Mergers and Acquisitions
January 01, 2015
SWS Group, Inc.
Hilltop completed its acquisition of Dallas-based SWS Group, Inc. (“SWS”) on January 1st, 2015. Southwest Securities, FSB, a $1.2 billion banking subsidiary of SWS, has been merged into Hilltop’s banking subsidiary, PlainsCapital Bank. SWS’ broker-dealer subsidiaries, Southwest Securities, Inc. and SWS Financial Services, Inc., became subsidiaries of Hilltop Securities Holdings LLC, a holding company directly under Hilltop and the successor of SWS in the merger.
In connection with the merger, FirstSouthwest and its related entities also became subsidiaries of Hilltop Securities Holdings LLC. Subsequent to the closing of the transaction, FirstSouthwest and Southwest Securities have merged into what is now HilltopSecurities, a change that was completed on January 25, 2016. Based on Hilltop’s closing market price of $19.95 on December 31st, 2014, the total value of the consideration for the acquisition (including Hilltop’s investment in SWS) was approximately $350 million.
SWS Group, Inc.
In 2011, Hilltop made a $50 million senior unsecured loan to SWS. At that time, Hilltop’s Chairman, Gerald J. Ford, joined the Board of Directors of SWS and Hilltop’s President and Chief Executive Officer, Jeremy B. Ford, became a non-voting observer to the SWS Board. In conjunction with Hilltop’s loan to SWS, Hilltop was issued a warrant to purchase 8,695,652 shares of SWS common stock at an exercise price of $5.75 per share, making it the beneficial owner of approximately 24% of SWS common stock. Following the announcement of Hilltop’s original offer on January 10th, 2014, the definitive merger agreement was announced jointly by Hilltop and SWS on April 1st, 2014. Shareholder approval of the transaction was announced on November 21st, 2014 and regulatory approval of the transaction was announced on December 16th, 2014.
SWS Group, Inc.
This transaction provided several strategic benefits to Hilltop. The ultimate combination of FirstSouthwest and Southwest Securities created the dominant Texas-based broker-dealer with significant strengths in municipal finance and clearing. The combined broker-dealer is also well positioned to compete and grow on an expanded platform. As a result of the merger of the banks, PlainsCapital Bank gained access to a significant source of additional core deposits and it became the 5th largest Texas-based bank by deposits at the time. The combined bank provides a stable and low cost funding profile and a more efficient operating platform.
September 13, 2013
First National Bank (Edinburg, TX)
Hilltop Holdings Inc. announced Sep. 13, 2013 that its subsidiary, PlainsCapital Bank, entered into a purchase and assumption agreement with the FDIC to assume substantially all of the liabilities and purchase substantially all of the assets of Edinburg, TX-based First National Bank. The transaction was structured as a whole bank purchase and assumption agreement with loss share coverage. PlainsCapital Bank assumed all deposits and did not pay a deposit premium to the FDIC. Based on April 19, 2013 balances of First National Bank, PlainsCapital Bank purchased at book value approximately $2.6 billion of assets and assumed approximately $2.4 billion of liabilities. First National Bank was successfully integrated into PlainsCapital Bank and its branches reopened as PlainsCapital Bank branches.
First National Bank (Edinburg, TX)
The assumption of the failed bank was announced by the FDIC on Sep. 13, 2013. PlainsCapital Bank acquired First National Bank the same day, and regulatory approval of the transaction was simultaneous with the announcement. Hilltop has previously bid on failed banks through the FDIC, but this is the first successful acquisition. The transaction represented one of the largest bank failures in Texas in recent history, at the time that it occurred.
First National Bank (Edinburg, TX)
This transaction allowed Hilltop to acquire one of the few sizable banks in Texas that would meaningfully expand the PlainsCapital Bank franchise. This transaction also allowed PlainsCapital Bank to enter the Rio Grande Valley, Houston, Corpus Christi, Laredo and El Paso markets, among others. With this acquisition, PlainsCapital Bank became established in all major Texas markets. Upon completion of the transaction, Hilltop Holdings and PlainsCapital Bank remained well capitalized.
November 30, 2012
PlainsCapital Corporation
Hilltop Holdings completed its acquisition of Dallas-based PlainsCapital Corporation, the bank holding company for PlainsCapital Bank, PrimeLending, and FirstSouthwest on November 30, 2012. Based on Hilltop’s closing market price of $14.29 on November 30, 2012, the total value of the consideration for the acquisition was approximately $700 million. Today, PlainsCapital Corporation is a wholly owned subsidiary of Hilltop.
PlainsCapital Corporation
The definitive merger agreement was announced jointly by Hilltop Holdings and PlainsCapital Corporation on May 9, 2012. Regulatory approval of the transaction was announced on November 15, 2012. The deal was ranked by SNL Financial as one of the top 10 biggest bank and thrift deals since Jan. 1, 2010.
PlainsCapital Corporation
Prior to the PlainsCapital Corporation acquisition, Hilltop Holdings was a public holding company with $600 million in excess cash that operated a property and casualty insurance company, but was seeking to acquire a bank. The PlainsCapital Corporation acquisition made Hilltop Holdings a diversified financial services company and provided a foundation on which to build a premier Texas-based bank. PlainsCapital Corporation’s proven track record of success, strength and stability provides the right platform for Hilltop to pursue its objective. Likewise, the acquisition provided liquidity for PlainsCapital Corporation’s long-time shareholders and gives PlainsCapital access to additional capital for future growth.