Executive Summary

Q3 2025 delivered clean beats: diluted EPS $0.74 and total net revenue ~$332.7M, with consolidated NIM rising to 3.06% and ROAA/ROAE at 1.20%/8.35%; Banking drove results via margin expansion and core loans/deposits growth, while Broker-Dealer posted a robust 18.3% pre-tax margin on $144.5M net revenues .
Mortgage origination remained soft (pre-tax loss $7.2M), though gain-on-sale margins improved; management continues to resize fixed costs and expects seasonal headwinds into Q4/Q1 .
Capital return accelerated: dividend $0.18 and $55.1M buybacks in Q3; authorization increased to $185M (≈$62M capacity remaining) — a potential support for shares amid fundamental stability .
2025 outlook updated: provision guidance lowered (0–10 bps vs 10–25 bps prior); non-variable expenses tighter (+/–1% vs +1–4% prior); NII up 2–4% but now assumes only one Fed cut in 2025, tempering 4Q margin expectations .

What Went Well and What Went Wrong

What Went Well

PlainsCapital Bank: NIM expanded 7 bps QoQ to 3.23% with strong core loan and deposit growth, producing $55M pre-tax income and ROAA 1.34% .
HilltopSecurities breadth: net revenues $144.5M, pre-tax margin 18.3%; strength across Public Finance, Structured Finance, Wealth Management, and Fixed Income drove broad-based fee growth .
Capital deployment: returned $66M to shareholders ($11M dividends, $55M buybacks); board increased buyback authorization to $185M .
- CEO quote: “Hilltop delivered a 1.2% return on average assets... strong core loan and deposit growth... robust net revenues at HilltopSecurities” .

What Went Wrong

Mortgage origination: pre-tax loss of $7.2M; summer home-buying season was dampened, origination fees under pressure despite margin improvement (as-reported gain-on-sale 234 bps) .
Expense friction: consolidated noninterest expense rose to $271.9M (+4% QoQ, +3% YoY), largely variable comp tied to fee businesses; efficiency ratio still elevated at 82.3% .
Auto lending risk tail: portfolio down materially since 2021, two relationships (~$30.2M) in non-accrual; management actively working out exposure amid sector stress .

Financial Results

Revenue and EPS vs Prior Periods and Estimates

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions) - Actual	$306.8	$309.1	$310.6	$332.7
Revenue Consensus Mean ($USD Millions)*	$301.2	$286.7	$308.8	$310.6
Surprise ($USD Millions)	+$5.6	+$22.5	+$1.9	+$22.1
EPS Diluted - Actual ($)	$0.46	$0.65	$0.57	$0.74
Primary EPS Consensus Mean ($)*	$0.368	$0.465	$0.465	$0.505
Surprise ($)	+$0.092	+$0.185	+$0.105	+$0.235

Values retrieved from S&P Global for estimates and actual revenue (no citations).
Company EPS actuals cited to press releases.

Margins and Return Metrics

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Net Interest Margin (Consolidated)	2.84%	2.84%	3.01%	3.06%
ROAA	0.84%	1.13%	0.98%	1.20%
ROAE	5.51%	7.82%	6.62%	8.35%
Book Value per Share ($)	$33.51	$34.29	$34.90	$35.69

Segment Breakdown – Q3 2025

Segment	Net Interest Income ($M)	Noninterest Income ($M)	Noninterest Expense ($M)	Income Before Taxes ($M)
Banking	$96.846	$11.001	$55.778	$54.690
Broker-Dealer	$12.662	$131.832	$117.912	$26.472
Mortgage Origination	$(2.051)	$76.608	$81.791	$(7.234)
Corporate/Other	$0.443	$3.081	$16.672	$(13.148)

KPIs

KPI	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Mortgage Origination Volume ($B)	$2.307	$1.742	$2.433	$2.297
Gain-on-Sale (As Reported, bps)	224	224	228	234
Loans Sold to Third Parties (bps)	218	222	223	226
Consolidated NIM (%)	2.84%	2.84%	3.01%	3.06%
Banking NIM (%)	3.05%	2.97%	3.16%	3.23%
Non-accrual Loans ($M)	$91.2	$81.5	$72.7	$68.3
Total Deposits ($B)	$10.791	$11.066	$10.392	$10.675
Est. Uninsured Deposits (% of total)	59%	52% (44% excl. collateral/internal)	50% (43% excl. collateral/internal)	54% (45% excl. collateral/internal)

Guidance Changes

Metric	Period	Previous Guidance (Q2 2025)	Current Guidance (Q3 2025)	Change
Average Bank Loans (ex-warehouse/retained)	FY 2025	0–2% increase	0–2% increase	Maintained
Average Bank Deposits	FY 2025	0–2% increase	0–2% increase	Maintained
Net Interest Income	FY 2025	+2–4%; assumes two Fed cuts in 2025	+2–4%; assumes one Fed cut in 2025	Assumption lowered (cuts)
Noninterest Income	FY 2025	Broker-Dealer fees −0–2%; Mortgage $8–$9B	Broker-Dealer fees −0–2%; Mortgage $8–$9B	Maintained
Non-variable Expenses	FY 2025	+1–4%	Stable (+/–1%)	Lowered
Provision / Avg Loans HFI	FY 2025	10–25 bps	0–10 bps	Lowered
Effective Tax Rate (GAAP)	FY 2025	22–24%	22–24%	Maintained
Dividend	Q3 2025	$0.18 declared prior quarter	$0.18 declared, payable Nov 21	Maintained
Share Repurchase Authorization	2025 Program	$135M authorized (subject to Fed non-objection)	Increased to $185M; ~$62M capacity remaining	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1/Q2)	Current Period (Q3 2025)	Trend
NII/NIM outlook & deposit betas	NIM recovery from 2.84% to 3.01%; deposit costs falling; betas ~70% in cut cycle	NIM 3.06%; internal outlook: +25 bps Fed cut in Q4 then two cuts in 1H26; deposit betas expected to decline but stay >60%	Improving NIM; cautious near term on rate cuts
Mortgage market	Seasonal weakness Q1; volumes stabilized at lower level; legal settlement benefit in Q2	Summer demand dampened; fees under pressure; margins up; cost takeout ongoing; expect seasonal weakness into Q4/Q1	Slow recovery with margin improvement
Broker-Dealer breadth	Public Finance strength; mixed contributions across lines in Q2	Broad-based strength; 18.3% pre-tax margin; expectation to revert to low-teens margins as episodic items fade	Above-trend quarter; normalizing ahead
Credit/ACL posture	Elevated provision in Q1, reversal in Q2; ACL % 1.22%	Reversal $2.5M; ACL down to $95.2M; improved collective reserves; monitoring non-depository FI exposure (2.4%)	Stable-to-improving
Auto finance exposure	Down since 2021; 2 relationships in non-accrual at Q2	Portfolio in runoff; 2 relationships (~$30.2M) remain non-accrual; subprime exposure acknowledged; reserved/managed	Managed wind-down
Leadership changes (Bank credit)	—	PlainsCapital CCO retirement; internal promotions to CCO and Dallas chair	Transition with bench strength
Government shutdown impacts	—	Limited impact on broker-dealer; some SBA/USDA processing delays in mortgage	Operational delays, manageable

Management Commentary

CEO Jeremy Ford: “PlainsCapital Bank… strong core loan and deposit growth… healthy net interest margin expansion… HilltopSecurities resulted in a pre-tax margin of 18% on net revenues of $144 million” .
CFO Will Furr: “Net interest income… $112M; NIM increased… to 306 bps; deposit betas averaged ~70%… expected to gradually decline but remain above 60%” .
On credit quality: “ACL declined… coverage ratio 1.16%; improvement in collective reserves and economic scenario” .
On mortgage: “Volumes remained under pressure… margins improved… continuing to optimize cost and productivity to restore standalone profitability” .

Q&A Highlights

NII guidance: Not raised due to expected immediate step-down from rate cut on cash and adjustable-rate loans while deposit repricing lags; loan growth/pipeline good but paydowns offset; new commercial originations ~6.9% yields .
Buybacks/M&A: Authorization raised to lean into repurchases given valuation and excess capital; Texas banking dislocation seen as an opportunity for client/banker acquisition rather than out-of-market M&A .
Auto lending: Portfolio runoff continues; two non-accrual relationships acknowledged with subprime exposure, appropriately reserved; no direct exposure to a recently publicized troubled name .
Broker-Dealer run-rate: Strong Q3 across all lines; management expects reversion toward low-teens pre-tax margins; sweep revenues to decline with rate reductions .
Government shutdown: Minimal primary impact on broker-dealer; SBA/USDA processing delays noted in mortgage .

Estimates Context

Q3 2025: EPS $0.74 vs consensus $0.505 — bold beat; revenue ~$332.7M vs $310.6M — bold beat, driven by bank NIM expansion and outsized broker-dealer net revenue breadth .
Q2 2025: EPS $0.57 vs $0.465 — beat; revenue ~$310.6M vs $308.8M — slight beat; mortgage legal settlement benefited Q2 noninterest income .
Q1 2025: EPS $0.65 vs $0.465 — beat; revenue ~$309.1M vs $286.7M — beat; merchant banking gain supported results .

Values retrieved from S&P Global for consensus and actual revenue (no citations).

Implications: Street models likely need higher broker-dealer fee trajectories (near term) and modestly higher consolidated NIM, partly offset by management’s caution on Q4 linked-quarter margin given rate-cut sensitivity and seasonal mortgage weakness .

Key Takeaways for Investors

Mix-driven beat: Bank NIM expansion and a broad-based broker-dealer quarter delivered outsized revenue/EPS surprises; expect broker-dealer margins to normalize toward low-teens, tempering extrapolation .
Mortgage headwinds persist: Seasonal and affordability constraints keep fee income under pressure; margin tailwinds and cost actions mitigate but near-term Q4/Q1 seasonality is a drag .
Credit stable: ACL coverage 1.16%, NPAs down to $76.5M; auto note exposure being worked down; watch C&I/CRE credit migration amid competitive Texas lending landscape .
Capital return catalyst: Increased buyback authorization ($185M) and ongoing repurchases provide downside support; dividend maintained at $0.18 .
NII cadence: Deposit betas to decline gradually but remain >60%; asset sensitivity implies near-term margin step-down if rates cut in Q4; models should reflect timing asymmetry on repricing .
Guidance constructive: Provision guidance lowered, non-variable expense tighter; mortgage volume and broker-dealer fee outlooks steady; implies disciplined 2025 execution .
Trading setup: Near-term pullbacks on rate-cut margin optics or broker-dealer normalization could be opportunities given excess capital, improving bank margin, and controlled credit.

Notes:
* Estimates and actual revenue values retrieved from S&P Global (no citations).

Hilltop Holdings Inc. (HTH)·Q3 2025 Earnings Summary