Earnings per Common Share

9 Months Ended

Sep. 30, 2017

23. 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, all of which are vested as of September 30, 2017, were the only instruments issued by Hilltop which qualified 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 and nine months ended September 30, 2017, RSUs were the only potentially dilutive non-participating instruments issued by Hilltop, while during the three and nine months ended September 30, 2016, stock options and RSUs were potentially dilutive non-participating instruments. 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 September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Basic earnings per share:
Income attributable to Hilltop	$	30,206	$	51,932	$	119,116	$	110,573
Less: income applicable to participating shares		—		(5)		—		(11)
Net earnings available to Hilltop common stockholders	$	30,206	$	51,927	$	119,116	$	110,562

Weighted average shares outstanding - basic		96,096		98,490		97,554		98,367

Basic earnings per common share	$	0.31	$	0.53	$	1.22	$	1.12

Diluted earnings per share:
Income attributable to Hilltop	$	30,206	$	51,932	$	119,116	$	110,573

Weighted average shares outstanding - basic		96,096		98,490		97,554		98,367
Effect of potentially dilutive securities		210		135		249		206
Weighted average shares outstanding - diluted		96,306		98,625		97,803		98,573

Diluted earnings per common share	$	0.31	$	0.53	$	1.22	$	1.12