On Dec 23, we issued an updated research report on Texas-based Hilltop Holdings Inc. HTH, a financial holding company with a complementary set of operating firms.
The company provides a diverse set of services like banking, mortgage origination, financial advisory and insurance services through its subsidiaries PlainsCapital Bank, PrimeLending, Hilltop Securities Holdings and National Lloyds.
Over the recent past, Hilltop has adopted an inorganic route to growth, which includes divestment and acquisition of companies. Starting in 2007, the company sold all the assets of manufactured home communities business for $1.8 billion. The transaction resulted in a net cash balance of $550 million. In the same year, Hilltop acquired National Llyods Incurance Corporation. Thereafter, it acquired SWS Group for $50 million in 2011, Plains Capital Corp. in 2012, First National Bank in 2013 and SWS Group Inc. for nearly $350 million in 2015.
The company’s subsidiary PlainsCapital has demonstrated consistent loan growth, while maintaining quality for the past 27 years, since its formation.
Hilltop also retains adequate financial stability. While integration risks prevail, prudent capital management should mitigate market risks to strengthen operating and competitive efficiencies. Going ahead, we expect Hilltop’s inorganic growth and expansion strategy to continue to enhance its operating leverage and financials.
Also, Hilltop has been consistently expanding its global presence and has entered the primary operating markets of Texas, Oklahoma, Georgia, Tennessee and Arizona.
However, Hilltop has a vast exposure to weather-risk prone areas such as Texas and Arizona, which makes it vulnerable to catastrophe losses.
Hilltop Holdings presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the space are Cardinal Financial Corp. CFNL, CommunityOne Bancorp COB, FCB Financial Holdings, Inc. FCB. All these stocks carry a Zacks Rank #2 (Buy).
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