Hilltop Holdings(US:HTH)2026-01-30 15:00Financial Data and Key Metrics Changes - Hilltop reported net income of approximately $42 million or $0.69 per diluted share for Q4 2025, with a return on average assets of 1.1% and return on average equity of 7.6% [6] - For the full year 2025, consolidated income attributable to common stockholders was $165.6 million, equating to $2.64 per diluted share, representing a growth of 46% [13] - Net interest income grew by 7% year-over-year, while non-interest income increased by 11%, contributing to a 26% improvement in diluted EPS [12] Business Line Data and Key Metrics Changes - PlainsCapital Bank saw an expansion in net interest margin, with a pre-tax income of $43.5 million and a return on average assets of 1.05% [6] - PrimeLending reported a pre-tax loss of $5 million in Q4 2025, despite a seasonally healthy origination volume of $2.4 billion [8] - Hilltop Securities generated pre-tax income of $26 million on net revenues of $138 million, achieving a pre-tax margin of 18% [10] Market Data and Key Metrics Changes - The average total deposits for Q4 2025 were approximately $10.7 billion, declining by $233 million compared to Q4 2024 [18] - Mortgage-related income and fees increased by $2.5 million year-over-year, driven by improvements in lock and originated volumes [20] - Public Finance, Wealth Management, and Structured Finance business lines within Hilltop Securities all generated higher fee income compared to the prior year [21] Company Strategy and Development Direction - Hilltop aims to be a full solution provider to clients, focusing on executing strategic initiatives [11] - The company is actively evaluating acquisition opportunities while also focusing on organic growth [44] - Management expressed optimism about the performance of Public Finance and Wealth Management, expecting continued improvement in these areas [32] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in the market regarding interest rates, inflation, and overall economic health, but remains optimistic about the company's positioning for long-term success [14][27] - The company expects full-year average bank loan growth of 4%-6% for 2026, excluding the impact of loans retained from PrimeLending [25] - Management anticipates that interest-bearing deposit costs will decrease somewhat over the coming quarters [19] Other Important Information - Hilltop returned $229 million to stockholders through share repurchases and common dividends in 2025 [5] - The allowance for credit losses decreased by $3.6 million to $91.5 million during the quarter [14] Q&A Session Summary Question: Expectations for broker-dealer fees and pre-tax margin for 2026 - Management expressed confidence in the stability of broker-dealer fees and indicated that a pre-tax margin of 13.5% is a reasonable baseline for 2026 [31][36] Question: Sensitivity of NII and broker-dealer fees to Fed cuts - Management noted that every 25 basis points reduction in rates could impact NII by about $4.5 million annually, with broker fee income being more variable [38] Question: Capital priorities and M&A opportunities - Management highlighted the increase in dividends and the standard share repurchase authorization, while also evaluating acquisition opportunities in a competitive market [44][45] Question: Loan growth and pricing competition - The loan pipeline entering 2026 is approximately $2.6 billion, with management feeling optimistic about organic loan growth despite pricing competition [55] Question: Gain on sale margins expectations - Management expects total revenue from gain on sale margins and mortgage origination fees to remain stable, with a projected range of 350-360 basis points [57]