — — — Real estate: Secured by commercial properties 1 1,481 1,352 — — — Secured by residential properties — — — — — — Construction and land development: Residential construction loans — — — — — — Commercial construction loans and land development 1 655 611 — — — Consumer — — — — — — Broker-dealer — — — — — — 2 $ 2,136 $ 1,963 1 $ 1,196 $ 944 |
Schedule of analysis of the aging of the entity's loan portfolio | An analysis of the aging of the Company’s non-covered loan portfolio is shown in the following tables (in thousands). Accruing Loans Loans Past Due Loans Past Due Loans Past Due Total Current PCI Total Past Due December 31, 2017 30-59 Days 60-89 Days 90 Days or More Past Due Loans Loans Loans Loans 90 Days or More Commercial and industrial: Secured $ 2,060 $ 312 $ 5,714 $ 8,086 $ 1,544,131 $ 6,099 $ 1,558,316 $ 640 Unsecured 642 — — 642 122,247 — 122,889 — Real estate: Secured by commercial properties 442 — 2,195 2,637 2,213,331 19,675 2,235,643 — Secured by residential properties 1,490 1,290 418 3,198 762,818 9,865 775,881 — Construction and land development: Residential construction loans 315 — — 315 176,937 — 177,252 — Commercial construction loans and land development 1,370 101 — 1,471 782,444 1,438 785,353 — Consumer 194 20 — 214 40,105 127 40,446 — Broker-dealer — — — — 577,889 — 577,889 — $ 6,513 $ 1,723 $ 8,327 $ 16,563 $ 6,219,902 $ 37,204 $ 6,273,669 $ 640 Accruing Loans Loans Past Due Loans Past Due Loans Past Due Total Current PCI Total Past Due December 31, 2016 30-59 Days 60-89 Days 90 Days or More Past Due Loans Loans Loans Loans 90 Days or More Commercial and industrial: Secured $ 4,727 $ 704 $ 6,770 $ 12,201 $ 1,576,239 $ 8,672 $ 1,597,112 $ 3,095 Unsecured 596 1 909 1,506 97,835 — 99,341 1 Real estate: Secured by commercial properties 550 9,417 1,492 11,459 1,915,126 28,510 1,955,095 — Secured by residential properties 506 361 369 1,236 849,947 10,489 861,672 — Construction and land development: Residential construction loans — 28 — 28 128,624 — 128,652 — Commercial construction loans and land development 2,500 1,784 48 4,332 650,399 3,467 658,198 — Consumer 176 31 — 207 40,851 294 41,352 — Broker-dealer — — — — 502,077 — 502,077 — $ 9,055 $ 12,326 $ 9,588 $ 30,969 $ 5,761,098 $ 51,432 $ 5,843,499 $ 3,096 |
Schedule of internal risk grades of loans by class | The following tables present the internal risk grades of non-covered loans, as previously described, in the portfolio by class (in thousands). December 31, 2017 Pass Special Mention Substandard PCI Total Commercial and industrial: Secured $ 1,483,502 $ 17,354 $ 51,361 $ 6,099 $ 1,558,316 Unsecured 121,774 — 1,115 — 122,889 Real estate: Secured by commercial properties 2,154,595 7,647 53,726 19,675 2,235,643 Secured by residential properties 756,091 — 9,925 9,865 775,881 Construction and land development: Residential construction loans 177,252 — — — 177,252 Commercial construction loans and land development 780,905 2,259 751 1,438 785,353 Consumer 40,211 — 108 127 40,446 Broker-dealer 577,889 — — — 577,889 $ 6,092,219 $ 27,260 $ 116,986 $ 37,204 $ 6,273,669 December 31, 2016 Pass Special Mention Substandard PCI Total Commercial and industrial: Secured $ 1,531,895 $ 72 $ 56,473 $ 8,672 $ 1,597,112 Unsecured 97,646 — 1,695 — 99,341 Real estate: Secured by commercial properties 1,888,231 3,693 34,661 28,510 1,955,095 Secured by residential properties 846,420 — 4,763 10,489 861,672 Construction and land development: Residential construction loans 128,624 — 28 — 128,652 Commercial construction loans and land development 653,808 — 923 3,467 658,198 Consumer 40,789 6 263 294 41,352 Broker-dealer 502,077 — — — 502,077 $ 5,689,490 $ 3,771 $ 98,806 $ 51,432 $ 5,843,499 |
Schedule of changes in the allowance for loan losses by portfolio segment | Changes in the allowance for non-covered loan losses, distributed by portfolio segment, are shown below (in thousands). Commercial and Construction and Year Ended December 31, 2017 Industrial Real Estate Land Development Consumer Broker-Dealer Total Balance, beginning of year $ 21,369 $ 25,236 $ 7,002 $ 424 $ 155 $ 54,186 Provision charged to operations 6,725 3,619 848 16 198 11,406 Loans charged off (6,253) (305) (13) (208) — (6,779) Recoveries on charged off loans 1,833 225 7 79 — 2,144 Balance, end of year $ 23,674 $ 28,775 $ 7,844 $ 311 $ 353 $ 60,957 Commercial and Construction and Year Ended December 31, 2016 Industrial Real Estate Land Development Consumer Broker-Dealer Total Balance, beginning of year $ 19,845 $ 18,983 $ 6,064 $ 314 $ 209 $ 45,415 Provision charged to (recapture from) operations 33,369 7,297 938 190 (53) 41,741 Loans charged off (33,776) (1,439) — (203) (1) (35,419) Recoveries on charged off loans 1,931 395 — 123 — 2,449 Balance, end of year $ 21,369 $ 25,236 $ 7,002 $ 424 $ 155 $ 54,186 Commercial and Construction and Year Ended December 31, 2015 Industrial Real Estate Land Development Consumer Broker-Dealer Total Balance, beginning of year $ 18,833 $ 11,131 $ 6,450 $ 461 $ 166 $ 37,041 Provision charged to (recapture from) operations 4,598 7,937 (386) 104 (80) 12,173 Loans charged off (7,144) (605) — (378) — (8,127) Recoveries on charged off loans 3,558 520 — 127 123 4,328 Balance, end of year $ 19,845 $ 18,983 $ 6,064 $ 314 $ 209 $ 45,415 |
Schedule of loan portfolio distributed by portfolio segment and impairment methodology | The non-covered loan portfolio was distributed by portfolio segment and impairment methodology as shown below (in thousands). Commercial and Construction and December 31, 2017 Industrial Real Estate Land Development Consumer Broker-Dealer Total Loans individually evaluated for impairment $ 16,819 $ 13,782 $ 611 $ — $ — $ 31,212 Loans collectively evaluated for impairment 1,658,287 2,968,202 960,556 40,319 577,889 6,205,253 PCI Loans 6,099 29,540 1,438 127 — 37,204 $ 1,681,205 $ 3,011,524 $ 962,605 $ 40,446 $ 577,889 $ 6,273,669 Commercial and Construction and December 31, 2016 Industrial Real Estate Land Development Consumer Broker-Dealer Total Loans individually evaluated for impairment $ 4,508 $ 9,704 $ 727 $ 205 $ — $ 15,144 Loans collectively evaluated for impairment 1,683,273 2,768,064 782,656 40,853 502,077 5,776,923 PCI Loans 8,672 38,999 3,467 294 — 51,432 $ 1,696,453 $ 2,816,767 $ 786,850 $ 41,352 $ 502,077 $ 5,843,499 |
Schedule of allowance for loan losses distributed by portfolio segment and impairment methodology | The allowance for non-covered loan losses was distributed by portfolio segment and impairment methodology as shown below (in thousands). Commercial and Construction and December 31, 2017 Industrial Real Estate Land Development Consumer Broker-Dealer Total Loans individually evaluated for impairment $ 365 $ 932 $ 93 $ — $ — $ 1,390 Loans collectively evaluated for impairment 23,220 26,127 7,536 293 353 57,529 PCI Loans 89 1,716 215 18 — 2,038 $ 23,674 $ 28,775 $ 7,844 $ 311 $ 353 $ 60,957 Commercial and Construction and December 31, 2016 Industrial Real Estate Land Development Consumer Broker-Dealer Total Loans individually evaluated for impairment $ 115 $ — $ 167 $ — $ — $ 282 Loans collectively evaluated for impairment 20,697 23,129 6,458 368 155 50,807 PCI Loans 557 2,107 377 56 — 3,097 $ 21,369 $ 25,236 $ 7,002 $ 424 $ 155 $ 54,186 |
Covered Assets and Indemnific51
Covered Assets and Indemnification Asset (Tables) - Covered | 12 Months Ended |
Dec. 31, 2017 | |
Loans | |
Summary of carrying value of the loans | The following table presents the carrying value of the covered loans summarized by portfolio segment (in thousands). December 31, 2017 2016 Commercial and industrial $ 1,055 $ 2,697 Real estate 179,359 244,469 Construction and land development 1,715 8,961 182,129 256,127 Allowance for covered loans (2,729) Total covered loans, net of allowance $ 179,400 $ 255,714 |
Schedule of carrying value and the outstanding balance of the PCI loans | The following table presents the carrying value and the outstanding contractual balance of the covered PCI loans (in thousands). December 31, 2017 2016 Carrying amount $ 87,113 $ 133,754 Outstanding balance 179,019 266,098 |
Schedule of changes in the accretable yield for the PCI loans | Changes in the accretable yield for the covered PCI loans were as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of period $ 143,731 $ 176,719 $ 193,493 Reclassifications from nonaccretable difference, net (1) 9,110 41,239 70,884 Transfer of loans to covered OREO (2) (999) (487) (1,309) Accretion (60,009) (73,740) (86,349) Balance, end of period $ 91,833 $ 143,731 $ 176,719 (1) Reclassifications from nonaccretable difference are primarily due to net increases in expected cash flows in the quarterly recasts, but may also include the reclassification and immediate income recognition of nonaccretable difference due to the favorable resolution of loans accounted for individually. Reclassifications to nonaccretable difference occur when accruing loans are moved to non-accrual and expected cash flows are no longer predictable and the accretable yield is eliminated. (2) Transfer of loans to covered OREO is the difference between the value removed from the pool and the expected cash flows for the loan. |
Summary of impaired loans by class | Covered impaired loans, segregated between those considered to be PCI loans and those without credit impairment at acquisition, are summarized by class in the following tables (in thousands). Unpaid Recorded Recorded Total Contractual Investment with Investment with Recorded Related December 31, 2017 Principal Balance No Allowance Allowance Investment Allowance PCI Commercial and industrial: Secured $ 3,783 $ — $ 194 $ 194 $ 19 Unsecured 5,732 — — — — Real estate: Secured by commercial properties 80,223 2,388 21,171 23,559 1,817 Secured by residential properties 125,361 249 63,107 63,356 861 Construction and land development: Residential construction loans 672 — — — — Commercial construction loans and land development 11,118 4 — 4 — 226,889 2,641 84,472 87,113 2,697 Non-PCI Commercial and industrial: Secured 44 — — — — Unsecured — — — — — Real estate: Secured by commercial properties — — — — — Secured by residential properties 6,279 5,370 — 5,370 — Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 18 12 — 12 — 6,341 5,382 — 5,382 — $ 233,230 $ 8,023 $ 84,472 $ 92,495 $ 2,697 Unpaid Recorded Recorded Total Contractual Investment with Investment with Recorded Related December 31, 2016 Principal Balance No Allowance Allowance Investment Allowance PCI Commercial and industrial: Secured $ 10,579 $ 1,024 $ 189 $ 1,213 $ 13 Unsecured 3,259 299 — 299 — Real estate: Secured by commercial properties 143,934 26,415 26,222 52,637 271 Secured by residential properties 148,384 73,240 1,161 74,401 60 Construction and land development: Residential construction loans 766 — — — — Commercial construction loans and land development 23,522 5,204 — 5,204 — 330,444 106,182 27,572 133,754 344 Non-PCI Commercial and industrial: Secured 52 52 — 52 — Unsecured — — — — — Real estate: Secured by commercial properties 396 310 — 310 — Secured by residential properties 4,175 3,537 — 3,537 — Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 24 20 — 20 — 4,647 3,919 — 3,919 — $ 335,091 $ 110,101 $ 27,572 $ 137,673 $ 344 |
Summary of average investment in impaired loans by class | Average investment in covered impaired loans is summarized by class in the following table (in thousands). Year Ended December 31, 2017 2016 2015 Commercial and industrial: Secured $ 730 $ 3,530 $ 9,934 Unsecured 150 1,040 4,293 Real estate: Secured by commercial properties 38,253 75,159 162,812 Secured by residential properties 73,332 88,794 121,069 Construction and land development: Residential construction loans — 331 1,017 Commercial construction loans and land development 2,620 13,067 33,278 $ 115,085 $ 181,921 $ 332,403 |
Summary of non-accrual loans by class | Covered non-accrual loans are summarized by class in the following table (in thousands). December 31, 2017 2016 Commercial and industrial: Secured $ — $ 52 Unsecured — — Real estate: Secured by commercial properties — 730 Secured by residential properties 5,087 3,035 Construction and land development: Residential construction loans — — Commercial construction loans and land development 17 19 $ 5,104 $ 3,836 |
Schedule of information regarding TDRs granted | Year Ended December 31, 2015 Number of Balance at Balance at Loans Extension End of Period Commercial and industrial: Secured — $ — $ — Unsecured — — — Real estate: Secured by commercial properties 1 573 — Secured by residential properties 7 860 824 Construction and land development: Residential construction loans — — — Commercial construction loans and land development — — — 8 $ 1,433 $ 824 |
Schedule of analysis of the aging of the entity's loan portfolio | An analysis of the aging of the Bank’s covered loan portfolio is shown in the following tables (in thousands). Accruing Loans Loans Past Due Loans Past Due Loans Past Due Total Current PCI Total (Non ‑ PCI) Past Due December 31, 2017 30 ‑ 59 Days 60 ‑ 89 Days 90 Days or More Past Due Loans Loans Loans Loans 90 Days or More Commercial and industrial: Secured $ — $ — $ — $ — $ 861 $ 194 $ 1,055 $ — Unsecured — — — — — — — — Real estate: Secured by commercial properties 209 113 — 322 11,472 23,559 35,353 — Secured by residential properties 5,624 1,211 3,226 10,061 70,589 63,356 144,006 283 Construction and land development: Residential construction loans — — — — — — — — Commercial construction loans and land development 38 — — 38 1,673 4 1,715 — $ 5,871 $ 1,324 $ 3,226 $ 10,421 $ 84,595 $ 87,113 $ 182,129 $ 283 Accruing Loans Loans Past Due Loans Past Due Loans Past Due Total Current PCI Total (Non ‑ PCI) Past Due December 31, 2016 30 ‑ 59 Days 60 ‑ 89 Days 90 Days or More Past Due Loans Loans Loans Loans 90 Days or More Commercial and industrial: Secured $ — $ 6 $ 96 $ 102 $ 1,083 $ 1,213 $ 2,398 $ 44 Unsecured — — — — — 299 299 — Real estate: Secured by commercial properties 96 229 — 325 19,132 52,637 72,094 — Secured by residential properties 3,511 1,345 1,479 6,335 91,639 74,401 172,375 129 Construction and land development: Residential construction loans — — — — — — — — Commercial construction loans and land development 15 — — 15 3,742 5,204 8,961 — $ 3,622 $ 1,580 $ 1,575 $ 6,777 $ 115,596 $ 133,754 $ 256,127 $ 173 |
Schedule of internal risk grades of loans | The following tables present the internal risk grades of covered loans in the portfolio by class (in thousands). December 31, 2017 Pass Special Mention Substandard PCI Total Commercial and industrial: Secured $ 429 $ — $ 432 $ 194 $ 1,055 Unsecured — — — — — Real estate: Secured by commercial properties 10,961 — 833 23,559 35,353 Secured by residential properties 68,544 356 11,750 63,356 144,006 Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 1,649 — 62 4 1,715 $ 81,583 $ 356 $ 13,077 $ 87,113 $ 182,129 December 31, 2016 Pass Special Mention Substandard PCI Total Commercial and industrial: Secured $ 592 $ — $ 593 $ 1,213 $ 2,398 Unsecured — — — 299 299 Real estate: Secured by commercial properties 17,996 — 1,461 52,637 72,094 Secured by residential properties 90,563 461 6,950 74,401 172,375 Construction and land development: Residential construction loans — — — — — Commercial construction loans and land development 2,281 — 1,476 5,204 8,961 $ 111,432 $ 461 $ 10,480 $ 133,754 $ 256,127 |
Schedule of changes in the allowance for loan losses by portfolio segment | Changes in the allowance for covered loan losses, distributed by portfolio segment, are shown below (in thousands). Commercial and Construction and Year Ended December 31, 2017 Industrial Real Estate Land Development Total Balance, beginning of year $ 35 $ 378 $ — $ 413 Provision charged to (recaptured from) operations 32 2,840 (7) 2,865 Loans charged off (49) (522) — (571) Recoveries on charged off loans 6 6 10 22 Balance, end of year $ 24 $ 2,702 $ 3 $ 2,729 Commercial and Construction and Year Ended December 31, 2016 Industrial Real Estate Land Development Total Balance, beginning of year $ 758 $ 774 $ — $ 1,532 Provision recaptured from operations (717) (351) (53) (1,121) Loans charged off (6) (62) (51) (119) Recoveries on charged off loans — 17 104 121 Balance, end of year $ 35 $ 378 $ — $ 413 Commercial and Construction and Year Ended December 31, 2015 Industrial Real Estate Land Development Total Balance, beginning of year $ 1,193 $ 3,334 $ 84 $ 4,611 Provision charged to operations 258 189 95 542 Loans charged off (915) (2,869) (179) (3,963) Recoveries on charged off loans 222 120 — 342 Balance, end of year $ 758 $ 774 $ — $ 1,532 |
Schedule of loan portfolio distributed by portfolio segment and impairment methodology | The covered loan portfolio was distributed by portfolio segment and impairment methodology as shown below (in thousands). Commercial and Construction and December 31, 2017 Industrial Real Estate Land Development Total Loans individually evaluated for impairment $ — $ — $ — $ — Loans collectively evaluated for impairment 861 92,444 1,711 95,016 PCI Loans 194 86,915 4 87,113 $ 1,055 $ 179,359 $ 1,715 $ 182,129 Commercial and Construction and December 31, 2016 Industrial Real Estate Land Development Total Loans individually evaluated for impairment $ — $ — $ — $ — Loans collectively evaluated for impairment 1,185 117,431 3,757 122,373 PCI Loans 1,512 127,038 5,204 133,754 $ 2,697 $ 244,469 $ 8,961 $ 256,127 |
Schedule of allowance for loan losses distributed by portfolio segment and impairment methodology | The allowance for covered loan losses was distributed by portfolio segment and impairment methodology as shown below (in thousands). Commercial and Construction and December 31, 2017 Industrial Real Estate Land Development Total Loans individually evaluated for impairment $ — $ — $ — $ — Loans collectively evaluated for impairment 5 24 3 32 PCI Loans 19 2,678 — 2,697 $ 24 $ 2,702 $ 3 $ 2,729 Commercial and Construction and December 31, 2016 Industrial Real Estate Land Development Total Loans individually evaluated for impairment $ — $ — $ — $ — Loans collectively evaluated for impairment 22 47 — 69 PCI Loans 13 331 — 344 $ 35 $ 378 $ — $ 413 |
Summary of the activity in covered OREO | A summary of the activity in covered OREO is as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 51,642 $ 99,090 $ 136,945 Additions to covered OREO 6,700 13,876 50,465 Dispositions of covered OREO (17,866) (42,843) (71,765) Valuation adjustments in the period (3,732) (18,481) (16,555) Balance, end of year $ 36,744 $ 51,642 $ 99,090 |
Summary of the activity in the FDIC Indemnification Asset | A summary of the activity in the FDIC Indemnification Asset is as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 71,313 $ 91,648 $ 130,437 FDIC Indemnification Asset accretion (amortization) (17,083) 242 1,147 Transfers to due from FDIC and other (24,890) (20,577) (39,936) Balance, end of year $ 29,340 $ 71,313 $ 91,648 |
Cash and Due from Banks (Tables
Cash and Due from Banks (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Cash and Due from Banks | |
Schedule of cash and due from banks | Cash and due from banks consisted of the following (in thousands). December 31, 2017 2016 Cash on hand $ 44,765 $ 49,152 Clearings and collection items 92,271 78,328 Deposits at Federal Reserve Bank 248,442 354,948 Deposits at Federal Home Loan Bank 1,501 4,237 Deposits in FDIC-insured institutions 99,998 182,692 $ 486,977 $ 669,357 |
Premises and Equipment (Tables)
Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Premises and Equipment | |
Summary of the components of premises and equipment | The components of premises and equipment are summarized as follows (in thousands). December 31, 2017 2016 Land and premises $ 111,203 $ 111,295 Furniture and equipment 207,552 190,914 318,755 302,209 Less accumulated depreciation and amortization (141,178) (111,848) $ 177,577 $ 190,361 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Other Intangible Assets | |
Schedule of carrying value of intangible assets subject to amortization | The carrying value of intangible assets subject to amortization was as follows (in thousands). Estimated Gross Net Useful Life Intangible Accumulated Intangible December 31, 2017 (Years) Assets Amortization Assets Core deposits 4 - 12 $ 38,930 $ (26,381) $ 12,549 Trademarks and trade names 15 - 20 20,000 (7,860) 12,140 Noncompete agreements 4 - 6 11,650 (10,529) 1,121 Customer contracts and relationships 12 - 14 21,400 (13,906) 7,494 Agent relationships 13 3,600 (3,472) 128 $ 95,580 $ (62,148) $ 33,432 Estimated Gross Net Useful Life Intangible Accumulated Intangible December 31, 2016 (Years) Assets Amortization Assets Core deposits 4 - 12 $ 38,930 $ (22,255) $ 16,675 Trademarks and trade names 15 - 20 20,000 (6,877) 13,123 Noncompete agreements 4 - 6 11,650 (9,306) 2,344 Customer contracts and relationships 12 - 14 21,400 (12,097) 9,303 Agent relationships 13 3,600 (3,350) 250 $ 95,580 $ (53,885) $ 41,695 |
Schedule of estimated aggregate future amortization expense for intangible assets | The estimated aggregate future amortization expense for intangible assets at December 31, 2017 is as follows (in thousands). 2018 $ 7,289 2019 5,142 2020 4,352 2021 3,607 2022 3,222 Thereafter 9,820 $ 33,432 |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Mortgage Servicing Rights | |
Schedule of change in fair value of the Company's MSR, as included in other assets within the consolidated balance sheets | The following tables present the changes in fair value of the Company’s MSR asset, as included in other assets within the consolidated balance sheets, and other information related to the serviced portfolio (dollars in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 61,968 $ 52,285 $ 36,155 Additions 16,401 23,381 24,974 Sales (17,499) (7,586) — Changes in fair value: Due to changes in model inputs or assumptions (1) (1,722) (153) (2,150) Due to customer payoffs (4,434) (5,959) (6,694) Balance, end of year $ 54,714 $ 61,968 $ 52,285 December 31, 2017 2016 Mortgage loans serviced for others $ 4,762,042 $ 5,480,943 MSR asset as a percentage of serviced mortgage loans 1.15 % 1.13 % (1) Primarily represents normal customer payments, changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates and the refinement of other MSR model assumptions. |
Schedule of key assumptions used in measuring the fair value of the Company's MSR | December 31, 2017 2016 Weighted average constant prepayment rate 10.93 % 10.47 % Weighted average discount rate 11.03 % 10.95 % Weighted average life (in years) 6.9 6.9 |
Schedule of sensitivity analysis of fair value of the Company's MSR to certain key assumptions | A sensitivity analysis of the fair value of the Company’s MSR asset to certain key assumptions is presented in the following table (in thousands). December 31, 2017 2016 Constant prepayment rate: Impact of 10% adverse change $ (1,948) $ (2,297) Impact of 20% adverse change (3,839) (4,471) Discount rate: Impact of 10% adverse change (2,135) (2,539) Impact of 20% adverse change (4,103) (4,882) |
Deposits (Tables)
Deposits (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deposits | |
Summary of deposits | Deposits are summarized as follows (in thousands). December 31, 2017 2016 Noninterest-bearing demand $ 2,411,849 $ 2,199,483 Interest-bearing: NOW accounts 1,202,752 1,252,832 Money market 2,222,555 1,626,218 Brokered - money market 101,624 125,272 Demand 411,771 384,847 Savings 218,812 279,911 Time 1,313,482 1,145,859 Brokered - time 95,274 49,389 $ 7,978,119 $ 7,063,811 |
Summary of scheduled maturities of interest-bearing time deposits | Scheduled maturities of interest-bearing time deposits at December 31, 2017 are as follows (in thousands). 2018 $ 791,721 2019 509,244 2020 82,839 2021 15,155 2022 and thereafter 9,797 $ 1,408,756 |
Short-term Borrowings (Tables)
Short-term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short-term borrowings | |
Schedule of short-term borrowings | Short-term borrowings are summarized as follows (in thousands). December 31, 2017 2016 Federal funds purchased $ 101,775 $ 87,125 Securities sold under agreements to repurchase 539,149 195,164 Federal Home Loan Bank 250,000 1,000,000 Short-term bank loans 315,500 135,000 $ 1,206,424 $ 1,417,289 |
Federal funds purchased and securities sold under agreements to repurchase. | |
Short-term borrowings | |
Schedule of short-term borrowings | Information concerning federal funds purchased and securities sold under agreements to repurchase is shown in the following tables (dollars in thousands). Year Ended December 31, 2017 2016 2015 Average balance during the year $ 588,847 $ 368,102 $ 315,904 Average interest rate during the year 1.06 % 0.58 % 0.33 % Maximum month-end balance during the year 904,704 520,715 514,776 December 31, 2017 2016 Average interest rate at end of year 1.21 % 0.42 % Securities underlying the agreements at end of year: Carrying value $ 581,636 $ 209,877 Estimated fair value $ 598,300 $ 206,641 |
FHLB notes | |
Short-term borrowings | |
Schedule of short-term borrowings | Other information regarding FHLB short-term borrowings is shown in the following tables (dollars in thousands). Year Ended December 31, 2017 2016 2015 Average balance during the year $ 390,616 $ 361,475 $ 294,959 Average interest rate during the year 1.08 % 0.46 % 0.27 % Maximum month-end balance during the year $ 850,000 $ 1,000,000 $ 600,000 December 31, 2017 2016 Average interest rate at end of year % % |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable | |
Schedule of notes payable | Notes payable consisted of the following (in thousands). December 31, 2017 2016 Senior Notes due April 2025, net of discount of $1,545 and $1,689, respectively $ 148,455 $ 148,311 FHLB notes, net of premium of $436 and $948, respectively, with maturities ranging from February 2018 to June 2030 and interest payable monthly 19,402 102,596 Insurance company note payable due March 2035, paid off in June 2017 — 20,000 NLIC note payable due May 2033, three-month LIBOR plus 4.10% (5.71% at December 31, 2017) with interest payable quarterly 10,000 10,000 NLIC note payable due September 2033, three-month LIBOR plus 4.05% (5.66% at December 31, 2017) with interest payable quarterly 10,000 10,000 ASIC note payable due April 2034, three-month LIBOR plus 4.05% (5.66% at December 31, 2017) with interest payable quarterly 7,500 7,500 Insurance company line of credit due December 30, 2018, 3.25% plus a calculated index rate (4.00% at December 31, 2017) with interest payable quarterly 1,000 3,000 Ventures Management lines of credit, with interest payable monthly 12,452 16,505 $ 208,809 $ 317,912 |
Scheduled maturities of notes payable | Scheduled maturities for notes payable outstanding at December 31, 2017 are as follows (in thousands). 2018 $ 25,791 2019 — 2020 3,425 2021 508 2022 203 Thereafter 179,991 $ 209,918 |
Junior Subordinated Debenture59
Junior Subordinated Debentures and Trust Preferred Securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Junior Subordinated Debentures and Trust Preferred Securities | |
Schedule of information regarding the PlainsCapital Debentures | Information regarding the PCC Debentures is shown in the following table (in thousands). Investor Issue Date Amount PCC Statutory Trust I July 31, 2001 $ 18,042 PCC Statutory Trust II March 26, 2003 $ 18,042 PCC Statutory Trust III September 17, 2003 $ 15,464 PCC Statutory Trust IV February 22, 2008 $ 15,464 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Schedule of components of the provision for income tax provision (benefit) | The significant components of the income tax provision are as follows (in thousands). Year Ended December 31, 2017 2016 2015 Current: Federal $ 63,769 $ 82,970 $ 49,570 State 5,440 10,181 3,969 69,209 93,151 53,539 Deferred: Federal 40,176 (6,732) 17,295 State 757 (2,958) 81 40,933 (9,690) 17,376 $ 110,142 $ 83,461 $ 70,915 |
Schedule of reconciliation of the income tax provision (benefit) and the amount that would be computed by applying the statutory Federal income tax rate to income (loss) before income taxes | The income tax provision differs from the amount that would be computed by applying the statutory Federal income tax rate of 35% to income before income taxes as a result of the following (in thousands). Year Ended December 31, 2017 2016 2015 Computed tax at federal statutory rate $ 85,150 $ 80,992 $ 99,223 Tax effect of: Tax Legislation 28,363 — — Non-taxable acquisition gain (6,682) — (33,426) Nondeductible transaction costs 774 2,608 3,969 Nondeductible expenses 3,089 3,301 3,215 State income taxes 4,028 4,708 2,632 Tax-exempt income, net (2,758) (2,850) (2,563) Valuation allowance — (2,094) (1,889) Share-based compensation benefit (412) (2,391) — Other (1,410) (813) (246) $ 110,142 $ 83,461 $ 70,915 |
Schedule of components of the tax effects of temporary differences that give rise to the net deferred tax asset | The components of the tax effects of temporary differences that give rise to the net deferred tax asset included in other assets within the consolidated balance sheets are as follows (in thousands). December 31, 2017 2016 Deferred tax assets: Net operating and built-in loss carryforward $ 11,697 $ 21,381 Covered loans 20,024 43,512 Purchase accounting adjustment - loans 4,859 10,682 Allowance for loan losses 15,105 20,703 Compensation and benefits 15,860 44,368 Legal and other reserves 4,359 15,985 Foreclosed property 6,400 16,486 Other 11,961 19,297 90,265 192,414 Deferred tax liabilities: Premises and equipment 10,288 21,013 FDIC Indemnification Asset 3,502 21,600 Intangible assets 8,994 17,392 Derivatives 4,527 8,581 Loan servicing 13,184 23,187 Other 8,156 18,868 48,651 110,641 Net deferred tax asset $ 41,614 $ 81,773 |
Schedule of changes in gross unrecognized tax benefits, which excludes interest and penalties | The aggregate changes in gross unrecognized tax benefits, which excludes interest and penalties, are as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 1,704 $ 644 $ 644 Increases related to tax positions taken during a prior year 476 844 — Decreases related to tax positions taken during a prior year (1,273) — — Increases related to tax positions taken during the current year 667 216 — Balance, end of year $ 1,574 $ 1,704 $ 644 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Schedule of roll-forward of claims activity for loans put-back to the mortgage origination segment | The following tables provide for a roll-forward of claims activity for loans put-back to the mortgage origination segment based upon an alleged breach of a representation or warranty with respect to a loan sold and related indemnification liability reserve activity (in thousands). Representation and Warranty Specific Claims Activity - Origination Loan Balance Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 40,669 $ 57,298 $ 53,906 Claims made 42,330 21,410 71,783 Claims resolved with no payment (37,439) (19,696) (38,862) Repurchases (6,490) (4,164) (14,884) Indemnification payments (5,368) (14,179) (14,645) Balance, end of year $ 33,702 $ 40,669 $ 57,298 Indemnification Liability Reserve Activity Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 18,239 $ 16,640 $ 17,619 Additions for new sales 3,962 4,638 4,006 Repurchases (466) (392) (1,420) Early payment defaults (228) (241) (64) Indemnification payments (713) (2,482) (3,027) Change in reserves for loans sold in prior years 2,678 76 (474) Balance, end of year $ 23,472 $ 18,239 $ 16,640 December 31, 2017 2016 Reserve for Indemnification Liability: Specific claims $ 646 $ 1,661 Incurred but not reported claims 22,826 16,578 Total $ 23,472 $ 18,239 |
Schedule of future minimum lease payments under non-cancelable operating and capital leases | Future minimum lease payments under these agreements follow (in thousands). Operating Leases Capital Leases 2018 $ 36,602 $ 1,444 2019 30,127 1,491 2020 24,461 1,528 2021 16,429 1,451 2022 14,306 1,127 Thereafter 31,422 4,125 Total minimum lease payments $ 153,347 11,166 Amount representing interest (3,497) Present value of minimum lease payments $ 7,669 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock-Based Compensation | |
Schedule of nonvested Restricted Stock Award and RSU activity | The following table summarizes information about Restricted Stock Award and RSU activity for the noted periods (shares in thousands). Restricted Stock Awards RSUs Weighted Weighted Average Average Grant Date Grant Date Outstanding Fair Value Outstanding Fair Value Balance, December 31, 2014 466 $ 13.32 435 $ 23.14 Granted 63 $ 19.95 491 $ 19.61 Vested/Released (54) $ 19.58 (12) $ 22.45 Forfeited (22) $ 13.25 (39) $ 21.93 Balance, December 31, 2015 453 $ 13.50 875 $ 21.22 Granted - $ - 598 $ 17.78 Vested/Released (447) $ 13.41 (7) $ 22.22 Forfeited (2) $ 19.72 (10) $ 20.70 Balance, December 31, 2016 4 $ 19.95 1,456 $ 19.83 Granted - $ - 450 $ 26.37 Vested/Released (4) $ 19.95 (451) $ 22.48 Forfeited - $ - (137) $ 22.41 Balance, December 31, 2017 - $ - 1,318 $ 20.89 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Matters | |
Schedule of comparison of the Plain Capital's and Hilltop's consolidated actual capital amounts and ratios to the regulatory minimum requirements and the Bank's regulatory minimum capital requirements and the Bank's regulatory minimum capital requirements needed to qualify as a well-capitalized institution without giving effect to the final Basel III capital rules adopted by the Federal Reserve Board | Minimum Capital Requirements Including Conservation Buffer In Effect at Fully To Be Well Actual End of Period Phased In Capitalized Amount Ratio Ratio Ratio Ratio December 31, 2017 Tier 1 capital (to average assets): PlainsCapital $ 1,147,527 12.32 % 4.0 % 4.0 % 5.0 % Hilltop 1,688,358 12.94 % 4.0 % 4.0 % N/A Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 1,147,527 14.47 % 5.75 % 7.0 % 6.5 % Hilltop 1,639,009 17.71 % 5.75 % 7.0 % N/A Tier 1 capital (to risk-weighted assets): PlainsCapital 1,147,527 14.47 % 7.25 % 8.5 % 8.0 % Hilltop 1,688,358 18.24 % 7.25 % 8.5 % N/A Total capital (to risk-weighted assets): PlainsCapital 1,212,793 15.29 % 9.25 % 10.5 % 10.0 % Hilltop 1,738,325 18.78 % 9.25 % 10.5 % N/A Minimum Capital Requirements Including Conservation Buffer In Effect at Fully To Be Well Actual End of Period Phased In Capitalized Amount Ratio Ratio Ratio Ratio December 31, 2016 Tier 1 capital (to average assets): PlainsCapital $ 1,108,484 12.35 % 4.0 % 4.0 % 5.0 % Hilltop 1,652,101 13.51 % 4.0 % 4.0 % N/A Common equity Tier 1 capital (to risk-weighted assets): PlainsCapital 1,108,484 14.64 % 5.125 % 7.0 % 6.5 % Hilltop 1,602,400 18.30 % 5.125 % 7.0 % N/A Tier 1 capital (to risk-weighted assets): PlainsCapital 1,108,484 14.64 % 6.625 % 8.5 % 8.0 % Hilltop 1,652,101 18.87 % 6.625 % 8.5 % N/A Total capital (to risk-weighted assets): PlainsCapital 1,164,767 15.38 % 8.625 % 10.5 % 10.0 % Hilltop 1,693,240 19.34 % 8.625 % 10.5 % N/A |
Schedule of reconciliation of equity capital to common equity Tier 1, Tier 1 and total capital (as defined) | A reconciliation of equity capital to common equity Tier 1, Tier 1 and total capital (as defined) is as follows (in thousands). December 31, 2017 December 31, 2016 PlainsCapital Hilltop PlainsCapital Hilltop Total equity capital $ 1,379,402 $ 1,912,081 $ 1,337,746 $ 1,870,509 Add: Net unrealized holding losses (gains) on securities available for sale and held in trust 3,520 394 2,303 (485) Deduct: Goodwill and other disallowed intangible assets (235,395) (273,466) (231,565) (267,624) Common equity Tier 1 capital (as defined) 1,147,527 1,639,009 1,108,484 1,602,400 Add: Tier 1 capital Trust preferred securities — 65,000 — 65,000 Deduct: Additional Tier 1 capital deductions — (15,651) — (15,299) Tier 1 capital (as defined) 1,147,527 1,688,358 1,108,484 1,652,101 Add: Allowable Tier 2 capital Allowance for loan losses 65,266 65,618 56,283 56,438 Deduct: Additional Tier 2 capital deductions — (15,651) — (15,299) Total capital (as defined) $ 1,212,793 $ 1,738,325 $ 1,164,767 $ 1,693,240 |
Schedule of net capital position | At December 31, 2017, the net capital position of each of the Hilltop Broker-Dealers was as follows (in thousands). HTS Hilltop Independent Securities Network Net capital $ 186,770 $ 3,278 Less: required net capital 10,513 250 Excess net capital $ 176,257 $ 3,028 Net capital as a percentage of aggregate debit items 35.5 % Net capital in excess of 5% aggregate debit items $ 160,487 |
Summary of statutory capital and surplus and statutory net income of each insurance subsidiary | A summary of statutory capital and surplus and statutory net income of each insurance subsidiary is as follows (in thousands). December 31, 2017 2016 Capital and surplus: National Lloyds Insurance Company $ 93,812 $ 131,328 American Summit Insurance Company 22,778 30,462 Year Ended December 31, 2017 2016 2015 Statutory net income (loss): National Lloyds Insurance Company $ (1,785) $ 13,043 $ 9,000 American Summit Insurance Company 742 2,124 1,611 |
Other Noninterest Income and 64
Other Noninterest Income and Expense (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Noninterest Income and Expense | |
Schedule of components of other noninterest income and expense | The following table shows the components of other noninterest income and expense (in thousands). Year Ended December 31, 2017 2016 2015 Other noninterest income: Net gains from Hilltop Broker-Dealer trading activities $ 70,922 $ 86,383 $ 44,042 Net gains from trading securities portfolio 20,210 15,926 12,796 Service charges on depositor accounts 14,429 14,162 15,169 SWS Merger appraisal proceeding 11,757 — — Trust fees 7,485 6,782 7,113 Insurance commissions 4,819 4,206 3,819 Insurance direct billing and other policy fees 4,353 4,818 5,329 Revenue from check and stored value cards 3,169 5,036 7,099 Rent and other income from other real estate owned 1,280 1,461 3,559 FDIC Indemnification Asset accretion — 242 1,147 Other 25,546 15,248 10,795 $ 163,970 $ 154,264 $ 110,868 Other noninterest expense: Software and information technology $ 45,891 $ 38,421 $ 39,250 Brokerage commissions and fees 22,884 24,654 16,637 Mortgage origination and servicing 22,353 25,736 19,375 Unreimbursed loan closing costs 20,428 31,234 35,253 Business development 18,619 19,738 18,291 FDIC Indemnification Asset amortization 17,083 — — Travel, meals and entertainment 12,839 13,683 12,748 Funding fees 8,464 7,451 5,865 Amortization of intangible assets 8,263 10,174 12,375 Office supplies 7,806 8,719 8,247 OREO and repossessed assets 4,004 13,438 12,570 FDIC "true-up" 2,100 8,750 5,475 Other 51,362 49,523 62,217 $ 242,096 $ 251,521 $ 248,303 |
Derivative Financial Instrume65
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Financial Instruments | |
Schedule of derivative positions | Derivative positions are presented in the following table (in thousands). December 31, 2017 December 31, 2016 Notional Estimated Notional Estimated Amount Fair Value Amount Fair Value Derivative instruments: IRLCs $ 850,850 $ 18,851 $ 944,550 $ 23,269 Customer-based written options 21,637 38 — — Customer-based purchased options 21,637 (38) — — Commitments to purchase MBSs 2,831,635 (921) 3,616,922 (1,155) Commitments to sell MBSs 4,963,498 2,972 5,609,250 (532) Interest rate swaps and swaptions 25,971 51 32,452 (283) U.S. Treasury bond futures and options (1) 214,500 — 297,000 — (1) |
Balance Sheet Offsetting (Table
Balance Sheet Offsetting (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Offsetting | |
Schedule of the assets subject to an enforceable master netting arrangement or repurchase agreements | The following tables present the assets and liabilities subject to enforceable master netting arrangements, repurchase agreements, or similar agreements with offsetting rights (in thousands). Gross Amounts Not Offset in Net Amounts the Balance Sheet Gross Amounts Gross Amounts of Assets Cash of Recognized Offset in the Presented in the Financial Collateral Net Assets Balance Sheet Balance Sheet Instruments Pledged Amount December 31, 2017 Securities borrowed: Institutional counterparties $ 1,386,821 $ — $ 1,386,821 $ (1,327,536) $ — $ 59,285 Interest rate options: Customer counterparties 38 — 38 — — 38 Reverse repurchase agreements: Institutional counterparties 186,537 — 186,537 (186,026) — 511 Forward MBS derivatives: Institutional counterparties 3,576 — 3,576 (3,576) — — $ 1,576,972 $ — $ 1,576,972 $ (1,517,138) $ — $ 59,834 December 31, 2016 Securities borrowed: Institutional counterparties $ 1,436,069 $ — $ 1,436,069 $ (1,385,664) $ — $ 50,405 Reverse repurchase agreements: Institutional counterparties 89,430 — 89,430 (89,369) — 61 Forward MBS derivatives: Institutional counterparties 21,366 (3,893) 17,473 (9,012) — 8,461 $ 1,546,865 $ (3,893) $ 1,542,972 $ (1,484,045) $ — $ 58,927 |
Schedule of the liabilities subject to an enforceable master netting arrangement or repurchase agreements | Gross Amounts Not Offset in Net Amounts the Balance Sheet Gross Amounts Gross Amounts of Liabilities Cash of Recognized Offset in the Presented in the Financial Collateral Net Liabilities Balance Sheet Balance Sheet Instruments Pledged Amount December 31, 2017 Securities loaned: Institutional counterparties $ 1,215,093 $ — $ 1,215,093 $ (1,157,198) $ — $ 57,895 Interest rate options: Institutional counterparties 38 — 38 — — 38 Interest rate swaps and swaptions: Institutional counterparties 35 (86) (51) (1,059) — (1,110) Repurchase agreements: Institutional counterparties 409,058 — 409,058 (409,058) — — Customer counterparties 130,091 — 130,091 (130,091) — — Forward MBS derivatives: Institutional counterparties 2,696 (1,171) 1,525 (1,295) — 230 $ 1,757,011 $ (1,257) $ 1,755,754 $ (1,698,701) $ — $ 57,053 December 31, 2016 Securities loaned: Institutional counterparties $ 1,283,676 $ — $ 1,283,676 $ (1,237,868) $ — $ 45,808 Interest rate swaps and swaptions: Institutional counterparties 297 (14) 283 (3,000) — (2,717) Repurchase agreements: Institutional counterparties 39,970 — 39,970 (39,970) — — Customer counterparties 155,194 — 155,194 (155,194) — — Forward MBS derivatives: Institutional counterparties 19,159 — 19,159 (19,159) — — $ 1,498,296 $ (14) $ 1,498,282 $ (1,455,191) $ — $ 43,091 |
Schedule of contractual maturities of repurchase agreements and secured borrowing transactions | The following tables present the remaining contractual maturities of repurchase agreement and securities lending transactions accounted for as secured borrowings (in thousands). The Company had no repurchase-to-maturity transactions outstanding at both December 31, 2017 and 2016. Remaining Contractual Maturities Overnight and Greater Than December 31, 2017 Continuous Up to 30 Days 30-90 Days 90 Days Total Repurchase agreement transactions: U.S. Treasury and agency securities $ 181,915 $ — $ — $ — $ 181,915 Asset-backed securities 357,234 — — — 357,234 Securities lending transactions: Corporate securities 11,499 — — — 11,499 Equity securities 1,203,594 — — — 1,203,594 Total $ 1,754,242 $ — $ — $ — $ 1,754,242 Gross amount of recognized liabilities for repurchase agreement and securities lending transactions in offsetting disclosure above $ 1,754,242 Amount related to agreements not included in offsetting disclosure above $ — Remaining Contractual Maturities Overnight and Greater Than December 31, 2016 Continuous Up to 30 Days 30-90 Days 90 Days Total Repurchase agreement transactions: U.S. Treasury and agency securities $ 195,164 $ — $ — $ — $ 195,164 Securities lending transactions: Corporate securities 14,816 — — — 14,816 Equity securities 1,268,860 — — — 1,268,860 Total $ 1,478,840 $ — $ — $ — $ 1,478,840 Gross amount of recognized liabilities for repurchase agreement and securities lending transactions in offsetting disclosure above $ 1,478,840 Amount related to agreements not included in offsetting disclosure above $ — |
Broker-Dealer and Clearing Or67
Broker-Dealer and Clearing Organization Receivables and Payables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Broker-Dealer and Clearing Organization Receivables and Payables | |
Schedule of broker-dealer and clearing organization receivables and payables | Broker-dealer and clearing organization receivables and payables consisted of the following (in thousands). December 31, 2017 2016 Receivables: Securities borrowed $ 1,386,821 $ 1,436,069 Securities failed to deliver 25,491 33,834 Trades in process of settlement 29,412 10,223 Other 22,654 17,615 $ 1,464,378 $ 1,497,741 Payables: Securities loaned $ 1,215,093 $ 1,283,676 Correspondents 30,160 31,040 Securities failed to receive 37,864 31,724 Other 4,446 688 $ 1,287,563 $ 1,347,128 |
Deferred Policy Acquisition C68
Deferred Policy Acquisition Cost (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Policy Acquisition Costs. | |
Schedule of activity in deferred policy acquisition costs | A summary of the activity in deferred policy acquisition costs is as follows (in thousands). Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ 18,603 $ 19,874 $ 20,416 Acquisition expenses capitalized 34,934 37,231 39,716 Amortization charged to income (36,549) (38,502) (40,258) Balance, end of year $ 16,988 $ 18,603 $ 19,874 |
Reserves for Losses and Loss 69
Reserves for Losses and Loss Adjustment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reserves for Losses and Loss Adjustment Expenses | |
Schedule of information regarding the reserve for unpaid losses and loss adjustment expenses ("LAE") as included in other liabilities within the consolidated balance sheets | A summary of NLC’s reserve for unpaid losses and LAE, as included in other liabilities within the consolidated balance sheets, is as follows (in thousands). December 31, 2017 2016 Reserve for unpaid losses and allocated LAE balance, net $ 17,470 $ 25,203 Reinsurance recoverables on unpaid losses 11,495 9,434 Unallocated LAE 1,248 1,189 Reserve for unpaid losses and LAE balance, gross $ 30,213 $ 35,826 |
Summary of claims loss reserve development activity | A summary of claims loss reserve development activity is presented in the following table (in thousands). December 31, 2017 Total of IBNR Reserves Plus Expected Cumulative Accident Year Ended December 31, 2017 Development on Number of Year Paid Incurred Reported Claims Reported Claims 2013 110,813 111,121 8 15,687 2014 83,346 84,074 119 13,099 2015 85,507 87,262 591 15,016 2016 81,682 85,189 2,622 21,277 2017 77,855 88,079 4,282 20,927 Total 439,203 $ 455,725 948 All outstanding reserves prior to 2013, net of reinsurance $ 17,470 Reserve for unpaid losses and allocated LAE, net of reinsurance |
Reinsurance Activity (Tables)
Reinsurance Activity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Activity | |
Schedule of reinsurers with a balance in excess of 5% of outstanding reinsurance receivables | Reinsurers with a balance in excess of 5% of the Company’s outstanding reinsurance receivables at December 31, 2017 are listed below (in thousands). Balances Due From A.M. Best Reinsurers Rating Arch Reinsurance Co. $ 1,115 N/A Partner Reinsurance Co. 1,947 A Aspen Bermuda 865 A R&V Versicherung AG 1,927 N/A Everest Re 767 A+ Lloyd's Syndicate #2001 729 A+ $ 7,350 |
Schedule of effects of reinsurance on premiums written and earned | The effects of reinsurance on premiums written and earned are summarized as follows (in thousands). Year Ended December 31, 2017 2016 2015 Written Earned Written Earned Written Earned Premiums from direct business $ 137,091 $ 144,990 $ 152,970 $ 159,884 $ 167,025 $ 169,334 Reinsurance assumed 12,150 11,767 11,338 11,024 10,714 10,283 Reinsurance ceded (12,280) (14,459) (14,962) (15,363) (17,170) (17,535) Net premiums $ 136,961 $ 142,298 $ 149,346 $ 155,545 $ 160,569 $ 162,082 |
Schedule of effects of reinsurance on incurred losses | The effects of reinsurance on incurred losses are as follows (in thousands). Year Ended December 31, 2017 2016 2015 Losses and LAE incurred $ 138,358 $ 113,494 $ 123,017 Reinsurance recoverables (43,657) (24,251) (23,951) Net loss and LAE incurred $ 94,701 $ 89,243 $ 99,066 |
Segment and Related Informati71
Segment and Related Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment and Related Information | |
Schedule of information about the segment revenues, operating results, goodwill, and assets of entity's reportable segments | The following tables present certain information about reportable business segment revenues, operating results, goodwill and assets (in thousands). Mortgage All Other and Hilltop Year Ended December 31, 2017 Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated Net interest income (expense) $ 366,581 $ 43,735 $ (915) $ 2,861 $ (10,069) $ 19,555 $ 421,748 Provision for loan losses 14,073 198 — — — — 14,271 Noninterest income 59,904 368,421 632,388 151,382 12,798 (19,829) 1,205,064 Noninterest expense 248,404 347,314 581,899 158,354 33,983 (699) 1,369,255 Income (loss) before income taxes $ 164,008 $ 64,644 $ 49,574 $ (4,111) $ (31,254) $ 425 $ 243,286 Mortgage All Other and Hilltop Year Ended December 31, 2016 Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated Net interest income (expense) $ 363,083 $ 31,172 $ (11,589) $ 3,164 $ (7,257) $ 18,958 $ 397,531 Provision for loan losses 40,673 (53) — — — — 40,620 Noninterest income 52,579 385,766 704,126 164,841 2 (20,349) 1,286,965 Noninterest expense 244,715 377,524 614,741 146,601 29,938 (1,048) 1,412,471 Income (loss) before income taxes $ 130,274 $ 39,467 $ 77,796 $ 21,404 $ (37,193) $ (343) $ 231,405 Mortgage All Other and Hilltop Year Ended December 31, 2015 Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated Net interest income (expense) $ 369,493 $ 32,971 $ (10,423) $ 3,187 $ (5,109) $ 18,464 $ 408,583 Provision for loan losses 12,795 (80) — — — — 12,715 Noninterest income 62,639 334,495 597,163 171,185 81,289 (19,129) 1,227,642 Noninterest expense 243,926 367,812 539,257 158,720 31,926 (1,625) 1,340,016 Income (loss) before income taxes $ 175,411 $ (266) $ 47,483 $ 15,652 $ 44,254 $ 960 $ 283,494 Mortgage All Other and Hilltop Banking Broker-Dealer Origination Insurance Corporate Eliminations Consolidated December 31, 2017 Goodwill $ 207,741 $ 7,008 $ 13,071 $ 23,988 $ — $ — $ 251,808 Total assets $ 9,558,718 $ 3,394,911 $ 1,937,327 $ 291,639 $ 2,106,978 $ (3,923,787) $ 13,365,786 December 31, 2016 Goodwill $ 207,741 $ 7,008 $ 13,071 $ 23,988 $ — $ — $ 251,808 Total assets $ 9,527,518 $ 2,777,849 $ 2,042,458 $ 347,252 $ 2,032,749 $ (3,989,764) $ 12,738,062 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings per Common Share | |
Schedule of the computation of basic and diluted earnings per common share | The following table presents the computation of basic and diluted earnings per common share (in thousands, except per share data). Year Ended December 31, 2017 2016 2015 Basic earnings per share: Income attributable to Hilltop $ 132,544 $ 145,894 $ 209,119 Less: income applicable to participating shares — (6) (952) Net earnings available to Hilltop common stockholders $ 132,544 $ 145,888 $ 208,167 Weighted average shares outstanding - basic 97,137 98,404 99,074 Basic earnings per common share $ 1.36 $ 1.48 $ 2.10 Diluted earnings per share: Income attributable to Hilltop $ 132,544 $ 145,894 $ 209,119 Weighted average shares outstanding - basic 97,137 98,404 99,074 Effect of potentially dilutive securities 216 225 888 Weighted average shares outstanding - diluted 97,353 98,629 99,962 Diluted earnings per common share $ 1.36 $ 1.48 $ 2.09 |
Condensed Financial Statement73
Condensed Financial Statements of Parent (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Statements of Parent | |
Schedule of Condensed Statements of Operations and Comprehensive Income (Loss) | Condensed financial statements of Hilltop (parent only) follow (in thousands). Investments in subsidiaries are determined using the equity method of accounting. Condensed Statements of Operations and Comprehensive Income Year Ended December 31, 2017 2016 2015 Dividends from bank and bank holding company subsidiaries $ 53,000 $ 87,826 $ — Dividends from nonbank subsidiaries 41,500 — — Investment income 312 382 445 Interest expense 10,381 7,639 5,554 Bargain purchase gain — — 81,289 Other income 12,798 2 — General and administrative expense 33,983 29,938 31,926 Income before income taxes, equity in undistributed earnings of subsidiaries and preferred stock activity 63,246 50,633 44,254 Income tax benefit (15,577) (10,077) (9,562) Equity in undistributed earnings of subsidiaries 54,321 87,234 158,763 Net income $ 133,144 $ 147,944 $ 212,579 Other comprehensive income (loss), net (879) (2,144) 1,978 Comprehensive income $ 132,265 $ 145,800 $ 214,557 |
Schedule of Condensed Balance Sheets | December 31, 2017 2016 2015 Assets: Cash and cash equivalents $ 96,764 $ 118,290 $ 55,542 Investment in subsidiaries: Bank and bank holding company subsidiaries 1,340,093 1,304,917 1,271,581 Nonbank subsidiaries 603,631 609,539 545,502 Other assets 66,490 3 32,922 Total assets $ 2,106,978 $ 2,032,749 $ 1,905,547 Liabilities and Stockholders’ Equity: Accounts payable and accrued expenses $ 46,442 $ 13,929 $ 20,419 Notes payable 148,455 148,311 148,174 Stockholders’ equity 1,912,081 1,870,509 1,736,954 Total liabilities and stockholders’ equity $ 2,106,978 $ 2,032,749 $ 1,905,547 |
Schedule of Condensed Statements of Cash Flows | Year Ended December 31, 2017 2016 2015 Operating Activities: Net income $ 133,144 $ 147,944 $ 212,579 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in undistributed earnings of subsidiaries (54,321) (87,234) (158,763) Bargain purchase gain — — (81,289) Deferred income taxes 2,511 (2,063) 12,429 Other, net (57,380) 20,812 2,443 Net cash provided by (used in) operating activities 23,954 79,459 (12,601) Investing Activities: Reimbursement from nonbank subsidiaries — 6,000 — Capital contribution to bank and bank holding company subsidiaries (10,000) — — Capital contribution to nonbank subsidiaries — (20,000) — Cash paid for acquisition — — (78,217) Other, net (4,241) (98) (31) Net cash used in investing activities (14,241) (14,098) (78,248) Financing Activities: Proceeds from issuance of common stock — 4,139 — Payments to repurchase common stock (27,388) — (30,028) Proceeds from issuance of notes payable — — 148,078 Dividends paid on common stock (23,140) (5,801) — Dividends paid on preferred stock — — (3,539) Redemption of preferred stock — — (114,068) Other, net 19,289 (951) — Net cash provided by (used in) financing activities (31,239) (2,613) 443 Net change in cash and cash equivalents (21,526) 62,748 (90,406) Cash and cash equivalents, beginning of year 118,290 55,542 145,948 Cash and cash equivalents, end of year $ 96,764 $ 118,290 $ 55,542 Supplemental Schedule of Non-Cash Activities: Common stock issued in acquisition $ — $ — $ 200,626 |
Selected Quarterly Financial 74
Selected Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Selected Quarterly Financial Information (Unaudited) | |
Schedule of quarterly financial information | Selected quarterly financial information is summarized as follows (in thousands, except per share data). Year Ended December 31, 2017 Fourth Third Second First Full Quarter Quarter Quarter Quarter Year Interest income $ 133,665 $ 128,944 $ 136,306 $ 108,241 $ 507,156 Interest expense 24,973 23,964 20,330 16,141 85,408 Net interest income 108,692 104,980 115,976 92,100 421,748 Provision for loan losses 5,453 1,260 5,853 1,705 14,271 Noninterest income 290,456 298,477 344,692 271,439 1,205,064 Noninterest expense 328,670 353,842 366,251 320,492 1,369,255 Income before income taxes 65,025 48,355 88,564 41,342 243,286 Income tax expense 51,350 18,003 25,754 15,035 110,142 Net income 13,675 30,352 62,810 26,307 133,144 Less: Net income attributable to noncontrolling interest 247 146 334 (127) 600 Income attributable to Hilltop $ 13,428 $ 30,206 $ 62,476 $ 26,434 $ 132,544 Earnings per common share: Basic $ 0.14 $ 0.31 $ 0.64 $ 0.27 $ 1.36 Diluted $ 0.14 $ 0.31 $ 0.63 $ 0.27 $ 1.36 Cash dividends declared per common share $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.24 Year Ended December 31, 2016 Fourth Third Second First Full Quarter Quarter Quarter Quarter Year Interest income $ 118,335 $ $ $ 108,154 $ 455,954 Interest expense 14,211 16,093 13,805 14,314 58,423 Net interest income 104,124 99,170 93,840 397,531 Provision for loan losses 4,347 3,990 28,876 3,407 40,620 Noninterest income 309,127 277,375 Noninterest expense 355,784 325,189 Income before income taxes 53,120 85,505 50,161 42,619 231,405 Income tax expense 17,582 33,017 18,439 14,423 83,461 Net income 35,538 52,488 31,722 28,196 147,944 Less: Net income attributable to noncontrolling interest 217 556 648 629 2,050 Income attributable to Hilltop $ 35,321 $ 51,932 $ 31,074 $ 27,567 $ 145,894 Earnings per common share: Basic $ 0.36 $ 0.53 $ 0.32 $ 0.28 $ 1.48 Diluted $ 0.36 $ 0.53 $ 0.32 $ 0.28 $ 1.48 Cash dividends declared per common share $ 0.06 $ — $ — $ — $ 0.06 |
Summary of Significant Accoun75
Summary of Significant Accounting and Reporting Policies - Basis of Presentation, Ownership (Details) | 12 Months Ended |
Dec. 31, 2017item | |
Basis of Presentation | |
Number of primary operating business units | 3 |
PPC | |
Basis of Presentation | |
Ownership percentage | 100.00% |
Securities Holdings | |
Basis of Presentation | |
Membership ownership percentage | 100.00% |
NLC | |
Basis of Presentation | |
Ownership percentage | 100.00% |
PPC | PlainsCapital | |
Basis of Presentation | |
Ownership percentage | 100.00% |
PPC | Plains Capital Equity LLC | |
Basis of Presentation | |
Membership ownership percentage | 100.00% |
PPC | PCC Statutory Trusts | |
Basis of Presentation | |
Ownership percentage | 100.00% |
PlainsCapital | PrimeLending | |
Basis of Presentation | |
Ownership percentage | 100.00% |
PrimeLending | Ventures Management | |
Basis of Presentation | |
Membership ownership percentage | 100.00% |
Summary of Significant Accoun76
Summary of Significant Accounting and Reporting Policies - Basis of Presentation - Loans (Details) | 12 Months Ended | |
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | |
Insurance Premiums Receivable | ||
Valuation allowance for uncollectible amounts | $ 0 | $ 0 |
Deferred Policy Acquisition Costs. | ||
Premium deficiency | $ 0 | $ 0 |
Minimum | ||
Loans Held for Sale | ||
Number of layers of common risk characteristics based on which certain acquired loans aggregated into various loan pools to determine respective fair values | item | 2 | |
Minimum | Single Family Residential Loans | ||
Loans Held for Sale | ||
Loans held-for-sale, period reported on balance sheet | 30 days | |
Maximum | ||
Loans Held for Sale | ||
Loans held-for-sale, period reported on balance sheet | 30 days | |
Maximum | Single Family Residential Loans | ||
Loans Held for Sale | ||
Loans held-for-sale, period reported on balance sheet | 45 days | |
Acquired loans | ||
Loans Held for Sale | ||
Carryover of Allowance for Loan and Lease Losses, Loans Acquired | $ 0 |
Summary of Significant Accoun77
Summary of Significant Accounting and Reporting Policies - Premises and Equipment (Details) - Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Minimum | |
Premises and Equipment | |
Estimated useful lives | 3 years |
Maximum | |
Premises and Equipment | |
Estimated useful lives | 40 years |
Summary of Significant Accoun78
Summary of Significant Accounting and Reporting Policies - Other Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 09, 2015 | |
FDIC Indemnification Asset | ||||
Threshold amount of cumulative net losses over the life of the loss-share agreements which will reduce the FDIC Indemnification Asset | $ 240.4 | |||
Advertising | ||||
Advertising Expense | 4.7 | $ 5.3 | $ 4.6 | |
Interest Expense | ||||
Debt Instrument | ||||
Debt issuance costs amortized | $ 0.1 | $ 0.1 | $ 0.4 | |
Senior Notes due April 2025 | ||||
Debt Instrument | ||||
Interest rate (as a percent) | 5.00% | |||
Senior Notes due April 2025 | Private Placement | ||||
Debt Instrument | ||||
Capitalized debt issuance costs | $ 1.9 | |||
Interest rate (as a percent) | 5.00% |
Acquisition - Consideration Pai
Acquisition - Consideration Paid (Details) $ / shares in Units, $ in Thousands, shares in Millions | Jan. 01, 2015USD ($)$ / sharesshares | Dec. 31, 2015USD ($) |
Acquisitions | ||
Bargain purchase gain | $ 81,289 | |
SWS | ||
Acquisitions | ||
Conversion of common stock | 0.2496 | |
Cash consideration paid per share | $ / shares | $ 1.94 | |
Fair value acquisition price (in dollars per share) | $ / shares | $ 6.92 | |
Aggregate purchase price, stock issued | shares | 10.1 | |
Bargain purchase gain | $ 81,289 | |
Fair value of consideration paid: | ||
Common stock issued | 200,626 | |
Cash | 78,217 | |
Fair value of Hilltop existing investment in SWS | 70,282 | |
Total consideration paid | $ 349,125 |
Acquisition - Identifiable Asse
Acquisition - Identifiable Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jan. 01, 2015 | Dec. 31, 2015 |
Fair values of the identifiable assets acquired, and liabilities assumed | ||
Bargain purchase gain | $ (81,289) | |
SWS | ||
Fair values of the identifiable assets acquired, and liabilities assumed | ||
Cash and due from banks | $ 119,314 | |
Federal funds sold and securities purchased under agreements to resell | 44,741 | |
Assets segregated for regulatory purposes | 181,610 | |
Securities | 707,476 | |
Non-covered loans, net | 863,819 | |
Broker-dealer and clearing organization receivables | 1,221,793 | |
Other assets | 159,906 | |
Total identifiable assets acquired | 3,298,659 | |
Deposits | (1,287,509) | |
Broker-dealer and clearing organization payables | (1,109,978) | |
Short-term borrowings | (164,240) | |
Securities sold, not yet purchased, at fair value | (140,409) | |
Notes payable | (76,643) | |
Other liabilities | (89,466) | |
Total liabilities assumed | (2,868,245) | |
Bargain purchase gain | (81,289) | |
Net identifiable assets acquired | 349,125 | |
Less Hilltop existing investment in SWS | (70,282) | |
Net identifiable assets acquired | 278,843 | |
Tax on bargain purchase gain | 0 | $ 0 |
Allocation to intangible assets | ||
Gross Intangible Assets | $ 7,460 | |
Customer Relationships | SWS | ||
Allocation to intangible assets | ||
Estimated Useful Life | 14 years | |
Gross Intangible Assets | $ 7,300 | |
Core Deposits | SWS | ||
Allocation to intangible assets | ||
Estimated Useful Life | 4 years | |
Gross Intangible Assets | $ 160 |
Acquisition - Acquired Loans at
Acquisition - Acquired Loans at Acquisition Date (Details) $ in Thousands | Jan. 01, 2015USD ($) |
Loans excluding PCI Loans | Broker-dealer | |
Information about the acquired loans at acquisition | |
Margin loans to customers and correspondents | $ 269,400 |
SWS | |
Information about the acquired loans at acquisition | |
Carryover of Allowance for Loan and Lease Losses, Loans Acquired | 0 |
Total loans | 863,819 |
SWS | Commercial and industrial | |
Information about the acquired loans at acquisition | |
Total loans | 188,453 |
SWS | Real estate | |
Information about the acquired loans at acquisition | |
Total loans | 386,695 |
SWS | Construction and land development | |
Information about the acquired loans at acquisition | |
Total loans | 16,099 |
SWS | Consumer | |
Information about the acquired loans at acquisition | |
Total loans | 3,216 |
SWS | Broker-dealer | |
Information about the acquired loans at acquisition | |
Total loans | 269,356 |
SWS | Loans excluding PCI Loans | |
Information about the acquired loans at acquisition | |
Total loans | 790,360 |
SWS | Loans excluding PCI Loans | Commercial and industrial | |
Information about the acquired loans at acquisition | |
Total loans | 178,603 |
SWS | Loans excluding PCI Loans | Real estate | |
Information about the acquired loans at acquisition | |
Total loans | 324,477 |
SWS | Loans excluding PCI Loans | Construction and land development | |
Information about the acquired loans at acquisition | |
Total loans | 14,708 |
SWS | Loans excluding PCI Loans | Consumer | |
Information about the acquired loans at acquisition | |
Total loans | 3,216 |
SWS | Loans excluding PCI Loans | Broker-dealer | |
Information about the acquired loans at acquisition | |
Total loans | 269,356 |
SWS | PCI loans | |
Information about the acquired loans at acquisition | |
Total loans | 73,459 |
SWS | PCI loans | Commercial and industrial | |
Information about the acquired loans at acquisition | |
Total loans | 9,850 |
SWS | PCI loans | Real estate | |
Information about the acquired loans at acquisition | |
Total loans | 62,218 |
SWS | PCI loans | Construction and land development | |
Information about the acquired loans at acquisition | |
Total loans | $ 1,391 |
Acquisition - Loans at Acquisit
Acquisition - Loans at Acquisition, Additional Info. and Pro Forma Results (Details) - SWS $ in Thousands | Jan. 01, 2015USD ($) |
Acquisitions | |
Total loans | $ 863,819 |
PCI loans | |
Acquisitions | |
Contractually required principal and interest payments | 120,078 |
Nonaccretable difference | 32,040 |
Cash flows expected to be collected | 88,038 |
Accretable difference | 14,579 |
Total loans | 73,459 |
Loans excluding PCI Loans | |
Acquisitions | |
Contractually required principal and interest payments | 901,672 |
Contractual cash flows not expected to be collected | 39,721 |
Total loans | $ 790,360 |
Fair Value Measurements - FV Op
Fair Value Measurements - FV Option (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair value measurements | ||
Mortgage loans held for sale, fair value | $ 1,580 | $ 1,750 |
Mortgage loans held for sale, unpaid principal balance | $ 1,530 | $ 1,710 |
Maximum | ||
Fair value measurements | ||
Loans Held for Sale Period of Time | 30 days |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Financial assets: | ||
Trading securities | $ 730,685 | $ 265,534 |
Available for sale securities | 765,560 | 598,007 |
Financial liabilities: | ||
Securities sold, not yet purchased, at fair value | 232,821 | 153,889 |
Recurring | ||
Financial assets: | ||
Trading securities | 730,685 | 265,534 |
Available for sale securities | 765,559 | 598,007 |
Loans held for sale | 1,581,603 | 1,748,498 |
Derivative assets | 34,150 | 57,036 |
Mortgage servicing asset | 54,714 | 61,968 |
Financial liabilities: | ||
Securities sold, not yet purchased, at fair value | 232,821 | 153,889 |
Derivative liabilities | 13,197 | 35,737 |
Recurring | Level 1 | ||
Financial assets: | ||
Trading securities | 3,329 | 9,481 |
Available for sale securities | 21,241 | 19,840 |
Financial liabilities: | ||
Securities sold, not yet purchased, at fair value | 156,586 | 60,715 |
Recurring | Level 2 | ||
Financial assets: | ||
Trading securities | 727,356 | 256,053 |
Available for sale securities | 744,318 | 578,167 |
Loans held for sale | 1,544,631 | 1,712,697 |
Derivative assets | 34,150 | 57,036 |
Financial liabilities: | ||
Securities sold, not yet purchased, at fair value | 76,235 | 93,174 |
Derivative liabilities | 13,197 | 35,737 |
Recurring | Level 3 | ||
Financial assets: | ||
Loans held for sale | 36,972 | 35,801 |
Mortgage servicing asset | $ 54,714 | $ 61,968 |
Fair Value Measurements - Roll
Fair Value Measurements - Roll Forward, Level 3 (Details) - Level 3 - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Rollforward for financial instruments measured at fair value using Level 3 inputs | |||
Asset balance, beginning of period | $ 97,769 | $ 78,166 | $ 45,172 |
Purchases/Additions | 53,292 | 84,380 | 85,075 |
Sales/Reductions | (44,272) | (47,223) | (28,911) |
Total gains or losses (realized or unrealized): | |||
Included in Net Income | (15,103) | (17,554) | (23,170) |
Asset balance, end of period | 91,686 | 97,769 | 78,166 |
Trading securities. | |||
Rollforward for financial instruments measured at fair value using Level 3 inputs | |||
Asset balance, beginning of period | 1 | ||
Purchases/Additions | 7,301 | ||
Sales/Reductions | (3,397) | ||
Total gains or losses (realized or unrealized): | |||
Included in Net Income | (1) | (3,903) | |
Asset balance, end of period | 1 | ||
Loans Held for Sale | |||
Rollforward for financial instruments measured at fair value using Level 3 inputs | |||
Asset balance, beginning of period | 35,801 | 25,880 | 9,017 |
Purchases/Additions | 36,891 | 60,999 | 52,800 |
Sales/Reductions | (26,773) | (39,637) | (25,514) |
Total gains or losses (realized or unrealized): | |||
Included in Net Income | (8,947) | (11,441) | (10,423) |
Asset balance, end of period | 36,972 | 35,801 | 25,880 |
MSR | |||
Rollforward for financial instruments measured at fair value using Level 3 inputs | |||
Asset balance, beginning of period | 61,968 | 52,285 | 36,155 |
Purchases/Additions | 16,401 | 23,381 | 24,974 |
Sales/Reductions | (17,499) | (7,586) | |
Total gains or losses (realized or unrealized): | |||
Included in Net Income | (6,156) | (6,112) | (8,844) |
Asset balance, end of period | $ 54,714 | $ 61,968 | $ 52,285 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3, Inputs, Recurring (Details) - Level 3 - Discounted cash flow | 12 Months Ended |
Dec. 31, 2017 | |
MSR | Weighted average | |
Significant unobservable inputs used in the fair value measurements | |
Constant prepayment rate (as a percent) | 10.93% |
Discount rates (as a percent) | 11.03% |
Recurring | Loans Held for Sale | Weighted average | |
Significant unobservable inputs used in the fair value measurements | |
Projected price (as a percent) | 95.00% |
Recurring | Loans Held for Sale | Minimum | |
Significant unobservable inputs used in the fair value measurements | |
Projected price (as a percent) | 90.00% |
Recurring | Loans Held for Sale | Maximum | |
Significant unobservable inputs used in the fair value measurements | |
Projected price (as a percent) | 95.00% |
Fair Value Measurements - Chang
Fair Value Measurements - Change in FV (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Transfers Between Level 1 and Level 2 | |||
Transfers of assets from level 1 to level 2 | $ 0 | $ 0 | $ 0 |
Transfers of assets from level 2 to level 1 | 0 | 0 | 0 |
Transfers of liabilities from level 1 to level 2 | 0 | 0 | 0 |
Transfers of liabilities from level 2 to level 1 | 0 | 0 | 0 |
Fair Value Option | |||
Net Gains (Losses) | 538,468 | 606,991 | 519,103 |
Other Noninterest Income | 163,970 | 154,264 | 110,868 |
Loans Held for Sale | |||
Fair Value Option | |||
Net Gains (Losses) | 10,655 | (8,275) | (2,970) |
Total Changes in Fair Value | 10,655 | (8,275) | (2,970) |
MSR | |||
Fair Value Option | |||
Net Gains (Losses) | (6,156) | (6,112) | (8,844) |
Total Changes in Fair Value | $ (6,156) | $ (6,112) | $ (8,844) |
Fair Value Measurements - Impai
Fair Value Measurements - Impaired Loans (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Jan. 01, 2015 | Sep. 13, 2013 | Nov. 30, 2012 | |
SWS | ||||
Fair value measurements | ||||
Fair value of loans acquired | $ 863,819 | |||
SWS | PCI loans | ||||
Fair value measurements | ||||
Fair value of loans acquired | 73,459 | |||
Level 3 | PPC | PCI loans | ||||
Fair value measurements | ||||
Fair value of loans acquired | $ 172,900 | |||
Level 3 | PPC | PCI loans | Weighted average | ||||
Fair Value Inputs [Abstract] | ||||
Weighted average default rate | 64.00% | |||
Weighted average loss severity rate | 66.00% | |||
Weighted average prepayment speed | 0.00% | |||
Weighted average expected loss | 42.00% | |||
Level 3 | FNB | PCI loans | ||||
Fair value measurements | ||||
Fair value of loans acquired | $ 822,800 | |||
Level 3 | FNB | PCI loans | Weighted average | ||||
Fair Value Inputs [Abstract] | ||||
Weighted average default rate | 41.00% | |||
Weighted average loss severity rate | 18.00% | |||
Weighted average prepayment speed | 7.00% | |||
Weighted average expected loss | 7.00% | |||
Level 3 | SWS | PCI loans | ||||
Fair value measurements | ||||
Fair value of loans acquired | $ 73,500 | |||
Level 3 | SWS | PCI loans | Weighted average | ||||
Fair Value Inputs [Abstract] | ||||
Weighted average default rate | 60.00% | |||
Weighted average loss severity rate | 28.00% | |||
Weighted average prepayment speed | 0.00% | |||
Weighted average expected loss | 17.00% |
Fair Value Measurements - OREO
Fair Value Measurements - OREO (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 13, 2013 | |
Fair Value | |||||||||||||
Non-covered impaired loans | $ 6,212,712 | $ 5,789,313 | $ 6,212,712 | $ 5,789,313 | |||||||||
Covered impaired loans | 179,400 | 255,714 | 179,400 | 255,714 | |||||||||
Covered other real estate owned | 36,744 | 51,642 | 36,744 | 51,642 | $ 99,090 | $ 136,945 | |||||||
Total Gains (Losses) of impaired loans | (5,453) | $ (1,260) | $ (5,853) | $ (1,705) | (4,347) | $ (3,990) | $ (28,876) | $ (3,407) | (14,271) | (40,620) | (12,715) | ||
Covered | |||||||||||||
Fair Value | |||||||||||||
Covered impaired loans | 179,400 | 255,714 | 179,400 | 255,714 | |||||||||
Total Gains (Losses) of impaired loans | (2,865) | 1,121 | (542) | ||||||||||
Noncovered | |||||||||||||
Fair Value | |||||||||||||
Non-covered impaired loans | 6,212,712 | 5,789,313 | 6,212,712 | 5,789,313 | |||||||||
Total Gains (Losses) of impaired loans | (11,406) | (41,741) | (12,173) | ||||||||||
Estimate of Fair Value | |||||||||||||
Fair Value | |||||||||||||
Non-covered impaired loans | 6,406,757 | 5,962,052 | 6,406,757 | 5,962,052 | |||||||||
Covered impaired loans | 269,386 | 367,444 | 269,386 | 367,444 | |||||||||
Level 2 | Estimate of Fair Value | |||||||||||||
Fair Value | |||||||||||||
Non-covered impaired loans | 577,889 | 502,077 | 577,889 | 502,077 | |||||||||
Level 2 | Estimate of Fair Value | Covered | |||||||||||||
Fair Value | |||||||||||||
Covered other real estate owned | 36,700 | 51,600 | 36,700 | 51,600 | |||||||||
Level 2 | Estimate of Fair Value | Noncovered | |||||||||||||
Fair Value | |||||||||||||
Non-covered other real estate owned | 3,900 | 4,500 | 3,900 | 4,500 | |||||||||
Level 3 | Estimate of Fair Value | |||||||||||||
Fair Value | |||||||||||||
Non-covered impaired loans | 5,828,868 | 5,459,975 | 5,828,868 | 5,459,975 | |||||||||
Covered impaired loans | 269,386 | $ 367,444 | 269,386 | 367,444 | |||||||||
Nonrecurring | Estimate of Fair Value | Covered | |||||||||||||
Fair Value | |||||||||||||
Covered impaired loans | 83,849 | 83,849 | |||||||||||
Covered other real estate owned | 10,187 | 10,187 | |||||||||||
Total Gains (Losses) of impaired loans | (2,353) | 1,156 | 3,034 | ||||||||||
Total Gains (Losses) of other real estate owned | (3,732) | (18,481) | (16,555) | ||||||||||
Nonrecurring | Estimate of Fair Value | Noncovered | |||||||||||||
Fair Value | |||||||||||||
Non-covered impaired loans | 29,063 | 29,063 | |||||||||||
Non-covered other real estate owned | 3,883 | 3,883 | |||||||||||
Total Gains (Losses) of impaired loans | (49) | 2,487 | (126) | ||||||||||
Total Gains (Losses) of other real estate owned | (704) | $ (555) | $ (28) | ||||||||||
Nonrecurring | Level 2 | FNB | Covered | PlainsCapital | |||||||||||||
Fair value measurements | |||||||||||||
Acquired OREO | $ 135,200 | ||||||||||||
Nonrecurring | Level 2 | Estimate of Fair Value | Covered | |||||||||||||
Fair Value | |||||||||||||
Covered other real estate owned | 10,187 | 10,187 | |||||||||||
Nonrecurring | Level 2 | Estimate of Fair Value | Noncovered | |||||||||||||
Fair Value | |||||||||||||
Non-covered other real estate owned | 3,883 | 3,883 | |||||||||||
Nonrecurring | Level 3 | Estimate of Fair Value | Covered | |||||||||||||
Fair Value | |||||||||||||
Covered impaired loans | 83,849 | 83,849 | |||||||||||
Nonrecurring | Level 3 | Estimate of Fair Value | Noncovered | |||||||||||||
Fair Value | |||||||||||||
Non-covered impaired loans | $ 29,063 | $ 29,063 |
Fair Value Measurements - Estim
Fair Value Measurements - Estimated Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Financial assets: | ||||
Held to maturity securities | $ 349,939 | $ 345,088 | ||
Non-covered loans, net | 6,212,712 | 5,789,313 | ||
Covered loans, net | 179,400 | 255,714 | ||
Broker-dealer and clearing organization receivables | 1,464,378 | 1,497,741 | ||
FDIC indemnification asset | 29,340 | 71,313 | $ 91,648 | $ 130,437 |
Financial liabilities: | ||||
Broker-dealer and clearing organization payables | 1,287,563 | 1,347,128 | ||
Carrying Amount | ||||
Financial assets: | ||||
Cash and cash equivalents | 487,382 | 690,764 | ||
Securities purchased under agreements to resell | 186,537 | 89,430 | ||
Assets segregated for regulatory purposes | 186,578 | 180,993 | ||
Held to maturity securities | 355,849 | 351,831 | ||
Loans held for sale | 133,754 | 46,965 | ||
Non-covered loans, net | 6,212,712 | 5,789,313 | ||
Covered loans, net | 179,400 | 255,714 | ||
Broker-dealer and clearing organization receivables | 1,464,378 | 1,497,741 | ||
FDIC indemnification asset | 29,340 | 71,313 | ||
Other assets | 64,862 | 62,904 | ||
Financial liabilities: | ||||
Deposits | 7,978,119 | 7,063,811 | ||
Broker-dealer and clearing organization payables | 1,287,563 | 1,347,128 | ||
Short-term borrowings | 1,206,424 | 1,417,289 | ||
Debt | 275,821 | 384,924 | ||
Other liabilities | 4,795 | 3,708 | ||
Estimate of Fair Value | ||||
Financial assets: | ||||
Cash and cash equivalents | 487,382 | 690,764 | ||
Securities purchased under agreements to resell | 186,537 | 89,430 | ||
Assets segregated for regulatory purposes | 186,578 | 180,993 | ||
Held to maturity securities | 349,939 | 345,088 | ||
Loans held for sale | 133,754 | 46,965 | ||
Non-covered loans, net | 6,406,757 | 5,962,052 | ||
Covered loans, net | 269,386 | 367,444 | ||
Broker-dealer and clearing organization receivables | 1,464,378 | 1,497,741 | ||
FDIC indemnification asset | 20,122 | 60,173 | ||
Other assets | 64,862 | 62,904 | ||
Financial liabilities: | ||||
Deposits | 7,973,101 | 7,058,837 | ||
Broker-dealer and clearing organization payables | 1,287,563 | 1,347,128 | ||
Short-term borrowings | 1,206,424 | 1,417,289 | ||
Debt | 289,719 | 378,822 | ||
Other liabilities | 4,795 | 3,708 | ||
Estimate of Fair Value | Level 1 | ||||
Financial assets: | ||||
Cash and cash equivalents | 487,382 | 690,764 | ||
Assets segregated for regulatory purposes | 186,578 | 180,993 | ||
Estimate of Fair Value | Level 2 | ||||
Financial assets: | ||||
Securities purchased under agreements to resell | 186,537 | 89,430 | ||
Held to maturity securities | 349,939 | 345,088 | ||
Loans held for sale | 133,754 | 46,965 | ||
Non-covered loans, net | 577,889 | 502,077 | ||
Broker-dealer and clearing organization receivables | 1,464,378 | 1,497,741 | ||
Other assets | 59,053 | 58,697 | ||
Financial liabilities: | ||||
Deposits | 7,973,101 | 7,058,837 | ||
Broker-dealer and clearing organization payables | 1,287,563 | 1,347,128 | ||
Short-term borrowings | 1,206,424 | 1,417,289 | ||
Debt | 289,719 | 378,822 | ||
Other liabilities | 4,795 | 3,708 | ||
Estimate of Fair Value | Level 3 | ||||
Financial assets: | ||||
Non-covered loans, net | 5,828,868 | 5,459,975 | ||
Covered loans, net | 269,386 | 367,444 | ||
FDIC indemnification asset | 20,122 | 60,173 | ||
Other assets | $ 5,809 | $ 4,207 |
Securities - Trading Securities
Securities - Trading Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of fair value of trading securities | ||
Trading Securities | $ 730,685 | $ 265,534 |
Investment-related Liabilities | ||
Securities sold, not yet purchased, at fair value | 232,821 | 153,889 |
US Treasury Securities | ||
Schedule of fair value of trading securities | ||
Trading Securities | 5,940 | |
Bonds | ||
Schedule of fair value of trading securities | ||
Trading Securities | 52,078 | 36,303 |
Residential mortgage-backed Securities | ||
Schedule of fair value of trading securities | ||
Trading Securities | 372,817 | 2,539 |
Commercial mortgage-backed securities | ||
Schedule of fair value of trading securities | ||
Trading Securities | 6,125 | 15,171 |
Collateralized mortgage obligations | ||
Schedule of fair value of trading securities | ||
Trading Securities | 5,122 | 5,607 |
Corporate securities | ||
Schedule of fair value of trading securities | ||
Trading Securities | 96,182 | 60,699 |
States and political subdivisions | ||
Schedule of fair value of trading securities | ||
Trading Securities | 170,413 | 89,946 |
Unit investment trusts | ||
Schedule of fair value of trading securities | ||
Trading Securities | 22,612 | 41,409 |
Private-label securitized product | ||
Schedule of fair value of trading securities | ||
Trading Securities | 1,631 | 4,292 |
Other | ||
Schedule of fair value of trading securities | ||
Trading Securities | $ 3,705 | $ 3,628 |
Securities - AFS and HTM, Amort
Securities - AFS and HTM, Amortized Cost and FV (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Available for sale | ||
Amortized Cost | $ 767,946 | $ 598,198 |
Gross Unrealized Gains | 6,269 | 6,895 |
Gross Unrealized Losses | (8,655) | (7,086) |
Fair Value | 765,560 | 598,007 |
Held to maturity | ||
Amortized cost | 355,849 | 351,831 |
Unrealized Gains | 741 | 313 |
Unrealized Losses | (6,651) | (7,056) |
Held to maturity, fair value | 349,939 | 345,088 |
US Treasury Securities | ||
Available for sale | ||
Amortized Cost | 24,665 | 31,701 |
Gross Unrealized Gains | 107 | 144 |
Gross Unrealized Losses | (103) | (44) |
Fair Value | 24,669 | 31,801 |
Bonds | ||
Available for sale | ||
Amortized Cost | 96,177 | 121,838 |
Gross Unrealized Gains | 829 | 881 |
Gross Unrealized Losses | (366) | (67) |
Fair Value | 96,640 | 122,652 |
Held to maturity | ||
Amortized cost | 39,015 | 40,513 |
Unrealized Losses | (1,188) | (1,287) |
Held to maturity, fair value | 37,827 | 39,226 |
Residential mortgage-backed Securities | ||
Available for sale | ||
Amortized Cost | 246,707 | 135,371 |
Gross Unrealized Gains | 538 | 708 |
Gross Unrealized Losses | (3,740) | (2,941) |
Fair Value | 243,505 | 133,138 |
Held to maturity | ||
Amortized cost | 16,130 | 19,606 |
Unrealized Gains | 44 | 13 |
Unrealized Losses | (6) | |
Held to maturity, fair value | 16,174 | 19,613 |
Commercial mortgage-backed securities | ||
Available for sale | ||
Amortized Cost | 11,966 | 8,771 |
Gross Unrealized Gains | 105 | 2 |
Gross Unrealized Losses | (48) | (58) |
Fair Value | 12,023 | 8,715 |
Held to maturity | ||
Amortized cost | 71,373 | 31,767 |
Unrealized Gains | 241 | 102 |
Unrealized Losses | (735) | (593) |
Held to maturity, fair value | 70,879 | 31,276 |
Collateralized mortgage obligations | ||
Available for sale | ||
Amortized Cost | 237,848 | 117,879 |
Gross Unrealized Gains | 106 | 29 |
Gross Unrealized Losses | (4,142) | (3,206) |
Fair Value | 233,812 | 114,702 |
Held to maturity | ||
Amortized cost | 173,928 | 217,954 |
Unrealized Gains | 19 | 128 |
Unrealized Losses | (3,969) | (3,372) |
Held to maturity, fair value | 169,978 | 214,710 |
Corporate securities | ||
Available for sale | ||
Amortized Cost | 66,868 | 76,866 |
Gross Unrealized Gains | 1,819 | 2,354 |
Gross Unrealized Losses | (25) | (91) |
Fair Value | 68,662 | 79,129 |
States and political subdivisions | ||
Available for sale | ||
Amortized Cost | 64,024 | 86,353 |
Gross Unrealized Gains | 1,099 | 1,498 |
Gross Unrealized Losses | (115) | (336) |
Fair Value | 65,008 | 87,515 |
Held to maturity | ||
Amortized cost | 55,403 | 41,991 |
Unrealized Gains | 437 | 70 |
Unrealized Losses | (759) | (1,798) |
Held to maturity, fair value | 55,081 | 40,263 |
Commercial mortgage-backed securities. | ||
Available for sale | ||
Amortized Cost | 499 | |
Gross Unrealized Gains | 16 | |
Fair Value | 515 | |
Equity securities | ||
Available for sale | ||
Amortized Cost | 19,691 | 18,920 |
Gross Unrealized Gains | 1,666 | 1,263 |
Gross Unrealized Losses | (116) | (343) |
Fair Value | $ 21,241 | $ 19,840 |
Securities - AFS in an Unrealiz
Securities - AFS in an Unrealized Loss Position (Details) $ in Thousands | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($)item |
Number of Securities | ||
Unrealized loss for less than twelve months | item | 59 | 68 |
Unrealized loss for twelve months or longer | item | 39 | 11 |
Total | item | 98 | 79 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 329,825 | $ 267,719 |
Unrealized loss for twelve months or longer | 187,676 | 30,877 |
Estimated Fair Value, Total | 517,501 | 298,596 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 2,258 | 5,863 |
Unrealized loss for twelve months or longer | 6,397 | 1,223 |
Total | $ 8,655 | $ 7,086 |
US Treasury Securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 6 | 7 |
Unrealized loss for twelve months or longer | item | 1 | |
Total | item | 7 | 7 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 15,449 | $ 21,694 |
Unrealized loss for twelve months or longer | 4,150 | |
Estimated Fair Value, Total | 19,599 | 21,694 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 69 | 44 |
Unrealized loss for twelve months or longer | 34 | |
Total | $ 103 | $ 44 |
Bonds | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 10 | 1 |
Total | item | 10 | 1 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 83,476 | $ 14,908 |
Estimated Fair Value, Total | 83,476 | 14,908 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 367 | 67 |
Total | $ 367 | $ 67 |
Residential mortgage-backed Securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 15 | 12 |
Unrealized loss for twelve months or longer | item | 11 | |
Total | item | 26 | 12 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 121,968 | $ 109,398 |
Unrealized loss for twelve months or longer | 93,358 | |
Estimated Fair Value, Total | 215,326 | 109,398 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 820 | 2,941 |
Unrealized loss for twelve months or longer | 2,920 | |
Total | $ 3,740 | $ 2,941 |
Commercial mortgage-backed securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 1 | 2 |
Total | item | 1 | 2 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 5,048 | $ 7,127 |
Estimated Fair Value, Total | 5,048 | 7,127 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 48 | 58 |
Total | $ 48 | $ 58 |
Collateralized mortgage obligations | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 16 | 11 |
Unrealized loss for twelve months or longer | item | 17 | 8 |
Total | item | 33 | 19 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 90,886 | $ 91,144 |
Unrealized loss for twelve months or longer | 80,492 | 19,320 |
Estimated Fair Value, Total | 171,378 | 110,464 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 819 | 2,340 |
Unrealized loss for twelve months or longer | 3,323 | 866 |
Total | $ 4,142 | $ 3,206 |
Corporate securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 1 | 3 |
Total | item | 1 | 3 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 5,073 | $ 5,899 |
Estimated Fair Value, Total | 5,073 | 5,899 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 25 | 91 |
Total | $ 25 | $ 91 |
States and political subdivisions | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 9 | 32 |
Unrealized loss for twelve months or longer | item | 9 | 1 |
Total | item | 18 | 33 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 6,981 | $ 17,549 |
Unrealized loss for twelve months or longer | 2,876 | 450 |
Estimated Fair Value, Total | 9,857 | 17,999 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 97 | 322 |
Unrealized loss for twelve months or longer | 18 | 14 |
Total | $ 115 | $ 336 |
Equity securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 1 | |
Unrealized loss for twelve months or longer | item | 1 | 2 |
Total | item | 2 | 2 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 944 | |
Unrealized loss for twelve months or longer | 6,800 | $ 11,107 |
Estimated Fair Value, Total | 7,744 | 11,107 |
Unrealized Loss | ||
Unrealized loss for less than twelve months | 13 | |
Unrealized loss for twelve months or longer | 102 | 343 |
Total | $ 115 | $ 343 |
Securities - HTM in an Unrealiz
Securities - HTM in an Unrealized Loss Position (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($)item | |
Number of Securities | ||
Unrealized loss for less than twelve months | item | 40 | 101 |
Unrealized loss for twelve months or longer | item | 63 | 2 |
Total | item | 103 | 103 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 93,489 | $ 282,825 |
Unrealized loss for twelve months or longer | 191,404 | 1,863 |
Total | 284,893 | 284,688 |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 656 | 7,043 |
Unrealized loss for twelve months or longer | 5,995 | 13 |
Total | $ 6,651 | $ 7,056 |
Bonds | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 1 | 4 |
Unrealized loss for twelve months or longer | item | 3 | |
Total | item | 4 | 4 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 5,950 | $ 33,225 |
Unrealized loss for twelve months or longer | 31,877 | |
Total | 37,827 | 33,225 |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 50 | 1,287 |
Unrealized loss for twelve months or longer | 1,138 | |
Total | $ 1,188 | $ 1,287 |
Residential mortgage-backed Securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 2 | |
Total | item | 2 | |
Fair Value | ||
Unrealized loss for less than twelve months | $ 13,178 | |
Total | 13,178 | |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 6 | |
Total | $ 6 | |
Commercial mortgage-backed securities | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 7 | 5 |
Unrealized loss for twelve months or longer | item | 2 | 1 |
Total | item | 9 | 6 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 39,396 | $ 18,891 |
Unrealized loss for twelve months or longer | 12,659 | 1,401 |
Total | 52,055 | 20,292 |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 271 | 588 |
Unrealized loss for twelve months or longer | 464 | 5 |
Total | $ 735 | $ 593 |
Collateralized mortgage obligations | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 10 | 19 |
Unrealized loss for twelve months or longer | item | 12 | |
Total | item | 22 | 19 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 37,064 | $ 187,669 |
Unrealized loss for twelve months or longer | 128,270 | |
Total | 165,334 | 187,669 |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 264 | 3,372 |
Unrealized loss for twelve months or longer | 3,705 | |
Total | $ 3,969 | $ 3,372 |
States and political subdivisions | ||
Number of Securities | ||
Unrealized loss for less than twelve months | item | 22 | 71 |
Unrealized loss for twelve months or longer | item | 46 | 1 |
Total | item | 68 | 72 |
Fair Value | ||
Unrealized loss for less than twelve months | $ 11,079 | $ 29,862 |
Unrealized loss for twelve months or longer | 18,598 | 462 |
Total | 29,677 | 30,324 |
Unrealized Losses | ||
Unrealized loss for less than twelve months | 71 | 1,790 |
Unrealized loss for twelve months or longer | 688 | 8 |
Total | $ 759 | $ 1,798 |
Securities - AFS Contractual Ma
Securities - AFS Contractual Maturities (Details) $ in Thousands | Dec. 31, 2017USD ($) |
AFS, Amortized Cost, Rolling Maturity | |
Due in one year or less | $ 101,815 |
Due after one year through five years | 95,284 |
Due after five years through ten years | 30,893 |
Due after ten years | 23,742 |
Total | 251,734 |
Total amortized cost | 748,255 |
AFS, Fair Value, Rolling Maturity | |
Due in one year or less | 101,922 |
Due after one year through five years | 96,442 |
Due after five years through ten years | 32,064 |
Due after ten years | 24,551 |
Total | 254,979 |
Fair Value | 744,319 |
Residential mortgage-backed Securities | |
AFS, Amortized Cost, Rolling Maturity | |
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 246,707 |
AFS, Fair Value, Rolling Maturity | |
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 243,505 |
Collateralized mortgage obligations | |
AFS, Amortized Cost, Rolling Maturity | |
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 237,848 |
AFS, Fair Value, Rolling Maturity | |
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 233,812 |
Commercial mortgage-backed Securities | |
AFS, Amortized Cost, Rolling Maturity | |
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 11,966 |
AFS, Fair Value, Rolling Maturity | |
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | $ 12,023 |
Securities - HTM Contractual Ma
Securities - HTM Contractual Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
HTM, Amortized Cost, Rolling Maturities | ||
Due in one year or less | $ 3,245 | |
Due after one year through five years | 2,847 | |
Due after five years through ten years | 27,051 | |
Due after ten years | 61,275 | |
Total | 94,418 | |
Amortized cost | 355,849 | $ 351,831 |
HTM, Fair Value, Rolling Maturities | ||
Due in one year or less | 3,242 | |
Due after one year through five years | 2,843 | |
Due after five years through ten years | 26,289 | |
Due after ten years | 60,534 | |
Total | 92,908 | |
Fair Value | 349,939 | 345,088 |
Residential mortgage-backed Securities | ||
HTM, Amortized Cost, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 16,130 | |
Amortized cost | 16,130 | 19,606 |
HTM, Fair Value, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 16,174 | |
Fair Value | 16,174 | 19,613 |
Collateralized mortgage obligations | ||
HTM, Amortized Cost, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 173,928 | |
Amortized cost | 173,928 | 217,954 |
HTM, Fair Value, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 169,978 | |
Fair Value | 169,978 | $ 214,710 |
Commercial mortgage-backed Securities | ||
HTM, Amortized Cost, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | 71,373 | |
HTM, Fair Value, Rolling Maturities | ||
Mortgage-backed securities, collateralized mortgage obligations and commercial mortgage-backed securities | $ 70,879 |
Securities - Additional Informa
Securities - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Realized net gains from trading securities portfolio | $ 20,200 | $ 15,900 | $ 12,800 |
Realized net gains from other securities | 16 | 0 | 4,400 |
Carrying amount of securities pledged | 738,500 | 695,100 | |
Fair value of securities pledged | 730,100 | 688,100 | |
Hilltop Broker-Dealers | |||
Realized net gains from trading securities portfolio | 62,800 | 109,800 | $ 300 |
NLC | |||
Deposit with various state insurance departments | $ 9,300 | $ 9,200 |
Non-Covered Loans and Allowan98
Non-Covered Loans and Allowance for Non-Covered Loan Losses - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Loans | ||||
Total loans | $ 6,273,669 | $ 5,843,499 | ||
Allowance for loan losses | (60,957) | (54,186) | ||
Non-covered loans, net | 6,212,712 | 5,789,313 | ||
Noncovered | ||||
Loans | ||||
Total loans | 6,273,669 | 5,843,499 | ||
Allowance for loan losses | (60,957) | (54,186) | $ (45,415) | $ (37,041) |
Non-covered loans, net | 6,212,712 | 5,789,313 | ||
Noncovered | Commercial and industrial | ||||
Loans | ||||
Total loans | 1,681,205 | 1,696,453 | ||
Allowance for loan losses | (23,674) | (21,369) | (19,845) | (18,833) |
Noncovered | Real estate | ||||
Loans | ||||
Total loans | 3,011,524 | 2,816,767 | ||
Allowance for loan losses | (28,775) | (25,236) | (18,983) | (11,131) |
Noncovered | Construction and land development | ||||
Loans | ||||
Total loans | 962,605 | 786,850 | ||
Allowance for loan losses | (7,844) | (7,002) | (6,064) | (6,450) |
Noncovered | Consumer | ||||
Loans | ||||
Total loans | 40,446 | 41,352 | ||
Allowance for loan losses | (311) | (424) | (314) | (461) |
Noncovered | Broker-dealer | ||||
Loans | ||||
Total loans | 577,889 | 502,077 | ||
Allowance for loan losses | $ (353) | $ (155) | $ (209) | $ (166) |
Non-Covered Loans and Allowan99
Non-Covered Loans and Allowance for Non-Covered Loan Losses - PCI Loans (Details) - PCI loans - Noncovered - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Carrying values and the outstanding contractual balances of the PCI loans | |||
Carrying amount | $ 37,204 | $ 51,432 | |
Outstanding balance | 51,064 | 67,988 | |
Changes in the accretable yield for the acquired impaired loans | |||
Balance, beginning of period | 13,116 | 17,744 | $ 12,814 |
Additions | 14,579 | ||
Reclassifications from nonaccretable difference, net | 3,836 | 6,168 | 19,759 |
Disposals of loans | (664) | (2,371) | |
Accretion | (9,275) | (10,796) | (27,037) |
Balance, end of period | 7,013 | 13,116 | $ 17,744 |
Nonaccretable difference | $ 19,200 | $ 22,800 |
Non-Covered Loans and Allowa100
Non-Covered Loans and Allowance for Non-Covered Loan Losses - Impaired Loans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Impaired loans | |||
Days outstanding loans and leases receivable are generally considered past due | 90 days | ||
Noncovered | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | $ 113,685 | $ 105,715 | |
Recorded Investment with No Allowance | 45,031 | 39,034 | |
Recorded Investment with Allowance | 26,633 | 30,123 | |
Total Recorded Investment | 71,664 | 69,157 | |
Related Allowance | 3,428 | 3,379 | |
Average investment in non-covered impaired loans | |||
Average investment in non-covered impaired loans | 70,413 | 77,718 | $ 75,045 |
Non-accrual loans | |||
Non-accrual loans | 37,779 | 22,745 | |
Interest income recorded on accruing impaired loans | 500 | 200 | 8,900 |
Noncovered | Secured | |||
Average investment in non-covered impaired loans | |||
Average investment in non-covered impaired loans | 18,418 | 19,730 | 25,991 |
Non-accrual loans | |||
Non-accrual loans | 20,262 | 8,590 | |
Noncovered | Unsecured | |||
Average investment in non-covered impaired loans | |||
Average investment in non-covered impaired loans | 771 | 486 | 104 |
Non-accrual loans | |||
Non-accrual loans | 616 | 925 | |
Noncovered | Secured by Commercial Properties | |||
Average investment in non-covered impaired loans | |||
Average investment in non-covered impaired loans | 36,403 | 40,014 | 32,149 |
Non-accrual loans | |||
Non-accrual loans | 14,620 | 11,034 | |
Noncovered | Secured by Residential Properties | |||
Average investment in non-covered impaired loans | |||
Average investment in non-covered impaired loans | 11,324 | 12,085 | 7,769 |
Non-accrual loans | |||
Non-accrual loans | 1,614 | 1,197 | |
Non-accrual loans held for sale | 2,700 | 1,700 | |
Noncovered | Residential Construction Loans | |||
Average investment in non-covered impaired loans | |||
Average investment in non-covered impaired loans | 14 | 125 | 111 |
Non-accrual loans | |||
Non-accrual loans | 28 | ||
Noncovered | Commercial construction loans and land development | |||
Average investment in non-covered impaired loans | |||
Average investment in non-covered impaired loans | 3,122 | 4,619 | 7,462 |
Non-accrual loans | |||
Non-accrual loans | 611 | 727 | |
Noncovered | Consumer | |||
Average investment in non-covered impaired loans | |||
Average investment in non-covered impaired loans | 361 | 659 | $ 1,459 |
Non-accrual loans | |||
Non-accrual loans | 56 | 244 | |
Noncovered | PCI loans | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 71,328 | 85,968 | |
Recorded Investment with No Allowance | 16,940 | 23,360 | |
Recorded Investment with Allowance | 20,264 | 28,072 | |
Total Recorded Investment | 37,204 | 51,432 | |
Related Allowance | 2,038 | 3,097 | |
Non-accrual loans | |||
Non-accrual loans | 3,300 | 5,000 | |
Noncovered | PCI loans | Secured | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 19,752 | 25,354 | |
Recorded Investment with No Allowance | 3,610 | 3,234 | |
Recorded Investment with Allowance | 2,489 | 5,438 | |
Total Recorded Investment | 6,099 | 8,672 | |
Related Allowance | 89 | 557 | |
Noncovered | PCI loans | Secured by Commercial Properties | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 34,598 | 38,005 | |
Recorded Investment with No Allowance | 7,583 | 11,097 | |
Recorded Investment with Allowance | 12,092 | 17,413 | |
Total Recorded Investment | 19,675 | 28,510 | |
Related Allowance | 1,391 | 1,907 | |
Noncovered | PCI loans | Secured by Residential Properties | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 12,600 | 13,606 | |
Recorded Investment with No Allowance | 5,307 | 7,401 | |
Recorded Investment with Allowance | 4,558 | 3,088 | |
Total Recorded Investment | 9,865 | 10,489 | |
Related Allowance | 325 | 200 | |
Noncovered | PCI loans | Commercial construction loans and land development | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 2,001 | 5,780 | |
Recorded Investment with No Allowance | 428 | 1,391 | |
Recorded Investment with Allowance | 1,010 | 2,076 | |
Total Recorded Investment | 1,438 | 3,467 | |
Related Allowance | 215 | 377 | |
Noncovered | PCI loans | Consumer | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 2,377 | 3,223 | |
Recorded Investment with No Allowance | 12 | 237 | |
Recorded Investment with Allowance | 115 | 57 | |
Total Recorded Investment | 127 | 294 | |
Related Allowance | 18 | 56 | |
Noncovered | Loans excluding PCI Loans | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 42,357 | 19,747 | |
Recorded Investment with No Allowance | 28,091 | 15,674 | |
Recorded Investment with Allowance | 6,369 | 2,051 | |
Total Recorded Investment | 34,460 | 17,725 | |
Related Allowance | 1,390 | 282 | |
Noncovered | Loans excluding PCI Loans | Secured | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 23,666 | 6,311 | |
Recorded Investment with No Allowance | 15,308 | 3,313 | |
Recorded Investment with Allowance | 2,072 | 1,372 | |
Total Recorded Investment | 17,380 | 4,685 | |
Related Allowance | 365 | 115 | |
Noncovered | Loans excluding PCI Loans | Unsecured | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 761 | 946 | |
Recorded Investment with No Allowance | 616 | 925 | |
Total Recorded Investment | 616 | 925 | |
Noncovered | Loans excluding PCI Loans | Secured by Commercial Properties | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 15,504 | 10,134 | |
Recorded Investment with No Allowance | 10,934 | 10,000 | |
Recorded Investment with Allowance | 3,686 | ||
Total Recorded Investment | 14,620 | 10,000 | |
Related Allowance | 932 | ||
Noncovered | Loans excluding PCI Loans | Secured by Residential Properties | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 1,596 | 1,344 | |
Recorded Investment with No Allowance | 1,177 | 1,116 | |
Total Recorded Investment | 1,177 | 1,116 | |
Noncovered | Loans excluding PCI Loans | Residential Construction Loans | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 15 | 28 | |
Recorded Investment with No Allowance | 28 | ||
Total Recorded Investment | 28 | ||
Noncovered | Loans excluding PCI Loans | Commercial construction loans and land development | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 653 | 738 | |
Recorded Investment with No Allowance | 48 | ||
Recorded Investment with Allowance | 611 | 679 | |
Total Recorded Investment | 611 | 727 | |
Related Allowance | 93 | 167 | |
Noncovered | Loans excluding PCI Loans | Consumer | |||
Non-covered impaired loans | |||
Unpaid Contractual Principal balance | 162 | 246 | |
Recorded Investment with No Allowance | 56 | 244 | |
Total Recorded Investment | $ 56 | $ 244 |
Non-Covered Loans and Allowa101
Non-Covered Loans and Allowance for Non-Covered Loan Losses - TDRs (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)loan | Dec. 31, 2016USD ($)loan | Dec. 31, 2015USD ($)loan | |
AB Note | Minimum | PlainsCapital | |||
TDRs, Non-covered loans | |||
Number of loans into which a single loan may be reconfigured | loan | 2 | ||
Noncovered | Payment Term Extension | |||
TDRs, Non-covered loans | |||
Number of TDR loans granted | loan | 4 | 1 | 3 |
TDR at extension | $ 6,787 | $ 1,196 | $ 1,248 |
TDR modification, end of period | $ 6,426 | $ 944 | $ 1,122 |
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | loan | 2 | 1 | |
TDR modifications, in which a payment was at least 30 days past due | $ 2,136 | $ 1,196 | |
TDR with payment at least 30 days past due | $ 1,963 | $ 944 | |
Noncovered | Secured | Payment Term Extension | |||
TDRs, Non-covered loans | |||
Number of TDR loans granted | loan | 1 | 1 | 1 |
TDR at extension | $ 1,357 | $ 1,196 | $ 89 |
TDR modification, end of period | $ 1,186 | $ 944 | $ 82 |
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | loan | 1 | ||
TDR modifications, in which a payment was at least 30 days past due | $ 1,196 | ||
TDR with payment at least 30 days past due | $ 944 | ||
Noncovered | Secured by Commercial Properties | Payment Term Extension | |||
TDRs, Non-covered loans | |||
Number of TDR loans granted | loan | 2 | 1 | |
TDR at extension | $ 4,775 | $ 1,083 | |
TDR modification, end of period | $ 4,629 | $ 1,040 | |
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | loan | 1 | ||
TDR modifications, in which a payment was at least 30 days past due | $ 1,481 | ||
TDR with payment at least 30 days past due | $ 1,352 | ||
Noncovered | Commercial construction loans and land development | Payment Term Extension | |||
TDRs, Non-covered loans | |||
Number of TDR loans granted | loan | 1 | 1 | |
TDR at extension | $ 655 | $ 76 | |
TDR modification, end of period | $ 611 | ||
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | loan | 1 | ||
TDR modifications, in which a payment was at least 30 days past due | $ 655 | ||
TDR with payment at least 30 days past due | $ 611 |
Non-Covered Loans and Allowa102
Non-Covered Loans and Allowance for Non-Covered Loan Losses - Aging (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total loans | $ 6,273,669 | $ 5,843,499 |
Noncovered | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 16,563 | 30,969 |
Current Loans | 6,219,902 | 5,761,098 |
Total loans | 6,273,669 | 5,843,499 |
Accruing Loans Past Due 90 Days or More | 640 | 3,096 |
Noncovered | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 6,513 | 9,055 |
Noncovered | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 1,723 | 12,326 |
Noncovered | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 8,327 | 9,588 |
Noncovered | PCI loans | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total loans | 37,204 | 51,432 |
Noncovered | Secured | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 8,086 | 12,201 |
Current Loans | 1,544,131 | 1,576,239 |
Total loans | 1,558,316 | 1,597,112 |
Accruing Loans Past Due 90 Days or More | 640 | 3,095 |
Noncovered | Secured | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 2,060 | 4,727 |
Noncovered | Secured | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 312 | 704 |
Noncovered | Secured | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 5,714 | 6,770 |
Noncovered | Secured | PCI loans | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total loans | 6,099 | 8,672 |
Noncovered | Unsecured | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 642 | 1,506 |
Current Loans | 122,247 | 97,835 |
Total loans | 122,889 | 99,341 |
Accruing Loans Past Due 90 Days or More | 1 | |
Noncovered | Unsecured | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 642 | 596 |
Noncovered | Unsecured | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 1 | |
Noncovered | Unsecured | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 909 | |
Noncovered | Secured by Commercial Properties | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 2,637 | 11,459 |
Current Loans | 2,213,331 | 1,915,126 |
Total loans | 2,235,643 | 1,955,095 |
Noncovered | Secured by Commercial Properties | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 442 | 550 |
Noncovered | Secured by Commercial Properties | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 9,417 | |
Noncovered | Secured by Commercial Properties | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 2,195 | 1,492 |
Noncovered | Secured by Commercial Properties | PCI loans | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total loans | 19,675 | 28,510 |
Noncovered | Secured by Residential Properties | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 3,198 | 1,236 |
Current Loans | 762,818 | 849,947 |
Total loans | 775,881 | 861,672 |
Noncovered | Secured by Residential Properties | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 1,490 | 506 |
Noncovered | Secured by Residential Properties | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 1,290 | 361 |
Noncovered | Secured by Residential Properties | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 418 | 369 |
Noncovered | Secured by Residential Properties | PCI loans | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total loans | 9,865 | 10,489 |
Noncovered | Residential Construction Loans | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 315 | 28 |
Current Loans | 176,937 | 128,624 |
Total loans | 177,252 | 128,652 |
Noncovered | Residential Construction Loans | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 315 | |
Noncovered | Residential Construction Loans | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 28 | |
Noncovered | Commercial construction loans and land development | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 1,471 | 4,332 |
Current Loans | 782,444 | 650,399 |
Total loans | 785,353 | 658,198 |
Noncovered | Commercial construction loans and land development | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 1,370 | 2,500 |
Noncovered | Commercial construction loans and land development | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 101 | 1,784 |
Noncovered | Commercial construction loans and land development | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 48 | |
Noncovered | Commercial construction loans and land development | PCI loans | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total loans | 1,438 | 3,467 |
Noncovered | Consumer | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 214 | 207 |
Current Loans | 40,105 | 40,851 |
Total loans | 40,446 | 41,352 |
Noncovered | Consumer | Financing Receivables, 30 to 59 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 194 | 176 |
Noncovered | Consumer | Financing Receivables, 60 to 89 Days Past Due | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total Past Due Loans | 20 | 31 |
Noncovered | Consumer | PCI loans | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Total loans | 127 | 294 |
Noncovered | Broker-dealer | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Current Loans | 577,889 | 502,077 |
Total loans | 577,889 | 502,077 |
Noncovered | PrimeLending | U.S. Government Agencies | ||
Non-Covered Loans and Allowance for Non-Covered Loan Losses | ||
Accruing Loans Past Due 90 Days or More | 84,500 | 44,400 |
Unpaid principal balance loans past due 90 days or more | $ 85,200 | $ 44,900 |
Non-Covered Loans and Allowa103
Non-Covered Loans and Allowance for Non-Covered Loan Losses - Internal Risk Grades (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Internal risk grades of non-covered loans | ||
Total loans | $ 6,273,669 | $ 5,843,499 |
Noncovered | ||
Internal risk grades of non-covered loans | ||
Total loans | 6,273,669 | 5,843,499 |
Noncovered | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 6,092,219 | 5,689,490 |
Noncovered | Special Mention | ||
Internal risk grades of non-covered loans | ||
Total loans | 27,260 | 3,771 |
Noncovered | Substandard | ||
Internal risk grades of non-covered loans | ||
Total loans | 116,986 | 98,806 |
Noncovered | Secured | ||
Internal risk grades of non-covered loans | ||
Total loans | 1,558,316 | 1,597,112 |
Noncovered | Secured | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 1,483,502 | 1,531,895 |
Noncovered | Secured | Special Mention | ||
Internal risk grades of non-covered loans | ||
Total loans | 17,354 | 72 |
Noncovered | Secured | Substandard | ||
Internal risk grades of non-covered loans | ||
Total loans | 51,361 | 56,473 |
Noncovered | Unsecured | ||
Internal risk grades of non-covered loans | ||
Total loans | 122,889 | 99,341 |
Noncovered | Unsecured | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 121,774 | 97,646 |
Noncovered | Unsecured | Substandard | ||
Internal risk grades of non-covered loans | ||
Total loans | 1,115 | 1,695 |
Noncovered | Secured by Commercial Properties | ||
Internal risk grades of non-covered loans | ||
Total loans | 2,235,643 | 1,955,095 |
Noncovered | Secured by Commercial Properties | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 2,154,595 | 1,888,231 |
Noncovered | Secured by Commercial Properties | Special Mention | ||
Internal risk grades of non-covered loans | ||
Total loans | 7,647 | 3,693 |
Noncovered | Secured by Commercial Properties | Substandard | ||
Internal risk grades of non-covered loans | ||
Total loans | 53,726 | 34,661 |
Noncovered | Secured by Residential Properties | ||
Internal risk grades of non-covered loans | ||
Total loans | 775,881 | 861,672 |
Noncovered | Secured by Residential Properties | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 756,091 | 846,420 |
Noncovered | Secured by Residential Properties | Substandard | ||
Internal risk grades of non-covered loans | ||
Total loans | 9,925 | 4,763 |
Noncovered | Residential Construction Loans | ||
Internal risk grades of non-covered loans | ||
Total loans | 177,252 | 128,652 |
Noncovered | Residential Construction Loans | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 177,252 | 128,624 |
Noncovered | Residential Construction Loans | Substandard | ||
Internal risk grades of non-covered loans | ||
Total loans | 28 | |
Noncovered | Commercial construction loans and land development | ||
Internal risk grades of non-covered loans | ||
Total loans | 785,353 | 658,198 |
Noncovered | Commercial construction loans and land development | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 780,905 | 653,808 |
Noncovered | Commercial construction loans and land development | Special Mention | ||
Internal risk grades of non-covered loans | ||
Total loans | 2,259 | |
Noncovered | Commercial construction loans and land development | Substandard | ||
Internal risk grades of non-covered loans | ||
Total loans | 751 | 923 |
Noncovered | Consumer | ||
Internal risk grades of non-covered loans | ||
Total loans | 40,446 | 41,352 |
Noncovered | Consumer | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 40,211 | 40,789 |
Noncovered | Consumer | Special Mention | ||
Internal risk grades of non-covered loans | ||
Total loans | 6 | |
Noncovered | Consumer | Substandard | ||
Internal risk grades of non-covered loans | ||
Total loans | 108 | 263 |
Noncovered | Broker-dealer | ||
Internal risk grades of non-covered loans | ||
Total loans | 577,889 | 502,077 |
Noncovered | Broker-dealer | Pass | ||
Internal risk grades of non-covered loans | ||
Total loans | 577,889 | 502,077 |
Noncovered | PCI loans | ||
Internal risk grades of non-covered loans | ||
Total loans | 37,204 | 51,432 |
Noncovered | PCI loans | Secured | ||
Internal risk grades of non-covered loans | ||
Total loans | 6,099 | 8,672 |
Noncovered | PCI loans | Secured by Commercial Properties | ||
Internal risk grades of non-covered loans | ||
Total loans | 19,675 | 28,510 |
Noncovered | PCI loans | Secured by Residential Properties | ||
Internal risk grades of non-covered loans | ||
Total loans | 9,865 | 10,489 |
Noncovered | PCI loans | Commercial construction loans and land development | ||
Internal risk grades of non-covered loans | ||
Total loans | 1,438 | 3,467 |
Noncovered | PCI loans | Consumer | ||
Internal risk grades of non-covered loans | ||
Total loans | $ 127 | $ 294 |
Non-Covered Loans and Allowa104
Non-Covered Loans and Allowance for Non-Covered Loan Losses - Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | $ 54,186 | $ 54,186 | |||||||||||
Provision charged to (recapture from) operations | $ 5,453 | $ 1,260 | $ 5,853 | 1,705 | $ 4,347 | $ 3,990 | $ 28,876 | $ 3,407 | 14,271 | $ 40,620 | $ 12,715 | ||
Balance, end of period | 60,957 | 54,186 | 60,957 | 54,186 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | $ 6,273,669 | $ 5,843,499 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | 60,957 | 54,186 | 54,186 | $ 54,186 | 54,186 | 60,957 | 54,186 | ||||||
Originated Financing Receivable | |||||||||||||
Allowance for loan losses | |||||||||||||
Rolling period considered for average net loss rate to calculate historical loss factors | 3 years | ||||||||||||
Originated Financing Receivable | Minimum | |||||||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment | 500 | ||||||||||||
Noncovered | |||||||||||||
Allowance for loan losses | |||||||||||||
Charge-off of single loan, currently in default | $ 24,500 | ||||||||||||
Other noninterest income coverage provided by an insurance policy for forgery | $ 15,000 | ||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 54,186 | 45,415 | $ 54,186 | 45,415 | 37,041 | ||||||||
Provision charged to (recapture from) operations | 11,406 | 41,741 | 12,173 | ||||||||||
Loans charged off | (6,779) | (35,419) | (8,127) | ||||||||||
Recoveries on charged off loans | 2,144 | 2,449 | 4,328 | ||||||||||
Balance, end of period | 60,957 | 54,186 | 60,957 | 54,186 | 45,415 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment | 31,212 | 15,144 | |||||||||||
Loans collectively evaluated for impairment | 6,205,253 | 5,776,923 | |||||||||||
Total loans | 6,273,669 | 5,843,499 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment, allowance | 1,390 | 282 | |||||||||||
Loans collectively evaluated for impairment, allowance | 57,529 | 50,807 | |||||||||||
Total loans, allowance | 60,957 | 54,186 | 54,186 | 45,415 | 54,186 | 45,415 | 37,041 | 60,957 | 54,186 | ||||
Noncovered | Commercial and industrial | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 21,369 | 19,845 | 21,369 | 19,845 | 18,833 | ||||||||
Provision charged to (recapture from) operations | 6,725 | 33,369 | 4,598 | ||||||||||
Loans charged off | (6,253) | (33,776) | (7,144) | ||||||||||
Recoveries on charged off loans | 1,833 | 1,931 | 3,558 | ||||||||||
Balance, end of period | 23,674 | 21,369 | 23,674 | 21,369 | 19,845 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment | 16,819 | 4,508 | |||||||||||
Loans collectively evaluated for impairment | 1,658,287 | 1,683,273 | |||||||||||
Total loans | 1,681,205 | 1,696,453 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment, allowance | 365 | 115 | |||||||||||
Loans collectively evaluated for impairment, allowance | 23,220 | 20,697 | |||||||||||
Total loans, allowance | 23,674 | 21,369 | 21,369 | 19,845 | 21,369 | 19,845 | 18,833 | 23,674 | 21,369 | ||||
Noncovered | Real estate | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 25,236 | 18,983 | 25,236 | 18,983 | 11,131 | ||||||||
Provision charged to (recapture from) operations | 3,619 | 7,297 | 7,937 | ||||||||||
Loans charged off | (305) | (1,439) | (605) | ||||||||||
Recoveries on charged off loans | 225 | 395 | 520 | ||||||||||
Balance, end of period | 28,775 | 25,236 | 28,775 | 25,236 | 18,983 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment | 13,782 | 9,704 | |||||||||||
Loans collectively evaluated for impairment | 2,968,202 | 2,768,064 | |||||||||||
Total loans | 3,011,524 | 2,816,767 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment, allowance | 932 | ||||||||||||
Loans collectively evaluated for impairment, allowance | 26,127 | 23,129 | |||||||||||
Total loans, allowance | 28,775 | 25,236 | 25,236 | 18,983 | 25,236 | 18,983 | 11,131 | 28,775 | 25,236 | ||||
Noncovered | Construction and land development | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 7,002 | 6,064 | 7,002 | 6,064 | 6,450 | ||||||||
Provision charged to (recapture from) operations | 848 | 938 | (386) | ||||||||||
Loans charged off | (13) | ||||||||||||
Recoveries on charged off loans | 7 | ||||||||||||
Balance, end of period | 7,844 | 7,002 | 7,844 | 7,002 | 6,064 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment | 611 | 727 | |||||||||||
Loans collectively evaluated for impairment | 960,556 | 782,656 | |||||||||||
Total loans | 962,605 | 786,850 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment, allowance | 93 | 167 | |||||||||||
Loans collectively evaluated for impairment, allowance | 7,536 | 6,458 | |||||||||||
Total loans, allowance | 7,844 | 7,002 | 7,002 | 6,064 | 7,002 | 6,064 | 6,450 | 7,844 | 7,002 | ||||
Noncovered | Consumer | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 424 | 314 | 424 | 314 | 461 | ||||||||
Provision charged to (recapture from) operations | 16 | 190 | 104 | ||||||||||
Loans charged off | (208) | (203) | (378) | ||||||||||
Recoveries on charged off loans | 79 | 123 | 127 | ||||||||||
Balance, end of period | 311 | 424 | 311 | 424 | 314 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans individually evaluated for impairment | 205 | ||||||||||||
Loans collectively evaluated for impairment | 40,319 | 40,853 | |||||||||||
Total loans | 40,446 | 41,352 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment, allowance | 293 | 368 | |||||||||||
Total loans, allowance | 311 | 424 | 424 | 314 | 424 | 314 | 461 | 311 | 424 | ||||
Noncovered | Broker-dealer | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 155 | 209 | 155 | 209 | 166 | ||||||||
Provision charged to (recapture from) operations | 198 | (53) | (80) | ||||||||||
Loans charged off | (1) | ||||||||||||
Recoveries on charged off loans | 123 | ||||||||||||
Balance, end of period | 353 | 155 | 353 | 155 | 209 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment | 577,889 | 502,077 | |||||||||||
Total loans | 577,889 | 502,077 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment, allowance | 353 | 155 | |||||||||||
Total loans, allowance | 353 | 155 | 155 | $ 209 | 155 | 209 | $ 166 | 353 | 155 | ||||
Noncovered | PCI loans | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 3,097 | 3,097 | |||||||||||
Balance, end of period | 2,038 | 3,097 | 2,038 | 3,097 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | 37,204 | 51,432 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | 2,038 | 3,097 | 3,097 | 3,097 | 3,097 | 2,038 | 3,097 | ||||||
Noncovered | PCI loans | Commercial and industrial | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 557 | 557 | |||||||||||
Balance, end of period | 89 | 557 | 89 | 557 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | 6,099 | 8,672 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | 89 | 557 | 557 | 557 | 557 | 89 | 557 | ||||||
Noncovered | PCI loans | Real estate | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 2,107 | 2,107 | |||||||||||
Balance, end of period | 1,716 | 2,107 | 1,716 | 2,107 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | 29,540 | 38,999 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | 1,716 | 2,107 | 2,107 | 2,107 | 2,107 | 1,716 | 2,107 | ||||||
Noncovered | PCI loans | Construction and land development | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 377 | 377 | |||||||||||
Balance, end of period | 215 | 377 | 215 | 377 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | 1,438 | 3,467 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | 215 | 377 | 377 | 377 | 377 | 215 | 377 | ||||||
Noncovered | PCI loans | Consumer | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 56 | 56 | |||||||||||
Balance, end of period | 18 | 56 | 18 | 56 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | 127 | 294 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | $ 18 | $ 56 | $ 56 | $ 56 | $ 56 | $ 18 | $ 56 |
Covered Assets and Indemnifi105
Covered Assets and Indemnification Asset - Indemnification Asset (Details) - PlainsCapital - FNB - Covered - USD ($) $ in Millions | Sep. 13, 2013 | Dec. 31, 2017 |
Loans | ||
Percentage of net losses to be absorbed by FDIC on the first $240.4 million of net losses incurred as per the loss sharing agreement | 80.00% | |
Threshold amount of net losses incurred for 80% of net losses to be absorbed by FDIC as per the loss sharing agreement, first layer | $ 240.4 | |
Percentage of net losses to be absorbed by FDIC in excess of $240.4 million up to and including $365.7 million of net losses incurred as per the loss sharing agreement | 0.00% | |
Threshold amount of net losses incurred for 0% of net losses to be absorbed by FDIC as per the loss sharing agreement, second layer | $ 365.7 | |
Percentage of net losses to be absorbed by FDIC in excess of $365.7 million of net losses incurred as per the loss sharing agreement | 80.00% | |
Threshold limit of subsequent recoveries reimbursable to the FDIC under the loss share agreement | $ 0 | |
Period for which payment is required to be made to the FDIC of true-up amount | 10 years | |
Payment accrual based on the current aggregate estimate of realized losses | $ 16.3 | |
Commercial Loan | ||
Loans | ||
Period of loss-sharing agreements in effect | 5 years | |
Period of loss recovery provisions in effect | 8 years | |
Single Family Residential Loans | ||
Loans | ||
Period of loss-sharing agreements in effect | 10 years | |
Period of loss recovery provisions in effect | 10 years |
Covered Assets and Indemnifi106
Covered Assets and Indemnification Asset - Covered Loans Summary (Details) - USD ($) $ in Thousands | Sep. 13, 2013 | Dec. 31, 2017 | Dec. 31, 2016 |
Covered Loans | |||
Allowance for covered loans | $ (2,729) | $ (413) | |
Total covered loans, net of allowance | 179,400 | 255,714 | |
Acquired loans | |||
Loans | |||
Carryover of the allowance for loan losses recorded | 0 | ||
Covered | |||
Covered Loans | |||
Total covered loans | 182,129 | 256,127 | |
Allowance for covered loans | (2,729) | (413) | |
Total covered loans, net of allowance | 179,400 | 255,714 | |
Covered | Commercial and industrial | |||
Covered Loans | |||
Total covered loans | 1,055 | 2,697 | |
Covered | Real estate | |||
Covered Loans | |||
Total covered loans | 179,359 | 244,469 | |
Covered | Construction and land development | |||
Covered Loans | |||
Total covered loans | $ 1,715 | $ 8,961 | |
Covered | Acquired loans | |||
Loans | |||
Fair value of loans acquired | $ 1,100,000 | ||
Carryover of the allowance for loan losses recorded | $ 0 |
Covered Assets and Indemnifi107
Covered Assets and Indemnification Asset - Covered PCI Loans (Details) - Covered - PCI loans - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Carrying value and the outstanding contractual balance of the covered PCI loans | |||
Carrying amount | $ 87,113 | $ 133,754 | |
Outstanding balance | 179,019 | 266,098 | |
Changes in the accretable yield for the acquired impaired loans | |||
Balance, beginning of period | 143,731 | 176,719 | $ 193,493 |
Reclassifications from nonaccretable difference, net | 9,110 | 41,239 | 70,884 |
Transfer of loans to covered OREO | (999) | (487) | (1,309) |
Accretion | (60,009) | (73,740) | (86,349) |
Balance, end of period | 91,833 | 143,731 | $ 176,719 |
Nonaccretable difference | $ 72,700 | $ 94,500 |
Covered Assets and Indemnifi108
Covered Assets and Indemnification Asset - Impaired Loans (Details) - Covered - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Impaired loans | |||
Unpaid Contractual Principal Balance | $ 233,230 | $ 335,091 | |
Recorded Investment with No Allowance | 8,023 | 110,101 | |
Recorded Investment with Allowance | 84,472 | 27,572 | |
Total Recorded Investment | 92,495 | 137,673 | |
Related Allowance | 2,697 | 344 | |
Average investment in covered impaired loans | |||
Average investment | 115,085 | 181,921 | $ 332,403 |
Non-accrual loans | |||
Non-accrual loans | 5,104 | 3,836 | |
Interest income recorded | 1,300 | 1,100 | 17,200 |
Secured | |||
Average investment in covered impaired loans | |||
Average investment | 730 | 3,530 | 9,934 |
Non-accrual loans | |||
Non-accrual loans | 52 | ||
Unsecured | |||
Average investment in covered impaired loans | |||
Average investment | 150 | 1,040 | 4,293 |
Secured by Commercial Properties | |||
Average investment in covered impaired loans | |||
Average investment | 38,253 | 75,159 | 162,812 |
Non-accrual loans | |||
Non-accrual loans | 730 | ||
Secured by Residential Properties | |||
Average investment in covered impaired loans | |||
Average investment | 73,332 | 88,794 | 121,069 |
Non-accrual loans | |||
Non-accrual loans | 5,087 | 3,035 | |
Residential Construction Loans | |||
Average investment in covered impaired loans | |||
Average investment | 331 | 1,017 | |
Commercial construction loans and land development | |||
Average investment in covered impaired loans | |||
Average investment | 2,620 | 13,067 | $ 33,278 |
Non-accrual loans | |||
Non-accrual loans | 17 | 19 | |
PCI loans | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 226,889 | 330,444 | |
Recorded Investment with No Allowance | 2,641 | 106,182 | |
Recorded Investment with Allowance | 84,472 | 27,572 | |
Total Recorded Investment | 87,113 | 133,754 | |
Related Allowance | 2,697 | 344 | |
Non-accrual loans | |||
Non-accrual loans | 400 | ||
PCI loans | Secured | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 3,783 | 10,579 | |
Recorded Investment with No Allowance | 1,024 | ||
Recorded Investment with Allowance | 194 | 189 | |
Total Recorded Investment | 194 | 1,213 | |
Related Allowance | 19 | 13 | |
PCI loans | Unsecured | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 5,732 | 3,259 | |
Recorded Investment with No Allowance | 299 | ||
Total Recorded Investment | 299 | ||
PCI loans | Secured by Commercial Properties | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 80,223 | 143,934 | |
Recorded Investment with No Allowance | 2,388 | 26,415 | |
Recorded Investment with Allowance | 21,171 | 26,222 | |
Total Recorded Investment | 23,559 | 52,637 | |
Related Allowance | 1,817 | 271 | |
PCI loans | Secured by Residential Properties | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 125,361 | 148,384 | |
Recorded Investment with No Allowance | 249 | 73,240 | |
Recorded Investment with Allowance | 63,107 | 1,161 | |
Total Recorded Investment | 63,356 | 74,401 | |
Related Allowance | 861 | 60 | |
PCI loans | Residential Construction Loans | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 672 | 766 | |
PCI loans | Commercial construction loans and land development | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 11,118 | 23,522 | |
Recorded Investment with No Allowance | 4 | 5,204 | |
Total Recorded Investment | 4 | 5,204 | |
Loans excluding PCI Loans | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 6,341 | 4,647 | |
Recorded Investment with No Allowance | 5,382 | 3,919 | |
Total Recorded Investment | 5,382 | 3,919 | |
Loans excluding PCI Loans | Secured | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 44 | 52 | |
Recorded Investment with No Allowance | 52 | ||
Total Recorded Investment | 52 | ||
Loans excluding PCI Loans | Secured by Commercial Properties | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 396 | ||
Recorded Investment with No Allowance | 310 | ||
Total Recorded Investment | 310 | ||
Loans excluding PCI Loans | Secured by Residential Properties | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 6,279 | 4,175 | |
Recorded Investment with No Allowance | 5,370 | 3,537 | |
Total Recorded Investment | 5,370 | 3,537 | |
Loans excluding PCI Loans | Commercial construction loans and land development | |||
Impaired loans | |||
Unpaid Contractual Principal Balance | 18 | 24 | |
Recorded Investment with No Allowance | 12 | 20 | |
Total Recorded Investment | $ 12 | $ 20 |
Covered Assets and Indemnifi109
Covered Assets and Indemnification Asset - TDRs (Details) - Covered $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017loan | Dec. 31, 2016loan | Dec. 31, 2015USD ($)loanitem | |
Recorded Investment in loans | |||
Number of TDR loans granted | 0 | 0 | 8 |
TDR at extension | $ | $ 1,433 | ||
TDR modification, end of period | $ | $ 824 | ||
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | 0 | 0 | |
AB Note | |||
Recorded Investment in loans | |||
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | 6 | ||
Interest Rate Adjustment | |||
Recorded Investment in loans | |||
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | 6 | ||
Payment Term Extension | |||
Recorded Investment in loans | |||
Number of TDRs granted in preceding twelve months for which payment was at least 30 days past due | 2 | ||
Secured by Commercial Properties | |||
Recorded Investment in loans | |||
Number of TDR loans granted | 1 | ||
TDR at extension | $ | $ 573 | ||
Secured by Residential Properties | |||
Recorded Investment in loans | |||
Number of TDR loans granted | 7 | ||
TDR at extension | $ | $ 860 | ||
TDR modification, end of period | $ | $ 824 |
Covered Assets and Indemnifi110
Covered Assets and Indemnification Asset - Aging (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Covered Assets and Indemnification Asset | ||
Total loans | $ 6,273,669 | $ 5,843,499 |
Covered | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 10,421 | 6,777 |
Current Loans | 84,595 | 115,596 |
Total loans | 182,129 | 256,127 |
Accruing Loans Past Due 90 Days or More | 283 | 173 |
Covered | Financing Receivables, 30 to 59 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 5,871 | 3,622 |
Covered | Financing Receivables, 60 to 89 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 1,324 | 1,580 |
Covered | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 3,226 | 1,575 |
Covered | PCI loans | ||
Covered Assets and Indemnification Asset | ||
Total loans | 87,113 | 133,754 |
Covered | Secured | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 102 | |
Current Loans | 861 | 1,083 |
Total loans | 1,055 | 2,398 |
Accruing Loans Past Due 90 Days or More | 44 | |
Covered | Secured | Financing Receivables, 60 to 89 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 6 | |
Covered | Secured | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 96 | |
Covered | Secured | PCI loans | ||
Covered Assets and Indemnification Asset | ||
Total loans | 194 | 1,213 |
Covered | Unsecured | ||
Covered Assets and Indemnification Asset | ||
Total loans | 299 | |
Covered | Unsecured | PCI loans | ||
Covered Assets and Indemnification Asset | ||
Total loans | 299 | |
Covered | Secured by Commercial Properties | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 322 | 325 |
Current Loans | 11,472 | 19,132 |
Total loans | 35,353 | 72,094 |
Covered | Secured by Commercial Properties | Financing Receivables, 30 to 59 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 209 | 96 |
Covered | Secured by Commercial Properties | Financing Receivables, 60 to 89 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 113 | 229 |
Covered | Secured by Commercial Properties | PCI loans | ||
Covered Assets and Indemnification Asset | ||
Total loans | 23,559 | 52,637 |
Covered | Secured by Residential Properties | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 10,061 | 6,335 |
Current Loans | 70,589 | 91,639 |
Total loans | 144,006 | 172,375 |
Accruing Loans Past Due 90 Days or More | 283 | 129 |
Covered | Secured by Residential Properties | Financing Receivables, 30 to 59 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 5,624 | 3,511 |
Covered | Secured by Residential Properties | Financing Receivables, 60 to 89 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 1,211 | 1,345 |
Covered | Secured by Residential Properties | Financing Receivables, Equal to Greater than 90 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 3,226 | 1,479 |
Covered | Secured by Residential Properties | PCI loans | ||
Covered Assets and Indemnification Asset | ||
Total loans | 63,356 | 74,401 |
Covered | Commercial construction loans and land development | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 38 | 15 |
Current Loans | 1,673 | 3,742 |
Total loans | 1,715 | 8,961 |
Covered | Commercial construction loans and land development | Financing Receivables, 30 to 59 Days Past Due | ||
Covered Assets and Indemnification Asset | ||
Total Past Due Loans | 38 | 15 |
Covered | Commercial construction loans and land development | PCI loans | ||
Covered Assets and Indemnification Asset | ||
Total loans | $ 4 | $ 5,204 |
Covered Assets and Indemnifi111
Covered Assets and Indemnification Asset - Internal Risk Grades (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Internal risk grades of covered loans in the portfolio | ||
Total loans | $ 6,273,669 | $ 5,843,499 |
Covered | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 182,129 | 256,127 |
Covered | PCI loans | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 87,113 | 133,754 |
Covered | Pass | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 81,583 | 111,432 |
Covered | Special Mention | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 356 | 461 |
Covered | Substandard | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 13,077 | 10,480 |
Covered | Secured | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 1,055 | 2,398 |
Covered | Secured | PCI loans | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 194 | 1,213 |
Covered | Secured | Pass | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 429 | 592 |
Covered | Secured | Substandard | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 432 | 593 |
Covered | Unsecured | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 299 | |
Covered | Unsecured | PCI loans | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 299 | |
Covered | Secured by Commercial Properties | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 35,353 | 72,094 |
Covered | Secured by Commercial Properties | PCI loans | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 23,559 | 52,637 |
Covered | Secured by Commercial Properties | Pass | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 10,961 | 17,996 |
Covered | Secured by Commercial Properties | Substandard | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 833 | 1,461 |
Covered | Secured by Residential Properties | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 144,006 | 172,375 |
Covered | Secured by Residential Properties | PCI loans | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 63,356 | 74,401 |
Covered | Secured by Residential Properties | Pass | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 68,544 | 90,563 |
Covered | Secured by Residential Properties | Special Mention | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 356 | 461 |
Covered | Secured by Residential Properties | Substandard | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 11,750 | 6,950 |
Covered | Commercial construction loans and land development | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 1,715 | 8,961 |
Covered | Commercial construction loans and land development | PCI loans | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 4 | 5,204 |
Covered | Commercial construction loans and land development | Pass | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | 1,649 | 2,281 |
Covered | Commercial construction loans and land development | Substandard | ||
Internal risk grades of covered loans in the portfolio | ||
Total loans | $ 62 | $ 1,476 |
Covered Assets and Indemnifi112
Covered Assets and Indemnification Asset - Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | $ 54,186 | $ 54,186 | |||||||||||
Provision charged to (recapture from) operations | $ 5,453 | $ 1,260 | $ 5,853 | 1,705 | $ 4,347 | $ 3,990 | $ 28,876 | $ 3,407 | 14,271 | $ 40,620 | $ 12,715 | ||
Balance, end of period | 60,957 | 54,186 | 60,957 | 54,186 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | $ 6,273,669 | $ 5,843,499 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | 60,957 | 54,186 | 54,186 | 54,186 | 54,186 | 60,957 | 54,186 | ||||||
Covered | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 413 | 1,532 | 413 | 1,532 | 4,611 | ||||||||
Provision charged to (recapture from) operations | 2,865 | (1,121) | 542 | ||||||||||
Loans charged off | (571) | (119) | (3,963) | ||||||||||
Recoveries on charged off loans | 22 | 121 | 342 | ||||||||||
Balance, end of period | 2,729 | 413 | 2,729 | 413 | 1,532 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment | 95,016 | 122,373 | |||||||||||
Total loans | 182,129 | 256,127 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment, allowance | 32 | 69 | |||||||||||
Total loans, allowance | 2,729 | 413 | 413 | 1,532 | 413 | 1,532 | 4,611 | 2,729 | 413 | ||||
Covered | Commercial and industrial | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 35 | 758 | 35 | 758 | 1,193 | ||||||||
Provision charged to (recapture from) operations | 32 | (717) | 258 | ||||||||||
Loans charged off | (49) | (6) | (915) | ||||||||||
Recoveries on charged off loans | 6 | 222 | |||||||||||
Balance, end of period | 24 | 35 | 24 | 35 | 758 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment | 861 | 1,185 | |||||||||||
Total loans | 1,055 | 2,697 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment, allowance | 5 | 22 | |||||||||||
Total loans, allowance | 24 | 35 | 35 | 758 | 35 | 758 | 1,193 | 24 | 35 | ||||
Covered | Real estate | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 378 | 774 | 378 | 774 | 3,334 | ||||||||
Provision charged to (recapture from) operations | 2,840 | (351) | 189 | ||||||||||
Loans charged off | (522) | (62) | (2,869) | ||||||||||
Recoveries on charged off loans | 6 | 17 | 120 | ||||||||||
Balance, end of period | 2,702 | 378 | 2,702 | 378 | 774 | ||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment | 92,444 | 117,431 | |||||||||||
Total loans | 179,359 | 244,469 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment, allowance | 24 | 47 | |||||||||||
Total loans, allowance | 2,702 | 378 | 378 | $ 774 | 378 | 774 | 3,334 | 2,702 | 378 | ||||
Covered | Construction and land development | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 84 | ||||||||||||
Provision charged to (recapture from) operations | (7) | (53) | 95 | ||||||||||
Loans charged off | (51) | (179) | |||||||||||
Recoveries on charged off loans | 10 | 104 | |||||||||||
Balance, end of period | 3 | 3 | |||||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment | 1,711 | 3,757 | |||||||||||
Total loans | 1,715 | 8,961 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Loans collectively evaluated for impairment, allowance | 3 | ||||||||||||
Total loans, allowance | 3 | 3 | $ 84 | 3 | |||||||||
Covered | PCI loans | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 344 | 344 | |||||||||||
Balance, end of period | 2,697 | 344 | 2,697 | 344 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | 87,113 | 133,754 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | 2,697 | 344 | 344 | 344 | 344 | 2,697 | 344 | ||||||
Covered | PCI loans | Commercial and industrial | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 13 | 13 | |||||||||||
Balance, end of period | 19 | 13 | 19 | 13 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | 194 | 1,512 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | 19 | 13 | 13 | 13 | 13 | 19 | 13 | ||||||
Covered | PCI loans | Real estate | |||||||||||||
Changes in the allowance for loan losses | |||||||||||||
Balance, beginning of period | 331 | 331 | |||||||||||
Balance, end of period | 2,678 | 331 | 2,678 | 331 | |||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | 86,915 | 127,038 | |||||||||||
Allowance for loan losses distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans, allowance | $ 2,678 | $ 331 | $ 331 | $ 331 | $ 331 | 2,678 | 331 | ||||||
Covered | PCI loans | Construction and land development | |||||||||||||
Loan portfolio distributed by portfolio segment and impairment methodology | |||||||||||||
Total loans | $ 4 | $ 5,204 |
Covered Assets and Indemnifi113
Covered Assets and Indemnification Asset - Covered OREO (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Activity in covered OREO | |||
Balance, beginning of period | $ 51,642 | $ 99,090 | $ 136,945 |
Additions to covered OREO | 6,700 | 13,876 | 50,465 |
Dispositions of covered OREO | (17,866) | (42,843) | (71,765) |
Valuation adjustments in the period | (3,732) | (18,481) | (16,555) |
Balance, end of period | $ 36,744 | $ 51,642 | $ 99,090 |
Covered Assets and Indemnifi114
Covered Assets and Indemnification Asset - FDIC Indemnification Asset (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Activity in the FDIC Indemnification Asset | |||
Balance, beginning of period | $ 71,313 | $ 91,648 | $ 130,437 |
FDIC Indemnification Asset accretion (amortization) | (17,083) | 242 | 1,147 |
Transfers to due from FDIC and other | (24,890) | (20,577) | (39,936) |
Balance, end of period | 29,340 | $ 71,313 | $ 91,648 |
FDIC, collections billed | 147,800 | ||
FDIC, collections received | $ 145,800 |
Cash and Due from Banks (Detail
Cash and Due from Banks (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Cash and Due from Banks | ||
Cash on hand | $ 44,765 | $ 49,152 |
Clearings and collection items | 92,271 | 78,328 |
Deposits at Federal Reserve Bank | 248,442 | 354,948 |
Deposits at Federal Home Loan Bank | 1,501 | 4,237 |
Deposits in FDIC-insured institutions | 99,998 | 182,692 |
Cash and due from banks | 486,977 | 669,357 |
Interest-bearing deposits | $ 302,200 | $ 479,300 |
Premises and Equipment (Details
Premises and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Premises and Equipment | |||
Premises and equipment, gross | $ 318,755 | $ 302,209 | |
Less accumulated depreciation and amortization | (141,178) | (111,848) | |
Premises and equipment, net | 177,577 | 190,361 | |
Assets recorded under capital leases | 8,400 | 8,400 | |
Accumulated amortization for assets under capital leases | 3,300 | 2,500 | |
Rental income | 1,800 | 2,000 | $ 2,200 |
Depreciation and amortization expense | 34,600 | 35,400 | $ 37,200 |
Land and premises | |||
Premises and Equipment | |||
Premises and equipment, gross | 111,203 | 111,295 | |
Furniture and equipment | |||
Premises and Equipment | |||
Premises and equipment, gross | $ 207,552 | $ 190,914 |
Goodwill and Other Intangibl117
Goodwill and Other Intangible Assets - Goodwill and Other (Details) - USD ($) $ in Thousands | Oct. 01, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill and Other Intangible Assets | |||
Carrying amount of goodwill | $ 251,808 | $ 251,808 | |
Other intangible assets, net | 36,432 | $ 44,695 | |
Goodwill impairment | $ 0 | ||
Percentage of excess fair value over the carrying value | 12.00% | ||
NLC | |||
Goodwill and Other Intangible Assets | |||
Carrying amount of goodwill | 24,000 | ||
Estimated fair value of indefinite lived intangible assets related to state licenses acquired as a part of the NLC acquisition | 3,000 | ||
PPC | |||
Goodwill and Other Intangible Assets | |||
Carrying amount of goodwill | $ 227,800 |
Goodwill and Other Intangibl118
Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Carrying value of intangible assets subject to amortization | |||
Gross Intangible Assets | $ 95,580 | $ 95,580 | |
Accumulated Amortization | (62,148) | (53,885) | |
Net Intangible Assets | 33,432 | 41,695 | |
Amortization expense related to intangible assets | 8,263 | 10,174 | $ 12,375 |
Core Deposits | |||
Carrying value of intangible assets subject to amortization | |||
Gross Intangible Assets | 38,930 | 38,930 | |
Accumulated Amortization | (26,381) | (22,255) | |
Net Intangible Assets | $ 12,549 | $ 16,675 | |
Core Deposits | Minimum | |||
Carrying value of intangible assets subject to amortization | |||
Estimated Useful Life | 4 years | 4 years | |
Core Deposits | Maximum | |||
Carrying value of intangible assets subject to amortization | |||
Estimated Useful Life | 12 years | 12 years | |
Trademarks and Trade Names | |||
Carrying value of intangible assets subject to amortization | |||
Gross Intangible Assets | $ 20,000 | $ 20,000 | |
Accumulated Amortization | (7,860) | (6,877) | |
Net Intangible Assets | $ 12,140 | $ 13,123 | |
Trademarks and Trade Names | Minimum | |||
Carrying value of intangible assets subject to amortization | |||
Estimated Useful Life | 15 years | 15 years | |
Trademarks and Trade Names | Maximum | |||
Carrying value of intangible assets subject to amortization | |||
Estimated Useful Life | 20 years | 20 years | |
Noncompete Agreements | |||
Carrying value of intangible assets subject to amortization | |||
Gross Intangible Assets | $ 11,650 | $ 11,650 | |
Accumulated Amortization | (10,529) | (9,306) | |
Net Intangible Assets | $ 1,121 | $ 2,344 | |
Noncompete Agreements | Minimum | |||
Carrying value of intangible assets subject to amortization | |||
Estimated Useful Life | 4 years | 4 years | |
Noncompete Agreements | Maximum | |||
Carrying value of intangible assets subject to amortization | |||
Estimated Useful Life | 6 years | 6 years | |
Customer contracts and relationships | |||
Carrying value of intangible assets subject to amortization | |||
Gross Intangible Assets | $ 21,400 | $ 21,400 | |
Accumulated Amortization | (13,906) | (12,097) | |
Net Intangible Assets | $ 7,494 | $ 9,303 | |
Customer contracts and relationships | Minimum | |||
Carrying value of intangible assets subject to amortization | |||
Estimated Useful Life | 12 years | 12 years | |
Customer contracts and relationships | Maximum | |||
Carrying value of intangible assets subject to amortization | |||
Estimated Useful Life | 14 years | 14 years | |
Agent relationships | |||
Carrying value of intangible assets subject to amortization | |||
Gross Intangible Assets | $ 3,600 | $ 3,600 | |
Accumulated Amortization | (3,472) | (3,350) | |
Net Intangible Assets | $ 128 | $ 250 | |
Estimated Useful Life | 13 years | 13 years |
Goodwill and Other Intangibl119
Goodwill and Other Intangible Assets - Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Estimated aggregate future amortization expense for intangible assets | ||
2,018 | $ 7,289 | |
2,019 | 5,142 | |
2,020 | 4,352 | |
2,021 | 3,607 | |
2,022 | 3,222 | |
Thereafter | 9,820 | |
Net Intangible Assets | $ 33,432 | $ 41,695 |
Mortgage Servicing Rights (Deta
Mortgage Servicing Rights (Details) - MSR - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Change in fair value of mortgage servicing rights | |||
Balance, beginning of year | $ 61,968 | $ 52,285 | $ 36,155 |
Additions | 16,401 | 23,381 | 24,974 |
Sales | (17,499) | (7,586) | |
Changes in fair value: Due to changes in model inputs or assumptions | (1,722) | (153) | (2,150) |
Changes in fair value: Due to customer payoffs | (4,434) | (5,959) | (6,694) |
Balance, end of year | 54,714 | 61,968 | $ 52,285 |
Mortgage loans serviced for others | $ 4,762,042 | $ 5,480,943 | |
MSR asset as a percentage of serviced mortgage loans | 1.15% | 1.13% | |
Key Assumptions | |||
Weighted average constant prepayment rate (as a percent) | 10.93% | 10.47% | |
Weighted average discount rate (as a percent) | 11.03% | 10.95% | |
Weighted average life | 6 years 10 months 24 days | 6 years 10 months 24 days |
Mortgage Servicing Rights - Sen
Mortgage Servicing Rights - Sensitivity Analysis (Details) - MSR - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Sensitivity analysis | |||
Constant prepayment rate: Impact of 10% adverse change | $ (1,948) | $ (2,297) | |
Constant prepayment rate: Impact of 20% adverse change | (3,839) | (4,471) | |
Discount rate: Impact of 10% adverse change | (2,135) | (2,539) | |
Discount rate: Impact of 20% adverse change | (4,103) | (4,882) | |
Contractually specified servicing fees, late fees and ancillary fees | $ 20,700 | $ 23,800 | $ 19,600 |
Deposits (Details)
Deposits (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deposits | ||
Noninterest-bearing demand | $ 2,411,849 | $ 2,199,483 |
Interest-bearing: | ||
NOW accounts | 1,202,752 | 1,252,832 |
Money market | 2,222,555 | 1,626,218 |
Brokered - money market | 101,624 | 125,272 |
Demand | 411,771 | 384,847 |
Savings | 218,812 | 279,911 |
Time | 1,313,482 | 1,145,859 |
Brokered - time | 95,274 | 49,389 |
Total deposits | 7,978,119 | $ 7,063,811 |
Time deposits that meet or exceed FDIC insurance limit | 778,800 | |
Scheduled maturities of interest-bearing time deposits | ||
2,018 | 791,721 | |
2,019 | 509,244 | |
2,020 | 82,839 | |
2,021 | 15,155 | |
2022 and thereafter | 9,797 | |
Time deposits | $ 1,408,756 |
Short-term Borrowings (Details)
Short-term Borrowings (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Short-term borrowings | |||
Short-term borrowings | $ 1,206,424 | $ 1,417,289 | |
Hilltop Broker-Dealers | |||
Short-term borrowings | |||
Weighted average interest rate (as a percent) | 2.27% | 1.59% | |
Federal funds purchased. | |||
Short-term borrowings | |||
Short-term borrowings | $ 101,775 | $ 87,125 | |
Securities sold under agreement to repurchase. | |||
Short-term borrowings | |||
Short-term borrowings | 539,149 | 195,164 | |
FHLB notes | |||
Short-term borrowings | |||
Short-term borrowings | 250,000 | 1,000,000 | |
Average balance during the year | $ 390,616 | $ 361,475 | $ 294,959 |
Average interest rate during the year | 1.08% | 0.46% | 0.27% |
Maximum month-end balance during the year | $ 850,000 | $ 1,000,000 | $ 600,000 |
Average interest rate at end of year (as a percent) | 1.30% | 0.55% | |
Amount of available collateral | $ 3,300,000 | ||
FHLB notes | Maximum | |||
Short-term borrowings | |||
Maturity term of debt | 365 days | ||
Short-term bank loans. | |||
Short-term borrowings | |||
Short-term borrowings | $ 315,500 | $ 135,000 | |
Federal funds purchased and securities sold under agreements to repurchase. | |||
Short-term borrowings | |||
Average balance during the year | $ 588,847 | $ 368,102 | $ 315,904 |
Average interest rate during the year | 1.06% | 0.58% | 0.33% |
Maximum month-end balance during the year | $ 904,704 | $ 520,715 | $ 514,776 |
Average interest rate at end of year (as a percent) | 1.21% | 0.42% | |
Carrying value | $ 581,636 | $ 209,877 | |
Estimated fair value | $ 598,300 | $ 206,641 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) $ in Thousands | Jun. 14, 2017 | Apr. 09, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 28, 2015 |
Debt Instrument | ||||||
Notes payable | $ 208,809 | $ 317,912 | ||||
Payments on notes payable | 512,193 | 217,630 | $ 42,571 | |||
Series B Preferred Stock | ||||||
Debt Instrument | ||||||
Aggregate liquidation value | $ 114,100 | |||||
Unpaid dividend | $ 400 | |||||
Senior Notes due April 2025 | ||||||
Debt Instrument | ||||||
Notes payable | 148,455 | 148,311 | ||||
Unamortized discount | 1,545 | 1,689 | ||||
Period before maturity for redemption of Senior Notes | 3 months | |||||
Percentage of redemption price | 100.00% | |||||
Interest rate (as a percent) | 5.00% | |||||
Senior Notes due April 2025 | Private Placement | ||||||
Debt Instrument | ||||||
Aggregate principal amount | $ 150,000 | |||||
Net proceeds from the offering, after deducting estimated fee and expenses and the initial purchaser’ discounts | $ 148,000 | |||||
Interest rate (as a percent) | 5.00% | |||||
FHLB notes | ||||||
Debt Instrument | ||||||
Notes payable | 19,402 | 102,596 | ||||
Unamortized premium | $ 436 | 948 | ||||
Weighted average interest rate | 2.10% | |||||
Debt instrument, collateral | $ 3,300,000 | |||||
FHLB notes | Minimum | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 1.19% | |||||
FHLB notes | Maximum | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 5.70% | |||||
Insurance company note payable due March 2035 | ||||||
Debt Instrument | ||||||
Notes payable | 20,000 | |||||
NLIC note payable due May 2033 | ||||||
Debt Instrument | ||||||
Notes payable | $ 10,000 | 10,000 | ||||
NLIC note payable due May 2033 | three-month LIBOR | ||||||
Debt Instrument | ||||||
Margin on interest rate (as a percent) | 4.10% | |||||
Interest rate at year end (as a percent) | 5.71% | |||||
NLIC note payable due September 2033 | ||||||
Debt Instrument | ||||||
Notes payable | $ 10,000 | 10,000 | ||||
NLIC note payable due September 2033 | three-month LIBOR | ||||||
Debt Instrument | ||||||
Margin on interest rate (as a percent) | 4.05% | |||||
Interest rate at year end (as a percent) | 5.66% | |||||
ASIC note payable due April 2034 | ||||||
Debt Instrument | ||||||
Notes payable | $ 7,500 | 7,500 | ||||
ASIC note payable due April 2034 | three-month LIBOR | ||||||
Debt Instrument | ||||||
Margin on interest rate (as a percent) | 4.05% | |||||
Interest rate at year end (as a percent) | 5.66% | |||||
Insurance company line of credit due December 31, 2018 | ||||||
Debt Instrument | ||||||
Notes payable | $ 1,000 | 3,000 | ||||
Margin on interest rate (as a percent) | 3.25% | |||||
Calculated index rate (as a percent) | 4.00% | |||||
Ventures Management line of credit | ||||||
Debt Instrument | ||||||
Notes payable | $ 12,452 | $ 16,505 | ||||
Maximum borrowing capacity | $ 70,000 | |||||
Single unaffiliated bank | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 2.75% | |||||
Maximum borrowing capacity | $ 30,000 | |||||
Outstanding borrowing | $ 12,500 | |||||
Calculated index rate (as a percent) | 3.09% | |||||
Bank | ||||||
Debt Instrument | ||||||
Maximum borrowing capacity | $ 40,000 | |||||
NLIC | Insurance Notes Payable | ||||||
Debt Instrument | ||||||
Statutory surplus of NLIC and ASIC | 30,000 | |||||
ASIC | Insurance Notes Payable | ||||||
Debt Instrument | ||||||
Statutory surplus of NLIC and ASIC | $ 15,000 | |||||
NLC | Insurance company note payable due March 2035 | ||||||
Debt Instrument | ||||||
Payments on notes payable | $ 20,000 | |||||
NLC | Insurance Notes Payable | ||||||
Debt Instrument | ||||||
Debt instrument repurchase minimum beneficial ownership interest percentage acquired | 50.00% | |||||
Percentage of debt instrument agreement price at which each holder has right to require entity to purchase notes expressed as minimum percentage of outstanding principal | 100.00% | |||||
NLC | Insurance company line of credit due December 31, 2018 | ||||||
Debt Instrument | ||||||
Maximum borrowing capacity | $ 7,500 |
Notes Payable - Scheduled Matur
Notes Payable - Scheduled Maturities (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Scheduled maturities | |
2,018 | $ 25,791 |
2,020 | 3,425 |
2,021 | 508 |
2,022 | 203 |
Thereafter | 179,991 |
Total Notes Payable | $ 209,918 |
Junior Subordinated Debentur126
Junior Subordinated Debentures and Trust Preferred Securities (Details) | 12 Months Ended | ||||||
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Feb. 22, 2008USD ($) | Sep. 17, 2003USD ($) | Mar. 26, 2003USD ($) | Jul. 31, 2001USD ($) | |
Junior subordinated debentures and trust preferred securities | |||||||
Floating rate preferred securities issued by the trusts | $ 4,139,000 | $ 200,033,000 | |||||
PPC | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Number of statutory trusts owned by subsidiary | item | 4 | ||||||
PPC | Special-purpose entity, parent not primary beneficiary | Debentures | Four statutory trusts | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Stated term | 30 years | ||||||
Average interest rate (as a percent) | 4.72% | ||||||
PPC | Special-purpose entity, parent not primary beneficiary | Debentures | Four statutory trusts | three-month LIBOR | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Margin on interest rate | 3-month LIBOR | ||||||
Average spread on variable rate basis (as a percent) | 3.22% | ||||||
PPC | Special-purpose entity, parent not primary beneficiary | Debentures | P C C Statutory Trust I | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Amount | $ 18,042,000 | ||||||
PPC | Special-purpose entity, parent not primary beneficiary | Debentures | P C C Statutory Trust I I | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Amount | $ 18,042,000 | ||||||
PPC | Special-purpose entity, parent not primary beneficiary | Debentures | P C C Statutory Trust I I I | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Amount | $ 15,464,000 | ||||||
PPC | Special-purpose entity, parent not primary beneficiary | Debentures | PCC Statutory Trust IV | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Amount | $ 15,464,000 | ||||||
PPC | Special-purpose entity, parent not primary beneficiary | Floating rate preferred securities | Four statutory trusts | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Floating rate preferred securities issued by the trusts | $ 65,000,000 | ||||||
PPC | Special-purpose entity, parent not primary beneficiary | Common Class A | Four statutory trusts | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Floating rate preferred securities issued by the trusts | $ 2,012,000 | ||||||
PPC | CONNECTICUT | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Number of statutory trusts owned by subsidiary, which were formed under laws of state | item | 3 | ||||||
PCC Statutory Trust IV | Delaware | |||||||
Junior subordinated debentures and trust preferred securities | |||||||
Number of statutory trusts owned by subsidiary, which were formed under laws of state | item | 1 |
Income Taxes - Provision and De
Income Taxes - Provision and Deferred Taxes (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current: | ||||||||||||
Federal | $ 63,769 | $ 82,970 | $ 49,570 | |||||||||
State | 5,440 | 10,181 | 3,969 | |||||||||
Total | 69,209 | 93,151 | 53,539 | |||||||||
Deferred: | ||||||||||||
Federal | 40,176 | (6,732) | 17,295 | |||||||||
State | 757 | (2,958) | 81 | |||||||||
Total | 40,933 | (9,690) | 17,376 | |||||||||
Income tax provision (benefit) | $ 51,350 | $ 18,003 | $ 25,754 | $ 15,035 | $ 17,582 | $ 33,017 | $ 18,439 | $ 14,423 | $ 110,142 | 83,461 | 70,915 | |
Statutory Federal income tax rate (as a percent) | 21.00% | 35.00% | ||||||||||
Reconciliation of the income tax provision (benefit) and the amount that would be computed by applying the statutory federal income tax rate to income (loss) before income taxes | ||||||||||||
Computed tax at federal statutory rate | $ 85,150 | 80,992 | 99,223 | |||||||||
Tax effect of: | ||||||||||||
Tax Legislation | 28,363 | |||||||||||
Non-taxable acquisition gain | (6,682) | (33,426) | ||||||||||
Nondeductible transaction costs | 774 | 2,608 | 3,969 | |||||||||
Nondeductible expenses | 3,089 | 3,301 | 3,215 | |||||||||
State income taxes | 4,028 | 4,708 | 2,632 | |||||||||
Tax-exempt income, net | (2,758) | (2,850) | (2,563) | |||||||||
Valuation allowance | (2,094) | (1,889) | ||||||||||
Share-based compensation benefit | (412) | (2,391) | ||||||||||
Other | (1,410) | (813) | (246) | |||||||||
Income tax provision (benefit) | 51,350 | $ 18,003 | $ 25,754 | $ 15,035 | 17,582 | $ 33,017 | $ 18,439 | $ 14,423 | 110,142 | 83,461 | $ 70,915 | |
Deferred tax assets: | ||||||||||||
Net operating and built-in-loss carryforward | 11,697 | 21,381 | 11,697 | 21,381 | ||||||||
Covered loans | 20,024 | 43,512 | 20,024 | 43,512 | ||||||||
Purchase accounting adjustment - loans | 4,859 | 10,682 | 4,859 | 10,682 | ||||||||
Allowance for loan losses | 15,105 | 20,703 | 15,105 | 20,703 | ||||||||
Compensation and benefits | 15,860 | 44,368 | 15,860 | 44,368 | ||||||||
Legal and other reserves | 4,359 | 15,985 | 4,359 | 15,985 | ||||||||
Foreclosed property | 6,400 | 16,486 | 6,400 | 16,486 | ||||||||
Other | 11,961 | 19,297 | 11,961 | 19,297 | ||||||||
Deferred tax assets | 90,265 | 192,414 | 90,265 | 192,414 | ||||||||
Deferred tax liabilities: | ||||||||||||
Premises and equipment | 10,288 | 21,013 | 10,288 | 21,013 | ||||||||
FDIC Indemnification Asset | 3,502 | 21,600 | 3,502 | 21,600 | ||||||||
Intangible assets | 8,994 | 17,392 | 8,994 | 17,392 | ||||||||
Derivatives | 4,527 | 8,581 | 4,527 | 8,581 | ||||||||
Loan servicing | 13,184 | 23,187 | 13,184 | 23,187 | ||||||||
Other | 8,156 | 18,868 | 8,156 | 18,868 | ||||||||
Deferred Tax Liabilities | 48,651 | 110,641 | 48,651 | 110,641 | ||||||||
Net deferred tax asset | $ 41,614 | $ 81,773 | $ 41,614 | $ 81,773 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Jan. 01, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Taxes | |||||||||||||
Tax Legislation | $ 28,363 | ||||||||||||
Statutory Federal income tax rate (as a percent) | 21.00% | 35.00% | |||||||||||
Effective income tax rate (as a percent) | 45.30% | 36.10% | 25.00% | ||||||||||
Income tax benefit | $ 51,350 | $ 18,003 | $ 25,754 | $ 15,035 | $ 17,582 | $ 33,017 | $ 18,439 | $ 14,423 | $ 110,142 | $ 83,461 | $ 70,915 | ||
Bargain purchase gain | 81,289 | ||||||||||||
Net operating loss carryforwards | 29,900 | 37,800 | 29,900 | 37,800 | |||||||||
Net operating loss carryforwards, tax effected basis | 6,300 | 13,200 | 6,300 | 13,200 | |||||||||
Recognized built-in loss carryforward ("RBIL") | 20,500 | $ 20,500 | |||||||||||
Realized built-in-loss recognition period | 5 years | ||||||||||||
Net unrealized built-in-loss carryforward | 9,800 | $ 9,800 | |||||||||||
Net unrealized built-in-loss recognition period | 5 years | ||||||||||||
Valuation allowance on deferred tax assets for net operating loss carryforwards | $ 0 | $ 0 | $ 0 | 0 | |||||||||
SWS | |||||||||||||
Income Taxes | |||||||||||||
Tax on bargain purchase gain | $ 0 | 0 | |||||||||||
Income tax benefit | (2,100) | ||||||||||||
Bargain purchase gain | $ 81,289 | ||||||||||||
Increase (decrease) in the valuation allowance | $ (2,200) | ||||||||||||
SWS | Capital Loss Carryforward Valuation Allowance | |||||||||||||
Income Taxes | |||||||||||||
Increase (decrease) in the valuation allowance | $ (1,900) |
Income Taxes - Unrecognized tax
Income Taxes - Unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Uncertain tax positions | |||
Unrecognized tax benefits if recognized would favorably impact the effective tax rate | $ 1,200 | $ 1,100 | |
Unrecognized Tax Benefits | |||
Balance, beginning of year | 1,704 | 644 | $ 644 |
Increases related to tax positions taken during a prior year | 476 | 844 | 0 |
Decreases related to tax positions taken during a prior year | (1,273) | 0 | |
Increases related to tax positions taken during the current year | 667 | 216 | 0 |
Balance, end of year | $ 1,574 | $ 1,704 | $ 644 |
Employee Benefits (Details)
Employee Benefits (Details) $ in Millions | Jan. 01, 2015USD ($) | Nov. 30, 2012USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2001USD ($) |
Employee Benefits | ||||||
Matching contributions | $ 13.9 | $ 15.1 | $ 12.6 | |||
Liability recorded upon completion of merger | $ 8.9 | |||||
Number of executive officers of PlainsCapital with retention agreements | item | 2 | |||||
Liability, including interest | 9.1 | 9 | ||||
Flexible premium universal life insurance | ||||||
Amount of insurance purchased | $ 15 | |||||
Carrying value of the policies | 25.8 | 24.8 | ||||
Income related to the policies | $ 0.6 | $ 0.6 | $ 0.8 | |||
SWS Plan | ||||||
Employee Benefits | ||||||
Deferred compensation plan, matching percentage | 15.00% | |||||
Deferred compensation plan, vesting period | 4 years | |||||
Contributions allowed under plan | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions | ||
Aggregate remaining lease obligation | $ 153,347 | |
Diamond A Administration Company LLC | ||
Related Party Transactions | ||
Ownership interest (as a percent) | 16.20% | |
Diamond A Financial LP | ||
Related Party Transactions | ||
Ownership interest (as a percent) | 16.20% | |
PlainsCapital | ||
Related Party Transactions | ||
Deposits of related parties held | $ 151,000 | $ 154,800 |
Co-Chief Executive Officer | Diamond A Administration Company LLC | ||
Related Party Transactions | ||
Ownership interest (as a percent) | 46.00% | |
Co-Chief Executive Officer | Diamond A Financial LP | ||
Related Party Transactions | ||
Ownership interest (as a percent) | 49.00% | |
Diamond A Administration Company LLC | Sublease Agreement | ||
Related Party Transactions | ||
Services and office space cost per month | $ 24 | |
Directors Executive Officers and Affiliates | PlainsCapital | ||
Related Party Transactions | ||
Loans to related parties | 34,600 | 27,300 |
Total principal additions to loans | 12,000 | |
Total principal payments | 4,700 | |
Lessor | PlainsCapital | Lease Agreements | ||
Related Party Transactions | ||
Future minimum payments due annually through 2028 | 500 | |
Aggregate remaining lease obligation | 5,500 | |
Related Party Company | PlainsCapital | ||
Related Party Transactions | ||
Loan Purchases | $ 2,100 | $ 3,000 |
Commitments and Contingencie132
Commitments and Contingencies (Details) | May 30, 2017USD ($)$ / sharesshares | Jan. 01, 2015USD ($)$ / shares | Sep. 13, 2013USD ($)item | Nov. 30, 2012item | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Reserve for Indemnification Liability: | ||||||||||
FDIC, collections received | $ 145,800,000 | |||||||||
Number of executive officers | item | 2 | |||||||||
Retention Agreement | ||||||||||
Reserve for Indemnification Liability: | ||||||||||
Number of executive officers | item | 2 | |||||||||
Retention Agreement | Chief Executive Officer One of Plains Capital Bank | ||||||||||
Reserve for Indemnification Liability: | ||||||||||
Retention agreement term | 3 years | |||||||||
Renewal period of contract | 1 year | |||||||||
Period from date of agreement at which initial renewal of agreement may occur | 2 years | |||||||||
Retention Agreement | Chief Executive Officer Two of Plains Capital Bank | ||||||||||
Reserve for Indemnification Liability: | ||||||||||
Retention agreement term | 2 years | |||||||||
Renewal period of contract | 1 year | |||||||||
SWS | ||||||||||
Commitments and Contingencies | ||||||||||
Conversion of common stock | 0.2496 | |||||||||
Consideration paid in cash | $ / shares | $ 1.94 | |||||||||
Fair value acquisition price (in dollars per share) | $ / shares | $ 6.92 | |||||||||
Representation and Warranty Claims | ||||||||||
Roll-forward of claims activity for loans put-back to the mortgage origination segment | ||||||||||
Balance, beginning of period | $ 53,906,000 | 40,669,000 | $ 57,298,000 | $ 53,906,000 | ||||||
Claims made | 42,330,000 | 21,410,000 | 71,783,000 | |||||||
Claims resolved with no payment | (37,439,000) | (19,696,000) | (38,862,000) | |||||||
Repurchases | (6,490,000) | (4,164,000) | (14,884,000) | |||||||
Indemnification payments | (5,368,000) | (14,179,000) | (14,645,000) | |||||||
Balance, end of period | 33,702,000 | 40,669,000 | 57,298,000 | |||||||
Reserve for Indemnification Liability: | ||||||||||
Total | 53,906,000 | 40,669,000 | 57,298,000 | 53,906,000 | $ 33,702,000 | $ 40,669,000 | ||||
Indemnification Agreement | ||||||||||
Commitments and Contingencies | ||||||||||
Provision for indemnification losses | 4,000,000 | 4,600,000 | 4,000,000 | |||||||
Roll-forward of claims activity for loans put-back to the mortgage origination segment | ||||||||||
Balance, beginning of period | 17,619,000 | 18,239,000 | 16,640,000 | 17,619,000 | ||||||
Additions for new sales | 3,962,000 | 4,638,000 | 4,006,000 | |||||||
Repurchases | (466,000) | (392,000) | (1,420,000) | |||||||
Early payment defaults | (228,000) | (241,000) | (64,000) | |||||||
Indemnification payments | (713,000) | (2,482,000) | (3,027,000) | |||||||
Change in reserves for loans sold in prior years | 2,678,000 | 76,000 | (474,000) | |||||||
Balance, end of period | 23,472,000 | 18,239,000 | 16,640,000 | |||||||
Reserve for Indemnification Liability: | ||||||||||
Specific claims | 646,000 | 1,661,000 | ||||||||
Incurred but not reported claims | 22,826,000 | 16,578,000 | ||||||||
Total | $ 17,619,000 | 18,239,000 | $ 16,640,000 | $ 17,619,000 | 23,472,000 | 18,239,000 | ||||
Shareholder Lawsuits | SWS | ||||||||||
Commitments and Contingencies | ||||||||||
Number of shares of SWS common stock held by purported shareholders | shares | 7,438,453 | |||||||||
Consideration paid in cash | $ / shares | $ 6.38 | |||||||||
Fair value acquisition price (in dollars per share) | $ / shares | $ 6.38 | |||||||||
Stock released from escrow and returned to unissued shares of common stock | $ 1,856,638 | |||||||||
Pre-tax net increase to noninterest income | $ 11,600,000 | |||||||||
PlainsCapital | ||||||||||
Commitments and Contingencies | ||||||||||
Aggregate amount of federal funds purchased and sold for which the Bank acts as an agent on behalf of certain correspondent banks | 3,000,000 | $ 19,000,000 | ||||||||
PlainsCapital | FNB | Covered | ||||||||||
Reserve for Indemnification Liability: | ||||||||||
Number of loss-sharing agreements | item | 2 | |||||||||
Loans and OREO acquired | $ 1,200,000,000 | |||||||||
Percentage of net losses to be absorbed by FDIC on the first $240.4 million of net losses incurred as per the loss sharing agreement | 80.00% | |||||||||
Threshold amount of net losses incurred for 80% of net losses to be absorbed by FDIC as per the loss sharing agreement, first layer | $ 240,400,000 | |||||||||
Percentage of net losses to be absorbed by FDIC in excess of $240.4 million up to and including $365.7 million of net losses incurred as per the loss sharing agreement | 0.00% | |||||||||
Threshold amount of net losses incurred for 0% of net losses to be absorbed by FDIC as per the loss sharing agreement, second layer | $ 365,700,000 | |||||||||
Percentage of net losses to be absorbed by FDIC in excess of $365.7 million of net losses incurred as per the loss sharing agreement | 80.00% | |||||||||
Threshold limit of subsequent recoveries reimbursable to the FDIC under the loss share agreement | $ 0 | |||||||||
Period for which payment is required to be made to the FDIC of true-up amount | 10 years | |||||||||
Payment accrual based on the current aggregate estimate of realized losses | $ 16,300,000 | |||||||||
Percentage of initial estimate of losses under loss sharing agreement | 80.00% | |||||||||
Amount of initial estimate of losses under loss sharing agreement | $ 240,400,000 | |||||||||
Covered net losses billed to the FDIC | $ 184,700,000 | |||||||||
Percentage of covered net losses reimbursable under the loss-share agreements | 80.00% | |||||||||
Amount of covered net losses reimbursable under the loss-share agreements | $ 147,800,000 | |||||||||
FDIC, collections received | $ 145,800,000 | |||||||||
PlainsCapital | FNB | Covered | Commercial Loan | ||||||||||
Reserve for Indemnification Liability: | ||||||||||
Period of loss-sharing agreements in effect | 5 years | |||||||||
Period of loss recovery provisions in effect | 8 years | |||||||||
PlainsCapital | FNB | Covered | Single Family Residential Loans | ||||||||||
Reserve for Indemnification Liability: | ||||||||||
Period of loss-sharing agreements in effect | 10 years | |||||||||
Period of loss recovery provisions in effect | 10 years |
Commitments and Contingencies -
Commitments and Contingencies - Lease Payments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies | |||
Rental expense under the operating leases | $ 43,500 | $ 41,900 | $ 40,300 |
Future minimum lease payments under operating leases | |||
2,018 | 36,602 | ||
2,019 | 30,127 | ||
2,020 | 24,461 | ||
2,021 | 16,429 | ||
2,022 | 14,306 | ||
Thereafter | 31,422 | ||
Total minimum lease payments | 153,347 | ||
Future minimum lease payments under capital leases | |||
2,018 | 1,444 | ||
2,019 | 1,491 | ||
2,020 | 1,528 | ||
2,021 | 1,451 | ||
2,022 | 1,127 | ||
Thereafter | 4,125 | ||
Total minimum lease payments | 11,166 | ||
Amount representing interest | (3,497) | ||
Present value of minimum lease payments | $ 7,669 | ||
Minimum | |||
Commitments and Contingencies | |||
Remaining terms of noncancelable operating leases | 1 year | ||
Remaining term of capital leases | 4 years | ||
Maximum | |||
Commitments and Contingencies | |||
Remaining terms of noncancelable operating leases | 11 years | ||
Remaining term of capital leases | 11 years |
Financial Instruments with O134
Financial Instruments with Off-Balance Sheet Risk (Details) $ in Millions | Dec. 31, 2017USD ($) |
Unused commitments to extend credit | |
Financial Instruments with Off-Balance Sheet Risk | |
Outstanding commitments | $ 1,900 |
Standby letters of credit | |
Financial Instruments with Off-Balance Sheet Risk | |
Outstanding commitments | $ 24.4 |
Stock-Based Compensation - Plan
Stock-Based Compensation - Plan Information (Details) - 2012 Plan - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Dec. 31, 2014 | Sep. 30, 2012 | |
Stock based compensation | ||||||
Number of awards approved for grant (in shares) | 4,000,000 | |||||
Common stock remaining available for issuance (in shares) | 1,634,804 | |||||
Compensation expense | $ 10.8 | $ 10.5 | $ 8.6 | |||
Restricted Stock Awards | ||||||
Stock based compensation | ||||||
Number of shares outstanding | 4,000 | 453,000 | 0 | 466,000 | ||
RSUs | ||||||
Stock based compensation | ||||||
Number of shares outstanding | 1,318,000 | 1,456,000 | 875,000 | 435,000 | ||
Vesting period | 3 years | |||||
Transfer restrictions period | 1 year | |||||
Board of Directors | ||||||
Stock based compensation | ||||||
Common shares granted to members of board of directors as compensation for director services | 16,859 | 21,224 | 13,631 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Awards and RSU Activity (Details) - 2012 Plan - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
RSUs | |||
Number of shares outstanding | |||
Balance at the beginning of the period ( in shares) | 1,456 | 875 | 435 |
Granted (in shares) | 450 | 598 | 491 |
Vested/Released (in shares) | (451) | (7) | (12) |
Forfeited (in shares) | (137) | (10) | (39) |
Balance at the end of the period ( in shares) | 1,318 | 1,456 | 875 |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 19.83 | $ 21.22 | $ 23.14 |
Grant date fair value (in dollars per share) | 26.37 | 17.78 | 19.61 |
Vested/Released (in dollars per share) | 22.48 | 22.22 | 22.45 |
Forfeited (in dollars per share) | 22.41 | 20.70 | 21.93 |
Balance at the end of the period (in dollars per share) | $ 20.89 | $ 19.83 | $ 21.22 |
Restricted Stock Awards | |||
Number of shares outstanding | |||
Balance at the beginning of the period ( in shares) | 4 | 453 | 466 |
Granted (in shares) | 63 | ||
Vested/Released (in shares) | (4) | (447) | (54) |
Forfeited (in shares) | (2) | (22) | |
Balance at the end of the period ( in shares) | 4 | 453 | |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 19.95 | $ 13.50 | $ 13.32 |
Grant date fair value (in dollars per share) | 19.95 | ||
Vested/Released (in dollars per share) | $ 19.95 | 13.41 | 19.58 |
Forfeited (in dollars per share) | 19.72 | 13.25 | |
Balance at the end of the period (in dollars per share) | $ 19.95 | $ 13.50 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - 2012 Plan - USD ($) $ in Millions | 12 Months Ended | 36 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
RSUs | ||||
Stock based compensation | ||||
Vested RSUs which require deferral of share settlement and statutory tax obligations | 35,685 | 35,685 | ||
Number of shares awarded (in shares) | 450,000 | 598,000 | 491,000 | |
Number of awards subject to time-based vesting (in shares) | 1,035,199 | |||
Number of awards vesting upon achievement of performance goals (in shares) | 282,329 | |||
Vesting period | 3 years | |||
Unrecognized compensation expense | $ 12.6 | $ 12.6 | ||
Weighted average period for unrecognized compensation expense (in years) | 1 year 2 months 27 days | |||
RSUs and RSAs | ||||
Stock based compensation | ||||
Vested/Released number of shares withheld to satisfy employee statutory tax obligations (in shares) | 252,133 | |||
Certain Executives and Key Employees | RSUs | ||||
Stock based compensation | ||||
Number of shares awarded (in shares) | 392,877 | |||
Number of awards subject to time-based vesting (in shares) | 313,301 | |||
Number of awards vesting upon achievement of performance goals (in shares) | 79,576 | |||
Vesting period | 3 years |
Regulatory Matters - Minimum Ca
Regulatory Matters - Minimum Capital Requirements (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
PlainsCapital | ||
Tier 1 capital (to average assets) | ||
Actual Amount | $ 1,147,527 | $ 1,108,484 |
Actual Ratio (as a percent) | 12.32% | 12.35% |
Minimum Capital Requirement Including Conservation Buffer in effect at end of period, ratio (as a percent) | 4.00% | 4.00% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 4.00% | 4.00% |
To Be Well Capitalized Minimum Capital Requirements, Ratio (as a percent) | 5.00% | 5.00% |
Common equity Tier 1 capital (to risk weighted assets) | ||
Actual Amount | $ 1,147,527 | $ 1,108,484 |
Actual Ratio (as a percent) | 14.47% | 14.64% |
Minimum Capital Requirement Including Conservation Buffer in effect at end of period, ratio (as a percent) | 5.75% | 5.125% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 7.00% | 7.00% |
To Be Well Capitalized Minimum Capital Requirements, Ratio (as a percent) | 6.50% | 6.50% |
Tier 1 capital (to risk-weighted assets) | ||
Actual Amount | $ 1,147,527 | $ 1,108,484 |
Actual Ratio (as a percent) | 14.47% | 14.64% |
Minimum Capital Requirement Including Conservation Buffer in effect at end of period, ratio (as a percent) | 7.25% | 6.625% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 8.50% | 8.50% |
To Be Well Capitalized Minimum Capital Requirements, Ratio (as a percent) | 8.00% | 8.00% |
Total capital (to risk-weighted assets) | ||
Actual Amount | $ 1,212,793 | $ 1,164,767 |
Actual Ratio (as a percent) | 15.29% | 15.38% |
Minimum Capital Requirement Including Conservation Buffer in effect at end of period, ratio (as a percent) | 9.25% | 8.625% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 10.50% | 10.50% |
To Be Well Capitalized Minimum Capital Requirements, Ratio (as a percent) | 10.00% | 10.00% |
Hilltop | ||
Tier 1 capital (to average assets) | ||
Actual Amount | $ 1,688,358 | $ 1,652,101 |
Actual Ratio (as a percent) | 12.94% | 13.51% |
Minimum Capital Requirement Including Conservation Buffer in effect at end of period, ratio (as a percent) | 4.00% | 4.00% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 4.00% | 4.00% |
Common equity Tier 1 capital (to risk weighted assets) | ||
Actual Amount | $ 1,639,009 | $ 1,602,400 |
Actual Ratio (as a percent) | 17.71% | 18.30% |
Minimum Capital Requirement Including Conservation Buffer in effect at end of period, ratio (as a percent) | 5.75% | 5.125% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 7.00% | 7.00% |
Tier 1 capital (to risk-weighted assets) | ||
Actual Amount | $ 1,688,358 | $ 1,652,101 |
Actual Ratio (as a percent) | 18.24% | 18.87% |
Minimum Capital Requirement Including Conservation Buffer in effect at end of period, ratio (as a percent) | 7.25% | 6.625% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 8.50% | 8.50% |
Total capital (to risk-weighted assets) | ||
Actual Amount | $ 1,738,325 | $ 1,693,240 |
Actual Ratio (as a percent) | 18.78% | 19.34% |
Minimum Capital Requirement Including Conservation Buffer in effect at end of period, ratio (as a percent) | 9.25% | 8.625% |
Minimum Capital Requirement Including Conservation Buffer fully phased-in, ratio (as a percent) | 10.50% | 10.50% |
Regulatory Matters - Net Capita
Regulatory Matters - Net Capital Position, Broker-Dealers (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Reconciliation of equity capital to Tier 1 and total capital (as defined) | ||
Total equity capital | $ 1,912,081 | $ 1,870,509 |
Net Capital | ||
Amount required to be segregated in cash and securities for the benefit of customers | 186,578 | 180,993 |
Hilltop Securities | ||
Net Capital | ||
Net capital | 186,770 | |
Less required net capital | 10,513 | |
Excess net capital | $ 176,257 | |
Net capital as a percentage of aggregate debit items | 35.50% | |
Net capital in excess of 5% aggregate debt items | $ 160,487 | |
HTS Independent Network | ||
Net Capital | ||
Net capital | 3,278 | |
Less required net capital | 250 | |
Excess net capital | 3,028 | |
Hilltop Broker-Dealers | ||
Net Capital | ||
Amount required to be segregated in cash and securities for the benefit of customers | 186,600 | 181,000 |
PlainsCapital | ||
Reconciliation of equity capital to Tier 1 and total capital (as defined) | ||
Total equity capital | 1,379,402 | 1,337,746 |
Add: | ||
Net unrealized holding losses (gains) on securities available for sale and held in trust | 3,520 | 2,303 |
Deduct: | ||
Goodwill and other disallowed intangible assets | (235,395) | (231,565) |
Common equity Tier 1 capital (as defined) | 1,147,527 | 1,108,484 |
Deduct: | ||
Tier 1 capital (as defined) | 1,147,527 | 1,108,484 |
Add: Allowable Tier 2 capital | ||
Allowance for loan losses | 65,266 | 56,283 |
Deduct | ||
Total capital (as defined) | 1,212,793 | 1,164,767 |
Hilltop | ||
Reconciliation of equity capital to Tier 1 and total capital (as defined) | ||
Total equity capital | 1,912,081 | 1,870,509 |
Add: | ||
Net unrealized holding losses (gains) on securities available for sale and held in trust | 394 | (485) |
Deduct: | ||
Goodwill and other disallowed intangible assets | (273,466) | (267,624) |
Common equity Tier 1 capital (as defined) | 1,639,009 | 1,602,400 |
Add: Tier 1 capital | ||
Trust preferred securities | 65,000 | 65,000 |
Deduct: | ||
Tier 1 deductions | (15,651) | (15,299) |
Tier 1 capital (as defined) | 1,688,358 | 1,652,101 |
Add: Allowable Tier 2 capital | ||
Allowance for loan losses | 65,618 | 56,438 |
Deduct | ||
Tier 2 Insurance Deduction | (15,651) | (15,299) |
Total capital (as defined) | $ 1,738,325 | $ 1,693,240 |
Regulatory Matters - Insurance
Regulatory Matters - Insurance Subsidiaries (Details) - Texas Department of Insurance - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
NLIC | |||
Insurance | |||
Capital and surplus | $ 93,812 | $ 131,328 | |
Statutory net income | (1,785) | 13,043 | $ 9,000 |
ASIC | |||
Insurance | |||
Capital and surplus | 22,778 | 30,462 | |
Statutory net income | $ 742 | $ 2,124 | $ 1,611 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | 16 Months Ended | ||||
Nov. 30, 2012 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 28, 2015 | Jan. 31, 2018 | Jan. 25, 2018 | |
Stock repurchase program | |||||||
Dividend declared per share | $ 0.24 | $ 0.06 | $ 0.07 | ||||
Cash dividends paid | $ 23,100 | $ 5,800 | |||||
Repurchase common stock authorized amount | $ 50,000 | ||||||
Payments to repurchase shares | $ 27,388 | $ 30,028 | |||||
Repurchase of common stock (in shares) | 1,057,656 | 1,390,977 | |||||
Average price (per share) | $ 25.87 | $ 21.56 | |||||
PlainsCapital | |||||||
Stock repurchase program | |||||||
Earnings available for dividend payments without regulatory approval | $ 181,700 | ||||||
NLC | |||||||
Stock repurchase program | |||||||
Maximum dividends that may be paid without regulatory approval | $ 16,200 | ||||||
Series B Preferred Stock | |||||||
Stock repurchase program | |||||||
Preferred stock, shares outstanding | 114,068 | ||||||
Dividend rate (as a percent) | 5.00% | ||||||
Aggregate liquidation value | $ 114,100 | ||||||
Unpaid dividend | $ 400 | ||||||
Series B Preferred Stock | PPC | |||||||
Stock repurchase program | |||||||
Number of shares of Hilltop Series B Preferred Stock into which each outstanding share of PlainsCapital Non-Cumulative Perpetual Preferred Stock, Series C is converted | 1 |
Other Noninterest Income and142
Other Noninterest Income and Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other noninterest income: | |||
Net gains from Hilltop Broker-Dealer trading activities | $ 70,922 | $ 86,383 | $ 44,042 |
Net gains from trading securities portfolio | 20,210 | 15,926 | 12,796 |
Service charges on depositor accounts | 14,429 | 14,162 | 15,169 |
SWS Merger appraisal proceeding | 11,757 | ||
Trust fees | 7,485 | 6,782 | 7,113 |
Insurance commissions | 4,819 | 4,206 | 3,819 |
Insurance direct billing and other policy fees | 4,353 | 4,818 | 5,329 |
Revenue from check and stored value cards | 3,169 | 5,036 | 7,099 |
Rent and other income from other real estate owned | 1,280 | 1,461 | 3,559 |
FDIC indemnification asset accretion | 242 | 1,147 | |
Other | 25,546 | 15,248 | 10,795 |
Other noninterest income | 163,970 | 154,264 | 110,868 |
Other noninterest expense: | |||
Software and Information technology | 45,891 | 38,421 | 39,250 |
Brokerage commissions and fees | 22,884 | 24,654 | 16,637 |
Mortgage servicing-related costs | 22,353 | 25,736 | 19,375 |
Unreimbursed loan closing costs | 20,428 | 31,234 | 35,253 |
Business development | 18,619 | 19,738 | 18,291 |
FDIC Indemnification Asset amortization | 17,083 | ||
Travel, meals and entertainment | 12,839 | 13,683 | 12,748 |
Funding fees | 8,464 | 7,451 | 5,865 |
Amortization of intangible assets | 8,263 | 10,174 | 12,375 |
Office supplies | 7,806 | 8,719 | 8,247 |
OREO and repossessed assets | 4,004 | 13,438 | 12,570 |
FDIC "true-up" | 2,100 | 8,750 | 5,475 |
Other | 51,362 | 49,523 | 62,217 |
Other noninterest expense | $ 242,096 | $ 251,521 | $ 248,303 |
Derivative Financial Instrum143
Derivative Financial Instruments (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
PrimeLending | |||
Derivative financial instruments | |||
Net gain (loss) due to changes in the fair value of the derivative instruments | $ (13,100) | $ 8,000 | $ 17,300 |
PlainsCapital | |||
Derivative financial instruments | |||
Net gain (loss) due to changes in the fair value of the derivative instruments | 300 | 400 | (200) |
Hilltop Broker-Dealers | |||
Derivative financial instruments | |||
Net gain (loss) due to changes in the fair value of the derivative instruments | 8,100 | (23,400) | $ 43,700 |
Interest Rate Lock Commitments | |||
Derivative financial instruments | |||
Notional Amount | 850,850 | 944,550 | |
Estimated Fair Value | 18,851 | 23,269 | |
Customer-based written options | |||
Derivative financial instruments | |||
Notional Amount | 21,637 | ||
Estimated Fair Value | 38 | ||
Customer-based purchased options | |||
Derivative financial instruments | |||
Notional Amount | 21,637 | ||
Estimated Fair Value | (38) | ||
Commitments to Purchase MBSs | |||
Derivative financial instruments | |||
Notional Amount | 2,831,635 | 3,616,922 | |
Estimated Fair Value | (921) | (1,155) | |
Commitments to Sell MBSs | |||
Derivative financial instruments | |||
Notional Amount | 4,963,498 | 5,609,250 | |
Estimated Fair Value | 2,972 | (532) | |
Commitments to Sell MBSs | PrimeLending | |||
Derivative financial instruments | |||
Cash collateral advanced to offset net derivative liability | 800 | 19,100 | |
Interest Rate Swap and Swaptions | |||
Derivative financial instruments | |||
Notional Amount | 25,971 | 32,452 | |
Estimated Fair Value | 51 | (283) | |
U.S. Treasury bond futures and options | |||
Derivative financial instruments | |||
Notional Amount | 214,500 | 297,000 | |
U.S. Treasury bond futures and options | PrimeLending | |||
Derivative financial instruments | |||
Cash collateral advanced to offset net derivative liability | $ 3,200 | $ 3,200 |
Balance Sheet Offsetting - Asse
Balance Sheet Offsetting - Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Reverse repurchase agreements: | ||
Net Amounts of Assets Presented in the Balance Sheet | $ 186,537 | $ 89,430 |
Total | ||
Gross Amounts of Recognized Assets | 1,576,972 | 1,546,865 |
Gross Amounts Offset in the Balance Sheet | (3,893) | |
Net Amounts of Assets Presented in the Balance Sheet | 1,576,972 | 1,542,972 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,517,138) | (1,484,045) |
Net Amount | 59,834 | 58,927 |
Institutional counterparties | ||
Securities borrowed: | ||
Gross Amounts of Recognized Assets | 1,386,821 | 1,436,069 |
Net Amounts of Assets Presented in the Balance Sheet | 1,386,821 | 1,436,069 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,327,536) | (1,385,664) |
Net Amount | 59,285 | 50,405 |
Interest Rate Options | Customer counterparties | ||
Derivatives: | ||
Gross Amounts of Recognized Assets | 38 | |
Net Amounts of Assets Presented in the Balance Sheet | 38 | |
Gross Amounts Not Offset in the Balance Sheet | ||
Net Amount | 38 | |
Reverse repurchase agreements | Institutional counterparties | ||
Reverse repurchase agreements: | ||
Gross Amounts of Recognized Assets | 186,537 | 89,430 |
Net Amounts of Assets Presented in the Balance Sheet | 186,537 | 89,430 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (186,026) | (89,369) |
Net Amount | 511 | 61 |
Forward MBS Derivatives | Institutional counterparties | ||
Derivatives: | ||
Gross Amounts of Recognized Assets | 3,576 | 21,366 |
Gross Amounts Offset in the Balance Sheet | (3,893) | |
Net Amounts of Assets Presented in the Balance Sheet | 3,576 | 17,473 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | $ (3,576) | (9,012) |
Net Amount | $ 8,461 |
Balance Sheet Offsetting - Liab
Balance Sheet Offsetting - Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Total | ||
Gross Amounts of Recognized Liabilities | $ 1,757,011 | $ 1,498,296 |
Gross Amounts Offset in the Balance Sheet | (1,257) | (14) |
Net Amounts of Liabilities Presented in the Balance Sheet | 1,755,754 | 1,498,282 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,698,701) | (1,455,191) |
Net Amount | 57,053 | 43,091 |
Institutional counterparties | ||
Securities loaned: | ||
Gross Amounts of Recognized Liabilities | 1,215,093 | 1,283,676 |
Net Amounts of Liabilities Presented in the Balance Sheets | 1,215,093 | 1,283,676 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,157,198) | (1,237,868) |
Net Amount | 57,895 | 45,808 |
Institutional counterparties | Interest Rate Options | ||
Derivatives: | ||
Gross Amounts of Recognized Liabilities | 38 | |
Net Amounts of Liabilities Presented in the Balance Sheet | 38 | |
Gross Amounts Not Offset in the Balance Sheet | ||
Net Amount | 38 | |
Institutional counterparties | Interest Rate Swap and Swaptions | ||
Derivatives: | ||
Gross Amounts of Recognized Liabilities | 35 | 297 |
Gross Amounts Offset in the Balance Sheet | (86) | (14) |
Net Amounts of Liabilities Presented in the Balance Sheet | (51) | 283 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,059) | (3,000) |
Net Amount | (1,110) | (2,717) |
Institutional counterparties | Repurchase agreements | ||
Repurchase agreements: | ||
Gross Amounts of Recognized Liabilities | 409,058 | 39,970 |
Net Amounts of Liabilities Presented in the Balance Sheet | 409,058 | 39,970 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (409,058) | (39,970) |
Net Amount | 0 | 0 |
Institutional counterparties | Forward MBS Derivatives | ||
Derivatives: | ||
Gross Amounts of Recognized Liabilities | 2,696 | 19,159 |
Gross Amounts Offset in the Balance Sheet | (1,171) | |
Net Amounts of Liabilities Presented in the Balance Sheet | 1,525 | 19,159 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (1,295) | (19,159) |
Net Amount | 230 | |
Customer counterparties | Repurchase agreements | ||
Repurchase agreements: | ||
Gross Amounts of Recognized Liabilities | 130,091 | 155,194 |
Net Amounts of Liabilities Presented in the Balance Sheet | 130,091 | 155,194 |
Gross Amounts Not Offset in the Balance Sheet | ||
Financial Instruments | (130,091) | (155,194) |
Net Amount | $ 0 | $ 0 |
Balance Sheet Offsetting - Secu
Balance Sheet Offsetting - Secured Borrowings (Details) $ in Thousands | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($)item |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Number of repurchase-to-maturity transactions outstanding | item | 0 | 0 |
Total borrowings | $ 1,754,242 | $ 1,478,840 |
Gross amount of recognized liabilities for repurchase agreements and securities lending in offsetting disclosure above | 1,754,242 | 1,478,840 |
Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Total borrowings | 1,754,242 | 1,478,840 |
US Treasury and agency securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 181,915 | 195,164 |
US Treasury and agency securities | Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 181,915 | 195,164 |
Assets-backed securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 357,234 | |
Assets-backed securities | Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements transactions | 357,234 | |
Corporate securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Securities lending transactions | 11,499 | 14,816 |
Corporate securities | Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Securities lending transactions | 11,499 | 14,816 |
Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Securities lending transactions | 1,203,594 | 1,268,860 |
Equity securities | Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Securities lending transactions | $ 1,203,594 | $ 1,268,860 |
Broker-Dealer and Clearing O147
Broker-Dealer and Clearing Organization Receivables and Payables (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Receivables: | ||
Securities borrowed | $ 1,386,821 | $ 1,436,069 |
Securities failed to deliver | 25,491 | 33,834 |
Trades in process of settlements | 29,412 | 10,223 |
Other | 22,654 | 17,615 |
Total receivables | 1,464,378 | 1,497,741 |
Payables: | ||
Securities loaned | 1,215,093 | 1,283,676 |
Correspondents | 30,160 | 31,040 |
Securities failed to receive | 37,864 | 31,724 |
Other | 4,446 | 688 |
Total Payables | $ 1,287,563 | $ 1,347,128 |
Deferred Policy Acquisition 148
Deferred Policy Acquisition Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Activity in deferred acquisition costs | |||
Balance, beginning of year | $ 18,603 | $ 19,874 | $ 20,416 |
Acquisition expenses capitalized | 34,934 | 37,231 | 39,716 |
Amortization charged to income | (36,549) | (38,502) | (40,258) |
Balance, end of year | $ 16,988 | $ 18,603 | $ 19,874 |
Reserves for Losses and Loss149
Reserves for Losses and Loss Adjustment Expenses - Reserve (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Information regarding of the reserve for unpaid losses and loss adjustment expenses | ||
Reserve for unpaid losses and allocated LAE balance, net | $ 17,470 | $ 25,203 |
Reinsurance recoverables on unpaid losses | 11,495 | 9,434 |
Unallocated LAE | 1,248 | 1,189 |
Reserve for unpaid losses and LAE balance, gross | $ 30,213 | $ 35,826 |
Reserves for Losses and Loss150
Reserves for Losses and Loss Adjustment Expenses - Activity (Details) $ in Thousands | Dec. 31, 2017USD ($)claim | Dec. 31, 2016USD ($) |
Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | ||
Total paid | $ 439,203 | |
Total incurred | 455,725 | |
All outstanding reserves prior to 2013, net of reinsurance | 948 | |
Reserve for unpaid losses and allocated LAE, net of reinsurance | 17,470 | $ 25,203 |
2,013 | ||
Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | ||
Total paid | 110,813 | |
Total incurred | 111,121 | |
Total of IBNR Reserves Plus Expected Development on Reported claims | $ 8 | |
Cumulative Number of Reported Claims | claim | 15,687 | |
2,014 | ||
Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | ||
Total paid | $ 83,346 | |
Total incurred | 84,074 | |
Total of IBNR Reserves Plus Expected Development on Reported claims | $ 119 | |
Cumulative Number of Reported Claims | claim | 13,099 | |
2,015 | ||
Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | ||
Total paid | $ 85,507 | |
Total incurred | 87,262 | |
Total of IBNR Reserves Plus Expected Development on Reported claims | $ 591 | |
Cumulative Number of Reported Claims | claim | 15,016 | |
2,016 | ||
Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | ||
Total paid | $ 81,682 | |
Total incurred | 85,189 | |
Total of IBNR Reserves Plus Expected Development on Reported claims | $ 2,622 | |
Cumulative Number of Reported Claims | claim | 21,277 | |
2,017 | ||
Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | ||
Total paid | $ 77,855 | |
Total incurred | 88,079 | |
Total of IBNR Reserves Plus Expected Development on Reported claims | $ 4,282 | |
Cumulative Number of Reported Claims | claim | 20,927 |
Reinsurance Activity - Credit R
Reinsurance Activity - Credit Risk (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Reinsurance activity | |
Balances due from Companies | $ 13,100 |
Allowance for uncollectible accounts | $ 0 |
Threshold percentage for disclosure of reinsurance recoverables | 5.00% |
Total | |
Reinsurance activity | |
Balances due from Companies | $ 7,350 |
Arch Reinsurance Co | |
Reinsurance activity | |
Balances due from Companies | 1,115 |
R and V Versicherung AG | |
Reinsurance activity | |
Balances due from Companies | 1,927 |
AM Best, A Rating | Partner Reinsurance | |
Reinsurance activity | |
Balances due from Companies | 1,947 |
AM Best, A Rating | Aspen Bermuda | |
Reinsurance activity | |
Balances due from Companies | 865 |
AM Best, A+ Rating | Everest Re | |
Reinsurance activity | |
Balances due from Companies | 767 |
AM Best, A+ Rating | Lloyds Syndicate 2001 | |
Reinsurance activity | |
Balances due from Companies | $ 729 |
Reinsurance Activity - Effects
Reinsurance Activity - Effects of Reinsurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earned | |||
Net premiums, Earned | $ 142,298 | $ 155,545 | $ 162,082 |
Effect of reinsurance on incurred losses | |||
Net loss and LAE incurred | 94,701 | 89,243 | 99,066 |
Property and casualty | |||
Written | |||
Premiums from direct business | 137,091 | 152,970 | 167,025 |
Reinsurance assumed | 12,150 | 11,338 | 10,714 |
Reinsurance ceded | (12,280) | (14,962) | (17,170) |
Net premiums, Written | 136,961 | 149,346 | 160,569 |
Earned | |||
Premiums from direct business | 144,990 | 159,884 | 169,334 |
Reinsurance assumed | 11,767 | 11,024 | 10,283 |
Reinsurance ceded | (14,459) | (15,363) | (17,535) |
Net premiums, Earned | 142,298 | 155,545 | 162,082 |
Effect of reinsurance on incurred losses | |||
Loss and LAE incurred | 138,358 | 113,494 | 123,017 |
Reinsurance recoverables | (43,657) | (24,251) | (23,951) |
Net loss and LAE incurred | $ 94,701 | $ 89,243 | $ 99,066 |
Reinsurance Activity - Coverage
Reinsurance Activity - Coverage (Details) - Catastrophic coverage $ in Millions | Jan. 01, 2018USD ($) | Jul. 01, 2017 | Dec. 31, 2017USD ($)item | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($)item |
First layer of protection | ||||||
Reinsurance activity | ||||||
Reinsurance in excess of retention | $ 17 | |||||
Retention amount | 8 | |||||
Second layer of protection | ||||||
Reinsurance activity | ||||||
Reinsurance coverage in losses per event | 30 | |||||
Retention amount | 25 | |||||
Third layer of protection | ||||||
Reinsurance activity | ||||||
Reinsurance coverage in losses per event | 50 | |||||
Retention amount | 55 | |||||
ASIC | ||||||
Reinsurance activity | ||||||
Reinsurance in excess of retention | 6.5 | |||||
Retention amount | 1.5 | |||||
NLIC | ||||||
Reinsurance activity | ||||||
Retention amount | $ 8 | |||||
NLC | ||||||
Reinsurance activity | ||||||
Number of layers of protection under reinsurance | item | 3 | 3 | ||||
Aggregate coverage in excess of retention for per event retention and sub-catastrophic event | $ 10 | |||||
Retention amount per event | $ 1 | |||||
Participation retained (as a percent) | 17.50% | 0.00% | ||||
Number of significant catastrophe experienced | item | 0 | 0 | ||||
Renewal period of reinsurance contract | 2 years | |||||
Number of tornado, hail and wind storms experienced | item | 16 | 15 | 12 | |||
Incurred losses | $ 38.1 | $ 44 | $ 35.3 | |||
Reinsurance recoverable favorable (loss) | $ 4.6 | $ 10 | $ 9.1 | |||
Reinsurance recoverable subscription level | 100.00% | 100.00% | 91.00% | |||
Reinstatement premiums | $ 1.4 | $ 0.6 | $ 0.2 | |||
NLC | Sub-catastrophic | ||||||
Reinsurance activity | ||||||
Retention amount | $ 17.5 | |||||
NLC | Hurricane Harvey | ||||||
Reinsurance activity | ||||||
Total gross losses and LAE incurred | $ 18.2 | |||||
Net exposure retention | 3.4 | |||||
Reinstatement premiums | $ 1.4 | |||||
NLIC and ASIC | ||||||
Reinsurance activity | ||||||
Number of catastrophe that could be experienced with limited retention | item | 1 | |||||
NLIC and ASIC | Maximum | ||||||
Reinsurance activity | ||||||
Retention amount | $ 8 |
Segment and Related Informat154
Segment and Related Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)segment | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Information about the revenues, operating results, goodwill and assets | |||||||||||
Number of reportable segments | segment | 4 | ||||||||||
Net interest income (expense) | $ 108,692 | $ 104,980 | $ 115,976 | $ 92,100 | $ 104,124 | $ 99,170 | $ 100,397 | $ 93,840 | $ 421,748 | $ 397,531 | $ 408,583 |
Provision for loan losses | 5,453 | 1,260 | 5,853 | 1,705 | 4,347 | 3,990 | 28,876 | 3,407 | 14,271 | 40,620 | 12,715 |
Noninterest income | 290,456 | 298,477 | 344,692 | 271,439 | 309,127 | 354,458 | 346,005 | 277,375 | 1,205,064 | 1,286,965 | 1,227,642 |
Noninterest expense | 328,670 | 353,842 | 366,251 | 320,492 | 355,784 | 364,133 | 367,365 | 325,189 | 1,369,255 | 1,412,471 | 1,340,016 |
Income before income taxes | 65,025 | $ 48,355 | $ 88,564 | $ 41,342 | 53,120 | $ 85,505 | $ 50,161 | $ 42,619 | 243,286 | 231,405 | 283,494 |
Goodwill | 251,808 | 251,808 | 251,808 | 251,808 | |||||||
Total assets | 13,365,786 | 12,738,062 | 13,365,786 | 12,738,062 | |||||||
Operating segment | Banking | |||||||||||
Information about the revenues, operating results, goodwill and assets | |||||||||||
Net interest income (expense) | 366,581 | 363,083 | 369,493 | ||||||||
Provision for loan losses | 14,073 | 40,673 | 12,795 | ||||||||
Noninterest income | 59,904 | 52,579 | 62,639 | ||||||||
Noninterest expense | 248,404 | 244,715 | 243,926 | ||||||||
Income before income taxes | 164,008 | 130,274 | 175,411 | ||||||||
Goodwill | 207,741 | 207,741 | 207,741 | 207,741 | |||||||
Total assets | 9,558,718 | 9,527,518 | 9,558,718 | 9,527,518 | |||||||
Operating segment | Broker-Dealer | |||||||||||
Information about the revenues, operating results, goodwill and assets | |||||||||||
Net interest income (expense) | 43,735 | 31,172 | 32,971 | ||||||||
Provision for loan losses | 198 | (53) | (80) | ||||||||
Noninterest income | 368,421 | 385,766 | 334,495 | ||||||||
Noninterest expense | 347,314 | 377,524 | 367,812 | ||||||||
Income before income taxes | 64,644 | 39,467 | (266) | ||||||||
Goodwill | 7,008 | 7,008 | 7,008 | 7,008 | |||||||
Total assets | 3,394,911 | 2,777,849 | 3,394,911 | 2,777,849 | |||||||
Operating segment | Mortgage Origination | |||||||||||
Information about the revenues, operating results, goodwill and assets | |||||||||||
Net interest income (expense) | (915) | (11,589) | (10,423) | ||||||||
Noninterest income | 632,388 | 704,126 | 597,163 | ||||||||
Noninterest expense | 581,899 | 614,741 | 539,257 | ||||||||
Income before income taxes | 49,574 | 77,796 | 47,483 | ||||||||
Goodwill | 13,071 | 13,071 | 13,071 | 13,071 | |||||||
Total assets | 1,937,327 | 2,042,458 | 1,937,327 | 2,042,458 | |||||||
Operating segment | Insurance Segment | |||||||||||
Information about the revenues, operating results, goodwill and assets | |||||||||||
Net interest income (expense) | 2,861 | 3,164 | 3,187 | ||||||||
Noninterest income | 151,382 | 164,841 | 171,185 | ||||||||
Noninterest expense | 158,354 | 146,601 | 158,720 | ||||||||
Income before income taxes | (4,111) | 21,404 | 15,652 | ||||||||
Goodwill | 23,988 | 23,988 | 23,988 | 23,988 | |||||||
Total assets | 291,639 | 347,252 | 291,639 | 347,252 | |||||||
Corporate | |||||||||||
Information about the revenues, operating results, goodwill and assets | |||||||||||
Net interest income (expense) | (10,069) | (7,257) | (5,109) | ||||||||
Noninterest income | 12,798 | 2 | 81,289 | ||||||||
Noninterest expense | 33,983 | 29,938 | 31,926 | ||||||||
Income before income taxes | (31,254) | (37,193) | 44,254 | ||||||||
Total assets | 2,106,978 | 2,032,749 | 2,106,978 | 2,032,749 | |||||||
All Other and Eliminations. | |||||||||||
Information about the revenues, operating results, goodwill and assets | |||||||||||
Net interest income (expense) | 19,555 | 18,958 | 18,464 | ||||||||
Noninterest income | (19,829) | (20,349) | (19,129) | ||||||||
Noninterest expense | (699) | (1,048) | (1,625) | ||||||||
Income before income taxes | 425 | (343) | $ 960 | ||||||||
Total assets | $ (3,923,787) | $ (3,989,764) | $ (3,923,787) | $ (3,989,764) |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic earnings per share: | |||||||||||
Income attributable to Hilltop | $ 132,544 | $ 145,894 | $ 209,119 | ||||||||
Less: income applicable to participating shares | (6) | (952) | |||||||||
Net earnings available to Hilltop common stockholders | $ 132,544 | $ 145,888 | $ 208,167 | ||||||||
Weighted average shares outstanding - basic | 97,137 | 98,404 | 99,074 | ||||||||
Basic earnings per common share (in dollars per share) | $ 0.14 | $ 0.31 | $ 0.64 | $ 0.27 | $ 0.36 | $ 0.53 | $ 0.32 | $ 0.28 | $ 1.36 | $ 1.48 | $ 2.10 |
Diluted earnings per share: | |||||||||||
Income attributable to Hilltop | $ 132,544 | $ 145,894 | $ 209,119 | ||||||||
Weighted average shares outstanding - basic | 97,137 | 98,404 | 99,074 | ||||||||
Effect of potentially dilutive securities (in shares) | 216 | 225 | 888 | ||||||||
Weighted average shares outstanding - diluted | 97,353 | 98,629 | 99,962 | ||||||||
Diluted earnings per common share (in dollars per share) | $ 0.14 | $ 0.31 | $ 0.63 | $ 0.27 | $ 0.36 | $ 0.53 | $ 0.32 | $ 0.28 | $ 1.36 | $ 1.48 | $ 2.09 |
Condensed Financial Statemen156
Condensed Financial Statements of Parent - Operations and Comp Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Statements of Operations and Comprehensive Income (Loss) | |||||||||||
Interest expense | $ 24,973 | $ 23,964 | $ 20,330 | $ 16,141 | $ 14,211 | $ 16,093 | $ 13,805 | $ 14,314 | $ 85,408 | $ 58,423 | $ 61,255 |
Bargain purchase gain | 81,289 | ||||||||||
Income tax benefit | 51,350 | 18,003 | 25,754 | 15,035 | 17,582 | 33,017 | 18,439 | 14,423 | 110,142 | 83,461 | 70,915 |
Net income | $ 13,675 | $ 30,352 | $ 62,810 | $ 26,307 | $ 35,538 | $ 52,488 | $ 31,722 | $ 28,196 | 133,144 | 147,944 | 212,579 |
Other comprehensive income (loss), net | (879) | (2,144) | 1,978 | ||||||||
Comprehensive income | 132,265 | 145,800 | 214,557 | ||||||||
Hilltop | |||||||||||
Condensed Statements of Operations and Comprehensive Income (Loss) | |||||||||||
Dividends from bank and bank holding company subsidiaries | 53,000 | 87,826 | |||||||||
Dividends from nonbank subsidiaries | 41,500 | ||||||||||
Investment income | 312 | 382 | 445 | ||||||||
Interest expense | 10,381 | 7,639 | 5,554 | ||||||||
Bargain purchase gain | 81,289 | ||||||||||
Other income | 12,798 | 2 | |||||||||
General and administrative expense | 33,983 | 29,938 | 31,926 | ||||||||
Income before income taxes, equity in undistributed earnings of subsidiaries and preferred stock activity | 63,246 | 50,633 | 44,254 | ||||||||
Income tax benefit | (15,577) | (10,077) | (9,562) | ||||||||
Equity in undistributed earnings of subsidiaries | 54,321 | 87,234 | 158,763 | ||||||||
Net income | 133,144 | 147,944 | 212,579 | ||||||||
Other comprehensive income (loss), net | (879) | (2,144) | 1,978 | ||||||||
Comprehensive income | $ 132,265 | $ 145,800 | $ 214,557 |
Condensed Financial Statemen157
Condensed Financial Statements of Parent - Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | |||
Cash and cash equivalents | $ 486,977 | $ 669,357 | |
Investment in subsidiaries: | |||
Other assets | 549,447 | 613,453 | |
Total assets | 13,365,786 | 12,738,062 | |
Liabilities and Stockholders' Equity | |||
Notes payable | 208,809 | 317,912 | |
Stockholders' equity | 1,912,081 | 1,870,509 | |
Total liabilities and stockholders' equity | 13,365,786 | 12,738,062 | |
Hilltop | |||
Assets | |||
Cash and cash equivalents | 96,764 | 118,290 | $ 55,542 |
Investment in subsidiaries: | |||
Bank and bank holding company subsidiaries | 1,340,093 | 1,304,917 | 1,271,581 |
Nonbank subsidiaries | 603,631 | 609,539 | 545,502 |
Other assets | 66,490 | 3 | 32,922 |
Total assets | 2,106,978 | 2,032,749 | 1,905,547 |
Liabilities and Stockholders' Equity | |||
Accounts payable and accrued expenses | 46,442 | 13,929 | 20,419 |
Notes payable | 148,455 | 148,311 | 148,174 |
Stockholders' equity | 1,912,081 | 1,870,509 | 1,736,954 |
Total liabilities and stockholders' equity | $ 2,106,978 | $ 2,032,749 | $ 1,905,547 |
Condensed Financial Statemen158
Condensed Financial Statements of Parent - Cash flows (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Activities: | |||||||||||
Net income | $ 13,675 | $ 30,352 | $ 62,810 | $ 26,307 | $ 35,538 | $ 52,488 | $ 31,722 | $ 28,196 | $ 133,144 | $ 147,944 | $ 212,579 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Bargain purchase gain | (81,289) | ||||||||||
Deferred income taxes | 40,933 | (9,690) | 17,376 | ||||||||
Net cash provided by (used in) operating activities | (326,303) | (183,348) | 35,737 | ||||||||
Investing Activities: | |||||||||||
Net cash provided by (used in) investing activities | (357,961) | (493,561) | 442,289 | ||||||||
Financing Activities: | |||||||||||
Proceeds from issuance of common stock | 4,139 | ||||||||||
Payments to repurchase common stock | (27,388) | (30,028) | |||||||||
Proceeds from issuance of notes payable | 403,136 | 296,993 | 150,078 | ||||||||
Dividends paid on common stock | (23,140) | (5,801) | |||||||||
Dividends paid on preferred stock | (3,539) | ||||||||||
Redemption of preferred stock | (114,068) | ||||||||||
Other, net | (674) | (868) | 718 | ||||||||
Net cash provided by (used in) financing activities | 480,882 | 698,228 | (621,656) | ||||||||
Net change in cash and cash equivalents | (203,382) | 21,319 | (143,630) | ||||||||
Cash and cash equivalents, beginning of year | 690,764 | 669,445 | 690,764 | 669,445 | 813,075 | ||||||
Cash and cash equivalents, end of year | 487,382 | 690,764 | 487,382 | 690,764 | $ 669,445 | ||||||
Supplemental Schedule of Non-Cash Activities: | |||||||||||
Common stock issued in acquisition | 200,626 | ||||||||||
Hilltop | |||||||||||
Operating Activities: | |||||||||||
Net income | 133,144 | 147,944 | $ 212,579 | ||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Equity in undistributed earnings of subsidiaries | (54,321) | (87,234) | (158,763) | ||||||||
Bargain purchase gain | (81,289) | ||||||||||
Deferred income taxes | 2,511 | (2,063) | 12,429 | ||||||||
Other, net | (57,380) | 20,812 | 2,443 | ||||||||
Net cash provided by (used in) operating activities | 23,954 | 79,459 | (12,601) | ||||||||
Investing Activities: | |||||||||||
Reimbursement from nonbank subsidiaries | 6,000 | ||||||||||
Capital contribution to bank and bank holding company subsidiaries | (10,000) | ||||||||||
Capital contribution to nonbank subsidiaries | (20,000) | ||||||||||
Cash paid for acquisition | (78,217) | ||||||||||
Other, net | (4,241) | (98) | (31) | ||||||||
Net cash provided by (used in) investing activities | (14,241) | (14,098) | (78,248) | ||||||||
Financing Activities: | |||||||||||
Proceeds from issuance of common stock | 4,139 | ||||||||||
Payments to repurchase common stock | (27,388) | (30,028) | |||||||||
Proceeds from issuance of notes payable | 148,078 | ||||||||||
Dividends paid on common stock | (23,140) | (5,801) | |||||||||
Dividends paid on preferred stock | (3,539) | ||||||||||
Redemption of preferred stock | (114,068) | ||||||||||
Other, net | 19,289 | (951) | |||||||||
Net cash provided by (used in) financing activities | (31,239) | (2,613) | 443 | ||||||||
Net change in cash and cash equivalents | (21,526) | 62,748 | (90,406) | ||||||||
Cash and cash equivalents, beginning of year | $ 118,290 | $ 55,542 | 118,290 | 55,542 | 145,948 | ||||||
Cash and cash equivalents, end of year | $ 96,764 | $ 118,290 | $ 96,764 | $ 118,290 | $ 55,542 | ||||||
Supplemental Schedule of Non-Cash Activities: | |||||||||||
Common stock issued in acquisition | 200,626 |
Condensed Financial Statemen159
Condensed Financial Statements of Parent - Cash flows- Additional Info. (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2015 | Apr. 28, 2015 | Apr. 09, 2015 | |
Investing Activities | ||||
Payments for repurchase of common stock associated with the resolution of the contingency on appraisal proceedings from SWS Merger | $ 47.1 | |||
Proceeds from subsidiaries due to organizational changes | $ 20.6 | |||
Senior Notes due April 2025 | ||||
Investing Activities | ||||
Interest rate (as a percent) | 5.00% | |||
Series B Preferred Stock | ||||
Investing Activities | ||||
Aggregate liquidation value | $ 114.1 | |||
Unpaid dividend | $ 0.4 | |||
Private Placement | Senior Notes due April 2025 | ||||
Investing Activities | ||||
Aggregate principal amount | $ 150 | |||
Interest rate (as a percent) | 5.00% |
Recent Issued Accounting Standa
Recent Issued Accounting Standards (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Recent Accounting Pronouncements | |||
Accumulated other comprehensive income (loss) | $ (394) | $ 485 | |
Retained earnings | $ 384,545 | $ 295,568 | |
Accounting Standards Update 2016-01 | Adjustment | |||
Recent Accounting Pronouncements | |||
Available-for-sale equity securities | $ 21,200 | ||
Accumulated other comprehensive income (loss) | (3,000) | ||
Retained earnings | 3,000 | ||
Accounting Standards Update 2016-01 | Adjustment | Other Assets | |||
Recent Accounting Pronouncements | |||
Other equity investments | $ 40,000 |
Selected Quarterly Financial161
Selected Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Selected Quarterly Financial Information (Unaudited) | |||||||||||
Interest income | $ 133,665 | $ 128,944 | $ 136,306 | $ 108,241 | $ 118,335 | $ 115,263 | $ 114,202 | $ 108,154 | $ 507,156 | $ 455,954 | $ 469,838 |
Interest expense | 24,973 | 23,964 | 20,330 | 16,141 | 14,211 | 16,093 | 13,805 | 14,314 | 85,408 | 58,423 | 61,255 |
Net interest income | 108,692 | 104,980 | 115,976 | 92,100 | 104,124 | 99,170 | 100,397 | 93,840 | 421,748 | 397,531 | 408,583 |
Provision for loan losses | 5,453 | 1,260 | 5,853 | 1,705 | 4,347 | 3,990 | 28,876 | 3,407 | 14,271 | 40,620 | 12,715 |
Noninterest income | 290,456 | 298,477 | 344,692 | 271,439 | 309,127 | 354,458 | 346,005 | 277,375 | 1,205,064 | 1,286,965 | 1,227,642 |
Noninterest expense | 328,670 | 353,842 | 366,251 | 320,492 | 355,784 | 364,133 | 367,365 | 325,189 | 1,369,255 | 1,412,471 | 1,340,016 |
Income before income taxes | 65,025 | 48,355 | 88,564 | 41,342 | 53,120 | 85,505 | 50,161 | 42,619 | 243,286 | 231,405 | 283,494 |
Income tax expense | 51,350 | 18,003 | 25,754 | 15,035 | 17,582 | 33,017 | 18,439 | 14,423 | 110,142 | 83,461 | 70,915 |
Net income | 13,675 | 30,352 | 62,810 | 26,307 | 35,538 | 52,488 | 31,722 | 28,196 | 133,144 | 147,944 | 212,579 |
Less: Net income attributable to noncontrolling interest | 247 | 146 | 334 | (127) | 217 | 556 | 648 | 629 | 600 | 2,050 | 1,606 |
Income attributable to Hilltop | $ 13,428 | $ 30,206 | $ 62,476 | $ 26,434 | $ 35,321 | $ 51,932 | $ 31,074 | $ 27,567 | $ 132,544 | $ 145,894 | $ 210,973 |
Earnings per common share: | |||||||||||
Basic (in dollars per share) | $ 0.14 | $ 0.31 | $ 0.64 | $ 0.27 | $ 0.36 | $ 0.53 | $ 0.32 | $ 0.28 | $ 1.36 | $ 1.48 | $ 2.10 |
Diluted (in dollars per share) | 0.14 | 0.31 | 0.63 | 0.27 | 0.36 | $ 0.53 | $ 0.32 | $ 0.28 | 1.36 | 1.48 | $ 2.09 |
Cash dividends declared per common share | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.24 | $ 0.06 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ in Thousands | Feb. 13, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Subsequent event | |||
Assets | $ 13,365,786 | $ 12,738,062 | |
Deposits. | 7,978,119 | $ 7,063,811 | |
Subsequent Event | BORO | |||
Subsequent event | |||
Aggregate purchase price, cash | $ 85,000 | ||
BORO | |||
Subsequent event | |||
Assets | 454,000 | ||
Loans | 344,000 | ||
Deposits. | $ 406,000 |
Schedule I - Insurance Incur163
Schedule I - Insurance Incurred and Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net Of Reinsurance (Details) $ in Thousands | Dec. 31, 2017USD ($)claim | Dec. 31, 2016USD ($) |
Incurred losses and allocated loss adjustment expenses, net of reinsurance | ||
2,017 | $ 455,725 | |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | ||
2,017 | 439,203 | |
All outstanding reserves prior to 2013, net of reinsurance | 948 | |
Reserve for unpaid losses and allocated loss adjustment expenses, net of reinsurance | 17,470 | $ 25,203 |
2,013 | ||
Incurred losses and allocated loss adjustment expenses, net of reinsurance | ||
2,013 | 107,793 | |
2,014 | 108,951 | |
2,015 | 111,006 | |
2,016 | 111,011 | |
2,017 | 111,121 | |
Total of incurred but not reported reserves plus expected development on reported claims | $ 8 | |
Cumulative Number of Reported Claims | claim | 15,687 | |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | ||
2,013 | $ 94,238 | |
2,014 | 104,938 | |
2,015 | 108,099 | |
2,016 | 109,662 | |
2,017 | 110,813 | |
2,014 | ||
Incurred losses and allocated loss adjustment expenses, net of reinsurance | ||
2,014 | 83,784 | |
2,015 | 85,037 | |
2,016 | 84,221 | |
2,017 | 84,074 | |
Total of incurred but not reported reserves plus expected development on reported claims | $ 119 | |
Cumulative Number of Reported Claims | claim | 13,099 | |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | ||
2,014 | $ 70,831 | |
2,015 | 79,713 | |
2,016 | 81,684 | |
2,017 | 83,346 | |
2,015 | ||
Incurred losses and allocated loss adjustment expenses, net of reinsurance | ||
2,015 | 89,646 | |
2,016 | 88,477 | |
2,017 | 87,262 | |
Total of incurred but not reported reserves plus expected development on reported claims | $ 591 | |
Cumulative Number of Reported Claims | claim | 15,016 | |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | ||
2,015 | $ 71,820 | |
2,016 | 82,940 | |
2,017 | 85,507 | |
2,016 | ||
Incurred losses and allocated loss adjustment expenses, net of reinsurance | ||
2,016 | 84,771 | |
2,017 | 85,189 | |
Total of incurred but not reported reserves plus expected development on reported claims | $ 2,622 | |
Cumulative Number of Reported Claims | claim | 21,277 | |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | ||
2,016 | $ 71,543 | |
2,017 | 81,682 | |
2,017 | ||
Incurred losses and allocated loss adjustment expenses, net of reinsurance | ||
2,017 | 88,079 | |
Total of incurred but not reported reserves plus expected development on reported claims | $ 4,282 | |
Cumulative Number of Reported Claims | claim | 20,927 | |
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance | ||
2,017 | $ 77,855 |