Hilltop Holdings Q2 2025: Contradictions Unraveled on Deposit Beta, Loan Growth, and Mortgage Expenses

Deposit beta assumption, deposit cost and NIM improvement, loan growth expectations, mortgage expense outlook, deposit beta and interest rate sensitivity are the key contradictions discussed in Hilltop Holdings Inc.'s latest 2025Q2 earnings call.



Net Income and Earnings per Share:
- Hilltop Holdings reported net income of approximately $36 million or $0.57 per diluted share for Q2 2025.
- The decline in earnings per share was due to reduced loan demand and competitive pressures in the mortgage origination market.

Net Interest Margin and Loan Growth:
- PlainsCapital Bank's net interest margin increased by 19 basis points in Q2, driven by a 9 basis points decline in blended cost of deposits and a 5 basis points rise in loan yields.
- Despite steady customer demand in Texas, stiff competition in the markets is expected to dampen loan growth in the near term.

PrimeLending's Performance:
- PrimeLending reported a pretax gain of $3 million in Q2, with a nonrecurring legal settlement of $9.5 million positively impacting results.
- The business continues to face challenges from elevated home prices, persistently high interest rates, and affordability issues, impacting margins and production volumes.

Deposit Flows and Cost Management:
- Average total deposit balances at PlainsCapital declined during the quarter due to seasonal outflows primarily in higher-yielding products.
- The bank achieved a 72% interest-bearing deposit beta during the initial 100 basis points of the rate cycle, reflecting effective pricing strategies.

Capital Management and Share Repurchases:
- Hilltop returned over $46 million to stockholders through dividends and share repurchases in Q2, with $35 million repurchased in shares.
- The company has authorized an additional $35 million for share repurchases in 2025, with the potential for more cash-type M&A deals due to the stock trading at a discount on a tangible book value basis.