On Oct 19, we issued an updated research report on Hilltop Holdings Inc. HTH.
Over the past few years, Hilltop has tactically grown through prudent acquisitions. The takeover of First National Bank in 2013 augmented the company’s asset-base, earnings potential and retail network to 84 branches.
In Jan 2015, the company acquired SWS Group and strengthened its banking operations. This made PlainsCapital (the holding company for PlainsCapital Bank acquired by the company in 2012) the fifth-largest Texas-based bank by deposits through the combination of Southwest Securities and First Securities.
Hilltop has maintained financial stability despite a series of acquisitions. 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. Of the acquisitions made by Hilltop, the takeover of PlainsCapital not only boosted its shareholder equity, but has also been highly accretive to revenues and earnings.
Hilltop operates as a property and casualty insurance company in the U.S., through its subsidiary National Lloyds Corp. ("NLC"), which is the key driver of its revenues over the last few years. This, combined with other amiable factors, supported the company’s top-line growth and lowered its operating loss. NLC’s disciplined underwriting philosophy, rate hikes and competitive position will continue to enhance premiums and contribute to overall growth.
Other banks in the southeast sector are CenterState Banks, Inc. CSFL, Fidelity Southern Corporation LION and Middleburg Financial Corporation MBRG.
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