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Section 1: 8-K (8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  February 13, 2018

 

Hilltop Holdings Inc.

(Exact name of registrant as specified in its charter)

 

Maryland

 

1-31987

 

84-1477939

(State or other jurisdiction of
incorporation)

 

(Commission
File Number)

 

(IRS Employer Identification
No.)

 

2323 Victory Avenue, Suite 1400

 

 

Dallas, Texas

 

75219

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:  (214) 855-2177

 

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o                        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o                        Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o                        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o                        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b— 2 of the Securities Exchange Act of 1934.

 

Emerging growth company o

 

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. o

 

 

 



 

Section 8 — Other Events

 

Item 8.01  Other Events

 

On February 13, 2018, Hilltop Holdings Inc., or the Company, issued a press release announcing that it had entered into a definitive agreement to acquire privately-held, Houston-based The Bank of River Oaks 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 The Bank of River Oaks.

 

Copies of the press release and investor presentation related to the announcement are attached as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The Company intends to use the investor presentation, in whole or in part, in one or more meetings with investors or analysts, including in a webcast on February 14, 2018 at 8:00 a.m. (central time).

 

Forward-Looking Statements

 

This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as our plans, objectives, strategies, expectations and intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “might,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view” or “would” or the negative of these words and phrases or similar words or phrases. Factors that could cause our actual results to differ materially from those described in the forward-looking statements include, among others: (i) the possibility that any of the anticipated benefits of the proposed transaction will not be realized or will not be realized within the expected time period; (ii) the risk that integration of the operations of The Bank of River Oaks will be materially delayed or will be more costly or difficult than expected; (iii) the failure of the proposed transaction to close on the expected timeline or at all; (iv) the effect of the announcement of the transaction on customer relationships and operating results; (v) ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval by The Bank of River Oaks shareholders on the expected terms and schedule; and (vi) the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events. For a discussion of additional factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

 

Section 9 — Financial Statements and Exhibits

 

Item 9.01  Financial Statements and Exhibits.

 

(a)

 

Financial statements of businesses acquired.

 

 

 

 

 

 

Not applicable.

(b)

 

Pro forma financial information.

 

 

 

 

 

 

Not applicable.

(c)

 

Shell company transactions.

 

 

 

 

 

 

Not applicable.

(d)

 

Exhibits.

 

 

 

2



 

The following exhibit(s) are filed or furnished, depending on the relative item requiring such exhibit, in accordance with the provisions of Item 601 of Regulation S-K and Instruction B.2 to this form.

 

Exhibit
Number

 

Description of Exhibit

 

 

 

99.1

 

Press Release dated February 13, 2018 (furnished pursuant to Item 8.01)

99.2

 

Investor Presentation dated February 14, 2018 (furnished pursuant to Item 8.01)

 

3



 

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 hereunto duly authorized.

 

 

 

Hilltop Holdings Inc.,

 

 

a Maryland corporation

 

 

 

Date: February 14, 2018

By:

/s/ Corey G. Prestidge

 

Name:

Corey G. Prestidge

 

Title:

Executive Vice President,

 

 

General Counsel & Secretary

 

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Section 2: EX-99.1 (EX-99.1)

Exhibit 99.1

 

 

Media Contact:

Ben Brooks  |  214.252.4047

ben.brooks@hilltop-holdings.com

 

Investor Relations Contact:

Isabell Novakov  |  214.252.4029

inovakov@hilltop-holdings.com

 

Hilltop Holdings Inc. to Acquire The Bank of River Oaks

 

DALLAS (February 13, 2018) — Dallas-based Hilltop Holdings Inc. (NYSE: HTH), the holding company for PlainsCapital Bank, today announced that it has entered into a definitive agreement to acquire privately held, Houston-based The Bank of River Oaks in an all-cash transaction. Under the terms of the definitive agreement, Hilltop Holdings has agreed to pay cash in the aggregate amount of $85 million to the shareholders and option holders of The Bank of River Oaks.

 

The Bank of River Oaks operates three full-service branch locations in the Houston area and, as of December 31, 2017, reported total assets of approximately $454 million, total loans of approximately $344 million, total deposits of approximately $406 million and total equity capital of approximately $46 million.

 

“We are pleased to announce the expansion of our Houston-area banking operations with the acquisition of The Bank of River Oaks,” Jeremy B. Ford, president and co-CEO of Hilltop Holdings, said. “The bank brings a valuable deposit franchise and a substantial commercial lending focus that are excellent complements to PlainsCapital Bank’s existing portfolio. This acquisition also fits well with our stated strategy of utilizing cash to acquire commercial-focused banks in key Texas markets, such as Houston, where we would like to grow significantly.”

 

The transaction brings together two like-minded, Texas-based community banks well known for their straightforward approach to banking and commitment to localized decision-making.

 

“We are very excited to join a successful, community-focused, Texas-based organization like PlainsCapital that shares our way of doing business,” said R. Andy Lane, Jr., chairman and CEO of The Bank of River Oaks. “Our banks have a common relationship-focused culture and lending philosophy that make this partnership a natural fit. We’re pleased to be able to offer our customers access to the broader array of banking technologies and solutions that PlainsCapital provides.”

 

Since entering the Houston market in 2013, PlainsCapital Bank has been focused on strategically increasing its presence in key locations throughout the area. In early 2017, PlainsCapital Bank celebrated the opening of its new flagship Houston office in the vibrant Upper Kirby District. With The Bank of River Oaks transaction, PlainsCapital Bank’s combined Houston branch network will grow to five locations with additions in the River Oaks, Uptown/Memorial and Medical Center areas.

 

“The acquisition of The Bank of River Oaks represents the continuation of our planned growth in the Greater Houston area and our ongoing commitment to serving the Houston community,” said Alan B. White, vice chairman and co-CEO of Hilltop Holdings and chairman of PlainsCapital Bank. “We are excited to further

 



 

expand our local expertise in commercial lending, healthcare lending, and private banking with the addition of the experienced River Oaks team to our PlainsCapital family.”

 

The transaction has been approved by the Boards of Directors of both companies and is expected to close during the third quarter of 2018, pending approval by shareholders of The Bank of River Oaks and required regulatory approvals.

 

Hilltop Holdings was advised in the transaction by Wachtell, Lipton, Rosen and Katz as legal counsel. The Bank of River Oaks was advised by Performance Trust Capital Partners, LLC as financial advisor and Parrott Sims McInnis & Foster, PLLC as legal counsel.

 

Hilltop Holdings Inc. will host a live webcast and conference call to discuss the transaction at 8:00 AM Central (9:00 AM Eastern) on Wednesday, February 14, 2018. Interested parties can access the conference call by dialing 1-877-508-9457 (domestic) or 1-412-317-0789 (international). The conference call also will be webcast simultaneously on the Hilltop Holdings Investor Relations website (http://ir.hilltop-holdings.com).

 

In addition to the information contained within this announcement, an investor presentation will be furnished to the Securities and Exchange Commission on Form 8-K and posted on Hilltop Holdings’ website containing additional information regarding this transaction.

 

About Hilltop Holdings Inc.

 

Hilltop Holdings is a Dallas-based financial holding company. Its primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank. PlainsCapital Bank’s wholly owned subsidiary, PrimeLending, provides residential mortgage lending throughout the United States. Hilltop Holdings’ broker-dealer subsidiaries, Hilltop Securities Inc. and Hilltop Securities Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. Through Hilltop Holdings’ other wholly owned subsidiary, National Lloyds Corporation, it provides property and casualty insurance through two insurance companies, National Lloyds Insurance Company and American Summit Insurance Company. At December 31, 2017, Hilltop employed approximately 5,500 people and operated approximately 475 locations in 44 states. Hilltop Holdings’ common stock is listed on the New York Stock Exchange under the symbol “HTH.” Find more information at Hilltop-Holdings.com, PlainsCapital.com, PrimeLending.com, NationalLloydsInsurance.com and HilltopSecurities.com.

 

FORWARD-LOOKING STATEMENTS

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as our plans, objectives, strategies, expectations and intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “might,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view” or “would” or the negative of these words and phrases or similar words or phrases. Factors that could cause our actual results to differ materially from those described in the forward-looking statements include, among others: (i) the possibility that any of the anticipated benefits of the proposed transaction will not be realized or will not be realized within the expected time period; (ii) the risk that

 



 

integration of the operations of The Bank of River Oaks will be materially delayed or will be more costly or difficult than expected; (iii) the failure of the proposed transaction to close on the expected timeline or at all; (iv) the effect of the announcement of the transaction on customer relationships and operating results; (v) ability to obtain regulatory approvals and meet other closing conditions to the mergers, including approval by The Bank of River Oaks shareholders on the expected terms and schedule; and (vi) the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events. For a discussion of additional factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

 

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Section 3: EX-99.2 (EX-99.2)

Exhibit 99.2

 

GRAPHIC

HilltopHoldingsInc. Acquisition of The Bank of River Oaks February 14, 2018

 


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Preface 2323 Victory Ave, Suite 1400 Dallas, TX 75219 Phone: 214-855-2177 www.hilltop-holdings.com Please Contact: Isabell Novakov Phone: 214-252-4029 Email: inovakov@hilltop-holdings.com FORWARD-LOOKING STATEMENTS This presentation and statements made by representatives of Hilltop Holdings Inc. (“Hilltop” or the “Company”) during the course of this presentation include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as our plans, objectives, strategies, expectations and intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “might,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view” or “would” or the negative of these words and phrases or similar words or phrases. Factors that could cause our actual results to differ materially from those described in the forward-looking statements include, among others: (i) the possibility that any of the anticipated benefits of the proposed transaction will not be realized or will not be realized within the expected time period; (ii) the risk that integration of the operations of The Bank of River Oaks will be materially delayed or will be more costly or difficult than expected; (iii) the failure of the proposed transaction to close on the expected timeline or at all; (iv) the effect of the announcement of the transaction on customer relationships and operating results; (v) ability to obtain regulatory approvals and meet other closing conditions to the mergers, including approval by The Bank of River Oaks shareholders on the expected terms and schedule; and (vi) the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events. For a discussion of additional factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed in our most recent Annual Report on Form 10-K , and subsequent Quarterly Reports on Form 10-Q and other reports, that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement. 2 Corporate Headquarters Additional Information

 


GRAPHIC

Strategic Overview • Hilltop’s acquisition of The Bank of River Oaks provides an opportunity to grow our footprint in Houston with an experienced and talented team of banking professionals This transaction is the fulfilment of Hilltop’s stated goal of expanding into the Houston market via an all-cash transaction to acquire a commercial lending platform • • • • Purchase price of $85 million 100% cash consideration 1.8x stated tangible book value as of 12/31/17 • Strengthen presence in the Houston market • Currently PlainsCapital Bank’s most underpenetrated market among major Texas MSAs Retain experienced management team capable of leading future growth • Veteran team with large bank background • Complementary cultures and operating philosophies Acquire attractive loan and deposit relationships • Commercial-focused lender with high concentration of C&I and owner-occupied CRE loans • Low-cost deposit franchise and attractive branch footprint Strategic investment of Hilltop’s excess capital • Projected to be accretive to Hilltop’s annual EPS in the year following the close of this transaction • Ample excess capital remains at Hilltop pro forma for this transaction • • • 3 Strategic Rationale Transaction

 


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The Bank of River Oaks Overview • • Houston, Texas based bank with $454 million of assets Rare and attractive combination of commercial loans and noninterest-bearing deposits relative to the competitive landscape Valuable deposit franchise with a 20 bps cost of deposits (2017) and attractive branch network Relationship-oriented with expertise in commercial lending, private banking and healthcare lending • Limited energy exposure (~2% of loan book) Pro forma, PlainsCapital Bank will have over $500 million in loans and over $460 million in deposits in Houston The Bank of River Oaks PlainsCapital Bank • • • Bank River Oaks Pro Forma Source: SNL (1) 2017 results reflect the Tax Law changes, impacting net income by approximately $800k Note: As of December 31, 2017 4 PlainsCapitalThe Bank of Lenders8715 Loans ($MM)166344509 Deposits ($MM)58406464 Branches235 Pro Forma Houston Presence $ in Thousands20162017 Balance Sheet Total Assets446,747454,391 Gross Loans339,571343,609 Total Deposits364,642406,097 Loans / Deposits 93.1% 84.6% Tangible Common Equity47,37046,160 Performance Pre-Tax Income5,6664,939 (1) Net Income4,4622,579 ROAA (%)1.000.58 NIM (%)3.723.83 Fee Income Ratio (%)4.44.1 Efficiency Ratio (%)66.359.6 Asset Quality & Capital CET 1 Ratio (%)13.0212.23 ALLL / Loans (%)0.981.11 NCOs / Average Loans (%)0.230.42 Financial Highlights Branch Network

 


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The Bank of River Oaks Management Team • The senior management team of The Bank of River Oaks each bring over 30 years of banking experience and decades in the Houston market Andy Lane will serve as the new Houston Region Chairman after the close of this transaction The senior management team has executed retention agreements to remain with Hilltop Holdings after the close of this transaction • • Whitney National Bank and Chase Bank Commercial Lending Whitney National Bank and Guaranty Bank Private Banking Amegy Bank and Southwest Bank of Texas Healthcare Lending 5 ExecutiveExperienceThe Bank of River Oaks Title 1) Andy Lane33 years of banking experience; former leadership experience with Chairman & CEO 2) Jerry Brewer40 years of banking experience; former leadership experience with Vice Chairman 3) Mark Troth33 years of banking experience; former leadership experience with President 3 2 1

 


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Pro Forma Loan Portfolio • Among Houston-based banks, The Bank of River Oaks has the 3rd highest concentration of C&I loans at 31% (1) Pro Forma ($000) 4Q'17 % of T otal ($000) 4Q'17 % of T otal ($000) 4Q'17 % of T otal Construction 1-4 SFR Multifamily OO CRE Other CRE C&I Consumer & Other 1,012,763 616,679 357,269 1,113,248 1,212,153 1,175,861 733,545 16% 10% 6% 18% 19% 19% 12% Construction 1-4 SFR Multifamily OO CRE Other CRE 48,443 48,724 5,337 63,959 62,026 14% 14% 2% 19% 18% Construction 1-4 SFR Multifamily OO CRE Other CRE C&I Consumer & Other 964,320 567,955 351,932 1,049,289 1,150,127 1,070,889 723,397 16% 10% 6% 18% 20% 18% 12% Consumer & Other 10,148 3% Total 343,609 100% Total 5,877,909 100% Total 6,221,518 100% Source: SNL Note: PlainsCapital loans and pro forma loans exclude loans held for sale (1) Ranking based on consolidated results for banks headquartered in Houston, TX. Loan figures used were the most recent quarter available as of February 11, 2018 6 C&I104,97231% T he Bank of River Oaks PlainsCapital Bank Pro Forma PlainsCapital Bank The Bank of River Oaks

 


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Pro Forma Deposit Composition • Among Houston-based banks, The Bank of River Oaks has the highest concentration of noninterest-bearing deposits at 42% (1) Pro Forma ($000) 4Q'17 % of Total ($000) 4Q'17 % of Total ($000) 4Q'17 % of Total NIB Demand MMDA, Sav. & Other CDs 2,308,844 3,833,803 1,408,756 31% 51% 19% NIB Demand MMDA, Sav. & Other CDs 2,477,738 4,036,678 1,443,084 31% 51% 18% MMDA, Sav. & Other CDs 202,875 34,328 50% 8% Total 406,097 100% Total 7,551,403 100% Total 7,957,500 100% Source: SNL (1) Ranking based on consolidated results for banks headquartered in Houston, TX. Deposit figures used were the most recent quarter available as of February 11, 2018 7 NIB Demand168,89442% The Bank of River Oaks PlainsCapital Bank Pro Forma PlainsCapital Bank The Bank of River Oaks

 


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Transaction Summary • • • $85 million purchase price for outstanding shares and in-the-money options 100% cash consideration Minimum common equity deliverable to Hilltop at closing, with a purchase price adjustment for any shortfall Minimum loan loss reserve of 98 bps at closing Retention agreements with the senior management team • • • • • • Price / Stated Tangible Book Value as of 12/31/17: 1.8x Price / Adjusted 2017 Net Income: 22x (1) Core Deposit Premium: 10.4% (2) Cost Saves: ~30% • Detailed due diligence process covering credit, securities, deposits, operations, management and integration • This acquisition has been unanimously approved by the Boards of Directors of both Hilltop and The Bank of River Oaks This acquisition is subject to approval by the shareholders of The Bank of River Oaks and standard regulatory approvals Expect to close this acquisition during the third quarter of 2018 • • (1) 2017 adjusted net income assumes a 21% tax rate on reported pre-tax income of $4.94 million (2) Core deposits calculated as total deposits less CDs greater than $100 thousand as of 12/31/17 8 Approvals & Closing Due Diligence Multiples & Assumptions Structure

 


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HilltopHoldings.

 

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