##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q



|x | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2010



| ̈ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|- | -----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 000-53629





PLAINSCAPITAL CORPORATION

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Texas                                                          |  | 75-2182440                          
|(State or other jurisdiction
of incorporation or organization) |  | (I.R.S. Employer
Identification No.)

2323 Victory Avenue, Suite 1400, Dallas, Texas 75219

(Address of principal executive offices, including zip code)

(214) 252-4000

(Registrants telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

As of July 31, 2010, there were 33,991,465 shares of the registrants Original Common Stock, $0.001 par value, and no shares of the
registrants Common Stock, $0.001 par value, outstanding, including 2,507,469 shares that participate in dividends but are not defined as outstanding under generally accepted accounting principles.



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##### Table of Contents

PlainsCapital Corporation

Quarterly Report on Form 10-Q for the period ended June 30, 2010

TABLE OF CONTENTS



|                                                                                         |  |                                                                                       |  |   
|---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | --
|PART I. FINANCIAL INFORMATION                                                            |  |                                                                                      
|                                                                                         |  |                                                                                      
|Item 1.                                                                                  |  | Financial Statements                                                                  |  |   
|                                                                                         | 
|Unaudited Consolidated Interim Financial Statements                                      |  |                                                                                      
|                                                                                         | 
|Consolidated Balance Sheets, June 30, 2010 and December 31, 2009                         |  | 3                                                                                    
|Consolidated Statements of Income, Three and Six Months Ended June 30, 2010 and 2009     |  | 4                                                                                    
|Consolidated Statements of Shareholders Equity, Six Months Ended June 30, 2010 and
2009 |  | 5                                                                                    
|Consolidated Statements of Cash Flows, Six Months Ended June 30, 2010 and 2009           |  | 6                                                                                    
|Notes to Consolidated Financial Statements                                               |  | 7                                                                                    
|                                                                                         |  |                                                                                      
|Item 2.                                                                                  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 32
|                                                                                         |  |                                                                                      
|Item 3.                                                                                  |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 54
|                                                                                         |  |                                                                                      
|Item 4T.                                                                                 |  | Controls and Procedures                                                               |  | 57
|                                                                                         | 
|PART II. OTHER INFORMATION                                                               |  |                                                                                      
|                                                                                         |  |                                                                                      
|Item 1.                                                                                  |  | Legal Proceedings                                                                     |  | 57
|                                                                                         |  |                                                                                      
|Item 1A.                                                                                 |  | Risk Factors                                                                          |  | 59
|                                                                                         |  |                                                                                      
|Item 2.                                                                                  |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 60
|                                                                                         |  |                                                                                      
|Item 3.                                                                                  |  | Defaults Upon Senior Securities                                                       |  | 60
|                                                                                         |  |                                                                                      
|Item 4.                                                                                  |  | (Removed and Reserved)                                                                |  | 60
|                                                                                         |  |                                                                                      
|Item 5.                                                                                  |  | Other Information                                                                     |  | 60
|                                                                                         |  |                                                                                      
|Item 6.                                                                                  |  | Exhibits                                                                              |  | 60
|                                                                                         | 
|Signatures                                                                               |  | 61                                                                                   



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

PlainsCapital Corporation and Subsidiaries

Consolidated Balance Sheets



|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                       |  | June 30, 2010(Unaudited) |           |   | December 31,2009 |  
|                                                                                                                                       |  | (in thousands)           |          
|Assets                                                                                                                                 |  |                          |           |   |                  |   |           |  
|Cash and due from banks                                                                                                                |  | $                        | 93,731    |   |                  | $ | 148,323   |  
|Federal funds sold                                                                                                                     |  |                          | 15,391    |   |                  |   | 12,044    |  
|Loans held for sale                                                                                                                    |  |                          | 701,046   |   |                  |   | 432,202   |  
|Securities                                                                                                                             |  |                          |           |   |                  |   |           |  
|Held to maturity, fair market value $261,420 and $294,887, respectively                                                                |  |                          | 258,227   |   |                  |   | 294,013   |  
|Available for sale, amortized cost $371,223 and $228,651, respectively                                                                 |  |                          | 370,126   |   |                  |   | 227,541   |  
|Trading, at fair market value                                                                                                          |  |                          | 93,326    |   |                  |   | 24,183    |  
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|                                                                                                                                       |  |                          | 721,679   |   |                  |   | 545,737   |  
|                                                                                                                                       |  |                         
|Loans, net of unearned income                                                                                                          |  |                          | 3,012,806 |   |                  |   | 3,071,769 |  
|Allowance for loan losses                                                                                                              |  |                          | (56,375   | ) |                  |   | (52,092   | )
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|Loans, net                                                                                                                             |  |                          | 2,956,431 |   |                  |   | 3,019,677 |  
|                                                                                                                                       |  |                         
|Broker-dealer and clearing organization receivables                                                                                    |  |                          | 64,964    |   |                  |   | 82,714    |  
|Fee award receivable                                                                                                                   |  |                          | 19,860    |   |                  |   | 20,504    |  
|Investment in unconsolidated subsidiaries                                                                                              |  |                          | 2,012     |   |                  |   | 2,012     |  
|Premises and equipment, net                                                                                                            |  |                          | 78,613    |   |                  |   | 75,602    |  
|Accrued interest receivable                                                                                                            |  |                          | 16,852    |   |                  |   | 15,876    |  
|Other real estate owned                                                                                                                |  |                          | 16,822    |   |                  |   | 17,531    |  
|Goodwill, net                                                                                                                          |  |                          | 35,880    |   |                  |   | 35,880    |  
|Other intangible assets, net                                                                                                           |  |                          | 14,529    |   |                  |   | 15,616    |  
|Other assets                                                                                                                           |  |                          | 186,760   |   |                  |   | 147,051   |  
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|Total assets                                                                                                                           |  | $                        | 4,924,570 |   |                  | $ | 4,570,769 |  
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|                                                                                                                                       |  |                         
|Liabilities and Shareholders Equity                                                                                                   |  |                          |           |   |                  |   |           |  
|Deposits                                                                                                                               |  |                          |           |   |                  |   |           |  
|Noninterest-bearing                                                                                                                    |  | $                        | 225,009   |   |                  | $ | 223,551   |  
|Interest-bearing                                                                                                                       |  |                          | 3,511,226 |   |                  |   | 3,054,488 |  
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|Total deposits                                                                                                                         |  |                          | 3,736,235 |   |                  |   | 3,278,039 |  
|                                                                                                                                       |  |                         
|Broker-dealer and clearing organization payables                                                                                       |  |                          | 108,246   |   |                  |   | 108,272   |  
|Short-term borrowings                                                                                                                  |  |                          | 368,366   |   |                  |   | 488,078   |  
|Capital lease obligation                                                                                                               |  |                          | 11,915    |   |                  |   | 12,128    |  
|Notes payable                                                                                                                          |  |                          | 67,450    |   |                  |   | 68,550    |  
|Junior subordinated debentures                                                                                                         |  |                          | 67,012    |   |                  |   | 67,012    |  
|Other liabilities                                                                                                                      |  |                          | 130,702   |   |                  |   | 124,531   |  
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|Total liabilities                                                                                                                      |  |                          | 4,489,926 |   |                  |   | 4,146,610 |  
|                                                                                                                                       |  |                         
|Commitments and contingencies                                                                                                          |  |                          |           |   |                  |   |           |  
|                                                                                                                                       |  |                         
|Shareholders equity                                                                                                                   |  |                          |           |   |                  |   |           |  
|PlainsCapital Corporation shareholders equity                                                                                         |  |                          |           |   |                  |   |           |  
|Preferred stock, $1.00 par value per share, authorized 50,000,000 shares;                                                              |  |                          |           |   |                  |   |           |  
|Series A, 87,631 shares issued                                                                                                         |  |                          | 84,031    |   |                  |   | 83,595    |  
|Series B, 4,382 shares issued                                                                                                          |  |                          | 4,759     |   |                  |   | 4,805     |  
|Original Common Stock, $0.001 par value per share, authorized 50,000,000 shares; 31,754,135 and 31,613,010 shares issued,
respectively |  |                          | 32        |   |                  |   | 32        |  
|Common Stock, $0.001 par value per share, authorized 150,000,000 shares; zero shares issued                                            |  |                          |          |   |                  |   |          |  
|Surplus                                                                                                                                |  |                          | 152,096   |   |                  |   | 150,626   |  
|Retained earnings                                                                                                                      |  |                          | 196,920   |   |                  |   | 186,743   |  
|Accumulated other comprehensive loss                                                                                                   |  |                          | (781      | ) |                  |   | (300      | )
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|                                                                                                                                       |  |                          | 437,057   |   |                  |   | 425,501   |  
|Unearned ESOP shares (275,867 shares)                                                                                                  |  |                          | (3,001    | ) |                  |   | (3,001    | )
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|Total PlainsCapital Corporation shareholders equity                                                                                   |  |                          | 434,056   |   |                  |   | 422,500   |  
|Noncontrolling interest                                                                                                                |  |                          | 588       |   |                  |   | 1,659     |  
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|Total shareholders equity                                                                                                             |  |                          | 434,644   |   |                  |   | 424,159   |  
|                                                                                                                                       |  |                          |           |   |                  |   |           |  
|Total liabilities and shareholders equity                                                                                             |  | $                        | 4,924,570 |   |                  | $ | 4,570,769 |  
|                                                                                                                                       |  |                          |           |   |                  |   |           |  

See accompanying notes.



3



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##### Table of Contents

PlainsCapital Corporation and Subsidiaries

Consolidated Statements of Income - Unaudited

(In thousands, except per share amounts)



|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|------------------------------------------------------------------ |  | --------------------------- | ------- | ------------------------- | - | ------ |  | ---- | ------- |  | - | -------
|                                                                   |  | Three Months Ended June 30, |         | Six Months Ended June 30,
|                                                                   |  | 2010                        |         | 2009                      |   | 2010   |  | 2009
|Interest income:                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Loans, including fees                                              |  | $                           | 47,170  |                           | $ | 45,205 |  | $    | 91,794  |  | $ | 87,541 
|Securities                                                         |  |                             |         |                           |   |        |  |      |         |  |   |        
|Taxable                                                            |  |                             | 4,783   |                           |   | 2,283  |  |      | 8,587   |  |   | 4,691  
|Tax-exempt                                                         |  |                             | 2,662   |                           |   | 1,720  |  |      | 5,113   |  |   | 3,433  
|Federal funds sold                                                 |  |                             | 11      |                           |   | 26     |  |      | 20      |  |   | 33     
|Interest-bearing deposits with banks                               |  |                             | 140     |                           |   | 13     |  |      | 383     |  |   | 25     
|Other                                                              |  |                             | 1,286   |                           |   | 1,625  |  |      | 2,463   |  |   | 2,783  
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Total interest income                                              |  |                             | 56,052  |                           |   | 50,872 |  |      | 108,360 |  |   | 98,506 
|                                                                   |  |                             |         |                          
|Interest expense                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Deposits                                                           |  |                             | 7,324   |                           |   | 7,219  |  |      | 14,468  |  |   | 16,003 
|Short-term borrowings                                              |  |                             | 662     |                           |   | 739    |  |      | 1,440   |  |   | 1,296  
|Capital lease obligation                                           |  |                             | 140     |                           |   | 109    |  |      | 281     |  |   | 218    
|Notes payable                                                      |  |                             | 878     |                           |   | 806    |  |      | 1,759   |  |   | 1,620  
|Junior subordinated debentures                                     |  |                             | 628     |                           |   | 775    |  |      | 1,241   |  |   | 1,640  
|Other                                                              |  |                             | 118     |                           |   | 237    |  |      | 196     |  |   | 385    
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Total interest expense                                             |  |                             | 9,750   |                           |   | 9,885  |  |      | 19,385  |  |   | 21,162 
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|                                                                   |  |                             |         |                          
|Net interest income                                                |  |                             | 46,302  |                           |   | 40,987 |  |      | 88,975  |  |   | 77,344 
|Provision for loan losses                                          |  |                             | 10,245  |                           |   | 10,750 |  |      | 33,200  |  |   | 24,763 
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Net interest income after provision for loan losses                |  |                             | 36,057  |                           |   | 30,237 |  |      | 55,775  |  |   | 52,581 
|                                                                   |  |                             |         |                          
|Noninterest income                                                 |  |                             |         |                           |   |        |  |      |         |  |   |        
|Service charges on depositor accounts                              |  |                             | 2,295   |                           |   | 2,208  |  |      | 4,413   |  |   | 4,420  
|Net realized gains on sale of securities                           |  |                             | 98      |                           |   |       |  |      | 1,710   |  |   | 301    
|Income from loan origination and net gains from sale of loans      |  |                             | 73,021  |                           |   | 63,309 |  |      | 120,423 |  |   | 111,728
|Trust fees                                                         |  |                             | 1,148   |                           |   | 878    |  |      | 2,221   |  |   | 1,772  
|Investment advisory fees and commissions                           |  |                             | 18,509  |                           |   | 19,009 |  |      | 34,045  |  |   | 32,865 
|Securities brokerage fees and commissions                          |  |                             | 5,755   |                           |   | 4,844  |  |      | 11,468  |  |   | 9,794  
|Other                                                              |  |                             | 1,370   |                           |   | 1,217  |  |      | 3,348   |  |   | 1,151  
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Total noninterest income                                           |  |                             | 102,196 |                           |   | 91,465 |  |      | 177,628 |  |   | 162,031
|                                                                   |  |                             |         |                          
|Noninterest expense                                                |  |                             |         |                           |   |        |  |      |         |  |   |        
|Employees compensation and benefits                               |  |                             | 73,545  |                           |   | 61,771 |  |      | 130,340 |  |   | 110,279
|Occupancy and equipment, net                                       |  |                             | 14,349  |                           |   | 11,871 |  |      | 28,186  |  |   | 23,243 
|Professional services                                              |  |                             | 7,257   |                           |   | 4,879  |  |      | 13,048  |  |   | 8,919  
|Deposit insurance premium                                          |  |                             | 1,475   |                           |   | 3,487  |  |      | 2,750   |  |   | 4,048  
|Repossession and foreclosure, net of recoveries                    |  |                             | 2,602   |                           |   | 1,079  |  |      | 4,054   |  |   | 2,113  
|Other                                                              |  |                             | 17,053  |                           |   | 13,852 |  |      | 30,722  |  |   | 25,601 
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Total noninterest expense                                          |  |                             | 116,281 |                           |   | 96,939 |  |      | 209,100 |  |   | 174,203
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|                                                                   |  |                             |         |                          
|Income before income taxes                                         |  |                             | 21,972  |                           |   | 24,763 |  |      | 24,303  |  |   | 40,409 
|Income tax provision                                               |  |                             | 7,016   |                           |   | 8,666  |  |      | 7,596   |  |   | 14,286 
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|                                                                   |  |                             |         |                          
|Net income                                                         |  |                             | 14,956  |                           |   | 16,097 |  |      | 16,707  |  |   | 26,123 
|Less: Net income attributable to noncontrolling interest           |  |                             | 305     |                           |   | 33     |  |      | 370     |  |   | 56     
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|                                                                   |  |                             |         |                          
|Net income attributable to PlainsCapital Corporation               |  |                             | 14,651  |                           |   | 16,064 |  |      | 16,337  |  |   | 26,067 
|Dividends on preferred stock and other                             |  |                             | 1,390   |                           |   | 1,379  |  |      | 2,778   |  |   | 2,938  
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Income applicable to PlainsCapital Corporation common shareholders |  | $                           | 13,261  |                           | $ | 14,685 |  | $    | 13,559  |  | $ | 23,129 
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|                                                                   |  |                             |         |                          
|Earnings per common share                                          |  |                             |         |                           |   |        |  |      |         |  |   |        
|Basic                                                              |  | $                           | 0.42    |                           | $ | 0.47   |  | $    | 0.43    |  | $ | 0.74   
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        
|Diluted                                                            |  | $                           | 0.40    |                           | $ | 0.44   |  | $    | 0.41    |  | $ | 0.70   
|                                                                   |  |                             |         |                           |   |        |  |      |         |  |   |        

See accompanying notes.



4



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##### Table of Contents

PlainsCapital Corporation and Subsidiaries

Consolidated Statements of Shareholders Equity - Unaudited



|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------ |  | ---------------------- | ------ | - | -------------------------------------- | ------ | ------------ | - | ------ |  | ---------- | -------- |  | ------- | ------------------------------ |  | -------- | ------------- | - | ------------- | -------------- | ------- | ------ |  | - | -------- | - |  | ----- | ------ | - |  | - | ------ | - |  | - | ------- | -
|                                                                                                                   |  |                        |        |   | PlainsCapital Corporation Shareholders |        |              |   |        |  |            |         
|                                                                                                                   |  |                        |        |   | Preferred Stock                        |        | Common Stock |   |        |  |            | Retained |  |         | AccumulatedOther
Comprehensive |  |          | Unearned
ESOP |   |               | Noncontrolling |         |        |  |  
|                                                                                                                   |  | Comprehensive          |        |   |                                        |        |              |   |        |  |           
|                                                                                                                   |  | Income                 |        |   | Shares                                 |        | Amount       |   | Shares |  |            | Amount   |  | Surplus |                                |  | Earnings |               |   | Income (Loss) |                |         | Shares |  |   | Interest |   |  | Total |       
|                                                                                                                   |  | (Dollars in thousands) |       
|Balance, January 1, 2009                                                                                           |  |                        |        |   |                                        | 92,013 |              | $ | 87,631 |  | 31,573,518 |          |  | $       | 32                             |  | $        | 147,445       |   |               | $              | 167,865 |        |  | $ | 331      |   |  | $     | (3,489 | ) |  | $ | 1,709  |   |  | $ | 401,524 |  
|Stock option plans activity, including compensation expense                                                       |  |                        |        |   |                                        |       |              |   |       |  | 14,928     |          |  |         |                               |  |          | 2,077         |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   |       |   |  |   | 2,077   |  
|Adjustment to stock issued in business combination                                                                 |  |                        |        |   |                                        |       |              |   |       |  | (63        | )        |  |         |                               |  |          | (1            | ) |               |                |        |        |  |   |         |   |  |       |       |   |  |   |       |   |  |   | (1      | )
|Stock-based compensation expense                                                                                   |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          | 428           |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   |       |   |  |   | 428     |  
|ESOP activity                                                                                                      |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                | 32      |        |  |   |         |   |  |       |       |   |  |   |       |   |  |   | 32      |  
|Dividends on common stock ($0.10 per share)                                                                        |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                | (3,382  | )      |  |   |         |   |  |       |       |   |  |   |       |   |  |   | (3,382  | )
|Dividends on preferred stock                                                                                       |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                | (2,547  | )      |  |   |         |   |  |       |       |   |  |   |       |   |  |   | (2,547  | )
|Preferred stock amortization and accretion                                                                         |  |                        |        |   |                                        |       |              |   | 390    |  |           |          |  |         |                               |  |          |              |   |               |                | (390    | )      |  |   |         |   |  |       |       |   |  |   |       |   |  |   |        |  
|Cash distributions to noncontrolling interest                                                                      |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   | (319   | ) |  |   | (319    | )
|Comprehensive income:                                                                                              |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Net income                                                                                                         |  | $                      | 26,123 |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                | 26,067  |        |  |   |         |   |  |       |       |   |  |   | 56     |   |  |   | 26,123  |  
|Other comprehensive income (loss):                                                                                 |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Unrealized losses on securities available for sale, net of tax of $153.1                                           |  |                        | (297   | ) |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Unrealized gains on securities held in trust for the Supplemental Executive Retirement Plan, net of tax of $124.6  |  |                        | 242    |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Unrealized losses on customer-related cash flow hedges, net of tax of $3.3                                         |  |                        | (6     | ) |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Other comprehensive loss                                                                                           |  |                        | (61    | ) |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                |        |        |  |   | (61      | ) |  |       |       |   |  |   |       |   |  |   | (61     | )
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                                         |  | $                      | 26,062 |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Balance, June 30, 2009                                                                                             |  |                        |        |   |                                        | 92,013 |              | $ | 88,021 |  | 31,588,383 |          |  | $       | 32                             |  | $        | 149,949       |   |               | $              | 187,645 |        |  | $ | 270      |   |  | $     | (3,489 | ) |  | $ | 1,446  |   |  | $ | 423,874 |  
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |           
|Balance, January 1, 2010                                                                                           |  |                        |        |   |                                        | 92,013 |              | $ | 88,400 |  | 31,613,010 |          |  | $       | 32                             |  | $        | 150,626       |   |               | $              | 186,743 |        |  | $ | (300     | ) |  | $     | (3,001 | ) |  | $ | 1,659  |   |  | $ | 424,159 |  
|Stock option plans activity, including compensation expense                                                       |  |                        |        |   |                                        |       |              |   |       |  | 65,706     |          |  |         |                               |  |          | 340           |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   |       |   |  |   | 340     |  
|Vesting of stock-based compensation                                                                                |  |                        |        |   |                                        |       |              |   |       |  | 75,419     |          |  |         |                               |  |          |              |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   |       |   |  |   |        |  
|Stock-based compensation expense                                                                                   |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          | 665           |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   |       |   |  |   | 665     |  
|ESOP activity                                                                                                      |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                | 14      |        |  |   |         |   |  |       |       |   |  |   |       |   |  |   | 14      |  
|Dividends on common stock ($0.10 per share)                                                                        |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                | (3,396  | )      |  |   |         |   |  |       |       |   |  |   |       |   |  |   | (3,396  | )
|Dividends on preferred stock                                                                                       |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                | (2,388  | )      |  |   |         |   |  |       |       |   |  |   |       |   |  |   | (2,388  | )
|Preferred stock amortization and accretion                                                                         |  |                        |        |   |                                        |       |              |   | 390    |  |           |          |  |         |                               |  |          |              |   |               |                | (390    | )      |  |   |         |   |  |       |       |   |  |   |       |   |  |   |        |  
|Cash received from noncontrolling interest                                                                         |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   | 74     |   |  |   | 74      |  
|Cash distributions to noncontrolling interest                                                                      |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   | (137   | ) |  |   | (137    | )
|Redemption of noncontrolling interest                                                                              |  |                        |        |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          | 465           |   |               |                |        |        |  |   |         |   |  |       |       |   |  |   | (1,378 | ) |  |   | (913    | )
|Comprehensive income:                                                                                              |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Net income                                                                                                         |  | $                      | 16,707 |   |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                | 16,337  |        |  |   |         |   |  |       |       |   |  |   | 370    |   |  |   | 16,707  |  
|Other comprehensive income (loss):                                                                                 |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Unrealized gains on securities available for sale, net of tax of $4.2                                              |  |                        | 8      |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Unrealized losses on securities held in trust for the Supplemental Executive Retirement Plan, net of tax of
$250.2 |  |                        | (474   | ) |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Unrealized losses on customer-related cash flow hedges, net of tax of $8.0                                         |  |                        | (15    | ) |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Other comprehensive loss                                                                                           |  |                        | (481   | ) |                                        |       |              |   |       |  |           |          |  |         |                               |  |          |              |   |               |                |        |        |  |   | (481     | ) |  |       |       |   |  |   |       |   |  |   | (481    | )
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                                         |  | $                      | 16,226 |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  
|Balance, June 30, 2010                                                                                             |  |                        |        |   |                                        | 92,013 |              | $ | 88,790 |  | 31,754,135 |          |  | $       | 32                             |  | $        | 152,096       |   |               | $              | 196,920 |        |  | $ | (781     | ) |  | $     | (3,001 | ) |  | $ | 588    |   |  | $ | 434,644 |  
|                                                                                                                   |  |                        |        |   |                                        |        |              |   |        |  |            |          |  |         |                                |  |          |               |   |               |                |         |        |  |   |          |   |  |       |        |   |  |   |        |   |  |   |         |  

See accompanying notes.



5



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##### Table of Contents

PlainsCapital Corporation and Subsidiaries

Consolidated Statements of Cash Flows - Unaudited

(In thousands)



|                                                                                          |  |                           |            |   |      |   |            |  
|----------------------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                          |  | Six Months Ended June 30, |           
|                                                                                          |  | 2010                      |            |   | 2009 |  
|Operating Activities                                                                      |  |                           |            |   |      |   |            |  
|Net income                                                                                |  | $                         | 16,707     |   |      | $ | 26,123     |  
|Adjustments to reconcile net income to net cash used in operating activities              |  |                           |            |   |      |   |            |  
|Provision for loan losses                                                                 |  |                           | 33,200     |   |      |   | 24,763     |  
|Net losses on other real estate owned                                                     |  |                           | 2,897      |   |      |   | 1,597      |  
|Depreciation and amortization                                                             |  |                           | 6,201      |   |      |   | 5,130      |  
|Stock-based compensation expense                                                          |  |                           | 738        |   |      |   | 548        |  
|Net realized gains on sale of securities                                                  |  |                           | (1,710     | ) |      |   | (301       | )
|Loss (gain) on sale of premises and equipment                                             |  |                           | 67         |   |      |   | (11        | )
|Stock dividends received on securities                                                    |  |                           | (31        | ) |      |   | (30        | )
|Deferred income taxes                                                                     |  |                           | (661       | ) |      |   | 2,894      |  
|Changes in prepaid FDIC assessments                                                       |  |                           | 2,386      |   |      |   |           |  
|Changes in assets segregated for regulatory purposes                                      |  |                           |           |   |      |   | (3,500     | )
|Changes in trading securities                                                             |  |                           | (69,143    | ) |      |   | (12,083    | )
|Changes in broker-dealer and clearing organization receivables                            |  |                           | 17,750     |   |      |   | (56,749    | )
|Changes in fee award receivable                                                           |  |                           | 644        |   |      |   | 627        |  
|Changes in broker-dealer and clearing organization payables                               |  |                           | (26        | ) |      |   | 80,122     |  
|Changes in other assets                                                                   |  |                           | (36,820    | ) |      |   | 8,151      |  
|Changes in other liabilities                                                              |  |                           | (2,768     | ) |      |   | 14,512     |  
|Net gains from loan origination and sale of loans                                         |  |                           | (120,423   | ) |      |   | (111,728   | )
|Loans originated for sale                                                                 |  |                           | (2,949,548 | ) |      |   | (2,977,014 | )
|Proceeds from loans sold                                                                  |  |                           | 2,792,770  |   |      |   | 2,853,737  |  
|                                                                                          |  |                           |            |   |      |   |            |  
|Net cash used in operating activities                                                     |  |                           | (307,770   | ) |      |   | (143,212   | )
|                                                                                          |  |                           |            |   |      |   |            |  
|                                                                                          |  |                          
|Investing Activities                                                                      |  |                           |            |   |      |   |            |  
|Proceeds from maturities and principal reductions of securities held to maturity          |  |                           | 45,250     |   |      |   | 5,251      |  
|Proceeds from sales, maturities and principal reductions of securities available for sale |  |                           | 120,242    |   |      |   | 89,047     |  
|Purchases of securities held to maturity                                                  |  |                           | (6,173     | ) |      |   | (47,571    | )
|Purchases of securities available for sale                                                |  |                           | (262,145   | ) |      |   | (87,768    | )
|Net (increase) decrease in loans                                                          |  |                           | 20,232     |   |      |   | (148,141   | )
|Purchases of premises and equipment and other assets                                      |  |                           | (6,676     | ) |      |   | (7,702     | )
|Proceeds from sales of premises and equipment and other real estate owned                 |  |                           | 8,267      |   |      |   | 5,703      |  
|Net cash paid for Federal Home Loan Bank and Federal Reserve Bank stock                   |  |                           | (1,698     | ) |      |   | (11,574    | )
|                                                                                          |  |                           |            |   |      |   |            |  
|Net cash used in investing activities                                                     |  |                           | (82,701    | ) |      |   | (202,755   | )
|                                                                                          |  |                           |            |   |      |   |            |  
|                                                                                          |  |                          
|Financing Activities                                                                      |  |                           |            |   |      |   |            |  
|Net increase in deposits                                                                  |  |                           | 465,831    |   |      |   | 17,045     |  
|Net increase (decrease) in short-term borrowings                                          |  |                           | (119,712   | ) |      |   | 402,475    |  
|Proceeds from notes payable                                                               |  |                           | 1,700      |   |      |   | 500        |  
|Payments on notes payable                                                                 |  |                           | (2,800     | ) |      |   | (81,334    | )
|Proceeds from issuance of common stock                                                    |  |                           | 267        |   |      |   | 72         |  
|Dividends paid                                                                            |  |                           | (5,784     | ) |      |   | (5,319     | )
|Cash received from noncontrolling interest                                                |  |                           | 74         |   |      |   |           |  
|Cash distributions to noncontrolling interest                                             |  |                           | (137       | ) |      |   | (319       | )
|Other, net                                                                                |  |                           | (213       | ) |      |   | (139       | )
|                                                                                          |  |                           |            |   |      |   |            |  
|Net cash provided by financing activities                                                 |  |                           | 339,226    |   |      |   | 332,981    |  
|                                                                                          |  |                           |            |   |      |   |            |  
|                                                                                          |  |                          
|Net decrease in cash and cash equivalents                                                 |  |                           | (51,245    | ) |      |   | (12,986    | )
|Cash and cash equivalents at beginning of period                                          |  |                           | 160,367    |   |      |   | 114,571    |  
|                                                                                          |  |                           |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                                |  | $                         | 109,122    |   |      | $ | 101,585    |  
|                                                                                          |  |                           |            |   |      |   |            |  
|Supplemental Disclosures of Cash Flow Information                                         |  |                           |            |   |      |   |            |  
|Cash paid during the period for:                                                          |  |                           |            |   |      |   |            |  
|Interest                                                                                  |  | $                         | 19,170     |   |      | $ | 22,401     |  
|                                                                                          |  |                           |            |   |      |   |            |  
|Income taxes                                                                              |  | $                         | 2,000      |   |      | $ | 10,680     |  
|                                                                                          |  |                           |            |   |      |   |            |  
|                                                                                          |  |                          
|Supplemental Schedule of Noncash Activities                                               |  |                           |            |   |      |   |            |  
|Conversion of loans to other real estate owned                                            |  | $                         | 9,809      |   |      | $ | 10,161     |  
|                                                                                          |  |                           |            |   |      |   |            |  

See accompanying notes.



6



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##### Table of Contents

PlainsCapital Corporation and Subsidiaries

Notes to Consolidated Interim Financial Statements  Unaudited

June 30, 2010

1.
Summary of Significant Accounting and Reporting Policies

Basis of Presentation

The unaudited consolidated financial statements of PlainsCapital Corporation, a Texas corporation, and its subsidiaries (we, us,
our, our company, or PlainsCapital) for the three and six month periods ended June 30, 2010 and 2009 have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission
(the SEC).

The consolidated interim financial statements of PlainsCapital and subsidiaries are unaudited, but in the opinion of
management, contain all adjustments (consisting primarily of normal recurring accruals) necessary for a fair statement of the results of the interim periods presented. The consolidated interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q adopted by the SEC. Accordingly, the financial statements do not include all of the information and footnotes
required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form
10-K filed with the SEC on March 26, 2010. Results for interim periods are not necessarily indicative of results to be expected for a full year or any future period.

PlainsCapital is a financial holding company registered under the Bank Holding Company Act of 1956, as amended by the Gramm-Leach-Bliley Act of 1999,
headquartered in Dallas, Texas, that provides, through its subsidiaries, an array of financial products and services. In addition to traditional banking services, PlainsCapital provides residential mortgage lending, investment banking, public
finance advisory, wealth and investment management, treasury management, capital equipment leasing, fixed income sales and trading, asset management and correspondent clearing services.

PlainsCapital owns 100% of the outstanding stock of PlainsCapital Bank (the Bank) and 100% of the membership interest in PlainsCapital
Equity, LLC. PlainsCapital owns a 60.9% interest in Hester Capital Management, LLC (Hester Capital). The Bank owns 100% of the outstanding stock of PrimeLending, a PlainsCapital Company (PrimeLending), PNB Aero Services,
Inc., PCB-ARC, Inc. and Plains Financial Corporation (PFC). The Bank has a 100% interest in First Southwest Holdings, LLC (First Southwest), PlainsCapital Leasing, LLC and PlainsCapital Securities, LLC, as well as a 51%
voting interest in PlainsCapital Insurance Services, LLC.

After the close of business on December 31, 2008, First Southwest Holdings,
Inc., a diversified, private investment banking corporation headquartered in Dallas, Texas merged into FSWH Acquisition LLC, a wholly owned subsidiary of the Bank. Following the merger, FSWH Acquisition LLC changed its name to First
Southwest Holdings, LLC. The principal subsidiaries of First Southwest are First Southwest Company (FSC), a broker-dealer registered with the SEC and the Financial Industry Regulatory Authority (FINRA), and First
Southwest Asset Management, Inc., a registered investment advisor under the Investment Advisors Act of 1940.

The acquisition cost of First
Southwest Holdings, Inc. was approximately $62.2 million. In addition, PlainsCapital placed approximately 1.7 million shares of PlainsCapital Original Common Stock, valued at approximately $19.2 million as of December 31, 2008, into
escrow. The percentage of shares to be released from escrow and distributed to former First Southwest stockholders will be determined based upon, among other factors, the valuation of certain auction rate bonds held by First Southwest prior to the
merger (or repurchased from investors following the closing of the merger) as of the last day of December 2012 or, if applicable, the aggregate sales price of such auction rate bonds prior to such date. Any shares issued out of the escrow will be
accounted for as additional acquisition cost.



7



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##### Table of Contents

1. Summary of Significant Accounting and Reporting Policies (continued)



PlainsCapital used a third-party valuation specialist to assist in the determination of the fair value
of assets acquired, including intangibles, and liabilities assumed in the acquisition. The purchase price allocation resulted in net assets acquired in excess of consideration paid of approximately $12.8 million. That amount has been
recorded in other liabilities until the contingent consideration issue described previously is settled. Upon resolution of the contingent consideration issue, the acquisition cost of First Southwest may increase, resulting in a smaller excess of net
assets acquired over consideration paid, or in certain circumstances, an excess of consideration paid over net assets acquired that would result in recording goodwill from the transaction. Any remaining excess of net assets acquired over
consideration paid will be allocated pro-rata to reduce the carrying value of purchased assets.

The consolidated interim financial statements
include the accounts of the above-named entities. All significant intercompany transactions and balances have been eliminated. Noncontrolling interests have been recorded for minority ownership in entities that are not wholly owned and are presented
in compliance with the provisions of Noncontrolling Interest in Subsidiary Subsections of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC).

PlainsCapital also owns 100% of the outstanding common stock of PCC Statutory Trusts I, II, III and IV (the Trusts), which are not included
in the consolidated financial statements under the requirements of the Variable Interest Entities Subsections of the ASC, because the primary beneficiaries of the Trusts are not within the consolidated group.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The allowance for loan losses is particularly subject to change.

Common Stock

On August 27, 2009, PlainsCapital shareholders authorized a change to the name of our then-existing class of common stock to
Original Common Stock and the creation of a new class of common stock with 150 million authorized shares. In addition, shareholders authorized a three-for-one split of PlainsCapital Original Common Stock and a change in the par
value of the Original Common Stock from $10 per share to $0.001 per share. These changes became effective August 28, 2009 when PlainsCapital filed its Third Amended and Restated Certificate of Formation with the Texas Secretary of
State. PlainsCapital has retrospectively adjusted previously reported share and per share amounts to reflect the stock split and the change in the par value of the Original Common Stock for all periods presented.

Comprehensive Income (Loss)

PlainsCapitals comprehensive income (loss) consists of its net income and unrealized holding gains (losses) on its available for sale securities,
investments held in trust for the Supplemental Executive Retirement Plan and derivative instruments designated as cash flow hedges.

The
components of accumulated other comprehensive income (loss), net of taxes, at June 30, 2010 and December 31, 2009 are shown in the following table (in thousands):



|                                                                                                  |  |              |      |   |                  |   |      |  
|------------------------------------------------------------------------------------------------- |  | ------------ | ---- | - | ---------------- | - | ---- | -
|                                                                                                  |  | June 30,2010 |      |   | December 31,2009 |  
|Unrealized loss on securities available for sale                                                  |  | $            | (713 | ) |                  | $ | (721 | )
|Unrealized gain (loss) on securities held in trust for the Supplemental Executive Retirement Plan |  |              | (180 | ) |                  |   | 294  |  
|Unrealized gain on customer-related cash flow hedges                                              |  |              | 112  |   |                  |   | 127  |  
|                                                                                                  |  |              |      |   |                  |   |      |  
|                                                                                                  |  | $            | (781 | ) |                  | $ | (300 | )
|                                                                                                  |  |              |      |   |                  |   |      |  



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##### Table of Contents

1. Summary of Significant Accounting and Reporting Policies (continued)



Subsequent Events

PlainsCapital has applied the provisions of the Subsequent Events Topic of the ASC to its consolidated interim financial statements for periods ended
after June 15, 2009. The Subsequent Event Topic establishes general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued or available to be issued.

Reclassification

Certain items in the
2009 financial statements have been reclassified to conform to the 2010 presentation.

2. Securities

The amortized cost and fair value of securities, excluding trading securities, as of June 30, 2010 and December 31, 2009, are summarized as
follows (in thousands):



|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|----------------------------------- |  | ------------------ | ------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | -------
|                                    |  | Held to Maturity  
|                                    |  | AmortizedCost      |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|As of June 30, 2010                 |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|U. S. government agencies           |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Mortgage-backed securities          |  | $                  | 14,395  |                      | $ | 834                   |  | $ | (7         | ) |  | $ | 15,222 
|Collateralized mortgage obligations |  |                    | 46,539  |                      |   | 439                   |  |   | (190       | ) |  |   | 46,788 
|States and political subdivisions   |  |                    | 123,399 |                      |   | 3,361                 |  |   | (541       | ) |  |   | 126,219
|Auction rate bonds                  |  |                    | 73,894  |                      |   | 1,390                 |  |   | (2,093     | ) |  |   | 73,191 
|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Totals                              |  | $                  | 258,227 |                      | $ | 6,024                 |  | $ | (2,831     | ) |  | $ | 261,420
|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|                                    |  |                    |         |                     
|As of December 31, 2009             |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|U. S. government agencies           |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Mortgage-backed securities          |  | $                  | 16,963  |                      | $ | 831                   |  | $ | (8         | ) |  | $ | 17,786 
|Collateralized mortgage obligations |  |                    | 50,533  |                      |   | 764                   |  |   | (1,042     | ) |  |   | 50,255 
|States and political subdivisions   |  |                    | 120,818 |                      |   | 2,626                 |  |   | (948       | ) |  |   | 122,496
|Auction rate bonds                  |  |                    | 105,699 |                      |   | 1,735                 |  |   | (3,084     | ) |  |   | 104,350
|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Totals                              |  | $                  | 294,013 |                      | $ | 5,956                 |  | $ | (5,082     | ) |  | $ | 294,887
|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|                                    | 
|                                    |  | Available for Sale
|                                    |  | AmortizedCost      |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|As of June 30, 2010                 |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|U. S. government agencies           |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Mortgage-backed securities          |  | $                  | 10,985  |                      | $ | 636                   |  | $ |           |   |  | $ | 11,621 
|Collateralized mortgage obligations |  |                    | 325,162 |                      |   | 1,130                 |  |   | (2,860     | ) |  |   | 323,432
|States and political subdivisions   |  |                    | 12,174  |                      |   | 296                   |  |   | (110       | ) |  |   | 12,360 
|Auction rate bonds                  |  |                    | 22,902  |                      |   |                      |  |   | (189       | ) |  |   | 22,713 
|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Totals                              |  | $                  | 371,223 |                      | $ | 2,062                 |  | $ | (3,159     | ) |  | $ | 370,126
|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|                                    |  |                    |         |                     
|As of December 31, 2009             |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|U. S. government agencies           |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Mortgage-backed securities          |  | $                  | 27,696  |                      | $ | 587                   |  | $ | (269       | ) |  | $ | 28,014 
|Collateralized mortgage obligations |  |                    | 146,765 |                      |   | 1,679                 |  |   | (3,083     | ) |  |   | 145,361
|States and political subdivisions   |  |                    | 9,568   |                      |   | 44                    |  |   |           |   |  |   | 9,612  
|Auction rate bonds                  |  |                    | 44,622  |                      |   | 66                    |  |   | (134       | ) |  |   | 44,554 
|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Totals                              |  | $                  | 228,651 |                      | $ | 2,376                 |  | $ | (3,486     | ) |  | $ | 227,541
|                                    |  |                    |         |                      |   |                       |  |   |            |   |  |   |        



9



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##### Table of Contents

2. Securities (continued)



Information regarding securities that were in an unrealized loss position as of June 30, 2010 and
December 31, 2009, is shown in the following tables (dollars in thousands):



|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|------------------------------------------- |  | ------------------- |  | ----------------------- | ------- | ---------------- | - | ------------------- |  | ---------- |  | ---------------- | ------- |  | - | -----
|                                            |  | As of June 30, 2010 |  | As of December 31, 2009
|                                            |  | Number ofSecurities |  | Fair Value              |         | UnrealizedLosses |   | Number ofSecurities |  | Fair Value |  | UnrealizedLosses
|Held to maturity                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|U. S. government agencies                   |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Mortgage-backed securities                  |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  |                    |  | $                       |        |                  | $ |                    |  | 1          |  | $                | 495     |  | $ | 8    
|Unrealized loss for more than twelve months |  | 1                   |  |                         | 495     |                  |   | 7                   |  |           |  |                  |        |  |   |     
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 1                   |  |                         | 495     |                  |   | 7                   |  | 1          |  |                  | 495     |  |   | 8    
|Collateralized mortgage obligations         |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  | 8                   |  |                         | 28,958  |                  |   | 190                 |  | 5          |  |                  | 26,453  |  |   | 1,042
|Unrealized loss for more than twelve months |  |                    |  |                         |        |                  |   |                    |  |           |  |                  |        |  |   |     
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 8                   |  |                         | 28,958  |                  |   | 190                 |  | 5          |  |                  | 26,453  |  |   | 1,042
|States and political subdivisions           |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  | 28                  |  |                         | 16,037  |                  |   | 234                 |  | 39         |  |                  | 20,085  |  |   | 304  
|Unrealized loss for more than twelve months |  | 19                  |  |                         | 9,293   |                  |   | 307                 |  | 26         |  |                  | 11,755  |  |   | 644  
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 47                  |  |                         | 25,330  |                  |   | 541                 |  | 65         |  |                  | 31,840  |  |   | 948  
|Auction rate bonds                          |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  | 1                   |  |                         | 5,792   |                  |   | 70                  |  |           |  |                  |        |  |   |     
|Unrealized loss for more than twelve months |  | 3                   |  |                         | 30,992  |                  |   | 2,023               |  | 3          |  |                  | 60,257  |  |   | 3,084
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 4                   |  |                         | 36,784  |                  |   | 2,093               |  | 3          |  |                  | 60,257  |  |   | 3,084
|Total held to maturity                      |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  | 37                  |  |                         | 50,787  |                  |   | 494                 |  | 45         |  |                  | 47,033  |  |   | 1,354
|Unrealized loss for more than twelve months |  | 23                  |  |                         | 40,780  |                  |   | 2,337               |  | 29         |  |                  | 72,012  |  |   | 3,728
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 60                  |  | $                       | 91,567  |                  | $ | 2,831               |  | 74         |  | $                | 119,045 |  | $ | 5,082
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Available for sale                          |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|U. S. government agencies                   |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Mortgage-backed securities                  |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  |                    |  | $                       |        |                  | $ |                    |  | 1          |  | $                | 1,443   |  | $ | 22   
|Unrealized loss for more than twelve months |  |                    |  |                         |        |                  |   |                    |  | 1          |  |                  | 4,955   |  |   | 247  
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  |                    |  |                         |        |                  |   |                    |  | 2          |  |                  | 6,398   |  |   | 269  
|Collateralized mortgage obligations         |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  | 16                  |  |                         | 184,030 |                  |   | 2,860               |  | 6          |  |                  | 71,875  |  |   | 3,083
|Unrealized loss for more than twelve months |  |                    |  |                         |        |                  |   |                    |  |           |  |                  |        |  |   |     
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 16                  |  |                         | 184,030 |                  |   | 2,860               |  | 6          |  |                  | 71,875  |  |   | 3,083
|States and political subdivisions           |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  | 3                   |  |                         | 3,810   |                  |   | 110                 |  |           |  |                  |        |  |   |     
|Unrealized loss for more than twelve months |  |                    |  |                         |        |                  |   |                    |  |           |  |                  |        |  |   |     
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 3                   |  |                         | 3,810   |                  |   | 110                 |  |           |  |                  |        |  |   |     
|Auction rate bonds                          |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  |                    |  |                         |        |                  |   |                    |  |           |  |                  |        |  |   |     
|Unrealized loss for more than twelve months |  | 1                   |  |                         | 22,712  |                  |   | 189                 |  | 1          |  |                  | 22,848  |  |   | 134  
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 1                   |  |                         | 22,712  |                  |   | 189                 |  | 1          |  |                  | 22,848  |  |   | 134  
|Total available for sale                    |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|Unrealized loss for less than twelve months |  | 19                  |  |                         | 187,840 |                  |   | 2,970               |  | 7          |  |                  | 73,318  |  |   | 3,105
|Unrealized loss for more than twelve months |  | 1                   |  |                         | 22,712  |                  |   | 189                 |  | 2          |  |                  | 27,803  |  |   | 381  
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      
|                                            |  | 20                  |  | $                       | 210,552 |                  | $ | 3,159               |  | 9          |  | $                | 101,121 |  | $ | 3,486
|                                            |  |                     |  |                         |         |                  |   |                     |  |            |  |                  |         |  |   |      

Management has the intent and ability to hold the securities
classified as held to maturity until they mature, at which time the Bank expects to receive full value for the securities. As of June 30, 2010, management does not intend to sell any of the securities classified as available for sale in the
previous table and it believes that it is more likely than not that the Bank will not have to sell any such securities before a recovery of cost. As of June 30, 2010, management believes the impairments detailed in the table are temporary and
relate primarily to changes in interest rates. Accordingly, no other-than-temporary impairment loss has been recognized in PlainsCapitals consolidated statements of income.



10



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##### Table of Contents

2. Securities (continued)



The amortized cost and fair value of securities, excluding trading securities, as of June 30, 2010,
are shown by contractual maturity below (in thousands).



|                                       |  |                             |         |                               |   |               |  |            |         |  |   |        
|-------------------------------------- |  | --------------------------- | ------- | ----------------------------- | - | ------------- |  | ---------- | ------- |  | - | -------
|                                       |  | Securities Held to Maturity |         | Securities Available for Sale
|                                       |  | AmortizedCost               |         | Fair Value                    |   | AmortizedCost |  | Fair Value
|Due in one year or less                |  | $                           | 1,406   |                               | $ | 1,423         |  | $          |        |  | $ |       
|Due after one year through five years  |  |                             | 3,206   |                               |   | 3,291         |  |            |        |  |   |       
|Due after five years through ten years |  |                             | 14,562  |                               |   | 15,018        |  |            |        |  |   |       
|Due after ten years                    |  |                             | 178,119 |                               |   | 179,678       |  |            | 35,076  |  |   | 35,072 
|                                       |  |                             |         |                               |   |               |  |            |         |  |   |        
|                                       |  |                             | 197,293 |                               |   | 199,410       |  |            | 35,076  |  |   | 35,072 
|                                       |  |                             |         |                              
|Mortgage-backed securities             |  |                             | 14,395  |                               |   | 15,222        |  |            | 10,985  |  |   | 11,622 
|Collateralized mortgage obligations    |  |                             | 46,539  |                               |   | 46,788        |  |            | 325,162 |  |   | 323,432
|                                       |  |                             |         |                               |   |               |  |            |         |  |   |        
|                                       |  | $                           | 258,227 |                               | $ | 261,420       |  | $          | 371,223 |  | $ | 370,126
|                                       |  |                             |         |                               |   |               |  |            |         |  |   |        

For the three and six months ended June 30, 2010, the Bank
received proceeds from the sale of available for sale securities of $38.0 and $92.3 million, respectively, and realized gross gains of $0.1 and $1.7 million, respectively. The Bank determines the cost of securities sold by specific identification.
The Bank did not sell securities in the three months ended June 30, 2009. For the six months ended June 30, 2009, the Bank received proceeds from the sale of available for sale securities of $21.3 million and recognized gross gains of $0.3
million.

FSC realized net gains from its trading securities portfolio of $1.0 million and $1.5 million for the three and six months ended
June 30, 2010, respectively, and $0.1 million and $0.5 million for the three and six months ended June 30, 2009, respectively. The net gains were recorded as a component of other noninterest income.

The Bank tendered $24.0 million par value of available for sale auction rate bonds during the first quarter of 2010, receiving $21.6 million of gross
proceeds. No gain or loss resulted from the transaction. In addition, auction rate bonds with a par value of $4.5 million and an unaccreted discount of approximately $0.4 million were called at par by the issuer. Since First Southwest provided
related financing to the issuer, the Bank began accreting the discount over the expected term of financing in the first quarter of 2010. At the end of the second quarter, the First Southwest financing noted above expired. Accordingly, the Bank
recognized the remaining $0.2 million of unaccreted discount related to call transactions associated with the First Southwest financing.

During the first quarter of 2010, auction rate bonds with a par value of $13.4 million and an unaccreted discount of approximately $1.2 million were
called by the issuer. In order to address a change in the interpretation of the regulatory requirements regarding the maximum level of investments in certain securities, the Bank agreed to reimburse the issuer approximately $1.0 million for costs
the issuer incurred related to the call. As a result of the accelerated discount accretion and the reimbursement to the issuer, the Bank realized a gain on the call transaction of approximately $0.2 million.

During the second quarter of 2010, auction rate bonds with a par value of $17.0 million and an unaccreted discount of approximately $1.4 million were
called by the issuer. The Bank reimbursed the issuer approximately $1.8 million for costs related to the call, resulting in a loss on the call transaction of approximately $0.4 million.

In the aggregate, the par value of the Banks holdings of auction rate bonds decreased by $58.9 million from December 31, 2009 to June 30,
2010.

Securities with a carrying amount of approximately $408.9 million and $365.2 million (fair value of approximately $411.9 million and
$366.5 million) at June 30, 2010 and December 31, 2009, respectively, were pledged to secure public and trust deposits, federal funds purchased and securities sold under agreements to repurchase, and for other purposes as required or
permitted by law. In addition, the Bank had secured a letter of credit from the Federal Home Loan Bank (FHLB) in the amount of $96.0 million and $149.0 million at June 30, 2010 and December 31, 2009, in lieu of pledging
securities to secure certain public deposits.



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3. Loans and Allowance for Loan Losses

Loans summarized by category as of June 30, 2010 and December 31, 2009, are as follows (in thousands):



|                                    |  |              |           |   |                  |   |           |  
|----------------------------------- |  | ------------ | --------- | - | ---------------- | - | --------- | -
|                                    |  | June 30,2010 |           |   | December 31,2009 |  
|Commercial and industrial           |  | $            | 1,225,621 |   |                  | $ | 1,264,735 |  
|Lease financing                     |  |              | 62,316    |   |                  |   | 78,088    |  
|Construction and land development   |  |              | 380,611   |   |                  |   | 402,876   |  
|Real estate                         |  |              | 1,115,364 |   |                  |   | 1,125,134 |  
|Securities (primarily margin loans) |  |              | 188,416   |   |                  |   | 152,145   |  
|Consumer                            |  |              | 40,478    |   |                  |   | 48,791    |  
|                                    |  |              |           |   |                  |   |           |  
|                                    |  |              | 3,012,806 |   |                  |   | 3,071,769 |  
|Allowance for loan losses           |  |              | (56,375   | ) |                  |   | (52,092   | )
|                                    |  |              |           |   |                  |   |           |  
|                                    |  | $            | 2,956,431 |   |                  | $ | 3,019,677 |  
|                                    |  |              |           |   |                  |   |           |  

Impaired (non-accrual) loans totaled approximately $72.3 million and $69.0 million at June 30, 2010 and
December 31, 2009, respectively. At June 30, 2010, an allowance for loan loss of approximately $5.6 million was associated with $25.1 million of impaired loans. At December 31, 2009, an allowance for loan loss of approximately $9.2
million was associated with $63.7 million of impaired loans. The average aggregate balance of impaired loans for the three months ended June 30, 2010 and 2009 was approximately $76.1 million and $56.0 million, respectively. For the six
months ended June 30, 2010 and 2009, the average aggregate balance of impaired loans was approximately $77.7 million and $53.3 million, respectively. Interest income recorded on impaired loans for the three and six months ended June 30,
2010 and 2009 was nominal.

At June 30, 2010 and December 31, 2009, the Bank and PlainsCapital Leasing, LLC had loans of
approximately $1.4 million and $0.2 million, respectively, that were more than 90 days past due, but upon which interest continued to accrue.

Net investment in lease financing at June 30, 2010 and December 31, 2009 is shown in the following table (in thousands).



|                                          |  |              |        |   |                  |   |        |  
|----------------------------------------- |  | ------------ | ------ | - | ---------------- | - | ------ | -
|                                          |  | June 30,2010 |        |   | December 31,2009 |  
|Future minimum lease payments             |  | $            | 66,623 |   |                  | $ | 83,390 |  
|Unguaranteed residual value               |  |              | 174    |   |                  |   | 580    |  
|Guaranteed residual value                 |  |              | 2,122  |   |                  |   | 2,310  |  
|Initial direct costs, net of amortization |  |              | 229    |   |                  |   | 348    |  
|Unearned income                           |  |              | (6,832 | ) |                  |   | (8,540 | )
|                                          |  |              |        |   |                  |   |        |  
|                                          |  | $            | 62,316 |   |                  | $ | 78,088 |  
|                                          |  |              |        |   |                  |   |        |  



12



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##### Table of Contents

3. Loans and Allowance for Loan Losses (continued)



Changes in the allowance for loan losses for the three and six months ended June 30, 2010 and 2009
were as follows (in thousands):



|                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|                                |  | 2010                        |        |   | 2009                      |   |        | 2010 |  |   | 2009    |  
|Balance at beginning of period  |  | $                           | 49,971 |   |                           | $ | 29,123 |      |  | $ | 52,092  |   |  | $ | 40,672  |  
|Provision charged to operations |  |                             | 10,245 |   |                           |   | 10,750 |      |  |   | 33,200  |   |  |   | 24,763  |  
|Loans charged-off               |  |                             | (4,055 | ) |                           |   | (8,423 | )    |  |   | (29,402 | ) |  |   | (34,196 | )
|Recoveries on charged-off loans |  |                             | 214    |   |                           |   | 328    |      |  |   | 485     |   |  |   | 539     |  
|                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Balance at end of period        |  | $                           | 56,375 |   |                           | $ | 31,778 |      |  | $ | 56,375  |   |  | $ | 31,778  |  
|                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  

4. Deposits

Deposits at June 30, 2010 and December 31, 2009 are summarized as follows (in thousands):



|                           |  |              |           |                  |   |          
|-------------------------- |  | ------------ | --------- | ---------------- | - | ---------
|                           |  | June 30,2010 |           | December 31,2009
|Noninterest-bearing demand |  | $            | 225,009   |                  | $ | 223,551  
|Interest-bearing:          |  |              |           |                  |   |          
|NOW accounts               |  |              | 49,249    |                  |   | 56,697   
|Money market               |  |              | 1,693,240 |                  |   | 1,638,763
|Demand                     |  |              | 57,413    |                  |   | 46,156   
|Savings                    |  |              | 149,523   |                  |   | 135,962  
|In foreign branches        |  |              | 140,558   |                  |   | 166,746  
|Time - $100,000 and over   |  |              | 741,926   |                  |   | 684,939  
|Time - brokered            |  |              | 457,306   |                  |   | 106,790  
|Time - other               |  |              | 222,011   |                  |   | 218,435  
|                           |  |              |           |                  |   |          
|                           |  | $            | 3,736,235 |                  | $ | 3,278,039
|                           |  |              |           |                  |   |          



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##### Table of Contents

5. Short-Term Borrowings

Short-term borrowings at June 30, 2010 and December 31, 2009 were as follows (in thousands):



|                                               |  |              |         |                  |   |        
|---------------------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|                                               |  | June 30,2010 |         | December 31,2009
|Federal funds purchased                        |  | $            | 90,350  |                  | $ | 150,075
|Securities sold under agreements to repurchase |  |              | 108,482 |                  |   | 59,927 
|Federal Home Loan Bank notes                   |  |              | 100,000 |                  |   | 275,000
|Treasury tax and loan note option account      |  |              | 3,034   |                  |   | 3,076  
|Short-term bank loans                          |  |              | 66,500  |                  |   |       
|                                               |  |              |         |                  |   |        
|                                               |  | $            | 368,366 |                  | $ | 488,078
|                                               |  |              |         |                  |   |        

Federal funds purchased and securities sold under agreements to
repurchase generally mature daily, on demand or on some other short-term basis. The Bank and FSC execute transactions to sell securities under agreements to repurchase with both their customers and broker-dealers. Securities involved in these
transactions are held by the Bank, FSC or the dealer. Information concerning federal funds purchased and securities sold under agreements to repurchase is shown in the following table (dollar amounts in thousands):



|                                                      |  |                           |         |   |                  |   |         |  
|----------------------------------------------------- |  | ------------------------- | ------- | - | ---------------- | - | ------- | -
|                                                      |  | Six Months Ended June 30, |        
|                                                      |  | 2010                      |         |   | 2009             |  
|Average balance during the period                     |  | $                         | 220,965 |   |                  | $ | 250,762 |  
|Average interest rate during the period               |  |                           | 0.23    | % |                  |   | 0.36    | %
|                                                      |  |                          
|                                                      |  | June 30,2010              |         |   | December 31,2009 |  
|Average interest rate at end of period                |  |                           | 0.26    | % |                  |   | 0.21    | %
|Securities underlying the agreements at end of period |  |                           |         |   |                  |   |         |  
|Carrying value                                        |  | $                         | 116,030 |   |                  | $ | 65,838  |  
|Estimated fair value                                  |  | $                         | 115,620 |   |                  | $ | 67,075  |  

FHLB notes mature over terms not
exceeding 365 days and are collateralized by FHLB Dallas stock, nonspecified real estate loans and certain specific commercial real estate loans. Other information regarding FHLB notes is shown in the following table (dollar amounts in thousands).



|                                        |  |                           |         |   |                  |   |         |  
|--------------------------------------- |  | ------------------------- | ------- | - | ---------------- | - | ------- | -
|                                        |  | Six Months Ended June 30, |        
|                                        |  | 2010                      |         |   | 2009             |  
|Average balance during the period       |  | $                         | 299,862 |   |                  | $ | 159,807 |  
|Average interest rate during the period |  |                           | 0.67    | % |                  |   | 0.43    | %
|                                        |  |                          
|                                        |  | June 30,2010              |         |   | December 31,2009 |  
|Average interest rate at end of period  |  |                           | 0.46    | % |                  |   | 0.75    | %

FSC uses short-term bank loans
periodically to finance securities owned, customers margin accounts and other short-term operating activities. Interest on the borrowings varies with the federal funds rate. The weighted average interest rate on the borrowings at June 30,
2010 was 1.31%. No short-term bank loans were outstanding at December 31, 2009.



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##### Table of Contents

6. Notes Payable

Notes payable at June 30, 2010 and December 31, 2009 consisted of the following (in thousands):



|                                                                                                                                        |  |              |        |                  |   |       
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------ | ---------------- | - | ------
|                                                                                                                                        |  | June 30,2010 |        | December 31,2009
|Federal Home Loan Bank Dallas advances                                                                                                  |  | $            | 1,475  |                  | $ | 1,534 
|Revolving credit line with JPMorgan Chase not to exceed $17.7 million. Facility matures July 31, 2011, with interest payable
quarterly. |  |              | 17,700 |                  |   | 17,000
|Revolving credit line with JPMorgan Chase not to exceed $5.0 million. Facility matures July 31, 2011 with interest payable
quarterly.   |  |              |       |                  |   | 7,650 
|Term note with JPMorgan Chase, due July 31, 2011. Principal payments of $1.9 million and interest are payable quarterly.                |  |              | 7,650  |                  |   |      
|Term note with JPMorgan Chase, due July 31, 2011. Principal payments of $0.5 million and interest are payable semi-annually.            |  |              | 3,000  |                  |   | 3,500 
|Term note with JPMorgan Chase, due October 27, 2015. Principal payments of $25,000 and interest are payable
quarterly.                  |  |              | 500    |                  |   | 500   
|Subordinated note with JPMorgan Chase, not to exceed $20 million. Facility matures October 27, 2015 with interest payable
quarterly.    |  |              | 20,000 |                  |   | 20,000
|First Southwest nonrecourse notes, due January 25, 2035 with interest payable quarterly.                                                |  |              | 17,125 |                  |   | 18,366
|                                                                                                                                        |  |              |        |                  |   |       
|                                                                                                                                        |  | $            | 67,450 |                  | $ | 68,550
|                                                                                                                                        |  |              |        |                  |   |       

The table above reflects July 2010 amendments (July 2010
Amendments) to loan agreements between PlainsCapital and JPMorgan Chase governing PlainsCapitals revolving credit facilities and term notes. The July 2010 Amendments extended the maturity of PlainsCapitals existing lines of credit
and term notes expiring July 31, 2010 to July 31, 2011, converted certain borrowings under PlainsCapitals existing lines of credit to term borrowings and reduced the aggregate borrowing capacity under PlainsCapitals existing
lines of credit from $30.0 million to $22.7 million without materially altering PlainsCapitals available borrowing capacity. As a result of the July 2010 Amendments, PlainsCapital had $5.0 million of available borrowing capacity under its
existing lines of credit.

In April 2010, PlainsCapital secured an amendment of the covenant in the JPMorgan Chase revolving credit line
agreements regarding the Banks non-performing asset ratio. The amendment increased the acceptable non-performing asset ratio for the Bank to 3.50% from 2.50%, effective for compliance as of March 31, 2010. The July 2010 Amendments specify
that the acceptable non-performing asset ratio for the Bank will remain at 3.50% through December 31, 2010, decrease to 3.25% at March 31, 2011 and decrease to 3.00% at all times thereafter. PlainsCapital was in compliance with all the
covenants included in the revolving credit line agreements at June 30, 2010.

7. Income Taxes

PlainsCapitals effective tax rate was 31.9% and 35.0% for the three months ended June 30, 2010 and 2009, respectively. For the six months
ended June 30, 2010 and 2009, PlainsCapitals effective tax rate was 31.3% and 35.4%, respectively. The reduction in the effective tax rate is a result of higher levels of tax-exempt income for the three and six months ended June 30, 2010,
compared to the corresponding period in 2009.

PlainsCapital files income tax returns in the U.S. federal jurisdiction and several U.S. state
jurisdictions. PlainsCapital is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2007.



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##### Table of Contents

8. Commitments and Contingencies

The Bank acts as agent on behalf of certain correspondent banks in the purchase and sale of federal funds that aggregated $0.5 million and $8.5 million at
June 30, 2010 and December 31, 2009, respectively.

Legal Matters

In November 2006, FSC received subpoenas from the SEC and the U.S. Department of Justice (the DOJ) in connection with an investigation of
possible antitrust and securities law violations, including bid-rigging, in the procurement of guaranteed investment contracts and other investment products for the reinvestment of bond proceeds by municipalities. The investigation is industry-wide
and includes approximately 30 or more firms, including some of the largest U.S. investment firms. To the extent that its participation is requested, FSC will continue to cooperate with these investigations.

As a result of these SEC and DOJ investigations into industry-wide practices, FSC was named as a co-defendant in a series of civil lawsuits filed during
2008 in several different federal courts by various state and local governmental entities suing on behalf of themselves and a purported class of similarly situated governmental entities. A similar set of lawsuits were filed in California state
courts by various local governmental entities suing only on behalf of themselves and not on behalf of a putative class. The California state court suits were removed to federal court, and all of the cases have been transferred to federal court in
New York. On April 29, 2009, the federal court judge dismissed all claims asserted against FSC and nearly all other defendants from the consolidated putative class action case and granted the lead class plaintiffs until June 18, 2009 to
file an amended complaint citing specific instances of alleged anti-competitive behavior by specific individuals at specific defendants.

On
June 18, 2009, the lead class plaintiffs filed a second consolidated amended class action complaint. This amended complaint did not name FSC as a defendant and did not make any specific allegations of misconduct against FSC or any of its
employees. As a result, FSC is no longer a party to the putative class action case. However, FSC is identified in this consolidated amended class action complaint as an alleged co-conspirator with the named defendants. The remaining defendants filed
motions to dismiss the second consolidated amended class action complaint, but on March 25, 2010, the Court denied those motions, thus allowing the consolidated class action to proceed against the remaining defendants.

With respect to putative class actions filed in federal court by California plaintiffs that opted not to join in the consolidated class action case, the
federal court judge granted those plaintiffs until September 15, 2009 to file an amended complaint. In their amended complaint, these California putative class plaintiffs also did not name FSC as a defendant and did not make any specific
allegations of misconduct against FSC or any of its employees. As a result, FSC is no longer a party to these California putative class actions. However, FSC is identified in this complaint as an alleged co-conspirator with the named defendants. The
remaining defendants filed motions to dismiss the amended complaint in the California class action. On April 26, 2010, the Court granted those motions in part and denied them in part, allowing certain claims to proceed against the remaining
defendants.

With respect to the removed California suits that do not seek class action status, the federal court judge gave the plaintiffs
until September 15, 2009 to file an amended complaint. These California plaintiffs, all of which are represented by the Cotchett, Pitre, and McCarthy law firm, filed amended complaints continuing to identify FSC as a named defendant. The few
allegations against FSC are very limited in scope.

On November 12, 2009, Sacramento Municipal Utility District, City of Riverside, The
Redevelopment Agency of the City of Riverside, and The Public Financing Authority of the City of Riverside filed new lawsuits on behalf of themselves, but not on behalf of a putative class, in federal court. Additionally, on December 10, 2009,
The Redevelopment Agency of the City of Stockton and The Public Financing Authority of the City of Stockton, County of Tulare, Los Angeles World Airports and Sacramento Suburban Water District filed new lawsuits on behalf of themselves, but not on
behalf of a putative class, in federal court. Similar to the other five cases previously brought by California public entities that do not seek to certify a class, FSC is named as a defendant, the plaintiffs are represented by the Cotchett, Pitre,
and McCarthy law firm, and the few allegations against FSC are very limited in scope. The eleven individual California actions are referred to herein as the Original Cotchett Complaints.



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##### Table of Contents

8. Commitments and Contingencies (continued)



On February 9, 2010, the defendants in the Original Cotchett Complaints, except Bank of America,
The Goldman Sachs Group, Inc., Goldman Sachs Mitsui Marine Derivative Products, L.P. and Goldman Sachs Bank USA, filed a Joint Motion to Dismiss the Original Cotchett Complaints along with a Memorandum in Support of Defendants Joint Motion to
Dismiss the Original Cotchett Complaints. Additionally, FSC filed a Supplemental Memorandum in Support of the Motion to Dismiss the Original Cotchett Complaints setting forth specific reasons why the Original Cotchett Complaints should be dismissed
as to FSC.

On March 26, 2010, the California plaintiffs filed a response to the motion to dismiss. On April 16, 2010, the moving
defendants filed a joint reply in support of the motion to dismiss, and FSC filed a Supplemental Reply Memorandum in Support of its Motion to Dismiss. On April 26, 2010, the court denied the motion to dismiss as to FSC and nearly every other
defendant named in the Original Cotchett Complaints.

On May 19, 2010, City of Richmond, California, City of Redwood City, California,
East Bay Municipal Utility District and Redevelopment Agency of the City and County of San Francisco filed new lawsuits on behalf of themselves, but not on behalf of a putative class, in United States Federal District Court. Additionally, on
May 21, 2010, City of San Jose, California filed a new lawsuit on behalf of itself, but not on behalf of a putative class, in United States Federal District Court. Similar to the Original Cotchett Complaints, the plaintiffs are represented by
the Cotchett, Pitre & McCarthy law firm, and the few allegations against FSC are very limited in scope. These five individual California actions are referred herein as the May Cotchett Complaints.

In both the Original Cotchett Complaints and the May Cotchett Complaints the plaintiffs allege that FSC violated Section 1 of the Sherman Act and
the California Cartwright Act.

FSC filed its answer to the Original Cotchett Complaints on June 28, 2010. FSCs answer to the May
Cotchett Complaints is due on or about August 6, 2010.

As part of an industry-wide inquiry by FINRA into sales practices related to
auction rate bonds, FSC executed a term sheet in 2008 in which it agreed to pay a fine and to buy back $41.6 million of auction rate bonds at par from a defined class of customers. The fine was paid in 2008, and the auction rate bonds were purchased
from these customers in February 2009. FSC recorded a liability of $3.8 million as of December 31, 2008 representing the loss relating to this settlement. In addition, for a 60-day period commencing June 16, 2009, FSC agreed to use
its best efforts to provide liquidity to certain other customers not otherwise part of the defined class referenced above. This 60-day period expired on August 14, 2009, and on September 11, 2009, FSC certified to FINRA the results of its
best efforts obligation.

PlainsCapital and subsidiaries are defendants in various other legal matters arising in the normal course of
business. Management believes that the ultimate liability, if any, arising from these matters will not materially affect the consolidated financial statements.

Other Contingencies

PlainsCapital and
its subsidiaries lease space, primarily for branch facilities and automated teller machines, under noncancelable operating leases with remaining terms, including renewal options, of 1 to 19 years and under capital leases with remaining terms of 12
to 19 years. Future minimum payments under these leases have not changed significantly from the amounts reported at December 31, 2009 in the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K
filed with the SEC on March 26, 2010. Rental expense under the operating leases was approximately $5.2 million and $4.3 million for the three months ended June 30, 2010 and 2009, respectively. For the six months ended June 30, 2010
and 2009, rental expense was approximately $10.4 million and $8.4 million, respectively.

9. Financial Instruments with Off-Balance Sheet
Risk

The Bank is party to financial instruments with off-balance sheet risk that are used in the normal course of business to meet the
financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit that involve varying degrees of credit and interest rate risk in excess of the amount recognized in the consolidated
financial statements. Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred or received. The contract amounts of those instruments reflect the extent of involvement (and therefore the
exposure to credit loss) the Bank has in particular classes of financial instruments.



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##### Table of Contents

9. Financial Instruments with Off-Balance Sheet Risk (continued)



Commitments to extend credit are agreements to lend to a customer provided that the terms established in
the contract are met. Commitments generally have fixed expiration dates and may require payment of fees. Because certain commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future
cash requirements. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The credit risk
involved in issuing letters of credit is essentially the same as that involved in extending loan commitments to customers.

The Bank had in
the aggregate outstanding unused commitments to extend credit of $886.1 million at June 30, 2010. The Bank had outstanding standby letters of credit of $48.9 million at June 30, 2010.

The Bank uses the same credit policies in making commitments and standby letters of credit as it does for on-balance sheet instruments. The amount of
collateral obtained, if deemed necessary, upon extension of credit is based on managements credit evaluation of the borrower. Collateral held varies but may include real estate, accounts receivable, marketable securities, interest-bearing
deposit accounts, inventory, and property, plant and equipment.

In the normal course of business, FSC executes, settles and finances various
securities transactions that may expose FSC to off-balance sheet risk in the event that a customer or counterparty does not fulfill its contractual obligations. Examples of such transactions include the sale of securities not yet purchased by
customers or for the account of First Southwest, clearing agreements between First Southwest and various clearinghouses and broker-dealers, secured financing arrangements that involve pledged securities, and when-issued underwriting and purchase
commitments.

10. Stock-Based Compensation

PlainsCapital and subsidiaries have four stock option plans (the Stock Option Plans) that provide for the granting of stock options to
officers and key employees. In addition, PlainsCapital has granted restricted stock to a group of officers and key employees.

On
March 18, 2010, PlainsCapitals board of directors adopted the PlainsCapital Corporation 2010 Long-Term Incentive Plan (the 2010 Plan). The 2010 Plan allows for the granting of nonqualified stock options, stock appreciation
rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights and other awards to employees of PlainsCapital, its subsidiaries and outside directors of PlainsCapital. In the aggregate, 1.0 million shares of
Original Common Stock may be delivered pursuant to awards granted under the 2010 Plan.

Following the adoption of the 2010 Plan, 8,281 shares
of restricted stock were granted to outside directors of PlainsCapital as a component of their annual directors fees. The restricted stock grants vest in one year.

Effective April 1, 2010, certain PrimeLending employees were granted an aggregate of 50,000 shares of restricted stock. The grants to the
PrimeLending employees vest in five years. In addition, certain employees of PlainsCapital and its subsidiaries were granted, effective April 1, 2010, an aggregate of 278,057 restricted stock units. The restricted stock units vest in five
years.

Effective July 1, 2010, a PrimeLending employee was granted 2,000 restricted stock units under the 2010 Plan. The restricted
stock units vest in five years.

Compensation cost related to the Stock Option Plans and the 2010 Plan was approximately $0.4 million and $0.2
million for the three months ended June 30, 2010 and 2009, respectively. For the six months ended June 30, 2010 and 2009, compensation cost was approximately $0.7 million and $0.5 million, respectively.



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##### Table of Contents

10. Stock-Based Compensation (continued)



At June 30, 2010, unrecognized cost related to the Stock Option Plans was approximately $0.1
million. At June 30, 2010, PlainsCapital had 510,862 shares of unvested restricted stock. Unrecognized cost related to the restricted stock was $5.4 million at June 30, 2010. Substantially all of the unrecognized cost will be recognized as
compensation cost ratably over the next six years. Except for those restricted shares granted to outside directors, the vesting of the restricted stock will automatically accelerate in full upon a change in control or the date upon which our common
stock is listed and traded on an exchange registered under the Securities Exchange Act of 1934, as amended (the Exchange Act). If the restricted stock vests on an accelerated basis, the entire unrecognized cost related to the restricted
stock would be recognized in noninterest expense immediately.

At June 30, 2010, a total of 81,258 shares were available for grant under
the Stock Option Plans and 663,662 shares were available for grant under the 2010 Plan. PlainsCapital typically issues new shares upon exercise of option grants.

Information regarding the stock option plans for the six months ended June 30, 2010 is as follows:



|                              |  |         |   |  |                              |     
|----------------------------- |  | ------- | - |  | ---------------------------- | ----
|                              |  | 2010   
|                              |  | Shares  |   |  | WeightedAverageExercisePrice
|Outstanding, January 1        |  | 943,515 |   |  | $                            | 8.50
|Exercised                     |  | (87,606 | ) |  |                              | 3.06
|Cancellations and expirations |  | (75,477 | ) |  |                              | 3.66
|                              |  |         |   |  |                              |     
|Outstanding, June 30          |  | 780,432 |   |  |                              | 9.58
|                              |  |         |   |  |                              |     



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##### Table of Contents

11. Regulatory Matters

The Bank and PlainsCapital are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatoryand possibly additional discretionaryactions by regulators that, if undertaken, could have a direct, material effect on the consolidated financial statements. The regulations
require the companies to meet specific capital adequacy guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital classifications are
also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures
established by regulation to ensure capital adequacy require the companies to maintain minimum amounts and ratios (set forth in the table below) of Tier 1 capital (as defined in the regulations) to total average assets (as defined), and minimum
ratios of Tier 1 and total capital (as defined) to risk-weighted assets (as defined). A comparison of the Banks and PlainsCapitals actual capital amounts and ratios to the minimum requirements is as follows (dollar amounts in thousands):



|                                         |        |                      |         |       |        |        |        |       |         |  |       |  
|---------------------------------------- | ------ | -------------------- | ------- | ----- | ------ | ------ | ------ | ----- | ------- |  | ----- | -
|                                         |        | At June 30, 2010     |        
|                                         |        | Required             |         |       | Actual |       
|                                         |        | Amount               |         | Ratio |        |        | Amount |       | Ratio   | 
|PlainsCapital Bank:                      |        |                      |         |       |        |        |        |       |         |  |       |  
|Tier 1 capital (to average assets)       |        | $                    | 190,465 |       | 4      | %      |        | $     | 471,561 |  | 9.90  | %
|Tier 1 capital (to risk-weighted assets) |        |                      | 148,135 |       | 4      | %      |        |       | 471,561 |  | 12.73 | %
|Total capital (to risk-weighted assets)  |        |                      | 296,271 |       | 8      | %      |        |       | 517,988 |  | 13.99 | %
|                                         |        |                      |         |      
|PlainsCapital Corporation:               |        |                      |         |       |        |        |        |       |         |  |       |  
|Tier 1 capital (to average assets)       |        | $                    | 191,011 |       | 4      | %      |        | $     | 449,537 |  | 9.41  | %
|Tier 1 capital (to risk-weighted assets) |        |                      | 148,553 |       | 4      | %      |        |       | 449,537 |  | 12.10 | %
|Total capital (to risk-weighted assets)  |        |                      | 297,106 |       | 8      | %      |        |       | 516,093 |  | 13.90 | %
|                                         |       
|                                         |        | At December 31, 2009 |        
|                                         |        | Required             |         |       | Actual |       
|                                         | Amount |                      | Ratio   |       |        | Amount |        | Ratio |        
|PlainsCapital Bank:                      |        |                      |         |       |        |        |        |       |         |  |       |  
|Tier 1 capital (to average assets)       |        | $                    | 184,958 |       | 4      | %      |        | $     | 461,109 |  | 9.97  | %
|Tier 1 capital (to risk-weighted assets) |        |                      | 144,012 |       | 4      | %      |        |       | 461,109 |  | 12.81 | %
|Total capital (to risk-weighted assets)  |        |                      | 288,024 |       | 8      | %      |        |       | 506,148 |  | 14.06 | %
|                                         |        |                      |         |      
|PlainsCapital Corporation:               |        |                      |         |       |        |        |        |       |         |  |       |  
|Tier 1 capital (to average assets)       |        | $                    | 185,146 |       | 4      | %      |        | $     | 437,442 |  | 9.45  | %
|Tier 1 capital (to risk-weighted assets) |        |                      | 144,589 |       | 4      | %      |        |       | 437,442 |  | 12.10 | %
|Total capital (to risk-weighted assets)  |        |                      | 289,179 |       | 8      | %      |        |       | 502,666 |  | 13.91 | %



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11. Regulatory Matters (continued)



To be considered adequately capitalized (as defined) under the regulatory framework for prompt
corrective action, the Bank must maintain minimum Tier 1 capital to total average assets and Tier 1 capital to risk-weighted assets ratios of 4%, and a total capital to risk-weighted assets ratio of 8%. Based on the actual capital amounts and ratios
shown in the previous table, the Banks ratios place it in the well capitalized (as defined) capital category under the regulatory framework for prompt corrective action. The minimum required capital amounts and ratios for the well capitalized
category are summarized as follows (dollar amounts in thousands):



|                                         |  |                      |         |       |        |   |        |   |         |  |       |  
|---------------------------------------- |  | -------------------- | ------- | ----- | ------ | - | ------ | - | ------- |  | ----- | -
|                                         |  | At June 30, 2010     |        
|                                         |  | Required             |         |       | Actual |  
|                                         |  | Amount               |         | Ratio |        |   | Amount |   | Ratio   | 
|PlainsCapital Bank:                      |  |                      |         |       |        |   |        |   |         |  |       |  
|Tier 1 capital (to average assets)       |  | $                    | 238,081 |       | 5      | % |        | $ | 471,561 |  | 9.90  | %
|Tier 1 capital (to risk-weighted assets) |  |                      | 222,203 |       | 6      | % |        |   | 471,561 |  | 12.73 | %
|Total capital (to risk-weighted assets)  |  |                      | 370,338 |       | 10     | % |        |   | 517,988 |  | 13.99 | %
|                                         | 
|                                         |  | At December 31, 2009 |        
|                                         |  | Required             |         |       | Actual |  
|                                         |  | Amount               |         | Ratio |        |   | Amount |   | Ratio   | 
|PlainsCapital Bank:                      |  |                      |         |       |        |   |        |   |         |  |       |  
|Tier 1 capital (to average assets)       |  | $                    | 231,197 |       | 5      | % |        | $ | 461,109 |  | 9.97  | %
|Tier 1 capital (to risk-weighted assets) |  |                      | 216,018 |       | 6      | % |        |   | 461,109 |  | 12.81 | %
|Total capital (to risk-weighted assets)  |  |                      | 360,030 |       | 10     | % |        |   | 506,148 |  | 14.06 | %

Pursuant to the net capital
requirements of Rule 15c3-1 of the Exchange Act, FSC has elected to determine its net capital requirements using the alternative method. Accordingly, FSC is required to maintain minimum net capital, as defined in Rule 15c3-1, equal to the greater of
$250,000 or 2% of aggregate debit balances, as defined in Rule 15c3-3. At June 30, 2010, FSC had net capital of $47.8 million; the minimum net capital requirement was $2.7 million; net capital maintained by FSC at June 30, 2010 was 36% of
aggregate debits; and net capital in excess of the minimum requirement at June 30, 2010 was $45.1 million.

As a mortgage originator,
PrimeLending is subject to minimum net worth requirements established by the United States Department of Housing and Urban Development (HUD). PrimeLending determines its compliance with the minimum net worth requirements on an annual
basis. As of December 31, 2009, PrimeLending was required to have net worth of $1.0 million. PrimeLendings adjusted net worth as defined by the Consolidated Audit Guide for Audits of HUD Programs was $35.3 million as of
December 31, 2009, resulting in adjusted net worth above the required amount of $34.3 million.

12. Shareholders Equity

The Bank is subject to certain restrictions on the amount of dividends it may declare without prior regulatory approval. At June 30,
2010, approximately $42.9 million of retained earnings was available for dividend declaration without prior approval from the Federal Reserve and the Texas Department of Banking.

PlainsCapital must receive the consent of the U.S. Treasury Department to increase the per share amount of dividends paid on our common stock until
December 19, 2011, unless we redeem the preferred stock issued pursuant to the Troubled Asset Relief Program (TARP) Capital Purchase Program.



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13. Broker-Dealer and Clearing Organization Receivables and Payables

Broker/dealer and clearing organization receivables and payables at June 30, 2010 and December 31, 2009 consisted of the following (in
thousands):



|                             |  |              |         |                  |   |        
|---------------------------- |  | ------------ | ------- | ---------------- | - | -------
|                             |  | June 30,2010 |         | December 31,2009
|Receivables                  |  |              |         |                  |   |        
|Securities borrowed          |  | $            | 43,399  |                  | $ | 73,139 
|Securities failed to deliver |  |              | 13,158  |                  |   | 6,110  
|Clearing organizations       |  |              | 8,357   |                  |   | 3,275  
|Due from dealers             |  |              | 50      |                  |   | 190    
|                             |  |              |         |                  |   |        
|                             |  | $            | 64,964  |                  | $ | 82,714 
|                             |  |              |         |                  |   |        
|Payables                     |  |              |         |                  |   |        
|Securities loaned            |  | $            | 68,488  |                  | $ | 86,207 
|Correspondents               |  |              | 25,648  |                  |   | 17,370 
|Securities failed to receive |  |              | 12,964  |                  |   | 4,433  
|Clearing organizations       |  |              | 1,146   |                  |   | 262    
|                             |  |              |         |                  |   |        
|                             |  | $            | 108,246 |                  | $ | 108,272
|                             |  |              |         |                  |   |        

14. Fair Value Measurements

Fair Value Measurements and Disclosures

PlainsCapital determines fair values in compliance with the Fair Value Measurements and Disclosures Topic of the ASC (Fair Value Topic). The
Fair Value Topic defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The Fair Value Topic 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. The Fair Value Topic assumes that transactions upon which fair value measurements are based occur in the principal market for the
asset or liability being measured. Further, fair value measurements made under the Fair Value Topic exclude transaction costs and are not the result of forced transactions.

The Fair Value Topic creates a fair value hierarchy that classifies fair value measurements based upon the inputs used in valuing the assets or
liabilities that are the subject of fair value measurements. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs, as indicated
below.



| |  |  | Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities that PlainsCapital can access at the measurement
date.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2 Inputs: Observable inputs other than Level 1 prices. Level 2 inputs include quoted prices for similar assets or liabilities in active
markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates and credit risks), and inputs that are
derived from or corroborated by market data, among others.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3 Inputs: Unobservable inputs that reflect an entitys own assumptions about the assumptions that market participants would use in
pricing the assets or liabilities. Level 3 inputs include pricing models and discounted cash flow techniques, among others.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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14. Fair Value Measurements (continued)



Fair Value Option

PlainsCapital has elected to measure substantially all of PrimeLendings mortgage loans held for sale and certain time deposits at fair value under
the provisions of the Fair Value Option Subsections of the ASC (Fair Value Option). PlainsCapital elected to apply the provisions of the Fair Value Option to these items so that it would have the opportunity to mitigate volatility
in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. PlainsCapital determines the fair value of the financial instruments accounted for under the provisions
of the Fair Value Option in compliance with the provisions of the Fair Value Topic discussed above.

At June 30, 2010, the aggregate fair
value of PrimeLending loans held for sale accounted for under the Fair Value Option was $699.7 million, while the unpaid principal balance of those loans was $680.2 million. At December 31, 2009, the aggregate fair value of PrimeLending loans
held for sale accounted for under the Fair Value Option was $430.8 million, while the unpaid principal balance of those loans was $419.5 million. The fair value excludes interest, which is reported as interest income on loans in the income
statement.

PlainsCapital holds a number of financial instruments that are measured at fair value on a recurring basis, either by the
application of the Fair Value Option or other authoritative pronouncements. The fair values of those instruments are determined primarily using Level 2 inputs. Those inputs include quotes from mortgage loan investors and derivatives dealers, data
from an independent pricing service and rates paid in the brokered certificate of deposit market.

At June 30, 2010, the Bank held a
collateralized mortgage obligation that the Bank was unable to price due to the terms and conditions of the instrument. As a result, the Bank determined that fair value approximated book value using Level 3 inputs. In addition, the Bank holds
auction rate bonds purchased as a result of the First Southwest acquisition. The estimated fair value of the auction rate bonds was determined by a third-party valuation specialist using Level 3 inputs, primarily due to the lack of observable market
data. Inputs for the valuation were developed using terms of the auction rate bonds, market interest rates, asset appropriate credit transition matrices and recovery rates and assumptions regarding the term to maturity of the auction rate bonds. The
following table reconciles the beginning and ending balances of assets measured at fair value using Level 3 inputs (in thousands).



|                                                     |  |                                   |         |   |                                 |   |        |                   |  |   |         |   |  |   |         |  
|---------------------------------------------------- |  | --------------------------------- | ------- | - | ------------------------------- | - | ------ | ----------------- |  | - | ------- | - |  | - | ------- | -
|                                                     |  | CollateralizedMortgageObligations |         |   | States andPoliticalSubdivisions |   |        | AuctionRate Bonds |  |   | Total   |  
|Balance, January 1, 2010                             |  | $                                 |        |   |                                 | $ | 3,839  |                   |  | $ | 44,554  |   |  | $ | 48,393  |  
|Unrealized losses in other comprehensive income, net |  |                                   |        |   |                                 |   |       |                   |  |   | (121    | ) |  |   | (121    | )
|Transfers to Level 2                                 |  |                                   | (20,166 | ) |                                 |   | (3,839 | )                 |  |   |        |   |  |   | (24,005 | )
|Purchases, issuances and settlements, net            |  |                                   | 35,280  |   |                                 |   |       |                   |  |   | (21,720 | ) |  |   | 13,560  |  
|                                                     |  |                                   |         |   |                                 |   |        |                   |  |   |         |   |  |   |         |  
|Balance, June 30, 2010                               |  | $                                 | 15,114  |   |                                 | $ |       |                   |  | $ | 22,713  |   |  | $ | 37,827  |  
|                                                     |  |                                   |         |   |                                 |   |        |                   |  |   |         |   |  |   |         |  

In the table above, settlements include premium amortization and discount accretion.

In the normal course of business, the Bank commits to purchase securities prior to their issuance. Because such when-issued securities are
purchased prior to their actual issuance, the Bank will not, on occasion, receive pricing data on these securities from its independent pricing service. In those instances, the Bank will classify fair value measurements regarding those securities as
Level 3. The Bank will transfer the fair value measurements out of Level 3 at the end of the month in which it begins to receive pricing data from the independent pricing service.



23



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##### Table of Contents

14. Fair Value Measurements (continued)



The following tables present information regarding financial assets and liabilities measured at fair
value on a recurring basis, including changes in fair value for those instruments that are reported at fair value under an election under the Fair Value Option (in thousands).



|                              |  |                  |   |               |   |         |               |  |                 |        |  |   |         |  
|----------------------------- |  | ---------------- | - | ------------- | - | ------- | ------------- |  | --------------- | ------ |  | - | ------- | -
|                              |  | At June 30, 2010 |  
|                              |  | Level 1Inputs    |   | Level 2Inputs |   |         | Level 3Inputs |  | Total FairValue |       
|Loans held for sale           |  | $                |  |               | $ | 699,686 |               |  | $               |       |  | $ | 699,686 |  
|Securities available for sale |  |                  |  |               |   | 332,300 |               |  |                 | 37,826 |  |   | 370,126 |  
|Trading securities            |  |                  |  |               |   | 93,326  |               |  |                 |       |  |   | 93,326  |  
|Derivative assets             |  |                  |  |               |   | 3,306   |               |  |                 |       |  |   | 3,306   |  
|Time deposits                 |  |                  |  |               |   | 913     |               |  |                 |       |  |   | 913     |  
|Trading liabilities           |  |                  |  |               |   | 6,437   |               |  |                 |       |  |   | 6,437   |  
|Derivative liabilities        |  |                  |  |               |   | (96     | )             |  |                 |       |  |   | (96     | )



|                    |  |                                                                                                  |       |                        |                                  |    |                           |  |   |                             |   |                        |   |       |                            |   |     |   |  |   |       |  
|------------------- |  | ------------------------------------------------------------------------------------------------ | ----- | ---------------------- | -------------------------------- | -- | ------------------------- |  | - | --------------------------- | - | ---------------------- | - | ----- | -------------------------- | - | --- | - |  | - | ----- | -
|                    |  | Changes in Fair Value for Assets and Liabilities 
Reported at Fair Value under Fair Value Option |      
|                    |  | Three Months Ended June 30, 2010                                                                 |       |                        | Three Months Ended June 30, 2009 |   
|                    |  | Net Gains fromSale of Loans                                                                      |       | OtherNoninterestIncome |                                  |    | TotalChanges inFair
Value |  |   | Net Gains fromSale of Loans |   | OtherNoninterestIncome |   |       | TotalChanges 
inFair Value |  
|Loans held for sale |  | $                                                                                                | 7,410 |                        | $                                |   |                           |  | $ | 7,410                       |   |                        | $ | 2,343 |                            | $ |    |   |  | $ | 2,343 |  
|Time deposits       |  |                                                                                                  |      |                        |                                  | (3 | )                         |  |   | (3                          | ) |                        |   |      |                            |   | (5  | ) |  |   | (5    | )
|                    |  |                                                                                                 
|                    |  | Six Months Ended June 30, 2010                                                                   |       |                        | Six Months Ended June 30, 2009   |   
|                    |  | Net Gains fromSale of Loans                                                                      |       | OtherNoninterestIncome |                                  |    | TotalChanges inFair Value |  |   | Net Gains fromSale of Loans |   | OtherNoninterestIncome |   |       | TotalChanges
inFair Value  |  
|Loans held for sale |  | $                                                                                                | 8,239 |                        | $                                |   |                           |  | $ | 8,239                       |   |                        | $ | 2,975 |                            | $ |    |   |  | $ | 2,975 |  
|Time deposits       |  |                                                                                                  |      |                        |                                  | (4 | )                         |  |   | (4                          | ) |                        |   |      |                            |   | (63 | ) |  |   | (63   | )

PlainsCapital also determines the fair
value of assets and liabilities on a non-recurring basis. For example, facts and circumstances may dictate a fair value measurement when there is evidence of impairment. Assets and liabilities measured on a non-recurring basis include the items
discussed below.

Impaired (Non-accrual) Loans  PlainsCapital reports non-accrual loans at fair value through allocations of the
allowance for loan losses. PlainsCapital determines fair value using Level 2 inputs consisting of observable loss experience for similar loans. At June 30, 2010, loans with a carrying amount of $25.1 million had been reduced by allocations of
the allowance for loan losses of $5.6 million, resulting in a reported fair value of $19.5 million.

Other Real Estate Owned 
PlainsCapital reports other real estate owned at fair value through use of valuation allowances that are charged against the allowance for loan losses when property is initially transferred to other real estate. Subsequent to the initial transfer to
other real estate, valuation allowances are charged against earnings. PlainsCapital determines fair value using Level 2 inputs consisting of independent appraisals. At June 30, 2010, the estimated fair value of other real estate owned was $16.8
million.

The Fair Value of Financial Instruments Subsection of the ASC requires disclosure of the fair value of financial assets and
liabilities, including the financial assets and liabilities previously discussed. The methods for determining estimated fair value for financial assets and liabilities is described in detail in Note 22 to the consolidated financial statements
included in our Annual Report on Form 10-K filed with the SEC on March 26, 2010.



24



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14. Fair Value Measurements (continued)



The estimated fair values of PlainsCapitals financial instruments are shown below (in thousands):



|                                                                 |  |                  |           |   |                      |   |           |                |  |   |                     |   |  |   |           |  
|---------------------------------------------------------------- |  | ---------------- | --------- | - | -------------------- | - | --------- | -------------- |  | - | ------------------- | - |  | - | --------- | -
|                                                                 |  | At June 30, 2010 |           |   | At December 31, 2009 |  
|                                                                 |  | CarryingAmount   |           |   | EstimatedFair Value  |   |           | CarryingAmount |  |   | EstimatedFair Value |  
|                                                                 |  |                  |          
|Financial assets                                                 |  |                  |           |   |                      |   |           |                |  |   |                     |   |  |   |           |  
|Cash and short-term investments                                  |  | $                | 109,122   |   |                      | $ | 109,122   |                |  | $ | 160,367             |   |  | $ | 160,367   |  
|Loans held for sale                                              |  |                  | 701,046   |   |                      |   | 701,046   |                |  |   | 432,202             |   |  |   | 432,202   |  
|Securities                                                       |  |                  | 721,679   |   |                      |   | 724,872   |                |  |   | 545,737             |   |  |   | 546,611   |  
|Loans, net                                                       |  |                  | 2,956,431 |   |                      |   | 2,986,406 |                |  |   | 3,019,677           |   |  |   | 3,053,759 |  
|Broker-dealer and clearing organization receivables              |  |                  | 64,964    |   |                      |   | 64,964    |                |  |   | 82,714              |   |  |   | 82,714    |  
|                                                                 |  |                  |           |  
|Fee award receivable                                             |  |                  | 19,860    |   |                      |   | 19,860    |                |  |   | 20,504              |   |  |   | 20,504    |  
|Cash surrender value of life insurance policies                  |  |                  | 21,818    |   |                      |   | 21,818    |                |  |   | 21,379              |   |  |   | 21,379    |  
|Interest rate swaps and interest rate lock commitments (IRLCs) |  |                  | 3,306     |   |                      |   | 3,306     |                |  |   | 1,851               |   |  |   | 1,851     |  
|Accrued interest receivable                                      |  |                  | 16,852    |   |                      |   | 16,852    |                |  |   | 15,876              |   |  |   | 15,876    |  
|                                                                 |  |                  |           |  
|Financial liabilities                                            |  |                  |           |   |                      |   |           |                |  |   |                     |   |  |   |           |  
|Deposits                                                         |  |                  | 3,736,235 |   |                      |   | 3,742,381 |                |  |   | 3,278,039           |   |  |   | 3,285,796 |  
|Broker-dealer and clearing organization payables                 |  |                  | 108,246   |   |                      |   | 108,246   |                |  |   | 108,272             |   |  |   | 108,272   |  
|Other trading liabilities                                        |  |                  | 6,437     |   |                      |   | 6,437     |                |  |   | 3,019               |   |  |   | 3,019     |  
|Short-term borrowings                                            |  |                  | 368,366   |   |                      |   | 368,366   |                |  |   | 488,078             |   |  |   | 488,078   |  
|Debt                                                             |  |                  | 134,462   |   |                      |   | 134,462   |                |  |   | 135,562             |   |  |   | 135,562   |  
|                                                                 |  |                  |           |  
|Forward purchase commitments                                     |  |                  | (96       | ) |                      |   | (96       | )              |  |   | (271                | ) |  |   | (271      | )
|Accrued interest payable                                         |  |                  | 5,876     |   |                      |   | 5,876     |                |  |   | 5,661               |   |  |   | 5,661     |  

15. Derivative Financial
Instruments

The Bank and PrimeLending use various derivative financial instruments to mitigate interest rate risk. The Banks
interest rate risk management strategy involves effectively modifying the re-pricing characteristics of certain assets and liabilities so that changes in interest rates do not adversely affect the net interest margin. PrimeLending has interest rate
risk relative to its inventory of mortgage loans held for sale and IRLCs. PrimeLending is exposed to such rate risk from the time an IRLC is made to an applicant to the time the related mortgage loan is sold.

Cash Flow Hedges

The Bank entered into
interest rate swap agreements to manage interest rate risk associated with certain customer contracts. The swaps were originally designated as cash flow hedges. The swaps were highly effective in offsetting future cash flow volatility caused by
changes in interest rates. The Bank has recorded the fair value of the swaps in other assets and unrealized gains (losses) associated with the swaps in other comprehensive income.

Non-Hedging Derivative Instruments and the Fair Value Option

As discussed in Note 14, PrimeLending elected to measure substantially all mortgage loans held for sale at fair value under the provisions of the Fair
Value Option. The election provides PrimeLending the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without applying complex hedge accounting provisions. PrimeLending provides
IRLCs to its customers and executes forward purchase commitments to sell mortgage loans. The fair values of both IRLCs and purchase commitments are recorded in other assets or other liabilities, as appropriate. Changes in the fair values of these
derivative instruments produced net losses of approximately $0.5 million and $0.2 million for the three months ended June 30, 2010 and 2009, respectively. For the six months ended June 30, 2010 and 2009, changes in the fair value of these
instruments produced net gains of approximately $1.1 million and $0.8 million, respectively. The net gains or losses were recorded as a component of gain on sale of loans.



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##### Table of Contents

15. Derivative Financial Instruments (continued)



Derivative positions at June 30, 2010 and December 31, 2009 are presented in the following
table (in thousands):



|                                   |  |                  |         |                      |                      |        |                |  |                      |         |  |   |       |  
|---------------------------------- |  | ---------------- | ------- | -------------------- | -------------------- | ------ | -------------- |  | -------------------- | ------- |  | - | ----- | -
|                                   |  | At June 30, 2010 |         |                      | At December 31, 2009 |       
|                                   |  | NotionalAmount   |         | EstimatedFair 
Value |                      |        | NotionalAmount |  | EstimatedFair 
Value |        
|                                   |  |                  |        
|Non-hedging derivative instruments |  |                  |         |                      |                      |        |                |  |                      |         |  |   |       |  
|IRLCs                              |  | $                | 633,911 |                      | $                    | 6,304  |                |  | $                    | 256,285 |  | $ | (511  | )
|Interest rate swaps                |  |                  | 1,969   |                      |                      | 135    |                |  |                      | 9,469   |  |   | (1    | )
|Forward purchase commitments       |  |                  | 499,893 |                      |                      | (3,037 | )              |  |                      | 200,467 |  |   | 2,634 |  

The Bank recorded unrealized gains
(losses), net of reclassifications adjustments, on the swaps designated as cash flow hedges in other comprehensive income as shown in the following table (in thousands).



|                                  |  |                                  |     |   |                                  |   |                 |  |   |                  |   |  |                      |    |                 |  |   |   |  |   |    |  
|--------------------------------- |  | -------------------------------- | --- | - | -------------------------------- | - | --------------- |  | - | ---------------- | - |  | -------------------- | -- | --------------- |  | - | - |  | - | -- | -
|                                  |  | Three Months Ended June 30, 2010 |     |   | Three Months Ended June 30, 2009 |  
|                                  |  | Before-TaxAmount                 |     |   | Tax Benefit(Expense)             |   | After-TaxAmount |  |   | Before-TaxAmount |   |  | Tax Benefit(Expense) |    | After-TaxAmount | 
|Change in market value            |  | $                                |    |   |                                  | $ |                |  | $ |                 |   |  | $                    |   |                 |  | $ |  |  | $ |   |  
|Reclassification adjustments      |  |                                  | (18 | ) |                                  |   | 6               |  |   | (12              | ) |  |                      | (5 | )               |  |   | 2 |  |   | (3 | )
|                                  |  |                                  |     |   |                                  |   |                 |  |   |                  |   |  |                      |    |                 |  |   |   |  |   |    |  
|Other comprehensive income (loss) |  | $                                | (18 | ) |                                  | $ | 6               |  | $ | (12              | ) |  | $                    | (5 | )               |  | $ | 2 |  | $ | (3 | )
|                                  |  |                                  |     |   |                                  |   |                 |  |   |                  |   |  |                      |    |                 |  |   |   |  |   |    |  
|                                  |  |                                 
|                                  |  | Six Months Ended June 30, 2010   |     |   | Six Months Ended June 30, 2009   |  
|                                  |  | Before-TaxAmount                 |     |   | Tax Benefit(Expense)             |   | After-TaxAmount |  |   | Before-TaxAmount |   |  | Tax Benefit(Expense) |    | After-TaxAmount | 
|Change in market value            |  | $                                |    |   |                                  | $ |                |  | $ |                 |   |  | $                    |   |                 |  | $ |  |  | $ |   |  
|Reclassification adjustments      |  |                                  | (23 | ) |                                  |   | 8               |  |   | (15              | ) |  |                      | (9 | )               |  |   | 3 |  |   | (6 | )
|                                  |  |                                  |     |   |                                  |   |                 |  |   |                  |   |  |                      |    |                 |  |   |   |  |   |    |  
|Other comprehensive income (loss) |  | $                                | (23 | ) |                                  | $ | 8               |  | $ | (15              | ) |  | $                    | (9 | )               |  | $ | 3 |  | $ | (6 | )
|                                  |  |                                  |     |   |                                  |   |                 |  |   |                  |   |  |                      |    |                 |  |   |   |  |   |    |  

16. Segment and Related Information

PlainsCapital has three reportable segments that are organized primarily by the core products offered to the segments respective customers. The
banking segment includes the operations of the Bank and PlainsCapital Leasing, LLC. The operations of PrimeLending comprise the mortgage origination segment. The financial advisory segment is composed of Hester Capital and First Southwest.

During the third quarter of 2009, PlainsCapital changed its reporting of segment results. Previously, the operations of PlainsCapital and its
remaining subsidiaries not discussed in the previous paragraph (collectively, the Holding Company) were not allocated to the segments. Beginning in the third quarter, we adopted a new procedure for determining segment results. First, we
eliminated intercompany transactions from the segments and certain noninterest expenses from the Bank. Second, we allocated the net expenses of the Holding Company among the three reporting segments based upon each segments relative net
income. Finally, we reallocated those noninterest expenses removed from the Bank above among the three segments based upon the annual determination of senior managers regarding the allocation of management time and resources. Senior management
believes this procedure assists with the allocation of corporate resources and decisions regarding capital investment.

Balance sheet amounts
for the Holding Company are included in All Other and Eliminations. We have adjusted segment results for prior periods for comparison purposes to reflect the change described above.



26



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##### Table of Contents

16. Segment and Related Information (continued)



The following tables present information about the revenues, profits and assets of PlainsCapitals
reportable segments (in thousands).

Income Statement Data



|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|-------------------------------------------------------- |  | -------------------------------- | ------- | ------------------- | - | ------- | ----------------- |  | ------------------------ | ------ |  | ------------------------- | ------- | - |  | - | -------
|                                                         |  | Three Months Ended June 30, 2010
|                                                         |  | Banking                          |         | MortgageOrigination |   |         | FinancialAdvisory |  | IntercompanyEliminations |        |  | PlainsCapitalConsolidated
|Interest income                                          |  | $                                | 54,249  |                     | $ | 6,783   |                   |  | $                        | 2,827  |  | $                         | (7,807  | ) |  | $ | 56,052 
|Interest expense                                         |  |                                  | 9,208   |                     |   | 7,383   |                   |  |                          | 988    |  |                           | (7,829  | ) |  |   | 9,750  
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         |  |                                  |         |                     |  
|Net interest income (expense)                            |  |                                  | 45,041  |                     |   | (600    | )                 |  |                          | 1,839  |  |                           | 22      |   |  |   | 46,302 
|Provision for loan losses                                |  |                                  | 9,510   |                     |   | 735     |                   |  |                          |       |  |                           |        |   |  |   | 10,245 
|Noninterest income                                       |  |                                  | 8,736   |                     |   | 72,877  |                   |  |                          | 25,003 |  |                           | (4,420  | ) |  |   | 102,196
|Noninterest expense                                      |  |                                  | 31,226  |                     |   | 64,261  |                   |  |                          | 25,208 |  |                           | (4,414  | ) |  |   | 116,281
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         |  |                                  |         |                     |  
|Net income before taxes                                  |  |                                  | 13,041  |                     |   | 7,281   |                   |  |                          | 1,634  |  |                           | 16      |   |  |   | 21,972 
|Income tax provision                                     |  |                                  | 4,167   |                     |   | 2,327   |                   |  |                          | 522    |  |                           |        |   |  |   | 7,016  
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         |  |                                  |         |                     |  
|Consolidated net income                                  |  |                                  | 8,874   |                     |   | 4,954   |                   |  |                          | 1,112  |  |                           | 16      |   |  |   | 14,956 
|Less: net income attributable to noncontrolling interest |  |                                  |        |                     |   | 220     |                   |  |                          | 85     |  |                           |        |   |  |   | 305    
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         |  |                                  |         |                     |  
|Net income attributable to PlainsCapital Corporation     |  | $                                | 8,874   |                     | $ | 4,734   |                   |  | $                        | 1,027  |  | $                         | 16      |   |  | $ | 14,651 
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         | 
|                                                         |  | Six Months Ended June 30, 2010  
|                                                         |  | Banking                          |         | MortgageOrigination |   |         | FinancialAdvisory |  | IntercompanyEliminations |        |  | PlainsCapitalConsolidated
|Interest income                                          |  | $                                | 105,154 |                     | $ | 11,273  |                   |  | $                        | 5,219  |  | $                         | (13,286 | ) |  | $ | 108,360
|Interest expense                                         |  |                                  | 18,530  |                     |   | 12,324  |                   |  |                          | 1,860  |  |                           | (13,329 | ) |  |   | 19,385 
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         |  |                                  |         |                     |  
|Net interest income (expense)                            |  |                                  | 86,624  |                     |   | (1,051  | )                 |  |                          | 3,359  |  |                           | 43      |   |  |   | 88,975 
|Provision for loan losses                                |  |                                  | 32,465  |                     |   | 735     |                   |  |                          |       |  |                           |        |   |  |   | 33,200 
|Noninterest income                                       |  |                                  | 19,348  |                     |   | 120,325 |                   |  |                          | 46,798 |  |                           | (8,843  | ) |  |   | 177,628
|Noninterest expense                                      |  |                                  | 57,821  |                     |   | 112,628 |                   |  |                          | 47,483 |  |                           | (8,832  | ) |  |   | 209,100
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         |  |                                  |         |                     |  
|Net income before taxes                                  |  |                                  | 15,686  |                     |   | 5,911   |                   |  |                          | 2,674  |  |                           | 32      |   |  |   | 24,303 
|Income tax provision                                     |  |                                  | 4,909   |                     |   | 1,850   |                   |  |                          | 837    |  |                           |        |   |  |   | 7,596  
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         |  |                                  |         |                     |  
|Consolidated net income                                  |  |                                  | 10,777  |                     |   | 4,061   |                   |  |                          | 1,837  |  |                           | 32      |   |  |   | 16,707 
|Less: net income attributable to noncontrolling interest |  |                                  |        |                     |   | 220     |                   |  |                          | 150    |  |                           |        |   |  |   | 370    
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        
|                                                         |  |                                  |         |                     |  
|Net income attributable to PlainsCapital Corporation     |  | $                                | 10,777  |                     | $ | 3,841   |                   |  | $                        | 1,687  |  | $                         | 32      |   |  | $ | 16,337 
|                                                         |  |                                  |         |                     |   |         |                   |  |                          |        |  |                           |         |   |  |   |        



27



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##### Table of Contents

16. Segment and Related Information (continued)



Income Statement Data



|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|-------------------------------------------------------- |  | -------------------------------- | ------ | ------------------- | - | ------- | ----------------- |  | ------------------------ | ------ |  | ------------------------- | ------ | - |  | - | -------
|                                                         |  | Three Months Ended June 30, 2009
|                                                         |  | Banking                          |        | MortgageOrigination |   |         | FinancialAdvisory |  | IntercompanyEliminations |        |  | PlainsCapitalConsolidated
|Interest income                                          |  | $                                | 49,622 |                     | $ | 3,671   |                   |  | $                        | 2,257  |  | $                         | (4,678 | ) |  | $ | 50,872 
|Interest expense                                         |  |                                  | 9,435  |                     |   | 4,332   |                   |  |                          | 843    |  |                           | (4,725 | ) |  |   | 9,885  
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         |  |                                  |        |                     |  
|Net interest income (expense)                            |  |                                  | 40,187 |                     |   | (661    | )                 |  |                          | 1,414  |  |                           | 47     |   |  |   | 40,987 
|Provision for loan losses                                |  |                                  | 10,750 |                     |   |        |                   |  |                          |       |  |                           |       |   |  |   | 10,750 
|Noninterest income                                       |  |                                  | 4,839  |                     |   | 63,397  |                   |  |                          | 23,929 |  |                           | (700   | ) |  |   | 91,465 
|Noninterest expense                                      |  |                                  | 28,395 |                     |   | 46,282  |                   |  |                          | 22,934 |  |                           | (672   | ) |  |   | 96,939 
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         |  |                                  |        |                     |  
|Net income before taxes                                  |  |                                  | 5,881  |                     |   | 16,454  |                   |  |                          | 2,409  |  |                           | 19     |   |  |   | 24,763 
|Income tax provision                                     |  |                                  | 2,060  |                     |   | 5,762   |                   |  |                          | 844    |  |                           |       |   |  |   | 8,666  
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         |  |                                  |        |                     |  
|Consolidated net income                                  |  |                                  | 3,821  |                     |   | 10,692  |                   |  |                          | 1,565  |  |                           | 19     |   |  |   | 16,097 
|Less: net income attributable to noncontrolling interest |  |                                  |       |                     |   |        |                   |  |                          | 33     |  |                           |       |   |  |   | 33     
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         |  |                                  |        |                     |  
|Net income attributable to PlainsCapital Corporation     |  | $                                | 3,821  |                     | $ | 10,692  |                   |  | $                        | 1,532  |  | $                         | 19     |   |  | $ | 16,064 
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         | 
|                                                         |  | Six Months Ended June 30, 2009  
|                                                         |  | Banking                          |        | MortgageOrigination |   |         | FinancialAdvisory |  | IntercompanyEliminations |        |  | PlainsCapitalConsolidated
|Interest income                                          |  | $                                | 95,678 |                     | $ | 6,187   |                   |  | $                        | 4,113  |  | $                         | (7,472 | ) |  | $ | 98,506 
|Interest expense                                         |  |                                  | 20,258 |                     |   | 6,776   |                   |  |                          | 1,696  |  |                           | (7,568 | ) |  |   | 21,162 
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         |  |                                  |        |                     |  
|Net interest income (expense)                            |  |                                  | 75,420 |                     |   | (589    | )                 |  |                          | 2,417  |  |                           | 96     |   |  |   | 77,344 
|Provision for loan losses                                |  |                                  | 24,763 |                     |   |        |                   |  |                          |       |  |                           |       |   |  |   | 24,763 
|Noninterest income                                       |  |                                  | 8,802  |                     |   | 111,123 |                   |  |                          | 43,006 |  |                           | (900   | ) |  |   | 162,031
|Noninterest expense                                      |  |                                  | 50,918 |                     |   | 81,767  |                   |  |                          | 42,355 |  |                           | (837   | ) |  |   | 174,203
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         |  |                                  |        |                     |  
|Net income before taxes                                  |  |                                  | 8,541  |                     |   | 28,767  |                   |  |                          | 3,068  |  |                           | 33     |   |  |   | 40,409 
|Income tax provision                                     |  |                                  | 3,022  |                     |   | 10,179  |                   |  |                          | 1,085  |  |                           |       |   |  |   | 14,286 
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         |  |                                  |        |                     |  
|Consolidated net income                                  |  |                                  | 5,519  |                     |   | 18,588  |                   |  |                          | 1,983  |  |                           | 33     |   |  |   | 26,123 
|Less: net income attributable to noncontrolling interest |  |                                  |       |                     |   |        |                   |  |                          | 56     |  |                           |       |   |  |   | 56     
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        
|                                                         |  |                                  |        |                     |  
|Net income attributable to PlainsCapital Corporation     |  | $                                | 5,519  |                     | $ | 18,588  |                   |  | $                        | 1,927  |  | $                         | 33     |   |  | $ | 26,067 
|                                                         |  |                                  |        |                     |   |         |                   |  |                          |        |  |                           |        |   |  |   |        



28



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16. Segment and Related Information (continued)



Balance Sheet Data



|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          
|--------------------------------------------------- |  | ----------------- | --------- | ------------------- | - | ----------------- |  | ------------------------- | ------- |  | ------------------------- | -------- | - |  | - | ---------
|                                                    |  | June 30, 2010    
|                                                    |  | Banking           |           | MortgageOrigination |   | FinancialAdvisory |  | All Other andEliminations |         |  | PlainsCapitalConsolidated
|Cash and due from banks                             |  | $                 | 92,074    |                     | $ | 34,563            |  | $                         | 3,258   |  | $                         | (36,164  | ) |  | $ | 93,731   
|Loans held for sale                                 |  |                   | 1,360     |                     |   | 699,686           |  |                           |        |  |                           |         |   |  |   | 701,046  
|Securities                                          |  |                   | 628,353   |                     |   |                  |  |                           | 93,326  |  |                           |         |   |  |   | 721,679  
|Loans, net                                          |  |                   | 2,765,261 |                     |   | 2,432             |  |                           | 189,883 |  |                           | (1,145   | ) |  |   | 2,956,431
|Broker-dealer and clearing organization receivables |  |                   |          |                     |   |                  |  |                           | 64,964  |  |                           |         |   |  |   | 64,964   
|Investment in subsidiaries                          |  |                   | 909,851   |                     |   |                  |  |                           |        |  |                           | (909,851 | ) |  |   |         
|Goodwill and other intangible assets, net           |  |                   | 7,867     |                     |   | 23,706            |  |                           | 18,836  |  |                           |         |   |  |   | 50,409   
|Other assets                                        |  |                   | 211,864   |                     |   | 22,498            |  |                           | 75,513  |  |                           | 26,435   |   |  |   | 336,310  
|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          
|                                                    |  |                   |           |                     |  
|Total assets                                        |  | $                 | 4,616,630 |                     | $ | 782,885           |  | $                         | 445,780 |  | $                         | (920,725 | ) |  | $ | 4,924,570
|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          
|                                                    |  |                   |           |                     |  
|Deposits                                            |  | $                 | 3,738,165 |                     | $ |                  |  | $                         | 67,595  |  | $                         | (69,525  | ) |  | $ | 3,736,235
|Broker-dealer and clearing organization payables    |  |                   |          |                     |   |                  |  |                           | 108,246 |  |                           |         |   |  |   | 108,246  
|Short-term borrowings                               |  |                   | 256,097   |                     |   |                  |  |                           | 112,269 |  |                           |         |   |  |   | 368,366  
|Notes payable                                       |  |                   | 53,385    |                     |   | 661,306           |  |                           | 20,319  |  |                           | (667,560 | ) |  |   | 67,450   
|Junior subordinated debentures                      |  |                   |          |                     |   |                  |  |                           |        |  |                           | 67,012   |   |  |   | 67,012   
|Other liabilities                                   |  |                   | 41,378    |                     |   | 51,265            |  |                           | 59,004  |  |                           | (9,030   | ) |  |   | 142,617  
|PlainsCapital Corporation shareholders equity      |  |                   | 527,605   |                     |   | 70,031            |  |                           | 78,347  |  |                           | (241,927 | ) |  |   | 434,056  
|Noncontrolling interest                             |  |                   |          |                     |   | 283               |  |                           |        |  |                           | 305      |   |  |   | 588      
|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          
|                                                    |  |                   |           |                     |  
|Total liabilities and shareholders equity          |  | $                 | 4,616,630 |                     | $ | 782,885           |  | $                         | 445,780 |  | $                         | (920,725 | ) |  | $ | 4,924,570
|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          
|                                                    | 
|                                                    |  | December 31, 2009
|                                                    |  | Banking           |           | MortgageOrigination |   | FinancialAdvisory |  | All Other andEliminations |         |  | PlainsCapitalConsolidated
|Cash and due from banks                             |  | $                 | 139,579   |                     | $ | 42,593            |  | $                         | 11,017  |  | $                         | (44,866  | ) |  | $ | 148,323  
|Loans held for sale                                 |  |                   | 1,442     |                     |   | 430,760           |  |                           |        |  |                           |         |   |  |   | 432,202  
|Securities                                          |  |                   | 521,554   |                     |   |                  |  |                           | 24,183  |  |                           |         |   |  |   | 545,737  
|Loans, net                                          |  |                   | 2,866,803 |                     |   |                  |  |                           | 154,123 |  |                           | (1,249   | ) |  |   | 3,019,677
|Broker-dealer and clearing organization receivables |  |                   |          |                     |   |                  |  |                           | 82,714  |  |                           |         |   |  |   | 82,714   
|Investment in subsidiaries                          |  |                   | 655,830   |                     |   |                  |  |                           |        |  |                           | (655,830 | ) |  |   |         
|Goodwill and other intangible assets, net           |  |                   | 7,871     |                     |   | 23,706            |  |                           | 19,919  |  |                           |         |   |  |   | 51,496   
|Other assets                                        |  |                   | 198,927   |                     |   | 14,626            |  |                           | 45,254  |  |                           | 31,813   |   |  |   | 290,620  
|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          
|                                                    |  |                   |           |                     |  
|Total assets                                        |  | $                 | 4,392,006 |                     | $ | 511,685           |  | $                         | 337,210 |  | $                         | (670,132 | ) |  | $ | 4,570,769
|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          
|                                                    |  |                   |           |                     |  
|Deposits                                            |  | $                 | 3,274,900 |                     | $ |                  |  | $                         | 64,911  |  | $                         | (61,772  | ) |  | $ | 3,278,039
|Broker-dealer and clearing organization payables    |  |                   |          |                     |   |                  |  |                           | 108,272 |  |                           |         |   |  |   | 108,272  
|Short-term borrowings                               |  |                   | 488,078   |                     |   |                  |  |                           |        |  |                           |         |   |  |   | 488,078  
|Notes payable                                       |  |                   | 68,511    |                     |   | 407,430           |  |                           | 22,329  |  |                           | (429,720 | ) |  |   | 68,550   
|Junior subordinated debentures                      |  |                   |          |                     |   |                  |  |                           |        |  |                           | 67,012   |   |  |   | 67,012   
|Other liabilities                                   |  |                   | 42,297    |                     |   | 38,529            |  |                           | 66,276  |  |                           | (10,443  | ) |  |   | 136,659  
|PlainsCapital Corporation shareholders equity      |  |                   | 518,220   |                     |   | 65,677            |  |                           | 75,422  |  |                           | (236,819 | ) |  |   | 422,500  
|Noncontrolling interest                             |  |                   |          |                     |   | 49                |  |                           |        |  |                           | 1,610    |   |  |   | 1,659    
|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          
|                                                    |  |                   |           |                     |  
|Total liabilities and shareholders equity          |  | $                 | 4,392,006 |                     | $ | 511,685           |  | $                         | 337,210 |  | $                         | (670,132 | ) |  | $ | 4,570,769
|                                                    |  |                   |           |                     |   |                   |  |                           |         |  |                           |          |   |  |   |          



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17. Earnings per Common Share

The following table presents the computation of basic and diluted earnings per common share for the three and six months ended June 30, 2010 and 2009
(in thousands, except per share data).



|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|------------------------------------------------------------------------------------------------------ |  | --------------------------- | ---------- | ------------------------- | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                                                                                       |  | Three Months Ended June 30, |            | Six Months Ended June 30,
|                                                                                                       |  | 2010                        |            | 2009                      |   | 2010       |  | 2009
|Income applicable to PlainsCapital Corporation common shareholders                                     |  | $                           | 13,261     |                           | $ | 14,685     |  | $    | 13,559     |  | $ | 23,129    
|Less: income applicable to participating securities                                                    |  |                             | 880        |                           |   | 1,010      |  |      | 839        |  |   | 1,528     
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|Income applicable to PlainsCapital Corporation common shareholders for basic earnings per common share |  | $                           | 12,381     |                           | $ | 13,675     |  | $    | 12,720     |  | $ | 21,601    
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|                                                                                                       |  |                             |            |                          
|Weighted-average shares outstanding                                                                    |  |                             | 31,478,268 |                           |   | 31,260,339 |  |      | 31,468,244 |  |   | 31,249,107
|Less: participating securities included in weighted-average shares outstanding                         |  |                             | 2,231,602  |                           |   | 2,225,430  |  |      | 2,231,602  |  |   | 2,225,430 
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|Weighted-average shares outstanding for basic earnings per common share                                |  |                             | 29,246,666 |                           |   | 29,034,909 |  |      | 29,236,642 |  |   | 29,023,677
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|                                                                                                       |  |                             |            |                          
|Basic earnings per common share                                                                        |  | $                           | 0.42       |                           | $ | 0.47       |  | $    | 0.43       |  | $ | 0.74      
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|                                                                                                       |  |                             |            |                          
|Income applicable to PlainsCapital Corporation common shareholders                                     |  | $                           | 13,261     |                           | $ | 14,685     |  | $    | 13,559     |  | $ | 23,129    
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|                                                                                                       |  |                             |            |                          
|Weighted-average shares outstanding                                                                    |  |                             | 31,478,268 |                           |   | 31,260,339 |  |      | 31,468,244 |  |   | 31,249,107
|Dilutive effect of contingently issuable shares due to First Southwest acquisition                     |  |                             | 1,720,740  |                           |   | 1,527,687  |  |      | 1,720,740  |  |   | 1,527,687 
|Dilutive effect of stock options and non-vested stock awards                                           |  |                             | 267,219    |                           |   | 318,336    |  |      | 282,971    |  |   | 308,091   
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|                                                                                                       |  |                             |            |                          
|Weighted-average shares outstanding for diluted earnings per common share                              |  |                             | 33,466,227 |                           |   | 33,106,362 |  |      | 33,471,955 |  |   | 33,084,885
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|                                                                                                       |  |                             |            |                          
|Diluted earnings per common share                                                                      |  | $                           | 0.40       |                           | $ | 0.44       |  | $    | 0.41       |  | $ | 0.70      
|                                                                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           

PlainsCapital uses the two-class method prescribed by the Earnings per
Share Topic of the ASC to compute earnings per common share. Participating securities include non-vested restricted stock and shares of PlainsCapital stock held in escrow pending the resolution of contingencies with respect to the First
Southwest acquisition.

The weighted-average shares outstanding used to compute diluted earnings per common share do not include outstanding
options of 57,000 for the three and six months ended June 30, 2010 and 60,163 for the three and six months ended June 30, 2009. The exercise price of the excluded options exceeded the estimated average market price of PlainsCapital stock
in the periods shown. Accordingly, the assumed exercise of the excluded options would have been antidilutive.

18. Recently Issued
Accounting Standards

Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities

In December 2009, the FASB amended the Consolidations Topic of the ASC to change how a company determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be consolidated (Variable Interest Entities Amendment). The determination of whether a company is required to consolidate an entity is based on, among other
things, an entitys purpose and design and a companys ability to direct the activities of the entity that most significantly impact the entitys economic performance. Companies are required to disclose the reporting entitys
involvement with variable-interest entities and any significant changes in risk exposure due to that involvement, as well as its effect on the entitys financial statements. The Variable Interest Entities Amendment became effective for
PlainsCapital on January 1, 2010, and its adoption did not have a significant effect on PlainsCapitals financial position, results of operations or cash flows.



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18. Recently Issued Accounting Standards (continued)



Improving Disclosures about Fair Value Measurements

In January 2010, the FASB amended the Fair Value Measurements and Disclosures Topic of the ASC to expand required disclosures related to fair value
measurements (Improved Fair Value Disclosure Amendment). The Improved Fair Value Disclosure Amendment requires disclosures regarding significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for the
transfers, reasons for transfers in or out of Level 3 of the fair value hierarchy, as well as separate disclosure of significant transfers, and policies for determining when transfers between levels of the fair value hierarchy are recognized. In
addition, the Improved Fair Value Disclosure Amendment requires gross presentation of purchases, sales, issuances and settlements of financial instruments that are measured on a recurring basis using Level 3 inputs.

The Improved Fair Value Disclosure Amendment also clarifies that fair value measurement disclosures should be provided for each class of assets and
liabilities, rather than major category, and that valuation techniques and inputs used to measure fair value on a recurring or nonrecurring basis should be provided for each class of assets and liabilities included in Levels 2 and 3 of the fair
value hierarchy. The Improved Fair Value Disclosure Amendment became effective for PlainsCapital on January 1, 2010, except for the provisions relating to gross presentation of purchases, sales, issuances and settlements of assets and
liabilities included in Level 3 of the fair value hierarchy, which become effective January 1, 2011. The adoption of the Improved Fair Value Disclosure Amendment did not have a significant effect on PlainsCapitals financial position,
results of operations or cash flows. PlainsCapital has included the disclosures required by the Improved Fair Value Disclosure Amendment in Note 14.

Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses

In July 2010, the FASB amended the Receivables Topic of the ASC to require entities to provide disclosures designed to facilitate financial statement
users evaluation of (i) the nature of credit risk inherent in the entitys portfolio of financing receivables, (ii) how that risk is analyzed and assessed in arriving at the allowance for credit losses and (iii) the changes
and reasons for those changes in the allowance for credit losses. Disclosures must be disaggregated by portfolio segment, the level at which an entity develops and documents a systematic method for determining its allowance for credit losses, and
class of financing receivable, which is generally a disaggregation of portfolio segment. The required disclosures include, among other things, a rollforward of the allowance for credit losses as well as information about modified, impaired,
non-accrual and past due loans and credit quality indicators. These amendments to the Receivables Topic will be effective for PlainsCapital as of December 31, 2010, as it relates to disclosures required as of the end of a reporting period.
Disclosures that relate to activity during a reporting period will become effective January 1, 2011.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

As used in this Quarterly Report on Form 10-Q (this Quarterly Report), unless the context otherwise indicates, the references to
we, us, our, our company or PlainsCapital refer to PlainsCapital Corporation, a Texas corporation, and its consolidated subsidiaries as a whole, references to the Bank refer to
PlainsCapital Bank, a Texas banking association (a wholly owned subsidiary of PlainsCapital Corporation), references to First Southwest refer to First Southwest Holdings, LLC, a Delaware limited liability company (a wholly owned
subsidiary of the Bank), and its subsidiaries as a whole, references to FSC refer to First Southwest Company, a Delaware corporation, (a wholly owned subsidiary of First Southwest Holdings, LLC) and references to PrimeLending
refer to PrimeLending, a PlainsCapital Company, a Texas corporation (a wholly owned subsidiary of the Bank), and its subsidiaries as a whole. In addition, unless the context otherwise requires, references to shareholders are to the
holders of our voting securities, which consist of our Common Stock, par value $0.001 per share, and our Original Common Stock, par value $0.001 per share, and references to our common stock are to our Common Stock and our Original
Common Stock, collectively.

The following discussion and analysis should be read in conjunction with (i) the attached unaudited
condensed consolidated financial statements and notes thereto for the three and six months ended June 30, 2010, and with our consolidated financial statements and notes thereto for the year ended December 31, 2009 included in our Annual
Report on Form 10-K filed with the Securities and Exchange Commission (the SEC) on March 26, 2010 (the Annual Report) and (ii) the discussion under the caption Managements Discussion and Analysis of
Financial Condition and Results of Operations of our Annual Report.

Forward-Looking Statements

Certain statements contained in this Quarterly Report that are not statements of historical fact such as expect, estimate,
project, budget, forecast, anticipate, intend, plan, may, will, could, should, believes, predicts,
potential, continue and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We make forward-looking statements regarding topics including our
projected sources of funds, anticipated changes in our revenues or earnings, expectations regarding financial or other market conditions, the effects of government regulation applicable to our operations, the adequacy of our allowance for loan
losses and provision for loan losses, and the collectibility of margin loans.

Forward-looking statements involve significant risks and
uncertainties that could cause our actual results to differ materially from those anticipated in such statements. Most of these factors are outside our control and difficult to predict. Factors that may cause such differences include, but are not
limited to:

(1) changes in general economic, market and business conditions in areas or markets where we compete, including
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act);

(2) changes in state and
federal laws, regulations or policies affecting one or more of our business segments, including changes in regulatory fees, deposit insurance premiums and capital requirements;

(3) changes in the interest rate environment;

(4) changes in the default rate of our loans and risks associated with concentration in real estate related loans;

(5) changes in the auction rate securities markets, including ongoing liquidity problems related thereto;

(6) cost and availability of capital;

(7) competition for our banking, mortgage origination and financial advisory segments from other banks and financial institutions as well
as insurance companies, mortgage originators, investment banking and financial advisory firms, asset-based non-bank lenders and government agencies;

(8) approval of new, or changes in, accounting policies and practices;



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(9) our participation in governmental programs implemented under the Emergency Economic
Stabilization Act of 2008 (the EESA) and the American Recovery and Reinvestment Act, including without limitation the Troubled Asset Relief Program (TARP), the Capital Purchase Program, and the Temporary Liquidity Guarantee
Program, including the Transaction Account Guarantee Program, and the impact of such programs and related regulations on us and on international, national and local economic and financial markets and conditions; and

(10) future legislative or administrative changes to the TARP Capital Purchase Program enacted under the EESA.

For a more detailed discussion of these and other factors that may affect our business, see the discussion under the caption Risk Factors set
forth in Item 1A of our Annual Report, the discussion under the caption Risk Factors set forth in Item 1A of Part II below and the discussion in this Managements Discussion and Analysis of Financial Condition and Results
of Operations. We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. All subsequent written and oral forward-looking statements
concerning our business attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statement, whether written
or oral, relating to the matters discussed in this Quarterly Report except to the extent required by federal securities laws.

Overview

We are a Texas corporation and a financial holding company registered under the Bank Holding Company Act of 1956, as amended by the
Gramm-Leach-Bliley Act of 1999. As of June 30, 2010, on a consolidated basis, we had total assets of approximately $4.9 billion, total deposits of approximately $3.7 billion, total loans, including loans held for sale, of approximately $3.7
billion and shareholders equity of approximately $434.1 million. The Bank, one of our wholly owned subsidiaries, provides a broad array of products and services, including commercial banking, personal banking, wealth management and treasury
management, from offices located throughout central, north and west Texas. In addition to the Bank, we have various subsidiaries with specialized areas of expertise that also offer an array of financial products and services such as mortgage
origination and financial advisory services.

We have experienced significant balance sheet growth since our inception. During the first half
of 2010, our assets increased by 7.74% driven by growth in loans held for sale and our investment portfolio. The increase in loans held for sale during the first half of 2010 was primarily the result of a sharp increase in loan originations from our
mortgage origination business. We temporarily hold these mortgage loans for sale on our balance sheet. During the first half of 2010, our deposits increased by 13.98%; loans, net of unearned income, decreased by 1.92%.

We generate revenue from net interest income and from noninterest income. Net interest income is the difference between interest income we earn on loans
and securities and interest expense we incur on deposits and borrowings. Net interest income is a significant contributor to revenues and net income. Fluctuations in interest rates, as well as the amounts and types of interest-earning assets and
interest-bearing liabilities we hold, affect net interest income. During the first half of 2010, we generated $89.0 million in net interest income, a 15.04% increase over the six-month period ended June 30, 2009. The increase in net interest
income was primarily due to the growth in the principal amount of loans and securities that we own, as well as increased yields on our securities portfolio primarily due to historically high yields on tax-exempt securities. Net interest margin is a
measure of net interest income as a percentage of average interest-earning assets, which is comprised primarily of loans and securities we own. Our taxable equivalent net interest margin was 4.11% for the six months ended June 30, 2010 versus
4.10% for the six months ended June 30, 2009. The increase in net interest margin was primarily due to changes in the composition of, and yield on, our earning assets.



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The contribution of noninterest income to revenue has increased significantly since we expanded our product
and service offerings starting with our 1998 acquisition of a Lubbock-based mortgage company. Our noninterest income is primarily comprised of three components:



| | (i) | Income from mortgage loan origination and net gains from sale of loans. Through our wholly owned subsidiary, PrimeLending, we generate noninterest income by
originating and selling mortgage loans. During the first half of 2010, we generated $120.4 million in income from loan origination and net gains from sale of loans, a 7.78% increase compared to the six-month period ended June 30, 2009.
This increase in income was primarily due to a higher volume of mortgage originations for home purchases during the six months ended June 30, 2010 compared to the corresponding period of 2009.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Investment advisory fees and commissions and securities brokerage fees and commissions. Through our wholly owned subsidiary, First Southwest, we provide public
finance advisory and various investment banking and brokerage services. We earned $45.5 million and $42.7 million in investment advisory fees and commissions and securities brokerage fees and commissions during the six months ended June 30,
2010 and June 30, 2009, respectively.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | Service charges on depositor accounts. We generate fees associated with offering depository services to our banking customers. We earned $4.4 million and $4.4
million in service charges on depositor accounts during the six months ended June 30, 2010 and June 30, 2009, respectively.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In the aggregate, we generated $177.6 million and $162.0 million in noninterest income during the six months ended June 30, 2010 and 2009,
respectively. The increase in noninterest income was primarily due to an increase in realized gains on the sale of loans and an increase in fees and commissions earned from investment advisory and securities brokerage activities. The contribution of
noninterest income to net revenues (net interest income plus noninterest income) was approximately 66.63% during the six months ended June 30, 2010 versus 67.69% during the six months ended June 30, 2009.

Offsetting our revenues are noninterest expenses we incur through the operations of our businesses. Our businesses engage in labor intensive activities
and, consequently, employees compensation and benefits represent the majority of our noninterest expenses.

Segment and Related
Information

We have three reportable segments that are organized primarily by the core products offered to the segments
respective customers. The banking segment includes the operations of the Bank and PlainsCapital Leasing, LLC. The operations of PrimeLending comprise the mortgage origination segment. The financial advisory segment is comprised of Hester Capital and
First Southwest. The principal subsidiaries of First Southwest are FSC, a broker-dealer registered with the SEC and FINRA, and First Southwest Asset Management, Inc., a registered investment advisor under the Investment Advisors Act of 1940.

Our reportable segments also serve as reporting units for the purpose of testing our goodwill for impairment. None of our reporting units is
currently at risk of failing the Step 1 impairment test prescribed in the Goodwill Subtopic of the FASB Accounting Standards Codification.

During 2009, PlainsCapital changed its reporting of segment results. We describe this change in Note 16 to our consolidated financial statements. Segment
net revenue percentages reflect net revenue from external customers.



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How We Generate Revenue and Net Income

We derive our revenue and net income primarily from the banking segment and the mortgage origination segment, while the remainder of our revenue and net
income is generated from the financial advisory segment. The banking segment provides primarily business banking and personal banking products and services. Approximately 38.48% and 35.07% of our net revenue and 64.63% and 21.15% of our net income
were derived from the banking segment for the six months ended June 30, 2010 and 2009, respectively. The banking segment generates revenue from earning assets, and its results of operations are primarily dependent on net interest income. Net
interest income represents the difference between the income earned on the banking segments assets, including its loans and investment securities, and the banking segments cost of funds, including the interest paid by the banking segment
on its deposits and borrowings that are used to support the banking segments assets. The banking segment also derives revenue from other sources, primarily service charges on customer deposit accounts and trust fees.

The mortgage origination segment generated approximately 43.31% and 46.02% of our net revenue, and 24.35% and 71.25% of our net income, for the six
months ended June 30, 2010 and 2009, respectively. The mortgage origination segment offers a variety of loan products from offices in 32 states, and generates revenue primarily from fees charged on the origination of loans and from selling
these loans in the secondary market.

We generate the remainder of our net revenue primarily from our financial advisory services. The
financial advisory segment generated approximately 18.21% and 18.91% of our net revenue, and 11.02% and 7.60% of our net income, for the six months ended June 30, 2010 and 2009, respectively. The majority of revenues in the financial advisory
segment are generated from fees and commissions earned from investment advisory and securities brokerage services at First Southwest.

The
fluctuations in the share of net revenue provided by our banking and mortgage origination segments for the six months ended June 30, 2010 compared with the six months ended June 30, 2009 generally reflect revenue growth in both the banking
and mortgage origination segments, although net revenue grew faster in the banking segment than the mortgage origination segment in the first half of 2010 compared with the corresponding period in 2009.

The fluctuations in the share of net income provided by our banking and mortgage origination segments for the six months ended June 30, 2010
compared with the six months ended June 30, 2009 are primarily attributable to historically high levels of net income in the mortgage origination segment during 2009. Net income from the mortgage origination segment has moderated during 2010 and, as
a result, the relative contribution of the mortgage origination segment to our net income has declined in the first half of 2010 compared with the first half of 2009.

Operating Results

Consolidated
net income for the second quarter of 2010 was $14.7 million, or $0.40 per diluted share, compared with $16.1 million, or $0.44 per diluted share, for the second quarter of 2009. We had net income of $16.3 million, or $0.41 per diluted share, for the
six months ended June 30, 2010, compared with $26.1 million, or $0.70 per diluted share, for the six months ended June 30, 2009.

We
consider the ratios shown in the table below to be key indicators of our performance.



|                                         |  |                              |   |  |                            |   |  |                              |  
|---------------------------------------- |  | ---------------------------- | - |  | -------------------------- | - |  | ---------------------------- | -
|                                         |  | Six Months EndedJune 30,2010 |   |  | Year EndedDecember 31,2009 |   |  | Six Months EndedJune 30,2009 |  
|Return on average shareholders equity   |  | 7.74                         | % |  | 7.50                       | % |  | 12.91                        | %
|                                         |  |                              |  
|Return on average assets                 |  | 0.69                         | % |  | 0.71                       | % |  | 1.25                         | %
|                                         |  |                              |  
|Net interest margin (taxable equivalent) |  | 4.11                         | % |  | 4.00                       | % |  | 4.10                         | %
|                                         |  |                              |  
|Leverage ratio                           |  | 9.41                         | % |  | 9.45                       | % |  | 10.43                        | %
|                                         |  |                              |  
|Efficiency ratio                         |  | 78.43                        | % |  | 77.14                      | % |  | 72.77                        | %



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The return on average shareholders equity ratio is calculated by dividing net income by average
shareholders equity for the period. The return on average assets ratio is calculated by dividing net income by average total assets for the period. Net interest margin is calculated by dividing net interest income (taxable equivalent) by
average interest-earning assets. The leverage ratio is discussed in the Liquidity and Capital Resources section below. The efficiency ratio is calculated by dividing noninterest expenses by the sum of total noninterest income and net
interest income for the period. The efficiency ratio is generally considered a measure of how well we utilize our resources and manage our expenses.

The changes in our earnings during the periods described above are primarily attributable to the factors listed below (in thousands).



|                                                              |  |                                        |         |   |                                      |   |         |  
|------------------------------------------------------------- |  | -------------------------------------- | ------- | - | ------------------------------------ | - | ------- | -
|                                                              |  | Earnings Increase (Decrease)           |         |   | Earnings Increase (Decrease)         |  
|                                                              |  | Three Months EndedJune 30,2010
v. 2009 |         |   | Six Months
EndedJune 30,2010 v. 2009 |  
|Net interest income                                           |  | $                                      | 5,315   |   |                                      | $ | 11,631  |  
|Provision for loan loss                                       |  |                                        | 505     |   |                                      |   | (8,437  | )
|Income from loan origination and net gains from sale of loans |  |                                        | 9,712   |   |                                      |   | 8,695   |  
|Investment advisory and brokerage fees and commissions        |  |                                        | 411     |   |                                      |   | 2,854   |  
|Noninterest expense                                           |  |                                        | (19,342 | ) |                                      |   | (34,897 | )
|All other (including tax effects)                             |  |                                        | 1,986   |   |                                      |   | 10,424  |  
|                                                              |  |                                        |         |   |                                      |   |         |  
|                                                              |  | $                                      | (1,413  | ) |                                      | $ | (9,730  | )
|                                                              |  |                                        |         |   |                                      |   |         |  

Net Interest Income

The following table summarizes the components of net interest income (in thousands):



|                                     |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |        |  
|------------------------------------ |  | --------------------------- | ------ | ---- | ------------------------- | ------------ |  | - | ----- | - | ---- | - | ------------ |  | - | ------ |  | - | ------ | -
|                                     |  | Three Months Ended June 30, |        |      | Six Months Ended June 30, |             
|                                     |  |                             |        |      |                           | Variance     |  |   |       |   |      |   | Variance     | 
|                                     |  | 2010                        |        | 2009 |                           | 2010 v. 2009 |  |   | 2010  |   | 2009 |   | 2010 v. 2009 | 
|Interest income                      |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |        |  
|Loans, including fees                |  | $                           | 47,170 |      | $                         | 45,205       |  | $ | 1,965 |   |      | $ | 91,794       |  | $ | 87,541 |  | $ | 4,253  |  
|Securities                           |  |                             | 4,783  |      |                           | 2,283        |  |   | 2,500 |   |      |   | 8,587        |  |   | 4,691  |  |   | 3,896  |  
|Securities - tax exempt              |  |                             | 2,662  |      |                           | 1,720        |  |   | 942   |   |      |   | 5,113        |  |   | 3,433  |  |   | 1,680  |  
|Federal funds sold                   |  |                             | 11     |      |                           | 26           |  |   | (15   | ) |      |   | 20           |  |   | 33     |  |   | (13    | )
|Interest-bearing deposits with banks |  |                             | 140    |      |                           | 13           |  |   | 127   |   |      |   | 383          |  |   | 25     |  |   | 358    |  
|Other securities                     |  |                             | 1,286  |      |                           | 1,625        |  |   | (339  | ) |      |   | 2,463        |  |   | 2,783  |  |   | (320   | )
|                                     |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |        |  
|Total interest income                |  |                             | 56,052 |      |                           | 50,872       |  |   | 5,180 |   |      |   | 108,360      |  |   | 98,506 |  |   | 9,854  |  
|                                     |  |                             |        |      |                           |             
|Interest expense                     |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |        |  
|Deposits                             |  |                             | 7,324  |      |                           | 7,219        |  |   | 105   |   |      |   | 14,468       |  |   | 16,003 |  |   | (1,535 | )
|Notes payable and other borrowings   |  |                             | 2,426  |      |                           | 2,666        |  |   | (240  | ) |      |   | 4,917        |  |   | 5,159  |  |   | (242   | )
|                                     |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |        |  
|Total interest expense               |  |                             | 9,750  |      |                           | 9,885        |  |   | (135  | ) |      |   | 19,385       |  |   | 21,162 |  |   | (1,777 | )
|                                     |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |        |  
|                                     |  |                             |        |      |                           |             
|Net interest income                  |  | $                           | 46,302 |      | $                         | 40,987       |  | $ | 5,315 |   |      | $ | 88,975       |  | $ | 77,344 |  | $ | 11,631 |  
|                                     |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |        |  

Net interest income increased $5.3 million for the second quarter of 2010 and $11.6 million for the six months ended
June 30, 2010 compared with the corresponding periods in 2009. The increase in net interest income for both periods was primarily due to growth in the loan and investment securities portfolios and higher yields on the investment securities
portfolio in the banking segment compared to the corresponding periods of 2009.



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Noninterest Income

Noninterest income was $102.2 million for the second quarter of 2010 compared with $91.5 million in the second quarter of 2009, an increase of $10.7
million. Noninterest income was $177.6 million for the six months ended June 30, 2010 compared with $162.0 million in the corresponding period in 2009, an increase of $15.6 million. The increase for both periods was primarily due to increased
income from loan originations and net gains on the sale of loans in the mortgage origination segment. Higher mortgage loan origination volume resulted from organic growth that captured a greater share of the national market for mortgage
originations. Also contributing to the increase in noninterest income for both periods was increased income derived from investment advisory fees and commissions and securities brokerage fees and commissions in the financial advisory segment, as
well as increases in intercompany financing fees in the banking segment.

Noninterest Expense

The following table summarizes noninterest expense for the periods indicated below (in thousands).



|                                     |  |                             |         |      |                           |              |  |   |        |   |      |   |              |  |   |         |  |   |        |  
|------------------------------------ |  | --------------------------- | ------- | ---- | ------------------------- | ------------ |  | - | ------ | - | ---- | - | ------------ |  | - | ------- |  | - | ------ | -
|                                     |  | Three Months Ended June 30, |         |      | Six Months Ended June 30, |             
|                                     |  |                             |         |      |                           | Variance     |  |   |        |   |      |   | Variance     | 
|                                     |  | 2010                        |         | 2009 |                           | 2010 v. 2009 |  |   | 2010   |   | 2009 |   | 2010 v. 2009 | 
|Noninterest expense                  |  |                             |         |      |                           |              |  |   |        |   |      |   |              |  |   |         |  |   |        |  
|Employees compensation and benefits |  | $                           | 73,545  |      | $                         | 61,771       |  | $ | 11,774 |   |      | $ | 130,340      |  | $ | 110,279 |  | $ | 20,061 |  
|Occupancy and equipment, net         |  |                             | 14,349  |      |                           | 11,871       |  |   | 2,478  |   |      |   | 28,186       |  |   | 23,243  |  |   | 4,943  |  
|Professional services                |  |                             | 7,257   |      |                           | 4,879        |  |   | 2,378  |   |      |   | 13,048       |  |   | 8,919   |  |   | 4,129  |  
|Deposit insurance premium            |  |                             | 1,475   |      |                           | 3,487        |  |   | (2,012 | ) |      |   | 2,750        |  |   | 4,048   |  |   | (1,298 | )
|Repossession and foreclosure         |  |                             | 2,602   |      |                           | 1,079        |  |   | 1,523  |   |      |   | 4,054        |  |   | 2,113   |  |   | 1,941  |  
|Other                                |  |                             | 17,053  |      |                           | 13,852       |  |   | 3,201  |   |      |   | 30,722       |  |   | 25,601  |  |   | 5,121  |  
|                                     |  |                             |         |      |                           |              |  |   |        |   |      |   |              |  |   |         |  |   |        |  
|Total noninterest expense            |  | $                           | 116,281 |      | $                         | 96,939       |  | $ | 19,342 |   |      | $ | 209,100      |  | $ | 174,203 |  | $ | 34,897 |  
|                                     |  |                             |         |      |                           |              |  |   |        |   |      |   |              |  |   |         |  |   |        |  

Noninterest expense increased $19.3 million for the second quarter of 2010 and $34.9 million for the six months ended
June 30, 2010 compared with the corresponding periods in 2009. The largest components of these increases were employees compensation and benefits, occupancy and equipment expenses, net of rental income, professional services and other
expenses.

Employees compensation and benefits increased $11.8 million for the second quarter of 2010 and $20.1 million for the six
months ended June 30, 2010 compared with the corresponding periods in 2009. The increase was primarily attributable to the mortgage origination segment resulting from increased staffing levels for the additional mortgage banking offices opened
during 2009 and 2010, as well as higher commission costs due to higher revenues subject to commissions.

Occupancy and equipment expenses, net
of rental income, increased $2.5 million for the second quarter of 2010 and $4.9 million for the six months ended June 30, 2010 compared with the corresponding periods in 2009. The increase was primarily attributable to the mortgage origination
segment resulting from costs incurred on the additional mortgage banking offices added during 2009 and 2010.

Professional services increased
$2.4 million for the second quarter of 2010 and $4.1 million for the six months ended June 30, 2010 compared to the corresponding periods in 2009. Among the factors contributing to the increase in professional services were higher
volume-related professional services fees, legal fees and appraisal and inspection fees attributable to the mortgage origination segment and higher legal fees attributable to collection and foreclosure activity in the banking segment.

Repossession and foreclosure expenses increased $1.5 million for the second quarter of 2010 and $1.9 million for the six months ended June 30, 2010
compared to the corresponding periods in 2009. The increase for both periods was due to costs incurred to complete construction on foreclosed real estate that exceeded the appraised value of the completed property.

Other expenses increased $3.2 million for the second quarter of 2010 and $5.1 million for the six months ended June 30, 2010 compared with the
corresponding periods in 2009. The increase was primarily attributable to the mortgage origination segment resulting from increases in loan origination-related expenses and to amortization of intangible assets in the financial advisory segment.



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Lines of Business

Banking Segment

The following
table summarizes the results for the banking segment for the indicated periods (in thousands):



|                          |  |                             |        |      |                           |              |  |   |        |   |      |   |              |  |   |        |  |   |       
|------------------------- |  | --------------------------- | ------ | ---- | ------------------------- | ------------ |  | - | ------ | - | ---- | - | ------------ |  | - | ------ |  | - | ------
|                          |  | Three Months Ended June 30, |        |      | Six Months Ended June 30,
|                          |  |                             |        |      |                           | Variance     |  |   |        |   |      |   | Variance    
|                          |  | 2010                        |        | 2009 |                           | 2010 v. 2009 |  |   | 2010   |   | 2009 |   | 2010 v. 2009
|Net interest income       |  | $                           | 45,041 |      | $                         | 40,187       |  | $ | 4,854  |   |      | $ | 86,624       |  | $ | 75,420 |  | $ | 11,204
|Provision for loan losses |  |                             | 9,510  |      |                           | 10,750       |  |   | (1,240 | ) |      |   | 32,465       |  |   | 24,763 |  |   | 7,702 
|Noninterest income        |  |                             | 8,736  |      |                           | 4,839        |  |   | 3,897  |   |      |   | 19,348       |  |   | 8,802  |  |   | 10,546
|Noninterest expense       |  |                             | 31,226 |      |                           | 28,395       |  |   | 2,831  |   |      |   | 57,821       |  |   | 50,918 |  |   | 6,903 
|                          |  |                             |        |      |                           |              |  |   |        |   |      |   |              |  |   |        |  |   |       
|Net income before taxes   |  |                             | 13,041 |      |                           | 5,881        |  |   | 7,160  |   |      |   | 15,686       |  |   | 8,541  |  |   | 7,145 
|Income tax provision      |  |                             | 4,167  |      |                           | 2,060        |  |   | 2,107  |   |      |   | 4,909        |  |   | 3,022  |  |   | 1,887 
|                          |  |                             |        |      |                           |              |  |   |        |   |      |   |              |  |   |        |  |   |       
|Net income                |  | $                           | 8,874  |      | $                         | 3,821        |  | $ | 5,053  |   |      | $ | 10,777       |  | $ | 5,519  |  | $ | 5,258 
|                          |  |                             |        |      |                           |              |  |   |        |   |      |   |              |  |   |        |  |   |       

Net income was $8.9 million for the second quarter of 2010 and $10.8
million for the six months ended June 30, 2010, which increased $5.1 million and $5.3 million, respectively, compared to the corresponding periods in 2009. The increase for the second quarter of 2010 compared to the corresponding period in
2009 was primarily due to increases in net revenue, partially offset by an increase in noninterest expense. The increase for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 was primarily due to increases
in net revenue, partially offset by increases in the provision for loan losses and noninterest expense.

Net interest income increased $4.9
million for the second quarter of 2010 and $11.2 million for the six months ended June 30, 2010. The increase for both periods was due primarily to increased interest income on the loan and investment securities portfolios, resulting from
higher yields compared to the corresponding periods in 2009. Noninterest income increased $3.9 million for the second quarter of 2010 and $10.5 million for the six months ended June 30, 2010. The increase for both periods was due primarily to
the increase in intercompany financing fees.

Provision for loan losses decreased $1.2 million for the second quarter of 2010, but increased
$7.7 million for the six months ended June 30, 2010 compared to the corresponding periods in 2009. The increase in the provision for loan losses for the six months ended June 30, 2010 was primarily a result of an increase in non-performing
loans due to continued challenging economic conditions.

Noninterest expense increased by $2.8 million for the second quarter of 2010 and $6.9
million for the six months ended June 30, 2010 compared to the corresponding periods in 2009. The increases were primarily due to increases in employees compensation and benefits, repossession and foreclosure, and professional services
expenses.



38



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##### Table of Contents

The following table summarizes the changes in the banking segments taxable equivalent net interest
income for the periods indicated below, including the component changes in the volume of average interest-earning assets and interest-bearing liabilities and changes in the rates earned or paid on those items (in thousands).



|                                                          |  |                                         |       |   |                                       |   |        |                  |  |   |        |   |  |            |       |   |        |   |        |   |  |   |        |  
|--------------------------------------------------------- |  | --------------------------------------- | ----- | - | ------------------------------------- | - | ------ | ---------------- |  | - | ------ | - |  | ---------- | ----- | - | ------ | - | ------ | - |  | - | ------ | -
|                                                          |  | Three Months Ended June 30,2010
v. 2009 |       |   | Six Months Ended June 30,2010 v.
2009 |  
|                                                          |  | Change Due To(1)                        |       |   |                                       |   |        | Change Due To(1) |  |   |        |  
|                                                          |  | Volume                                  |       |   | Yield/Rate                            |   |        | Change           |  |   | Volume |   |  | Yield/Rate |       |   | Change |  
|Interest income                                           |  |                                         |       |   |                                       |   |        |                  |  |   |        |   |  |            |       |   |        |   |        |   |  |   |        |  
|Loans                                                     |  | $                                       | 1,513 |   |                                       | $ | 138    |                  |  | $ | 1,651  |   |  | $          | 4,461 |   |        | $ | (220   | ) |  | $ | 4,241  |  
|Investment securities(2)                                  |  |                                         | 1,799 |   |                                       |   | 1,546  |                  |  |   | 3,345  |   |  |            | 3,359 |   |        |   | 2,160  |   |  |   | 5,519  |  
|Federal funds sold                                        |  |                                         | (9    | ) |                                       |   | (6     | )                |  |   | (15    | ) |  |            | (7    | ) |        |   | (6     | ) |  |   | (13    | )
|Interest-bearing deposits in other financial institutions |  |                                         | 51    |   |                                       |   | 76     |                  |  |   | 127    |   |  |            | 194   |   |        |   | 172    |   |  |   | 366    |  
|Other securities                                          |  |                                         | (45   | ) |                                       |   | (49    | )                |  |   | (94    | ) |  |            | 21    |   |        |   | (10    | ) |  |   | 11     |  
|                                                          |  |                                         |       |   |                                       |   |        |                  |  |   |        |   |  |            |       |   |        |   |        |   |  |   |        |  
|Total interest income(2)                                  |  |                                         | 3,309 |   |                                       |   | 1,705  |                  |  |   | 5,014  |   |  |            | 8,028 |   |        |   | 2,096  |   |  |   | 10,124 |  
|                                                          |  |                                         |       |   |                                       |  
|Interest expense                                          |  |                                         |       |   |                                       |   |        |                  |  |   |        |   |  |            |       |   |        |   |        |   |  |   |        |  
|Deposits                                                  |  |                                         | 1,940 |   |                                       |   | (1,838 | )                |  |   | 102    |   |  |            | 3,647 |   |        |   | (5,118 | ) |  |   | (1,471 | )
|Notes payable and other borrowings                        |  |                                         | (607  | ) |                                       |   | 154    |                  |  |   | (453   | ) |  |            | (227  | ) |        |   | (246   | ) |  |   | (473   | )
|                                                          |  |                                         |       |   |                                       |   |        |                  |  |   |        |   |  |            |       |   |        |   |        |   |  |   |        |  
|Total interest expense                                    |  |                                         | 1,333 |   |                                       |   | (1,684 | )                |  |   | (351   | ) |  |            | 3,420 |   |        |   | (5,364 | ) |  |   | (1,944 | )
|                                                          |  |                                         |       |   |                                       |   |        |                  |  |   |        |   |  |            |       |   |        |   |        |   |  |   |        |  
|Net interest income(2)                                    |  | $                                       | 1,976 |   |                                       | $ | 3,389  |                  |  | $ | 5,365  |   |  | $          | 4,608 |   |        | $ | 7,460  |   |  | $ | 12,068 |  
|                                                          |  |                                         |       |   |                                       |   |        |                  |  |   |        |   |  |            |       |   |        |   |        |   |  |   |        |  



|(1) | Changes attributable to both volume and yield/rate are included in yield/rate.
|--- | ------------------------------------------------------------------------------

|(2) | Taxable equivalent.
|--- | -------------------

Taxable equivalent net
interest income increased $5.4 million for the second quarter of 2010 compared with the corresponding period in 2009. Changes in yields earned and rates paid increased taxable equivalent net interest income by $3.4 million. Yields on the loan
portfolio increased due to higher rate floors on renewed variable-rate loans. Yields on the investment securities portfolio increased due to historically higher yields on tax-exempt securities issued by political subdivisions of the State of Texas.
The $1.7 million decrease in the rates paid on interest-bearing liabilities was primarily due to the decrease in market interest rates compared with the prevailing market rates in the second quarter of 2009. Increases in the volume of
interest-earning assets, primarily in the loan and investment securities portfolios, increased taxable equivalent net interest income by $3.3 million, while increases in the volume of interest-bearing liabilities reduced taxable equivalent net
interest income by $1.3 million.

Taxable equivalent net interest income increased $12.1 million for the six months ended June 30,
2010 compared with the corresponding period in 2009. Changes in yields earned and rates paid increased taxable equivalent net interest income by $7.5 million. Changes in the yields earned, primarily in the investment securities portfolio, increased
net interest income by $2.1 million. The increase in yields on the investment securities portfolio resulted from historically higher yields on tax-exempt securities issued by political subdivisions of the State of Texas. The $5.4 million decrease in
the rates paid on interest-bearing liabilities was primarily due to the decrease in market interest rates compared with the prevailing market rates in the first half of 2009. Increases in the volume of interest-earning assets, primarily in the loan
and investment securities portfolios, increased taxable equivalent net interest income by $8.0 million, while increases in the volume of interest-bearing liabilities reduced taxable equivalent net interest income by $3.4 million.



39



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##### Table of Contents

The tables below provide additional details regarding the banking segments net interest income (dollar
amounts in thousands).



|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|--------------------------------------------------------- |  | ------------------------------ | --------- | - | ------------------------------ | - | ---------------------- |  | ---- | ------------------------- |  | - | --------------------- | - | ---------------------- | - | ------ |  | ---- | -
|                                                          |  | Three Months EndedJune 30,2010 |           |   | Three Months EndedJune 30,2009 |  
|                                                          |  | AverageOutstandingBalance      |           |   | InterestEarned orPaid          |   | AnnualizedYield orRate |  |      | AverageOutstandingBalance |  |   | InterestEarned orPaid |   | AnnualizedYield orRate |  
|Assets                                                    |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-earning assets                                   |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Loans, gross(1)                                           |  | $                              | 3,368,476 |   |                                | $ | 47,123                 |  | 5.61 | %                         |  | $ | 3,260,306             |   |                        | $ | 45,472 |  | 5.59 | %
|Investment securities - taxable                           |  |                                | 415,894   |   |                                |   | 4,363                  |  | 4.20 | %                         |  |   | 221,163               |   |                        |   | 2,218  |  | 4.01 | %
|Investment securities - non-taxable(2)                    |  |                                | 212,289   |   |                                |   | 3,686                  |  | 6.95 | %                         |  |   | 226,313               |   |                        |   | 2,486  |  | 4.39 | %
|Federal funds sold                                        |  |                                | 12,598    |   |                                |   | 11                     |  | 0.35 | %                         |  |   | 18,737                |   |                        |   | 26     |  | 0.56 | %
|Interest-bearing deposits in other financial institutions |  |                                | 95,645    |   |                                |   | 134                    |  | 0.56 | %                         |  |   | 11,571                |   |                        |   | 7      |  | 0.24 | %
|Other securities                                          |  |                                | 26,962    |   |                                |   | 154                    |  | 2.28 | %                         |  |   | 32,905                |   |                        |   | 248    |  | 3.01 | %
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-earning assets, gross                            |  |                                | 4,131,864 |   |                                |   | 55,471                 |  | 5.38 | %                         |  |   | 3,770,995             |   |                        |   | 50,457 |  | 5.37 | %
|Allowance for loan losses                                 |  |                                | (51,078   | ) |                                |   |                        |  |      |                           |  |   | (29,777               | ) |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-earning assets, net                              |  |                                | 4,080,786 |   |                                |   |                        |  |      |                           |  |   | 3,741,218             |   |                        |   |        |  |      |  
|Noninterest-earning assets                                |  |                                | 453,174   |   |                                |   |                        |  |      |                           |  |   | 458,102               |   |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Total assets                                              |  | $                              | 4,533,960 |   |                                |   |                        |  |      |                           |  | $ | 4,199,320             |   |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |  
|Liabilities and Shareholders Equity                      |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-bearing liabilities                              |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-bearing deposits                                 |  | $                              | 3,266,655 |   |                                |   | 7,346                  |  | 0.90 | %                         |  | $ | 2,578,163             |   |                        |   | 7,244  |  | 1.13 | %
|Notes payable and other borrowings                        |  |                                | 522,339   |   |                                |   | 1,244                  |  | 0.96 | %                         |  |   | 811,670               |   |                        |   | 1,697  |  | 0.84 | %
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Total interest-bearing liabilities                        |  |                                | 3,788,994 |   |                                |   | 8,590                  |  | 0.91 | %                         |  |   | 3,389,833             |   |                        |   | 8,941  |  | 1.06 | %
|Noninterest-bearing liabilities                           |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Noninterest-bearing deposits                              |  |                                | 192,365   |   |                                |   |                        |  |      |                           |  |   | 198,641               |   |                        |   |        |  |      |  
|Other liabilities                                         |  |                                | 28,532    |   |                                |   |                        |  |      |                           |  |   | 95,225                |   |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Total liabilities                                         |  |                                | 4,009,891 |   |                                |   |                        |  |      |                           |  |   | 3,683,699             |   |                        |   |        |  |      |  
|Shareholders equity                                      |  |                                | 524,069   |   |                                |   |                        |  |      |                           |  |   | 515,621               |   |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Total liabilities and shareholders equity                |  | $                              | 4,533,960 |   |                                |   |                        |  |      |                           |  | $ | 4,199,320             |   |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |  
|Net interest income(2)                                    |  |                                |           |   |                                | $ | 46,881                 |  |      |                           |  |   |                       |   |                        | $ | 41,516 |  |      |  
|                                                          |  |                                |           |   |                                |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|                                                          |  |                                |           |   |                                |  
|Net interest spread(2)                                    |  |                                |           |   |                                |   |                        |  | 4.48 | %                         |  |   |                       |   |                        |   |        |  | 4.31 | %
|                                                          |  |                                |           |   |                                |  
|Net interest margin(2)                                    |  |                                |           |   |                                |   |                        |  | 4.55 | %                         |  |   |                       |   |                        |   |        |  | 4.42 | %



|(1) | Average loans include non-accrual loans and warehouse lines of credit to subsidiaries.
|--- | --------------------------------------------------------------------------------------

|(2) | Taxable equivalent adjustments are based on a 35% tax rate. The adjustment to interest income was $1.2 million and $0.8 million for the second quarter of 2010 and 2009,
respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



40



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##### Table of Contents

|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|--------------------------------------------------------- |  | ---------------------------- | --------- | - | ---------------------------- | - | ---------------------- |  | ---- | ------------------------- |  | - | --------------------- | - | ---------------------- | - | ------ |  | ---- | -
|                                                          |  | Six Months
EndedJune 30,2010 |           |   | Six Months
EndedJune 30,2009 |  
|                                                          |  | AverageOutstandingBalance    |           |   | InterestEarned orPaid        |   | AnnualizedYield orRate |  |      | AverageOutstandingBalance |  |   | InterestEarned orPaid |   | AnnualizedYield orRate |  
|Assets                                                    |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-earning assets                                   |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Loans, gross(1)                                           |  | $                            | 3,296,882 |   |                              | $ | 91,674                 |  | 5.61 | %                         |  | $ | 3,138,071             |   |                        | $ | 87,433 |  | 5.62 | %
|Investment securities - taxable                           |  |                              | 370,921   |   |                              |   | 8,052                  |  | 4.34 | %                         |  |   | 224,793               |   |                        |   | 4,621  |  | 4.11 | %
|Investment securities - non-taxable(2)                    |  |                              | 214,733   |   |                              |   | 7,018                  |  | 6.54 | %                         |  |   | 200,326               |   |                        |   | 4,930  |  | 4.92 | %
|Federal funds sold                                        |  |                              | 12,510    |   |                              |   | 20                     |  | 0.32 | %                         |  |   | 15,682                |   |                        |   | 33     |  | 0.42 | %
|Interest-bearing deposits in other financial institutions |  |                              | 174,095   |   |                              |   | 378                    |  | 0.44 | %                         |  |   | 10,209                |   |                        |   | 12     |  | 0.24 | %
|Other securities                                          |  |                              | 26,413    |   |                              |   | 318                    |  | 2.41 | %                         |  |   | 24,701                |   |                        |   | 307    |  | 2.49 | %
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-earning assets, gross                            |  |                              | 4,095,554 |   |                              |   | 107,460                |  | 5.29 | %                         |  |   | 3,613,782             |   |                        |   | 97,336 |  | 5.43 | %
|Allowance for loan losses                                 |  |                              | (51,427   | ) |                              |   |                        |  |      |                           |  |   | (29,647               | ) |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-earning assets, net                              |  |                              | 4,044,127 |   |                              |   |                        |  |      |                           |  |   | 3,584,135             |   |                        |   |        |  |      |  
|Noninterest-earning assets                                |  |                              | 460,887   |   |                              |   |                        |  |      |                           |  |   | 512,446               |   |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Total assets                                              |  | $                            | 4,505,014 |   |                              |   |                        |  |      |                           |  | $ | 4,096,581             |   |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |  
|Liabilities and Shareholders Equity                      |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-bearing liabilities                              |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Interest-bearing deposits                                 |  | $                            | 3,189,308 |   |                              |   | 14,522                 |  | 0.92 | %                         |  | $ | 2,601,041             |   |                        |   | 15,993 |  | 1.24 | %
|Notes payable and other borrowings                        |  |                              | 583,516   |   |                              |   | 2,728                  |  | 0.94 | %                         |  |   | 627,642               |   |                        |   | 3,201  |  | 1.03 | %
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Total interest-bearing liabilities                        |  |                              | 3,772,824 |   |                              |   | 17,250                 |  | 0.92 | %                         |  |   | 3,228,683             |   |                        |   | 19,194 |  | 1.20 | %
|Noninterest-bearing liabilities                           |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Noninterest-bearing deposits                              |  |                              | 178,503   |   |                              |   |                        |  |      |                           |  |   | 197,119               |   |                        |   |        |  |      |  
|Other liabilities                                         |  |                              | 29,940    |   |                              |   |                        |  |      |                           |  |   | 159,304               |   |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Total liabilities                                         |  |                              | 3,981,267 |   |                              |   |                        |  |      |                           |  |   | 3,585,106             |   |                        |   |        |  |      |  
|Shareholders equity                                      |  |                              | 523,747   |   |                              |   |                        |  |      |                           |  |   | 511,475               |   |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|Total liabilities and shareholders equity                |  | $                            | 4,505,014 |   |                              |   |                        |  |      |                           |  | $ | 4,096,581             |   |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |  
|Net interest income(2)                                    |  |                              |           |   |                              | $ | 90,210                 |  |      |                           |  |   |                       |   |                        | $ | 78,142 |  |      |  
|                                                          |  |                              |           |   |                              |   |                        |  |      |                           |  |   |                       |   |                        |   |        |  |      |  
|                                                          |  |                              |           |   |                              |  
|Net interest spread(2)                                    |  |                              |           |   |                              |   |                        |  | 4.37 | %                         |  |   |                       |   |                        |   |        |  | 4.23 | %
|                                                          |  |                              |           |   |                              |  
|Net interest margin(2)                                    |  |                              |           |   |                              |   |                        |  | 4.44 | %                         |  |   |                       |   |                        |   |        |  | 4.36 | %



|(1) | Average loans include non-accrual loans and warehouse lines of credit to subsidiaries.
|--- | --------------------------------------------------------------------------------------

|(2) | Taxable equivalent adjustments are based on a 35% tax rate. The adjustment to interest income was $2.3 million and $1.7 million for the six months ended June 30,
2010 and 2009, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The banking segments net interest margin shown above exceeds our consolidated net interest
margin. Our consolidated net interest margin includes the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities in the financial advisory segment, as well as the borrowing costs of
PlainsCapital at the holding company level, both of which reduce our consolidated net interest margin.



41



---

##### Table of Contents

Mortgage Origination Segment

The following table summarizes the results for the mortgage origination segment for the indicated periods (in thousands):



|                          |  |                             |        |   |                           |   |        |              |  |   |        |   |  |      |         |   |              |   |         |   |  |   |         |  
|------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ------------ |  | - | ------ | - |  | ---- | ------- | - | ------------ | - | ------- | - |  | - | ------- | -
|                          |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|                          |  |                             |        |   |                           |   |        | Variance     |  |   |        |   |  |      |         |   | Variance     |  
|                          |  | 2010                        |        |   | 2009                      |   |        | 2010 v. 2009 |  |   | 2010   |   |  | 2009 |         |   | 2010 v. 2009 |  
|Net interest expense      |  | $                           | (600   | ) |                           | $ | (661   | )            |  | $ | 61     |   |  | $    | (1,051  | ) |              | $ | (589    | ) |  | $ | (462    | )
|Provision for loan losses |  |                             | 735    |   |                           |   |       |              |  |   | 735    |   |  |      | 735     |   |              |   |        |   |  |   | 735     |  
|Noninterest income        |  |                             | 72,877 |   |                           |   | 63,397 |              |  |   | 9,480  |   |  |      | 120,325 |   |              |   | 111,123 |   |  |   | 9,202   |  
|Noninterest expense       |  |                             | 64,261 |   |                           |   | 46,282 |              |  |   | 17,979 |   |  |      | 112,628 |   |              |   | 81,767  |   |  |   | 30,861  |  
|                          |  |                             |        |   |                           |   |        |              |  |   |        |   |  |      |         |   |              |   |         |   |  |   |         |  
|Net income before taxes   |  |                             | 7,281  |   |                           |   | 16,454 |              |  |   | (9,173 | ) |  |      | 5,911   |   |              |   | 28,767  |   |  |   | (22,856 | )
|Income tax provision      |  |                             | 2,327  |   |                           |   | 5,762  |              |  |   | (3,435 | ) |  |      | 1,850   |   |              |   | 10,179  |   |  |   | (8,329  | )
|                          |  |                             |        |   |                           |   |        |              |  |   |        |   |  |      |         |   |              |   |         |   |  |   |         |  
|Net income                |  | $                           | 4,954  |   |                           | $ | 10,692 |              |  | $ | (5,738 | ) |  | $    | 4,061   |   |              | $ | 18,588  |   |  | $ | (14,527 | )
|                          |  |                             |        |   |                           |   |        |              |  |   |        |   |  |      |         |   |              |   |         |   |  |   |         |  

Net income was $5.0 million for the second quarter of 2010 and $4.1 for the six months ended June 30, 2010, a decrease
of $5.7 million and $14.5 million, respectively, compared to the corresponding periods in 2009. The decrease for both periods was due primarily to an increase in noninterest expense, partially offset by an increase in noninterest income.
Employees compensation and benefits and other expenses accounted for the majority of the increase in noninterest expense.

Employees compensation and benefits increased $10.2 million for the second quarter of 2010 and $15.4 million for the six months ended June 30,
2010 compared to the corresponding periods in 2009. The increase was attributable to increased staffing levels to support the additional mortgage banking offices opened during 2009 and 2010, as well as higher commission costs due to higher revenues
subject to commissions. Other expenses increased $6.3 million for the second quarter of 2010 and $12.0 million for the six months ended June 30, 2010 compared to the corresponding periods in 2009, which was primarily attributable to increases
in intercompany financing costs and legal fees due to regulatory compliance activities and litigation.

Mortgage loan origination volume was
$1.831 billion for the second quarter of 2010 compared to $1.680 billion for the second quarter of 2009, an increase of 8.99%. Mortgage loan origination volume was $3.004 billion for the six months ended June 30, 2010 compared to $2.985 billion
for the six months ended June 30, 2009, an increase of 0.64%. For the second quarter of 2010, refinancings and home purchases accounted by dollar volume for 22.7% and 77.3%, respectively, of the total mortgage loan origination volume. For the
six months ended June 30, 2010, refinancings and home purchases accounted by dollar volume for 27.2% and 72.8%, respectively, of total mortgage loan origination volume.



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##### Table of Contents

Financial Advisory Segment

The following table summarizes the results for the financial advisory segment for the indicated periods (in thousands):



|                        |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |       |  
|----------------------- |  | --------------------------- | ------ | ---- | ------------------------- | ------------ |  | - | ----- | - | ---- | - | ------------ |  | - | ------ |  | - | ----- | -
|                        |  | Three Months Ended June 30, |        |      | Six Months Ended June 30, |             
|                        |  |                             |        |      |                           | Variance     |  |   |       |   |      |   | Variance     | 
|                        |  | 2010                        |        | 2009 |                           | 2010 v. 2009 |  |   | 2010  |   | 2009 |   | 2010 v. 2009 | 
|Net interest income     |  | $                           | 1,839  |      | $                         | 1,414        |  | $ | 425   |   |      | $ | 3,359        |  | $ | 2,417  |  | $ | 942   |  
|Noninterest income      |  |                             | 25,003 |      |                           | 23,929       |  |   | 1,074 |   |      |   | 46,798       |  |   | 43,006 |  |   | 3,792 |  
|Noninterest expense     |  |                             | 25,208 |      |                           | 22,934       |  |   | 2,274 |   |      |   | 47,483       |  |   | 42,355 |  |   | 5,128 |  
|                        |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |       |  
|Net income before taxes |  |                             | 1,634  |      |                           | 2,409        |  |   | (775  | ) |      |   | 2,674        |  |   | 3,068  |  |   | (394  | )
|Income tax provision    |  |                             | 522    |      |                           | 844          |  |   | (322  | ) |      |   | 837          |  |   | 1,085  |  |   | (248  | )
|                        |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |       |  
|Net income              |  | $                           | 1,112  |      | $                         | 1,565        |  | $ | (453  | ) |      | $ | 1,837        |  | $ | 1,983  |  | $ | (146  | )
|                        |  |                             |        |      |                           |              |  |   |       |   |      |   |              |  |   |        |  |   |       |  

Net income was $1.1 million for the second quarter of 2010 and $1.8 million for the six months ended June 30, 2010,
which decreased $0.5 million and $0.1 million, respectively, compared to the corresponding periods in 2009. The decreases were due primarily to increases in noninterest expense, partially offset by increases in net interest income and noninterest
income.

Noninterest expense increased $2.3 million for the second quarter of 2010 and $5.1 million for the six months ended June 30,
2010 compared to the corresponding periods in 2009. Other expenses accounted for the majority of the increase in noninterest expense during the second quarter of 2010. Other expenses increased $0.8 million for the second quarter of 2010 compared to
the corresponding period in 2009, which was due primarily to the amortization of intangible assets that began in the second half of 2009. Employees compensation and benefits and other expenses accounted for the majority of the increase in
noninterest expense during the six-month period ending June 30, 2010. Employees compensation and benefits increased $1.3 million for the six months ended June 30, 2010 compared to the corresponding period in 2009. The increase was
attributable to higher commission expenses related to increased sales of securities and a slight increase in staffing levels during the first quarter of 2010. Other expenses increased $1.6 million for the six months ended June 30, 2010 compared
to the corresponding period in 2009, which was due primarily to the amortization of intangible assets that began in the second half of 2009.

Net interest income increased $0.4 million for the second quarter of 2010 and $0.9 million for the six months ended June 30, 2010, respectively,
compared to the corresponding periods in 2009. The increase resulted from higher customer margin loan balances and from an increased level of trading securities used to support sales and underwriting activities.

The majority of noninterest income is generated from fees and commissions earned from investment advisory and securities brokerage activities, which
increased $0.4 million for the second quarter of 2010 and $2.9 million for the six months ended June 30, 2010, respectively, compared to the corresponding periods in 2009.



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##### Table of Contents

Financial Condition

The following discussion contains a more detailed analysis of our financial condition at June 30, 2010 and as compared to December 31, 2009.

Securities Portfolio

The securities portfolio plays a role in the management of interest rate sensitivity and generates additional interest income. In addition, the securities
portfolio is used to meet collateral requirements and the available for sale portion thereof serves as a source of liquidity. Historically, our policy has been to invest primarily in securities of the U.S. government and its agencies, obligations of
municipalities in the State of Texas and other high grade fixed income securities to minimize credit risk. In connection with our acquisition of First Southwest, we purchased a portfolio of auction rate bonds for which an active market does not
currently exist.

The securities portfolio consists of three major components: securities held to maturity, securities available for sale and
trading securities. Securities are classified as held to maturity based on the intent and ability of our management, at the time of purchase, to hold such securities to maturity. These securities are carried at amortized cost. Securities that
may be sold in response to changes in market interest rates, changes in securities prepayment risk, increases in loan demand, general liquidity needs and other similar factors are classified as available for sale and are carried at estimated
fair value. Trading securities are held by First Southwest. A broker-dealer is required to carry these securities at fair value. These trading securities are used to support sales, underwriting and other customer activities. The table below
summarizes our securities portfolio (in thousands).



|                                               |  |              |         |                  |   |        
|---------------------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|                                               |  | June 30,2010 |         | December 31,2009
|Securities available for sale, at fair value   |  |              |         |                  |   |        
|U. S. Treasury securities                      |  | $            |        |                  | $ |       
|U. S. government agencies                      |  |              |         |                  |   |        
|Bonds                                          |  |              |        |                  |   |       
|Mortgage-backed securities                     |  |              | 11,621  |                  |   | 28,014 
|Collateralized mortgage obligations            |  |              | 323,432 |                  |   | 145,361
|States and political subdivisions              |  |              | 12,359  |                  |   | 9,612  
|Auction rate bonds                             |  |              | 22,714  |                  |   | 44,554 
|                                               |  |              |         |                  |   |        
|                                               |  |              | 370,126 |                  |   | 227,541
|                                               |  |             
|Securities held to maturity, at amortized cost |  |              |         |                  |   |        
|U. S. government agencies                      |  |              |         |                  |   |        
|Mortgage-backed securities                     |  |              | 14,395  |                  |   | 16,963 
|Collateralized mortgage obligations            |  |              | 46,539  |                  |   | 50,533 
|States and political subdivisions              |  |              | 123,399 |                  |   | 120,818
|Auction rate bonds                             |  |              | 73,894  |                  |   | 105,699
|                                               |  |              |         |                  |   |        
|                                               |  |              | 258,227 |                  |   | 294,013
|                                               |  |             
|Trading securities, at fair value              |  |              | 93,326  |                  |   | 24,183 
|                                               |  |              |         |                  |   |        
|Total securities portfolio                     |  | $            | 721,679 |                  | $ | 545,737
|                                               |  |              |         |                  |   |        

We had a net unrealized loss of $1.1 million related to the available
for sale investment portfolio at both June 30, 2010 and December 31, 2009.

The market value of securities held to maturity at
June 30, 2010 was $3.2 million above book value. At December 31, 2009, the market value of held to maturity securities was $0.9 million above book value.



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##### Table of Contents

We hold securities issued by Access to Loans for Learning Student Loan Corporation that exceed 10% of our
shareholders equity. The aggregate book value and aggregate market value of these securities at June 30, 2010, was $96.8 million and $95.9 million, respectively.

Loan Portfolio

Loans held for investment in our banking and financial advisory segments are detailed in the table below (in thousands) and classified by type.



|                                    |  |              |           |   |                  |   |           |  
|----------------------------------- |  | ------------ | --------- | - | ---------------- | - | --------- | -
|                                    |  | June 30,2010 |           |   | December 31,2009 |  
|Commercial and industrial           |  | $            | 1,225,621 |   |                  | $ | 1,264,735 |  
|Lease financing                     |  |              | 62,316    |   |                  |   | 78,088    |  
|Construction and land development   |  |              | 380,611   |   |                  |   | 402,876   |  
|Real estate                         |  |              | 1,115,364 |   |                  |   | 1,125,134 |  
|Securities (including margin loans) |  |              | 188,416   |   |                  |   | 152,145   |  
|Consumer                            |  |              | 40,478    |   |                  |   | 48,791    |  
|                                    |  |              |           |   |                  |   |           |  
|Loans, gross                        |  |              | 3,012,806 |   |                  |   | 3,071,769 |  
|Allowance for loan losses           |  |              | (56,375   | ) |                  |   | (52,092   | )
|                                    |  |              |           |   |                  |   |           |  
|Loans, net                          |  | $            | 2,956,431 |   |                  | $ | 3,019,677 |  
|                                    |  |              |           |   |                  |   |           |  

Banking Segment

The banking segments loan portfolio constitutes the major earning asset of the banking segment and typically offers the banking segment its best
alternative for obtaining the maximum interest spread above the cost of funds. The overall economic strength of the banking segment generally parallels the quality and yield of its loan portfolio. The banking segments total loans, net of the
allowance for loan losses, were $2.8 billion and $2.9 billion as of June 30, 2010 and December 31, 2009, respectively. The $101.5 million decrease in net loans at June 30, 2010 compared with December 31, 2009, was primarily
attributable to declines in commercial and industrial loans and real estate loans that reflect efforts to control the growth of the loan portfolio in response to current economic conditions.

The banking segment does not generally participate in syndicated loan transactions and has no foreign loans in its portfolio. At June 30, 2010,
the banking segment had loan concentrations (loans to borrowers engaged in similar activities) which exceeded 10% of total loans in its real estate loan portfolio. The areas of concentration within our real estate portfolio were construction and
land development loans and non-construction commercial real estate loans. At June 30, 2010, construction and land development loans were 13% of total loans, while non-construction commercial real estate loans were 27% of total loans. The
banking segments loan concentrations were within regulatory guidelines as of June 30, 2010.

Mortgage Origination Segment

The loan portfolio of the mortgage origination segment consists of loans held for sale, primarily single-family residential mortgages
funded through PrimeLending, and pipeline loans, which are loans in various stages of the application process, but not yet closed and funded. Pipeline loans may not close if potential borrowers elect in their sole discretion not to proceed with the
loan application. Total loans held for sale, which does not include pipeline loans, were $699.7 million and $430.8 million as of June 30, 2010 and December 31, 2009, respectively. The $268.9 million increase in net loans at June 30,
2010 compared with December 31, 2009 was primarily attributable to internally generated growth that resulted in the opening of additional offices and market conditions that led to increased home purchases. Most of the growth during the second
quarter of 2010 occurred in June 2010. PrimeLending was able to service the increased demand for home purchases due to the availability of warehouse financing through our banking segment.



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##### Table of Contents

The components of the mortgage origination segments loans held for sale and pipeline loans are shown
in the following table (in thousands).



|                         |  |              |         |                  |   |         |  
|------------------------ |  | ------------ | ------- | ---------------- | - | ------- | -
|                         |  | June 30,2010 |         | December 31,2009 |  
|Loans held for sale      |  |              |         |                  |   |         |  
|Unpaid principal balance |  | $            | 680,160 |                  | $ | 419,473 |  
|Fair value adjustment    |  |              | 19,526  |                  |   | 11,287  |  
|                         |  |              |         |                  |   |         |  
|                         |  | $            | 699,686 |                  | $ | 430,760 |  
|                         |  |              |         |                  |   |         |  
|Pipeline loans           |  |              |         |                  |   |         |  
|Unpaid principal balance |  | $            | 633,911 |                  | $ | 256,285 |  
|Fair value adjustment    |  |              | 6,304   |                  |   | (512    | )
|                         |  |              |         |                  |   |         |  
|                         |  | $            | 640,215 |                  | $ | 255,773 |  
|                         |  |              |         |                  |   |         |  

Financial Advisory Segment

The loan portfolio of the financial advisory segment consists primarily of margin loans to customers and correspondents. These loans are
collateralized by the securities purchased or by other securities owned by the clients and, because of collateral coverage ratios, are believed to present minimal collectability exposure. Additionally, these loans are subject to a number of
regulatory requirements as well as First Southwests internal policies. The financial advisory segments total loans, net of the allowance for loan losses, were $189.9 million as of June 30, 2010 and $154.1 million as of
December 31, 2009. The $35.8 million increase from December 31, 2009 to June 30, 2010 is primarily attributable to increased borrowings in margin accounts held by First Southwest customers and correspondents.

Allowance for Loan Losses

The
allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents managements best estimate of probable losses that have been incurred within the existing portfolio of loans. Our
management has responsibility for determining the level of the allowance for loan losses, subject to review by the Audit Committee of our board of directors and the Directors Loan Review Committee of the Banks board of directors.

It is our managements responsibility at the end of each quarter, or more frequently as deemed necessary, to analyze the level of the
allowance for loan losses to ensure that it is appropriate for the estimated credit losses in the portfolio consistent with the Interagency Policy Statement on the Allowance for Loan and Lease Losses. Estimated credit losses are the probable current
amount of loans that we will be unable to collect given facts and circumstances as of the evaluation date. When management determines that a loan, or portion thereof, is uncollectible, the loan, or portion thereof, is charged off against the
allowance for loan losses.



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##### Table of Contents

We have developed a methodology that seeks to determine an allowance within the scope of Receivables and
Contingencies Topics of the ASC. Loans within the scope of the Receivables Topic are individually evaluated for impairment using one of three impairment measurement methods as of the evaluation date: (1) the present value of expected future
cash flows discounted on those loans, (2) the loans observable market price, or (3) the fair value of the collateral if the loan is collateral dependent. If loans are determined to be impaired, specific reserves would be provided in
our estimate of the allowance. Loans within the scope of the Contingencies Topic include all other loans. Estimates of loss for the Contingencies Topic are calculated based on historical loss experience by loan portfolio segments adjusted for
changes in trends, conditions, and other relevant factors that affect repayment of loans as of the evaluation date. While historical loss experience provides a reasonable starting point for the analysis, historical losses, or recent trends in
losses, are not the sole basis upon which to determine the appropriate level for the allowance for loan losses. Management considers those qualitative or environmental factors that are likely to cause estimated credit losses associated with the
existing portfolio to differ from historical loss experience, including but not limited to: changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered
elsewhere in estimating credit losses; changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments;
changes in the nature and volume of the portfolio and in the terms of loans; changes in the experience, ability, and depth of lending management and other relevant staff; changes in the volume and severity of past due loans, the volume of nonaccrual
loans, and the volume and severity of adversely classified or graded loans; changes in the quality of the institutions loan review system; changes in the value of underlying collateral for collateral-dependent loans; and the existence and
effect of any concentrations of credit, and changes in the level of such concentrations.

We design our loan review program to timely identify
and monitor problem loans by maintaining a credit grading process, ensuring that timely and appropriate changes are made to the loans with assigned risk grades and coordinating the timely delivery of the information necessary to assess the
appropriateness of the allowance for loan losses. Loans are evaluated for impairment when: (i) payments are delayed, typically 90 days or more (unless in the process of collection), (ii) a loan becomes classified, (iii) a loan is
being reviewed in the normal course of the loan review scope, or (iv) identified by the servicing officer as a problem. On an annual basis, our loan review department targets 60% coverage of the dollar amount of our loan portfolio, regardless
of risk. We review all loan relationships that exhibit probable or observed credit weaknesses, the top 25 loan relationships by dollar amount in each market we serve, and additional relationships necessary to achieve our desired coverage ratio.

The allowance is subject to regulatory examinations and determinations as to adequacy, which may take into account such factors as the
methodology used to calculate the allowance and the size of the allowance in comparison to peer banks identified by regulatory agencies. Homogenous loans, such as consumer installment, residential mortgage loans and home equity loans, are not
individually reviewed and are generally risk graded at the same levels. The risk grade and reserves are established for each homogenous pool of loans based on the expected net charge-offs from a current trend in delinquencies, losses or historical
experience and general economic conditions. As of June 30, 2010, we had no material delinquencies in these types of loans.

While we
believe we have sufficient allowance for our existing portfolio as of June 30, 2010, additional provisions for losses on existing loans may be necessary in the future. We recorded net charge-offs in the amount of $3.8 million for the second
quarter of 2010 compared to $8.1 million for the second quarter of 2009. For the six months ended June 30, 2010 and 2009, net charge-offs were $28.9 million and $33.7 million, respectively. Our allowance for loan losses totaled $56.4 million at
June 30, 2010 and $52.1 million at December 31, 2009. The ratio of the allowance for loan losses to total loans held for investment at June 30, 2010 and December 31, 2009 was 1.87% and 1.70%, respectively.

Provisions for loan losses are charged to operations to record the total allowance for loan losses at a level deemed appropriate by the banking
segments management based on such factors as the volume and type of lending it conducted, the amount of non-performing loans and related collateral security, the present level of the allowance for loan losses, the results of recent regulatory
examinations, generally accepted accounting principles, general economic conditions and other factors related to the ability to collect loans in its portfolio.



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##### Table of Contents

The provision for loan losses, primarily in the banking segment, was $33.2 million for the six months ended
June 30, 2010; an increase of $8.4 million compared to the six months ended June 30, 2009. The increase was primarily a result of a significant increase in non-performing loans due to the broad downturn in the U.S. economy. These
challenging economic conditions have resulted, at times, in sudden deterioration in the creditworthiness of some seasoned borrowers, and we have significantly increased the loan loss provision, as well as the allowance for loan losses, to address
these circumstances.

The following table presents the activity in our allowance for loan losses for the dates indicated (dollar amounts in
thousands). Substantially all of the activity shown below occurred within the banking segment.



|                                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|-------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                             |  | Three Months EndedJune 
30, |        |   | Six Months EndedJune 
30, |  
|                                             |  | 2010                        |        |   | 2009                      |   |        | 2010 |  |   | 2009    |  
|Balance at beginning of period               |  | $                           | 49,971 |   |                           | $ | 29,123 |      |  | $ | 52,092  |   |  | $ | 40,672  |  
|Provisions charged to operating expenses     |  |                             | 10,245 |   |                           |   | 10,750 |      |  |   | 33,200  |   |  |   | 24,763  |  
|Recoveries of loans previously charged off   |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Commercial and industrial                    |  |                             | (49    | ) |                           |   | 291    |      |  |   | 115     |   |  |   | 491     |  
|Real estate                                  |  |                             |       |   |                           |   |       |      |  |   | 2       |   |  |   |        |  
|Construction and land development            |  |                             | 9      |   |                           |   | 3      |      |  |   | 15      |   |  |   | 3       |  
|Lease financing                              |  |                             |       |   |                           |   | 10     |      |  |   |        |   |  |   | 10      |  
|Consumer                                     |  |                             | 254    |   |                           |   | 24     |      |  |   | 353     |   |  |   | 35      |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Total recoveries                             |  |                             | 214    |   |                           |   | 328    |      |  |   | 485     |   |  |   | 539     |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Loans charged off                            |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Commercial and industrial                    |  |                             | 2,707  |   |                           |   | 5,013  |      |  |   | 19,871  |   |  |   | 27,930  |  
|Real estate                                  |  |                             |       |   |                           |   | 1,218  |      |  |   | 7,698   |   |  |   | 2,046   |  
|Construction and land development            |  |                             | 370    |   |                           |   | 1,552  |      |  |   | 566     |   |  |   | 1,929   |  
|Lease financing                              |  |                             | 325    |   |                           |   | 579    |      |  |   | 452     |   |  |   | 1,126   |  
|Consumer                                     |  |                             | 653    |   |                           |   | 61     |      |  |   | 815     |   |  |   | 1,165   |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Total charge-offs                            |  |                             | 4,055  |   |                           |   | 8,423  |      |  |   | 29,402  |   |  |   | 34,196  |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net charge-offs                              |  |                             | (3,841 | ) |                           |   | (8,095 | )    |  |   | (28,917 | ) |  |   | (33,657 | )
|                                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Balance at end of period                     |  | $                           | 56,375 |   |                           | $ | 31,778 |      |  | $ | 56,375  |   |  | $ | 31,778  |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net charge-offs to average loans outstanding |  |                             | 0.51   | % |                           |   | 1.07   | %    |  |   | 1.93    | % |  |   | 2.26    | %

The distribution of the allowance for loan
losses among loan types and the percentage of the loans for that type to gross loans, excluding unearned income, are presented in the table below (dollar amounts in thousands). Amounts shown in Unallocated include the portion of the
allowance that is attributable to factors that cannot be distributed by type. Those factors include credit concentrations, trends in loan growth, and various other market, economic and regulatory considerations.



|                                                          |  |              |        |                |                  |   |         |   |                |  |        |  
|--------------------------------------------------------- |  | ------------ | ------ | -------------- | ---------------- | - | ------- | - | -------------- |  | ------ | -
|                                                          |  | June 30,2010 |        |                | December 31,2009 |  
|                                                          |  | Reserve      |        | % ofGrossLoans |                  |   | Reserve |   | % ofGrossLoans | 
|Commercial and industrial                                 |  | $            | 30,875 |                | 40.68            | % |         | $ | 28,580         |  | 41.17  | %
|Real estate (including construction and land development) |  |              | 20,704 |                | 49.65            | % |         |   | 12,357         |  | 49.74  | %
|Lease financing                                           |  |              | 133    |                | 2.07             | % |         |   | 1,114          |  | 2.54   | %
|Securities (including margin loans)                       |  |              | 1,280  |                | 6.25             | % |         |   | 1,280          |  | 4.95   | %
|Consumer                                                  |  |              | 504    |                | 1.34             | % |         |   | 469            |  | 1.60   | %
|Unallocated                                               |  |              | 2,879  |                |                  |   |         |   | 8,292          |  |        |  
|                                                          |  |              |        |                |                  |   |         |   |                |  |        |  
|Total                                                     |  | $            | 56,375 |                | 100.00           | % |         | $ | 52,092         |  | 100.00 | %
|                                                          |  |              |        |                |                  |   |         |   |                |  |        |  



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##### Table of Contents

Potential Problem Loans

Potential problem loans consist of loans that are performing in accordance with contractual terms but for which management has concerns about the ability
of an obligor to continue to comply with repayment terms because of the obligors potential operating or financial difficulties. Management monitors these loans and reviews their performance on a regular basis. As of June 30, 2010, we had
20 credit relationships totaling $73.0 million in loans of this type which are not included in either the non-accrual or 90 days past due loan categories.

Non-Performing Assets

The
following table presents the components of our non-performing assets at the dates indicated (dollar amounts in thousands).



|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  
|----------------------------------------------------- |  | ------------ | ------ | - | ---------------- | - | ------ | ------------ |  | - | ------ | -
|                                                      |  | June 30,2010 |        |   | December 31,2009 |   |        | June 30,2009 | 
|Loans accounted for on a non-accrual basis            |  |              |        |   |                  |   |        |              |  |   |        |  
|Commercial and industrial                             |  | $            | 39,030 |   |                  | $ | 38,592 |              |  | $ | 21,042 |  
|Lease financing                                       |  |              | 6,201  |   |                  |   | 3,835  |              |  |   | 3,140  |  
|Construction and land development                     |  |              | 17,537 |   |                  |   | 16,317 |              |  |   | 17,750 |  
|Real estate                                           |  |              | 9,515  |   |                  |   | 10,279 |              |  |   | 11,533 |  
|Consumer                                              |  |              |       |   |                  |   |       |              |  |   |       |  
|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  
|                                                      |  | $            | 72,283 |   |                  | $ | 69,023 |              |  | $ | 53,465 |  
|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  
|                                                      |  |              |       
|Non-performing loans as a percentage of total loans   |  |              | 1.95   | % |                  |   | 1.97   | %            |  |   | 1.54   | %
|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  
|                                                      |  |              |       
|Other Real Estate Owned                               |  | $            | 16,822 |   |                  | $ | 17,531 |              |  | $ | 10,632 |  
|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  
|                                                      |  |              |       
|Other repossessed assets                              |  | $            | 1,876  |   |                  | $ | 2,538  |              |  | $ | 1,941  |  
|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  
|                                                      |  |              |       
|Non-performing assets                                 |  | $            | 90,981 |   |                  | $ | 89,092 |              |  | $ | 66,038 |  
|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  
|                                                      |  |              |       
|Non-performing assets as a percentage of total assets |  |              | 1.85   | % |                  |   | 1.95   | %            |  |   | 1.50   | %
|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  
|                                                      |  |              |       
|Loans past due 90 days or more and still accruing     |  | $            | 1,381  |   |                  | $ | 150    |              |  | $ | 341    |  
|                                                      |  |              |        |   |                  |   |        |              |  |   |        |  

At June 30, 2010, total non-performing assets increased $1.9 million to $91.0 million compared to $89.1 million at
December 31, 2009. Non-accrual loans increased by $3.3 million to $72.3 million at June 30, 2010 compared to $69.0 million at December 31, 2009. Of these non-accrual loans, $39.0 million were characterized as commercial and industrial
loans as of June 30, 2010, an increase of $0.4 million compared to December 31, 2009. The commercial and industrial loans included a $10.8 million business loan secured principally by the guarantor. Approximately $9.7 million in business
loans were included in commercial and industrial loans, which are for investment properties arising primarily from a single customer relationship and secured principally by the inventory and property, plant and equipment of a group of related
borrowers. Also included in the commercial and industrial loan category were two business loans each from a single customer relationship totaling $4.5 million and $2.7 million and secured by each borrowers accounts receivable and inventory, a
$1.8 million business loan secured by livestock, a $1.5 million business loan secured by life insurance, a $1.4 million business loan secured by accounts receivable and inventory and a $1.4 million business loan secured by oil and gas properties.

Non-accrual loans at June 30, 2010 also included $17.5 million characterized as construction and land development loans. This included
two real estate loans totaling approximately $5.8 million from a single customer relationship and secured by assisted living centers, two residential real estate development loans totaling approximately $4.4 million from a single customer
relationship and secured by unimproved land, and a $1.4 million residential real estate loan from a single customer relationship secured by commercial land development. Non-accrual loans also included $9.5 million characterized as real estate loans.
This included a $1.2 million commercial real estate loan secured by occupied residential property, two commercial real estate loans from a single customer relationship totaling approximately $1.1 million and secured by unoccupied townhomes and a
$0.9 million commercial real estate loan secured by occupied non-residential property.



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Loans in troubled debt restructurings bearing market rates of interest at the time of restructuring and
performing in compliance with their modified terms are considered impaired in the calendar year of the restructuring. At June 30, 2010, troubled debt restructurings totaled $16.7 million; of which $2.5 million were included in performing loans
and $14.2 million were included in non-accrual loans.

Other Real Estate Owned decreased $0.7 million to $16.8 million at June 30, 2010
compared to $17.5 million at December 31, 2009. At June 30, 2010, Other Real Estate Owned included $15.7 million of commercial real estate property consisting of single family residences under development and $1.1 million of residential
lots at various levels of completion.

We would have recorded additional interest income of $2.9 million and $2.7 million for the six months
ended June 30, 2010 and 2009, if non-accrual loans had been current during the respective periods.

Borrowings

Our borrowings as of June 30, 2010 and December 31, 2009 are shown in the table below (in thousands).



|                               |  |          |         |              |   |              |  |   |          |  
|------------------------------ |  | -------- | ------- | ------------ | - | ------------ |  | - | -------- | -
|                               |  | June 30, |         | December 31, |   | Variance     | 
|                               |  | 2010     |         | 2009         |   | 2010 v. 2009 | 
|Short-term borrowings          |  | $        | 368,366 |              | $ | 488,078      |  | $ | (119,712 | )
|Notes payable                  |  |          | 67,450  |              |   | 68,550       |  |   | (1,100   | )
|Junior subordinated debentures |  |          | 67,012  |              |   | 67,012       |  |   |         |  
|Other borrowings               |  |          | 11,915  |              |   | 12,128       |  |   | (213     | )
|                               |  |          |         |              |   |              |  |   |          |  
|                               |  | $        | 514,743 |              | $ | 635,768      |  | $ | (121,025 | )
|                               |  |          |         |              |   |              |  |   |          |  

Short-term borrowings consist of federal funds purchased and securities sold under agreements to repurchase, as well as
borrowings at the Federal Home Loan Bank. The $119.7 million decrease in short-term borrowings at June 30, 2010 compared with December 31, 2009 was due mostly to the purchase of brokered deposits, which had favorable pricing relative to
the Federal Home Loan Bank and Federal Reserve. Our brokered deposits were $457.3 million at June 30, 2010, an increase of $350.5 million from December 31, 2009.

We have revolving lines of credit with JP Morgan Chase Bank, N.A. As a result of the amendments described in Note 6 to the consolidated interim financial
statements, the aggregate borrowing capacity under those revolving lines of credit was reduced from $30.0 million to $22.7 million. In addition, we converted $7.7 million of borrowings under the revolving lines of credit to term borrowings that
mature July 31, 2011 and will be repaid in quarterly installments of $1.9 million beginning September 1, 2010. The changes described above did not result in a material change in our available borrowing capacity, which was $5.0 million as a
result of the amendments.

Liquidity and Capital Resources

Liquidity refers to the measure of our ability to meet our customers short-term and long-term deposit withdrawals and anticipated and unanticipated
increases in loan demand without penalizing earnings. Interest rate sensitivity involves the relationships between rate-sensitive assets and liabilities and is an indication of the probable effects of interest rate fluctuations on our net interest
income. We discuss our management of interest rate and other risks in Part I, Item 3, Quantitative and Qualitative Disclosures about Market Risk, herein.



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Our asset and liability group is responsible for continuously monitoring our liquidity position to ensure
that assets and liabilities are managed in a manner that will meet our short-term and long-term cash requirements. Funds invested in short-term marketable instruments, the continuous maturing of other interest-earning assets, cash flows from
self-liquidating investments such as mortgage-backed securities and collateralized mortgage obligations, the possible sale of available for sale securities and the ability to securitize certain types of loans provide sources of liquidity from an
asset perspective. The liability base provides sources of liquidity through deposits and the maturity structure of short-term borrowed funds. For short-term liquidity needs, we utilize federal fund lines of credit with correspondent banks,
securities sold under agreements to repurchase, borrowings from the Federal Reserve and borrowings under lines of credit with other financial institutions. For intermediate liquidity needs, we utilize advances from the Federal Home Loan Bank.
To supply liquidity over the longer term, we have access to brokered certificates of deposit, term loans at the Federal Home Loan Bank and borrowings under lines of credit with other financial institutions.

On December 19, 2008, we sold approximately $87.6 million of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, and Fixed Rate Cumulative
Perpetual Preferred Stock, Series B (the Series A and Series B Preferred Stock), the aggregate liquidation preference of which is $92.0 million, to the U.S. Treasury pursuant to the TARP Capital Purchase Program. The shares of Series B
Preferred Stock were issued to the U.S. Treasury upon the exercise of a warrant issued in conjunction with the Series A Preferred Stock. The Series A and Series B Preferred Stock are senior to shares of our Original Common Stock with respect to
dividends and liquidation preference. Under the terms of the Series A Preferred Stock, we are obligated to pay a 5% per annum cumulative dividend on the stated value of the preferred stock until February 14, 2014 and thereafter at a rate
of 9% per annum. As long as shares of the Series A and Series B Preferred Stock remain outstanding, we may not pay dividends to our common shareholders (nor may we repurchase or redeem any shares of our common stock) unless all accrued and
unpaid dividends on the preferred stock have been paid in full. Furthermore, prior to December 19, 2011, unless we have redeemed all of the preferred stock, the consent of the U.S. Treasury will be required to, among other things, increase the
per share amount of dividends paid on our common stock. After December 19, 2011 and thereafter until December 19, 2018, the consent of the U.S. Treasury (if it still holds our preferred stock) will be required for any increase in the
aggregate common stock dividends per share greater than 3% per annum. After December 19, 2018, we will be prohibited from paying dividends on, or repurchasing any common stock until the preferred stock issued to the U.S. Treasury is
redeemed in whole or the U.S. Treasury has transferred all of its preferred stock to third parties. If dividends on the preferred stock are not paid in full for six dividend periods, whether or not consecutive, the U.S. Treasury will have the right
to elect two directors to our board of directors until all unpaid cumulative dividends are paid in full. The terms of the Series B Preferred Stock are identical to those described above for the Series A Preferred Stock except that (i) the
dividend rate is 9% per annum and (ii) the Series B Preferred Stock may not be redeemed unless all of the Series A Preferred Stock is redeemed.

We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements may
prompt certain actions by regulators that, if undertaken, could have a direct material adverse effect on our financial condition and results of operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action,
we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject
to qualitative judgments by the regulators about components, risk weightings and other factors.

At June 30, 2010, we exceeded all
regulatory capital requirements and were considered to be well-capitalized with a total capital to risk weighted assets ratio of 13.90%, Tier 1 capital to risk weighted assets ratio of 12.10% and a Tier 1 capital to average assets, or
leverage, ratio of 9.41%. At June 30, 2010, the Bank was also considered to be well-capitalized. We discuss regulatory capital requirements in more detail in Note 11 to our consolidated financial statements.

Cash and cash equivalents (consisting of cash and due from banks and federal funds sold), totaled $109.1 million at June 30, 2010, a decrease of
$51.2 million, or 31.93%, from $160.4 million at December 31, 2009. This decrease was primarily due to a decrease in short-term borrowings, partially offset by the net increase in deposits and reduced payments on notes payable.

Deposit flows, calls of investment securities and borrowed funds, and prepayments of loans and mortgage-backed securities are strongly influenced by
interest rates, general and local economic conditions and competition in the marketplace. These factors reduce the predictability of the timing of these sources of funds.

Cash used in operations during the first half of 2010 was $307.8 million, an increase in cash used of $164.6 million compared with the first half of
2009. Cash used in operations increased primarily due to increases in trading securities and broker-dealer and clearing payables at First Southwest.



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Our primary use of funds is for the origination of loans, primarily commercial and industrial loans and real
estate loans. Our loan portfolio at June 30, 2010, excluding loans held for sale and the allowance for loan losses, and net of unearned income, was $3.0 billion, a decrease of $59.0 million compared with $3.1 billion at December 31,
2009. The decrease in net loans was concentrated in commercial and industrial loans and construction and land development loans and reflects efforts to control the growth and risk of the loan portfolio in response to current economic conditions.

Cash used in our investment activities included net purchases of securities for our investment portfolio during the six months ended
June 30, 2010, which were $102.8 million compared with net purchases of $41.0 million during the six months ended June 30, 2009. The increase in net purchases of securities during the first half of 2010 compared to the corresponding period
in 2009 resulted from the purchase of both municipal securities and collateralized mortgage obligations to take advantage of attractive yields and provide collateral for pledging and, with respect to collateralized mortgage obligations, repurchase
agreements. We sold approximately $92.3 million and $21.3 million of available for sale securities during the six months ended June 30, 2010 and 2009, respectively.

Cash provided by financing activities was $339.2 million for the six months ended June 30, 2010 compared with $333.0 million for the six months
ended June 30, 2009. The $6.2 million increase was due mostly to the net increase in deposits and reduced payments on notes payable, partially offset by the decrease in short-term borrowings.

We had deposits of $3.7 billion at June 30, 2010, an increase of $458.2 million, or 14.0%, from the level of deposits at December 31, 2009.
Deposit flows are affected by the level of market interest rates, the interest rates and products offered by competitors, the volatility of equity markets and other factors. Within the deposit portfolio, brokered deposits, time deposits over
$100,000 and money market deposits increased $350.5 million, $57.0 million and $54.5 million, respectively from December 31, 2009 to June 30, 2010.

Our 15 largest depositors, excluding First Southwest, our indirect wholly owned subsidiary, accounted for approximately 22.24% of our total deposits, and
our five largest depositors, excluding First Southwest, accounted for approximately 14.70% of our total deposits at June 30, 2010. The loss of one or more of our largest customers, or a significant decline in the deposit balances due to
ordinary course fluctuations related to these customers businesses, would adversely affect our liquidity and require us to raise deposit rates to attract new deposits, purchase federal funds or borrow funds on a short-term basis to replace
such deposits. We have not experienced any liquidity issues to date with respect to brokered deposits or our other large balance deposits, and we believe alternative sources of funding are available, albeit currently at slightly higher rates, to
more than compensate for the loss of one or more of these customers.

PrimeLending funds the mortgage loans it originates through a warehouse
line of credit of up to $750.0 million maintained with the Bank. At June 30, 2010, PrimeLending had outstanding borrowings of $661.3 million against the warehouse line of credit. PrimeLending sells substantially all mortgage loans it
originates to various investors in the secondary market with servicing released. As these mortgage loans are sold in the secondary market, PrimeLending pays down its warehouse line of credit with the Bank.

FSC relies on its equity capital, short-term bank borrowings, interest-bearing and non-interest-bearing client credit balances, correspondent deposits,
securities lending arrangements, repurchase agreement financings and other payables to finance its assets and operations. FSC has credit arrangements with commercial banks of up to $160.0 million, which are used to finance securities owned,
securities held for correspondent accounts and receivables in customer margin accounts. These credit arrangements are provided on an as offered basis and are not committed lines of credit. At June 30, 2010, First Southwest had
borrowed approximately $66.5 million under these credit arrangements.

Off-Balance Sheet Arrangements; Commitments; Guarantees

In the normal course of business, we enter into various transactions, which, in accordance with accounting principles generally accepted in
the United States, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit and standby letters of credit, which
involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in our consolidated balance sheets.

We enter into contractual loan commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for
specific purposes. Substantially all of our commitments to extend credit are contingent upon customers maintaining specific credit standards until the time of loan funding. We minimize our exposure to loss under these commitments by subjecting them
to credit approval and monitoring procedures. We assess the credit risk associated with certain commitments to extend credit in determining the level of the allowance for possible loan losses.



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Standby letters of credit are written conditional commitments issued by us to guarantee the performance of a
customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, we would be required to fund the commitment. The maximum potential amount of future payments we could be
required to make is represented by the contractual amount of the commitment. If the commitment is funded, we would be entitled to seek recovery from the customer. Our policies generally require that standby letter of credit arrangements contain
security and debt covenants similar to those contained in loan agreements.

In the normal course of business, FSC executes, settles and
finances various securities transactions that may expose FSC to off-balance sheet risk in the event that a customer or counterparty does not fulfill its contractual obligations. Examples of such transactions include the sale of securities not yet
purchased by customers or for the account of FSC, clearing agreements between FSC and various clearinghouses and broker-dealers, secured financing arrangements that involve pledged securities, and when-issued underwriting and purchase commitments.

Critical Accounting Policies and Estimates

Our accounting policies are integral to understanding the results reported. Our accounting policies are described in detail in Note 1 to our consolidated
financial statements for the year ended December 31, 2009, which are included in our Annual Report on Form 10-K filed with the SEC on March 26, 2010. You are encouraged to read in its entirety Note 1 to our consolidated financial
statements for the year ended December 31, 2009 for additional insight into managements approach and methodology in estimating the allowance for loan losses. We believe that of our significant accounting policies, the allowance for loan
losses may involve a higher degree of judgment and complexity.

The allowance for loan losses is a valuation allowance for probable losses
inherent in the loan portfolio. Loans are charged to the allowance when the loss is confirmed or when a determination is made that a probable loss has occurred on a specific loan. Recoveries are credited to the allowance at the time of recovery.
Throughout the year, management estimates the probable level of losses to determine whether the allowance for credit losses is adequate to absorb losses in the existing portfolio. Based on these estimates, an amount is charged to the provision for
loan losses and credited to the allowance for loan losses in order to adjust the allowance to a level determined to be adequate to absorb losses. Managements judgment regarding the adequacy of the allowance for loan losses involves the
consideration of current economic conditions and their estimated effects on specific borrowers; an evaluation of the existing relationships among loans, potential loan losses and the present level of the allowance; results of examinations of the
loan portfolio by regulatory agencies; and managements internal review of the loan portfolio. In determining the ability to collect certain loans, management also considers the fair value of any underlying collateral. The amount ultimately
realized may differ from the carrying value of these assets because of economic, operating or other conditions beyond our control. For a complete discussion of allowance for loan losses and provisions for loan losses, see the section entitled
Allowance for Loan Losses earlier in this Item 2.



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|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Some of the information below contains forward-looking statements. The primary objective of the following information is to provide forward-looking
quantitative and qualitative information about our potential exposure to market risks. The disclosure is not meant to be a precise indicator of expected future losses, but rather an indicator of reasonably possible losses, and therefore our actual
results may differ from any of the following projections. This forward-looking information provides an indicator of how we view and manage our ongoing market risk exposures.

We are engaged primarily in the business of investing funds obtained from deposits and borrowings in interest-earning loans and investments, and our
primary component of market risk is interest rate risk volatility. Consequently, our earnings depend to a significant extent on our net interest income, which is the difference between interest income on loans and investments and our interest
expense on deposits and borrowing. To the extent that our interest-bearing liabilities do not reprice or mature at the same time as our interest-bearing assets, we are subject to interest rate risk and corresponding fluctuations in net interest
income.

Interest rate risk is the potential of economic losses due to future interest rate changes. These economic losses can be reflected as
a loss of future net interest income and/or a loss of current fair market values. The magnitude of the change in earnings and market value of equity resulting from interest rate changes is impacted by the time remaining to maturity on fixed-rate
obligations, the contractual ability to adjust rates prior to maturity, competition, the general level of interest rates and customer actions. Our objective is to measure the effect of interest rate changes on net interest income and to adjust the
balance sheet to minimize the inherent risk while at the same time maximizing income.

There are several common sources of interest rate risk
that must be effectively managed if there is to be minimal impact on our earnings and capital. Repricing risk arises largely from timing differences in the pricing of assets and liabilities. Reinvestment risk refers to the reinvestment of cash
flows from interest payments and maturing assets at lower or higher rates. Basis risk exists when different yield curves or pricing indices do not change at precisely the same time or in the same magnitude such that assets and liabilities with the
same maturity are not all affected equally. Yield curve risk refers to unequal movements in interest rates across a full range of maturities.

We have employed asset/liability management policies that attempt to manage our interest-earning assets and interest-bearing liabilities, thereby
attempting to control the volatility of net interest income, without having to incur unacceptable levels of credit or investment risk. We manage our exposure to interest rates by structuring our balance sheet in the ordinary course of business. In
addition, the asset/liability management policies permit the use of various derivative instruments to manage interest rate risk or hedge specified assets and liabilities. We manage our interest rate sensitivity position consistent with our
established asset/liability management policies.

An interest rate sensitive asset or liability is one that, within a defined time period,
either matures or experiences an interest rate change in line with general market interest rates. The management of interest rate risk is performed by analyzing the maturity and repricing relationships between interest-earning assets and
interest-bearing liabilities at specific points in time (GAP) and by analyzing the effects of interest rate changes on net interest income over specific periods of time by projecting the performance of the mix of assets and liabilities
in varied interest rate environments. Interest rate sensitivity reflects the potential effect on net interest income resulting from a movement in interest rates. A company is considered to be asset sensitive, or have a positive GAP, when the amount
of its interest-earning assets maturing or repricing within a given period exceeds the amount of its interest-bearing liabilities also maturing or repricing within that time period. Conversely, a company is considered to be liability sensitive,
or have a negative GAP, when the amount of its interest-bearing liabilities maturing or repricing within a given period exceeds the amount of its interest-earning assets also maturing or repricing within that time period. During a period of rising
interest rates, a negative GAP would tend to affect net interest income adversely, while a positive GAP would tend to result in an increase in net interest income. During a period of falling interest rates, a negative GAP would tend to result in an
increase in net interest income, while a positive GAP would tend to affect net interest income adversely. However, it is our intent to achieve a proper balance so that incorrect rate forecasts should not have a significant impact on earnings.

Interest rate sensitivity analysis presents the amount of assets and liabilities that are estimated to reprice through specified periods. The
interest rate sensitivity analysis in the following table reflects changes in banking segment earnings and costs resulting from changes in assets and liabilities on June 30, 2010 that will either be repriced in accordance with market rates,
mature or are estimated to mature early within the periods indicated. This is a one-day position that is continually changing and is not necessarily indicative of our position at any other time.



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As illustrated in the following table, the banking segment is asset sensitive overall. Loans which adjust
daily or monthly to the Wall Street Journal Prime rate comprise a large percentage of interest sensitive assets and are the primary cause of the banking segments asset sensitivity. To help neutralize interest rate sensitivity, the banking
segment has kept the terms of most of its borrowings under one year. It also attempts to match longer term assets with certificates of deposit with terms of three to five years (dollar amounts in thousands).



|                                               |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|---------------------------------------------- |  | --------------- | --------- | - | ------------------- | - | ------- | ------------------ |  | - | ------------------- | - |  | --------- | ------- | - | ----- | - | ------- | - |  | - | ---------
|                                               |  | June 30, 2010  
|                                               |  | 3 Months orLess |           |   | > 3 Months to1 Year |   |         | > 1 Year to3 Years |  |   | > 3 Years to5 Years |   |  | > 5 Years |         |   | Total
|Interest sensitive assets:                     |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|Loans                                          |  | $               | 2,602,561 |   |                     | $ | 379,048 |                    |  | $ | 310,538             |   |  | $         | 94,983  |   |       | $ | 124,484 |   |  | $ | 3,511,614
|Securities                                     |  |                 | 136,381   |   |                     |   | 120,686 |                    |  |   | 194,288             |   |  |           | 22,072  |   |       |   | 154,925 |   |  |   | 628,352  
|Federal funds sold                             |  |                 | 15,391    |   |                     |   |        |                    |  |   |                    |   |  |           |        |   |       |   |        |   |  |   | 15,391   
|Other interest sensitive assets                |  |                 | 35,345    |   |                     |   |        |                    |  |   |                    |   |  |           |        |   |       |   |        |   |  |   | 35,345   
|                                               |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|Total interest sensitive assets                |  |                 | 2,789,678 |   |                     |   | 499,734 |                    |  |   | 504,826             |   |  |           | 117,055 |   |       |   | 279,409 |   |  |   | 4,190,702
|                                               |  |                 |           |   |                     |  
|Interest sensitive liabilities:                |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|Interest bearing checking                      |  | $               | 1,442,010 |   |                     | $ |        |                    |  | $ |                    |   |  | $         |        |   |       | $ |        |   |  | $ | 1,442,010
|Savings                                        |  |                 | 149,522   |   |                     |   |        |                    |  |   |                    |   |  |           |        |   |       |   |        |   |  |   | 149,522  
|Time deposits                                  |  |                 | 710,072   |   |                     |   | 401,678 |                    |  |   | 303,486             |   |  |           | 2,445   |   |       |   | 3,561   |   |  |   | 1,421,242
|Notes payable & other borrowings               |  |                 | 182,808   |   |                     |   | 75,722  |                    |  |   | 2,054               |   |  |           | 1,101   |   |       |   | 7,802   |   |  |   | 269,487  
|                                               |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|Total interest sensitive liabilities           |  |                 | 2,484,412 |   |                     |   | 477,400 |                    |  |   | 305,540             |   |  |           | 3,546   |   |       |   | 11,363  |   |  |   | 3,282,261
|                                               |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|                                               |  |                 |           |   |                     |  
|Interest sensitivity gap                       |  | $               | 305,266   |   |                     | $ | 22,334  |                    |  | $ | 199,286             |   |  | $         | 113,509 |   |       | $ | 268,046 |   |  | $ | 908,441  
|                                               |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|                                               |  |                 |           |   |                     |  
|Cumulative interest sensitivity gap            |  | $               | 305,266   |   |                     | $ | 327,600 |                    |  | $ | 526,886             |   |  | $         | 640,395 |   |       | $ | 908,441 |   |  |   |          
|                                               |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|                                               |  |                 |           |   |                     |  
|Percentage of cumulative gap to total interest |  |                 |           |   |                     |   |         |                    |  |   |                     |   |  |           |         |   |       |   |         |   |  |   |          
|Sensitive assets                               |  |                 | 7.28      | % |                     |   | 7.82    | %                  |  |   | 12.57               | % |  |           | 15.28   | % |       |   | 21.68   | % |  |   |          

The positive GAP in the interest rate sensitivity analysis indicates that banking segment net interest income
would generally rise if rates increase. Because of inherent limitations in interest rate sensitivity analysis, the banking segment uses multiple interest rate risk measurement techniques. Simulation analysis is used to subject the current repricing
conditions to rising and falling interest rates in increments and decrements of 1%, 2% and 3% to determine the effect on net interest income changes for the next 12 months. The banking segment also measures the effects of changes in interest rates
on market value of equity by discounting projected cash flows of deposits and loans. Market value changes in the investment portfolio are estimated by discounting future cash flows and using duration analysis. Loan and investment security
prepayments are estimated using current market information. We believe the simulation analysis presents a more accurate picture than the GAP analysis. Simulation analysis recognizes that deposit products may not react to changes in interest rates as
quickly or with the same magnitude as earning assets contractually tied to a market rate index. The sensitivity to changes in market rates varies across deposit products. Also, unlike GAP analysis, simulation analysis takes into account the effect
of embedded options in the securities and loan portfolios as well as any off-balance-sheet derivatives. The projected changes in net interest income at June 30, 2010 were in compliance with established policy guidelines.



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The following table shows the estimated impact of increases and decreases in interest rates of 1%, 2% and 3%
on net interest income and on market value of portfolio equity for the banking segment as of June 30, 2010 (dollar amounts in thousands).



|                         |  |                               |        |   |                                  |       |   |        |   |          |         |  |        |  
|------------------------ |  | ----------------------------- | ------ | - | -------------------------------- | ----- | - | ------ | - | -------- | ------- |  | ------ | -
|                         |  | June 30, 2010                 |       
|                         |  | Changes
InNet Interest Income |        |   | Changes inMarket Value of Equity |      
|Change in Interest Rates |  | Amount                        |        |   | Percent                          |       |   | Amount |   |          | Percent | 
|Up 3%                    |  | $                             | (3,649 | ) |                                  | -2.09 | % |        | $ | 47,079   |         |  | 8.40   | %
|Up 2%                    |  | $                             | (8,732 | ) |                                  | -5.00 | % |        | $ | 43,331   |         |  | 7.73   | %
|Up 1%                    |  | $                             | (6,007 | ) |                                  | -3.44 | % |        | $ | 32,167   |         |  | 5.74   | %
|Down 1%                  |  | $                             | (3,008 | ) |                                  | -1.72 | % |        | $ | (53,043  | )       |  | -9.46  | %
|Down 2%                  |  | $                             | (6,579 | ) |                                  | -3.77 | % |        | $ | (101,573 | )       |  | -18.11 | %
|Down 3%                  |  | $                             | (7,297 | ) |                                  | -4.18 | % |        | $ | (148,171 | )       |  | -26.42 | %

The projected changes in net
interest income and market value of equity to changes in interest rates at June 30, 2010 were in compliance with established policy guidelines. These projected changes in net interest income results are based on numerous assumptions of growth
and changes in the mix of assets or liabilities.

The historically low level of interest rates, combined with the existence of rate floors
that are in effect for a significant portion of the loan portfolio, are projected to cause yields on our earning assets to rise more slowly than increases in market interest rates. As a result, in a rising interest rate environment, our interest
rate margins are projected to compress until the rise in market interest rates is sufficient to allow our loan portfolio to reprice above applicable rate floors.

Due to historically low interest rates, the table above may not predict the full effect of decreasing interest rates upon our net interest income that
would occur in a more traditional, higher interest rate environment. This is because short-term interest rates are near zero percent and certain modeling assumptions, such as the restriction that deposit and loan rates cannot fall below zero
percent, may distort the models results.



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|Item 4T. | Controls and Procedures
|-------- | -----------------------

Our management,
with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and has concluded that our disclosure
controls and procedures as of the end of the period covered by this report were designed to ensure that material information relating to us is made known to the Chief Executive Officer and Chief Financial Officer by others within our Company, and,
based on their evaluations, our controls and procedures were effective as of the end of the period covered by this report.

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

In November 2006, FSC
received subpoenas from the SEC and the U.S. Department of Justice (the DOJ) in connection with an investigation of possible antitrust and securities law violations, including bid-rigging, in the procurement of guaranteed investment
contracts and other investment products for the reinvestment of bond proceeds by municipalities. The investigation is industry-wide and includes approximately 30 or more firms, including some of the largest U.S. investment firms. To the extent that
its participation is requested, FSC will continue to cooperate with these investigations.

As a result of these SEC and DOJ investigations
into industry-wide practices, FSC was named as a co-defendant in a series of civil lawsuits filed during 2008 in several different federal courts by various state and local governmental entities suing on behalf of themselves and a purported class of
similarly situated governmental entities. A similar set of lawsuits were filed in California state courts by various local governmental entities suing only on behalf of themselves and not on behalf of a putative class. The California state court
suits were removed to federal court, and all of the cases have been transferred to federal court in New York. On April 29, 2009, the federal court judge dismissed all claims asserted against FSC and nearly all other defendants from the
consolidated putative class action case and granted the lead class plaintiffs until June 18, 2009 to file an amended complaint citing specific instances of alleged anti-competitive behavior by specific individuals at specific defendants.

On June 18, 2009, the lead class plaintiffs filed a second consolidated amended class action complaint. This amended complaint did not
name FSC as a defendant and did not make any specific allegations of misconduct against FSC or any of its employees. As a result, FSC is no longer a party to the putative class action case. However, FSC is identified in this consolidated amended
class action complaint as an alleged co-conspirator with the named defendants. The remaining defendants filed motions to dismiss the second consolidated amended class action complaint, but on March 25, 2010, the Court denied those motions, thus
allowing the consolidated class action to proceed against the remaining defendants.

With respect to putative class actions filed in federal
court by California plaintiffs that opted not to join in the consolidated class action case, the federal court judge granted those plaintiffs until September 15, 2009 to file an amended complaint. In their amended complaint, these California
putative class plaintiffs also did not name FSC as a defendant and did not make any specific allegations of misconduct against FSC or any of its employees. As a result, FSC is no longer a party to these California putative class actions. However,
FSC is identified in this complaint as an alleged co-conspirator with the named defendants. The remaining defendants filed motions to dismiss the amended complaint in the California class action. On April 26, 2010, the Court granted those
motions in part and denied them in part, allowing certain claims to proceed against the remaining defendants.

With respect to the removed
California suits that do not seek class action status, the federal court judge gave the plaintiffs until September 15, 2009 to file an amended complaint. These California plaintiffs, all of which are represented by the Cotchett, Pitre, and
McCarthy law firm, filed amended complaints continuing to identify FSC as a named defendant. The few allegations against FSC are very limited in scope.



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On November 12, 2009, Sacramento Municipal Utility District, City of Riverside, The Redevelopment
Agency of the City of Riverside, and The Public Financing Authority of the City of Riverside filed new lawsuits on behalf of themselves, but not on behalf of a putative class, in federal court. Additionally, on December 10, 2009, The
Redevelopment Agency of the City of Stockton and The Public Financing Authority of the City of Stockton, County of Tulare, Los Angeles World Airports and Sacramento Suburban Water District filed new lawsuits on behalf of themselves, but not on
behalf of a putative class, in federal court. Similar to the other five cases previously brought by California public entities that do not seek to certify a class, FSC is named as a defendant, the plaintiffs are represented by the Cotchett, Pitre,
and McCarthy law firm, and the few allegations against FSC are very limited in scope. The eleven individual California actions are referred to herein as the Original Cotchett Complaints.

On February 9, 2010, the defendants in the Original Cotchett Complaints, except Bank of America, The Goldman Sachs Group, Inc., Goldman Sachs Mitsui
Marine Derivative Products, L.P. and Goldman Sachs Bank USA, filed a Joint Motion to Dismiss the Original Cotchett Complaints along with a Memorandum in Support of Defendants Joint Motion to Dismiss the Original Cotchett Complaints.
Additionally, FSC filed a Supplemental Memorandum in Support of the Motion to Dismiss the Original Cotchett Complaints setting forth specific reasons why the Original Cotchett Complaints should be dismissed as to FSC.

On March 26, 2010, the California plaintiffs filed a response to the motion to dismiss. On April 16, 2010, the moving defendants filed a joint
reply in support of the motion to dismiss, and FSC filed a Supplemental Reply Memorandum in Support of its Motion to Dismiss. On April 26, 2010, the court denied the motion to dismiss as to FSC and nearly every other defendant named in the
Original Cotchett Complaints.

On May 19, 2010, City of Richmond, California, City of Redwood City, California, East Bay Municipal
Utility District and Redevelopment Agency of the City and County of San Francisco filed new lawsuits on behalf of themselves, but not on behalf of a putative class, in United States Federal District Court. Additionally, on May 21, 2010, City of
San Jose, California filed a new lawsuit on behalf of itself, but not on behalf of a putative class, in United States Federal District Court. Similar to the Original Cotchett Complaints, the plaintiffs are represented by the Cotchett,
Pitre & McCarthy law firm, and the few allegations against FSC are very limited in scope. These five individual California actions are referred herein as the May Cotchett Complaints.

In both the Original Cotchett Complaints and the May Cotchett Complaints the plaintiffs allege violations of Section 1 of the Sherman Act and the
California Cartwright Act.

FSC filed its answer to the Original Cotchett Complaints on June 28, 2010. FSCs answer to the May
Cotchett Complaints is due on or about August 6, 2010.

Like other financial institutions, we are subject to various federal, state and
local laws and regulations relating to environmental matters. Under these laws and regulations, we could be held liable for costs relating to environmental contamination at or from properties that secure our loan portfolio. With respect to our
borrowers properties, the potential liabilities may far exceed the original amount of the loan made by us and secured by the property. Currently, we are not a defendant in any environmental legal proceeding.



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|Item 1A. | Risk Factors
|-------- | ------------

The following risk factors
constitute material amendments to the risk factors disclosed under Item 1A of our Annual Report. For more information concerning our risk factors, please refer to Item 1A of our Annual Report.

We are subject to extensive supervision and regulation that restricts our activities and imposes financial requirements and limitations on the
conduct of our business and limits our ability to generate income.

We are subject to extensive federal and state regulation and
supervision, including that of the Federal Reserve Board, the Texas Department of Banking, the FDIC, the SEC and FINRA. Banking regulations are primarily intended to protect depositors funds, federal deposit insurance funds and the banking
system as a whole, not security holders. Likewise, regulations promulgated by FINRA are primarily intended to protect customers of broker-dealer businesses rather than security holders. These regulations affect our 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, restitution or reputational
damage, which could have a material adverse effect on our business, financial condition and results of operations. While we have policies and procedures designed to prevent any such violations, 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 Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which significantly alters the regulation of financial institutions and the financial services
industry. The Dodd-Frank Act establishes the Bureau of Consumer Financial Protection (the BCFP) and requires the BCFP and other federal agencies to implement many provisions of the Dodd-Frank Act.

We expect that several aspects of the Dodd-Frank Act may affect our business, including, without limitation, higher deposit insurance premiums and new
examinations, consumer protection rules, 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 our business. Compliance with
these new laws and regulations likely will result in additional costs, which could be significant and may adversely impact our results of operations, financial condition, and liquidity.

During the second quarter of 2010, the Bank received its 2008 Community Reinvestment Act Performance Evaluation from the Federal Reserve. Despite
high satisfactory or outstanding ratings on the various components of the Community Reinvestment Act (CRA) rating , the Federal Reserve lowered the Banks overall CRA rating from satisfactory to
needs to improve, as a result of alleged fair lending issues associated with our mortgage origination segment in prior years. Unless and until the Banks CRA rating improves, we, as a financial holding company, may not commence new
activities that are financial in nature or acquire companies engaged in these activities. Our current CRA rating may also adversely affect the Banks ability to establish new branches.

In November 2009, the Federal Reserve Board issued a final rule that, effective July 1, 2010, prohibits financial institutions from charging
consumers fees for paying overdrafts on automated teller machine and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions. Consumers must be provided a notice that
explains the financial institutions overdraft services, including the fees associated with the service, and the consumers choices. Because the Banks customers must provide advance consent to the overdraft service for automated
teller machine and one-time debit card transactions, we cannot provide any assurance as to the ultimate impact of this rule on the amount of overdraft/insufficient funds charges reported in future periods.



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We cannot predict whether or in what form any other proposed regulations or statutes will be adopted or the
extent to which our business may be affected by any new regulation or statute. Such changes could subject our business to additional costs, limit the types of financial services and products we may offer and increase the ability of non-banks to
offer competing financial services and products, among other things.

No market currently exists for our common stock. We cannot assure
you that an active trading market will ever develop for our common stock.

There is no established trading market for shares of our
common stock. As a qualified plan, our Employee Stock Ownership Plan (the ESOP) is therefore required by the Employer Retirement Income Security Act to report account values to ESOP participants on an annual basis based upon an appraised
value. As of December 31, 2009, the value of the shares of common stock held in the ESOP was determined to be $11.26 per share in an independent appraisal obtained solely for this purpose. Because there is no established public trading market
for shares of our common stock, this value obtained for ESOP purposes may not reflect the actual market value of a share of our common stock, and your ability to transfer your shares of our common stock may be significantly restricted, even if such
transfer is exempt from registration under the securities laws. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market or how liquid that market might become. We are not at
this time seeking listing on any securities exchange. Consequently, you may be unable to liquidate your investment and should be able to bear the economic risk of the investment in our common stock indefinitely.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

Not applicable.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not
applicable.



|Item 4. | (Removed and Reserved)
|------- | ----------------------



|Item 5. | Other Information
|------- | -----------------

Not applicable.



|Item 6. | Exhibits
|------- | --------

A list of exhibits filed
herewith is contained in the Exhibit Index that immediately precedes such exhibits and is incorporated by reference herein.



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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized



|                      |  |                           |  |                                                          
|--------------------- |  | ------------------------- |  | ---------------------------------------------------------
|                      |  | PLAINSCAPITAL CORPORATION
|                      |  |                          
|Date: August 12, 2010 |  | By:                       |  | /s/ ALLEN CUSTARD                                        
|                      |  | Name:                     |  | Allen Custard                                            
|                      |  | Title:                    |  | Executive Vice President and Chief Financial Officer     
|                      |  |                           |  | (Duly authorized officer and principal financial officer)
|                      |  |                          
|Date: August 12, 2010 |  | By:                       |  | /s/ JEFF ISOM                                            
|                      |  | Name:                     |  | Jeff Isom                                                
|                      |  | Title:                    |  | Executive Vice President of Finance and Accounting       
|                      |  |                           |  | (Principal accounting officer)                           



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Exhibit Index



|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               |  |                           |  |           |  |         |  |           
|----------- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               |  | Incorporated by Reference
|Exhibit No. |  |   |  | Exhibit Description                                                                                                                                                                                                                                                                               |  | FiledHerewith |  | Form                      |  | File No.  |  | Exhibit |  | FilingDate
|3.1         |  |  |  | Third Amended and Restated Certificate of Formation of PlainsCapital Corporation.                                                                                                                                                                                                                 |  |               |  | 10-Q                      |  | 000-53629 |  | 3.1     |  | 10/21/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|3.2         |  |  |  | Amended and Restated Bylaws of PlainsCapital Corporation.                                                                                                                                                                                                                                         |  |               |  | 8-K                       |  | 000-53629 |  | 3.1     |  | 08/31/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.1         |  |  |  | Letter Agreement and Securities Purchase AgreementStandard Terms incorporated therein, dated as of December 19, 2008, between PlainsCapital Corporation (f/k/a Plains Capital
Corporation) and the United States Department of the Treasury.                                                     |  |               |  | 10                        |  | 000-53629 |  | 4.1     |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.2         |  |  |  | Amended and Restated Declaration of Trust, dated as of July 31, 2001, by and among State Street Bank and Trust Company of Connecticut, National Association, PlainsCapital
Corporation (f/k/a Plains Capital Corporation), and Alan B. White, George McCleskey, and Jeff Isom, as Administrators. |  |               |  | 10                        |  | 000-53629 |  | 4.2     |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.3         |  |  |  | First Amendment to Amended and Restated Declaration of Trust, dated as of August 7, 2006, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and U.S. Bank
National Association.                                                                                                |  |               |  | 10                        |  | 000-53629 |  | 4.3     |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.4         |  |  |  | Indenture, dated as of July 31, 2001, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and State Street Bank and Trust Company of Connecticut, National
Association.                                                                                                          |  |               |  | 10                        |  | 000-53629 |  | 4.4     |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.5         |  |  |  | First Supplemental Indenture, dated as of August 7, 2006, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and U.S. Bank National Association.                                                                                                                                |  |               |  | 10                        |  | 000-53629 |  | 4.5     |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.6         |  |  |  | Amended and Restated Floating Rate Junior Subordinated Deferrable Interest Debenture of PlainsCapital Corporation (f/k/a Plains Capital Corporation), dated as of August 7, 2006, by
PlainsCapital Corporation in favor of U.S. Bank National Association.                                        |  |               |  | 10                        |  | 000-53629 |  | 4.6     |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.7         |  |  |  | Guarantee Agreement, dated as of July 31, 2001, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and State Street Bank and Trust Company of Connecticut, National
Association, as trustee.                                                                                    |  |               |  | 10                        |  | 000-53629 |  | 4.7     |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.8         |  |  |  | First Amendment to Guarantee Agreement, dated as of August 7, 2006, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and U.S. Bank National
Association.                                                                                                                      |  |               |  | 10                        |  | 000-53629 |  | 4.8     |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                                   |  |               | 
|4.9         |  |  |  | Amended and Restated Declaration of Trust, dated as of March 26, 2003, by and among U.S. Bank National Association, PlainsCapital Corporation (f/k/a Plains Capital Corporation), and
Alan B. White, George McCleskey, and Jeff Isom, as Administrators.                                          |  |               |  | 10                        |  | 000-53629 |  | 4.9     |  | 04/17/09  



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##### Table of Contents

|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               |  |                           |  |           |  |         |  |           
|----------- |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               |  | Incorporated by Reference
|Exhibit No. |  |   |  | Exhibit Description                                                                                                                                                                                                                                                                       |  | FiledHerewith |  | Form                      |  | File No.  |  | Exhibit |  | FilingDate
|4.10        |  |  |  | Indenture, dated as of March 26, 2003, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and U.S. Bank National Association.                                                                                                                                           |  |               |  | 10                        |  | 000-53629 |  | 4.10    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.11        |  |  |  | Floating Rate Junior Subordinated Deferrable Interest Debenture of PlainsCapital Corporation (f/k/a Plains Capital Corporation), dated as of March 26, 2003, by PlainsCapital
Corporation in favor of U.S. Bank National Association.                                                     |  |               |  | 10                        |  | 000-53629 |  | 4.11    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.12        |  |  |  | Guarantee Agreement, dated as of March 26, 2003, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and U.S. Bank National Association, as trustee.                                                                                                                     |  |               |  | 10                        |  | 000-53629 |  | 4.12    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.13        |  |  |  | Amended and Restated Declaration of Trust, dated as of September 17, 2003, by and among U.S. Bank National Association, PlainsCapital Corporation (f/k/a Plains Capital Corporation),
and Alan B. White, George McCleskey, and Jeff Isom, as Administrators.                              |  |               |  | 10                        |  | 000-53629 |  | 4.13    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.14        |  |  |  | Indenture, dated as of September 17, 2003, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and U.S. Bank National Association.                                                                                                                                       |  |               |  | 10                        |  | 000-53629 |  | 4.14    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.15        |  |  |  | Floating Rate Junior Subordinated Deferrable Interest Debenture of PlainsCapital Corporation (f/k/a Plains Capital Corporation), dated as of September 17, 2003, by PlainsCapital
Corporation in favor of U.S. Bank National Association.                                                 |  |               |  | 10                        |  | 000-53629 |  | 4.15    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.16        |  |  |  | Guarantee Agreement, dated as of September 17, 2003, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and U.S. Bank National Association, as trustee.                                                                                                                 |  |               |  | 10                        |  | 000-53629 |  | 4.16    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.17        |  |  |  | Amended and Restated Trust Agreement, dated as of February 22, 2008, by and among PlainsCapital Corporation (f/k/a Plains Capital Corporation), Wells Fargo Bank, N.A., Wells Fargo
Delaware Trust Company, and Alan B. White, DeWayne Pierce, and Jeff Isom, as Administrative Trustees. |  |               |  | 10                        |  | 000-53629 |  | 4.17    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.18        |  |  |  | Junior Subordinated Indenture, dated as of February 22, 2008, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Wells Fargo Bank, N.A.                                                                                                                             |  |               |  | 10                        |  | 000-53629 |  | 4.18    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.19        |  |  |  | PlainsCapital Corporation (f/k/a Plains Capital Corporation) Floating Rate Junior Subordinated Note due 2038, dated as of February 22, 2008, by PlainsCapital Corporation in favor of
Wells Fargo Bank, N.A., as trustee of the PCC Statutory Trust IV.                                   |  |               |  | 10                        |  | 000-53629 |  | 4.19    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                           |  |               | 
|4.20        |  |  |  | Guarantee Agreement, dated as of February 22, 2008, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Wells Fargo Bank, N.A.                                                                                                                                       |  |               |  | 10                        |  | 000-53629 |  | 4.20    |  | 04/17/09  



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##### Table of Contents

|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               |  |                           |  |           |  |         |  |           
|----------- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               |  | Incorporated by Reference
|Exhibit No. |  |   |  | Exhibit Description                                                                                                                                                                                                                                                                         |  | FiledHerewith |  | Form                      |  | File No.  |  | Exhibit |  | FilingDate
|4.21        |  |  |  | Registration Rights Agreement, dated as of December 31, 2008, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Hill A. Feinberg, as Stockholders
Representative.                                                                                                   |  |               |  | 10/A                      |  | 000-53629 |  | 4.21    |  | 06/26/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.1        |  |  |  | Agreement and Plan of Merger, dated as of November 7, 2008, by and among PlainsCapital Corporation (f/k/a Plains Capital Corporation), PlainsCapital Bank, First Southwest Holdings,
Inc., and Hill A. Feinberg, as Stockholders Representative.                                           |  |               |  | 10                        |  | 000-53629 |  | 10.1    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.2        |  |  |  | First Amendment to Agreement and Plan of Merger, dated as of December 8, 2008, by and among PlainsCapital Corporation (f/k/a Plains Capital Corporation), PlainsCapital Bank, First
Southwest Holdings, Inc., and Hill A. Feinberg, as Stockholders Representative.                        |  |               |  | 10                        |  | 000-53629 |  | 10.2    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.3        |  |  |  | Second Amendment to Agreement and Plan of Merger, dated as of December 8, 2008, by and among PlainsCapital Corporation (f/k/a Plains Capital Corporation), PlainsCapital Bank, FSWH
Acquisition LLC, First Southwest Holdings, Inc., and Hill A. Feinberg, as Stockholders Representative. |  |               |  | 10                        |  | 000-53629 |  | 10.3    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.4        |  |  |  | Amended and Restated Employment Agreement, dated as of January 1, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Alan White.                                                                                                                                |  |               |  | 10                        |  | 000-53629 |  | 10.4    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.5        |  |  |  | First Amendment to Amended and Restated Employment Agreement, dated as of March 2, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Alan
White.                                                                                                               |  |               |  | 10                        |  | 000-53629 |  | 10.5    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.6        |  |  |  | Employment Agreement, effective as of December 31, 2008, by and among First Southwest Holdings, LLC, PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Hill A.
Feinberg.                                                                                                     |  |               |  | 10                        |  | 000-53629 |  | 10.6    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.7        |  |  |  | First Amendment to Employment Agreement, dated as of March 2, 2009, by and among First Southwest Holdings, LLC, PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Hill
A. Feinberg.                                                                                          |  |               |  | 10                        |  | 000-53629 |  | 10.7    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.8        |  |  |  | Employment Agreement, dated as of January 1, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Jerry L. Schaffner.                                                                                                                                             |  |               |  | 10                        |  | 000-53629 |  | 10.8    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.9        |  |  |  | First Amendment to Employment Agreement, dated as of March 2, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Jerry L. Schaffner.                                                                                                                            |  |               |  | 10                        |  | 000-53629 |  | 10.9    |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                                                                                             |  |               | 
|10.10       |  |  |  | Employment Agreement, dated as of January 1, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Jeff Isom.                                                                                                                                                      |  |               |  | 10                        |  | 000-53629 |  | 10.10   |  | 04/17/09  



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##### Table of Contents

|            |  |   |  |                                                                                                                                                                                                        |  |               |  |                           |  |           |  |         |  |           
|----------- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------
|            |  |   |  |                                                                                                                                                                                                        |  |               |  | Incorporated by Reference
|Exhibit No. |  |   |  | Exhibit Description                                                                                                                                                                                    |  | FiledHerewith |  | Form                      |  | File No.  |  | Exhibit |  | FilingDate
|10.11       |  |  |  | First Amendment to Employment Agreement, dated as of March 2, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Jeff Isom.                                                |  |               |  | 10                        |  | 000-53629 |  | 10.11   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.12       |  |  |  | Employment Agreement, dated as of December 18, 2008, by and among PlainsCapital Corporation (f/k/a Plains Capital Corporation), First Southwest Holdings, LLC and W. Allen Custard
III.                |  |               |  | 8-K                       |  | 000-53629 |  | 10.1    |  | 07/08/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.13       |  |  |  | First Amendment to Employment Agreement, dated as of March 2, 2009, by and among PlainsCapital Corporation (f/k/a Plains Capital Corporation), First Southwest Holdings, LLC and W.
Allen Custard III. |  |               |  | 8-K                       |  | 000-53629 |  | 10.2    |  | 07/08/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.14       |  |  |  | Employment Agreement, dated as of April 1, 2010, between PlainsCapital Corporation and Roseanna McGill.                                                                                                |  |               |  | 8-K                       |  | 000-53629 |  | 10.1    |  | 03/23/10  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.15       |  |  |  | Plains Capital Corporation Incentive Stock Option Plan, dated October 16, 1996 (the 1996 Incentive Stock Option Plan).                                                                               |  |               |  | 10                        |  | 000-53629 |  | 10.12   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.16       |  |  |  | Plains Capital Corporation Incentive Stock Option Plan, dated March 25, 1998 (the 1998 Incentive Stock Option Plan).                                                                                 |  |               |  | 10                        |  | 000-53629 |  | 10.13   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.17       |  |  |  | Plains Capital Corporation Incentive Stock Option Plan, dated April 18, 2001 (the 2001 Incentive Stock Option Plan).                                                                                 |  |               |  | 10                        |  | 000-53629 |  | 10.14   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.18       |  |  |  | Plains Capital Corporation Incentive Stock Option Plan, dated March 25, 2003 (the 2003 Incentive Stock Option Plan).                                                                                 |  |               |  | 10                        |  | 000-53629 |  | 10.15   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.19       |  |  |  | Plains Capital Corporation 2005 Incentive Stock Option Plan, dated April 20, 2005.                                                                                                                     |  |               |  | 10                        |  | 000-53629 |  | 10.16   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.20       |  |  |  | Amended and Restated Plains Capital Corporation 2007 Nonqualified and Incentive Stock Option Plan, dated December 31, 2008.                                                                            |  |               |  | 10                        |  | 000-53629 |  | 10.17   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.21       |  |  |  | PlainsCapital Corporation 2009 Long-Term Incentive Plan.                                                                                                                                               |  |               |  | 8-K                       |  | 000-53629 |  | 10.1    |  | 08/31/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.22       |  |  |  | PlainsCapital Corporation 2010 Long-Term Incentive Plan.                                                                                                                                               |  |               |  | 8-K                       |  | 000-53629 |  | 10.2    |  | 03/23/10  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.23       |  |  |  | PNB Financial Bank Supplemental Executive Pension Plan, effective as of January 1, 2008.                                                                                                               |  |               |  | 10                        |  | 000-53629 |  | 10.18   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.24       |  |  |  | First Amendment to PlainsCapital Bank Supplemental Executive Pension Plan, effective as of March 19, 2009.                                                                                             |  |               |  | 10                        |  | 000-53629 |  | 10.19   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                        |  |               | 
|10.25       |  |  |  | Plains Capital Corporation Employee Stock Ownership Plan, effective January 1, 2004 and as amended and restated as of January 1, 2006.                                                                 |  |               |  | 10                        |  | 000-53629 |  | 10.20   |  | 04/17/09  



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##### Table of Contents

|            |  |   |  |                                                                                                                                                                                         |  |               |  |                           |  |           |  |         |  |           
|----------- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------
|            |  |   |  |                                                                                                                                                                                         |  |               |  | Incorporated by Reference
|Exhibit No. |  |   |  | Exhibit Description                                                                                                                                                                     |  | FiledHerewith |  | Form                      |  | File No.  |  | Exhibit |  | FilingDate
|10.26       |  |  |  | First Amendment to Plains Capital Corporation Employees Stock Ownership Plan, effective as of January 1, 2007.                                                                         |  |               |  | 10                        |  | 000-53629 |  | 10.21   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.27       |  |  |  | Second Amendment to Plains Capital Corporation Employees Stock Ownership Plan, dated as of December 1, 2008.                                                                           |  |               |  | 10                        |  | 000-53629 |  | 10.22   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.28       |  |  |  | Form of Restricted Stock Award Agreement for restricted stock awards issued to Messrs. Isom, Schaffner and White on December 17, 2008.                                                  |  |               |  | 10                        |  | 000-53629 |  | 10.23   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.29       |  |  |  | Form of Restricted Stock Award Agreement for restricted stock awards issued to Messrs. Custard and Feinberg, effective as of December 31, 2008.                                         |  |               |  | 10                        |  | 000-53629 |  | 10.24   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.30       |  |  |  | Form of Stock Option Agreement under the 1996 Incentive Stock Option Plan.                                                                                                              |  |               |  | 10                        |  | 000-53629 |  | 10.25   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.31       |  |  |  | Form of Stock Option Agreement under the 1998 Incentive Stock Option Plan.                                                                                                              |  |               |  | 10                        |  | 000-53629 |  | 10.26   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.32       |  |  |  | Form of Stock Option Agreement under the 2001 Incentive Stock Option Plan.                                                                                                              |  |               |  | 10                        |  | 000-53629 |  | 10.27   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.33       |  |  |  | Form of Stock Option Agreement under the 2003 Incentive Stock Option Plan.                                                                                                              |  |               |  | 10                        |  | 000-53629 |  | 10.28   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.34       |  |  |  | Form of Stock Option Agreement under the PlainsCapital Corporation 2005 Incentive Stock Option Plan.                                                                                    |  |               |  | 10                        |  | 000-53629 |  | 10.29   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.35       |  |  |  | Form of Stock Option Agreement under the Amended and Restated PlainsCapital Corporation 2007 Nonqualified and Incentive Stock Option Plan.                                              |  |               |  | 10                        |  | 000-53629 |  | 10.30   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.36       |  |  |  | Form of Restricted Stock Award Agreement under the PlainsCapital Corporation 2010 Long-Term Incentive Plan.                                                                             |  |               |  | 8-K                       |  | 000-53629 |  | 10.3    |  | 03/23/10  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.37       |  |  |  | Form of Restricted Stock Unit Award Agreement under the PlainsCapital Corporation 2010 Long-Term Incentive Plan.                                                                        |  |               |  | 8-K                       |  | 000-53629 |  | 10.4    |  | 03/23/10  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.38       |  |  |  | Amended and Restated Subordinate Credit Agreement, dated as of December 19, 2007, between JP Morgan Chase Bank, N.A. and PlainsCapital Corporation (f/k/a Plains Capital
Corporation).  |  |               |  | 10                        |  | 000-53629 |  | 10.31   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.39       |  |  |  | Renewal, Extension and Modification Agreement, dated as of June 19, 2009, between JPMorgan Chase Bank, NA and PlainsCapital Corporation (f/k/a Plains Capital
Corporation).             |  |               |  | 10-Q                      |  | 000-53629 |  | 10.32   |  | 10/21/09  
|            |  |   |  |                                                                                                                                                                                         |  |               | 
|10.40       |  |  |  | Third Amended and Restated Subordinate Promissory Note, dated as of June 19, 2009, by PlainsCapital Corporation (f/k/a Plains Capital Corporation) in favor of JPMorgan Chase Bank,
NA. |  |               |  | 10-Q                      |  | 000-53629 |  | 10.33   |  | 10/21/09  



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##### Table of Contents

|            |  |   |  |                                                                                                                                                                                                                  |  |               |  |                           |  |           |  |         |  |           
|----------- |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------
|            |  |   |  |                                                                                                                                                                                                                  |  |               |  | Incorporated by Reference
|Exhibit No. |  |   |  | Exhibit Description                                                                                                                                                                                              |  | FiledHerewith |  | Form                      |  | File No.  |  | Exhibit |  | FilingDate
|10.41       |  |  |  | Amended and Restated Loan Agreement, dated as of October 1, 2001, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank, NA (f/k/a Bank
One, NA).                         |  |               |  | 10                        |  | 000-53629 |  | 10.33   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.42       |  |  |  | First Amendment to Amended and Restated Loan Agreement, dated as of August 1, 2002, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank, NA
(f/k/a Bank One, NA).       |  |               |  | 10                        |  | 000-53629 |  | 10.34   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.43       |  |  |  | Second Amendment to Amended and Restated Loan Agreement, dated as of August 1, 2003, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank, NA
(f/k/a Bank One, NA).      |  |               |  | 10                        |  | 000-53629 |  | 10.35   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.44       |  |  |  | Third Amendment to Amended and Restated Loan Agreement, dated as of June 1, 2004, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank, NA
(f/k/a Bank One, NA).         |  |               |  | 10                        |  | 000-53629 |  | 10.36   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.45       |  |  |  | Fourth Amendment to Amended and Restated Loan Agreement, dated as of November 21, 2005, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank,
NA.                        |  |               |  | 10                        |  | 000-53629 |  | 10.37   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.46       |  |  |  | Fifth Amendment to Amended and Restated Loan Agreement, dated as of October 16, 2006, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank,
NA.                          |  |               |  | 10                        |  | 000-53629 |  | 10.38   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.47       |  |  |  | Sixth Amendment to Amended and Restated Loan Agreement, dated as of December 19, 2007, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank,
NA.                         |  |               |  | 10                        |  | 000-53629 |  | 10.39   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.48       |  |  |  | Seventh Amendment to Amended and Restated Loan Agreement, dated as of June 19, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank,
NA.                           |  |               |  | 10-Q                      |  | 000-53629 |  | 10.41   |  | 10/21/09  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.49       |  |  |  | Eighth Amendment to Amended and Restated Loan Agreement, dated as of April 23, 2010, between JPMorgan Chase Bank, NA and PlainsCapital Corporation.                                                              |  |               |  | 8-K                       |  | 000-53629 |  | 10.1    |  | 04/29/10  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.50       |  |  |  | Ninth Amendment to Amended and Restated Loan Agreement, dated as of July 30, 2010, between JPMorgan Chase Bank, NA and PlainsCapital Corporation.                                                                |  |               |  | 8-K                       |  | 000-53629 |  | 10.1    |  | 08/05/10  
|            |  |   |  |                                                                                                                                                                                                                  |  |               | 
|10.51       |  |  |  | Commercial Pledge and Security Agreement, dated as of November 1, 2000, by PlainsCapital Corporation (f/k/a Plains Capital Corporation) for the benefit of JPMorgan Chase Bank, NA
(f/k/a Bank One, Texas N.A.). |  |               |  | 10                        |  | 000-53629 |  | 10.40   |  | 04/17/09  



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##### Table of Contents

|            |  |   |  |                                                                                                                                                                             |  |               |  |                           |  |           |  |         |  |           
|----------- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------
|            |  |   |  |                                                                                                                                                                             |  |               |  | Incorporated by Reference
|Exhibit No. |  |   |  | Exhibit Description                                                                                                                                                         |  | FiledHerewith |  | Form                      |  | File No.  |  | Exhibit |  | FilingDate
|10.52       |  |  |  | Fifth Amended and Restated Promissory Note, dated as of July 30, 2010, by PlainsCapital Corporation in favor of JPMorgan Chase Bank, NA.                                    |  |               |  | 8-K                       |  | 000-53629 |  | 10.2    |  | 08/05/10  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.53       |  |  |  | Loan Agreement, dated as of September 22, 2004, between JPMorgan Chase Bank, NA (f/k/a Bank One, NA) and PlainsCapital Corporation (f/k/a Plains Capital Corporation).      |  |               |  | 10                        |  | 000-53629 |  | 10.42   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.54       |  |  |  | Renewal, Extension and Modification Agreement, dated as of June 19, 2009, between JPMorgan Chase Bank, NA and PlainsCapital Corporation (f/k/a Plains Capital
Corporation). |  |               |  | 10-Q                      |  | 000-53629 |  | 10.45   |  | 10/21/09  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.55       |  |  |  | Renewal, Extension and Modification Agreement, dated as of July 30, 2010, between JPMorgan Chase Bank, NA and PlainsCapital Corporation.                                    |  |               |  | 8-K                       |  | 000-53629 |  | 10.6    |  | 08/05/10  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.56       |  |  |  | Second Amended and Restated Promissory Note, dated as of July 30, 2010, by PlainsCapital Corporation in favor of JPMorgan Chase Bank.                                       |  |               |  | 8-K                       |  | 000-53629 |  | 10.7    |  | 08/05/10  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.57       |  |  |  | Loan Agreement, dated as of October 27, 2004, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank, NA (f/k/a Bank One, NA).        |  |               |  | 10                        |  | 000-53629 |  | 10.44   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.58       |  |  |  | Renewal, Extension and Modification Agreement, dated as of June 19, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank,
NA. |  |               |  | 10-Q                      |  | 000-53629 |  | 10.48   |  | 10/21/09  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.59       |  |  |  | Renewal, Extension and Modification Agreement, dated as of July 30, 2010, between PlainsCapital Corporation and JPMorgan Chase Bank, NA.                                    |  |               |  | 8-K                       |  | 000-53629 |  | 10.8    |  | 08/05/10  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.60       |  |  |  | Fourth Amended and Restated Promissory Note, dated as of July 30, 2010, by PlainsCapital Corporation in favor of JPMorgan Chase Bank.                                       |  |               |  | 8-K                       |  | 000-53629 |  | 10.9    |  | 08/05/10  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.61       |  |  |  | Credit Agreement, dated as of October 13, 2006, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank, N.A.                          |  |               |  | 10                        |  | 000-53629 |  | 10.47   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.62       |  |  |  | Renewal, Extension and Modification Agreement, dated as of June 19, 2009, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and JPMorgan Chase Bank,
NA. |  |               |  | 10-Q                      |  | 000-53629 |  | 10.51   |  | 10/21/09  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.63       |  |  |  | Modification Agreement, dated as of April 23, 2010, between JPMorgan Chase Bank, NA and PlainsCapital Corporation.                                                          |  |               |  | 8-K                       |  | 000-53629 |  | 10.2    |  | 04/29/10  
|            |  |   |  |                                                                                                                                                                             |  |               | 
|10.64       |  |  |  | Renewal, Extension and Modification Agreement, dated as of July 30, 2010, between PlainsCapital Corporation and JPMorgan Chase Bank, NA.                                    |  |               |  | 8-K                       |  | 000-53629 |  | 10.3    |  | 08/05/10  



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##### Table of Contents

|            |  |   |  |                                                                                                                                                                                |  |               |  |                           |  |           |  |         |  |           
|----------- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------
|            |  |   |  |                                                                                                                                                                                |  |               |  | Incorporated by Reference
|Exhibit No. |  |   |  | Exhibit Description                                                                                                                                                            |  | FiledHerewith |  | Form                      |  | File No.  |  | Exhibit |  | FilingDate
|10.65       |  |  |  | Third Amended and Restated Promissory Note, dated as of July 30, 2010, by PlainsCapital Corporation in favor of JPMorgan Chase Bank.                                           |  |               |  | 8-K                       |  | 000-53629 |  | 10.4    |  | 08/05/10  
|            |  |   |  |                                                                                                                                                                                |  |               | 
|10.66       |  |  |  | Promissory Note, dated as of July 30, 2010, by PlainsCapital Corporation in favor of JPMorgan Chase Bank.                                                                      |  |               |  | 8-K                       |  | 000-53629 |  | 10.5    |  | 08/05/10  
|            |  |   |  |                                                                                                                                                                                |  |               | 
|10.67       |  |  |  | Office Lease, dated as of February 7, 2007, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Block L Land, L.P.                                        |  |               |  | 10                        |  | 000-53629 |  | 10.49   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                |  |               | 
|10.68       |  |  |  | First Amendment to Office Lease, dated as of April 3, 2007, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and Block L Land, L.P.                        |  |               |  | 10                        |  | 000-53629 |  | 10.50   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                |  |               | 
|10.69       |  |  |  | Second Amendment to Office Lease, dated as of November 14, 2008, between PlainsCapital Corporation (f/k/a Plains Capital Corporation) and H/H Victory Holdings, L.P.           |  |               |  | 10                        |  | 000-53629 |  | 10.51   |  | 04/17/09  
|            |  |   |  |                                                                                                                                                                                |  |               | 
|10.70       |  |  |  | Waiver Letter, dated as of October 16, 2009, from JP Morgan Chase Bank, NA to PlainsCapital Corporation.                                                                       |  |               |  | 10-Q                      |  | 000-53629 |  | 10.59   |  | 10/21/09  
|            |  |   |  |                                                                                                                                                                                |  |               | 
|31.1        |  |  |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                        |  | X             |  |                           |  |           |  |         |  |           
|            |  |   |  |                                                                                                                                                                                |  |               | 
|31.2        |  |  |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                        |  | X             |  |                           |  |           |  |         |  |           
|            |  |   |  |                                                                                                                                                                                |  |               | 
|32.1        |  |  |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |  | X             |  |                           |  |           |  |         |  |