Hilltop (HTH) 10-Q/A 2019 Q1 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A

(Amendment No. 1)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-31987

Hilltop Holdings Inc.

(Exact name of registrant as specified in its charter)

Maryland	84-1477939
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)
2323 Victory Avenue, Suite 1400
Dallas, TX	75219
(Address of principal executive offices)	(Zip Code)

(214) 855-2177

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	HTH	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐  No ☒

The number of shares of the registrant's common stock outstanding at April 25, 2019 was 93,983,247.

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A (this “Amended Filing”) amends our original Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 25, 2019 (the “Original Filing”).

The purpose of this Amended Filing is to revise Part I, Item 4 in the Original Filing to reflect management’s conclusion that our disclosure controls and procedures were not effective at March 31, 2019 due to material weaknesses in our internal control over financial reporting identified subsequent to the issuance of the Original Filing. These material weaknesses did not result in any change to our consolidated financial statements as set forth in the Original Filing. As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by the Company’s Principal Executive Officer and Principal Financial Officer are being filed herewith as exhibits to this Amended Filing (Exhibits 31.1 and 31.2). Because no financial statements are contained within this Amended Filing, paragraph 3 of such certifications has been omitted.

Other than the inclusion within this Amended Filing of new certifications required by management (and related amendment to the exhibit index to reflect the addition of such certifications) and the section “Plan for Remediation of Material Weaknesses” in Part I, Item 4, this Amended Filing speaks only as of the date of the Original Filing and does not modify, supplement or update any other information or disclosures contained in our Original Filing. Specifically, there are no changes to our consolidated financial statements set forth in the Original Filing, including but not limited to any subsequent events. This Amended Filing should be read in conjunction with the Original Filing and reports filed with the SEC subsequent to the Original Filing.

HILLTOP HOLDINGS INC.

FORM 10-Q/A

FOR THE QUARTER ENDED MARCH 31, 2019

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 4.	Controls and Procedures	4
PART II — OTHER INFORMATION
Item 6.	Exhibits	5

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PART I. FINANCIAL INFORMATION

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the supervision and participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.

At the time we filed the Original Filing, our Principal Executive Officer and Principal Financial Officer had concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective. Subsequent to that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2019 because of material weaknesses identified in our internal control over financial reporting. The Company is amending this Item 4 to reflect this conclusion. As a result of this reevaluation, management determined that (1) the Company did not design and maintain effective controls over certain aspects relating to the determination of the qualitative factors considered by management in the allowance for loan losses estimation process, specifically control activities to adequately support the analysis and the impact of such support on the loss measurement and (2) certain control enhancements implemented as a part of the Company’s process for the approval of customer wires were not operating as designed. These control deficiencies could result in misstatements of the interim or annual consolidated financial statements and disclosures that would result in a material misstatement that would not be prevented or detected.

Notwithstanding these material weaknesses, the Company has concluded that no material misstatements exist in the consolidated financial statements as filed in the Original Filing and such financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2019 and December 31, 2018, and the results of its operations and its cash flows for the three months ended March 31, 2019 and March 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Plan for Remediation of Material Weaknesses

The Company and its Board of Directors are committed to maintaining a strong internal control environment. Management has evaluated the material weaknesses described above and has made significant progress updating its design and implementation of internal controls to remediate the aforementioned deficiencies and enhance the Company’s internal control environment. The respective remediation plans are being implemented and include (1) enhanced the analysis to support the qualitative factors considered in the estimation of the allowance for loan losses and (2) enhanced processes with respect to approval of customer wires. Management is committed to successfully implementing the respective remediation plans and currently plans to commence the evaluation of its updated internal controls design and determine whether the controls have operated effectively during the fourth quarter of 2019.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except that we implemented internal controls and key system functionality to enable the preparation of financial information upon the adoption of ASC 842, Leases.

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PART II. OTHER INFORMATION

Item 6. Exhibits. 

Exhibit Number	Description of Exhibit
2.1	Termination Agreement among Federal Deposit Insurance Corporation, as Receiver of First National Bank, Edinburg, Texas, PlainsCapital Bank and Federal Deposit Insurance Corporation, acting in its corporate capacity, dated as of October 17, 2018 (filed as Exhibit 99.1 to the Registrant’s Current Report on Form 8-K file October 22, 2018 (File no. 001-31987) and incorporated herein by reference).
10.1	Separation and Release Agreement, dated as of February 21, 2019, by and between Hilltop Holdings Inc. and any of its parents, predecessors, successors, subsidiaries, affiliates or related companies, organizations, managers, officers, directors, executives, agents, plan fiduciaries, shareholders, attorneys and/or representatives, and Alan B. White (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2019 (File No. 001-31987) and incorporated herein by reference).
10.2	Retention Agreement, dated as of February 19, 2019, by and between Hill A. Feinberg and Hilltop Holdings Inc. (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 22, 2019 (File No. 001-31987) and incorporated herein by reference).
10.3**	Form of Restricted Stock Unit Award Agreement (Performance-Based Vesting) for awards beginning in 2019.
10.4**	Form of Restricted Stock Unit Award Agreement (Time-Based Vesting for Section 16 Officers) for awards beginning in 2019.
10.5**	Form of Restricted Stock Unit Award Agreement  (Time-Based Vesting for Non-Section 16 Officers) for awards beginning in 2019.
31.1*	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1^	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

*Filed herewith.

**Previously filed with our Quarterly Report on Form 10-Q originally filed on April 25, 2019.

^Previously furnished with our Quarterly Report on Form 10-Q originally filed on April 25, 2019.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HILLTOP HOLDINGS INC.
Date: November 20, 2019	By:	/s/ William B. Furr
		William B. Furr
		Chief Financial Officer (Principal Financial Officer and duly authorized officer)

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