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Financial Statements.
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-182513


LOGO
 
LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Shareholder:

         The board of directors of each of Hilltop Holdings Inc. ("Hilltop") and PlainsCapital Corporation ("PlainsCapital") have agreed to a strategic business combination of Hilltop and PlainsCapital pursuant to the terms of an Agreement and Plan of Merger, dated May 8, 2012, which we refer to as the merger agreement. If we complete the merger, PlainsCapital will merge with and into Meadow Corporation, a wholly owned subsidiary of Hilltop, and PlainsCapital will become a subsidiary of Hilltop.

         In the merger, each share of PlainsCapital common stock will be converted into (i) 0.776 shares of Hilltop common stock, subject to certain adjustments, and (ii) $9.00 in cash, subject to certain adjustments. The value of the merger consideration will fluctuate with the market price of Hilltop common stock and may fluctuate if the number of outstanding shares of PlainsCapital common stock changes, and will not be known at the time you vote on the merger. Hilltop common stock is currently quoted on the New York Stock Exchange under the symbol "HTH." On August 1, 2012, the last practicable trading day before the date of this joint proxy statement/prospectus, the merger consideration of $9.00 in cash and 0.776 Hilltop shares represented approximately $17.148 in value for each share of PlainsCapital common stock. We urge you to obtain current market quotations for Hilltop common stock.

         Each outstanding option to purchase shares of PlainsCapital common stock will vest in full and will be entitled to receive the merger consideration with respect to the underlying shares of PlainsCapital common stock, less the applicable exercise price and withholding taxes. Each outstanding PlainsCapital restricted stock unit and share of PlainsCapital restricted common stock will vest in full and will be converted into the right to receive the merger consideration less applicable withholding taxes. Each share of PlainsCapital Series C preferred stock will be converted into one share of preferred stock of Hilltop having the same rights and preferences as the PlainsCapital Series C preferred stock.

         Hilltop and PlainsCapital will each hold a special meeting of shareholders to consider the proposed merger and certain related matters. We cannot complete the merger unless the shareholders of both Hilltop and PlainsCapital approve the respective proposals related to the merger. The U.S. Department of the Treasury ("U.S. Treasury"), which holds all of the currently issued and outstanding PlainsCapital Series C preferred stock, is not entitled to and is not being requested to vote at the PlainsCapital special meeting.

         Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend your company's special meeting, we urge you to vote your shares as promptly as possible by (1) accessing the internet site listed on your proxy card, (2) calling the toll-free number listed on your proxy card, or (3) signing and returning all proxy cards that you receive and returning them in the postage-paid envelopes provided, so that your shares may be represented and voted at the Hilltop or PlainsCapital special meeting, as applicable. You may revoke your proxy at any time before the vote at your company's respective special meeting by following the procedures outlined in the accompanying joint proxy statement/prospectus.

         We look forward to the successful combination of Hilltop and PlainsCapital.


GRAPHIC
 
GRAPHIC
JEREMY B. FORD   ALAN B. WHITE
Chief Executive Officer   Chairman and Chief Executive Officer
Hilltop Holdings Inc.   PlainsCapital Corporation

         The obligations of Hilltop and PlainsCapital to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement. More information about Hilltop, PlainsCapital, the special meetings, the merger agreement and the merger is contained in the accompanying joint proxy statement/prospectus. Hilltop and PlainsCapital encourage you to read the entire joint proxy statement/prospectus carefully, including the section titled "Risk Factors" beginning on page 30.

         Neither the Securities and Exchange Commission nor any state securities commission or bank regulatory agency has approved or disapproved of the Hilltop common stock to be issued under this document or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

         The securities to be issued in the merger are not savings and deposit accounts and are not insured by the Federal Deposit Insurance Corporation, or any other governmental agency.

         The date of this document is August 3, 2012, and it is first being mailed to Hilltop shareholders and PlainsCapital shareholders on or about August 6, 2012.


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LOGO

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 20, 2012

To the shareholders of Hilltop Holdings Inc.:

        On September 20, 2012, Hilltop Holdings Inc. ("Hilltop") will hold a special meeting of shareholders in Dallas, Texas at 10:00 a.m., local time, at the Crescent Club at 200 Crescent Court, 17th Floor, Dallas, Texas 75201, to consider and vote upon the following matters:

    a proposal to approve the issuance of Hilltop common stock to PlainsCapital shareholders in connection with the merger (the "share issuance proposal");

    a proposal to approve the adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan (the "Equity Incentive Plan proposal");

    a proposal to approve the adoption of the Hilltop Holdings Inc. Annual Incentive Plan (the "Annual Incentive Plan proposal"); and

    a proposal to approve the adjournment of the Hilltop special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the share issuance proposal (the "Hilltop adjournment proposal").

        The approval by Hilltop's shareholders of the share issuance proposal is required for the completion of the merger described in this joint proxy statement/prospectus.

        Hilltop will transact no other business at the meeting except such business as may properly be brought before the Hilltop special meeting or any adjournment or postponement thereof. Please refer to the joint proxy statement/prospectus of which this notice forms a part for further information with respect to the business to be transacted at the Hilltop special meeting.

        The Hilltop board of directors has fixed the close of business on August 3, 2012, as the record date for the Hilltop special meeting. Only Hilltop shareholders of record at that time are entitled to notice of, and to vote at, the special meeting, or any adjournment or postponement of the Hilltop special meeting.

        Approval of each of (i) the share issuance proposal, (ii) the Equity Incentive Plan proposal and (iii) the Annual Incentive Plan proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock voting on that proposal, provided that the total votes cast on the proposal (including abstentions) represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting. Approval of the Hilltop adjournment proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock represented in person or by proxy at the Hilltop special meeting and entitled to vote on the proposal.

        Your vote is important.    Whether or not you plan to attend the Hilltop special meeting, we urge you to vote your shares as promptly as possible by (1) accessing the internet site listed on your proxy card, (2) calling the toll-free number listed on your proxy card, or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the Hilltop special meeting. If your shares are held in the name of a bank, broker or other nominee, please follow the voting instructions furnished by the record holder.


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        The Hilltop board of directors unanimously recommends that Hilltop shareholders vote "FOR" the share issuance proposal, "FOR" the adoption of the Equity Incentive Plan, "FOR" the adoption of the Annual Incentive Plan and "FOR" the adjournment of the Hilltop special meeting if necessary or appropriate to permit further solicitation of proxies.

By Order of the Board of Directors

SIG

Corey G. Prestidge
General Counsel & Secretary

Dallas, Texas
August 3, 2012


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LOGO

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 20, 2012

To the shareholders of PlainsCapital Corporation:

        On September 20, 2012, PlainsCapital Corporation ("PlainsCapital") will hold a special meeting of shareholders in Dallas, Texas at 10:00 a.m., local time, at PlainsCapital's conference facility located at 2323 Victory Avenue, 5th Floor, Dallas, Texas 75219, to consider and vote upon the following matters:

    a proposal to adopt and approve the Agreement and Plan of Merger, dated as of May 8, 2012, by and among Hilltop Holdings Inc., Meadow Corporation, a wholly owned subsidiary of Hilltop, and PlainsCapital, as such agreement may be amended from time to time (the "merger proposal");

    a proposal to approve, on a non-binding, advisory basis, compensation that may be paid or become payable to PlainsCapital's named executive officers in connection with the merger (the "compensation proposal"); and

    a proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the merger proposal (the "PlainsCapital adjournment proposal").

        The approval by PlainsCapital's shareholders of the merger proposal is required for the completion of the merger described in this joint proxy statement/prospectus.

        PlainsCapital will transact no other business at the PlainsCapital special meeting except such business as may properly be brought before the PlainsCapital special meeting or any adjournment or postponement thereof. Please refer to the joint proxy statement/prospectus of which this notice forms a part for further information with respect to the business to be transacted at the PlainsCapital special meeting.

        The PlainsCapital board of directors has fixed the close of business on August 3, 2012, as the record date for the PlainsCapital special meeting. Only PlainsCapital shareholders of record at that time are entitled to notice of, and to vote at, the special meeting, or any adjournment or postponement of the special meeting.

        Approval of the merger proposal requires the affirmative vote of a majority of shares of PlainsCapital common stock outstanding on the record date for the PlainsCapital special meeting. The compensation proposal and the PlainsCapital adjournment proposal will be approved if they receive the affirmative vote of the holders of at least a majority of the shares of PlainsCapital common stock represented in person or by proxy at the PlainsCapital special meeting and entitled to vote on each such proposal.

        Your vote is important. Whether or not you plan to attend the PlainsCapital special meeting, we urge you to vote your shares as promptly as possible by (1) accessing the internet site listed on your proxy card, (2) calling the toll-free number listed on your proxy card, or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the PlainsCapital special meeting. If your shares are held in the name of a bank, broker or other nominee, please follow the voting instructions furnished by the record holder.


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        The PlainsCapital board of directors unanimously recommends that PlainsCapital shareholders vote "FOR" the merger proposal, "FOR" the compensation proposal and "FOR" the PlainsCapital adjournment proposal.

By Order of the Board of Directors

GRAPHIC

Alan B. White
Chairman and Chief Executive Officer

Dallas, Texas
August 3, 2012


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REFERENCES TO ADDITIONAL INFORMATION

        This document incorporates by reference important business and financial information about Hilltop from documents that are not included in or delivered with this document. You can obtain documents incorporated by reference in this document, other than certain exhibits to those documents, free of charge through the Securities and Exchange Commission website (http://www.sec.gov) or by requesting them in writing or by telephone from Hilltop at the following address:

Hilltop Holdings Inc.
200 Crescent Court, Suite 1330
Dallas, Texas 75201
Attention: Investor Relations
Telephone: (214) 855-2177

        You will not be charged for any of these documents that you request. Hilltop shareholders and PlainsCapital shareholders requesting documents should do so by September 13, 2012, in order to receive them before their respective special meetings.

        Investors may also consult Hilltop's or PlainsCapital's websites for more information concerning the merger described in this document. Hilltop's website is www.hilltop-holdings.com. PlainsCapital's website is www.plainscapital.com. Information included on these websites is not incorporated by reference into this document.

        You should rely only on the information contained in or incorporated by reference into this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated August 3, 2012, and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document. Neither the mailing of this document to Hilltop shareholders or PlainsCapital shareholders nor the issuance by Hilltop of shares of Hilltop common stock in connection with the merger will create any implication to the contrary.

        This document does not constitute an offer to sell, or a solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding PlainsCapital has been provided by PlainsCapital and information contained in this document regarding Hilltop has been provided by Hilltop.

        See "Where You Can Find More Information" included elsewhere in this joint proxy statement/prospectus.


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TABLE OF CONTENTS

 
   
  Page  

QUESTIONS AND ANSWERS

    v  

SUMMARY

   
1
 

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HILLTOP

   
10
 

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF PLAINSCAPITAL

   
13
 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

   
15
 

HILLTOP HOLDINGS INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF MARCH 31, 2012

   
17
 

HILLTOP HOLDINGS INC. UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE THREE MONTHS ENDED MARCH 31, 2012

   
18
 

HILLTOP HOLDINGS INC. UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011

   
19
 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

   
20
 

UNAUDITED COMPARATIVE PER SHARE DATA

   
26
 

RECENT DEVELOPMENTS

   
28
 

RISK FACTORS

   
30
 

Risk Factors Relating to the Merger

    30  

Risk Factors Relating to PlainsCapital's Business

    38  

Other Risk Factors of Hilltop

    47  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

   
48
 

THE HILLTOP SPECIAL MEETING

   
50
 

Matters to be Considered

   
50
 

Proxies

    50  

Solicitation of Proxies

    51  

Record Date

    51  

Quorum

    51  

Vote Required

    51  

Recommendation of the Hilltop Board of Directors

    52  

Attending the Special Meeting

    52  

PROPOSALS SUBMITTED TO HILLTOP SHAREHOLDERS

   
53
 

Issuance of Hilltop Common Stock in Connection with the Merger (Proposal 1)

   
53
 

Approval of the Adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan (Proposal 2)

    54  

Approval of the Adoption of the Hilltop Holdings Inc. 2012 Annual Incentive Plan (Proposal 3)

    61  

Approval of the Adjournment or Postponement of the Hilltop Special Meeting (Proposal 4)

    64  

THE PLAINSCAPITAL SPECIAL MEETING

   
66
 

Matters to be Considered

   
66
 

Proxies

    66  

ESOP Voting Instructions

    67  

Solicitation of Proxies

    67  

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  Page  

           

Record Date

    68  

Quorum

    68  

Vote Required

    68  

Recommendation of the PlainsCapital Board of Directors

    69  

Attending the Special Meeting

    69  

PROPOSALS SUBMITTED TO PLAINSCAPITAL SHAREHOLDERS

   
70
 

Adoption and Approval of the Merger Agreement (Proposal 1)

   
70
 

Non-Binding Advisory Vote Approving Compensation (Proposal 2)

    70  

Approval of the Adjournment or Postponement of the PlainsCapital Special Meeting (Proposal 3)

    71  

INFORMATION ABOUT THE COMPANIES

   
72
 

Hilltop Holdings Inc.

   
72
 

Meadow Corporation

    73  

PlainsCapital Corporation

    73  

Business

    73  

Legal Proceedings

    100  

Market Price and Dividends on PlainsCapital's Common Equity and Related Shareholder Matters

    101  

Securities Authorized for Issuance under Equity Compensation Plans

    102  

Selected Financial Data

    103  

PlainsCapital Non-GAAP to GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures

    105  

Supplementary Financial Information

    106  

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    107  

Management's Discussion and Analysis

    107  

PlainsCapital Management

    154  

Compensation Discussion and Analysis

    161  

Security Ownership of Certain Beneficial Owners and Management

    188  

THE MERGER

   
193
 

Terms of the Merger

   
193
 

Background of the Merger

    193  

PlainsCapital's Reasons for the Merger; Recommendation of the PlainsCapital Board of Directors

    197  

Hilltop's Reasons for the Merger; Recommendation of the Hilltop Board of Directors

    199  

Opinion of PlainsCapital's Financial Advisor

    200  

Certain PlainsCapital Prospective Financial Information

    207  

Opinion of Hilltop's Financial Advisor

    208  

Certain Hilltop Prospective Financial Information

    218  

Hilltop Board of Directors Following Completion of the Merger

    219  

PlainsCapital Directors Expected to be Appointed to Hilltop Board of Directors Following Completion of the Merger

    219  

Public Trading Markets

    219  

Dissenters' Rights

    219  

Regulatory Approvals Required for the Merger

    222  

Interests of Certain PlainsCapital Directors and Executive Officers in the Merger

    223  

SEPP Termination and Payout

    225  

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  Page  

           

Accelerated Vesting of Equity Awards

    226  

Executive Officer Merger—Related Compensation

    227  

Indemnification of PlainsCapital Directors and Officers and Continuation of Directors' and Officers' Insurance

    231  

THE MERGER AGREEMENT

   
232
 

Structure of the Merger

   
232
 

Treatment of PlainsCapital Stock Options and Other Equity-Based Awards

    233  

Closing and Completion of the Merger

    233  

Conversion of Shares; Exchange of Certificates

    233  

Representations and Warranties

    234  

Covenants and Agreements

    237  

No Solicitation

    242  

Change in Recommendation

    243  

Conditions to Completion of the Merger

    243  

Termination of the Merger Agreement

    244  

Termination Fee

    245  

Effect of Termination

    245  

Expenses and Fees

    246  

Amendment, Waiver and Extension of the Merger Agreement

    246  

First Southwest Merger Agreement Amendment

    246  

Voting Agreements

    246  

DESCRIPTION OF HILLTOP CAPITAL STOCK

   
247
 

Authorized Capital Stock

   
247
 

Common Stock

    247  

Preferred Stock

    248  

Listing

    249  

ACCOUNTING TREATMENT OF THE MERGER

   
250
 

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

   
251
 

COMPARISON OF SHAREHOLDERS' RIGHTS

   
255
 

MARKET PRICES AND DIVIDENDS OF HILLTOP COMMON STOCK

   
268
 

LEGAL MATTERS

   
269
 

EXPERTS

   
269
 

DEADLINES FOR SUBMITTING SHAREHOLDER PROPOSALS AND OTHER MATTERS

   
269
 

PlainsCapital

   
269
 

Hilltop

    269  

WHERE YOU CAN FIND MORE INFORMATION

   
271
 

Hilltop SEC Filings

   
271
 

Financial Statements.

   
F-1
 

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ANNEXES

           

ANNEX A

 

Agreement and Plan of Merger, dated as of May 8, 2012, by and among PlainsCapital Corporation, Hilltop Holdings Inc. and Meadow Corporation

       

ANNEX B

 

Opinion of J.P. Morgan Securities LLC

       

ANNEX C

 

Opinion of Stephens Inc.

       

ANNEX D

 

Form of Voting and Support Agreement, dated as of May 8, 2012, between Hilltop Holdings Inc. and the PlainsCapital Corporation supporting shareholders

       

ANNEX E

 

Voting and Support Agreement, dated as of May 8, 2012, between PlainsCapital Corporation and Diamond A Financial,  L.P.

       

ANNEX F

 

Hilltop Holdings Inc. 2012 Equity Incentive Plan

       

ANNEX G

 

Hilltop Holdings Inc. Annual Incentive Plan

       

ANNEX H

 

Chapter 10, Subchapter H of the Texas Business Organizations Code

       

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QUESTIONS AND ANSWERS

        The following are answers to certain questions that you may have regarding the Hilltop special meeting or the PlainsCapital special meeting. We urge you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to, and the documents incorporated by reference into, this document.

Q:
Why am I receiving this document?

A:
The Hilltop and PlainsCapital boards of directors are using this document to solicit proxies of Hilltop and PlainsCapital shareholders in connection with the merger agreement entered into among Hilltop, PlainsCapital, and Meadow Corporation, a wholly owned subsidiary of Hilltop, and certain related matters. In addition, we are using this document as a prospectus for PlainsCapital shareholders because Hilltop is offering shares of its common stock to be issued in exchange for shares of PlainsCapital common stock in the merger.

Q:
What are holders of Hilltop common stock being asked to vote on?

A:
Holders of Hilltop common stock are being asked to vote on a proposal to approve the issuance of Hilltop common stock to PlainsCapital shareholders in connection with the merger (the "share issuance proposal"), a proposal to approve the adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan (the "Equity Incentive Plan proposal"), a proposal to approve the adoption of the Hilltop Holdings Inc. Annual Incentive Plan (the "Annual Incentive Plan proposal") and a proposal to approve the adjournment of the Hilltop special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the share issuance proposal (the "Hilltop adjournment proposal").

Q:
What are holders of PlainsCapital common stock being asked to vote on?

A:
PlainsCapital shareholders are being asked to vote on a proposal to adopt and approve the merger agreement (the "merger proposal"), a proposal to approve, on a non-binding, advisory basis, compensation that may be paid or become payable to PlainsCapital's named executive officers in connection with the merger (the "compensation proposal"), and a proposal to approve the adjournment of the PlainsCapital special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the merger proposal (the "PlainsCapital adjournment proposal").

Q:
What will holders of PlainsCapital common stock receive in the merger?

A:
If the merger is completed, holders of PlainsCapital common stock will receive (i) 0.776 shares of Hilltop common stock, subject to certain adjustments, and (ii) $9.00 in cash, subject to certain adjustments, for each share of PlainsCapital common stock that they hold immediately prior to the merger. No fractional shares of Hilltop common stock will be issued in connection with the merger. A holder of PlainsCapital common stock who otherwise would have received a fraction of a share of Hilltop common stock will instead receive an amount in cash reflecting the market value of the fractional shares of Hilltop common stock at the date of the closing of the merger, rounded to the nearest cent.

Q:
Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?

A:
The value of the merger consideration may fluctuate between the date of this joint proxy statement/prospectus and your company's special meeting, and your company's special meeting and the completion of the merger based upon the market value for Hilltop common stock and changes in the number of shares of PlainsCapital common stock outstanding. In the merger, PlainsCapital

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    shareholders will receive cash and a fraction of a share of Hilltop common stock for each share of PlainsCapital common stock they hold. Any fluctuation in the market price of Hilltop stock after the special meeting will change the value of the shares of Hilltop common stock that PlainsCapital shareholders will receive. In addition, the aggregate merger consideration payable by Hilltop will not increase in the event that additional shares of PlainsCapital common stock are issued or become outstanding following the execution of the merger agreement, other than in connection with certain equity awards. As a result, if additional shares of PlainsCapital common stock are issued or become outstanding, the per share merger consideration will decrease.

Q:
When do you expect to complete the merger?

A:
We currently expect to complete the merger prior to the end of 2012. However, we cannot assure you when or if the merger will occur. We must, among other things, first obtain the required approvals of Hilltop shareholders and PlainsCapital shareholders at their respective special meetings and the required regulatory approvals described below in "The Merger—Regulatory Approvals Required for the Merger."

Q:
What happens if the merger is not completed?

A:
If the merger is not completed, shares of Hilltop common stock will not be issued, and holders of PlainsCapital common stock will not receive any consideration for their shares, in connection with the merger. Instead, PlainsCapital will remain an independent company. Under specified circumstances in connection with the termination of the merger agreement, including circumstances involving a change in recommendation by either party's board of directors or failure to receive required shareholder approvals, Hilltop or PlainsCapital may be required to pay the other a termination fee of $17.5 million, or PlainsCapital may be required to pay Hilltop $5 million in respect of Hilltop's expenses in connection with the merger agreement.

Q:
When and where is the Hilltop special meeting?

A:
The Hilltop special meeting will be held at the Crescent Club at 200 Crescent Court, 17th Floor, Dallas, Texas 75201 on September 20 at 10:00 a.m. local time.

Q:
When and where is the PlainsCapital special meeting?

A:
The PlainsCapital special meeting will be held at PlainsCapital's conference facility located at 2323 Victory Avenue, 5th Floor, Dallas, Texas 75219 on September 20 at 10:00 a.m. local time.

Q:
How do I vote?

A:
If you are a shareholder of record of PlainsCapital as of the record date for the PlainsCapital special meeting or a shareholder of Hilltop as of the record date for the Hilltop special meeting, you may vote by:

    accessing the internet website specified on your proxy card;

    calling the toll-free number specified on your proxy card; or

    signing the enclosed proxy card and returning it in the postage-paid envelope provided.

    You may also cast your vote in person at your respective company's special meeting. If you hold Hilltop common stock or PlainsCapital common stock in "street name" through a bank, broker or other nominee, please follow the voting instructions provided by your bank, broker or other nominee to ensure that your shares are represented at your special meeting. Shareholders that hold shares through a bank, broker, or other nominee who wish to vote at their respective company's special meeting will need to obtain a "legal proxy" from the record holder.

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Q:
Why is my vote important?

A:
If you do not vote, it will be more difficult to obtain the necessary quorum to hold your company's respective special meeting. In addition, we cannot complete the merger without obtaining the necessary vote of Hilltop shareholders in favor of the share issuance proposal and of PlainsCapital shareholders in favor of the merger proposal.

Q:
How does the Hilltop board of directors recommend that I vote?

A:
The Hilltop board of directors unanimously recommends that you vote "FOR" the share issuance proposal, "FOR" the Equity Incentive Plan proposal, "FOR" the Annual Incentive Plan proposal, and "FOR" the Hilltop adjournment proposal.

Q:
How does the PlainsCapital board of directors recommend that I vote?

A:
The PlainsCapital board of directors unanimously recommends that you vote "FOR" the merger proposal, "FOR" the compensation proposal and "FOR" the PlainsCapital adjournment proposal.

Q:
What constitutes a quorum for the Hilltop special meeting?

A:
The presence at the special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Hilltop common stock entitled to vote at the Hilltop special meeting will constitute a quorum for the transaction of business. Abstentions and broker non-votes will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum. A broker non-vote occurs under stock exchange rules when a broker is not permitted to vote on a matter without instructions from the beneficial owner of the shares and no instructions are given.

Q:
What constitutes a quorum for the PlainsCapital special meeting?

A:
The presence at the special meeting, in person or by proxy, of holders of a majority of the outstanding shares of PlainsCapital common stock entitled to vote at the PlainsCapital special meeting will constitute a quorum for the transaction of business. Abstentions and broker non-votes will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum. A broker non-vote occurs under stock exchange rules when a broker is not permitted to vote on a matter without instructions from the beneficial owner of the shares and no instructions are given.

Q:
What is the vote required to approve each proposal at the Hilltop special meeting?

A:
Approval of each of (i) the share issuance proposal, (ii) the Equity Incentive Plan proposal and (iii) the Annual Incentive Plan proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock voting on that proposal, provided that the total votes cast on the proposal (including abstentions) represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting. Approval of the Hilltop adjournment proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock represented in person or by proxy at the Hilltop special meeting and entitled to vote on the proposal.

Q:
What is the vote required to approve each proposal at the PlainsCapital special meeting?

A:
Approval of the merger proposal requires the affirmative vote of a majority of shares of PlainsCapital common stock outstanding on the record date for the PlainsCapital special meeting. The compensation proposal and the PlainsCapital adjournment proposal will be approved if they receive the affirmative vote of the holders of at least a majority of the shares of PlainsCapital common stock represented in person or by proxy at the PlainsCapital special meeting and entitled to vote on each such proposal.

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Q:
What will happen if PlainsCapital's shareholders do not approve, on an advisory (non-binding) basis, the compensation payable to PlainsCapital's named executive officers in connection with the merger?

A:
The vote on the compensation proposal is a vote separate and apart from the vote to approve the merger agreement. You may vote for the compensation proposal and against the merger proposal, and vice versa. Because the vote on the compensation proposal is advisory only, it will not be binding on either PlainsCapital or Hilltop. Accordingly, because PlainsCapital is contractually obligated to pay the compensation, if the merger were completed, the compensation would be payable, subject only to the conditions applicable thereto, regardless of the outcome of the advisory (non-binding) vote.

Q:
If my shares are held in street name by my broker, will my broker automatically vote my shares for me?

A:
No. Your broker cannot vote your shares without instructions from you. You should instruct your broker as to how to vote your shares, following the directions your broker provides to you. Please check the voting form used by your broker. Without instructions, your shares will not be voted, which will have the effect described below.

Q:
What if I abstain from voting or fail to instruct my broker?

A:
If you are a holder of Hilltop common stock and you abstain from voting or fail to instruct your broker to vote your shares, it will have no effect on the proposals to be voted on at the Hilltop special meeting. However, if you fail to vote your shares, your failure to do so may make it more difficult for Hilltop to meet the NYSE requirement that the total votes cast on each of such proposals (including abstentions) represent a majority of the shares of Hilltop common stock outstanding as of the record date for the Hilltop special meeting.

    If you are a holder of PlainsCapital common stock and you abstain from voting or fail to instruct your broker to vote your shares, it will have the same effect as a vote against the merger proposal. An abstention or broker non-vote will have no effect on the compensation proposal or the PlainsCapital adjournment proposal.

Q:
Can I attend the Hilltop special meeting and vote my shares in person?

A:
Yes. All Hilltop shareholders, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the Hilltop special meeting. Holders of record of Hilltop common stock can vote in person at the Hilltop special meeting. If you are not a shareholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the Hilltop special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a statement from your bank, broker or other record holder confirming your ownership of shares as of the record date for the Hilltop special meeting. In addition, you must bring a form of personal photo identification with you in order to be admitted. Hilltop reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the Hilltop special meeting is prohibited without Hilltop's express written consent.

    Regardless of whether you plan to attend the Hilltop special meeting, we recommend that you vote your shares early by internet, telephone or mail to ensure that a quorum exists at the Hilltop special meeting and to ensure that your vote will be counted if you later choose not to attend the Hilltop special meeting. You may revoke any previously submitted proxy and vote your shares in person at the Hilltop special meeting.

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Q:
Can I attend the PlainsCapital special meeting and vote my shares in person?

A:
Yes. All PlainsCapital shareholders, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the PlainsCapital special meeting. Holders of record of PlainsCapital common stock can vote in person at the PlainsCapital special meeting. If you are not a shareholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the PlainsCapital special meeting, you must hold your shares in your own name or have a statement from your bank, broker or other record holder confirming your ownership of shares as of the record date for the PlainsCapital special meeting. In addition, you must bring a form of personal photo identification with you in order to be admitted. PlainsCapital reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the PlainsCapital special meeting is prohibited without PlainsCapital's express written consent.

    Regardless of whether you plan to attend the PlainsCapital special meeting, we recommend that you vote your shares early by internet, telephone or mail to ensure that a quorum exists at the PlainsCapital special meeting and to ensure that your vote will be counted if you later choose not to attend the PlainsCapital special meeting. You may revoke any previously submitted proxy and vote your shares in person at the PlainsCapital special meeting.

Q:
What do I do if I want to change or revoke my vote?

A:
You may revoke your proxy and change your vote at any time before your company's respective special meeting, or earlier deadline specified in the proxy card, by voting again via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the applicable special meeting will be counted), by signing and returning a new proxy card or voting instruction form with a later date, or by attending the special meeting and voting in person. Your attendance at the applicable special meeting, however, will not automatically revoke your proxy unless you vote again at the special meeting. We provide additional information on changing your vote under the headings "The Hilltop Special Meeting—Proxies" and "The PlainsCapital Special Meeting—Proxies" included elsewhere in this joint proxy statement/prospectus.

Q:
Am I entitled to exercise dissenters' rights as a PlainsCapital shareholder?

A:
If you wish to exercise dissenters' rights and receive the fair value of your PlainsCapital shares in cash instead of the merger consideration described in this joint proxy statement/prospectus, your shares must be voted against approval of the merger proposal, and you must follow other procedures in accordance with applicable Texas law. If you return a signed proxy without voting instructions or with instructions to vote "FOR" the merger agreement, your shares will be automatically voted in favor of the merger agreement and you will lose dissenters' rights. If you return a signed proxy with instructions to "ABSTAIN" from the merger proposal, you will also lose dissenters' rights. Thus, if you wish to dissent and you execute and return a proxy, you must specify that your shares are to be voted "AGAINST" with respect to approval of the merger. For additional information on exercising dissenters' rights, see "The Merger—Dissenters' Rights" included elsewhere in this joint proxy statement/prospectus.

Q:
What if some or all of my PlainsCapital shares are held in the ESOP?

A:
If you are a participant in the PlainsCapital Corporation Employees' Stock Ownership Plan (the "ESOP"), then you may be receiving this material because of the common stock held for you in the ESOP. In that case, you should use the enclosed proxy card to instruct the ESOP trustees how to vote those shares. Return your proxy card, which serves as your voting instructions to the ESOP

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    trustees, as described on the card itself. To allow sufficient time for voting by the ESOP trustees, your ESOP voting instructions must be received no later than September 17, 2012 at 5:00 p.m, Central time. PlainsCapital's transfer agent will tabulate the ESOP voting instructions it receives and provide aggregate ESOP voting instructions to the ESOP trustees. The ESOP trustees will vote the shares in accordance with such instructions and the terms of the ESOP. Your ESOP voting instructions are confidential and will not be disclosed to PlainsCapital. Please note that you will not be able to vote the shares of common stock held for you in the ESOP in person at the PlainsCapital special meeting, as these shares may only be voted by the ESOP trustees.

    The ESOP trustees may vote the shares held for you even if you do not direct them how to vote. The ESOP trustees will vote any shares held in the ESOP for which they do not timely receive instructions in their own, or the ESOP committee's, discretion and in accordance with the ESOP plan documents.

    If your shares of common stock are held by you in both your record name and in the ESOP, you may use the same enclosed proxy card to vote the shares held in your record name and to direct the ESOP trustees to vote the shares held for you in the ESOP. You must timely return the enclosed proxy card to direct the vote of the shares held for you in the ESOP.

Q:
Should I send in my PlainsCapital stock certificates now?

A:
No. PlainsCapital shareholders with shares represented by stock certificates should not send PlainsCapital stock certificates with their proxy cards. After the merger is completed, holders of PlainsCapital common stock certificates will be mailed a transmittal form with instructions on how to exchange their PlainsCapital stock certificates for the merger consideration. Shares of PlainsCapital common stock held in book-entry form will automatically be exchanged for the merger consideration.

Q:
What if I cannot find my stock certificates?

A:
There will be a procedure for you to receive the merger consideration in the merger, even if you have lost one or more of your PlainsCapital stock certificates. This procedure, however, may take time to complete. In order to ensure that you will be able to receive the merger consideration promptly after the merger is completed, if you cannot locate your PlainsCapital stock certificates after looking for them carefully, we urge you to contact PlainsCapital's transfer agent, Continental Stock Transfer & Trust Company, as soon as possible and follow the procedure they explain to you for replacing your PlainsCapital stock certificates. Continental Stock Transfer & Trust Company can be reached at (212) 509-4000, extension 237, or on its website at http://www.continentalstock.com, or you can write to them at the following address:

    Continental Stock Transfer & Trust Co.
    17 Battery Place
    New York, New York 10004

Q:
Whom should I call with questions?

A:
Hilltop shareholders should contact Hilltop by telephone at (214) 855-2177 or D.F. King & Co., Inc., Hilltop's proxy solicitor, collect at (212) 269-5550 or toll-free at (800) 859-8511. PlainsCapital shareholders should call PlainsCapital at (214) 252-4155.

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SUMMARY

        This summary highlights selected information from this document. It may not contain all of the information that is important to you. We urge you to carefully read the entire document and the other documents to which we refer in order to fully understand the merger and the related transactions. See "Where You Can Find More Information" included elsewhere in this joint proxy statement/prospectus. Each item in this summary refers to the page of this joint proxy statement/prospectus on which that subject is discussed in more detail.

Information About the Companies (page 72)

Hilltop Holdings Inc.

        Hilltop is a holding company that endeavors to identify and execute attractive acquisitions and business combinations. Hilltop also provides fire and homeowners insurance to low value dwellings and manufactured homes, primarily in Texas and other areas of the south through its wholly owned property and casualty insurance holding company, NLASCO, Inc., or NLASCO. Hilltop acquired NLASCO in January 2007. NLASCO operates through its wholly owned subsidiaries, National Lloyds Insurance Company, or NLIC, and American Summit Insurance Company, or ASIC.

        Hilltop's common stock is listed on the New York Stock Exchange under the symbol "HTH."

        Hilltop's principal office is located at 200 Crescent Court, Suite 1330, Dallas, Texas 75201, and its telephone number at that location is (214) 855-2177. Hilltop's internet address is www.hilltop-holdings.com. Additional information about Hilltop and its subsidiaries is included in documents incorporated by reference in this document. See "Where You Can Find More Information" included elsewhere in this joint proxy statement/prospectus.

PlainsCapital Corporation

        PlainsCapital is a Texas-based and Dallas-headquartered financial holding company registered under the Bank Holding Company Act of 1956 (as amended, the "Bank Holding Company Act"), as amended by the Gramm-Leach-Bliley Act of 1999 (the "Gramm-Leach-Bliley Act"), and was incorporated in 1987. Historically, the majority of PlainsCapital's net income has been derived from its wholly owned bank subsidiary, PlainsCapital Bank. PlainsCapital Bank provides business and consumer banking services from offices located throughout central, north and west Texas. PlainsCapital Bank's subsidiaries have specialized areas of expertise that allow it to provide an array of financial products and services, such as mortgage origination and financial advisory services. As of March 31, 2012, on a consolidated basis, PlainsCapital had total assets of approximately $5.8 billion, total deposits of approximately $4.2 billion, total loans, including loans held for sale, of approximately $4.2 billion, and shareholders' equity of approximately $539.1 million.

        PlainsCapital's principal executive offices are located at 2323 Victory Avenue, Suite 1400, Dallas, Texas 75219, and its telephone number at that location is (214) 252-4000. PlainsCapital's internet address is www.plainscapital.com. Additional information about PlainsCapital and its subsidiaries can be found below in the section titled "Information About the Companies—PlainsCapital Corporation."

Meadow Corporation

        Meadow Corporation is a Maryland corporation and a wholly owned subsidiary of Hilltop. Meadow Corporation was formed in May 2012 for the purpose of effecting the merger. Meadow Corporation has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement.

 


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Risk Factors (page 30)

        An investment in shares of Hilltop common stock involves risks, some of which are related to the merger. In considering the merger, you should carefully consider the information about these risks set forth under "Risk Factors" beginning on page 30, together with the other information included or incorporated by reference or in this joint proxy statement/prospectus.

The Merger (page 193)

        If the merger is completed, each share of PlainsCapital common stock, par value $0.01 per share, issued and outstanding immediately prior to the completion of the merger will be converted into the right to receive $9.00 in cash and 0.776 of a share of Hilltop common stock, subject to certain adjustments if PlainsCapital issues additional shares of its common stock other than pursuant to the exercise of certain equity awards which were outstanding on the date of the merger agreement. We refer to this cash and stock consideration as the merger consideration. No fractional shares of Hilltop common stock will be issued in connection with the merger. A holder of PlainsCapital common stock who otherwise would have received a fraction of a share of Hilltop common stock will instead receive an amount in cash rounded to the nearest cent. For example, if you hold 10 shares of PlainsCapital common stock and the merger consideration is not adjusted, you will receive $90.00 and seven shares of Hilltop common stock and a cash payment instead of the 0.76 shares of Hilltop common stock that you otherwise would have received.

        The value of the merger consideration may fluctuate between the date of each company's special meeting and the completion of the merger based upon the market value for Hilltop common stock and certain changes in the number of shares of PlainsCapital common stock outstanding. Any fluctuation in the market price of Hilltop stock after the date of the special meetings will change the value of the shares of Hilltop common stock that PlainsCapital shareholders will receive. In addition, the aggregate merger consideration payable by Hilltop will not increase in the event that additional shares of PlainsCapital common stock are issued or become outstanding following the execution of the merger agreement, other than in connection with certain equity awards as permitted in the merger agreement. As a result, if additional shares of PlainsCapital common stock are issued or become outstanding other than pursuant to certain equity awards, the per share merger consideration will decrease. For information about the historical prices of Hilltop common stock, see "Market Prices and Dividends of Hilltop Common Stock."

        The merger agreement governs the merger. The merger agreement is included in this joint proxy statement/prospectus as Annex A. Please read the merger agreement carefully. All descriptions in this summary and elsewhere in this prospectus of the terms and conditions of the merger are qualified by reference to the merger agreement.

Recommendation of the Board of Directors of Hilltop (page 199)

        Hilltop's board of directors has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Hilltop and its shareholders and has unanimously approved the merger and the merger agreement. Hilltop's board of directors unanimously recommends that Hilltop shareholders vote "FOR" the approval of the share issuance proposal, the Equity Incentive Plan proposal, the Annual Incentive Plan proposal and the Hilltop adjournment proposal. For the factors considered by Hilltop's board of directors in reaching its decision to approve the merger agreement, see "The Merger—Hilltop's Reasons for the Merger; Recommendation of the Hilltop Board of Directors."

Recommendation of the Board of Directors of PlainsCapital (page 197)

        PlainsCapital's board of directors has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of

 

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PlainsCapital and its shareholders and has unanimously approved the merger and the merger agreement. PlainsCapital's board of directors unanimously recommends that PlainsCapital shareholders vote "FOR" the merger proposal, the compensation proposal and the PlainsCapital adjournment proposal. For the factors considered by PlainsCapital's board of directors in reaching its decision to approve the merger agreement, see "The Merger—PlainsCapital's Reasons for the Merger; Recommendation of the PlainsCapital Board of Directors."

Opinions of Financial Advisors (page 200 and page 208)

    Opinion of Financial Advisor to PlainsCapital

        On May 8, 2012, J.P. Morgan Securities LLC ("J.P. Morgan"), PlainsCapital's financial advisor in connection with the merger, rendered its oral opinion to PlainsCapital's board of directors, which was subsequently confirmed in a written opinion dated the same date, that, as of such date and based upon and subject to the various factors, assumptions and any limitations set forth in its written opinion, the merger consideration to be paid to the holders of PlainsCapital common stock in the proposed merger was fair, from a financial point of view, to such holders.

        The full text of J.P. Morgan's opinion, dated May 8, 2012, is attached as Annex B to this joint proxy statement/prospectus. You should read the opinion in its entirety for a discussion of, among other things, the assumptions made, procedures followed, matters considered and any limitations on the review undertaken by J.P. Morgan in rendering its opinion.

        J.P. Morgan's written opinion is addressed to the PlainsCapital board of directors, is directed only to the merger consideration to be paid in the merger and does not constitute a recommendation to any PlainsCapital shareholder as to how such shareholder should vote with respect to the merger or any other matter.

        For further information, see "The Merger—Opinion of PlainsCapital's Financial Advisor."

    Opinion of Financial Advisor to Hilltop

        On May 8, 2012, Stephens Inc. ("Stephens"), Hilltop's financial advisor in connection with the merger, rendered its oral opinion to Hilltop's board of directors, which was subsequently confirmed in a written opinion dated the same date, that as of such date and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in the written opinion, the cash and stock consideration to be paid by Hilltop pursuant to the merger agreement was fair, from a financial point of view, to Hilltop.

        The full text of Stephens' opinion, dated May 8, 2012, is attached as Annex C to this joint proxy statement/prospectus. You should read the opinion in its entirety for a discussion of the assumptions made, procedures followed, matters considered and limitations upon the review undertaken by Stephens in rendering its opinion.

        Stephens' opinion is addressed to Hilltop's board of directors and the opinion is not a recommendation as to how any shareholder of Hilltop should vote with respect to the merger or any other matter or as to any action that a shareholder should take relating to the merger.

        The opinion addresses only the fairness of the cash and stock consideration to be paid by Hilltop from a financial point of view and does not address the merits of the underlying decision by Hilltop to enter into the merger agreement, the merits of the merger as compared to other alternatives potentially available to Hilltop or the relative effects of any alternative transaction in which Hilltop might engage. Stephens will receive a fee for its services, portions of which have been paid, and a significant portion of which will be payable upon consummation of the merger.

        For further information, see "The Merger—Opinion of Hilltop's Financial Advisor."

 

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What Holders of PlainsCapital Stock Options and Other Equity-Based Awards Will Receive (page 233)

        If the merger is completed, each outstanding stock option to acquire shares of PlainsCapital common stock will immediately vest in full and, subject to the execution of a stock-based award surrender agreement, the holder of a PlainsCapital stock option will be entitled to receive the merger consideration with respect to each share of PlainsCapital common stock underlying such option, less the exercise price and the applicable withholding taxes.

        If the merger is completed, each share of PlainsCapital restricted stock and each PlainsCapital restricted stock unit will vest in full and, subject to the execution of a stock-based award surrender agreement, the holders of such restricted stock or restricted stock units will be entitled to receive the merger consideration with respect to such equity award, less applicable withholding taxes.

        If the merger is completed, each share of PlainsCapital Non-Cumulative Perpetual Preferred Stock, Series C (the "Series C preferred stock") will be converted into a share of a new series of Hilltop's preferred stock with equivalent rights and preferences.

Hilltop Will Hold Its Special Meeting on September 20, 2012 (page 50)

        The Hilltop special meeting will be held on September 20, 2012, at 10:00 a.m., local time at the Crescent Club at 200 Crescent Court, 17th Floor, Dallas, Texas 75201. The purpose of the special meeting is to vote on:

    a proposal to approve the issuance of Hilltop common stock to PlainsCapital shareholders in connection with the merger (the "share issuance proposal");

    a proposal to approve the adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan (the "Equity Incentive Plan proposal");

    a proposal to approve the adoption of the Hilltop Holdings Inc. Annual Incentive Plan (the "Annual Incentive Plan proposal"); and

    a proposal to approve the adjournment of the Hilltop special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the Hilltop special meeting to approve the share issuance proposal (the "Hilltop adjournment proposal").

        Only holders of record of Hilltop common stock at the close of business on August 3, 2012 will be entitled to vote at the Hilltop special meeting. Each share of Hilltop common stock is entitled to one vote on each proposal to be considered at the Hilltop special meeting.

        As of the record date for the Hilltop special meeting, there were 56,363,647 shares of Hilltop common stock outstanding and entitled to vote at the Hilltop special meeting. As of the record date for the Hilltop special meeting, to the knowledge of Hilltop, directors and executive officers of Hilltop (including the shares owned by Diamond A Financial, L.P. discussed below) had the right to vote approximately 16,910,159 shares of Hilltop common stock, or approximately 30% of the outstanding shares of Hilltop common stock entitled to vote at the special meeting. We currently expect that each of these individuals will vote their shares of Hilltop common stock in favor of the proposals to be presented at the Hilltop special meeting.

        Diamond A Financial, L.P., a limited partnership whose sole general partner is Gerald J. Ford, Chairman of the Hilltop board of directors, has entered into a voting and support agreement with PlainsCapital. Pursuant to such agreement, Diamond A Financial has agreed to vote all of its shares of Hilltop common stock in favor of the share issuance proposal and certain related matters, subject to certain exceptions. As of the record date for the Hilltop special meeting and to the knowledge of Hilltop, Diamond A Financial owned and had the ability to vote approximately 15,048,102 shares of Hilltop common stock, or approximately 26.7% of the outstanding shares of Hilltop common stock entitled to vote at the special meeting.

 

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        Approval of each of (i) the share issuance proposal, (ii) the Equity Incentive Plan proposal and (iii) the Annual Incentive Plan proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock voting on that proposal, provided that the total votes cast on such proposal (including abstentions) must represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting. Approval of the Hilltop adjournment proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock represented in person or by proxy at the Hilltop special meeting and entitled to vote on the proposal.

PlainsCapital Will Hold Its Special Meeting on September 20, 2012 (page 66)

        The PlainsCapital special meeting will be held on September 20, 2012, at 10:00 a.m., local time, at PlainsCapital's conference facility located at 2323 Victory Avenue, 5th Floor, Dallas, Texas 75219. The purpose of the PlainsCapital special meeting is to vote on:

    a proposal to adopt and approve the merger agreement as such agreement may be amended from time to time (the "merger proposal");

    a proposal to approve, on a non-binding, advisory basis, compensation that may be paid or become payable to PlainsCapital's named executive officers that is based on or otherwise relates to the merger (the "compensation proposal"); and

    a proposal to approve the adjournment of the PlainsCapital special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the PlainsCapital special meeting to approve the merger proposal (the "PlainsCapital adjournment proposal").

        Only holders of record of PlainsCapital common stock at the close of business on August 3, 2012 will be entitled to vote at the PlainsCapital special meeting. Each share of PlainsCapital common stock is entitled to one vote on each proposal to be considered at the PlainsCapital special meeting.

        As of the record date for the PlainsCapital special meeting, there were 34,462,390 shares of PlainsCapital common stock outstanding and entitled to vote at the PlainsCapital special meeting. As of the record date for the PlainsCapital special meeting, to the knowledge of PlainsCapital, directors and executive officers of PlainsCapital (including those parties who have entered into voting agreements with Hilltop, as discussed below) may be deemed to have had voting power over approximately 6,321,870 shares of PlainsCapital common stock, or approximately 18.3% of the outstanding shares of PlainsCapital common stock entitled to vote at the PlainsCapital special meeting. We currently expect that each of these individuals will vote their shares of PlainsCapital common stock in favor of the proposals to be presented at the PlainsCapital special meeting.

        Alan B. White, Chairman and Chief Executive Officer of PlainsCapital, and certain entities controlled by him, and Hill A. Feinberg, a director of PlainsCapital and Chief Executive Officer of First Southwest Holdings, LLC, a wholly owned subsidiary of PlainsCapital ("First Southwest"), have each entered into a voting and support agreement with Hilltop. Pursuant to such agreements, each such shareholder has agreed to vote all of their shares of PlainsCapital common stock in favor of the merger proposal and related matters, subject to certain exceptions. As of the record date for the PlainsCapital special meeting and to the knowledge of PlainsCapital, the shareholders party to these agreements owned and had the ability to vote approximately 4,944,083 shares of PlainsCapital common stock, or approximately 14.3% of the outstanding shares of PlainsCapital common stock entitled to vote at the PlainsCapital special meeting.

 

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        Approval of the merger proposal requires the affirmative vote of a majority of shares of PlainsCapital common stock outstanding on the record date for the PlainsCapital special meeting. The compensation proposal and the PlainsCapital adjournment proposal will be approved if they receive the affirmative vote of the holders of at least a majority of the shares of PlainsCapital common stock represented in person or by proxy at the PlainsCapital special meeting and entitled to vote on each such proposal.

The Merger is Intended to Be Tax-Free to Holders of PlainsCapital Common Stock as to the Shares of Hilltop Common Stock They Receive (page 251)

        The merger is intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code") and it is a condition to the respective obligations of Hilltop and PlainsCapital to complete the merger that each of Hilltop and PlainsCapital receives a legal opinion to that effect. Accordingly, a PlainsCapital common shareholder generally will recognize gain, but not loss, in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess of the sum of the amount of cash and the fair market value of the shares of Hilltop common stock received pursuant to the merger over that holder's adjusted tax basis in its shares of PlainsCapital common stock surrendered) and (2) the amount of cash received pursuant to the merger. Further, a holder of shares of PlainsCapital common stock generally will recognize gain or loss with respect to cash received instead of fractional shares of Hilltop common stock that the PlainsCapital common shareholder would otherwise be entitled to receive. For further information, please refer to "United States Federal Income Tax Consequences of the Merger."

        The United States federal income tax consequences described above may not apply to all holders of PlainsCapital common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

PlainsCapital's Officers and Directors Have Financial Interests in the Merger that Differ from Your Interests (page 223)

        PlainsCapital shareholders should be aware that some of PlainsCapital's directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of PlainsCapital shareholders generally. These interests and arrangements may create potential conflicts of interest. PlainsCapital's board of directors was aware of these interests and considered these interests, among other matters, when making its decision to approve the merger agreement, and in recommending that PlainsCapital's shareholders vote in favor of approving the merger proposal and the compensation proposal. For purposes of all of the PlainsCapital agreements and plans described below, the completion of the transactions contemplated by the merger agreement will constitute a change of control.

        These interests include the following:

    Upon completion of the merger, the board of directors of Hilltop will include members selected by the pre-merger board of directors of PlainsCapital, as described under "The Merger—Hilltop Board of Directors Following Completion of the Merger."

    Alan B. White and Jerry L. Schaffner each entered into retention agreements with Hilltop and Meadow Corporation that will become effective on the consummation of the merger, superseding their current employment agreements with PlainsCapital. The new retention agreements set forth the titles for each of Messrs. White and Schaffner and provide for ongoing base salary, annual bonus opportunity, discretionary equity grants, severance and a payment upon termination of employment that is in respect of amounts that would otherwise be owed in connection with a termination of employment pursuant to the applicable executive's current employment agreement.

 

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    PlainsCapital previously entered into employment agreements with each of its executive officers (including employment agreements with Messrs. White and Schaffner that will be superseded by the retention agreements described above) that provide for enhanced severance upon certain qualifying terminations of employment in connection with a change in control.

    Messrs. White, Schaffner and Huffines participate in the PlainsCapital Supplemental Executive Pension Plan ("SEPP"). On May 8, 2012, PlainsCapital Bank amended the SEPP to eliminate additional service crediting for participants who have their employment terminated in connection with the merger and to clarify certain benefits that are creditable upon termination of the SEPP prior to December 31, 2012. It is anticipated that the SEPP will be terminated in connection with completion of the merger, with all accrued amounts (including all accruals in respect of 2012) to be paid to SEPP participants within 30 days of the completion of the merger.

    All outstanding PlainsCapital equity awards will vest in connection with the merger and each holder will receive merger consideration in exchange for the vested equity awards.

    Each present and former director, officer and employee of PlainsCapital and its subsidiaries (when acting in such capacity) will be indemnified to the fullest extent permitted by law for any acts arising out of or pertaining to matters existing or occurring at or prior to the closing of the merger. Hilltop will also provide director and officer liability insurance with respect to claims arising from facts or events occurring before the completion of the merger or, at PlainsCapital's option, PlainsCapital may purchase a "tail" policy for directors' and officers' liability insurance.

        For further information, see the discussion in "The Merger—Interests of Certain Directors and Executive Officers in the Merger" included elsewhere in this joint proxy statement/prospectus.

PlainsCapital Shareholders Dissenters' Rights (page 219)

        Under the Texas Business Organization Code, or "TBOC," PlainsCapital shareholders have the right to demand appraisal of their shares of common stock in connection with the merger and to receive, in lieu of the merger consideration, payment in cash, for the fair value of their shares of PlainsCapital common stock as determined by an appraiser selected in a Texas state court proceeding. Any shareholder electing to exercise dissenters' rights must vote against the merger proposal and must comply with the provisions of Section 10.356 of the TBOC in order to perfect its rights of dissent and appraisal. Strict compliance with the statutory procedures is required to perfect dissenters' rights. The procedures to be followed by dissenting shareholders are described below in "The Merger—Dissenters' Rights."

Regulatory Approvals Required for the Merger (page 222)

        Hilltop and PlainsCapital have agreed to use their reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. These approvals include approval from the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and the Texas Department of Banking, among others. Hilltop has filed applications and notifications to obtain the required regulatory approvals.

        We are not aware of any material governmental approvals or actions that are required for completion of the merger other than those described above. It is presently contemplated that if any such additional governmental approvals or actions are required, those approvals or actions will be sought. Any such additional approvals or actions may not be obtained.

Conditions that Must be Satisfied or Waived for the Merger to Occur (page 243)

        Currently, Hilltop and PlainsCapital expect to complete the merger by the end of 2012. As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived.

 

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These conditions include, among others, approval of the merger by PlainsCapital's shareholders, approval of the share issuance proposal by Hilltop's shareholders and the receipt of certain required regulatory approvals, including approval of the Federal Reserve Board.

        Neither Hilltop nor PlainsCapital can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed. For a further discussion of the conditions to the completion of the merger, see "The Merger Agreement—Conditions to Completion of the Merger."

Termination of the Merger Agreement (page 244)

        The merger agreement can be terminated at any time prior to the completion of the merger by mutual consent, or by either party in the following circumstances:

    a governmental entity that must grant a required regulatory approval has denied approval and such denial has become final, or an injunction or legal prohibition against the transaction becomes final and nonappealable;

    the merger has not been consummated by December 31, 2012;

    the other party breaches any of its covenants or agreements under the merger agreement in a manner that would cause the closing conditions not to be satisfied and which is not cured by the earlier of December 31, 2012 or 30 days following written notice of the breach (provided that the terminating party is not also in material breach of any of its obligations under the merger agreement);

    either or both of Hilltop's shareholders or PlainsCapital's shareholders fail to approve the share issuance proposal or the merger proposal, respectively; or

    the other party's board of directors withdraws or materially and adversely modifies its recommendation with respect to the transactions contemplated by the merger agreement or recommends an alternative acquisition proposal.

Expenses and Termination Fees (page 245)

        In general, each of Hilltop and PlainsCapital will be responsible for all expenses incurred by it in connection with the negotiation and completion of the transactions contemplated by the merger agreement. However, the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus, and all filing and other fees paid to the Securities and Exchange Commission (the "SEC") in connection with the merger, will be borne equally by Hilltop and PlainsCapital.

        Upon termination of the merger agreement under specified circumstances, including circumstances involving a change in recommendation by either party's board of directors or failure to receive required shareholder approvals, Hilltop or PlainsCapital may be required to pay the other a termination fee of $17.5 million.

        PlainsCapital will be required to pay the termination fee to Hilltop under the following circumstances:

    if (i) a third party makes a takeover proposal that is publicly disclosed or made known to PlainsCapital management and is not withdrawn, (ii) the merger agreement is later terminated because the merger has not been consummated by December 31, 2012, and the approval of the merger proposal has not been obtained by such date, or because PlainsCapital's shareholders fail to approve the merger proposal, or because PlainsCapital breaches its covenants under the merger agreement in a manner that would cause the closing conditions not to be satisfied and which is not cured, and (iii) PlainsCapital consummates or enters into a definitive agreement with respect to a takeover proposal within 12 months after termination; or

 

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    if PlainsCapital's board of directors withdraws or materially and adversely modifies its recommendation or recommends an alternative PlainsCapital acquisition proposal and Hilltop terminates the merger agreement as a result.

        Hilltop will be required to pay the termination fee to PlainsCapital under the following circumstances:

    if the merger agreement is terminated because Hilltop's shareholders fail to approve the share issuance proposal; or

    if Hilltop's board of directors withdraws or materially and adversely modifies its recommendation or recommends an alternative Hilltop acquisition proposal and PlainsCapital terminates the merger agreement as a result.

        If Hilltop terminates the merger agreement because the PlainsCapital shareholders fail to approve the merger proposal and the termination fee is not required to be paid, PlainsCapital will be required to pay Hilltop $5 million in respect of Hilltop's expenses in connection with the merger agreement.

Hilltop Board of Directors Following Completion of the Merger (page 219)

        Under the merger agreement, upon completion of the merger, Hilltop and its board of directors have agreed to take all actions necessary so that, at the effective time of the Merger, the board of directors of Hilltop will consist of members selected by the pre-merger board of directors of Hilltop and members selected by the pre-merger board of directors of PlainsCapital, with the number of members selected by the pre-merger board of directors of PlainsCapital to be one less in number than the number of members selected by the pre-merger board of directors of Hilltop.

        In addition, upon completion of the merger, the board of directors of Hilltop will include, in addition to its existing committees, an Executive Committee of five members, including three individuals selected from the pre-merger members of the board of directors of Hilltop and two individuals selected from the pre-merger members of the board of directors of PlainsCapital who will be designated to the board of directors of Hilltop. Mr. White will initially serve as Chairman of the Executive Committee of the board of directors of Hilltop.

PlainsCapital Directors Expected to be Appointed to Hilltop Board of Directors Following Completion of the Merger (page 219)

        The individuals from the pre-merger board of directors of PlainsCapital to be elected to the board of directors of Hilltop following the merger will include Mr. White, and have otherwise not yet been determined.

The Rights of PlainsCapital Shareholders Will Change as a Result of the Merger (page 255)

        The rights of PlainsCapital shareholders will change as a result of the merger due to differences in Hilltop's and PlainsCapital's governing documents. The rights of PlainsCapital shareholders are governed by Texas law and by PlainsCapital's certificate of formation and bylaws, each as amended to date (which we refer to as PlainsCapital's articles of incorporation and bylaws, respectively). Upon the completion of the merger, the rights of PlainsCapital shareholders will be governed by Maryland law and Hilltop's articles of incorporation and bylaws.

        See "Comparison of Shareholders' Rights" included elsewhere in this joint proxy statement/prospectus for a description of the material differences in shareholder rights under each of the Hilltop and PlainsCapital governing documents.

 

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HILLTOP

        Set forth below is certain consolidated financial data of Hilltop as of and for the years ended December 31, 2007 through December 31, 2011 and as of and for the three months ended March 31, 2012 and 2011. The results of operations for the three months ended March 31, 2012 and 2011 are not necessarily indicative of the results of operations for the full year or any other interim period. Hilltop management prepared the unaudited consolidated information as of and for the three months ended March 31, 2012 and 2011 on the same basis as it prepared Hilltop's audited consolidated financial statements as of and for the year ended December 31, 2011. In the opinion of Hilltop management, this information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of this data for those dates. You should read this information in conjunction with Hilltop's consolidated financial statements and related notes included in Hilltop's Annual Report on Form 10-K for the year ended December 31, 2011 and Hilltop's Quarterly Report on Form 10-Q for the three months ended March 31, 2012, which are incorporated by reference in this document and from which this information is derived. See "Where You Can Find More Information" included elsewhere in this joint proxy statement/prospectus.

 

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  Three Months
Ended March 31,
  Year Ended December 31,  
 
  2012   2011   2011   2010   2009   2008   2007  
 
  (unaudited)
  (in thousands, except per share data)
 

Income Statement Data:

                                           

Direct premium written

  $ 40,741   $ 37,241   $ 155,054   $ 139,290   $ 131,309   $ 132,642   $ 122,708  

Net premium written

    37,562     33,701     141,737     121,691     114,743     113,285     118,357  

Net premium earned

   
35,155
   
30,932
   
134,048
   
117,192
   
115,153
   
115,247
   
96,804
 

Net investment income

    3,259     2,081     10,538     7,664     6,458     27,143     24,829  

Net realized gain (loss)

    21     19     817     137     307     (45,992 )   3,205  

Other income, net

    1,711     1,625     6,785     6,744     6,917     6,147     6,445  
                               

Total revenue

    40,146     34,657     152,188     131,737     128,835     102,545     131,283  
                               

Loss and loss adjustment expense

    22,542     16,004     96,734     70,943     70,295     80,435     52,074  

Policy acquisition and other underwriting expense

    12,915     11,985     58,008     53,378     52,333     53,726     42,397  

Interest expense

    2,139     2,176     8,985     8,971     9,668     10,528     11,539  
                               

Total expenses

    39,600     32,470     163,727     133,292     132,296     144,689     106,010  
                               

(Loss) income from continuing operations before federal income tax

    546     2,187     (11,540 )   (1,555 )   (3,461 )   (42,144 )   25,273  

Federal income taxes (expense) benefit

    (203 )   (777 )   5,009     1,007     1,349     19,559     (10,635 )
                               

Net (loss) income

  $ 343   $ 1,410   $ (6,531 ) $ (548 ) $ (2,112 ) $ (22,585 ) $ 14,638  
                               

Selected Balance Sheet Data:

                                           

Total investments

    219,521     144,502     224,200     148,965     129,968     138,568     191,024  

Total assets

    924,310     941,565     925,424     939,641     1,040,752     1,048,770     1,085,491  

Total liabilities

    273,013     287,493     270,042     286,586     256,975     257,315     261,306  

Shareholders' equity

    651,297     654,072     655,382     653,055     783,777     791,455     824,185  

Other Data:

                                           

Loss and loss adjustment expense ratio

    64.1 %   51.7 %   72.2 %   60.5 %   61.0 %   69.8 %   53.8 %

Policy acquisition and other underwriting expense less agency expense ratio

    35.5 %   37.3 %   34.0 %   36.0 %   35.7 %   35.6 %   29.2 %

Combined ratio

    99.6 %   89.0 %   106.2 %   96.5 %   96.8 %   105.4 %   83.0 %

Statutory surplus

  $ 120,899   $ 122,375   $ 118,708   $ 119,297   $ 117,063   $ 108,478   $ 124,892  

Statutory premiums to surplus ratio

    116.3 %   101.1 %   119.4 %   102.0 %   98.0 %   104.4 %   94.8 %

Per Share Data:

                                           

Basic (loss) earnings per share attributable to common shareholders

  $ 0.01   $ 0.02   $ (0.12 ) $ (0.24 ) $ (0.22 ) $ (0.58 ) $ 5.10  

Weighted average shares outstanding—basic

    56,499     56,496     56,499     56,492     56,474     56,453     55,421  

Diluted (loss) earnings per share attributable to common shareholders

  $ 0.01   $ 0.02   $ (0.12 ) $ (0.24 ) $ (0.22 ) $ (0.58 ) $ 5.02  

Weighted average shares outstanding—diluted

    56,555     56,496     56,511     56,492     56,474     56,453     56,326  

Book value per common share

  $ 11.56   $ 11.58   $ 11.60   $ 11.56   $ 11.77   $ 11.91   $ 12.49  

Tangible book value per share common share

  $ 10.97   $ 10.97   $ 11.01   $ 10.95   $ 11.13   $ 11.24   $ 11.79  

Cash Dividends Declared per Share of Unit:

                                           

Series A preferred stock dividends

  $   $   $   $ 1.24   $ 2.06   $ 2.06   $ 2.06  

 

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Hilltop Non-GAAP to GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures

        Hilltop presents two measures in its selected financial data that are not measures of financial performance recognized by GAAP.

        "Tangible book value per common share" is defined as total shareholders' equity, excluding preferred stock, reduced by goodwill and other intangible assets, divided by total common shares outstanding. "Tangible common equity to tangible assets" is defined as total shareholders' equity, excluding preferred stock, reduced by goodwill and other intangible assets divided by total assets reduced by goodwill and other intangible assets.

        These measures are important to investors interested in changes from period to period in tangible common equity per share exclusive of changes in intangible assets. For companies that have engaged in business combinations, purchase accounting can result in the recording of significant amounts of goodwill and other intangible assets related to those transactions.

        You should not view these disclosures as a substitute for results determined in accordance with GAAP, and these disclosures are not necessarily comparable to that of other companies that use non-GAAP measures. The following table reconciles these non-GAAP financial measures for Hilltop to the most comparable GAAP financial measures, "book value per common share" and "Hilltop shareholders' equity to total assets" (in thousands, except per share data):

 
  As of March 31,   As of December 31,  
 
  2012   2011   2011   2010   2009   2008   2007  

Book value per common share

  $ 11.56   $ 11.58   $ 11.60   $ 11.56   $ 11.77   $ 11.91   $ 12.49  

Effect of goodwill and intangible assets per common share

  $ (0.58 ) $ (0.61 ) $ (0.59 ) $ (0.61 ) $ (0.64 ) $ (0.67 ) $ (0.70 )

Tangible book value per share common share

  $ 10.97   $ 10.97   $ 11.01   $ 10.95   $ 11.13   $ 11.24   $ 11.79  

Hilltop Holdings Inc. shareholders' equity

  $ 651,297   $ 654,072   $ 655,383   $ 653,055   $ 783,777   $ 791,455   $ 824,185  

Less: preferred stock

                    119,108     119,108     119,108  

Less: goodwill and intangible assets, net

    32,753     34,198     33,062     34,587     36,229     37,990     39,493  
                               

Tangible common equity

    618,544     619,874     622,321     618,468     628,440     634,357     665,584  

Total assets

    924,310     941,565     925,425     939,641     1,040,752     1,048,770     1,085,491  

Less: goodwill and intangible assets, net

    32,753     34,198     33,062     34,587     36,229     37,990     39,493  
                               

Tangible assets

    891,557     907,367     892,363     905,054     1,004,523     1,010,780     1,045,998  

 

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF PLAINSCAPITAL

        Set forth below is certain consolidated financial data of PlainsCapital as of and for the years ended December 31, 2007 through December 31, 2011 and as of and for the three months ended March 31, 2012 and 2011. The results of operations for the three months ended March 31, 2012 and 2011 are not necessarily indicative of the results of operations for the full year or any other interim period. PlainsCapital management prepared the unaudited consolidated information as of and for the three months ended March 31, 2012 and 2011 on the same basis as it prepared PlainsCapital's audited consolidated financial statements as of and for the year ended December 31, 2011. In the opinion of PlainsCapital management, this unaudited consolidated information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of this data for those dates. You should read this information in conjunction with PlainsCapital's consolidated financial statements and related notes for the year ended December 31, 2011 and PlainsCapital's unaudited consolidated financial statements and related notes for the three months ended March 31, 2012, which are included in this document and from which this information is derived.

 
  Three Months
Ended March 31
  Year Ended December 31,  
 
  2012   2011   2011   2010   2009   2008   2007  
 
  (unaudited)
  (in thousands, except per share data)
 

Income Statement Data:

                                           

Total interest income

  $ 56,556   $ 52,003   $ 219,443   $ 218,425   $ 202,823   $ 193,392   $ 220,895  

Total interest expense

    7,347     9,578     36,512     38,725     42,464     66,069     104,805  
                               

Net interest income

    49,209     42,425     182,931     179,700     160,359     127,323     116,090  

Provision for loan losses

    2,221     6,500     21,757     83,226     66,673     22,818     5,517  
                               

Net interest income after provision for loan losses

    46,988     35,925     161,174     96,474     93,686     104,505     110,573  

Total noninterest income

    150,106     85,340     477,758     432,183     334,908     119,066     84,281  

Total noninterest expense

    164,102     109,041     554,018     480,046     382,191     185,983     150,815  
                               

Income from continuing operations before income taxes

    32,992     12,224     84,914     48,611     46,403     37,588     44,039  

Federal income tax provision

    11,254     4,508     30,068     15,412     14,855     13,027     14,904  
                               

Net income

    21,738     7,716     54,846     33,199     31,548     24,561     29,135  

Less: Net income attributable to noncontrolling interest

    481     122     1,650     790     220     437     543  
                               

Net income attributable to PlainsCapital Corporation

    21,257     7,594     53,196     32,409     31,328     24,124     28,592  

Dividends on preferred stock and other

    1,094     1,400     7,488     5,569     5,704          
                               

Income applicable to PlainsCapital Corporation common shareholders

    20,163     6,194     45,708     26,840     25,624     24,124     28,592  

Less: income applicable to participating securities

    702     217     1,670     976     953          
                               

Income applicable to PlainsCapital Corporation common shareholders for basic earnings per common share

  $ 19,461   $ 5,977   $ 44,038   $ 25,864   $ 24,671   $ 24,124   $ 28,592  
                               

Per Share Data:

                                           

Net income—basic

  $ 0.61   $ 0.19   $ 1.39   $ 0.82   $ 0.79   $ 0.92   $ 1.10  

Weighted average shares outstanding—basic

    31,843,784     31,625,519     31,649,566     31,476,675     31,259,995     26,117,934     26,012,250  

Net income—diluted

  $ 0.59   $ 0.18   $ 1.36   $ 0.80   $ 0.77   $ 0.92   $ 1.09  

Weighted average shares outstanding—diluted

    33,924,350     33,523,518     33,492,717     33,547,896     33,352,858     26,256,165     26,195,211  

Book value per common share

  $ 13.26   $ 11.33   $ 12.70   $ 11.33   $ 10.66   $ 9.99   $ 8.97  

Tangible book value per common share

  $ 11.79   $ 9.79   $ 11.21   $ 9.76   $ 9.02   $ 8.82   $ 7.54  

Dividends per common share

  $ 0.06   $ 0.05   $ 0.24   $ 0.20   $ 0.20   $ 0.20   $ 0.19  

 

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PlainsCapital Non-GAAP to GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures

        PlainsCapital presents two measures in its selected financial data that are not measures of financial performance recognized by GAAP.

        "Tangible book value per common share" is defined as PlainsCapital's total shareholders' equity, excluding preferred stock, reduced by goodwill and other intangible assets, divided by total common shares outstanding. "Tangible common equity to tangible assets" is defined as PlainsCapital's total shareholders' equity, excluding preferred stock, reduced by goodwill and other intangible assets divided by total assets reduced by goodwill and other intangible assets.

        These measures are important to investors interested in changes from period to period in tangible common equity per share exclusive of changes in intangible assets. For companies such as PlainsCapital that have engaged in business combinations, purchase accounting can result in the recording of significant amounts of goodwill and other intangible assets related to those transactions.

        You should not view this disclosure as a substitute for results determined in accordance with GAAP, and PlainsCapital's disclosure is not necessarily comparable to that of other companies that use non-GAAP measures. The following table reconciles these non-GAAP financial measures to the most comparable GAAP financial measures, "book value per common share" and "PlainsCapital Corporation shareholders' equity to total assets" (in thousands, except per share data):

 
  As of March 31,   As of December 31,  
 
  2012   2011   2011   2010   2009   2008   2007  

Book value per common share

  $ 13.26   $ 11.33   $ 12.70   $ 11.33   $ 10.66   $ 9.99   $ 8.97  

Effect of goodwill and intangible assets per share

  $ (1.47 ) $ (1.54 ) $ (1.49 ) $ (1.57 ) $ (1.64 ) $ (1.17 ) $ (1.43 )

Tangible book value per common share

  $ 11.79   $ 9.79   $ 11.21   $ 9.76   $ 9.02   $ 8.82   $ 7.54  

PlainsCapital Corporation shareholders' equity

 
$

539,133
 
$

447,851
 
$

517,031
 
$

446,491
 
$

422,500
 
$

399,815
 
$

233,890
 

Less: preferred stock

    114,068     89,399     114,068     89,193     88,400     87,631      

Less: goodwill and intangible assets, net

    46,877     48,807     47,265     49,321     51,496     36,568     37,307  
                               

Tangible common equity

    378,188     309,645     355,698     307,977     282,604     275,616     196,583  

Total assets

   
5,787,557
   
5,404,364
   
5,700,020
   
5,313,405
   
4,570,769
   
3,951,996
   
3,182,863
 

Less: goodwill and intangible assets, net

    46,877     48,807     47,265     49,321     51,496     36,568     37,307  
                               

Tangible assets

    5,740,680     5,355,557     5,652,755     5,264,084     4,519,273     3,915,428     3,145,556  

Equity to assets

   
9.32

%
 
8.29

%
 
9.07

%
 
8.40

%
 
9.24

%
 
10.12

%
 
7.35

%

Tangible common equity to tangible assets

    6.59 %   5.78 %   6.29 %   5.85 %   6.25 %   7.04 %   6.25 %

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

        The following unaudited pro forma condensed combined financial statements are based on the separate historical financial statements of Hilltop and PlainsCapital after giving effect to the merger and the issuance of Hilltop common stock in connection therewith, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined balance sheet as of March 31, 2012 is presented as if the merger with PlainsCapital had occurred on March 31, 2012. The unaudited pro forma condensed combined income statements for the year ended December 31, 2011 and the three months ended March 31, 2012 are presented as if the merger had occurred on January 1, 2011. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the merger and, with respect to the income statements only, expected to have a continuing impact on consolidated results of operations.

        The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting for business combinations under accounting principles generally accepted in the United States. Hilltop is the acquirer for accounting purposes. Hilltop has not had sufficient time to completely evaluate the significant identifiable long-lived tangible and identifiable intangible assets of PlainsCapital. Accordingly, the unaudited pro forma adjustments, including the allocations of the purchase price, are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information.

        A final determination of the acquisition consideration and fair values of PlainsCapital's assets and liabilities, which cannot be made prior to the completion of the merger, will be based on the actual net tangible and intangible assets of PlainsCapital that exist as of the date of completion of the transaction. Consequently, amounts preliminarily allocated to goodwill and identifiable intangibles could change significantly from those allocations used in the unaudited pro forma condensed combined financial statements presented below and could result in a material change in amortization of acquired intangible assets.

        In connection with the plan to integrate the operations of Hilltop and PlainsCapital following the completion of the merger, Hilltop anticipates that nonrecurring charges, such as costs associated with systems implementation, severance, and other costs related to exit or disposal activities, could be incurred. Hilltop is not able to determine the timing, nature, and amount of these charges as of the date of this joint proxy statement/prospectus. However, these charges could affect the results of operations of Hilltop and PlainsCapital, as well as those of the combined company following the completion of the merger, in the period in which they are recorded. The unaudited pro forma condensed combined financial statements do not include the effects of the costs associated with any restructuring or integration activities resulting from the transaction, as they are nonrecurring in nature and not factually supportable at the time that the unaudited pro forma condensed combined financial statements were prepared. Additionally, the unaudited pro forma adjustments do not give effect to any nonrecurring or unusual restructuring charges that may be incurred as a result of the integration of the two companies or any anticipated disposition of assets that may result from such integration. Transaction-related expenses estimated at $13.1 million are not included in the unaudited pro forma condensed combined income statements.

        The actual amounts recorded as of the completion of the merger may differ materially from the information presented in these unaudited pro forma condensed combined financial statements as a result of:

    changes in the trading price for Hilltop's common stock;

    net cash used or generated in PlainsCapital's operations between the signing of the merger agreement and completion of the merger;

 

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    the timing of the completion of the merger;

    other changes in PlainsCapital's net assets that occur prior to completion of the merger, which could cause material differences in the information presented below; and

    changes in the financial results of the combined company, which could change the future discounted cash flow projections.

        The unaudited pro forma condensed combined financial statements are provided for informational purposes only. The unaudited pro forma condensed combined financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transaction been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma condensed combined financial statements and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma condensed combined financial statements should be read together with:

    the accompanying notes to the unaudited pro forma condensed combined financial statements;

    Hilltop's separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2011, included in Hilltop's Annual Report on Form 10-K for the year ended December 31, 2011;

    PlainsCapital's separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2011, included in this joint proxy statement/prospectus beginning on page F-1;

    Hilltop's separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2012 included in Hilltop's Quarterly Report on Form 10-Q for the three months ended March 31, 2012;

    PlainsCapital's separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2012, included in this joint proxy statement/prospectus beginning on page F-1; and

    other information pertaining to Hilltop and PlainsCapital contained in or, with respect to Hilltop, incorporated by reference into this joint proxy statement/prospectus. See "Selected Consolidated Historical Financial Data of Hilltop" and "Selected Consolidated Historical Financial Data of PlainsCapital" included elsewhere in this joint proxy statement/prospectus.

 

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HILLTOP HOLDINGS INC. UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET AS OF MARCH 31, 2012

 
  Historical    
   
   
 
  Pro Forma
Adjustments
  Pro Forma
Combined
   
 
  Hilltop   PlainsCapital   Notes
 
  (In thousands)
   

Assets:

                           

Cash, cash equivalents, and amounts due from banks

  $ 579,639   $ 244,864   $ (336,840 ) $ 487,663   A

Federal funds sold and securities purchased under agreements to resell

        19,858         19,858    

Investments in securities:

                           

Trading

        66,804         66,804    

Available for sale

    162,961     616,609     (4,061 )   775,509   B

Held to maturity

        175,647     6,090     181,737   C
                     

Total investments in securities

    162,961     859,060     2,029     1,024,050    

Other investments

    56,560             56,560    

Loans

        3,269,255     (86,588 )   3,182,667   D

Loans held for sale

        853,801         853,801    

Broker-dealer and clearing organization receivables

        196,990         196,990    

Premiums receivable

    25,197             25,197    

Fee award receivable

        17,706         17,706    

Deferred acquisition costs

    19,395             19,395    

Reinsurance recoverable

    25,932             25,932    

Intangible assets

    8,765     10,997     75,903     95,665   E

Goodwill

    23,988     35,880     176,452     236,320   F

Property and equipment

    2,139     92,335     26,430     120,904   G

Other real estate owned

        23,590     (9,015 )   14,575   H

Other assets

    19,734     163,221     47,832     230,787   I
                     

Total assets

  $ 924,310   $ 5,787,557   $ (103,797 ) $ 6,608,070    
                     

Liabilities:

                           

Deposits

  $   $ 4,168,776   $ 7,073   $ 4,175,849   J

Broker-dealer and clearing organization payables

        220,012         220,012    

Short-term borrowings

        606,774         606,774    

Reserve for losses and loss adjustment expenses

    47,861             47,861    

Unearned premiums

    82,796             82,796    

Notes payable

    131,450     51,828         183,278    

Junior subordinated debentures

        67,012         67,012    

Other liabilities

    10,906     132,193     31,896     174,995   K
                     

Total liabilities

    273,013     5,246,595     38,969     5,558,577    
                     

Stockholders' Equity:

                           

Preferred stock

        114,068         114,068   L

Common stock

    564     32     241     837   M

Additional paid-in capital

    917,165     159,835     126,764     1,203,764   N

Accumulated other comprehensive income

    10,582     4,857     (4,857 )   10,582   O

Accumulated earnings (deficit)

    (277,014 )   262,411     (266,984 )   (281,587 ) P

Unearned ESOP shares

        (2,070 )   2,070       Q
                     

Total stockholders' equity before noncontrolling interest

    651,297     539,133     (142,766 )   1,047,664    

Noncontrolling interest

        1,829         1,829    
                     

Total stockholders' equity

    651,297     540,962     (142,766 )   1,049,493    
                     

Total liabilities and stockholders' equity

  $ 924,310   $ 5,787,557   $ (103,797 ) $ 6,608,070    
                     

   

See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.

 

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HILLTOP HOLDINGS INC. UNAUDITED PRO FORMA CONDENSED COMBINED
INCOME STATEMENT FOR THE THREE MONTHS ENDED MARCH 31, 2012

 
  Historical    
   
   
 
  Pro Forma
Adjustments
  Pro Forma
Combined
   
 
  Hilltop   PlainsCapital   Notes
 
  (In thousands, except per share data)
   

Interest income:

                           

Loans, including fees

  $   $ 48,600   $ 982   $ 49,582   R

Net investment and other interest income

    3,259     7,956     (202 )   11,013   S
                     

Total interest income

    3,259     56,556     780     60,595    

Interest expense:

                           

Deposits

        5,265         5,265    

Short-term borrowings

        428         428    

Notes payable

    2,139     723         2,862    

Junior subordinated debentures

        648         648    

Other interest expense

        283         283    
                     

Total interest expense

    2,139     7,347         9,486    

Net interest income

   
1,120
   
49,209
   
780
   
51,109
   

Provision for loan losses

        2,221     342     2,563   T
                     

Net interest income after provision for loan losses

    1,120     46,988     438     48,546    

Noninterest income:

                           

Net gains from sale of loans

        99,718         99,718    

Mortgage loan origination fees

        18,325         18,325    

Investment advisory and securities brokerage fees and commissions

        24,595         24,595    

Net premiums earned

    35,155             35,155    

Other noninterest income

    1,732     7,468         9,200    
                     

Total noninterest income

    36,887     150,106         186,993    

Noninterest expense:

                           

Loss and loss adjustment expenses

    22,542             22,542    

Policy acquisition and other underwriting expenses

    12,915             12,915    

Employees' compensation and benefits

    2,220     105,774         107,994    

Occupancy & equipment

    271     17,082         17,353    

General and administrative and other expenses

    (486 )   41,246     3,407     44,167   U
                     

Total noninterest expense

    37,461     164,102     3,407     204,970    

Income before income tax expense

   
546
   
32,992
   
(2,969

)
 
30,569
   

Income tax expense

    203     11,254     (1,069 )   10,388   V
                     

Net Income

    343     21,738     (1,900 )   20,181    

Less: net income attributable to noncontrolling interest

        481         481    

Less: dividends on preferred stock and other

        1,094         1,094    
                     

Net income attributable to common stockholders

  $ 343   $ 20,163   $ (1,900 ) $ 18,606    
                     

Net income per share attributable to common stockholders:

                           

Basic

  $ 0.01   $ 0.61         $ 0.22    

Diluted

  $ 0.01   $ 0.59         $ 0.22    

Weighted average common shares outstanding:

                           

Basic

    56,499     32,991     (5,670 )   83,820    

Diluted

    56,555     33,924     (6,603 )   83,876    

 

   

See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.

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HILLTOP HOLDINGS INC. UNAUDITED PRO FORMA CONDENSED COMBINED
INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011

 
  Historical    
   
   
 
  Pro Forma
Adjustments
  Pro Forma
Combined
   
 
  Hilltop   PlainsCapital   Notes
 
  (In thousands, except per share data)
   

Interest income:

                           

Loans, including fees

  $   $ 180,209   $ 3,457   $ 183,666   R

Net investment and other interest income

    10,538     39,234     (808 )   48,964   S
                     

Total interest income

    10,538     219,443     2,648     232,629    

Interest expense:

                           

Deposits

        28,172         28,172    

Short-term borrowings

        1,700         1,700    

Notes payable

    8,985     3,141         12,126    

Junior subordinated debentures

        2,502         2,502    

Other interest expense

        997         997    
                     

Total interest expense

    8,985     36,512         45,497    

Net interest income

   
1,553
   
182,931
   
2,648
   
187,132
   

Provision for loan losses

        21,757     (12,757 )   9,000   T
                     

Net interest income after provision for loan losses

    1,553     161,174     15,405     178,132    

Noninterest income:

                           

Net gains from sale of loans

        293,469         293,469    

Mortgage loan origination fees

        72,351         72,351    

Investment advisory and securities brokerage fees and commissions

        92,101         92,101    

Net premiums earned

    134,048             134,048    

Other noninterest income

    7,602     19,837         27,439    
                     

Total noninterest income

    141,650     477,758         619,408    

Noninterest expense:

                           

Loss and loss adjustment expenses

    96,734             96,734    

Policy acquisition and other underwriting expenses

    47,425             47,425    

Employees' compensation and benefits

    7,714     348,121         355,835    

Occupancy & equipment

    958     64,682         65,640    

General and administrative and other expenses

    1,911     141,215     12,880     156,006   U
                     

Total noninterest expense

    154,743     554,018     12,880     721,641    

Income before income tax expense

   
(11,540

)
 
84,914
   
2,525
   
75,899
   

Income tax expense

    (5,009 )   30,068     909     25,968   V
                     

Net Income

    (6,531 )   54,846     1,616     49,931    

Less: net income attributable to noncontrolling interest

        1,650         1,650    

Less: dividends on preferred stock and other

        7,488         7,488    
                     

Net income attributable to common stockholders

  $ (6,531 ) $ 45,708   $ 1,616   $ 40,793    
                     

Net income per share attributable to common stockholders:

                           

Basic

  $ (0.12 ) $ 1.39         $ 0.49    

Diluted

  $ (0.12 ) $ 1.36         $ 0.49    

Weighted average common shares outstanding:

                           

Basic

    56,499     32,851     (5,530 )   83,820    

Diluted

    56,511     33,493     (6,172 )   83,832    

See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1.     Basis of Pro Forma Presentation

        The unaudited pro forma condensed combined balance sheet as of March 31, 2012 and the unaudited pro forma condensed combined income statements for the three months ended March 31, 2012 and the year ended December 31, 2011 are based on the historical financial statements of Hilltop and PlainsCapital after giving effect to the completion of the merger and the assumptions and adjustments described in the accompanying notes. It does not reflect cost savings or operating synergies expected to result from the merger, or the costs to achieve these cost savings or operating synergies, or any anticipated disposition of assets that may result from the integration of the operations of the two companies.

        The transaction will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805"). In business combination transactions in which the consideration given is not in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable.

        Under ASC 805, all of the assets acquired and liabilities assumed in a business combination are recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. Subsequent to the completion of the merger, Hilltop and PlainsCapital will finalize an integration plan, which may affect how the assets acquired, including intangible assets, will be utilized by the combined company. For those assets in the combined company that will be phased out or will no longer be used, additional amortization, depreciation and possibly impairment charges will be recorded after management completes the integration plan.

        The unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.

2.     Preliminary Estimated Acquisition Consideration

        On May 8, 2012, Hilltop entered into a definitive agreement and plan of merger with PlainsCapital and Meadow Corporation, pursuant to which PlainsCapital will merge with and into Meadow Corporation and become a subsidiary of Hilltop. The purchase consideration to PlainsCapital shareholders includes approximately 27.3 million shares of Hilltop common stock, 114,068 shares of Hilltop preferred stock, and approximately $317 million of cash. At the closing (as defined in the merger agreement) each outstanding share of PlainsCapital common stock will be converted into the right to receive 0.776 shares of Hilltop common stock and $9.00 in cash (collectively, the "Merger Consideration"), subject to certain adjustments. Each outstanding and unexercised option to purchase shares of PlainsCapital common stock will vest in full and the holder thereof will be entitled to receive the Merger Consideration in respect of each share of PlainsCapital common stock underlying such stock option, less the applicable exercise price and withholding taxes. Each outstanding PlainsCapital restricted stock unit and share of PlainsCapital restricted common stock will vest in full and will be converted into the right to receive the Merger Consideration, less applicable withholding taxes. Each share of PlainsCapital Series C preferred stock will be converted into one share of preferred stock of Hilltop having the same rights, preferences, privileges, voting powers, limitations, and restrictions as the PlainsCapital Series C preferred stock.

 

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        Based on PlainsCapital's estimated shares of common stock and equity awards outstanding as of August 3, 2012, and assuming that all equity awards are vested and exercised as of the closing of the merger, the preliminary estimated acquisition consideration is as follows (in thousands):

Preliminary Estimated Acquisition Consideration

Number of shares of PlainsCapital common stock outstanding at March 31, 2012

    32,255        

Escrow common shares expected to be issued prior to closing of the merger(1)

    1,042        

Restricted stock units that will vest upon closing of the merger

    939        

Restricted shares that will vest upon closing of the merger

    453        

Stock options that will vest and be exercised prior to closing of the merger

    519        
             

Total PlainsCapital common stock upon closing of the merger

    35,208        

Per share exchange ratio

    0.776        
             

Number of shares of Hilltop common stock—as exchanged

    27,321        

Multiplied by Hilltop common stock price on August 1, 2012

  $ 10.50        
             

Estimated fair value of Hilltop common stock issued

        $ 286,872  

Estimated fair value of Hilltop preferred stock issued

          114,068  

Estimated cash distribution to PlainsCapital common stockholders(2)

          316,870  
             

Total Preliminary Estimated Acquisition Consideration

        $ 717,810  
             

(1)
Escrow common shares expected to be issued represent the estimated number of PlainsCapital shares that will be released from escrow and delivered to former First Southwest stockholders under the terms of its December 2008 merger agreement with PlainsCapital and is based on the estimated fair value of certain auction rate securities.

(2)
The estimated cash distribution to PlainsCapital common shareholders equals the cash portion of the Merger Consideration of $9.00, multiplied by the total PlainsCapital common stock upon closing of the merger.

3.     Preliminary Estimated Acquisition Consideration Allocation

        Under the acquisition method of accounting, the total acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of PlainsCapital based on their estimated fair values as of the closing of the merger. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

        The allocation of the estimated acquisition consideration is preliminary because the proposed merger has not yet been completed. The preliminary allocation is based on estimates, assumptions, valuations, and other studies which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, the acquisition consideration allocation unaudited pro forma adjustments will remain preliminary until Hilltop management determines the final acquisition consideration and the fair values of assets acquired and liabilities assumed. The final determination of the acquisition consideration allocation is anticipated to be completed as soon as practicable after the completion of the merger and will be based on the value of the Hilltop share price at the closing of the transaction. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma condensed combined financial statements.

 

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        The total preliminary estimated acquisition consideration as shown in the table above is allocated to PlainsCapital's tangible and intangible assets and liabilities as of March 31, 2012 based on their preliminary estimated fair values as follows (in thousands):

    Preliminary Estimated Acquisition Consideration Allocation

Cash, cash equivalents, and amounts due from banks

  $ 230,470  

Federal funds sold and securities purchased under agreements to resell

    19,858  

Investment securities

    861,089  

Loans held for sale

    853,801  

Loans

    3,182,667  

Broker-dealer and clearing organization receivables

    196,990  

Fee award receivable

    17,706  

Property and equipment

    118,765  

Other real estate owned

    14,575  

Other assets

    210,050  

Deposits

    (4,175,849 )

Broker-dealer and clearing organization payables

    (220,012 )

Short-term borrowings

    (606,774 )

Notes payable

    (51,828 )

Junior subordinated debentures

    (67,012 )

Other liabilities

    (164,089 )

Noncontrolling interest

    (1,829 )

Intangible assets

    86,900  

Goodwill

    212,332  
       

Preliminary Estimated Acquisition Consideration

  $ 717,810  
       

        Approximately $86.9 million has been preliminarily allocated to amortizable intangible assets acquired. The amortization related to the preliminary fair value of net amortizable intangible assets is reflected as a pro forma adjustment to the unaudited pro forma condensed combined financial statements.

        Identifiable intangible assets.    The preliminary fair values of intangible assets were determined based on the provisions of ASC 805, which defines fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or "ASC 820." ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Intangible assets were identified that met either the separability criterion or the contractual-legal criterion described in ASC 805. The preliminary allocation to intangible assets is as follows (dollar amounts in thousands):

 
   
  Estimated
Useful Life
(Years)
 

Core deposit intangible

  $ 42,700     9  

Customer contracts and relationships

    14,500     14  

Non-compete agreements

    14,100     5  

Trademarks and trade names

    12,000     23  

Internally-developed software

    3,600     3  
             

Total intangible assets

  $ 86,900        
             

        Goodwill.    Goodwill represents the excess of the preliminary estimated acquisition consideration over the preliminary fair value of the underlying net tangible and intangible assets. Among the factors

 

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that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets are the skill sets, operations, customer base and organizational cultures that can be leveraged to enable the combined company to build an enterprise greater than the sum of its parts. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, goodwill will not be amortized, but instead will be tested for impairment at least annually and whenever events or circumstances have occurred that may indicate a possible impairment. In the event management determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of the impairment during the period in which the determination is made.

4.     Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments

        The unaudited pro forma financial information is not necessarily indicative of what the financial position actually would have been had the merger been completed at the date indicated, and includes adjustments which are preliminary and may be revised. Such revisions may result in material changes. The financial position shown herein is not necessarily indicative of what the past financial position of the combined companies would have been, nor necessarily indicative of the financial position of the post-merger periods. The unaudited pro forma financial information does not give consideration to the impact of possible expense efficiencies, synergies, strategy modifications, asset dispositions, or other actions that may result from the merger.

        The following unaudited pro forma adjustments result from accounting for the merger, including the determination of fair value of the assets, liabilities, and commitments which Hilltop, as the acquirer for accounting purposes, will acquire from PlainsCapital. The descriptions related to these preliminary adjustments are as follows (in thousands):

Balance Sheet

A

 

Adjustments to cash

       

 

To reflect cash used to purchase outstanding shares of PlainsCapital

  $ (316,870 )

 

To reflect cash proceeds to PlainsCapital from assumed stock option exercises, immediately prior to closing of the merger

    5,374  

 

To reflect cash paid by PlainsCapital to settle executive compensation obligations

    (12,267 )

 

To reflect cash used to pay estimated transaction costs of Hilltop

    (5,577 )

 

To reflect cash used to pay estimated transaction costs of PlainsCapital

    (7,500 )
           

      $ (336,840 )
           

B

 

Adjustment to available for sale investments

       

 

To reflect estimated fair value at acquisition date

  $ (4,061 )

C

 

Adjustment to held to maturity investments

       

 

To reflect estimated fair value at acquisition date

  $ 6,090  

D

 

Adjustment to loans

       

 

To reflect estimated fair value at acquisition date

  $ (86,588 )

E

 

Adjustments to intangible assets

       

 

To eliminate PlainsCapital historical acquired intangible assets

  $ (10,997 )

 

To record the estimated fair value of acquired identifiable intangible assets

    86,900  
           

      $ 75,903  
           

F

 

Adjustments to goodwill

       

 

To eliminate PlainsCapital historical acquired goodwill

  $ (35,880 )

 

To reflect the goodwill associated with the PlainsCapital acquisition

    212,332  
           

      $ 176,452  
           

 

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G

 

Adjustment to property and equipment

       

 

To reflect estimated fair value at acquisition date

  $ 26,430  

H

 

Adjustment to other real estate owned

       

 

To reflect estimated fair value at acquisition date

  $ (9,015 )

I

 

Adjustments to other assets

       

 

To reflect acquired current tax recoverable from estimated transaction costs of PlainsCapital

  $ 1,350  

 

To reflect current tax recoverable from estimated transaction costs of Hilltop

    1,004  

 

To reflect deferred tax asset changes resulting from pro forma adjustments

    45,478  
           

      $ 47,832  
           

J

 

Adjustment to deposits

       

 

To reflect estimated fair value at acquisition date

  $ 7,073  

K

 

Adjustments to other liabilities

       

 

To eliminate contingent liability related to First Southwest escrow shares

  $ (13,273 )

 

To reflect liability for change in control payments due under existing contracts

    13,404  

 

To reflect cash paid by PlainsCapital to settle executive compensation obligations

    (12,267 )

 

To reflect liability for indemnification reserve

    5,000  

 

To reflect deferred tax liability changes resulting from pro forma adjustments

    39,032  
           

      $ 31,896  
           

L

 

Adjustments to preferred stock

       

 

To eliminate PlainsCapital historical preferred stock

  $ (114,068 )

 

To reflect the issuance of Hilltop preferred stock, at fair value

    114,068  
           

      $  
           

M

 

Adjustments to common stock

       

 

To eliminate PlainsCapital historical common stock

  $ (32 )

 

To reflect the issuance of Hilltop common stock to PlainsCapital shareholders

    273  
           

      $ 241  
           

N

 

Adjustments to additional paid-in capital

       

 

To eliminate PlainsCapital historical additional paid-in capital

  $ (159,835 )

 

To reflect the issuance of Hilltop common stock to PlainsCapital shareholders

    286,599  
           

      $ 126,764  
           

O

 

Adjustment to accumulated other comprehensive income

       

 

To eliminate PlainsCapital historical accumulated other comprehensive income

  $ (4,857 )

P

 

Adjustments to accumulated deficit

       

 

To eliminate PlainsCapital retained earnings

  $ (262,411 )

 

To reflect estimated transactions costs of Hilltop, net of tax

    (4,573 )
           

      $ (266,984 )
           

Q

 

Adjustment to unearned ESOP shares

       

 

To reflect vesting of PlainsCapital unearned ESOP shares

  $ 2,070  

        Pursuant to the acquisition method of accounting, the final acquisition consideration will be based on the price of Hilltop's common stock immediately prior to the effective time of the merger. A 20% difference in per share price at the closing of the merger compared to the amount used in these unaudited pro forma condensed combined financial statements would increase or decrease total acquisition consideration and goodwill by approximately $57 million.

 

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Income Statements

 
   
  Three Months
Ended
March 31, 2012
  Year Ended
December 31, 2011
 

R

 

Adjustment to loan interest income

             

 

To reflect amortization of loan discounts resulting from loan fair value pro forma adjustment

  $ 982   $ 3,457  

S

 

Adjustment to net investment and other interest income

             

 

To reflect foregone interest resulting from pro forma cash adjustments

  $ (202 ) $ (808 )

T

 

Adjustment to provision for loan losses

             

 

To reflect changes to loan loss provision

  $ 342   $ (12,757 )

U

 

Adjustments to general and administrative and other expenses

             

 

To eliminate PlainsCapital historical amortization expense

  $ (388 ) $ (2,100 )

 

To reflect amortization of acquired intangible assets

    2,600     10,200  

 

To reflect additional depreciation expense resulting from property and equipment pro forma adjustment

    1,195     4,780  
               

      $ 3,407   $ 12,880  
               

V

 

Adjustment to income tax expense

             

 

To reflect the income tax effect of pro forma adjustments R - U at Hilltop's estimated combined statutory tax rate of 36%

  $ (1,069 ) $ 909  

        Note that the estimated transaction costs included as part of the unaudited pro forma condensed combined balance sheet as of March 31, 2012, have not been included in the above unaudited pro forma condensed combined income statements.

5.     Earnings per Common Share

        Unaudited pro forma earnings per common share for the three months ended March 31, 2012 and for the year ended December 31, 2011 have been calculated using Hilltop's historic weighted average common shares outstanding plus the common shares assumed to be issued to PlainsCapital shareholders per the merger agreement.

        The following table sets forth the calculation of basic and diluted unaudited pro forma earnings per common share for the three months ended March 31, 2012 and the year ended December 31, 2011 (in thousands, except per share data).

 
  Three Months
Ended
March 31, 2012
  Year Ended
December 31, 2011
 
 
  Basic   Diluted   Basic   Diluted  

Pro forma net income

  $ 18,606   $ 18,606   $ 40,793   $ 40,793  

Weighted average common shares outstanding:

                         

Historic Hilltop

    56,499     56,555     56,499     56,511  

Common shares issued to PlainsCapital

    27,321     27,321     27,321     27,321  
                   

Pro forma

    83,820     83,876     83,820     83,832  
                   

Pro forma net income per common share

  $ 0.22   $ 0.22   $ 0.49   $ 0.49  
                   

 

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UNAUDITED COMPARATIVE PER SHARE DATA

        The following table sets forth for Hilltop common stock and PlainsCapital common stock certain historical, pro forma and pro forma-equivalent per share financial information. The pro forma and pro forma-equivalent per share information gives effect to the merger and the planned conversion of the outstanding PlainsCapital Series C preferred stock into shares of a new series of Hilltop preferred stock with equivalent rights and preferences as if such transactions had been effective on the dates presented, in the case of the book value data, and as if the transactions had become effective on January 1, 2011, in the case of the net income and dividends declared data.

        The unaudited pro forma per share data in the tables assume that the merger is accounted for using the acquisition method of accounting and represents a current estimate based on available information of the combined company's results of operations. The unaudited pro forma condensed combined financial statement adjustments record the assets and liabilities of PlainsCapital at their estimated fair values and are subject to adjustment as additional information becomes available and as additional analyses are performed. See "Unaudited Pro Forma Condensed Combined Financial Statements" included elsewhere in this joint proxy statement/prospectus. The information in the following table is based on, and should be read together with, the historical financial information that Hilltop presented in its prior filings with the SEC and that Hilltop and PlainsCapital have included in this joint proxy statement/prospectus. See "Where You Can Find More Information" included elsewhere in this joint proxy statement/prospectus.

        The unaudited pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the impact of possible business model changes as a result of current market conditions which may impact revenues, expense efficiencies, asset dispositions, share repurchases and other factors. It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during these periods nor is it indicative of the results of operations in future periods or the future financial position of the combined company. The Comparative Per Share Data Table for the three months ended March 31, 2012 and the year ended December 31, 2011 combines the historical income per share data of Hilltop and subsidiaries and PlainsCapital and subsidiaries after giving effect to the transactions contemplated by the merger agreement as if such transactions had become effective on January 1, 2011. The unaudited pro forma adjustments are based upon available information and certain assumptions that Hilltop management believes are reasonable. Upon completion of the merger, the operating results of PlainsCapital will be reflected in the consolidated financial statements of Hilltop on a prospective basis.

 

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  Hilltop
Historical
  PlainsCapital
Historical
  Pro Forma
Combined
  Per Equivalent
PlainsCapital
Share(2)
 

Income (loss) from operations for the year ended December 31, 2011:

                         

Basic earnings (loss) per share

  $ (0.12 ) $ 1.39   $ 0.49   $ 0.38  

Diluted earnings (loss) per share

  $ (0.12 ) $ 1.36   $ 0.49   $ 0.38  

Dividends paid for the year ended December 31, 2011:

 
$

 
$

0.24
 
$

0.10
 
$

0.08
 

Book value per share as of December 31, 2011:

  $ 11.60   $ 12.70     N/A     N/A  

Tangible book value per share as of December 31, 2011:

  $ 11.01   $ 11.21     N/A     N/A  

Income from operations for the three months ended March 31, 2012:

                         

Basic earnings per share

  $ 0.01   $ 0.61   $ 0.22   $ 0.17  

Diluted earnings per share

  $ 0.01   $ 0.59   $ 0.22   $ 0.17  

Dividends paid for the three months ended March 31, 2012:

 
$

 
$

0.06
 
$

0.02
 
$

0.02
 

Book value per share as of March 31, 2012:

  $ 11.56   $ 13.26   $ 11.16   $ 8.66  

Tangible book value per share as of March 31, 2012(1):

  $ 10.97   $ 11.79   $ 7.19   $ 5.58  

(1)
Please see "—Hilltop Non-GAAP to GAAP Reconciliation and Mangement's Explanation of Non-GAAP Financial Measures" and "—PlainsCapital Non-GAAP to GAAP Reconciliation and Mangement's Explanation of Non-GAAP Financial Measures" for a reconciliation of each company's tangible book value per common share to book value per common share.

(2)
The per equivalent PlainsCapital share data is based only on the 0.776 shares of Hilltop common stock to be issued to PlainsCapital shareholders as the stock portion of the merger consideration for each share of PlainsCapital common stock and does not give effect to the $9.00 in cash to be received by PlainsCapital shareholders as the cash portion of the merger consideration for each share of PlainsCapital common stock.

 

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RECENT DEVELOPMENTS

        On August 3, 2012, PlainsCapital announced its results of operations for the quarter ended June 30, 2012. The following is a summary of PlainsCapital's unaudited results for the three and six months ended June 30, 2012 and 2011. This summary is not intended to be a comprehensive statement of PlainsCapital's unaudited financial results for these periods. Full financial results will be included in PlainsCapital's Quarterly Report on Form 10-Q for the period ended June 30, 2012.

        The following table presents certain data from PlainsCapital's consolidated results of operations for the three and six months ended June 30, 2012 and 2011 (in thousands, except per share amounts):

 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
 
  2012   2011   2012   2011  

Net interest income

  $ 49,985   $ 45,185   $ 99,194   $ 87,610  

Provision for loan losses

    3,419     7,238     5,640     13,738  

Noninterest income

    168,419     107,589     318,525     192,929  

Noninterest expense

    172,791     121,930     336,893     230,971  
                   

Income before income taxes

    42,194     23,606     75,186     35,830  

Income tax provision

    15,962     7,992     27,216     12,500  
                   

Consolidated net income

  $ 26,232   $ 15,614   $ 47,970   $ 23,330  
                   

Diluted earnings per common share

  $ 0.72   $ 0.42   $ 1.32   $ 0.60  
                   

Dividends per common share

  $ 0.06   $ 0.05   $ 0.12   $ 0.10  
                   

        PlainsCapital announced consolidated net income for the second quarter of 2012 of $26.2 million, a 68% increase over its second quarter 2011 earnings of $15.6 million. On a per share basis, earnings were $0.72 per diluted common share for the three months ended June 30, 2012, compared to $0.42 per diluted common share reported for the quarter ended a year earlier. Consolidated net income for the six months ended June 30, 2012 was $48.0 million, a 106% increase over earnings of $23.3 million for the six months ended June 30, 2011. On a per share basis, earnings were $1.32 per diluted share for the first six months of 2012, compared to $0.60 per diluted share reported for the six-month period ended June 30, 2011. Returns on average assets and average shareholders' equity for the six months ended June 30, 2012 were 1.63% and 17.38%, respectively, compared to 0.87% and 10.28% for the six months ended June 30, 2011.

        Net interest income increased $4.8 million for the second quarter of 2012, from $45.2 million in the second quarter of 2011 to $50.0 million in the second quarter of 2012, and $11.6 million for the six months ended June 30, 2012, from $87.6 million in the first half of 2011 to $99.2 million in the first half of 2012. The increase for both periods was due to increases in average loan volumes within PlainsCapital's banking segment and decreases in market interest rates paid on deposits.

        The provision for loan losses was $3.4 million and $5.6 million for the three and six months ended June 30, 2012, respectively. Provision for loan losses decreased by $3.8 million for the second quarter of 2012 and $8.1 million for the six months ended June 30, 2012 compared with the corresponding periods in 2011. The decrease was primarily a result of a decrease in non-performing loans during the first half of 2012 compared with the first half of 2011 resulting from the improving economic and financial environment for banking in Texas.

        Noninterest income was $168.4 million for the second quarter of 2012 compared with $107.6 million for the second quarter of 2011, an increase of $60.8 million. Noninterest income was $318.5 million for the six months ended June 30, 2012 compared with $192.9 million for the six months ended June 30, 2011, an increase of $125.6 million. The increase for both periods was primarily due to

 

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increased mortgage loan origination volume, which increased 58% during the second quarter of 2012 and 67% during the six months ended June 30, 2012 compared with the corresponding periods in 2011. The increased mortgage loan origination volume resulted from PrimeLending's efforts to add staff and open mortgage banking offices in recent years, in addition to a more favorable interest rate environment in the first half of 2012, compared to the same period in 2011. The increased mortgage origination volume led to higher combined net gains on the sale of mortgage loans and mortgage loan origination fees during the first half of 2012. PrimeLending expects its rate of mortgage loan origination volume growth to moderate throughout the remainder of 2012.

        Noninterest expense was $172.8 million for the second quarter of 2012 compared with $121.9 million for the second quarter of 2011, an increase of $50.9 million. Noninterest expense was $336.9 million for the six months ended June 30, 2012, compared with $231.0 million for the same period in 2011, an increase of $105.9 million. The largest component of the increase was employees' compensation and benefits, which increased primarily due to higher variable costs for commissions incurred by the mortgage origination segment as a result of an increase in the volume of mortgage loan originations during the first half of 2012 compared with the first half of 2011.

        The following table presents certain balance sheet data for PlainsCapital as of June 30, 2012 and December 31, 2011 (in millions):

 
  June 30,
2012
  December 31,
2011
 

Total assets

  $ 5,846   $ 5,700  

Loans, including loans held for sale

    4,272     4,127  

Deposits

    3,953     4,246  

PlainsCapital Corporation shareholders' equity

    562     517  

        As of June 30, 2012, on a consolidated basis, PlainsCapital had total assets of approximately $5.8 billion, total loans, including loans held for sale, of approximately $4.3 billion, and shareholders' equity of approximately $0.6 billion. PlainsCapital had deposits of $4.0 billion at June 30, 2012, a decrease of $293 million compared with December 31, 2011. The decrease in deposits was due primarily to PlainsCapital's decision to replace certain maturing time deposits with lower cost sources of funding, including advances from the Federal Home Loan Bank.

        As of June 30, 2012, PlainsCapital exceeded all regulatory capital requirements with a total capital to risk weighted assets ratio of 14.34%, Tier 1 capital to risk weighted assets ratio of 12.87% and a Tier 1 capital to average assets, or leverage, ratio of 10.17%.

 

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RISK FACTORS

        In addition to the other information included and incorporated by reference in this document, Hilltop shareholders should consider the matters described below in determining whether to approve the issuance of Hilltop common stock to PlainsCapital shareholders as contemplated by the merger agreement and PlainsCapital shareholders should consider the matters described below in determining whether to adopt and approve the merger agreement.


Risk Factors Relating to the Merger

         Because the market price of Hilltop common stock will fluctuate and the per share merger consideration may be adjusted, PlainsCapital shareholders cannot be sure of the value of the merger consideration they will receive.

        Upon completion of the merger, each share of PlainsCapital common stock will be converted into merger consideration consisting of $9.00 in cash and 0.776 of a share of Hilltop common stock, subject to certain adjustments. The market value of the merger consideration may vary from the closing price of Hilltop common stock on the date we announced the merger, on the date that this document was mailed to PlainsCapital shareholders, on the date of the special meeting of the PlainsCapital shareholders and on the date we complete the merger and thereafter. Any change in the market price of Hilltop common stock prior to completion of the merger will affect the market value of the merger consideration that PlainsCapital shareholders will receive upon completion of the merger. In addition, the aggregate merger consideration payable by Hilltop will not increase in the event that additional shares of PlainsCapital common stock are issued or become outstanding following the execution of the merger agreement, other than in connection with certain equity awards. As a result, if additional shares of PlainsCapital common stock are issued or become outstanding other than as permitted in the merger agreement, the per share merger consideration will decrease. Accordingly, at the time of the special meeting, PlainsCapital shareholders will not know or be able to calculate the value of the merger consideration they would receive upon completion of the merger. Neither company is permitted to terminate the merger agreement or resolicit the vote of its shareholders solely because of changes in the market price of Hilltop's common stock, and there will be no adjustment to the merger consideration for changes in such market price. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations. Many of these factors are beyond our control. We urge you to obtain current market quotations for shares of Hilltop common stock before you vote your shares at the PlainsCapital special meeting.

         We may fail to realize all of the anticipated benefits of the merger.

        The success of the merger will depend, in part, on our ability to successfully combine the Hilltop and PlainsCapital organizations. If we are not able to achieve this objective, the anticipated benefits of the merger may not be realized fully or at all or may take longer than expected to be realized.

        Hilltop and PlainsCapital have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the acquisition of PlainsCapital by Hilltop could result in the loss of key employees and the disruption of each company's ongoing businesses. The companies may have difficulty addressing possible differences in corporate cultures and management philosophies. It is also possible that clients, customers, depositors and counterparties of PlainsCapital could choose to discontinue their relationships with the combined company post-merger because they prefer doing business with an independent company or for any other reason, which would adversely affect the future performance of the combined company. Transition efforts between the two companies will also divert management attention and resources. These transition matters could have an adverse effect on each of

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PlainsCapital and Hilltop during the pre-merger period and for an undetermined period after consummation of the merger.

         The results of operations of Hilltop after the merger may be affected by factors different from those currently affecting the results of operations of Hilltop and PlainsCapital.

        The businesses of Hilltop and PlainsCapital differ in important respects and, accordingly, the results of operations of the combined company and the market price of the combined company's common stock may be affected by factors different from those currently affecting the independent results of operations of Hilltop and PlainsCapital. For a discussion of the business of Hilltop and of certain factors to consider in connection with Hilltop's business, see "Information About the Companies—Hilltop Holdings Inc." and the documents incorporated by reference in this document and referred to under "Where You Can Find More Information" included elsewhere in this joint proxy statement/prospectus. For a discussion of the business of PlainsCapital and of certain factors to consider in connection with PlainsCapital's business, see "Information About the Companies—PlainsCapital Corporation" included elsewhere in this joint proxy statement/prospectus and the consolidated financial statements of PlainsCapital beginning on page F-1 of this joint proxy statement/prospectus.

         The merger agreement limits Hilltop's and PlainsCapital's ability to pursue an alternative transaction and requires Hilltop or PlainsCapital to pay a termination fee of $17.5 million under limited circumstances relating to alternative acquisition proposals.

        The merger agreement prohibits Hilltop and PlainsCapital from soliciting, initiating, endorsing or knowingly encouraging or facilitating certain alternative acquisition proposals with any third party, subject to exceptions set forth in the merger agreement. See "The Merger Agreement—No Solicitation" included elsewhere in this joint proxy statement/prospectus. The merger agreement also provides for the payment by Hilltop or PlainsCapital of a termination fee in the amount of $17.5 million in the event that the other party terminates the merger agreement for certain reasons involving a material and adverse change in the recommendation of Hilltop's or PlainsCapital's board of directors, a failure of Hilltop's shareholders to approve the share issuance proposal or a termination of the merger agreement in certain circumstances followed by an acquisition of PlainsCapital by a third party. These provisions may discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of PlainsCapital or Hilltop from considering or proposing such an acquisition. Furthermore, if the merger agreement is terminated and PlainsCapital's board of directors seeks another party to acquire PlainsCapital, PlainsCapital shareholders cannot be certain that PlainsCapital will be able to find a party willing to pay the equivalent or greater consideration than that which Hilltop has agreed to pay in the merger. See "The Merger Agreement—Termination Fee" included elsewhere in this joint proxy statement/prospectus.

         The fairness opinions that Hilltop and PlainsCapital have obtained from Stephens and J.P. Morgan, respectively, have not been, and are not expected to be, updated to reflect any changes in circumstances that may have occurred since the signing of the merger agreement.

        The fairness opinions issued to Hilltop and PlainsCapital by Stephens and J.P. Morgan, which are Hilltop's and PlainsCapital's respective financial advisors, regarding the fairness, from a financial point of view, of the consideration to be paid in connection with the merger, speak only as of May 8, 2012. Changes in the operations and prospects of Hilltop or PlainsCapital, general market and economic conditions and other factors which may be beyond the control of Hilltop and PlainsCapital, and on which the fairness opinions were based, may have altered the value of Hilltop or PlainsCapital or the market price of shares of Hilltop common stock as of the date of this document, or may alter such values and market price by the time the merger is completed. Stephens and J.P. Morgan do not have

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any obligation to update, revise or reaffirm their respective opinions to reflect subsequent developments, and have not done so. For a description of the opinions that Hilltop and PlainsCapital received from their respective financial advisors, please refer to "The Merger—Opinion of Hilltop's Financial Advisor" included elsewhere in this joint proxy statement/prospectus and "The Merger—Opinion of PlainsCapital's Financial Advisor" included elsewhere in this joint proxy statement/prospectus. For a description of the other factors considered by Hilltop's board of directors in determining to approve the merger, please refer to "The Merger—Hilltop's Reasons for the Merger; Recommendation of the Hilltop Board of Directors" included elsewhere in this joint proxy statement/prospectus. For a description of the other factors considered by PlainsCapital's board of directors in determining to approve the merger, please refer to "The Merger—PlainsCapital's Reasons for the Merger; Recommendation of the PlainsCapital Board of Directors" included elsewhere in this joint proxy statement/prospectus.

         The merger is subject to the receipt of consents and approvals from government entities that may impose conditions that could have an adverse effect on the combined company following the merger.

        Before the merger may be completed, various approvals or consents must be obtained from the Federal Reserve Board, the Texas Department of Banking and various other securities, antitrust, and other regulatory authorities. These government entities may impose conditions on the completion of the merger or require changes to the terms of the merger. Although Hilltop and PlainsCapital do not currently expect that any such material conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of the combined company following the merger, any of which might have an adverse effect on the combined company following the merger.

         Hilltop's ability to engage in nonbanking activities may be adversely affected if it is unable to obtain financial holding company status.

        Hilltop's existing insurance activities, which are conducted through NLASCO, its wholly owned subsidiary, and certain of PlainsCapital's existing activities, including its merchant banking activities, will be deemed impermissible activities for Hilltop under the Bank Holding Company Act as of the closing of the merger, and must be terminated or disposed of by the expiration of a two-year grace period or any extensions granted thereof. While these activities may be continued if Hilltop is able to elect to become a financial holding company under the Bank Holding Company Act, Hilltop may be unable to satisfy the financial holding company requirements prior to the expiration of the grace period, and activities, businesses or investments that would be permissible for a financial holding company but not for a bank holding company will need to be terminated or disposed of. This could adversely affect the business, results of operations or financial position of the combined company following the merger.

         PlainsCapital will be subject to business uncertainties, and Hilltop and PlainsCapital are subject to contractual restrictions while the merger is pending.

        Uncertainty about the effect of the merger on employees and customers may have an adverse effect on PlainsCapital and consequently on Hilltop. These uncertainties may impair PlainsCapital's ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with PlainsCapital to seek to change existing business relationships with PlainsCapital. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty or a desire not to remain with the business, Hilltop's business following the merger could be negatively impacted.

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        In addition, the merger agreement restricts Hilltop and PlainsCapital from making certain acquisitions and taking other specified actions until the merger occurs without the consent of the other party. These restrictions may prevent Hilltop and PlainsCapital from pursuing attractive business opportunities that may arise prior to the completion of the merger. See "The Merger Agreement—Covenants and Agreements—Conduct of Business Prior to the Completion of the Merger" included elsewhere in this joint proxy statement/prospectus for a description of the restrictive covenants applicable to Hilltop and PlainsCapital.

        In addition, PlainsCapital's or Hilltop's businesses may be indirectly adversely affected by the failure to pursue other beneficial opportunities due to the focus of management on the merger. Further, if the merger agreement is terminated because the PlainsCapital shareholders fail to approve the merger proposal and the termination fee is not otherwise payable pursuant to the merger agreement, PlainsCapital will be required to pay $5 million to Hilltop in respect of Hilltop's expenses in connection with the merger agreement.

         The merger is subject to certain closing conditions that, if not satisfied or waived, will result in the merger not being completed, which may cause the price of Hilltop common stock and the value of PlainsCapital common stock to decline.

        The merger is subject to customary conditions to closing, including the receipt of required regulatory approvals and approvals of the Hilltop and PlainsCapital shareholders. If any condition to the merger is not satisfied or waived, to the extent permitted by law, the merger will not be completed. In addition, Hilltop and PlainsCapital may terminate the merger agreement under certain circumstances even if the merger is approved by PlainsCapital and Hilltop shareholders, including if the merger has not been completed on or before December 31, 2012 or if either party's board of directors recommends in favor of an alternative acquisition proposal. If Hilltop and PlainsCapital do not complete the merger, the trading price of Hilltop common stock on the NYSE and the value of PlainsCapital common stock may decline to the extent that the current prices reflect a market assumption that the merger will be completed. In addition, neither company would realize any of the expected benefits of having completed the merger. If the merger is not completed, additional risks could materialize, which could materially and adversely affect the business, financial condition and results of Hilltop or PlainsCapital. For more information on closing conditions to the merger agreement, see "The Merger Agreement—Conditions to Completion of the Merger" included elsewhere in this joint proxy statement/prospectus.

         Current Hilltop shareholders and PlainsCapital shareholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

        Current Hilltop shareholders have the right to vote in the election of the Hilltop board of directors and on other matters affecting Hilltop. Current PlainsCapital shareholders have the right to vote in the election of the PlainsCapital board of directors and on other matters affecting PlainsCapital. Immediately after the merger is completed, it is expected that, on a fully diluted basis, current Hilltop shareholders will own approximately 67%, and current PlainsCapital shareholders will own approximately 33%, of the outstanding shares of Hilltop common stock. As a result of the merger, current Hilltop shareholders will have less influence on the management and policies of Hilltop post-merger than they currently have, and current PlainsCapital shareholders will have less influence on the management and policies of Hilltop post-merger than they currently have with respect to PlainsCapital.

         Current PlainsCapital shareholders may not receive dividends on the Hilltop common stock that they receive in the merger.

        Hilltop has not historically paid cash dividends on its common stock. Hilltop has agreed to cause its board of directors to consider a policy for the payment of dividends on the Hilltop common stock,

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subject to applicable law, and taking into account the level of dividends historically paid on the PlainsCapital common stock. However, any decision to approve such a policy, and any future declaration of dividends, will be at the discretion of the Hilltop board of directors and will depend on Hilltop's results of operations, financial condition, capital requirements, regulatory contractual restrictions, business strategy and other factors that the Hilltop board of directors deems relevant at that time. Current PlainsCapital shareholders may not continue to receive dividends on their common stock as holders of Hilltop common stock following completion of the merger at the same level as they receive today, or at all.

         The financial analyses and forecasts considered by Hilltop and PlainsCapital and their respective financial advisors may not be realized, which may adversely affect the market price of Hilltop shares following the merger.

        In performing their financial analyses and rendering their opinions regarding the fairness, from a financial point of view, of the merger consideration set forth in the merger agreement, each of the respective financial advisors to Hilltop and PlainsCapital independently reviewed and relied on, among other things, internal standalone and pro forma financial analyses and forecasts as separately provided to each respective financial advisor by Hilltop or PlainsCapital. See the sections titled "The Merger—Certain Hilltop Prospective Financial Information" included elsewhere in this joint proxy statement/prospectus and "The Merger—Certain PlainsCapital Prospective Financial Information" included elsewhere in this joint proxy statement/prospectus. The financial advisors assumed, at the direction of the board of directors of PlainsCapital (in the case of J.P. Morgan) and of Hilltop (in the case of Stephens Inc.), that such financial information was reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of PlainsCapital and Hilltop as to the future performance of their respective companies and that such future financial results will be achieved at the times and in the amounts projected by management of PlainsCapital and Hilltop. These analyses and forecasts were prepared by, or as directed by, the managements of Hilltop and PlainsCapital and were also considered by the board of directors of each of Hilltop and PlainsCapital. None of these analyses or forecasts was prepared with a view towards public disclosure or compliance with the published guidelines of the SEC, generally accepted accounting principles in the U.S. ("GAAP"), statutory accounting principles ("SAP") or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts. These projections are inherently based on various estimates and assumptions that are subject to the judgment of those preparing them. These projections are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of Hilltop and PlainsCapital. Accordingly, Hilltop's and/or PlainsCapital's financial condition or results of operations may not be consistent with those set forth in such analyses and forecasts. Worse financial results could have a material adverse effect on the market price of Hilltop common stock following the merger.

         Some of the executive officers and directors of PlainsCapital have interests in seeing the merger completed that are different from, or in addition to, those of the other PlainsCapital shareholders. Therefore, some of the executive officers and directors of PlainsCapital may have a conflict of interest in recommending the proposals being voted on at the PlainsCapital special meeting.

        The executive officers of PlainsCapital may have arrangements that provide them with interests in the merger that are different from, or in addition to, those of shareholders of PlainsCapital generally. These interests include, among others, continued service by current PlainsCapital executive officers as executive officers of Hilltop or PlainsCapital following the merger, and payments to current PlainsCapital executive officers in connection with the merger. These interests may influence the executive officers of PlainsCapital to support or approve the proposals to be presented at the PlainsCapital special meeting.

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        In addition, certain directors of PlainsCapital may have interests in the merger that are different from, or in addition to, those of shareholders of PlainsCapital generally, including the accelerated vesting of certain equity awards and service as a director of Hilltop following the merger. These interests may influence the directors of PlainsCapital to support or approve the proposals to be presented at the PlainsCapital special meeting.

        See "The Merger—Interests of Certain Directors and Executive Officers in the Merger" included elsewhere in this joint proxy statement/prospectus for a more detailed description of these interests.

         The completion of the merger may trigger change in control provisions in certain agreements to which PlainsCapital is a party.

        The completion of the merger may trigger change in control provisions in certain agreements to which PlainsCapital is a party. Such agreements include a line of credit provided by and term notes issued to JPMorgan Chase Bank, N.A. under which PlainsCapital's subsidiary, PlainsCapital Bank, had an aggregate of $39.5 million in indebtedness as of March 31, 2012. If PlainsCapital and Hilltop are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements (including terminating the agreements or seeking monetary penalties). Even if PlainsCapital or Hilltop is able to obtain waivers, the counterparties may demand a fee for such waivers or seek to renegotiate the agreements on materially less favorable terms than those currently in place.

         The shares of Hilltop common stock to be received by PlainsCapital shareholders as a result of the merger will have different rights from the shares of PlainsCapital common stock.

        Upon completion of the merger, PlainsCapital shareholders will become Hilltop shareholders and their rights as shareholders will be governed by the Hilltop charter and the Hilltop bylaws. The rights associated with PlainsCapital common stock are different from the rights associated with Hilltop common stock. See "Comparison of Shareholders' Rights" included elsewhere in this joint proxy statement/prospectus for a discussion of the different rights associated with Hilltop common stock.

         Termination of the merger agreement could negatively impact PlainsCapital and/or Hilltop.

        If the merger agreement is terminated, there may be various consequences. For example, PlainsCapital's or Hilltop's businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. A termination of the merger agreement may also damage the reputations and franchise values of Hilltop and PlainsCapital. If the merger agreement is terminated and PlainsCapital's board of directors seeks another merger or business combination, PlainsCapital shareholders cannot be certain that PlainsCapital will be able to find a party willing to pay the equivalent or greater consideration than that which Hilltop has agreed to pay in the merger. In addition, if the merger agreement is terminated under certain circumstances, PlainsCapital may be required to pay $5 million to Hilltop in respect of Hilltop's expenses in connection with the merger agreement or pay Hilltop a termination fee of $17.5 million, or Hilltop may be required to pay PlainsCapital a termination fee of $17.5 million.

         The combined company expects to incur substantial expenses related to the merger.

        The combined company expects to incur substantial expenses in connection with completing the merger and combining the business, operations, networks, systems, technologies, policies and procedures of the two companies. Although Hilltop and PlainsCapital have assumed that a certain level of transaction and combination expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their combination expenses. Many of the

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expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and combination expenses associated with the merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination of the businesses following the completion of the merger. As a result of these expenses, both Hilltop and PlainsCapital expect to take charges against their earnings before and after the completion of the merger. The charges taken in connection with the merger are expected to be significant, although the aggregate amount and timing of such charges are uncertain at present.

         If completed, the merger may not produce its anticipated results, and Hilltop and PlainsCapital may be unable to combine their operations in the manner expected.

        Hilltop and PlainsCapital entered into the merger agreement with the expectation that the merger will result in various benefits. Achieving the anticipated benefits of the merger is subject to a number of uncertainties, including whether the Hilltop and PlainsCapital organizations can be combined in an efficient, effective and timely manner.

        It is possible that the transition process could take longer than anticipated and could result in the loss of valuable employees, the disruption of each company's ongoing businesses, controls, procedures, policies and compensation arrangements, any of which could adversely affect the combined company's ability to achieve the anticipated benefits of the merger. The combined company's results of operations could also be adversely affected by any issues attributable to either company's operations that arise or are based on events or actions that occur prior to the closing of the merger. The companies may have difficulty addressing possible differences in corporate cultures and management philosophies. The transition process is subject to a number of uncertainties, and no assurance can be given that the anticipated benefits will be realized or, if realized, the timing of their realization. Failure to achieve these anticipated benefits could result in increased costs or decreases in the amount of expected revenues and could adversely affect the combined company's future business, financial condition, operating results and prospects.

         The merger may not be accretive to earnings and may cause dilution to Hilltop's earnings per share, which may negatively affect the market price of Hilltop's common stock.

        Hilltop currently anticipates that the merger will be accretive to earnings in the first full year following the completion of the merger, after factoring in synergies and excluding costs to achieve synergies and other one-time costs related to the merger. This expectation is based on preliminary estimates that are subject to change. If such estimates change or prove to be inaccurate, the merger may not be accretive to earnings. Hilltop also could encounter additional transaction and integration-related costs, may fail to realize all of the benefits anticipated in the merger or be subject to other factors that affect preliminary estimates. Any of these factors could cause a decrease in Hilltop's adjusted earnings per share or decrease or delay the expected accretive effect of the merger and contribute to a decrease in the price of Hilltop's common stock.

         If the merger is consummated, Hilltop will become a bank holding company pursuant to the Bank Holding Company Act and its operations will be limited to activities permissible by bank holding companies.

        A bank holding company ("BHC") is subject to ongoing supervision, regulation, examination and enforcement by the Federal Reserve. This Federal Reserve jurisdiction also extends to any company that is directly or indirectly controlled by a BHC, such as subsidiaries and other companies in which the BHC has a controlling investment. If the merger is consummated, Hilltop will become a BHC and any legal entity that is deemed to control Hilltop also will be required to become a BHC.

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        It is a policy of the Federal Reserve that a BHC should serve as a source of financial and managerial strength to the depository institutions that it controls. In furtherance thereof, the regulators may require certain financial and other actions by a BHC in support of controlled depository institutions including raising and contributing capital, even if such actions are not in the best interests of the BHC or its shareholders. The types of activities and investments that can be conducted, directly or indirectly, by a BHC are limited by applicable law to those that are generally related to the banking business. A BHC is generally not permitted to engage in commercial, manufacturing or industrial activities. The Gramm-Leach-Bliley Act expanded the universe of activities and investments permissible for those BHCs that meet certain criteria to qualify as a "financial holding company" that Hilltop intends to seek to meet. In general, a financial holding company may engage in activities that are (i) financial in nature or incidental to such financial activity or (ii) complementary to a financial activity. Permissible activities for a financial holding company include the activities permissible for a BHC, as well as: insurance agency and underwriting activities; financial, investment or economic advisory services; underwriting, dealing in or making a market in securities; and limited investing in non-financial companies subject to various restrictions. Because, upon consummation of the merger, Hilltop will become a BHC, regulators could require Hilltop to take certain financial and other actions in support of PlainsCapital Bank even if such actions are not in the best interests of the combined company or its shareholders and the activities and investments of Hilltop will be limited in the future as described above.

         If the merger fails to qualify as a "reorganization" within the meaning of Section 368(a) of the Code, PlainsCapital shareholders may be required to recognize additional gain or loss on the exchange of their shares of PlainsCapital common stock in the merger for U.S. federal income tax purposes.

        Hilltop and PlainsCapital have structured the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. Neither Hilltop nor PlainsCapital intends to request any ruling from the Internal Revenue Service as to the tax consequences of the exchange of shares of PlainsCapital common stock for shares of Hilltop common stock in the merger. If the merger fails to qualify as a reorganization, a PlainsCapital shareholder would generally recognize gain or loss for U.S. federal income tax purposes on each share of PlainsCapital common stock exchanged in the merger in an amount equal to the difference between that shareholder's basis in such share and the sum of the amount of the cash and the fair market value of the shares of Hilltop common stock the PlainsCapital shareholder receives or may receive in exchange for each such share of PlainsCapital common stock. You are urged to consult with your own tax advisor regarding the proper reporting of the amount and timing of such gain or loss. See "United States Federal Income Tax Consequences of the Merger" elsewhere in this joint proxy statement/prospectus.

         The unaudited pro forma financial statements included in this document are presented for illustrative purposes only and may not be an indication of the combined company's financial condition or results of operations following the merger.

        The unaudited pro forma financial statements contained in this document are presented for illustrative purposes only, are based on various adjustments, assumptions and preliminary estimates and may not be an indication of the combined company's financial condition or results of operations following the merger for several reasons. The actual financial condition and results of operations of the combined company following the merger may not be consistent with, or evident from, these unaudited pro forma financial statements. In addition, the assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect the combined company's financial condition or results of operations following the merger. Any potential decline in the combined company's financial condition or results of operations may cause significant variations in the stock price of the combined company.

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Risk Factors Relating to PlainsCapital's Business

         An adverse change in real estate market values may result in losses and otherwise adversely affect the profitability of the combined company following the merger.

        As of December 31, 2011, approximately 40% of PlainsCapital's loan portfolio was comprised of loans with real estate as the primary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. The negative developments in the financial industry and economy as a whole over the past several years have adversely affected real estate market values generally and in PlainsCapital's market areas in Texas specifically and may continue to decline. A decline in real estate values could further impair the value of PlainsCapital's collateral and PlainsCapital's ability to sell the collateral upon any foreclosure. In the event of a default with respect to any of these loans, the amounts PlainsCapital receives upon sale of the collateral may be insufficient to recover the outstanding principal and interest on the loan. As a result, the profitability and financial condition of the combined company following the merger may be adversely affected by a further decrease in real estate market values.

         PlainsCapital's allowance for loan losses may not be adequate to cover actual losses.

        As a lender, PlainsCapital is exposed to the risk that it could sustain losses because borrowers, guarantors, and related parties may fail to perform in accordance with the terms of their loans. PlainsCapital has historically addressed this risk by maintaining an allowance for loan losses in an amount intended to cover management's estimate of losses inherent in the loan portfolio. As a result of the merger, the combined company will be required under generally accepted accounting principles to estimate the fair value of the loan portfolio after the consummation of the merger and write the portfolio down to that estimate. For most loans, this will mean computing the net present value of estimated cash flows to be received from borrowers. PlainCapital's allowance for loan losses that had been maintained will be eliminated in this accounting. A new allowance for loan losses will be established for loans made subsequent to consummation of the merger and for any subsequent decrease in the estimate of cash flows to be received from the loans held.

        The estimate of fair value as of the consummation of the merger will be based on economic conditions at such time and on management's projections regarding both future economic conditions and the ability of PlainsCapital Bank's borrowers to continue to repay their loans. However, if management's assumptions and projections prove to be incorrect, the estimate of fair value may be higher than the actual fair value and the combined company may suffer losses in excess of those estimated. Further, the allowance for loan losses established for new loans or for revised estimates may prove to be inadequate to cover actual losses, especially if economic conditions worsen.

        While management will endeavor to estimate fair value and the allowance to cover current losses, no underwriting and credit monitoring policies and procedures that the combined company could adopt to address credit risk could provide complete assurance that there will not be unexpected losses. These losses could have a material adverse effect on the combined company's business, financial condition, results of operations and cash flows. In addition, federal regulators periodically evaluate the adequacy of the allowance for loan losses and may require the combined company to increase its provision for loan losses or recognize further loan charge-offs based on judgments different from those of management.

         Negative developments in the financial industry and the domestic and international credit markets during the past several years may adversely affect our operations and results.

        The U.S. and global economies have suffered a dramatic downturn during the past several years, which has negatively impacted many industries, including the financial industry. Although economic

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conditions have improved, certain sectors, such as real estate and manufacturing, remain weak and unemployment remains high.

        As a result, commercial as well as consumer loan portfolio performances deteriorated at many financial institutions and have only recently begun to rebound, and the competition for deposits and quality loans has increased significantly. In addition, the values of real estate collateral supporting many commercial loans and home mortgages declined, which contributed to a greater degree of loan defaults. Financial institutions were also particularly impacted by the lack of liquidity and loss of confidence in the financial sector. These factors collectively had a negative impact on PlainsCapital's business, financial condition and results of operations. While market conditions are improving, there is no clear indication of the magnitude of any improvement, or its sustainability. Concerns about the European Union's sovereign debt crisis and the soundness of its banking system have also caused uncertainty for financial markets globally. Should these market conditions worsen or the U.S. or global economies suffer a future downturn, the credit quality of PlainsCapital's loan portfolio and the results of operations and financial condition of the combined company following the merger could be adversely affected.

        In response to some of these concerns, and with the intent of preventing future crises, the federal government adopted significant new laws and regulations relating to financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"). Numerous other actions have been taken by the Federal Reserve Board, the U.S. Congress, the U.S. Department of the Treasury ("U.S. Treasury"), the FDIC, the SEC and others to address financial stability, and neither PlainsCapital nor Hilltop can predict the full effect of these actions or any future regulatory reforms. Negative developments in the financial industry and the domestic and international credit markets, and the impact of new or future legislation in response to those developments, may negatively impact PlainsCapital's operations by restricting its business operations, including its ability to originate or sell loans, price financial products and services and attract and retain experienced personnel, and adversely impact the combined company's financial performance.

         PlainsCapital's geographic concentration may magnify the adverse effects and consequences of any regional or local economic downturn.

        PlainsCapital conducts its banking operations primarily in Texas. Substantially all of the real estate loans in PlainsCapital's loan portfolio are secured by properties located in Texas, with more than 75% secured by properties located in the Dallas/Fort Worth and Austin/San Antonio markets as of December 31, 2011. Likewise, substantially all of the real estate loans in PlainsCapital's loan portfolio are made to borrowers who live and conduct business in Texas. In addition, mortgage origination fee income is dependent to a significant degree on economic conditions in Texas and California. During 2011, approximately 26% and 16% by dollar volume of PlainsCapital's mortgage loans originated were collateralized by properties located in Texas and California, respectively. PlainsCapital's businesses are affected by general economic conditions such as inflation, recession, unemployment and many other factors beyond its control. Adverse economic conditions in Texas may result in a reduction in the value of the collateral securing PlainsCapital's loans. Any regional or local economic downturn that affects Texas or existing or prospective property or borrowers in Texas may affect PlainsCapital and its profitability more significantly and more adversely than its competitors that are less geographically concentrated.

         PlainsCapital's business is subject to interest rate risk, and fluctuations in interest rates may adversely affect the earnings, capital levels and overall results of the combined company following the merger.

        The majority of PlainsCapital's assets are monetary in nature and, as a result, PlainsCapital is subject to significant risk from changes in interest rates. Changes in interest rates may impact PlainsCapital's net interest income as well as the valuation of its assets and liabilities. PlainsCapital's

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earnings are significantly dependent on its net interest income, which is the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. PlainsCapital expects to periodically experience "gaps" in the interest rate sensitivities of its assets and liabilities, meaning that either its interest-bearing liabilities will be more sensitive to changes in market interest rates than its interest-earning assets, or vice versa. In either event, if market interest rates should move contrary to PlainsCapital's position, this "gap" may work against it, and the earnings of the combined company may be adversely affected.

        An increase in the general level of interest rates may also, among other things, adversely affect the demand for loans and PlainsCapital's ability to originate loans. In particular, if mortgage interest rates increase, the demand for residential mortgage loans and the refinancing of residential mortgage loans will likely decrease, which will have an adverse effect on PlainsCapital's income generated from mortgage origination activities. Conversely, a decrease in the general level of interest rates, among other things, may lead to prepayments on PlainsCapital's loan and mortgage-backed securities portfolios and increased competition for deposits. Accordingly, changes in the general level of market interest rates may adversely affect PlainsCapital's net yield on interest-earning assets, loan origination volume and its overall results.

        Market interest rates are affected by many factors outside of PlainsCapital's control, including inflation, recession, unemployment, money supply, and international disorder and instability in domestic and foreign financial markets. PlainsCapital may not be able to accurately predict the likelihood, nature and magnitude of such changes or how and to what extent such changes may affect its business. PlainsCapital also may not be able to adequately prepare for, or compensate for, the consequences of such changes. Any failure to predict and prepare for changes in interest rates, or adjust for the consequences of these changes, may adversely affect the earnings and capital levels and overall results of the combined company following the merger.

         PlainsCapital is subject to extensive supervision and regulation that could restrict its activities and impose financial requirements or limitations on the conduct of its business and limit its ability to generate income.

        PlainsCapital is subject to extensive federal and state regulation and supervision, including that of the Federal Reserve Board, the Texas Department of Banking, the FDIC, the Consumer Financial Protection Bureau ("CFPB"), the SEC and Financial Industry Regulatory Authority ("FINRA"). Banking regulations are primarily intended to protect depositors' funds, federal deposit insurance funds and the banking system as a whole, not shareholders. Likewise, regulations promulgated by FINRA are primarily intended to protect customers of broker-dealer businesses rather than shareholders. These regulations affect PlainsCapital's lending practices, capital structure, investment practices, dividend policy and growth, among other things. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, damages, civil money penalties or reputational damage, which could have a material adverse effect on the business, financial condition and results of operations of the combined company following the merger. There can be no assurance that such violations will not occur.

        The U.S. Congress and federal regulatory agencies frequently revise banking and securities laws, regulations and policies. On July 21, 2010, President Obama signed into law the Dodd-Frank Act, which significantly alters the regulation of financial institutions and the financial services industry. The Dodd-Frank Act establishes the CFPB and requires the CFPB and other federal agencies to implement many provisions of the Dodd-Frank Act. PlainsCapital expects that several aspects of the Dodd-Frank Act may affect its business, including, without limitation, increased capital requirements, increased mortgage regulation, restrictions on proprietary trading in securities, restrictions on investments in hedge funds and private equity funds, executive compensation restrictions and disclosure and reporting requirements. At this time, it is difficult to predict the extent to which the Dodd-Frank Act or the resulting rules and regulations will affect PlainsCapital's business. Compliance with these new laws and

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regulations likely will result in additional costs, which could be significant and may adversely impact the results of operations, financial condition, and liquidity of the combined company following the merger.

        During the second quarter of 2010, PlainsCapital Bank received its 2008 CRA Performance Evaluation from the Federal Reserve Board. The Federal Reserve Board lowered PlainsCapital Bank's overall Community Reinvestment Act ("CRA") rating from "satisfactory" to "needs to improve" as a result of alleged fair lending issues associated with PlainsCapital's mortgage origination segment in prior years. In the fourth quarter of 2011, PlainsCapital Bank received the results of its current CRA Performance Evaluation, which returned PlainsCapital Bank's CRA rating to "satisfactory." During such time as PlainsCapital Bank's CRA rating was "needs to improve," PlainsCapital could not commence new activities that were "financial in nature" or acquire companies engaged in these activities. In addition, a CRA rating of less than "satisfactory" adversely affected PlainsCapital Bank's ability to establish new branches. If PlainsCapital Bank fails to maintain its "satisfactory" rating, it would again be subject to these restrictions on its activities, acquisitions and ability to establish new branches.

        Neither PlainsCapital nor Hilltop can predict whether or in what form any other proposed regulations or statutes will be adopted or the extent to which PlainsCapital's business may be affected by any new regulation or statute. Such changes could subject PlainsCapital's business to additional costs, limit the types of financial services and products it may offer and increase the ability of non-banks to offer competing financial services and products, among other things.

         The combined company may be unable to increase or maintain its level of qualified small business lending, which could subject the combined company to higher dividend rates on its outstanding preferred stock.

        On September 27, 2011, PlainsCapital sold approximately $114.1 million of its Series C Preferred Stock to the Secretary of the Treasury pursuant to the Small Business Lending Fund (the "SBLF"), and such preferred stock will be exchanged for preferred stock of Hilltop in connection with the merger. The SBLF encourages participant banks to increase their lending to small businesses by offering banks reduced dividend rates on the senior preferred shares they issued to the Secretary of the Treasury if they meet certain thresholds of increased small business lending. If PlainsCapital and the combined company following the merger do not increase their qualified lending to small businesses from its "baseline" level, the combined company could become subject to higher dividend rates and penalties in the future. Until December 31, 2013, the dividend rate the combined company will pay on any outstanding shares of such preferred stock will fluctuate on a quarterly basis between one percent (1%) and five percent (5%) per annum, based upon changes in the level of qualified small business lending by PlainsCapital Bank against its baseline. From January 1, 2014 through March 26, 2016, if PlainsCapital and the combined company have not sufficiently increased their small business lending, the combined company may become subject to a dividend rate as high as seven percent (7%) per annum, and may be required to pay a dividend rate penalty of 0.5% per quarter. Beginning March 27, 2016, the dividend rate on any outstanding shares of such preferred stock will be fixed at nine percent (9%) per annum. The future demands for additional lending are unclear and uncertain, and the combined company's ability to make qualifying small business loans depends on a number of factors, many of which may be outside of its control. These factors include, among other things, general economic conditions, demand for loans, the effectiveness of its marketing efforts, the ability of borrowers to meet its lending standards, competition from other lenders, the lending policies of its competitors and regulatory restrictions. If PlainsCapital and the combined company fail to increase their level of qualified small business lending from the applicable baseline, the resulting increase in the dividend rate on the preferred stock could increase the combined company's cost of capital and adversely affect its results of operations and financial condition.

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         PlainsCapital's banking segment is subject to funding risks associated with its high deposit concentration and reliance on brokered deposits.

        As of December 31, 2011, PlainsCapital's fifteen largest depositors, excluding First Southwest, its indirect wholly owned subsidiary, accounted for 20.24% of its total deposits, and its five largest depositors, excluding First Southwest, accounted for 12.38% of its total deposits. Brokered deposits as of December 31, 2011 accounted for 10.06% of PlainsCapital's total deposits. Loss of one or more of the largest customers of PlainsCapital Bank, a significant decline in PlainsCapital's deposit balances due to ordinary course fluctuations related to these customers' businesses, or a loss of a significant amount of PlainsCapital's brokered deposits could adversely affect PlainsCapital's liquidity. Additionally, such circumstances could require PlainsCapital to raise deposit rates in an attempt to attract new deposits, or purchase federal funds or borrow funds on a short-term basis at higher rates, which would adversely affect the results of operations of the combined company. Under applicable regulations, if PlainsCapital Bank were no longer "well capitalized," PlainsCapital Bank would not be able to accept brokered deposits without the approval of the FDIC.

         The combined company will be subject to losses due to fraudulent and negligent acts.

        PlainsCapital's business is subject to potential losses resulting from fraudulent activities. PlainsCapital's banking segment is subject to the risk that its customers may engage in fraudulent activities, including fraudulent access to legitimate customer accounts or the use of a false identity to open an account, or the use of forged or counterfeit checks for payment. The banking segment is subject to the risk of higher than expected charge-offs for loans it holds to maturity on its balance sheet if its borrowers supply fraudulent information. Such types of fraud may be difficult to prevent or detect, and PlainsCapital may not be able to recover losses caused by such activities. Any such losses could have a material adverse effect on PlainsCapital's business, financial condition and operating results.

        PlainsCapital's mortgage origination segment relies heavily upon information supplied by third parties including the information contained in the loan application, property appraisal, title information and employment and income documentation. If any of this information is intentionally or negligently misrepresented and such misrepresentation is not detected prior to loan funding, the investment value of the loan may be significantly lower than expected. Whether a misrepresentation is made by the loan applicant, another third party or one of PlainsCapital's employees, PlainsCapital generally bears the risk of loss associated with the misrepresentation. A mortgage loan subject to a material misrepresentation is typically unsalable to investors in the secondary market. If PlainsCapital has already sold the loan when the material misrepresentation is discovered, then the loan is subject to repurchase, but PlainsCapital will often instead agree to indemnify the purchaser for any losses arising from such loan because, in the general course of business, PlainsCapital does not seek to hold for investment the mortgage loans it originates. Even though PlainsCapital may have rights against persons and entities who made or knew about the misrepresentation, such persons and entities are often difficult to locate, and it is often difficult to collect any monetary losses that PlainsCapital has suffered from them. If PlainsCapital experiences a significant number of such fraudulent or negligent acts, the business, financial condition, liquidity and results of operations of the combined company following the merger could be significantly harmed. Neither PlainsCapital nor Hilltop can assure you that PlainsCapital has detected or will detect all misrepresented information in its loan originations.

        First Southwest engages in the underwriting of municipal and other tax-exempt and taxable debt securities. As an underwriter, First Southwest may be liable jointly and severally under federal, state and foreign securities laws for false and misleading statements concerning the securities, or the issuer of the securities, that it underwrites. First Southwest is sometimes brought into lawsuits in connection with its correspondent clearing business based on actions of its correspondents. In addition, First Southwest may act as a fiduciary in other capacities. Liability under such laws or under common law

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fiduciary principles could have a material adverse effect on the business, financial condition, liquidity and results of operations of the combined company.

         PlainsCapital's mortgage origination segment is subject to investment risk on loans that it originates.

        PlainsCapital intends to sell, and not hold for investment, all residential mortgage loans that it originates through PrimeLending. At times, however, PrimeLending may originate a loan or execute an interest rate lock commitment ("IRLC") with a customer pursuant to which it agrees to originate a mortgage loan on a future date at an agreed-upon interest rate without having identified a purchaser for such loan or the loan underlying such IRLC. An identified purchaser may also decline to purchase a loan for a variety of reasons. In these instances, PrimeLending will bear interest rate risk on an IRLC until, and unless, it is able to find a buyer for the loan underlying such IRLC and the risk of investment on a loan until, and unless, it is able to find a buyer for such loan. In addition, if a customer defaults on a mortgage payment shortly after the loan is originated, the purchaser of the loan may have a put right, whereby the purchaser can require PrimeLending to repurchase the loan at the full amount that it paid. During periods of market downturn, PrimeLending has at times chosen to hold mortgage loans when the identified purchasers have declined to purchase such loans because it could not obtain an acceptable substitute bid price for such loan. The failure of mortgage loans that PrimeLending holds on its books to perform adequately will have a material adverse effect on the financial condition, liquidity and results of operations of the combined company.

         First Southwest is subject to various risks associated with the securities industry, particularly those impacting the public finance industry.

        PlainsCapital's financial advisory business, conducted primarily through First Southwest, is subject to uncertainties that are common in the securities industry. These uncertainties include:

    intense competition in the public finance and other sectors of the securities industry;

    the volatility of domestic and international financial, bond and stock markets;

    extensive governmental regulation;

    litigation; and

    substantial fluctuations in the volume and price level of securities.

        As a result, the revenues and operating results of PlainsCapital's financial advisory segment may vary significantly from quarter to quarter and from year to year. Unfavorable financial or economic conditions could reduce the number and size of transactions in which PlainsCapital provides financial advisory, underwriting and other services. Disruptions in fixed income and equity markets could lead to a decline in the volume of transactions executed for customers and therefore, to declines in revenues from commissions and clearing services. First Southwest is much smaller and has much less capital than many competitors in the securities industry. During the recent market downturn, First Southwest's business has been, and could continue to be, adversely affected in many ways. In addition, First Southwest is an operating subsidiary of PlainsCapital Bank, which means that its activities are limited to those that are permissible for PlainsCapital Bank.

         Financial markets are susceptible to disruptive events that may lead to little or no liquidity for auction rate bonds.

        As of December 31, 2011, PlainsCapital Bank held in its securities portfolio auction rate bonds backed by pools of student loans under the Federal Family Education Loan Program with approximately $107.3 million in face value and an estimated fair market value of $90.7 million. These auction rate bonds were acquired by PlainsCapital Bank in connection with PlainsCapital's acquisition

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of First Southwest at the end of 2008. The market for auction rate securities began experiencing disruptions in late 2007 through the failure of auctions for auction rate securities issued by leveraged closed-end funds, municipal governments, state instrumentalities and student loan companies backed by pools of student loans guaranteed by the U.S. Department of Education. These conditions will likely continue until either these securities are restructured or refunded or a liquid secondary market re-emerges for these securities. If PlainsCapital Bank were forced to sell these securities, the results of operations of the combined company could be adversely affected. The estimated fair value of these auction rate bonds may further decline and require write-downs and losses as additional market information is obtained or in the event the current market conditions continue or worsen, in which case, the results of operations of the combined company would be adversely affected.

         A decline in the market for advisory services could adversely affect the combined company's business and results of operations.

        First Southwest has historically earned a significant portion of its revenues from advisory fees paid to it by its clients, in large part upon the successful completion of the client's transaction. Financial advisory revenues from First Southwest's public finance group represented the largest component of First Southwest's net revenues for the year ended December 31, 2011. Unlike other investment banks, First Southwest earns most of its revenues from its advisory fees and, to a lesser extent, from other business activities such as commissions and underwriting. New issuances in the municipal market by cities, counties, school districts, state and other governmental agencies, airports, healthcare institutions, institutions of higher education and other clients that First Southwest's public finance group serves can be subject to significant fluctuations based on factors such as changes in interest rates, property tax bases, budget pressures on certain issuers caused by uncertain economic times and other factors. PlainsCapital expects that First Southwest's reliance on advisory fees will continue for the foreseeable future, and a decline in public finance advisory engagements or the market for advisory services generally would have an adverse effect on the business and results of operations of the combined company.

         Negative publicity regarding PlainsCapital, or financial institutions in general, could damage the reputation and adversely impact the business and results of operations of the combined company.

        The combined company's ability to attract and retain customers and conduct its business could be adversely affected to the extent its reputation is damaged. Reputational risk, or the risk to the business of the combined company, earnings and capital from negative public opinion regarding the combined company, or financial institutions in general, is inherent in the combined company's business. Adverse perceptions concerning the combined company's reputation could lead to difficulties in generating and maintaining accounts as well as in financing them. In particular, negative perceptions concerning the combined company's reputation could lead to decreases in the level of deposits that consumer and commercial customers and potential customers choose to maintain with PlainsCapital. Negative public opinion could result from actual or alleged conduct in any number of activities or circumstances, including, lending or foreclosure practices; sales practices; corporate governance and potential conflicts of interest; ethical failures or fraud, including alleged deceptive or unfair lending or pricing practices; regulatory compliance; protection of customer information; cyber-attacks, whether actual, threatened, or perceived; negative news about the combined company or the financial institutions industry generally; and general company performance; or from actions taken by government regulators and community organizations in response to such activities or circumstances. The negative publicity surrounding such activities or circumstances could adversely affect the combined company's reputation and brand image. Furthermore, the combined company's failure to address, or the perception that it has failed to address, these issues appropriately could impact the combined company's ability to keep and attract customers and/or employees and could expose it to litigation and/or regulatory action, which could have an adverse effect on the business and results of operations of the combined company.

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         An interruption in, or cybersecurity breach of, PlainsCapital's information systems may result in a loss of customer business or subject the combined company to financial liability.

        PlainsCapital relies heavily on communications and information systems to conduct its business. Any failure or interruption or breach in security of these systems, including those that could result from planned changes, upgrades and maintenance of these systems, could result in failures or disruptions in PlainsCapital's customer relationship management, securities trading, general ledger, deposits, servicing or loan origination systems. If such failures or interruptions occur, PlainsCapital may not be able to adequately address them in a timely fashion or at all. The occurrence of any failures or interruptions could result in a loss of customer business, impose substantial costs and expenses upon PlainsCapital, such as for new internal use software, reimbursements to customers, reissuing debit cards, other remedial measures and applicable insurance deductibles, expose PlainsCapital to civil litigation and possible financial liability and could have a material adverse effect on the public relations, reputation, results of operations and financial condition of the combined company.

         Changes in government monetary policies may have an adverse effect on the combined company's earnings.

        PlainsCapital's earnings are affected by domestic economic conditions and the monetary and fiscal policies of the U.S. government and its agencies. The monetary policies of the Federal Reserve Board have had, and are likely to continue to have, an important impact on the operating results of financial institutions through its power to implement national monetary policy in order to, among other things, curb inflation or combat a recession. The monetary policies of the Federal Reserve Board affect the levels of bank loans, investments and deposits through its control over the issuance of U.S. government securities, its regulation of the discount rate applicable to member banks and its influence over reserve requirements to which member banks are subject. Neither PlainsCapital nor Hilltop can predict the nature or impact of future changes in monetary and fiscal policies, and any such changes may have an adverse effect upon the combined company's liquidity, capital resources and results of operations.

         PlainsCapital faces strong competition from other financial institutions and financial service companies, which may adversely affect the operations and financial condition of the combined company.

        PlainsCapital's banking and mortgage origination businesses face vigorous competition from banks and other financial institutions, including savings and loan associations, savings banks, finance companies and credit unions. A number of these banks and other financial institutions have substantially greater resources and lending limits, larger branch systems and a wider array of banking services than PlainsCapital. PlainsCapital also competes with other providers of financial services, such as money market mutual funds, brokerage firms, consumer finance companies, insurance companies and governmental organizations, each of which may offer more favorable financing than PlainsCapital is able to provide. In addition, some of PlainsCapital's non-bank competitors are not subject to the same extensive regulations that govern PlainsCapital. The banking business in Texas, particularly in the Austin, Dallas/Fort Worth, Lubbock and San Antonio metropolitan and surrounding areas, has become increasingly competitive over the past several years, and PlainsCapital expects the level of competition it faces to further increase. PlainsCapital's profitability depends on our ability to compete effectively in these markets. This competition may reduce or limit PlainsCapital's margins on banking services, reduce its market share and adversely affect the results of operations and financial condition of the combined company.

        Additionally, the financial advisory and investment banking industries are intensely competitive industries and will likely remain competitive. PlainsCapital's financial advisory business competes directly with numerous other financial advisory and investment banking firms, broker-dealers and banks, including large national and major regional firms and smaller niche companies, some of whom are not broker-dealers and, therefore, not subject to the broker-dealer regulatory framework. In

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addition to competition from firms currently in the industry, there has been increasing competition from others offering financial services, including automated trading and other services based on technological innovations. First Southwest competes on the basis of a number of factors, including the quality of advice and service, innovation, reputation and price. Many of First Southwest's competitors in the investment banking industry have a greater range of products and services, greater financial and marketing resources, larger customer bases, greater name recognition, more managing directors to serve their clients' needs, greater global reach and more established relationships with their customers than First Southwest. Additionally, some of First Southwest's competitors have reorganized or plan to reorganize from investment banks into bank holding companies which may provide them with a competitive advantage. These larger and better capitalized competitors may be more capable of responding to changes in the investment banking market, to compete for skilled professionals, to finance acquisitions, to fund internal growth and to compete for market share generally. Increased pressure created by any current or future competitors, or by First Southwest's competitors collectively, could materially and adversely affect our business and results of operations. Increased competition may result in reduced revenue and loss of market share. Further, as a strategic response to changes in the competitive environment, First Southwest may from time to time make certain pricing, service or marketing decisions that also could materially and adversely affect the business and results of operations of the combined company.

         PlainsCapital's mortgage origination business is subject to seasonal fluctuations and fluctuations in interest rates, and, as a result, its results of operations for any given quarter may not be indicative of the results that may be achieved for the full fiscal year.

        PlainsCapital's mortgage origination business is subject to several variables that can impact loan origination volume, including seasonal and interest rate fluctuations. It typically experiences increased loan origination volume from purchases of homes during the spring and summer, when more people tend to move and buy or sell homes. In addition, an increase in the general level of interest rates may, among other things, adversely affect the demand for mortgage loans and PlainsCapital's ability to originate mortgage loans. In particular, if mortgage interest rates increase, the demand for residential mortgage loans and the refinancing of residential mortgage loans will likely decrease, which will have an adverse effect on PlainsCapital's mortgage origination activities. Conversely, a decrease in the general level of interest rates, among other things, may lead to increased competition for mortgage loan origination business. As a result of these variables, PlainsCapital's results of operations for any single quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

         PlainsCapital is subject to claims and litigation that could have a material adverse effect on the business of the combined company.

        PlainsCapital faces significant legal risks in the business segments in which it operates, and the volume of claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial institutions remains high. These risks often are difficult to assess or quantify, and their existence and magnitude often remain unknown for substantial periods of time. Substantial legal liability or significant regulatory action against the combined company or any of its subsidiaries (including PlainsCapital) could have a material adverse effect on the results of operations of the combined company or cause significant reputational harm to it, which could seriously harm the business and prospects of the combined company. Further, regulatory inquiries and subpoenas, other requests for information, or testimony in connection with litigation may require incurrence of significant expenses, including fees for legal representation and fees associated with document production. These costs may be incurred even if PlainsCapital is not a target of the inquiry or a party to the litigation. Any financial liability or reputational damage could have a material adverse effect on PlainsCapital's business, which, in turn, could have a material adverse effect on the financial condition and results of operations of the combined company. Specifically, First Southwest is involved in legal proceedings

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related to the procurement of guaranteed investment contracts and other investment products for the reinvestment of bond proceeds by municipalities.

         PlainsCapital may be subject to environmental liabilities in connection with the foreclosure on real estate assets securing its loan portfolio.

        Hazardous or toxic substances or other environmental hazards may be located on the real estate that secures PlainsCapital's loans. If PlainsCapital acquires such properties as a result of foreclosure, or otherwise, it could become subject to various environmental liabilities. For example, PlainsCapital could be held liable for the cost of cleaning up or otherwise addressing contamination at or from these properties. PlainsCapital could also be held liable to a governmental entity or third party for property damage, personal injury or other claims relating to any environmental contamination at or from these properties. In addition, PlainsCapital could be held liable for costs relating to environmental contamination at or from our current or former properties. PlainsCapital may not detect all environmental hazards associated with these properties. If PlainsCapital ever became subject to significant environmental liabilities, the business, financial condition, liquidity and results of operations of the combined company could be harmed.

         PlainsCapital's medium-sized business target market may have fewer financial resources to weather a downturn in the economy.

        PlainsCapital targets its business development and marketing strategy primarily to serve the banking and financial services needs of businesses with an annual revenue between $5 million and $250 million. These medium-sized businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities. If general economic conditions adversely impact these businesses within Texas, the results of operations and financial condition of the combined company may be adversely affected.


Other Risk Factors of Hilltop

        Hilltop's business is and will be subject to the risks described above. In addition, Hilltop is, and will continue to be, subject to the risks described in Hilltop's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. See "Where You Can Find More Information" included elsewhere in this joint proxy statement/prospectus for the location of information incorporated by reference in this joint proxy statement/prospectus.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This document contains or incorporates by reference a number of "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the financial conditions, results of operations, earnings outlook and prospects of Hilltop, PlainsCapital and the potential combined company and may include statements for the period following the completion of the merger. You can find many of these statements by looking for words such as "plan," "believe," "expect," "intend," "anticipate," "estimate," "project," "potential," "possible" or other similar expressions which identify these forward-looking statements and appear in a number of places in this joint proxy statement/prospectus (and the documents to which we refer you in this joint proxy statement/prospectus) and include, but are not limited to, all statements relating directly or indirectly to the timing or likelihood of completing the merger, plans for future growth and other business development activities as well as capital expenditures, financing sources and the effects of regulation and competition and all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers.

        The forward-looking statements involve certain risks and uncertainties. The ability of either Hilltop or PlainsCapital to predict results or the actual effects of its plans and strategies, or those of the combined company, is subject to inherent uncertainty. Factors that may cause actual events or results to differ materially from such forward-looking statements include those set forth under "Risk Factors" included elsewhere in this joint proxy statement/prospectus, as well as, among others, the following:

    those discussed and identified in public filings with the SEC made by Hilltop;

    fluctuations in the market price of Hilltop common stock and the related effect on the market value of the merger consideration that common shareholders will receive upon completion of the merger;

    business uncertainties and contractual restrictions while the merger is pending;

    the possibility that the proposed merger does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all;

    the terms of the proposed merger may need to be modified to satisfy such approvals or conditions;

    the anticipated benefits from the proposed merger are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations (including changes to capital requirements) and their enforcement, and the degree of competition in the geographic and business areas in which the companies operate;

    the ability to promptly and effectively combine the businesses of PlainsCapital and Hilltop;

    reputational risks and the reaction of the companies' respective customers to the merger;

    diversion of management time on merger related issues;

    changes in general economic, market and business conditions;

    changes in asset quality and credit risk and risks associated with concentrations in real estate related loans;

    the inability to sustain revenue and earnings;

    changes in interest rates and capital markets and the value of securities held;

    inflation;

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    customer borrowing, repayment, investment and deposit practices;

    the introduction, withdrawal, success and timing of business initiatives;

    changes in accounting policies;

    technology changes;

    competitive conditions; and

    the impact, extent and timing of actions of the Federal Reserve Board and federal and state banking regulators, and legislative and regulatory actions and reforms, including those associated with the Dodd-Frank Act.

        Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this document or the date of any document incorporated by reference in this document.

        All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this document and attributable to Hilltop or PlainsCapital or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this document. Except to the extent required by applicable law or regulation, Hilltop and PlainsCapital undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.

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THE HILLTOP SPECIAL MEETING

        The Hilltop board of directors is using this document to solicit proxies from the holders of shares of Hilltop common stock for use at the Hilltop special meeting.

        Together with this document, Hilltop is also sending you a notice of the special meeting and a form of proxy that is solicited by the Hilltop board of directors. The Hilltop special meeting will be held on September 20, 2012, at 10:00 a.m., local time at the Crescent Club at 200 Crescent Court, 17th Floor, Dallas, Texas 75201.


Matters to be Considered

        At the Hilltop special meeting, Hilltop will ask its shareholders to consider and vote on:

    a proposal to approve the issuance of Hilltop common stock to PlainsCapital shareholders in connection with the merger (the "share issuance proposal");

    a proposal to approve the adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan (the "Equity Incentive Plan proposal");

    a proposal to approve the adoption of the Hilltop Holdings Inc. Annual Incentive Plan (the "Annual Incentive Plan proposal"); and

    a proposal to approve the adjournment of the Hilltop special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the Hilltop special meeting to approve the share issuance proposal (the "Hilltop adjournment proposal").


Proxies

        Each copy of this document mailed to holders of Hilltop common stock is accompanied by a form of proxy with instructions for voting by mail, by telephone or through the internet. If you hold stock in your name as a shareholder of record and are voting by mail, you should complete and return all proxy cards that you receive to ensure that your vote is counted at the Hilltop special meeting, or at any adjournment or postponement of the Hilltop special meeting, regardless of whether you plan to attend in person. You may also vote your shares by telephone or through the internet. Information and applicable deadlines for voting by telephone or through the internet are set forth in the enclosed proxy card.

        If you hold your stock in "street name" through a bank, broker or other nominee, you must direct your bank, broker or nominee to vote in accordance with the instructions you have received from your bank, broker or nominee.

        If you hold stock in your name as a shareholder of record, you may revoke any proxy at any time before it is voted by signing and returning a proxy card with a later date, delivering a written revocation letter to Corey G. Prestidge, General Counsel and Secretary of Hilltop, or by attending the special meeting in person, notifying the Secretary, and voting by ballot at the special meeting. If you have voted your shares by telephone or through the internet, you may revoke your prior telephone or internet vote by recording a different vote, or by signing and returning a proxy card dated as of a date that is later than your last telephone or internet vote.

        Any shareholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying the Secretary) of a shareholder at the special meeting will not constitute revocation of a previously given proxy.

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        Written notices of revocation and other communications about revoking your proxy should be addressed to:

    Hilltop Holdings Inc.
    200 Crescent Court, Suite 1330
    Dallas, Texas 75201
    Attn: Corey G. Prestidge, General Counsel & Secretary

        If your shares are held in "street name" by a bank, broker or other nominee, you should follow the instructions of your bank, broker or nominee regarding the revocation of proxies.

        All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via internet or telephone.

        If you sign and return your proxy card, but make no specification on your proxy card as to how you want your shares voted your proxy will be voted "FOR" approval of the share issuance proposal, "FOR" approval of the Equity Incentive Plan proposal, "FOR" approval of the Annual Incentive Plan proposal and "FOR" approval of the Hilltop adjournment proposal. In accordance with to the Hilltop bylaws, business to be conducted at the Hilltop special meeting will be limited to the objects stated in Hilltop's notice of the special meeting.


Solicitation of Proxies

        Hilltop will bear the entire cost of soliciting proxies from its shareholders. In addition to solicitation of proxies by mail, Hilltop will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of Hilltop common stock and secure their voting instructions. Hilltop will reimburse the record holders for their reasonable expenses in taking those actions. Hilltop has also made arrangements with D.F. King & Co., Inc. to assist it in soliciting proxies and has agreed to pay them $12,000, plus reasonable expenses for these services. If necessary, Hilltop may use several of its regular employees, who will not be specially compensated, to solicit proxies from Hilltop shareholders, either personally or by telephone, facsimile, letter or other electronic means.


Record Date

        The close of business on August 3, 2012 has been fixed as the record date for determining the Hilltop shareholders entitled to receive notice of and to vote at the Hilltop special meeting. At that time, 56,363,647 shares of Hilltop common stock were outstanding, held by approximately 166 holders of record.


Quorum

        In order to conduct business at the Hilltop special meeting, there must be a quorum. A quorum is the number of shares that must be present at the meeting, either in person or by proxy. To have a quorum at the Hilltop special meeting requires the presence of shareholders or their proxies who are entitled to cast at least a majority of the votes that all shareholders are entitled to cast. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.


Vote Required

        Approval of each of (i) the share issuance proposal, (ii) the Equity Incentive Plan proposal and (iii) the Annual Incentive Plan proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock voting on that proposal, provided that the total votes cast on the proposal (including abstentions) must represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting. Approval of the Hilltop

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adjournment proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock represented in person or by proxy at the Hilltop special meeting and entitled to vote on the proposal. Each holder of Hilltop common stock will be entitled to one vote per share on each of the proposals presented at the Hilltop annual meeting.

        The Hilltop board of directors urges Hilltop shareholders to promptly vote by: (1) accessing the internet site listed in the proxy card instructions if voting through the internet; (2) calling the toll-free number listed in the proxy card instructions if voting by telephone; or (3) completing, dating, and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope. If you hold your stock in "street name" through a bank or broker, please vote by following the voting instructions of your bank or broker.

        Shareholders will vote at the meeting by ballot. Votes properly cast at the meeting, in person or by proxy, will be tallied by Hilltop's inspector of election. As of the record date, there were 56,363,647 shares of Hilltop common stock outstanding and entitled to vote at the Hilltop special meeting.

        As of the record date, to the knowledge of Hilltop, directors and executive officers of Hilltop (including shares held by Diamond A Financial, L.P. as discussed below) had the right to vote approximately 16,910,159 shares of Hilltop common stock, or approximately 30% of the outstanding shares of Hilltop common stock entitled to vote at the special meeting. We currently expect that each of these individuals will vote their shares of Hilltop common stock in favor of the proposals to be presented at the special meeting.

        Diamond A Financial, L.P., a limited partnership whose sole general partner is Gerald J. Ford, Chairman of the Hilltop board of directors, has entered into a voting and support agreement with PlainsCapital. Pursuant to such agreement, Diamond A Financial has agreed to vote all of its shares of Hilltop common stock in favor of the share issuance proposal and certain related matters, subject to certain exceptions. As of the record date for the Hilltop special meeting and to the knowledge of Hilltop, Diamond A Financial owned and had the ability to vote approximately 15,048,102 shares of Hilltop common stock, or approximately 26.7% of the outstanding shares of Hilltop common stock entitled to vote at the special meeting.


Recommendation of the Hilltop Board of Directors

        The Hilltop board of directors has unanimously adopted and approved the merger agreement and the transactions it contemplates, including the merger. The Hilltop board of directors determined that the merger, merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Hilltop and its shareholders and recommends that you vote "FOR" the share issuance proposal, "FOR" the Equity Incentive Plan proposal, "FOR" the Annual Incentive Plan proposal and "FOR" the Hilltop adjournment proposal. See "The Merger—Hilltop's Reasons for the Merger; Recommendation of the Hilltop Board of Directors" included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the Hilltop board of directors' recommendation.


Attending the Special Meeting

        All holders of Hilltop common stock, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. If you hold your Hilltop shares in an account at a brokerage firm or bank, your name will not appear on our shareholder list. Please bring an account statement or a letter from your broker showing your Hilltop shareholdings. Please show this documentation at the meeting registration desk to attend the meeting. Everyone who attends the special meeting must abide by the rules for the conduct of the meeting. These rules will be printed on the meeting agenda.

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PROPOSALS SUBMITTED TO HILLTOP SHAREHOLDERS

Issuance of Hilltop Common Stock in Connection with the Merger (Proposal 1)

        This joint proxy statement/prospectus is being furnished to Hilltop shareholders as part of the solicitation of proxies by the Hilltop board of directors for use at the Hilltop special meeting to consider and vote on the proposal to issue Hilltop common stock in connection with the merger as contemplated by the merger agreement. IF HILLTOP SHAREHOLDERS FAIL TO APPROVE THE ISSUANCE OF HILLTOP COMMON STOCK IN CONNECTION WITH THE MERGER AS CONTEMPLATED BY THE MERGER AGREEMENT, THE MERGER CANNOT BE COMPLETED. Holders of Hilltop common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

        The merger agreement provides that Hilltop will issue shares of Hilltop common stock in the merger. Upon the completion of the merger, each share of PlainsCapital common stock issued and outstanding immediately prior to the completion of the merger will be converted into the right to receive $9.00 in cash and 0.776 of a share of Hilltop common stock, subject to certain adjustments if PlainsCapital issues additional shares of its common stock other than pursuant to the exercise of certain equity awards outstanding on the date of the merger agreement. The exchange ratio will not be adjusted to reflect changes in the market prices of Hilltop common stock or PlainsCapital common stock prior to closing.

        Under the NYSE Listed Company Manual, a company listed on the NYSE is required to obtain shareholder approval prior to the issuance of common stock, or of securities convertible into or exercisable for common stock, in any transaction or series of related transactions if the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock or of securities convertible into or exercisable for common stock. If we complete the merger, we estimate that Hilltop would issue or reserve for issuance approximately 27.3 million shares of Hilltop common stock in connection with the merger, including shares reserved for issuance under various equity plans. On an as-converted basis, the aggregate number of shares of Hilltop common stock that Hilltop will issue in the merger will exceed 20% of the shares of Hilltop common stock outstanding before such issuance, and for this reason Hilltop must obtain the approval of Hilltop shareholders for the issuance of shares of Hilltop common stock to holders of PlainsCapital common stock in connection with the merger.

        Approval of the share issuance proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock voting on the proposal, provided that the total votes cast on the proposal (including abstentions) must represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting. Therefore, assuming that a quorum is present, your failure to vote, an abstention or a broker non-vote will have no effect on the approval of the share issuance proposal. However, it may make it more difficult for Hilltop to meet the NYSE requirement that the total votes cast on such proposal (including abstentions) represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting.

        The Hilltop board of directors recommends that its shareholders vote "FOR" the issuance of Hilltop common stock to the shareholders of PlainsCapital in connection with the merger.

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Approval of the Adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan (Proposal 2)

        Hilltop is asking its shareholders to approve the adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan ("Equity Incentive Plan"). The Equity Incentive Plan was adopted, subject to shareholder approval, by the Hilltop board of directors on August 2, 2012.

        The following is a summary of the material terms of the Equity Incentive Plan. The full text of the Equity Incentive Plan is attached as Annex F to this joint proxy statement/prospectus, and the following summary is qualified in its entirety by reference to the terms of the Equity Incentive Plan. Shareholders are urged to review the Equity Incentive Plan before determining how to vote on this proposal.

        Hilltop shareholders are being asked to approve the Equity Incentive Plan, including the performance criteria described below and the issuance of shares of common stock to eligible participants in accordance with the Equity Incentive Plan, in order to assist Hilltop in meeting the purposes set forth below, to provide Hilltop with additional flexibility to grant equity awards to its expanded employee population, including the approximately 3,500 employees of PlainsCapital who will become employees of Hilltop if the merger is consummated, and to permit Hilltop to design incentive awards that are eligible to meet the requirements of "performance-based" compensation under Section 162(m) of the Code.

        Under Section 162(m) of the Code, Hilltop is not entitled to a federal income tax deduction for compensation in excess of $1 million paid in any year to a "covered employee" (within the meaning of Section 162(m) of the Code), subject to certain exceptions. Compensation that qualifies as "performance-based" under Section 162(m) of the Code is exempt from this limitation. The Equity Incentive Plan sets forth a list of alternative performance goals, the attainment of which may determine the degree of payout and/or vesting with respect to awards that are designed to qualify for the performance-based exception to Section 162(m) of the Code. Under the Equity Incentive Plan, the committee may grant awards in a manner that qualifies them for the exemption for performance-based compensation, or it may grant awards that do not qualify for the exemption. The applicable conditions of the performance-based compensation exemption include, among others, a requirement that the shareholders of Hilltop approve the material terms of the Equity Incentive Plan.

        Hilltop believes the Equity Incentive Plan will help Hilltop to focus directors, officers and other employees and consultants on business performance that creates shareholder value, to encourage innovative approaches to the business of Hilltop, to encourage ownership of Hilltop common stock by directors, officers and other employees and consultants and to continue to attract and retain employees in a competitive labor market, which is essential to Hilltop's long-term growth and success.

Summary of the Equity Incentive Plan

        General.    Awards granted under the Equity Incentive Plan may be in the form of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units, performance units, other stock-based awards or any combination of those awards. The Equity Incentive Plan provides that awards may be made under the Equity Incentive Plan for ten years.

        Administration.    Under the terms of the Equity Incentive Plan, the Equity Incentive Plan will be administered by the Hilltop board of directors or, if the Hilltop board so elects, by the Compensation Committee or such other committee of the Hilltop board of directors as may be designated by the Hilltop board of directors and which consists entirely of two or more "outside directors" within the meaning of Section 162(m) of the Code and who are "non-employee directors" as defined in Rule 16b-3 under the Securities Exchange Act of 1934. Unless and until the Hilltop board of directors designates a committee to administer the Equity Incentive Plan, the Equity Incentive Plan will be administered by the Hilltop board of directors (which will hereinafter be referred to in this summary as the "Committee").

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        Under the terms of the Equity Incentive Plan, the Committee can make rules and regulations and establish such procedures for the administration of the Equity Incentive Plan as it deems appropriate. Any determination made by the Committee under the Equity Incentive Plan will be made in the sole discretion of the Committee and such determinations will be final and binding on all persons.

        Shares Available; Individual Share Limits.    The Equity Incentive Plan provides that the aggregate number of shares of Hilltop common stock that may be subject to awards under the Equity Incentive Plan cannot exceed 4,000,000, subject to adjustment in certain circumstances to prevent dilution or enlargement. No participant may be granted, in each case during any calendar year, performance-based equity awards intended to qualify under Section 162(m) of the Code (other than stock options and SARs) covering in excess of 500,000 shares or stock options and SARs covering in excess of 750,000 shares. The maximum number of shares that may be granted pursuant to incentive stock options is 2,000,000.

        If the Equity Incentive Plan is approved by Hilltop shareholders, no new awards may be granted under the 2003 Hilltop Equity Incentive Plan (the "Prior Plan"). However, awards previously granted and outstanding under the Prior Plan will remain in full force and effect under such Prior Plan according to their respective terms and dividend equivalents may continue to be issued under the Prior Plan in respect of awards granted under such Prior Plan which are outstanding as of the Effective Date.

        Shares underlying awards that expire or are forfeited or terminated without being exercised or awards that are settled for cash will again be available for the grant of additional awards within the limits provided by the Equity Incentive Plan. Shares withheld by or delivered to us to satisfy the exercise price of stock options or tax withholding obligations with respect to any award granted under the Equity Incentive Plan will nonetheless be deemed to have been issued under the Equity Incentive Plan.

        Eligibility.    The Equity Incentive Plan provides for awards to the directors, officers, employees and consultants of the company and its subsidiaries and affiliates and prospective directors, officers, employees and consultants who have accepted offers of employment or consultancy from the company or its subsidiaries or affiliates. As of the date of this joint proxy statement/prospectus, there were approximately 3,500 directors, officers and employees eligible to participate in the Equity Incentive Plan. Hilltop's current executive officers and each of Hilltop's directors are among the individuals eligible to receive awards under the Equity Incentive Plan.

        Stock Options.    Subject to the terms and provisions of the Equity Incentive Plan, stock options to purchase shares of Hilltop common stock may be granted to eligible individuals at any time and from time to time as determined by the Committee. Stock options may be granted as incentive stock options, which are intended to qualify for favorable treatment to the recipient under Federal tax law, or as nonqualified stock options, which do not qualify for this favorable tax treatment. Subject to the limits provided in the Equity Incentive Plan, the Committee determines the number of stock options granted to each recipient. Each stock option grant will be evidenced by a stock option agreement that specifies the stock option exercise price, whether the stock options are intended to be incentive stock options or nonqualified stock options, the duration of the stock options, the number of shares to which the stock options pertain and such additional limitations, terms and conditions as the Committee may determine.

        The Committee determines the exercise price for each stock option granted, except that the stock option exercise price may not be less than 100 percent of the fair market value of a share of Hilltop common stock on the date of grant. As of August 1, 2012, the fair market value (as that term is defined under the Equity Incentive Plan) of a share of Hilltop common stock was $10.50. All stock options granted under the Equity Incentive Plan will expire no later than ten years from the date of grant. Stock options are nontransferable except by will or by the laws of descent and distribution or, in

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the case of nonqualified stock options, as otherwise expressly permitted by the Committee. The granting of a stock option does not accord the recipient the rights of a shareholder, and such rights accrue only after the exercise of a stock option and the registration of shares of Hilltop common stock in the recipient's name.

        Stock Appreciation Rights.    The Committee in its discretion may grant SARs under the Equity Incentive Plan. SARs may be "tandem SARs," which are granted in conjunction with a stock option, or "free-standing SARs," which are not granted in conjunction with a stock option. A SAR entitles the holder to receive from us upon exercise an amount equal to the excess, if any, of the aggregate fair market value of a specified number of shares of Hilltop common stock to which such SAR pertains over the aggregate exercise price for the underlying shares. The exercise price of a Free-Standing SAR shall not be less than 100% of the fair market value of a share of Hilltop common stock on the date of grant.

        A tandem SAR may be granted at the grant date of the related stock option. A tandem SAR will be exercisable only at such time or times and to the extent that the related stock option is exercisable and will have the same exercise price as the related stock option. A tandem SAR will terminate or be forfeited upon the exercise or forfeiture of the related stock option, and the related stock option will terminate or be forfeited upon the exercise or forfeiture of the tandem SAR.

        Each SAR will be evidenced by an award agreement that specifies the base price, the number of shares to which the SAR pertains and such additional limitations, terms and conditions as the Committee may determine. The company may make payment of the amount to which the participant exercising SARs is entitled by delivering shares of Hilltop common stock, cash or a combination of stock and cash as set forth in the award agreement relating to the SARs. SARs are not transferable except by will or the laws of descent and distribution or, with respect to SARs that are not granted in "tandem" with a stock option, as expressly permitted by the Committee.

        Restricted Stock.    The Equity Incentive Plan provides for the award of shares of Hilltop common stock that are subject to forfeiture and restrictions on transferability as set forth in the Equity Incentive Plan, the applicable award agreement and as may be otherwise determined by the Committee. Except for these restrictions and any others imposed by the Committee, upon the grant of restricted stock, the recipient will have rights of a shareholder with respect to the restricted stock, including the right to vote the restricted stock and to receive all dividends and other distributions paid or made with respect to the restricted stock on such terms as will be set forth in the applicable award agreement. During the restriction period set by the Committee, the recipient may not sell, transfer, pledge, exchange or otherwise encumber the restricted stock.

        Restricted Stock Units.    The Equity Incentive Plan authorizes the Committee to grant restricted stock units. Restricted stock units are not shares of Hilltop common stock and do not entitle the recipients to the rights of a shareholder, although the award agreement may provide for rights with respect to dividend equivalents. The recipient may not sell, transfer, pledge or otherwise encumber restricted stock units granted under the Equity Incentive Plan prior to their vesting. Restricted stock units will be settled in cash, shares of Hilltop common stock, or a combination thereof as provided in the applicable award agreement, in an amount based on the fair market value of Hilltop common stock on the settlement date.

        Performance Units.    The Equity Incentive Plan provides for the award of performance units that are valued by reference to a designated amount of cash or other property other than shares of Hilltop common stock. The payment of the value of a performance unit is conditioned upon the achievement of performance goals set by the Committee in granting the performance unit and may be paid in cash, shares of Hilltop common stock, other property or a combination thereof. The maximum value of cash, shares or other property that may be paid to a participant pursuant to a performance unit intended to

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be a qualified performance-based award under Section 162(m) of the Code in any calendar year is $10,000,000. Any terms relating to the termination of a participant's employment shall be set forth in the applicable award agreement.

        Other Stock-Based Awards.    The Equity Incentive Plan also provides for the award of shares of Hilltop common stock and other awards that are valued by reference to Hilltop common stock, including unrestricted stock, dividend equivalents and convertible debentures.

        Performance Goals.    The Equity Incentive Plan provides that performance goals may be established by the Committee in connection with the grant of any award under the Equity Incentive Plan. In the case of an award intended to qualify for the performance-based compensation exception of Section 162(m) of the Code:

    such goals shall be based on the attainment of specified levels of one or more of the following measures: stock price, earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization), earnings per share (whether on pre-tax, after-tax, operations or other basis), operating earnings, total return to shareholders, ratio of debt to debt plus equity, net borrowing, credit quality or debt ratings, return on assets or operating assets, asset quality, net interest margin, loan portfolio growth, efficiency ratio, deposit portfolio growth, liquidity, market share, objective customer service measures or indices, shareholder value added, embedded value added, loss ratio, expense ratio, combined ratio, premiums, pre- or after-tax income, net income, cash flow (before or after dividends), expense or expense levels, economic value added, cash flow per share (before or after dividends), free cash flow, gross margin, risk-based capital, revenues, revenue growth, sales growth, return on capital (including return on total capital or return on invested capital), capital expenditures, cash flow return on investment, cost, cost control, gross profit, operating profit, economic profit, profit before tax, net profit, cash generation, unit volume, sales, net asset value per share, asset quality, cost saving levels, market-spending efficiency, core non-interest income or change in working capital, in each case with respect to the company or any one or more subsidiaries, divisions, business units or business segments of the company either in absolute terms or relative to the performance of one or more other companies (including an index covering multiple companies);

    the performance goals may be adjusted as determined by the Committee in a manner consistent with Section 162(m) of the Code and the terms of the Equity Incentive Plan; and

    such performance goals will be set by the Committee within the time period and other requirements prescribed by Section 162(m) of the Code and the regulations promulgated thereunder.

        Change in Control.    In the event of a "change in control" of Hilltop (as defined in the Equity Incentive Plan and described below), unless determined otherwise by the Committee, (i) all outstanding stock options and SARs shall become fully vested and exercisable, (ii) all restrictions on any restricted stock, restricted stock units or other stock-based awards that are not subject to performance goals shall lapse, and such awards shall become free of all restrictions and become fully vested and transferable to the full extent of the original grant and (iii) all restrictions on any restricted stock, restricted stock units, performance units or other stock-based awards that are subject to performance goals shall lapse and be deemed to be achieved at the level set forth in the applicable award agreement, and such awards shall become free of all restrictions and become fully vested and transferable, in each case, to the extent set forth in the applicable award agreement. The Committee shall establish such terms and conditions as may be required to permit a participant to exercise a stock option or SAR that shall terminate in connection with the change in control.

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        For the purposes of the Equity Incentive Plan, a "change in control" will be deemed to occur upon:

    the acquisition by any individual, entity or group of "beneficial ownership" (pursuant to the meaning given in Rule 13d-3 under the Exchange Act) of 33% or more (on a fully diluted basis) of either (a) the outstanding shares of Hilltop's common stock or (b) the combined voting power of Hilltop's then outstanding voting securities, with each of clauses (a) and (b) subject to certain exceptions, such as acquisitions from Hilltop, or acquisitions by an employee benefit plan of Hilltop, a corporation controlled by Hilltop or an individual entity or group who currently holds or controls 10% of Hilltop's common stock;

    a majority of the directors who constituted Hilltop's board of directors at the time the Equity Incentive Plan was adopted are replaced by directors whose appointment or election is not endorsed by at least two-thirds of the incumbent directors then on the board of directors;

    consummation of a merger, consolidation or sale of all or substantially all of Hilltop's assets, other than a transaction in which all or substantially all of the shareholders of Hilltop receive 50% or more of the stock of the company resulting from the transaction, at least a majority of the board of directors of the resulting corporation were members of the incumbent board, and after which no individual, entity or group owns 33% or more of the stock of the resulting corporation, who did not own such stock immediately before the transaction; or

    approval by Hilltop's shareholders of Hilltop's complete dissolution or liquidation.

        Amendment.    The Hilltop board of directors or the Committee may amend, alter, or discontinue the Equity Incentive Plan, but no amendment, alteration or discontinuation shall be made which would materially impair the rights of the participant with respect to a previously granted award without such participant's consent, except such an amendment made to comply with applicable law, including, without limitation, Section 409A of the Code, stock exchange rules or accounting rules. In addition, no such amendment shall be made without the approval of the company's shareholders to the extent such approval is required by applicable law or the listing standards of the applicable stock exchange.

Federal Income Tax Consequences

        The following is a summary of certain federal income tax consequences of awards made under the Equity Incentive Plan based upon the laws in effect on the date hereof. The discussion is general in nature and does not take into account a number of considerations which may apply in light of the circumstances of a particular participant under the Equity Incentive Plan. The income tax consequences under applicable state and local tax laws may not be the same as under federal income tax laws.

        Nonqualified Stock Options.    A participant will not recognize taxable income at the time of grant of a nonqualified stock option, and Hilltop will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) upon exercise of a nonqualified stock option equal to the excess of the fair market value of the shares purchased over their exercise price, and Hilltop generally will be entitled to a corresponding deduction.

        Incentive Stock Options.    A participant will not recognize taxable income at the time of grant of an incentive stock option. A participant will not recognize taxable income (except for purposes of the alternative minimum tax) upon exercise of an incentive stock option. If the shares acquired by exercise of an incentive stock option are held for the longer of two years from the date the stock option was granted and one year from the date the shares were transferred, any gain or loss arising from a subsequent disposition of such shares will be taxed as long-term capital gain or loss, and Hilltop will not be entitled to any deduction. If, however, such shares are disposed of within such two- or one-year

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periods, then in the year of such disposition the participant will recognize compensation taxable as ordinary income equal to the excess of the lesser of the amount realized upon such disposition and the fair market value of such shares on the date of exercise over the exercise price, and Hilltop generally will be entitled to a corresponding deduction. The excess of the amount realized through the disposition date over the fair market value of the stock on the exercise date will be treated as capital gain.

        SARs.    A participant will not recognize taxable income at the time of grant of a SAR, and Hilltop will not be entitled to a tax deduction at such time. Upon exercise, a participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) equal to the fair market value of any shares delivered and the amount of cash paid by us, and Hilltop generally will be entitled to a corresponding deduction.

        Restricted Stock.    A participant will not recognize taxable income at the time of grant of shares of restricted stock, and Hilltop will not be entitled to a tax deduction at such time, unless the participant makes an election under Section 83(b) of the Code to be taxed at such time. If such election is made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of the grant equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for such shares. If such election is not made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time the restrictions lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for such shares. Hilltop is entitled to a corresponding deduction at the time the ordinary income is recognized by the participant, except to the extent the deduction limits of Section 162(m) of the Code apply. In addition, a participant receiving dividends with respect to restricted stock for which the above-described election has not been made and prior to the time the restrictions lapse will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee), rather than dividend income, and Hilltop will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply.

        Restricted Stock Units.    A participant will not recognize taxable income at the time of grant of a restricted stock unit, and Hilltop will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of settlement of the award equal to the fair market value of any shares delivered and the amount of cash paid by Hilltop, and Hilltop will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply.

        Performance Units.    A participant will not recognize taxable income at the time of grant of performance units, and Hilltop will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of settlement of the award equal to the fair market value of any shares or property delivered and the amount of cash paid by Hilltop, and Hilltop will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply.

        Section 162(m) Limitations.    As explained above, Section 162(m) of the Code generally places a $1 million annual limit on a company's tax deduction for compensation paid to certain senior executives, other than compensation that satisfies the applicable requirements for a performance-based compensation exception. The Equity Incentive Plan is designed so that stock options and SARs qualify for this exemption, and it also permits the Committee to grant other awards designed to qualify for this exception. However, the Committee reserves the right to grant awards that do not qualify for this exception, and, in some cases, the exception may cease to be available for some or all awards that

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otherwise so qualify. Thus, it is possible that Section 162(m) of the Code may disallow compensation deductions that would otherwise be available to the company.

        The foregoing general tax discussion is intended for the information of shareholders considering how to vote with respect to this proposal and not as tax guidance to participants in the Equity Incentive Plan. Participants are strongly urged to consult their own tax advisors regarding the federal, state, local, foreign and other tax consequences to them of participating in the Equity Incentive Plan.

New Plan Benefits

        It cannot be determined at this time what benefits or amounts, if any, will be received by or allocated to any person or group of persons under the Equity Incentive Plan if the Equity Incentive Plan is adopted or what benefits or amounts would have been received by or allocated to any person or group of persons for the last fiscal year if the Equity Incentive Plan had been in effect.

Required Vote

        Approval of the adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan and the material terms of the performance goals thereunder requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock voting on the proposal, provided that the total votes cast on the proposal (including abstentions) must represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting. Therefore, assuming that a quorum is present, your failure to vote, an abstention or a broker non-vote will have no effect on the approval of the Equity Incentive Plan proposal. However, it may make it more difficult for Hilltop to meet the NYSE requirement that the total votes cast on such proposal (including abstentions) represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting.

        The Hilltop board of directors unanimously recommends that its shareholders vote "FOR" the adoption of the Hilltop Holdings Inc. 2012 Equity Incentive Plan and the material terms of the performance goals thereunder.

Equity Compensation Plan Information

        The following table sets forth as of December 31, 2011, information concerning Hilltop's equity compensation plans, including the number of shares issued and available for issuance under our plans, options, warrants and rights; weighted average exercise price of outstanding options, warrants and rights; and the number of securities remaining available for future issuance.

Plan Category
  Number of Securities
to Be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
  Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
  Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
 

Equity compensation plans approved by security holders*

    700,000   $ 8.32     423,831  
               

Total

    700,000   $ 8.32     423,831  
               


    *
    Excludes shares of restricted stock granted, as all of these shares are vested. No exercise price is required to be paid upon the vesting of the restricted shares of common stock granted. These shares are issuable under the Hilltop 2003 equity incentive plan, which provides for the grant of equity-based incentives, including restricted shares of Hilltop common stock, stock options, grants of shares and other equity-based awards, to Hilltop's directors, officers and other employees and those of Hilltop's subsidiaries selected by Hilltop's Compensation Committee for participation in

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      the 2003 equity incentive plan. At inception, 1,992,387 shares were authorized for grant pursuant to this plan. All shares outstanding, whether vested or unvested, are entitled to receive dividends and to vote, unless forfeited. No participant in Hilltop's 2003 equity incentive plan may be granted awards in any fiscal year covering more than 500,000 shares of Hilltop common stock. Assuming completion of the transaction between Hilltop and PlainsCapital, no new awards will be granted under the equity incentive plans maintained by PlainsCapital.


Approval of the Adoption of the Hilltop Holdings Inc. 2012 Annual Incentive Plan (Proposal 3)

        Hilltop is asking its shareholders to approve the adoption of the Hilltop Holdings Inc. Annual Incentive Plan (the "Annual Incentive Plan"). The Annual Incentive Plan was adopted, subject to shareholder approval, by the board of directors on August 2, 2012.

        The following is a summary of the material terms of the Annual Incentive Plan. The full text of the Annual Incentive Plan is attached as Annex G to this joint proxy statement/prospectus, and the following summary is qualified in its entirety by reference to the terms of the Annual Incentive Plan. Capitalized terms used in this proposal are defined in the Annual Incentive Plan. In the event of any inconsistency between the Annual Incentive Plan and this summary, the Annual Incentive Plan will control. Hilltop shareholders are urged to review the Annual Incentive Plan before determining how to vote on this proposal.

        Hilltop shareholders are being asked to approve the Annual Incentive Plan, including the performance criteria described below, in order to assist Hilltop in meeting the purposes set forth below and to permit Hilltop to design annual incentive awards that are eligible to meet the requirements of "performance-based" compensation under Section 162(m) of the Code. Under Section 162(m) of the Code, Hilltop is not entitled to a federal income tax deduction for compensation in excess of $1 million paid in any year to a "covered employee" (within the meaning of Section 162(m) of the Code), subject to certain exceptions. Compensation that qualifies as "performance-based" under Section 162(m) of the Code is exempt from this limitation. The Annual Incentive Plan sets forth a list of alternative performance goals, the attainment of which may determine the degree of payout with respect to awards that are designed to qualify for the performance-based exception to Section 162(m) of the Code. The applicable conditions of the performance-based compensation exemption include, among others, a requirement that the shareholders of the Hilltop approve the material terms, including the performance goals, of the Annual Incentive Plan.

Summary of the Annual Incentive Plan

Purpose

        The purposes of the Annual Incentive Plan are to reward executives whose performance during the fiscal year enabled Hilltop to achieve favorable business results and to assist Hilltop in attracting and retaining executives. The Annual Incentive Plan is designed to allow the Committee to grant awards that focus the executive's efforts on the achievement of specific goals in support of the company's business strategy.

Eligible Employees

        The Compensation Committee selects executives who are eligible to receive awards under the Annual Incentive Plan and who will be participants in the Annual Incentive Plan during any performance period in which they may earn an award. Eligible employees include each officer of Hilltop (as such term is used in Section 16 of the Securities Exchange Act of 1934, as amended) and any other executive of Hilltop or any of its subsidiaries as determined by the Compensation Committee.

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Performance Goals

        The Annual Incentive Plan provides that, in order to meet the performance-based compensation exception under Section 162(m) of the Code, performance goals shall be established by the Compensation Committee for each performance period. The performance goals applicable to awards granted pursuant to the Annual Incentive Plan may provide for a targeted level or levels of achievement using one or more of the following measures: stock price, earnings (including earnings before interest, taxes, depreciation and amortization), earnings per share (whether on pre-tax, after-tax, operations or other basis), operating earnings, total return to shareholders, ratio of debt to debt plus equity, net borrowing, credit quality or debt ratings, return on assets or operating assets, asset quality, net interest margin, loan portfolio growth, efficiency ratio, deposit portfolio growth, liquidity, market share, objective customer service measures or indices, shareholder value added, embedded value added, loss ratio, expense ratio, combined ratio, premiums, premium growth, investment income, pre- or after-tax income, net income, cash flow (before or after dividends), expense or expense levels, economic value added, cash flow per share (before or after dividends), free cash flow, gross margin, risk-based capital, revenues, revenue growth, sales growth, return on capital (including return on total capital or return on invested capital), capital expenditures, cash flow return on investment, cost, cost control, gross profit, operating profit, economic profit, profit before tax, net profit, cash generation, unit volume, sales, net asset value per share, asset quality, cost saving levels, market-spending efficiency, core non-interest income or change in working capital in each case, with respect to the company or any one or more of its subsidiaries, divisions, business units or business segments. The performance goals may be based on absolute target numbers or relative results in one or more such categories compared to a prior period or to the performance of one or more other companies (including an index covering multiple companies). The Compensation Committee may adjust the performance goals applicable to any awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in Hilltop's financial statements, notes to the financial statements, management's discussion and analysis or other Hilltop filings with the SEC, provided that such adjustment does not violate Section 162(m) of the Code.

Incentive Award Payment

        Determination of Award Amounts; Maximum Award Limit.    After the performance period ends, the Compensation Committee will determine the payment amount of individual awards based on the achievement of the applicable previously designated performance goal(s), provided that no payment to any individual participant based on the achievement of these goal(s) may be greater than $10,000,000 in any fiscal year of the company.

        Payment Eligibility.    Unless determined otherwise by the Compensation Committee, participants generally must be actively employed on the date final awards are approved by the Compensation Committee, as applicable.

        Form of Payment.    Awards are paid to participants in cash, provided that the Compensation Committee, in its discretion, may determine for any performance period that all or a portion of awards to one or more participants will instead be paid in shares of (or equity awards in respect of) Hilltop common stock, which shares or awards would be granted under the applicable Hilltop equity plan and have such terms and conditions as may be determined by the Compensation Committee.

        Timing of Payment.    Awards are paid as soon as practicable after the end of the performance period, but in no event more than two and a half months after the end of the calendar year with respect to which the award was earned, unless the Compensation Committee determines to defer payment of all or a portion of an award (including by electing to pay all or a portion of an award in

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the form of equity awards), or the Participant has submitted a timely election to defer receipt of all or a portion of the award in accordance with a deferred compensation plan approved by the Compensation Committee.

Administration; Amendment and Termination

        The Annual Incentive Plan is interpreted and administered by the Compensation Committee. The Annual Incentive Plan will be interpreted and construed in a manner so as to cause payments intended to constitute performance-based compensation under Section 162(m) of the Code to qualify as performance-based compensation under Section 162(m) of the Code. The Annual Incentive Plan may be amended or terminated at any time for any reason by the Compensation Committee. Shareholder approval will be obtained in connection with any amendment for which shareholder approval is necessary.

Unfunded Plan; Participants are General Creditors

        Award amounts are paid from Hilltop's general funds and participants are considered unsecured general creditors with no special or prior right to any of Hilltop's assets for payments under the Annual Incentive Plan. Nothing in the Annual Incentive Plan is intended to create a trust for the benefit of any participant or to create a fiduciary relationship between Hilltop and any participant with respect to any of Hilltop's assets.

Tax Withholding

        Awards paid under the Annual Incentive Plan are subject to all applicable withholding taxes.

Section 162(m) of the Code

        The following is a summary of certain federal income tax consequences to the company of awards made under the Annual Incentive Plan, based upon the laws in effect on the date hereof. The discussion is general in nature and does not take into account a number of considerations which may apply in light of particular circumstances. This general tax discussion is intended for the information of shareholders considering how to vote with respect to this proposal and not as tax guidance to participants in the Annual Incentive Plan.

        If an award under the Annual Incentive Plan is paid in cash or its equivalent, a participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time the award is paid in an amount equal to the cash or the fair market value of its equivalent, and Hilltop will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply.

        Section 162(m) of the Code limits the deductibility of certain compensation of Hilltop's chief executive officer and the three other highest paid executive officers (other than the chief financial officer). Compensation paid to such an officer during a year in excess of $1 million that does not satisfy the performance-based exception under Section 162(m) of the Code would not be deductible on Hilltop's federal income tax return for that year. It is intended that compensation attributable to awards payable under the Annual Incentive Plan will be eligible to qualify as performance-based compensation under Section 162(m) of the Code. However, the Compensation Committee reserves the right to grant bonus awards that do not qualify for this exception, and, in some cases, the exception may cease to be available for some or all bonus awards that otherwise so qualify. Thus, it is possible that Section 162(m) of the Code may disallow compensation deductions that would otherwise be available to the company.

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New Plan Benefits

        Except for with respect to Alan B. White, the amount of awards payable under the Annual Incentive Plan, if any, to any participant is not determinable as awards have not yet been determined under the Annual Incentive Plan. Participation in the Annual Incentive Plan does not guarantee the payment of an award, and all awards under the Annual Incentive Plan are discretionary and subject to approval by Hilltop's Compensation Committee, as described above. Mr. White, who will be an executive officer of Hilltop following the completion of merger, has a guaranteed minimum bonus set forth in his retention agreement. The retention agreement provides that if a certain specified performance threshold is obtained, Mr. White will be guaranteed an annual bonus equal to no less than the average bonus paid in respect of the three most recently completed calendar years (which is currently approximately $535,000).

Required Vote

        Approval of the adoption of the Hilltop Holdings Inc. 2012 Annual Incentive Plan and the material terms of the performance goals thereunder requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock voting on the proposal, provided that the total votes cast on the proposal (including abstentions) must represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting. Therefore, assuming that a quorum is present, your failure to vote, an abstention or a broker non-vote will have no effect on the approval of the Annual Incentive Plan proposal. However, it may make it more difficult for Hilltop to meet the NYSE requirement that the total votes cast on such proposal (including abstentions) represent a majority of the shares of Hilltop common stock outstanding on the record date for the Hilltop special meeting.

        The Hilltop board of directors unanimously recommends that its shareholders vote "FOR" the adoption of the Hilltop Holdings Inc. 2012 Annual Incentive Plan and the material terms of the performance goals thereunder.


Approval of the Adjournment or Postponement of the Hilltop Special Meeting (Proposal 4)

        The Hilltop special meeting may be adjourned to another time or place, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the share issuance proposal.

        If, at the Hilltop special meeting, the number of shares of Hilltop common stock present or represented and voting in favor of the share issuance proposal is insufficient to approve such proposal, Hilltop intends to move to adjourn the Hilltop special meeting in order to solicit additional proxies for such proposal. In accordance with the Hilltop bylaws, a vote to approve the proposal to adjourn the Hilltop special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Hilltop special meeting to adopt the share issuance proposal may be taken in the absence of a quorum. Hilltop does not intend to call a vote on this proposal if the share issuance proposal has been approved at the Hilltop special meeting.

        In this proposal, Hilltop is asking its shareholders to authorize the holder of any proxy solicited by the Hilltop board of directors to vote in favor of granting discretionary authority to proxy holders, and each of them individually, to adjourn the Hilltop special meeting to another time and place for the purpose of soliciting additional proxies. If Hilltop shareholders approve this adjournment proposal, Hilltop could adjourn the Hilltop special meeting and any adjourned session of the Hilltop special meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from Hilltop shareholders who have previously voted.

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        Approval of the Hilltop adjournment proposal requires the affirmative vote of the holders of at least a majority of the shares of Hilltop common stock represented in person or by proxy at the Hilltop special meeting and entitled to vote on the proposal.

        The Hilltop board of directors recommends that holders of Hilltop common stock vote "FOR" the approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt the share issuance proposal.

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THE PLAINSCAPITAL SPECIAL MEETING

        This section contains information about the special meeting of PlainsCapital shareholders that has been called to consider, adopt and approve the merger agreement.

        Together with this document, PlainsCapital is also sending you a notice of the PlainsCapital special meeting and a form of proxy that is solicited by the PlainsCapital board of directors. The PlainsCapital special meeting will be held on September 20, 2012, at 10:00 a.m., local time, at PlainsCapital's conference facility located at 2323 Victory Avenue, 5th Floor, Dallas, Texas 75219.


Matters to be Considered

        At the PlainsCapital special meeting, holders of PlainsCapital common stock as of the record date will be asked to vote on:

    a proposal to adopt and approve the merger agreement as such agreement may be amended from time to time (the "merger proposal");

    a proposal to approve, on a non-binding, advisory basis, compensation that may be paid or become payable to PlainsCapital's named executive officers that is based on or otherwise relates to the merger (the "compensation proposal"); and

    a proposal to approve the adjournment of the PlainsCapital special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the PlainsCapital special meeting to approve the merger proposal (the "PlainsCapital adjournment proposal").


Proxies

        Each copy of this document mailed to holders of PlainsCapital common stock is accompanied by a form of proxy with instructions for voting. If you hold stock in your name as a shareholder of record, you may complete, sign, date and mail your proxy card in the enclosed postage paid return envelope as soon as possible, vote by telephone by calling the toll-free number listed on the PlainsCapital proxy card, vote by accessing the internet site listed on the PlainsCapital proxy card or vote in person at the PlainsCapital special meeting. If you hold your stock in "street name" through a bank or broker, you must direct your bank or broker to vote in accordance with the instruction form included with these materials and forwarded to you by your bank or broker. This voting instruction form provides instructions for voting. To vote using the proxy card you must sign, date and return it in the enclosed postage-paid envelope. Instructions on how to vote by telephone or by the internet are included with your proxy card.

        If you are a holder of record, to change your vote, you must:

    mail a new signed proxy card with a later date to PlainsCapital;

    vote by calling the toll-free number listed on the PlainsCapital proxy card or accessing the internet site listed on the PlainsCapital proxy card by 6:00 p.m., Central time on September 19, 2012; or

    attend the PlainsCapital special meeting and vote in person.

        If you wish to revoke rather than change your vote, you must send a written, signed revocation to PlainsCapital Corporation, 2323 Victory Avenue, Suite 1400, Dallas, Texas 75219, Attn: Scott J. Luedke, General Counsel and Secretary, which must be received prior to the exercise of the proxy. You must include your control number.

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        If you hold shares in street name and wish to change or revoke your vote, please refer to the information on the voting instruction form included with these materials and forwarded to you by your bank, broker or other holder of record to see your voting options.

        All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted "FOR" the merger proposal, "FOR" the compensation proposal and "FOR" approval of the PlainsCapital adjournment proposal.

        PlainsCapital shareholders with shares represented by stock certificates should not send PlainsCapital stock certificates with their proxy cards. After the merger is completed, holders of PlainsCapital common stock certificates will be mailed a transmittal form with instructions on how to exchange their PlainsCapital stock certificates for the merger consideration. Shares of PlainsCapital common stock held in book-entry form will automatically be exchanged for the merger consideration.


ESOP Voting Instructions

        If you are a participant in PlainsCapital's Employees' Stock Ownership Plan (the "ESOP"), then you may be receiving this material because of the common stock held for you in the ESOP. In that case, you should use the enclosed proxy card to instruct the ESOP trustees how to vote those shares. Return your proxy card, which serves as your voting instructions to the ESOP trustees, as described on the card itself. To allow sufficient time for voting by the ESOP trustees, your ESOP voting instructions must be received no later than September 17, 2012 at 5:00 p.m. Central time. PlainsCapital's transfer agent will tabulate the ESOP voting instructions it receives and provide aggregate ESOP voting instructions to the ESOP trustees. The ESOP trustees will vote the shares in accordance with such instructions and the terms of the ESOP. Please note that you will not be able to vote the shares of common stock held for you in the ESOP in person at the special meeting as these shares may only be voted by the ESOP trustees.

        The ESOP trustees may vote the shares held for you even if you do not direct them how to vote. The ESOP trustees will vote any shares held in the ESOP for which they do not timely receive instructions in their own, or the ESOP committee's, discretion and in accordance with the ESOP plan documents.

        If your shares of common stock are held by you in both your record name and in the ESOP, you may use the same enclosed proxy card to vote the shares held in your record name and to direct the ESOP trustees to vote the shares held for you in the ESOP. You must timely return the enclosed proxy card to direct the vote of the shares held for you in the ESOP.


Solicitation of Proxies

        PlainsCapital will bear the entire cost of soliciting proxies from its shareholders. In addition to solicitation of proxies by mail, PlainsCapital will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of PlainsCapital common stock and secure their voting instructions. PlainsCapital will reimburse the record holders for their reasonable expenses in taking those actions. PlainsCapital has also made arrangements with Morrow & Co., LLC to assist PlainsCapital in soliciting proxies and has agreed to pay Morrow & Co., LLC $5,500 plus a fixed rate for each shareholder contacted and reasonable fees and expenses. If necessary, PlainsCapital may use several of its regular employees, who will not be specially compensated, to solicit proxies from PlainsCapital shareholders, either personally or by telephone, facsimile, letter or other electronic means.

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Record Date

        The close of business on August 3, 2012 has been fixed as the record date for determining the PlainsCapital shareholders entitled to receive notice of and to vote at the PlainsCapital special meeting. At that time, 34,462,390 shares of PlainsCapital common stock were outstanding, held by approximately 980 holders of record.


Quorum

        In order to conduct business at the PlainsCapital special meeting, there must be a quorum. A quorum is the number of shares that must be present at the meeting, either in person or by proxy. To have a quorum at the special meeting requires the presence of shareholders or their proxies who are entitled to cast at least a majority of the votes that all shareholders are entitled to cast. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.

        You are entitled to one vote for each share of PlainsCapital common stock you held as of the record date. Holders of shares of PlainsCapital preferred stock are not entitled to vote on the adoption and approval of the merger agreement or otherwise at the PlainsCapital special meeting.

Vote Required

        Approval of the merger proposal requires the affirmative vote of a majority of the shares of PlainsCapital common stock outstanding on the record date for the PlainsCapital special meeting. Because the affirmative vote of the holders of at least a majority of the shares of PlainsCapital common stock outstanding on the record date for the PlainsCapital special meeting is needed to approve the merger proposal, an abstention or a broker non-vote will have the effect of a vote against the merger proposal. Approval of each of the compensation proposal and the PlainsCapital adjournment proposal requires the affirmative vote of the holders of at least a majority of the shares of PlainsCapital common stock represented in person or by proxy at the PlainsCapital special meeting. An abstention or broker non-vote will have no effect on the compensation proposal or the PlainsCapital adjournment proposal. Each holder of PlainsCapital common stock will be entitled to one vote per share on each of the proposals presented at the PlainsCapital annual meeting.

        The PlainsCapital board of directors urges PlainsCapital shareholders to promptly vote by: (1) completing, signing, dating and mailing your proxy card in the enclosed postage paid return envelope as soon as possible; (2) calling the toll-free number listed on the PlainsCapital proxy card; or (3) accessing the internet site listed on the PlainsCapital proxy card. If you hold your stock in "street name" through a bank or broker, please direct your bank or broker to vote in accordance with the instruction form included with these materials and forwarded to you by your bank or broker.

        As of the record date, to the knowledge of PlainsCapital, directors and executive officers of PlainsCapital may be deemed to have had voting power over approximately 6,321,870 shares of PlainsCapital common stock (including the shares held by the shareholders subject to the voting agreements described below), or approximately 18.3% of the outstanding shares of PlainsCapital common stock entitled to vote at the special meeting. We currently expect that each of these individuals will vote their shares of PlainsCapital common stock in favor of the proposals to be presented at the special meeting.

        Alan B. White, Chairman and Chief Executive Officer of PlainsCapital, and certain entities controlled by him, and Hill A. Feinberg, a director of PlainsCapital and Chief Executive Officer of First Southwest, a wholly owned subsidiary of PlainsCapital, have each entered into a voting and support agreement with Hilltop. Pursuant to such agreements, each such shareholder has agreed to vote all of their shares of PlainsCapital common stock in favor of the merger proposal and related matters, subject to certain exceptions. As of the record date for the PlainsCapital special meeting and to the knowledge of PlainsCapital, the shareholders party to these agreements owned and had the ability to vote approximately 4,944,083 shares of PlainsCapital common stock, or approximately 14.3% of the outstanding shares of PlainsCapital common stock entitled to vote at the PlainsCapital special meeting.

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Recommendation of the PlainsCapital Board of Directors

        The PlainsCapital board of directors has unanimously approved the merger agreement and the transactions it contemplates, including the merger. See "The Merger—PlainsCapital's Reasons for the Merger; Recommendation of the PlainsCapital Board of Directors" included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the PlainsCapital board of directors' recommendation.

        The PlainsCapital board of directors recommends that you vote your shares as follows:

    "FOR" the adoption and approval of the merger agreement;

    "FOR" the approval, on a non-binding, advisory basis, of the compensation that may be paid or become payable to PlainsCapital's named executive officers that is based on or otherwise relates to the merger; and

    "FOR" the approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger proposal.


Attending the Special Meeting

        All holders of PlainsCapital common stock, including holders of record and shareholders who hold their stock through banks, brokers, nominees or any other holder of record, are invited to attend the PlainsCapital special meeting. Only shareholders of record on the record date can vote in person at the PlainsCapital special meeting. If you are not a shareholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the PlainsCapital special meeting. If you plan to attend the PlainsCapital special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted. PlainsCapital reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification.

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PROPOSALS SUBMITTED TO PLAINSCAPITAL SHAREHOLDERS

Adoption and Approval of the Merger Agreement (Proposal 1)

        This joint proxy statement/prospectus is being furnished to PlainsCapital shareholders as part of the solicitation of proxies by the PlainsCapital board of directors for use at the PlainsCapital special meeting to consider and vote on the proposal to adopt and approve the merger agreement. IF PLAINSCAPITAL SHAREHOLDERS FAIL TO ADOPT AND APPROVE THE MERGER AGREEMENT, THE MERGER CANNOT BE COMPLETED. Holders of PlainsCapital common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

        After careful consideration, the PlainsCapital board of directors determined that the merger agreement and the transactions contemplated by the merger agreement were advisable and in the best interests of PlainsCapital and its shareholders and approved the merger agreement and the transactions contemplated by the merger agreement, including the merger. See "The Merger—PlainsCapital's Reasons for the Merger; Recommendation of the PlainsCapital Board of Directors" included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the PlainsCapital board of directors' recommendation.

        Approval of the merger proposal requires the affirmative vote of a majority of the shares of PlainsCapital common stock outstanding on the record date for the PlainsCapital special meeting.

        The PlainsCapital board of directors recommends that its shareholders vote "FOR" the adoption and approval of the merger agreement. For a discussion of interests of PlainsCapital's directors and executive officers in the merger that may be different from, or in addition to, the interest of PlainsCapital's shareholders generally, see "The Merger—Interests of Certain Directors and Executive Officers in the Merger" included elsewhere in this joint proxy statement/prospectus.


Non-Binding Advisory Vote Approving Compensation (Proposal 2)

        The Dodd-Frank Act and Rule 14a-21(c) under the Exchange Act require PlainsCapital to provide its shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to the named executive officers of PlainsCapital that is based on or otherwise relates to the merger. Information required by Item 402(t) of Regulation S-K concerning this compensation, subject to certain assumptions described herein, is presented under the heading "The Merger—Compensation."

        Accordingly, PlainsCapital is requesting that holders of PlainsCapital common stock approve the following resolution:

    "RESOLVED, that the shareholders of PlainsCapital Corporation approve, on a non-binding advisory basis, the compensation that may be paid or become payable to its named executive officers that is based on or otherwise relates to the merger, as disclosed in the joint proxy statement/prospectus relating to the PlainsCapital special meeting in the table titled "Golden Parachute Compensation" pursuant to Item 402(t) of Regulation S-K, including the associated narrative discussion."

        Approval of this proposal is not a condition to completion of the merger. While the PlainsCapital board of directors intends to consider the vote resulting from this proposal, the vote is advisory, and therefore not binding on PlainsCapital or on Hilltop or the board of directors or the compensation committees of PlainsCapital or Hilltop. Accordingly, such compensation, including amounts that PlainsCapital is contractually obligated to pay, could still be payable regardless of the outcome of this advisory vote, subject only to the conditions applicable thereto.

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        The affirmative vote, in person or by proxy, of the holders of at least a majority of the shares of PlainsCapital common stock represented in person or by proxy at the special meeting entitled to be voted and voted for or against the proposal is required to approve the compensation proposal.

        The PlainsCapital board of directors recommends that its shareholders vote "FOR" the approval, on a non-binding, advisory basis, of the compensation that may be paid or become payable to PlainsCapital's named executive officers that is based on or otherwise relates to the merger.


Approval of the Adjournment or Postponement of the PlainsCapital Special Meeting (Proposal 3)

        The PlainsCapital special meeting may be adjourned to another time or place, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the merger proposal.

        If, at the PlainsCapital special meeting, the number of shares of PlainsCapital common stock present or represented and voting in favor of the merger proposal is insufficient to approve such proposal, PlainsCapital intends to move to adjourn the PlainsCapital special meeting in order to solicit additional proxies for the adoption and approval of the merger agreement. In accordance with the PlainsCapital bylaws, a vote to approve the proposal to adjourn the PlainsCapital special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the PlainsCapital special meeting to approve the merger proposal may be taken in the absence of a quorum. PlainsCapital does not intend to call a vote on this proposal if the merger proposal has been approved at the PlainsCapital special meeting.

        In this proposal, PlainsCapital is asking its shareholders to authorize the holder of any proxy solicited by the PlainsCapital board of directors to vote in favor of granting discretionary authority to proxy holders, and each of them individually, to adjourn the PlainsCapital special meeting to another time and place for the purpose of soliciting additional proxies. If PlainsCapital shareholders approve this adjournment proposal, PlainsCapital could adjourn the PlainsCapital special meeting and any adjourned session of the PlainsCapital special meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from PlainsCapital shareholders who have previously voted.

        Approval of the PlainsCapital adjournment proposal requires the affirmative vote of the holders of at least a majority of the shares of PlainsCapital common stock represented in person or by proxy at the PlainsCapital special meeting and entitled to vote on the proposal.

        The PlainsCapital board of directors recommends that holders of PlainsCapital common stock vote "FOR" the approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement.

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INFORMATION ABOUT THE COMPANIES

Hilltop Holdings Inc.

        Hilltop is a holding company that endeavors to identify and execute attractive acquisitions and business combinations. As of March 31, 2012, Hilltop had approximately $528 million aggregate available cash and cash equivalents that may be used for this purpose, of which approximately $317 million is expected to be paid to PlainsCapital shareholders in connection with the merger. No assurances can be given that Hilltop will be able to consummate the merger with PlainsCapital, identify additional suitable business combinations, or successfully integrate or operate PlainsCapital or any other business that may be acquired in the future.

        On July 29, 2011, Hilltop extended SWS Group, Inc. ("SWS") a $50 million term loan, which bears interest at 8% per annum, is prepayable by SWS subject to certain conditions after three years, and has a maturity of five years. SWS issued Hilltop a warrant to purchase 8,695,652 shares of SWS common stock, $0.10 par value per share, exercisable at a price of $5.75 per share subject to anti-dilution adjustments. Additionally, Hilltop has purchased 1,475,387 shares of SWS common stock on the open market. If the warrant were fully exercised, Hilltop would beneficially own 24.5% of SWS.

        Hilltop also provides fire and homeowners insurance to low value dwellings and manufactured homes, primarily in Texas and other areas of the south through its wholly owned property and casualty insurance holding company, NLASCO, Inc. ("NLASCO"). Hilltop acquired NLASCO in January 2007. NLASCO operates through its wholly-owned subsidiaries, National Lloyds Insurance Company ("NLIC") and American Summit Insurance Company ("ASIC").

        NLASCO targets underserved markets that require underwriting expertise that many larger carriers have been unwilling to develop given the relatively small volume of premiums produced by local agents. Within these markets, NLASCO attempts to capitalize on its superior local knowledge to identify profitable underwriting opportunities. NLASCO believes that it distinguishes itself from competitors by delivering products that are not provided by many larger carriers, providing a high level of customer service and responding quickly to the needs of its agents and policyholders. NLASCO applies a high level of selectivity in the risks it underwrites and uses a risk-adjusted return approach to capital allocation, which NLASCO believes allows it to generate underwriting profits.

        NLIC and ASIC carry a financial strength rating of "A" (Excellent) by A.M. Best. An "A" rating is the third highest of 16 rating categories used by A.M. Best. Many insurance buyers, agents and brokers use the ratings assigned by A.M. Best and other rating agencies to assist them in assessing the financial strength and overall quality of the companies from which they purchase insurance. This rating is intended to provide an independent opinion of an insurer's ability to meet its obligations to policyholders and is not an evaluation directed at investors. This rating assignment is subject to the ability to meet A.M. Best's expectations as to performance and capitalization on an ongoing basis, including with respect to management of liabilities for losses and loss adjustment expenses, and is subject to revocation or revision at any time at the sole discretion of A.M. Best.

        Hilltop's common stock is listed on the NYSE under the symbol "HTH."

        Hilltop's principal office is located at 200 Crescent Court, Suite 1330, Dallas, Texas 75201, and its telephone number at that location is (214) 855-2177. Hilltop's internet address is www.hilltop-holdings.com. Additional information about Hilltop and its subsidiaries is included in documents incorporated by reference in this document. See "Where You Can Find More Information" included elsewhere in this joint proxy statement/prospectus.

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Meadow Corporation

        Meadow Corporation is a Maryland corporation and a wholly owned subsidiary of Hilltop. Meadow Corporation was formed in May 2012 for the purpose of effecting the merger. Meadow Corporation has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement.


PlainsCapital Corporation

Business

    Overview

        PlainsCapital is a Texas-based and Dallas-headquartered financial holding company registered under the Bank Holding Company Act, as amended by the Gramm-Leach-Bliley Act, and was incorporated in 1987. Historically, the majority of PlainsCapital's net income has been derived from its wholly owned bank subsidiary, PlainsCapital Bank. PlainsCapital Bank provides business and consumer banking services from offices located throughout central, north and west Texas. PlainsCapital Bank's subsidiaries have specialized areas of expertise that allow it to provide an array of financial products and services such as mortgage origination and financial advisory services. As of March 31, 2012, on a consolidated basis, PlainsCapital had total assets of approximately $5.8 billion, total deposits of approximately $4.2 billion, total loans, including loans held for sale, of approximately $4.2 billion, and shareholders' equity of approximately $539.1 million.

    Geographic Dispersion of PlainsCapital's Deposits and Loan Portfolio

        As of March 31, 2012, PlainsCapital had approximately $4.2 billion in deposits. The following table summarizes PlainsCapital's deposit portfolio as of March 31, 2012 (dollar amounts in thousands).

 
  March 31, 2012  
 
  West Texas(1)   DFW(2)   Central/South(3)   Other(4)   Total  

Demand deposits

  $ 135,888   $ 93,473   $ 47,977   $ 53,299   $ 330,637  

NOW accounts

    82,464     39,974     4,851     503     127,792  

Money market deposit accounts

    653,059     1,153,648     293,240     11,640     2,111,587  

Brokered money market deposit accounts

                224,243     224,243  

Other savings deposits

    40,379     51,212     80,392     1,639     173,622  

Time deposits under $100,000

    117,176     81,992     7,303     48     206,519  

Time deposit of $100,000 or more

    240,051     524,146     63,886     21     828,104  

Brokered time deposits

                166,272     166,272  
                       

Total deposits

  $ 1,269,017   $ 1,944,445   $ 497,649   $ 457,665   $ 4,168,776  
                       

Percentage of total deposits

    30.4 %   46.6 %   12.0 %   11.0 %   100.0 %

(1)
"West Texas" consists of deposits originated in Lubbock, Texas.

(2)
"DFW" primarily consists of deposits originated in Dallas, Texas and Fort Worth, Texas.

(3)
"Central/South" primarily consists of deposits originated in Austin, Texas and San Antonio, Texas.

(4)
"Other" consists of deposits that are not managed on a regional basis.

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        The following table summarizes PlainsCapital's loans held for investment as of March 31, 2012 (dollar amounts in thousands).

 
  March 31, 2012  
 
  West Texas(1)   DFW(2)   Central/South(3)   Other(4)   Total  

Commercial and industrial

                               

Commercial

  $ 306,733   $ 871,307   $ 286,858   $   $ 1,464,898  

Lease financing

                29,425     29,425  

Securities (including margin loans)

    809     261     2,557     311,203     314,830  

Real estate

    242,024     634,768     335,480         1,212,272  

Construction and land dev