Hilltop (NYSE:HTH) outlined improved full-year profitability and steady momentum across its banking and broker-dealer operations while acknowledging continued pressure in the mortgage business, according to management’s remarks on the company’s fourth-quarter 2025 earnings call held Friday.
Full-year 2025 performance and macro backdrop
CEO Jeremy Ford said 2025 was marked by a decline in short-term interest rates after the Federal Open Market Committee cut its target rate three times, totaling 75 basis points. He added that the yield curve steepened further during the year as long-term rates, including the 10-year Treasury, remained “range-bound between 4%–4.5%.” Ford said Hilltop benefited from the steeper curve, which contributed to higher net interest income and net interest margin (NIM).
At Hilltop Securities, Ford said strong execution in core businesses produced a 13.5% pre-tax margin on net revenue of $501 million for 2025. He also noted that Hilltop returned $229 million to stockholders through dividends and share repurchases while delivering $166 million of net income, up 46% year over year.
Fourth-quarter results: earnings, margin, and capital
For the fourth quarter, Hilltop reported net income attributable to common stockholders of $41.6 million, or $0.69 per diluted share. Ford said return on average assets was 1.1% and return on average equity was 7.6%.
CFO Will Dunham said the quarter included a $7.8 million provision for credit losses, reflecting net charge-offs and a “modest deterioration” in the economic outlook. Dunham also said net interest income grew 7% year over year and non-interest income rose 11%, contributing to a 26% improvement in diluted EPS compared to the prior-year quarter.
Hilltop ended the quarter with a Common Equity Tier 1 capital ratio of 19.7%. Ford said tangible book value per share increased $0.60 sequentially to $31.83. During the quarter, Hilltop returned $11 million through dividends and repurchased $61 million in shares.
Banking: deposit costs, loan growth, and credit items
PlainsCapital Bank generated $43.5 million of pre-tax income in the quarter and a 1.05% return on average assets, Ford said. He added that bank NIM expanded to 329 basis points, largely due to active management of deposit costs. Dunham reported consolidated net interest margin rose 30 basis points year over year to 302 basis points.
Dunham said Hilltop’s interest-bearing deposit beta through this part of the cycle has been 68%, and management expects it could fall toward 60%–65% if the Federal Reserve reduces rates an additional two to three times. He said average interest-bearing deposit cost declined 21 basis points from the third quarter to 269 basis points and that management expects deposit costs to move “somewhat lower” in coming quarters before stabilizing absent further Fed action.
On balance sheet trends, Dunham said fourth-quarter average total deposits were about $10.7 billion, down $233 million from the prior-year quarter, driven by the decision to return sweep deposits to Hilltop Securities for its FDIC-insured sweep program. Ford said core deposits in bank markets increased, allowing an additional $225 million of sweep deposits to be returned to the broker-dealer; the sweep balance was $100 million at quarter-end, down 82% from year-end 2024.
Loan growth was a key focus in the Q&A. Management said the loan pipeline entering 2026 is about $2.6 billion, “on the high side” for the company. Dunham said average held-for-investment (HFI) loans were $8.2 billion, up 1.8% sequentially, and period-end HFI loans rose $361 million from the prior-year quarter, driven by commercial real estate lending. Looking ahead, Dunham said Hilltop expects full-year 2026 average bank loan growth of 4%–6%, excluding loans retained from PrimeLending and mortgage warehouse lending. Executives also noted loan pricing pressure, with management citing a roughly 35-basis-point decline in “going-in yield” in the quarter amid the lower-rate environment.
On credit, Dunham said the allowance for credit losses declined $3.6 million to $91.5 million, while net charge-offs totaled $11.5 million during the quarter. The largest items were $9.5 million of write-downs tied to two auto note credits previously discussed on earlier calls. Dunham said expected cash flows for the underlying loan portfolios declined substantially, prompting management to mark the assets to updated fair value and recognize charge-offs rather than carry an “outsized allowance.” He said about $5.7 million of the charge-offs had been previously reserved. At year-end, the allowance for credit losses was 1.1% of total HFI loans. For the full year, net charge-offs were $16.9 million, or 21 basis points of average HFI loans, and Dunham said management does not currently see “any large systemic areas of concern” in the portfolio.
Mortgage and broker-dealer: mixed trends and 2026 expectations
PrimeLending posted a fourth-quarter pre-tax loss of $5 million. Ford said origination volume was a “seasonally adjusted” $2.4 billion, benefiting from a decline in mortgage rates and a modest rebound from subdued second- and third-quarter activity. However, he said broader industry headwinds continue to weigh on volumes and margins, and management expects the first quarter to be seasonally slow. Dunham reported mortgage-related income and fees increased $2.5 million year over year, with refinance volumes up $168 million, or 49%, while purchase volumes were relatively stable at $1.9 billion. He said gain-on-sale margins improved 19 basis points on third-party loan sales versus the prior-year quarter, but origination fees fell 25 basis points as customer demand to buy down mortgage rates diminished alongside lower rates.
Asked about forward margins, management said it expects total revenue from gain-on-sale margins and origination fees combined to be stable, with an aggregate “350–360 basis point” range as its expectation, while reiterating that it anticipates a steady improvement in the mortgage market rather than a sharp rebound.
Hilltop Securities reported pre-tax income of $26 million on net revenues of $138 million, for an 18% pre-tax margin in the quarter. Ford said wealth management, public finance, and structured finance all delivered positive results. Public finance net revenues were up 20% year over year, structured finance increased by $2 million versus the fourth quarter of 2024 (with higher lock volumes offsetting lower trading revenue), and wealth management net revenues rose 16% to $53 million, supported by higher advisory fees and improved transaction revenue. Ford also cited sweep deposit revenues as a continued tailwind.
On 2026 expectations for Hilltop Securities, management said it feels “very good” about the franchise. Executives said they expect public finance to remain reasonably strong, see moderation and improvement in fixed income services relative to investments made, view wealth management as positioned to improve over time though market-dependent, and expect structured finance demand to track first-time homebuyers and housing agency activity. Management reiterated that the segment’s pre-tax margin has been consistently about 13.5% in recent years and referenced a historical guidance range of 10%–14%.
Capital deployment and rate sensitivity
During Q&A, management discussed capital priorities, pointing to an 11% dividend increase and a $125 million share repurchase authorization for 2026 that executives described as “pretty standard” for the beginning of the year. On M&A, management said it continues to evaluate acquisition opportunities while also focusing on organic growth and potential market dislocation from ongoing deal activity in Texas. Executives also said the company remains open to partnering with a larger institution if it is in shareholders’ best interest, while noting Hilltop’s business model differs from more “pure play” banks, which may limit the universe of potential acquirers.
Regarding interest rates, management said the company has worked to reduce asset sensitivity, citing modeled asset sensitivity of “just over 4%” on an instantaneous and parallel basis. Executives said that in that environment, each 25-basis-point move equates to roughly $4.5 million of net interest income on an annual basis. They added that broker-fee income has offsetting factors in different rate environments, and rate moves could pressure sweep income by “single-digit millions” of dollars. Management also said the lack of Fed action in January was viewed as constructive for the first quarter, though it noted continued exposure to rate cuts given the company’s remaining asset-sensitive balance sheet.
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.
