Hilltop Holdings Inc. (NYSE:HTH)

Hilltop Holdings (NYSE:HTH) update by Stern Agee confirms our thoughts that there is upside to our evaluation scenarios.   Please see our report here. From Stern Agee…

The early look at PlainsCapital call report data suggests further momentum from the mortgage origination platform, strong C&I loan growth, and increased core profitability in 3Q12. While the acquisition has not yet closed, we expect the contribution of PlainsCapital 3Q12 earnings should result in HTH's pro-forma TBVPS exceeding our initial modeling upon consummation of the merger (which should occur in the next quarter).

Thoughts on the Shares. We continue to view HTH as a unique and undervalued story given the combination of management's track record for maximizing shareholder value and PlainsCapital's diverse business mix well positioned for further growth. While HTH and PlainsCapital Corp. (PCC) have yet to report 3Q12 earnings on a GAAP basis, the early look at PCC's subsidiary bank (97% of total holding company assets) call report data indicates incrementally higher mortgage banking revenues, solid loan growth (ex. the HFS portfolio) and improved profitability. While we will wait for 10-Qs to be filed, the important points are our previous pro-forma TBVPS(Tangible Book Value Per Share) modeling of $7.90(GeoTeam calculated TBVPS was $8.23) ( for year-end will likely prove ~$0.30 conservative and our EPS estimates could likewise prove conservative depending on mortgage banking in FY13.