Hilltop Q2 Earnings Call Highlights

Key Points

• Hilltop beat on earnings in Q2 2026, posting net income of $36.5 million, or $0.63 per share, as strength in banking and broker-dealer operations offset ongoing weakness in mortgage lending.
• PlainsCapital Bank drove results with loan growth and margin expansion, while HilltopSecurities delivered solid revenue gains; PrimeLending remained under pressure from high mortgage rates and posted a $2 million pretax loss.
• Capital returns increased as Hilltop raised its quarterly dividend 10% to $0.22 per share and added $75 million to its buyback authorization, while maintaining a strong CET1 capital ratio of 18.3%.

Hilltop NYSE: HTH reported second-quarter 2026 net income attributable to common stockholders of $36.5 million, or $0.63 per diluted share, as growth at its banking and broker-dealer operations offset continued pressure in mortgage banking.

Return on average assets was 1.0% and return on average equity was 6.9% for the quarter. President and CEO Jeremy Ford said PlainsCapital Bank generated $51 million in pretax income, while HilltopSecurities produced $12 million. PrimeLending posted a $2 million pretax loss amid a difficult mortgage market.

Bank posts loan growth and margin expansion

PlainsCapital Bank’s net interest margin expanded to 3.42% during the second quarter, according to Ford, while the bank delivered a 1.3% return on average assets. The bank’s efficiency ratio was 55%, unchanged from the first quarter of 2026 and the second quarter of 2025.

CFO Will Furr said consolidated net interest income totaled $116 million, including $800,000 of purchase accounting accretion. Net interest income rose 5% from a year earlier, supported by lower interest-bearing deposit costs and a shift in the balance sheet from cash into loans held for investment.

On a consolidated basis, net interest margin increased 8 basis points from the first quarter to 3.21%. Furr said Hilltop’s current economic outlook assumes one rate increase in December 2026. Under that scenario, the company expects net interest margin to remain around current levels but potentially decline modestly in the second half, while net interest income remains relatively stable in coming quarters.

Period-end loans held for investment rose by $239 million from the first quarter. The increase included $114 million in commercial real estate lending, $54 million in commercial and industrial lending, $45 million in broker-dealer-related loans and $28 million of seasonal mortgage warehouse lending growth.

Hilltop increased its full-year forecast for average loan growth to a range of 5% to 7%, excluding mortgage warehouse lending and mortgages retained from PrimeLending. During the question-and-answer session, Furr said new loan production yields were in a range of roughly 6.5% to 7%, depending on asset class and individual transaction, despite intense competition in the company’s markets.

Average total deposits were approximately $10.4 billion, down $263 million from the prior-year quarter. Ending deposits were stable from the first quarter at $10.5 billion, including a $300 million movement of HilltopSecurities sweep deposits into the bank. Excluding that movement, Furr attributed deposit declines to seasonal tax payments, public-fund distributions and flows from large commercial and industrial customers. The company expects customer deposits to begin growing again in the second half.

Interest-bearing deposit costs declined to 2.37%, and Furr said PlainsCapital achieved a 75% interest-bearing deposit beta during the down-rate cycle. However, he said rising competition could lead to higher offered rates and more exception pricing.

Credit reserve declines despite one loan deterioration

Hilltop recorded a $1 million net reversal of provision for credit losses in the quarter. Its allowance for credit losses declined by $4 million to $85 million.

The company recorded approximately $3.2 million of net charge-offs, equivalent to 16 basis points of average loans. It also increased specific reserves by $1.9 million, primarily related to deterioration in one loan. Classified and special mention loans increased in the period, largely because of a large single-family credit that deteriorated, Furr said.

Still, management said overall credit quality remained sound, while nonperforming asset levels have declined consistently over the past 12 months. The bank’s allowance for credit losses coverage ended the quarter at 103 basis points, including mortgage warehouse lending.

Broker-dealer gains offset mortgage weakness

HilltopSecurities reported net revenue of $124 million and a 10% pretax margin. Net revenue increased 13% from the second quarter of 2025, while pretax income rose by $6 million year over year.

Structured Finance net revenue increased 73% from a year earlier, driven by robust buy-side demand for call-protected collateral. Fixed Income services reported a 10% increase in net revenue as municipal and taxable sales and trading revenue improved. Wealth Management also grew, helped by advisory and transaction fees in the retail business.

Public Finance generated $30 million in net revenue, a modest decline from the prior-year quarter. Ford said industry issuance volumes were strong in the first half and are expected to remain elevated during the second half.

Furr said Hilltop’s broker-dealer revenue outlook calls for a range of negative 3% to positive 1%. He cited the potential effects of rate movements on sweep fees, public-finance debt issuance and the shape of the yield curve on Fixed Income services. Management said it remained constructive on Public Finance, Fixed Income, Wealth Management and Structured Finance, while acknowledging that capital-markets revenues can fluctuate with market conditions, liquidity and production volumes.

PrimeLending’s results continued to reflect elevated mortgage rates, home affordability concerns, property taxes, insurance costs and limited housing inventory. Mortgage revenue declined $1.8 million from a year earlier, principally because of lower valuation marks on the rate-lock pipeline. Second-quarter originations were consistent with prior-year levels, while gain-on-sale margins on loans sold to third parties declined 6 basis points to 217 basis points.

Ford said PrimeLending had reduced fixed costs by about $10 million on an annualized basis compared with the second quarter of 2025. The company expects the mortgage market to remain highly competitive until long-term rates decline and industry volumes improve.

Capital returns increase

Hilltop ended the quarter with a Common Equity Tier 1 capital ratio of 18.3% and tangible book value per share of $32.36. The company returned $11.6 million to shareholders through dividends and repurchased $47 million in shares during the quarter.

The board increased the quarterly cash dividend by 10% to $0.22 per share and added $75 million to the company’s share repurchase authorization. Ford said Hilltop had $200 million of total repurchase authorization for 2026 and would prioritize organic growth first, followed by capital returns, while retaining resources for potential mergers and acquisitions.

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.

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