Executive Summary

Hilltop delivered EPS of $0.57 and ROA of 0.98%, with NIM expanding to 3.01% as deposit costs declined; a $7.3M reversal of credit losses and higher banking NII drove the quarter .
EPS beat S&P Global consensus ($0.57 vs $0.465*) and revenue modestly exceeded consensus ($310.65M* vs $308.80M*); management cautioned NII to run “a few million” per quarter below Q2 levels going forward .
Board declared a $0.18 dividend and increased buyback authorization to $135M; HTH repurchased $34.9M (~1.16M shares @ $30.17) in Q2 .
PlainsCapital’s NIM rose 19 bps QoQ; HilltopSecurities net revenue +5% YoY but pre-tax margin compressed to 5.8% amid rate volatility; PrimeLending posted $3.2M pre-tax including a $9.5M one-time legal settlement .
Catalysts: continued NIM stabilization, credit normalization, buyback capacity, and public finance strength vs. watch items (fee pressure in mortgage, broker-dealer volatility, deposit seasonality) .

What Went Well and What Went Wrong

What Went Well

Banking NIM expanded 19 bps QoQ; management: “PlainsCapital Bank’s net interest margin expanded by 19 basis points as we continued to proactively manage deposit costs” .
Credit normalized: $7.3M reversal of credit losses; ACL down $8.2M with upgrades and a change to Moody’s Baseline Scenario .
Capital returns: $47M returned via dividends and buybacks; authorization raised to $135M; repurchased $34.9M in Q2 .
Quote: “As we move into the second half… prioritize protecting our balance sheet and executing on our strategic priorities” — Jeremy Ford .

What Went Wrong

Broker-dealer margin compressed to 5.8% despite net revenue growth; rate volatility weighed on profitability .
Mortgage fees under pressure: net gains/fees down 13.1% YoY to $80.7M; margins stable but competitive environment pressed origination fees .
Deposits declined QoQ to $10.4B due to seasonal outflows; uninsured deposits ~50% (43% ex collateralized/internal) remained elevated .
Analyst concerns: fixed expense inflation (personnel, software), broker-dealer efficiency ratio/ severance, and NII moderation outlook .

Financial Results

Consolidated Performance vs Prior Periods

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$306.93*	$309.12*	$310.65*
Diluted EPS (GAAP)	$0.55	$0.65	$0.57
Net Interest Margin %	2.72%	2.84%	3.01%
Return on Avg Assets %	0.92%	1.13%	0.98%
Return on Avg Equity %	6.50%	7.82%	6.62%

Values retrieved from S&P Global.

P&L Components

Metric ($USD Millions)	Q4 2024	Q1 2025	Q2 2025
Net Interest Income	$105.48	$105.12	$110.67
Noninterest Income	$195.59	$213.34	$192.63
Noninterest Expense	$262.76	$251.47	$261.18
Effective Tax Rate %	14.2%	22.7%	23.4%

Segment Breakdown (Q2 2025)

Segment	Net Interest Income (Expense)	Noninterest Income	Noninterest Expense	Income (Loss) Before Taxes
Banking	$94.92	$11.89	$59.23	$54.93
Broker-Dealer	$13.15	$96.50	$103.25	$6.40
Mortgage Origination	$(2.30)	$90.25	$84.74	$3.21
Corporate	$(0.17)	$(0.63)	$14.29	$(15.08)
Eliminations	$5.07	$(5.38)	$(0.32)	$0.02
Hilltop Consolidated	$110.67	$192.63	$261.18	$49.47

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Total Deposits ($B)	$11.07	$10.83	$10.39
Est. Uninsured Deposits (% of Total)	52%	52% (44% ex collateral/internal)	50% (43% ex collateral/internal)
Loans Held for Sale ($B)	$0.86	$0.82	$0.98
Non-accrual Loans ($M)	$88.1	$81.5	$72.7
Non-accrual Loans (% of Total Loans)	1.00%	0.93%	0.80%
CET1 (%)	21.23%	21.29%	20.74%
Mortgage Originations ($B)	$2.25	$1.74	$2.43
Gain on Sale (bps, as reported)	221	224	228
Book Value/Share ($)	$33.71	$34.29	$34.90

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Avg Loan Growth (HFI)	FY 2025	0%–3%	0%–2%	Lowered
Net Interest Income run-rate	2H 2025	“Stabilized at these levels” (around recent quarters)	“Likely stabilize a few million per quarter lower than Q2’s $110.7M”	Lowered
Rate Outlook	FY 2025	2 additional cuts in 2025	2 cuts (one in Q3, one in Q4)	Maintained (timing specified)
Deposit Beta (through cycle)	FY 2025	Model 55%	Expect decline toward 50–55% with more cuts	Maintained
Mortgage Production Volume	FY 2025	$8B–$9.5B	No explicit update; margins stable near ~223 bps; fees pressured	Maintained
Share Repurchase Authorization	2025 Program	$100M	$135M (subject to Fed non-objection)	Raised
Dividend per Share	Q2 2025	$0.18	$0.18 (payable Aug 29; record Aug 15)	Maintained

Earnings Call Themes & Trends

Topic	Q4 2024	Q1 2025	Q2 2025	Trend
NIM / Deposit Beta	NIM 2.72%	NIM 2.84%; 64% beta realized on first 100 bps	NIM 3.01%; 72% beta realized; moderation expected	Improving, moderating ahead
Mortgage Market	$2.25B originations; margins 221 bps	$1.74B; margins 224 bps; fixed expense −12% YoY	$2.43B; margins 228 bps; fees pressured; $9.5M legal benefit	Gradual volume recovery; margin stable; fees pressured
Broker-Dealer	Strong structured finance & wealth; 16.1% pre-tax margin	Fixed income under pressure; 8.5% margin	Public finance +36% YoY; 5.8% margin; rate volatility weighed	Mixed; margin compressed
Credit Quality	Reversal $5.9M; NPA 0.56%	Provision $9.3M; office downgrade $18M	Reversal $7.3M; ACL −$8.2M; upgrades; Moody’s Baseline	Improving normalization
Capital Return / M&A	New $100M buyback	Repurchased $33M	Repurchased $34.9M; authorization to $135M; open to cash M&A; shares trade at discount (management)	Increasing buybacks; opportunistic M&A

Management Commentary

Jeremy Ford: “Hilltop delivered a 1% return on average assets and returned $47 million to stockholders... PlainsCapital Bank’s net interest margin expanded by 19 basis points… HilltopSecurities produced a 5% year-over-year improvement… PrimeLending had pre-tax income of $3.2 million on $2.4 billion of mortgage origination volume… includes a one-time pre-tax benefit of $9.5 million” .
Will Furr: “We expect that NIM levels will moderate at current levels and that net interest income will likely stabilize at a few million dollars per quarter lower than what we recorded during the second quarter” .
Will Furr: “Interest bearing deposit costs declined… 72% interest bearing deposit beta… with additional rate reductions… betas decline towards… 50 to 55%” .
Jeremy Ford: “We bought about $68 million of our stock… our board just authorized increasing our share repurchase by $35 million… anticipation is… continue to work towards that” .

Q&A Highlights

Broker-dealer margin drivers: revenue mix shift and ~$1.5M severance impacted margin .
Expense outlook: inflation in personnel and software drives fixed expense guidance higher despite mortgage fixed cost cuts .
Deposit/NIM dynamics: achieved 72% beta via improved analytics and more rational market; expect betas to trend toward 50–55% with more cuts .
Loan growth: pipelines strong; CRE growth offset by intentional C&I runoff (auto note); full-year average loan growth trimmed to 0–2% .
Capital return/M&A: continued buybacks; open to cash deals; noted stock trades at discount to tangible book .
Deposits seasonality: outflows tied to public funds and tax season, expected rebuild in 2H .

Estimates Context

Metric	Q4 2024	Q1 2025	Q2 2025
Primary EPS Consensus Mean	$0.28*	$0.465*	$0.465*
Revenue Consensus Mean ($USD)	$286.72M*	$286.66M*	$308.80M*
Primary EPS – # of Estimates	4*	4*	4*
Revenue – # of Estimates	4*	4*	4*
Actual Diluted EPS (GAAP)	$0.55	$0.65	$0.57
Actual Revenue ($USD)	$306.93M*	$309.12M*	$310.65M*

Values retrieved from S&P Global. Note: S&P’s “Primary EPS” may reflect normalized/continuing operations and can differ from GAAP diluted EPS reported in company filings.

Q2 2025: EPS beat (GAAP $0.57 vs $0.465* consensus) and revenue beat ($310.65M* vs $308.80M*).
Prior quarters show actual revenue consistently above consensus; EPS outcomes vary by GAAP vs normalized basis.

Key Takeaways for Investors

NIM expansion to 3.01% and deposit cost decline underpin core earnings; management expects NII to run “a few million” below Q2’s $110.7M in coming quarters, tempering near-term upside .
Credit normalization (−$7.3M provision), falling non-accruals to 0.80% of loans, and ACL improvements reduce tail risk and support valuation .
Broker-dealer momentum in public finance and wealth continues, but blended margin sensitive to rate volatility; expect continued variability in structured/fixed income .
Mortgage segment: volumes improved to $2.43B and gain-on-sale reached 228 bps, yet origination fees remain under pressure; one-time $9.5M legal benefit elevated Q2 results .
Capital returns accelerate: $135M buyback authorization and $0.18 dividend sustained; Q2 repurchases of $34.9M signal confidence and provide support at/near tangible book .
Guidance reset: loan growth trimmed to 0–2% and NII moderation anticipated; deposit beta expected to normalize toward 50–55% with additional Fed cuts .
Near-term trading lens: EPS/revenue beats and buyback increase are positives; watch for broker-dealer margin recovery, deposit inflow seasonality, and confirmation of NII trajectory in 2H.

Hilltop Holdings Inc. (HTH)·Q2 2025 Earnings Summary