• Net Income: $42 million, or $0.65 per diluted share.
• Return on Average Assets: 1.1%.
• Return on Average Equity: 7.8%.
• PlainsCapital Bank Pre-Tax Income: $40 million on $13 billion of average assets.
• Average Core Deposits Increase: Nearly $300 million year-over-year.
• Provision for Credit Losses: $9 million.
• Net Interest Margin: 2.97%.
• PrimeLending Pre-Tax Loss: $8 million.
• PrimeLending Origination Volume: $1.7 billion.
• HilltopSecurities Pre-Tax Income: $9 million on net revenue of $109 million.
• Merchant Bank Gain on Sale: $23.6 million, or $0.37 per diluted share.
• Insurance Recovery Impact: $5 million, or $0.08 per diluted share.
• Common Equity Tier 1 Capital Ratio: 21%.
• Tangible Book Value Per Share: Increased by $0.53 to $30.
• Dividends and Share Repurchases: $12 million in dividends and $33 million in share repurchases.
• Allowance for Credit Losses: Increased by $5 million to $106 million.
• Net Interest Income: $105 million.
• Total Non-Interest Income: $213.3 million.
• Average Total Deposits: Approximately $10.9 billion.
• Non-Interest Expenses: Impacted by $11.3 million from Moser sale and $6.5 million legal recovery.
• Average HFI Loans: $7.9 billion.
• Net Charge-Offs: $4.3 million.

• Warning! GuruFocus has detected 1 Warning Sign with HTH.

Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hilltop Holdings Inc (NYSE:HTH) reported a net income of $42 million, or $0.65 per diluted share, for the first quarter of 2025.
• PlainsCapital Bank generated $40 million of pre-tax income on $13 billion of average assets, demonstrating strong performance.
• HilltopSecurities saw a 34% year-over-year increase in net revenues from Public Finance Services.
• The company maintained a strong capital position with a common equity Tier 1 capital ratio of 21%.
• Hilltop Holdings Inc (NYSE:HTH) returned $12 million to stockholders through dividends and repurchased $33 million in shares during the quarter.

Negative Points

• The mortgage origination segment continues to face challenges due to ongoing constraints in the mortgage market.
• PrimeLending reported a pre-tax loss of $8 million during the first quarter, with origination volumes under pressure.
• HilltopSecurities experienced a decline in net revenues from the Fixed Income Services line of business.
• The bank recorded a $9 million provision for credit losses due to negative risk rating migration within the portfolio.
• Average total deposit balances at PlainsCapital Bank decreased during the quarter, primarily due to expected seasonal outflows and repositioning by large balance customers.

Q & A Highlights

Q: How big was the office credit that was downgraded in the quarter, and what drove the improvement in classified loans? A: The office credit that was downgraded was about $18 million. The improvement in classified loans was due to a series of smaller credits migrating positively, with nothing of significant consequence. - William Furr, Executive Vice President, Chief Financial Officer

Q: With deposit costs moving lower, is there capacity to reduce them further, and can the net interest margin (NIM) improve? A: We've taken advantage of the 100 basis points reduction by the Federal Reserve and are looking to minimize deposit costs while growing customer deposits. If the Fed moves further, deposit rates could lower, but the largest portion of work has been completed. NIM has stabilized due to the upward-sloping yield curve, and we feel comfortable with the current levels. - William Furr, Executive Vice President, Chief Financial Officer

Q: Should we expect a reversal of the seasonal commercial outflows of deposits in the second quarter of 2025? A: After the tax season impact in April, we generally see core customer deposits start to build and rebuild through the balance of the year, with growth expected from customer deposits and client acquisition. - William Furr, Executive Vice President, Chief Financial Officer

Q: Are there any early signs that could support a rebound in Structured Finance this quarter? A: The most significant driver of incremental activity would be additional support from state budgets for downpayment assistance programs, which we generally hear about in the middle of the year. - William Furr, Executive Vice President, Chief Financial Officer

Q: How has the volatility in the bond markets impacted HilltopSecurities, and what are the expectations if it continues? A: The volatility, especially from tariff announcements, impacted the municipal portfolio and trading results in early April. We are managing through it, but it has been challenging. - William Furr, Executive Vice President, Chief Financial Officer

Q: What is the outlook for loan growth, and how does mortgage retention play into this? A: The pipeline and customer activity remain strong, but pull-through rates are challenged. We expect to retain $20 million to $30 million per month in mortgage retention, leading to modest growth in the one-to-four family portfolio. - Jeremy Ford, President, CEO, Director, CEO of PlainsCapital Bank and William Furr, Executive Vice President, Chief Financial Officer

Q: Will Hilltop continue repurchasing stock given the current market conditions? A: We have a $100 million authorization and have repurchased $33 million so far. We are evaluating our trading value and considering further repurchases. - Jeremy Ford, President, CEO, Director, CEO of PlainsCapital Bank

Q: How much of the improvement in expenses was due to the insurance recovery, and what is the expected run rate for fixed expenses? A: The insurance recovery certainly benefits, but the team has worked hard to keep expenses stable. The expected run rate for fixed expenses is in the $185 million to $190 million range, excluding variable compensation. - William Furr, Executive Vice President, Chief Financial Officer

For the complete transcript of the earnings call, please refer to the full earnings call transcript.