Financial Data and Key Metrics Changes - Hilltop reported net income of approximately $36 million or $0.57 per diluted share for Q2 2025, with a return on average assets of 1% and return on average equity of 6.6% [4] - Net interest income increased by 7% year-over-year, totaling $110.7 million, while net interest margin improved by 17 basis points to 301 basis points [16][19] - The allowance for credit losses declined by $8.2 million to $98 million, with a net reversal of credit losses of $7.3 million during the quarter [15][8] Business Line Data and Key Metrics Changes - PlainsCapital Bank generated $55 million of pretax income on average assets of $12.7 billion, resulting in a return on average assets of 1.35% [5] - PrimeLending reported a pretax gain of $3 million, including a nonrecurring legal settlement of $9.5 million, while origination volumes increased by 2% year-over-year [9][10] - Hilltop Securities generated pretax income of $6 million on net revenues of $110 million, with public finance services seeing a 36% year-over-year increase in net revenues [11][12] Market Data and Key Metrics Changes - Average total deposits at PlainsCapital declined during the quarter, reflecting normal seasonal flows, but are expected to grow again in the second half of 2025 [17][7] - Core deposits increased by approximately $275 million year-over-year, indicating strong growth in the market [8] - Mortgage revenues declined by $12 million due to lower valuation marks and origination fees, highlighting ongoing challenges in the mortgage banking sector [19][20] Company Strategy and Development Direction - The company aims to manage deposit costs actively while expanding lending activity, focusing on maintaining strong capital levels with a common equity Tier one capital ratio of 20.8% [13][8] - Hilltop is looking to continue share repurchases and evaluate M&A opportunities, particularly in cash-type deals, as the stock trades at a discount to tangible book value [58][59] - The company is adjusting its expected full-year average loan growth rate to 0% to 2% for 2025, reflecting competitive pressures and market conditions [23][46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the bank's performance despite uncertainties in the market regarding interest rates and inflation [24][25] - The outlook for 2025 reflects the current assessment of the economy, with expectations for continued activity in M&A and a focus on returning the mortgage business to profitability [25][58] - Management noted that competition in the mortgage origination market remains challenging, impacting overall margins and production volumes [9][10] Other Important Information - The company returned over $46 million to stockholders through dividends and share repurchases during the quarter [5][13] - Fixed expenses increased by 1.8% year-over-year, driven by higher variable compensation and inflation in personnel and software costs [20][34] Q&A Session Summary Question: Regarding the broker dealer business and efficiency ratio - Management indicated that the elevated efficiency ratio is largely due to the revenue mix, with public finance services up and structured finance flat or down [30][32] Question: On fixed expense guidance - The increase in non-variable expense outlook is driven by inflation in personnel and software costs [34] Question: About net interest margin (NIM) and deposit beta - Management noted that improved analytics and a more rational marketplace contributed to achieving a higher than expected deposit beta [34][35] Question: On loan growth and competition - Management discussed strong pipelines but acknowledged that competition is impacting loan growth, particularly in commercial real estate and C&I portfolios [42][46] Question: On capital management and share repurchases - Management confirmed a strong appetite for share repurchases, with $135 million authorized for 2025, and noted ongoing M&A activity in the market [58][59] Question: About classified loans and credit quality - The improvement in classified loans was primarily driven by paydowns and successful workout activities [61] Question: On deposit costs and outflows - Management expects seasonal outflows to normalize and deposits to rebuild in the latter half of the year [63]

Financial Data and Key Metrics Changes - Hilltop reported net income of approximately $36 million or $0.57 per diluted share, with a return on average assets of 1% and return on average equity of 6.6% [4] - The net interest margin increased by 19 basis points, while the blended cost of deposits declined by 9 basis points [5][6] - Net interest income for the second quarter was $110.7 million, reflecting a year-over-year increase of 7% [14][17] - The allowance for credit losses declined by $8.2 million to $98 million, with net charge-offs of approximately $900,000 [15][16] Business Line Data and Key Metrics Changes - PlainsCapital Bank generated $55 million of pretax income on average assets of $12.7 billion, resulting in a return on average assets of 1.35% [5] - PrimeLending reported a pretax gain of $3 million, including a nonrecurring legal settlement of $9.5 million [9] - Hilltop Securities generated pretax income of $6 million on net revenues of $110 million, with public finance services seeing a 36% year-over-year increase in net revenues [11] Market Data and Key Metrics Changes - Average total deposits at PlainsCapital declined during the quarter, reflecting normal seasonal flows related to tax payments and distributions [18] - Core deposits increased by approximately $275 million year-over-year [8] - Mortgage revenues declined by $12 million, driven by lower valuation marks on the pipeline and lower loan origination fees [20] Company Strategy and Development Direction - The company aims to return its mortgage business to profitability while managing deposit costs and expanding lending activity [24] - Hilltop continues to focus on prudent growth of revenue producers while gaining efficiency across middle and back office functions [21] - The company anticipates ongoing activity in M&A, looking for cash-type deals due to trading at a discount on a tangible book value basis [51] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the work being done to support customers and communities, despite uncertainties in the market regarding interest rates and inflation [24] - The outlook for 2025 reflects the current assessment of the economy and market conditions, with adjustments expected as the market changes [25] - The company expects to recapture a material portion of deposits in the second half of 2025 as seasonal inflows occur [7] Other Important Information - The company returned over $46 million to stockholders through dividends and share repurchases during the quarter [5] - The tangible book value per share increased by $0.54 to $30.56 [13] Q&A Session Summary Question: Regarding the broker dealer business and elevated efficiency ratio - Management indicated that the elevated efficiency ratio is largely a reflection of the revenue mix, with public finance services up and structured finance flat to down [27][28] Question: On fixed expense guidance and incremental expense outlook - Management noted ongoing inflation in personnel and software expenses as drivers for the increased expense outlook [30] Question: About the net interest margin and deposit beta - Management highlighted improvements in analytic capabilities and a more rational marketplace as factors contributing to a higher than expected deposit beta [31][32] Question: On loan growth and competition - Management discussed strong pipelines and the impact of competition on loan growth, indicating that it will take time to fund commitments [36][41] Question: On capital management and share repurchases - Management expressed satisfaction with share repurchases and indicated plans to continue this strategy, while also evaluating M&A opportunities [50][51] Question: About credit improvements and classified loans - Management attributed improvements in classified loans to pay downs and effective workout activities by the credit team [53] Question: On deposit costs and outflows - Management clarified that recent outflows were seasonal and expected to rebuild in the second half of the year [55]

Core Insights - Hilltop Holdings Inc. (HTH) reported second-quarter 2025 earnings of 57 cents per share, exceeding the Zacks Consensus Estimate of 41 cents, and reflecting an 83.9% increase from the prior-year quarter [1][9] - The earnings growth was driven by higher net interest income (NII) and a reversal of provisions, although higher non-interest expenses and lower non-interest income, along with a decline in deposits, posed challenges [1][10] Financial Performance - Net income attributable to common stockholders was $36.1 million, representing a 77.4% year-over-year increase, surpassing the estimate of $22.4 million [2] - Net revenues for the second quarter totaled $303.3 million, a 2.1% year-over-year increase, but fell short of the Zacks Consensus Estimate of $307.6 million [3] - NII rose by 6.8% year over year to $110.7 million, exceeding the estimate of $106.1 million, while the net interest margin (NIM) improved to 3.04%, up 12 basis points from the previous year [3] - Non-interest income decreased slightly to $192.6 million, missing the projected $196.3 million, primarily due to declines in most components except for securities commissions and fees [4] - Non-interest expenses increased by 1.8% year over year to $261.2 million, slightly below the estimate of $262.4 million [4] Loan and Deposit Trends - As of June 30, 2025, net loans held for investment were $8 billion, reflecting a 1.3% sequential increase, while total deposits decreased by 4.1% to $10.4 billion [5] Credit Quality and Capital Ratios - Hilltop Holdings experienced a reversal of credit losses amounting to $7.3 million, compared to a provision for credit losses of $10.9 million in the prior-year quarter [6] - Non-performing assets as a percentage of total assets improved to 0.53%, down 17 basis points from the previous year [6] - Return on average assets increased to 0.98% from 0.59% year over year, and return on average stockholders' equity rose to 6.62% from 3.84% [7] - The common equity tier 1 capital ratio improved to 20.74% from 19.45% year over year, while the total capital ratio increased to 23.38% from 22.57% [7] Strategic Outlook - The company's restructuring efforts, improving fee income, and favorable interest rates are expected to support revenue growth, although challenges remain in the Mortgage Origination segment and asset quality [10]

Financial Performance - Hilltop Holdings' Q2 2025 net income available to common stockholders was $31 million[5] - The company's Q2 2025 earnings per diluted share (EPS) was $095[5] - Hilltop Securities generated pre-tax income of $62 million in Q2 2025[5, 63] - PrimeLending generated income before taxes of $32 million in Q2 2025[57] Capital Management - Hilltop returned $464 million to stockholders through dividends and share repurchases in Q2 2025[9] - $115 million in dividends[9] - $349 million in share repurchases[9] - Tangible book value per share increased to $3490 as of June 30, 2025, representing a 2074% increase year-over-year[7] PlainsCapital Bank Highlights - PlainsCapital Bank's net interest margin was 310%[56] - Full-service branches decreased to 55[56] - Efficiency ratio was 554%[56] Mortgage Origination - PrimeLending's origination volume was $24 billion in Q2 2025, with 89% purchase[5, 57] - PrimeLending's sales volume was $2135 million[57] Net Interest Income and Margin - Net interest income increased to $1107 million in Q2 2025[17] - Net interest margin increased to 301% in Q2 2025[19]

Core Insights - Hilltop Holdings (HTH) reported revenue of $303.31 million for Q2 2025, a year-over-year increase of 2.1% and an EPS of $0.57, up from $0.31 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $307.62 million, resulting in a surprise of -1.4%, while the EPS exceeded expectations by 39.02% compared to the consensus estimate of $0.41 [1] Financial Performance Metrics - Average Outstanding Balance of interest-earning assets was $14.72 billion, below the three-analyst average estimate of $14.95 billion [4] - Non-accrual loans were reported at $72.74 million, compared to the estimated $86.47 million [4] - Net Interest Margin stood at 3%, slightly above the three-analyst average estimate of 2.9% [4] - Non-performing assets totaled $81.89 million, lower than the $94.75 million average estimate [4] - Efficiency Ratio was reported at 55.4%, significantly better than the two-analyst average estimate of 86.8% [4] - Net Interest Income (FTE) was $111.48 million, exceeding the average estimate of $106.91 million [4] - Total Noninterest Income was $192.63 million, below the estimated $201.11 million [4] - Investment and securities advisory fees and commissions reached $43.73 million, higher than the average estimate of $37.05 million [4] - Mortgage loan origination fees were $28.74 million, slightly below the average estimate of $30.82 million [4] - Noninterest income from other sources was $35.18 million, compared to the average estimate of $48.96 million [4] - Net gains from the sale of loans and other mortgage production income were $51.95 million, below the average estimate of $54.28 million [4] Stock Performance - Hilltop Holdings shares returned +5% over the past month, compared to the Zacks S&P 500 composite's +5.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Group 1 - Hilltop Holdings reported quarterly earnings of $0.57 per share, exceeding the Zacks Consensus Estimate of $0.41 per share, and up from $0.31 per share a year ago, representing an earnings surprise of +39.02% [1] - The company posted revenues of $303.31 million for the quarter ended June 2025, which was 1.4% below the Zacks Consensus Estimate, but an increase from $296.95 million year-over-year [2] - Hilltop Holdings has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] Group 2 - The stock has gained approximately 9.5% since the beginning of the year, outperforming the S&P 500's gain of 8.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.50 on revenues of $320.73 million, and for the current fiscal year, it is $1.88 on revenues of $1.24 billion [7] - The Zacks Industry Rank for Banks - Southeast, to which Hilltop Holdings belongs, is currently in the top 9% of over 250 Zacks industries, indicating a favorable outlook for the sector [8]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Hilltop Holdings reported strong Q2 2025 results, marked by increased profitability and effective capital management [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) Hilltop Holdings reported a significant increase in profitability for the second quarter of 2025, with net income to common stockholders reaching $36.1 million, or $0.57 per diluted share | Metric | Q2 2025 (USD) | Q2 2024 (USD) | | :--- | :--- | :--- | | Income to Common Stockholders | $36.1 million | $20.3 million | | Diluted EPS | $0.57 | $0.31 | - Key drivers for the improved financial results compared to Q2 2024 include: a reversal of credit losses, an increase in net interest income within the banking segment, increased net revenues and noninterest expenses in the broker-dealer segment, and declines in net interest expense, noninterest income, and noninterest expense in the mortgage origination segment[1](index=1&type=chunk) [Capital Management](index=1&type=section&id=Capital%20Management) The company demonstrated a commitment to returning capital to shareholders by declaring a quarterly cash dividend of $0.18 per share and repurchasing $34.9 million of its common stock during the quarter - A quarterly cash dividend of **$0.18 per common share** was declared, payable on August 29, 2025[2](index=2&type=chunk) | Share Repurchase Activity | Value (USD) | | :--- | :--- | | Shares Repurchased in Q2 2025 | 1,157,396 | | Total Cost | $34.9 million | | Average Price per Share | $30.17 | - The stock repurchase program was increased by **$35.0 million** to a total of **$135.0 million**, with approximately **$67 million** of capacity available through January 2026, subject to Federal Reserve non-objection[3](index=3&type=chunk) [CEO Commentary and Segment Highlights](index=1&type=section&id=CEO%20Commentary%20and%20Segment%20Highlights) Chairman, President and CEO Jeremy B. Ford highlighted the company's solid performance, including a 1% return on average assets and the return of $47 million to stockholders - PlainsCapital Bank's net interest margin expanded by **19 basis points** due to proactive deposit cost management and higher repricing of earning assets[5](index=5&type=chunk) - HilltopSecurities achieved a **5% year-over-year increase** in net revenue and a pre-tax margin of **5.8%**[5](index=5&type=chunk) - PrimeLending generated pre-tax income of **$3.2 million** on **$2.4 billion** of mortgage origination volume, including a one-time pre-tax benefit of **$9.5 million** from prior legal settlements[5](index=5&type=chunk) [Key Financial Highlights and Metrics](index=1&type=section&id=Key%20Financial%20Highlights%20and%20Metrics) This section details Hilltop's consolidated and segment-specific financial performance, asset quality, and capital ratios for Q2 2025 [Consolidated Performance Highlights](index=1&type=section&id=Consolidated%20Performance%20Highlights) Hilltop's consolidated performance in Q2 2025 showed significant improvement over the prior year, with a reversal of credit losses of $7.3 million compared to a $10.9 million provision in Q2 2024 - The company recorded a reversal of credit losses of **$7.3 million** in Q2 2025, a significant shift from the **$10.9 million provision** for credit losses in Q2 2024, primarily driven by changes in the U.S. economic outlook[5](index=5&type=chunk) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Return on Average Assets (ROA) | 0.98% | 0.59% | | Return on Average Stockholders' Equity (ROE) | 6.62% | 3.84% | | Book Value per Common Share | $34.90 | $32.86 (at June 30, 2024) | - The consolidated net interest margin increased to **3.01%** for Q2 2025, compared to **2.84%** in Q1 2025[7](index=7&type=chunk) [Segment Performance](index=4&type=section&id=Segment%20Performance) The Banking segment was the main contributor to profitability with $54.9 million in pre-tax income, while Broker-Dealer and Mortgage Origination segments also reported positive pre-tax income | Segment (Q2 2025) | Income (Loss) Before Taxes (USD) | | :--- | :--- | | Banking | $54,928,000 | | Broker-Dealer | $6,397,000 | | Mortgage Origination | $3,210,000 | - Mortgage loan origination volume was **$2.4 billion** in Q2 2025, consistent with the volume in Q2 2024[7](index=7&type=chunk) - The Broker-Dealer segment's pre-tax margin was **5.8%** in Q2 2025, a decrease from **6.9%** in Q2 2024[10](index=10&type=chunk) [Asset Quality](index=2&type=section&id=Asset%20Quality) Asset quality improved during the quarter, with non-accrual loans decreasing to $72.7 million, or 0.80% of total loans, down from $81.5 million (0.93%) in the previous quarter | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Non-accrual loans | $72.7 million | $81.5 million | $105.7 million | | Non-accrual loans as a % of total loans | 0.80% | 0.93% | 1.12% | | Non-performing assets as a % of total assets | 0.53% | 0.56% | 0.70% | [Capital Ratios](index=2&type=section&id=Capital%20Ratios) Hilltop maintained robust capital levels as of June 30, 2025, with Tier 1 Leverage Ratio at 13.11% and CET1 Capital Ratio at 20.74%, both well above regulatory requirements | Capital Ratio (Hilltop Consolidated) | June 30, 2025 (%) | | :--- | :--- | | Tier 1 Leverage Ratio | 13.11% | | Common Equity Tier 1 Capital Ratio | 20.74% | | Total Capital (to risk-weighted assets) | 23.38% | [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents Hilltop's consolidated balance sheets, income statements, and net interest margin analysis for Q2 2025 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Hilltop's total assets were $15.4 billion, a slight decrease from $15.8 billion at the end of the prior quarter | Balance Sheet Item | June 30, 2025 (USD Billions) | March 31, 2025 (USD Billions) | | :--- | :--- | :--- | | Total Assets | $15.4 | $15.8 | | Loans held for investment, net | $8.0 | $7.9 | | Total Deposits | $10.4 | $10.8 | | Total Stockholders' Equity | $2.2 | $2.2 | [Consolidated Income Statements](index=4&type=section&id=Consolidated%20Income%20Statements) For the second quarter of 2025, the company generated $110.7 million in net interest income and $192.6 million in noninterest income, contributing to a net income of $36.1 million | Income Statement Item (Q2 2025) | Amount (USD Millions) | | :--- | :--- | | Net Interest Income | $110.7 | | Provision for (reversal of) credit losses | $(7.3) | | Total Noninterest Income | $192.6 | | Total Noninterest Expense | $261.2 | | Income Attributable to Hilltop | $36.1 | [Net Interest Margin Analysis](index=6&type=section&id=Net%20Interest%20Margin%20Analysis) The taxable equivalent net interest margin (NIM) expanded to 3.04% in Q2 2025, up from 2.92% in Q2 2024, driven by a reduction in the cost of interest-bearing liabilities | Net Interest Margin Detail | Q2 2025 (%) | Q2 2024 (%) | | :--- | :--- | :--- | | Net Interest Margin (Taxable Equivalent) | 3.04% | 2.92% | | Net Interest Spread | 2.01% | 1.75% | | Yield on Interest-Earning Assets | 5.39% | 5.82% | | Rate on Interest-Bearing Liabilities | 3.38% | 4.07% | [Supplementary Information](index=8&type=section&id=Supplementary%20Information) This section provides details on the upcoming conference call and an overview of Hilltop Holdings' business operations [Conference Call Information](index=8&type=section&id=Conference%20Call%20Information) Hilltop Holdings will host a conference call and live webcast to discuss its second quarter 2025 financial results on Friday, July 25, 2025, at 8:00 AM Central Time - The conference call to review Q2 2025 results is scheduled for **Friday, July 25, 2025, at 8:00 AM Central (9:00 AM Eastern)**[17](index=17&type=chunk) [About Hilltop](index=8&type=section&id=About%20Hilltop) Hilltop Holdings is a Dallas-based financial holding company operating primarily through its subsidiaries: PlainsCapital Bank, PrimeLending, and Hilltop Securities Inc - Hilltop is a financial holding company with key business lines in: - **Banking:** PlainsCapital Bank - **Mortgage Lending:** PrimeLending - **Broker-Dealer:** Hilltop Securities Inc. and Momentum Independent Network Inc.[18](index=18&type=chunk)

Core Viewpoint - Hilltop Holdings (HTH) is expected to report a year-over-year increase in earnings driven by higher revenues, with the consensus outlook being crucial for assessing the company's earnings picture [1][2] Earnings Expectations - The upcoming earnings report is anticipated to be released on July 24, with expectations that better-than-expected results could lead to a stock price increase, while missing estimates may result in a decline [2] - The consensus EPS estimate for Hilltop Holdings is $0.41 per share, reflecting a year-over-year increase of +32.3%, with revenues projected at $307.62 million, up 3.6% from the previous year [3] Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised 0.67% higher, indicating a collective reassessment by analysts [4] - The Most Accurate Estimate for Hilltop Holdings is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -4.10%, suggesting a bearish outlook from analysts [12] Earnings Surprise History - In the last reported quarter, Hilltop Holdings had an earnings surprise of +132.14%, with actual earnings of $0.65 per share compared to an expected $0.28 [13] - The company has beaten consensus EPS estimates in each of the last four quarters [14] Comparison with Industry Peers - Cadence (CADE), another player in the Zacks Banks - Southeast industry, is expected to report earnings of $0.69 per share, unchanged from the previous year, with revenues projected at $468.8 million, up 2.6% [18] - Cadence has an Earnings ESP of +2.9% and a Zacks Rank of 2 (Buy), indicating a strong likelihood of beating the consensus EPS estimate [20]

Core Viewpoint - Hilltop Holdings (HTH) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it focuses on earnings estimate revisions, which are strongly correlated with near-term stock price movements [2][3]. - Institutional investors rely on earnings estimates to determine the fair value of stocks, leading to significant price movements when estimates change [3]. Company Performance - The upgrade for Hilltop Holdings reflects an improvement in the company's underlying business, suggesting that investor sentiment may drive the stock price higher [4]. - Over the past three months, the Zacks Consensus Estimate for Hilltop Holdings has increased by 21.1%, indicating a positive trend in earnings expectations [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [6]. - Hilltop Holdings' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [9].

Company Overview - Hilltop Holdings Inc. is a financial holding company founded in 1998 and headquartered in Dallas, TX, providing consumer and business banking services through PlainsCapital Bank [12] - The company offers a wide range of financial products and services through its broker-dealers and mortgage origination, employing nearly 3,640 people and operating approximately 316 locations across 47 states as of March 31, 2025 [12] Investment Ratings - Hilltop Holdings is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of A, indicating a solid position in the market [13] - The company has a Momentum Style Score of B, with shares increasing by 0.8% over the past four weeks [13] Earnings Estimates - For fiscal 2025, four analysts have revised their earnings estimates upwards in the last 60 days, with the Zacks Consensus Estimate increasing by $0.32 to $1.86 per share [13] - Hilltop Holdings boasts an average earnings surprise of 68.9%, suggesting strong performance relative to expectations [13] Investment Considerations - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, Hilltop Holdings is recommended for investors' short lists [14]