HTH — Hilltop Holdings Inc.

Summary of Hilltop Holdings Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Income: $38 million, or $0.64 per diluted share.
• Return on Average Assets: 1%.
• Return on Average Equity: 7.1%.
• Net Interest Income: $112 million, up 6.7% year-over-year.
• Net Interest Margin: 3.38%.
• Average Loans Held for Investment (HFI): $8.3 billion, a 2.7% increase from Q4 2025.
• Total Deposits: Approximately $10.6 billion, a decline of $82 million (less than 1%) from Q4 2025.
• Tangible Book Value per Share: Increased to $31.97.
• Common Equity Tier 1 Capital Ratio: 19.1%.

2. Strategic Updates and Business Highlights

• PlainsCapital Bank: Continued expansion in net interest margin and growth in core loans and deposits. Achieved $47 million in pretax income.
• PrimeLending: Narrowed operating loss to $2 million, benefiting from higher origination volumes despite ongoing challenges in the mortgage market.
• HilltopSecurities: Generated $15 million in pretax income, with strong performance in public finance and fixed income services.
• Capital Management: Returned $11.8 million to shareholders through dividends and repurchased $47.5 million in shares.

3. Forward Guidance and Outlook

• Loan Growth: Expected full-year average HFI loan growth of 4% to 6%.
• Mortgage Production: Maintaining guidance of $9 billion to $10 billion for the year, though caution is advised due to potential impacts from interest rates and geopolitical tensions.
• Net Interest Income (NII): Anticipates two additional Fed rate cuts in 2026, which could impact NII positively by $8 million to $10 million if no cuts occur.
• Expense Management: Non-variable expenses expected to grow modestly by 0% to 2% due to inflation and investments in technology and personnel.

4. Bad News, Challenges, or Points of Concern

• Deposit Declines: Total deposits decreased by $347 million from the previous quarter, attributed to seasonal outflows from public entity and commercial clients.
• Mortgage Market Volatility: Ongoing geopolitical tensions and rising interest rates are creating uncertainty in mortgage demand, particularly in the spring and summer months.
• Credit Quality: A $1.8 million provision expense was noted, primarily related to stressed auto note credits. Nonperforming assets increased slightly.
• Competitive Pressures: Intense competition in the deposit market may necessitate higher interest rates, impacting margins.

5. Notable Q&A Insights

• NII Guidance: Analysts inquired about the increase in NII guidance, with management citing solid loan growth and improved deposit beta.
• Mortgage Outlook: Management expressed cautious optimism regarding mortgage volumes, acknowledging potential softness due to external factors.
• Capital Priorities: Share buybacks remain a focus, with M&A considered if compelling opportunities arise.
• Expense Management: Non-variable expenses are expected to remain stable, with ongoing investments in technology and personnel to drive productivity.

Overall, Hilltop Holdings reported a solid first quarter with growth in key areas, but faces challenges from external economic factors, particularly in the mortgage sector and competitive deposit pressures.