Hilltop's Credit Provision Flips After Margin Expansion

The Tip Desk · October 27, 2026 · 4 min read

Income attributable to common stockholders fell to $24.9 million, or $0.44 a share, as a $10.2 million provision reversed a $1.0 million credit-loss reversal.

Hilltop Holdings Inc. (HTH), the Dallas-based regional bank and securities firm, recorded income attributable to common stockholders of $24.9 million, or $0.44 a share, for the third quarter of 2026, down from $36.5 million, or $0.63 a share, in the second quarter.

The swing was driven by a $10.2 million provision for credit losses, compared with a $1.0 million reversal in the prior quarter. The company said the charge reflected loan-mix changes, risk-rating migration, net loan growth, a build in specific reserves and a worse U.S. economic outlook for collectively evaluated loans. Banking pre-tax income was $44.1 million, versus $51.0 million in the second quarter, and banking return on average assets was 1.06%.

Net interest income still rose. Consolidated net interest income was $122.4 million, and the consolidated net interest margin expanded 12 basis points to 3.33% from 3.21%, following an 8-basis-point expansion from 3.13% to 3.21% in the second quarter. Banking-segment net interest margin widened 7 basis points to 3.49% from 3.42%. Chairman, President and CEO Jeremy B. Ford said PlainsCapital Bank generated a 1.1% return on average assets and $44 million of pre-tax income as margin expansion and earning-asset growth were partly offset by the $10 million provision.

Loans held for investment, net of allowance, were $8.71 billion at September 30, 2026, versus $8.59 billion at June 30. The allowance for credit losses was $93.9 million. Non-accrual loans declined to $51.4 million, or 0.54% of loans, from $54.8 million, or 0.57%. Banking net charge-offs were $1.2 million, versus $3.2 million in the second quarter. Total deposits were $11.0 billion, with noninterest-bearing deposits of $2.90 billion.

PrimeLending’s pre-tax loss widened to $10.8 million from a $2.0 million loss in the second quarter. Ford said a dramatic intra-quarter increase in mortgage rates depressed purchase activity and reduced the mark-to-market value of loans in the pipeline. Mortgage origination volume was $2.21 billion, with home purchases of $1.95 billion and refinancings of $255.9 million. Net gains from sale of loans and other mortgage production income plus origination fees were $67.7 million. Net gains from mortgage loans sold to third parties, including broker fee income, compressed to 211 basis points from 229 basis points. Loans held for sale fell 37.7% from June 30 to $625.6 million.

HilltopSecurities produced a 5.9% pre-tax margin on $117 million of net revenues, or $7 million of pre-tax income, versus a 10.0% margin and $12 million of pre-tax income in the second quarter. Ford said Public Finance Services and Wealth Management were strong, while Structured Finance and Fixed Income Services were negatively impacted by the speed and size of the change in long-term interest rates. Principal transactions, commissions and fees fell to $46.2 million from $64.2 million. Investment banking, advisory and administrative fees increased to $54.1 million from $44.2 million.

Consolidated return on average assets was 0.67% and return on average stockholders’ equity was 4.67%. Noninterest income was $187.1 million. Noninterest expense was $264.1 million. The effective tax rate was 25.2%. Book value per common share was $36.99. Total assets were $16.2 billion.

The board declared a quarterly cash dividend of $0.22 a share, payable November 20, 2026. Hilltop paid $20.0 million to repurchase 512,075 shares at an average $38.96, leaving about $86 million of remaining 2026 buyback capacity. Common Equity Tier 1 capital was 18.28% and Tier 1 leverage was 12.63% at September 30. Ford said Hilltop returned approximately $33 million to stockholders through dividends and share repurchases.

The company said uncertain economic conditions, including further changes in U.S. Treasury yields and mortgage interest rates, funding costs, inflation, elevated energy prices and international armed conflicts, have had and are expected to continue to have an adverse impact on operating results during the remainder of 2026.