Hilltop Q1 Earnings Call Highlights

Key Points

• Hilltop reported Q1 net income of approximately $38 million (EPS $0.64) with a 1.0% ROA and 7.1% ROE, driven by improving bank profitability, a narrower mortgage operating loss, and stronger broker‑dealer results.
• PlainsCapital Bank produced $47 million of pre‑tax income with a favorable 3.38% net interest margin and NII of $112 million (up 6.7% YoY) as core loans rose about 5% and interest‑bearing deposit costs fell to 2.49%; management reported a 74% deposit beta on the first 175bps of Fed cuts but expects a through‑the‑cycle beta of 60–65%.
• PrimeLending’s pre‑tax loss narrowed to $2 million on 16% higher origination volume, though management remains cautious about rate volatility and kept full‑year production guidance at $9–10 billion, while Hilltop Securities earned $15 million pre‑tax (12.7% margin); the company finished the quarter with a strong capital position (CET1 19.1%), returned $11.8 million in dividends, and repurchased $47.5 million of stock under a $125 million authorization.

Hilltop NYSE: HTH reported first-quarter 2026 net income of approximately $38 million, or $0.64 per diluted share, as the company cited improving bank profitability, a narrower mortgage operating loss, and stronger broker-dealer results. Return on average assets was 1% and return on average equity was 7.1%, Chairman, President and CEO Jeremy Ford said on the company’s earnings call.

Bank results driven by margin expansion and loan growth

PlainsCapital Bank produced $47 million of pre-tax income and a 1.2% return on average assets, supported by what Ford described as “active management of the deposit portfolio” and a continued shift of earning assets into core loans. Ford said the bank posted a “favorable 3.38% net interest margin” and delivered year-over-year growth in both core loans and core deposits.

CFO Will Furr said net interest income (NII) totaled $112 million in the quarter, including $1.3 million of purchase accounting accretion. NII increased $7 million, or 6.7%, from the year-ago period, which Furr attributed to efforts to lower deposit costs while growing customer deposits and relationships, as well as approximately 5% year-over-year average held-for-investment (HFI) loan growth at PlainsCapital Bank.

On the call, Furr said the company’s “going loan yields during the quarter were about 6.5% overall.” He also discussed deposit repricing dynamics as the Federal Reserve rate cycle evolves, noting that PlainsCapital Bank achieved an interest-bearing deposit beta of 74% from the first 175 basis points of Fed reductions. While he said management was “pleased with these results to date,” he added that “competitive intensity and pricing pressures could escalate in the future,” and reiterated an expectation for a through-the-cycle deposit beta of 60%–65%.

Furr also pointed to an improved asset mix versus the prior year, with average excess cash levels down about $1.1 billion and average HFI loans up about $407 million. He said the company expects the mix shift to continue benefiting net interest income in future quarters.

Deposit trends and funding costs

Average total deposits were approximately $10.6 billion in the first quarter, down $82 million, or less than 1%, from the fourth quarter of 2025. On an ending balance basis, deposits declined $347 million to $10.5 billion, which Furr said reflected “expected outflows” tied to seasonal distributions among certain public entity and commercial clients.

Furr said the company expects deposits to stabilize and grow in the second half of 2026 and highlighted the “stability in our non-interest-bearing deposits” alongside continued efforts to grow treasury management relationships. Total interest-bearing deposit cost fell 20 basis points sequentially to 2.49% as of March 31, and Furr said the company expects those costs to stabilize near current levels until additional Fed movement.

PrimeLending loss narrows as volumes improve, but rate volatility clouds outlook

PrimeLending reported a first-quarter pre-tax loss of $2 million. Ford said the year-over-year improvement was driven by higher origination volumes, better gain-on-sale margins, and cost structure enhancements implemented in 2025. He cautioned, however, that mortgage profitability remained under pressure from “affordability and the interest rate lock-in effect,” and noted that volatility in long-term interest rates was creating more uncertainty around second- and third-quarter production than in a typical year.

Furr said mortgage-related income and fees increased by $5 million from the first quarter of 2025, reflecting 16% growth in loan origination volume. He also said mortgage demand slowed late in the quarter as interest rates were impacted by “concerns over the Iran conflict.”

Given the uncertainty, management maintained its full-year mortgage production volume expectation of $9 billion to $10 billion, and Furr said the company expects gain-on-sale margins to remain “relatively stable at the current levels.” In response to analyst questions, Furr said the company did not have “clear visibility into the buying season” and described the outlook as “cautiously optimistic,” adding that PrimeLending’s performance would depend on “how temporary” the demand effects are and how the market recovers.

Hilltop Securities posts higher earnings with strength in Fixed Income and Structured Finance

Hilltop Securities generated pre-tax income of $15 million on net revenue of $116 million, for a pre-tax margin of 12.7%, Ford said. He noted that net revenues showed momentum across business lines and that the segment improved pre-tax income by 60% year over year despite a volatile rate backdrop.

• Public Finance Services: Net revenue of $23.6 million, which Ford said was a modest decline versus a “robust” first quarter last year.
• Structured Finance: Net revenue of $23.6 million, which Ford said benefited from a “material increase in TBA lock volume” year over year.
• Wealth management: Results improved versus the prior year’s first quarter from higher advisory and transaction fees, with Ford citing continued organic growth in a competitive environment.
• Fixed Income Services: Net revenue of $14 million, up 58% year over year, primarily due to strong sales volumes.

Furr said revenue from principal transactions, commissions, and fees increased by $11.2 million, driven primarily by Fixed Income Services as well as growth in wealth management and Structured Finance. He also cautioned that dealer-type securities revenues in Fixed Income Services and Structured Finance “can be volatile from period to period” due to interest rates, market liquidity, and production trends.

Credit, capital returns, and 2026 assumptions

Hilltop recorded a $1.8 million provision expense at PlainsCapital Bank, which Ford said was “largely driven by a stressed auto note credit” discussed in prior quarters. Furr added that first-quarter net charge-offs totaled $4.3 million, including $3.6 million tied to write-downs in the auto note finance portfolio. He said non-performing assets increased modestly due largely to “the negative migration of one credit” in the commercial real estate portfolio, while adding, “we do not see any prevailing trends that cause undue concern in our portfolio.”

The allowance for credit losses declined $2.5 million to $89 million, which Furr attributed to modest overall credit quality improvement, including credit rating migration, payoffs, and new loan growth. As of March 31, the ACL-to-total loans HFI ratio was 106 basis points. Furr also said the macroeconomic and geopolitical landscape could drive volatility and uncertainty in future periods and reiterated that CECL-driven allowance levels could be volatile based on loan growth, credit migration, and changes in macroeconomic outlook.

On capital, Ford said Hilltop ended the quarter with a Common Equity Tier 1 capital ratio of 19.1% and tangible book value per share of $31.97. The company returned $11.8 million to stockholders through dividends and repurchased $47.5 million in shares during the quarter. Responding to a question on capital priorities, Ford said the company has a $125 million share repurchase authorization for the year and expects activity to be “market dependent,” with an emphasis on consistency. He added that M&A “is always available to us” and would be a priority if there is “the right strategic fit” or a “financially compelling transaction.”

Looking ahead, Furr said the company’s estimates for future net interest income and net interest margin reflect an expectation of “two additional rate reductions in 2026,” and he said that assumption is applied “across all of our businesses consistently.” He added that if no additional cuts occur, net interest income could be $8 million to $10 million higher, and Hilltop Securities could see a “slightly better” revenue outlook.

On expenses, Furr said noninterest expenses declined $3 million year over year to $248 million and that the company expects expenses excluding variable compensation to remain relatively stable. He said guidance for non-variable expenses assumes normal inflation in personnel and technology service provider costs, alongside continued investments in client-facing resources and technology, including “the deployment of AI where practical.”

About Hilltop NYSE: HTH

Hilltop Holdings, Inc NYSE: HTH is a Dallas, Texas–based financial holding company offering commercial banking, mortgage lending and capital markets services through its three primary subsidiaries: PlainsCapital Corporation, PrimeLending and HilltopSecurities. PlainsCapital provides deposit, lending and treasury management solutions to small and mid-sized businesses, professionals and individuals. PrimeLending specializes in home purchase and refinance loans, serving retail, wholesale and correspondent channels.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.