Hilltop Holdings Q1 2025 presentation: EPS jumps 55%, returns $45M to shareholders

Introduction & Market Context

Hilltop Holdings Inc (NYSE:HTH) reported strong first-quarter 2025 results on April 25, with earnings per share increasing 55% year-over-year, according to the company’s latest investor presentation. The financial services holding company, which operates through its PlainsCapital Bank, PrimeLending, and HilltopSecurities segments, saw its stock close at $29.29 on April 24, up 1.17% for the day, though premarket trading on April 25 indicated a 2.36% decline.

The company’s performance comes amid a challenging interest rate environment, where Hilltop has managed to maintain stable net interest income while significantly growing noninterest revenue streams. The results build on momentum from Q4 2024, when the company beat analyst expectations with an EPS of $0.55 against a forecasted $0.30.

Quarterly Performance Highlights

Hilltop reported net income of $42.1 million for Q1 2025, representing a 52% increase from the same period last year. Diluted earnings per share reached $0.65, up 55% year-over-year, while return on average assets and return on average equity improved to 1.13% and 7.82%, respectively.

As shown in the following comprehensive financial summary:

The company’s pre-provision net revenue surged 90% year-over-year to $67.0 million, driven by a 17% increase in noninterest income to $213.3 million. Net interest income remained relatively stable at $105.1 million, up 1% from Q1 2024, while noninterest expenses were well-controlled at $251.5 million, also up just 1% year-over-year.

It’s worth noting that Q1 results benefited from two nonrecurring items: a preliminary gain on the sale of operations by a merchant banking investment ($30.5 million pre-tax) and an insurance recovery at PlainsCapital Bank ($6.5 million pre-tax).

Segment Performance Analysis

Hilltop’s performance varied across its three main business segments, with banking operations providing the most substantial contribution to overall results.

The company’s PlainsCapital Bank segment generated $40.1 million in pre-tax income, maintaining a stable net interest margin of 2.97%. Average loans held for investment decreased slightly by $8 million (0.1%), while average deposits decreased by $191 million (1.7%) from the previous quarter.

As illustrated in the banking segment highlights:

Meanwhile, the PrimeLending mortgage segment reported a pre-tax loss of $8.3 million, though there were positive indicators including a 4% increase in origination volume to $1.7 billion and a 5% reduction in non-interest expenses. The segment also saw gain-on-sale margins improve by 6 basis points from Q4 2024.

The HilltopSecurities segment contributed $9.2 million in pre-tax income on total net revenue of $108.5 million, resulting in a pre-tax margin of 8.5%. However, net revenue declined by $8.3 million compared to the previous quarter.

Capital Management & Shareholder Returns

Hilltop demonstrated its commitment to shareholder returns by distributing $44.9 million to stockholders during Q1 2025, including $11.6 million in dividends and $33.3 million in share repurchases. The company has maintained a strong capital position, with tangible book value per share reaching $30.02 as of March 31, 2025, compared to $27.18 at the end of 2022.

The following chart illustrates Hilltop’s consistent growth in tangible book value and capital management:

The company’s allowance for credit losses to total loans held for investment ratio stood at 1.33% as of March 31, 2025, slightly up from 1.29% a year earlier. This reflects Hilltop’s prudent approach to risk management in an uncertain economic environment.

2025 Outlook & Forward Guidance

Looking ahead, Hilltop provided a generally optimistic outlook for 2025, projecting modest growth across its key business segments. Management expects full-year average bank loans (excluding retained mortgages and mortgage warehouse lending) to increase by 0-3%, while full-year average bank deposits are projected to grow by 2-5%.

The company anticipates net interest income to increase by 0-2%, primarily driven by lower deposit costs throughout 2025. For its mortgage business, Hilltop forecasts origination volume of $8-9.5 billion, dependent on market conditions, while broker-dealer fees are expected to increase by 1-4%.

The complete 2025 outlook is detailed in the following slide:

This guidance suggests management’s confidence in navigating the current interest rate environment while continuing to grow the business organically. The projected increase in deposits and potential for lower deposit costs could help offset ongoing pressure on net interest margins.

In conclusion, Hilltop Holdings delivered strong first-quarter results with significant year-over-year improvement in earnings, despite challenges in certain business segments. The company’s focus on expense management, capital returns to shareholders, and prudent credit risk policies positions it well for continued performance through 2025, though investors should monitor the impact of nonrecurring items on future quarters’ results.

Full presentation:

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