Earnings per Common Share

3 Months Ended

Mar. 31, 2015

Earnings per Common Share

Earnings per Common Share

22. Earnings per Common Share

Nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of earnings per share pursuant to the two-class method prescribed by the Earnings Per Share Topic of the ASC. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Restricted Stock Awards are the only instruments issued by Hilltop which qualify as participating securities.

Net earnings, less any preferred dividends accumulated for the period (whether or not declared), is allocated between the common stock and participating securities pursuant to the two-class method. Basic earnings per common share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during the period, excluding participating nonvested restricted shares.

Diluted earnings per common share is computed in a similar manner, except that first the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares, excluding the participating securities, were issued using the treasury stock method. During the three months ended March 31, 2015 and 2014, stock options and RSUs are the only potentially dilutive non-participating instruments issued by Hilltop. Next, the Company determines and includes in the diluted earnings per common share calculation the more dilutive effect of the participating securities using the treasury stock method or the two-class method. Undistributed losses are not allocated to the nonvested share-based payment awards (the participating securities) under the two-class method as the holders are not contractually obligated to share in the losses of the Company.

The following table presents the computation of basic and diluted earnings per common share (in thousands, except per share data).

	Three Months Ended March 31,
	2015			2014
Basic earnings per share:
Income applicable to Hilltop common stockholders	$	113,402		$	23,760
Less: income applicable to participating shares	(581		)	(124		)
Net earnings available to Hilltop common stockholders	$	112,821		$	23,636
Weighted average shares outstanding - basic	99,741			89,707
Basic earnings per common share	$	1.13		$	0.26
Diluted earnings per share:
Income applicable to Hilltop common stockholders	$	113,402		$	23,760
Weighted average shares outstanding - basic	99,741			89,707
Effect of potentially dilutive securities	886			878
Weighted average shares outstanding - diluted	100,627			90,585
Diluted earnings per common share	$	1.13		$	0.26