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Key Takeaways Hilltop Holdings has gained 13.5% YTD, outperforming its industry and the broader market.HTH's NII benefits from loan demand, easing funding costs and an improving net interest margin.Hilltop Holdings faces asset-quality and mortgage risks, while its balance sheet supports performance. Shares of Hilltop Holdings Inc. (HTH - Free Report) have gained 13.5% so far this year, outperforming the industry’s 9.5% growth and the S&P 500 Index’s 10.9% rally.

If we compare the company’s price performance with its peers, Commerce Bancshares, Inc. (CBSH - Free Report) and Hancock Whitney, Corp. (HWC - Free Report) , it appears that while the HTH stock has underperformed Hancock Whitney, it has outperformed Commerce Bancshares in the same period.

Year to date, the HWC stock has gained 17.5%, while the CBSH stock has risen 10.7%.

YTD Price Performance
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Let us see if the Hilltop Holdings stock has more upside left despite recent strength in price. In order to understand this, we must dig deep into its fundamentals and growth prospects.

Key Strengths of Hilltop HoldingsImproving Net Interest Income (NII): Hilltop Holdings remains focused on strengthening its NII through disciplined balance-sheet mix and funding management. After declining in 2024, NII rebounded in 2025 and maintained its growth momentum in the first half of 2026, supported by healthy loan demand, a favorable rate environment and easing funding-cost pressures.

Encouragingly, the company’s net interest margin (NIM) improved to 2.98% in 2025 from 2.81% in 2024 and continued to expand during the first six months of 2026.

Given decent loan growth prospects and stabilizing funding costs, the positive NII and margin trajectory is likely to persist. We project NII to see a compound annual growth rate (CAGR) of 4.5% through 2028, while NIM is expected to expand to 3.20% in 2026.

Prudent Expense Management: Hilltop Holdings has maintained a disciplined approach to expense management, supporting operating efficiency amid an uncertain business environment. Although non-interest expenses increased in the first half of 2026, they recorded a negative CAGR of 2.3% over the six years ended 2025, reflecting continued cost-control initiatives, particularly across lower-return businesses such as PrimeLending.

Expense Trend
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For 2026, management expects non-variable expenses to increase only 0-2%, while variable costs are expected to move largely in line with fee revenues. We project non-interest expenses to rise marginally this year.

Solid Balance Sheet: Hilltop Holdings maintains a solid balance sheet and robust capital position, providing considerable financial flexibility. As of June 30, 2026, the company had cash and due from banks of $750.5 million, while debt, comprising short-term borrowings and notes payable, totaled $1.39 billion. Importantly, capital levels remained strong, with a common equity tier 1 capital ratio of 18.34% and a tier 1 leverage ratio of 12.73%, providing substantial cushions above regulatory requirements.

The company also maintains investment-grade credit ratings of BBB+/Baa2 with stable outlooks from Fitch Ratings and Moody’s Investors Service, respectively, supporting favorable access to wholesale funding. Further, the bank was not utilizing any of its Federal Home Loan Bank borrowing capacity at the end of June 2026, underscoring its funding flexibility.

Consistent Capital Returns: Hilltop Holdings has demonstrated a strong commitment to returning capital to shareholders, supported by its solid liquidity and capital position. The company initiated its dividend in 2016 and has increased it regularly since then, with the latest hike announced in July 2026.

In addition, the company continues to actively repurchase shares. In January 2026, HTH’s board authorized a share repurchase program of up to $125 million through January 2027, which was subsequently expanded to $200 million in July.

Given the company’s healthy earnings capacity, strong capitalization and ample financial flexibility, it appears well-positioned to sustain dividends and opportunistic share repurchases.

Hilltop Holdings’ HeadwindsWeak Asset Quality: Hilltop Holdings’ asset quality remains a major concern, particularly given its exposure to real estate-related lending and pockets of stress across select portfolios. Although provisions declined significantly in 2024, they increased substantially in 2022, 2023 and 2025, highlighting continued credit-cost volatility. Further, net charge-offs (NCOs) witnessed a CAGR of 20.4% over the six years ended 2025.

While both provisions and NCOs declined in the first six months of 2026, a challenging macroeconomic backdrop and continued exposure to real estate-related loans could keep credit costs elevated.

Mortgage Banking Weakness: Hilltop Holdings’ Mortgage Origination segment continues to face profitability challenges amid a difficult housing market. Although mortgage origination volumes increased in 2024, 2025 and the first half of 2026, the recent improvement has been supported largely by higher refinance activity, while the purchase mix has weakened.

PrimeLending has responded by reducing headcount, consolidating underperforming branches and lowering its fixed-cost base. However, the segment remains highly sensitive to mortgage rates, housing inventory and affordability trends.

Management’s 2026 origination volume outlook of $8.5-$9.5 billion remains market dependent, and subdued purchase activity could limit the benefits of ongoing cost actions. Thus, persistent pressure on mortgage volumes and margins is likely to constrain the segment’s profitability and remain a drag on Hilltop Holdings’ overall performance.

Analyzing HTH’s Earnings Estimates & ValuationThe Zacks Consensus Estimate for Hilltop Holdings’ 2026 earnings is pegged at $2.59 per share, which indicates a year-over-year decline of 1.9%. The estimate for 2027 earnings is $2.51, suggesting a decline of 3.1%. Over the past 30 days, the 2026 earnings estimate has been revised higher, while the 2027 estimate has been unchanged.

Earnings Estimate Revision
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Hilltop Holdings has a 12-month forward price-to-earnings (P/E) ratio of 15.19X, above the industry’s 10.82X. This indicates that its shares are trading at a premium than the broader industry.

P/E (F12M) Ratio
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Commerce Bancshares has a P/E (F12M) ratio of 12.95X, while Hancock Whitney’s forward price/earnings ratio is 10.73X. This implies that the HTH stock is relatively more expensive than its close peers.

How to Approach the HTH Stock NowWeak asset quality and subdued mortgage origination volumes remain key headwinds for Hilltop Holdings’ growth. Moreover, analysts remain cautious about the company’s earnings growth prospects, while its stretched valuation warrants some caution.

Nevertheless, prudent expense management and a solid balance sheet should continue to support Hilltop Holdings’ financial performance. Stabilizing funding costs, improving net interest margins and decent loan demand are also likely to sustain NII growth.

Given these factors, HTH appears well-positioned despite near-term challenges. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways Hilltop Holdings' NII climbed 5.6% y/y to $227.9 million in the first half of 2026.HTH's 2Q26 NIM rose to 3.21% as deposit costs fell and funds shifted into higher-yielding loans.HTH raised its 2026 average loan growth outlook to 5-7%, but expects NII to stay relatively stable. Hilltop Holdings’ (HTH - Free Report) net interest income (NII) displayed healthy momentum in the first half of 2026, increasing 5.6% year over year to $227.9 million. The improvement primarily reflected strength in the banking segment and a favorable shift in funding costs. In the second quarter alone, NII rose 4.7% year over year and 3.4% sequentially to $115.9 million.

The company’s improving net interest margin (NIM) has been a key driver of NII growth. Consolidated NIM expanded to 3.21% in the second quarter of 2026 from 3.13% in the prior quarter. Management attributed the improvement to lower interest-bearing deposit costs and a favorable balance-sheet mix as funds shifted from lower-yielding cash into loans held for investment.

The company’s loan balances also improved in the first six months of this year. Net loans held for investment increased to $8.6 billion as of June 30, 2026, up 8% year over year and 3% sequentially. Given the healthy momentum, management raised its 2026 average loan (excluding mortgage warehouse lending and mortgages retained from PrimeLending) growth expectation to 5-7% from 4-6%.

Sustained loan growth, particularly at PlainsCapital Bank, along with a continued favorable shift in funding costs, will likely keep supporting NII growth in the remaining quarters of 2026. However, the pace of NII growth could moderate. Management expects NIM to remain around the current levels or decline modestly during the second half of 2026, with NII likely to stay relatively stable over the next few quarters.

Thus, while lower funding costs, favorable balance-sheet repositioning and solid loan growth are encouraging for HTH’s spread-income trajectory, another sharp acceleration appears unlikely because much of the recent margin benefit has already been captured.

Let’s Examine NII Trajectory of Hilltop Holdings’ PeersAmong HTH’s close peers, let us see how Cullen/Frost Bankers (CFR - Free Report) and Prosperity Bancshares (PB - Free Report) have fared so far this year in terms of NII growth.

Cullen/Frost has witnessed a steady NII uptrend, with the metric rising 4.8% year over year to $886.3 million in the first half of 2026. In the second quarter, Cullen/Frost’s NII increased 4.2% to $447.7 million, while taxable-equivalent NIM expanded to 3.75% from 3.67% a year earlier.

Likewise, Prosperity Bancshares recorded considerably stronger NII growth, aided by acquisitions and margin expansion. PB’s NII rose 22.2% year over year to $651.7 million in the first half of 2026. In the second quarter, NII was $330.6 million, up roughly 23% year over year and 2.9% sequentially, while taxable-equivalent NIM improved 29 basis points year over year to 3.47%. Thus, similar to HTH, improving spreads are supporting Prosperity Bancshares’ NII trajectory, though its recent acquisitions have provided an additional growth boost.

Hilltop Holdings’ Price Performance & Zacks RankOver the past three months, HTH shares have gained 4.5% compared with the industry’s 8.9% growth.

Image Source: Zacks Investment Research

Currently, Hilltop Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hilltop Holdings Inc. (HTH) Q2 2026 Earnings Call July 24, 2026 9:00 AM EDT

Company Participants

Matthew Dunn - Head of Investor Relations
Jeremy Ford - President, CEO & Chairman
William Furr - Executive VP & CFO

Conference Call Participants

Matt Olney - Stephens Inc., Research Division
Evan Yee - Raymond James & Associates, Inc., Research Division

Presentation

Operator

Hello, everyone. Thank you for joining us, and welcome to Hilltop Holdings Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Matt Dunn, Corporate Development Officer and Head of Investor Relations. Matt, please go ahead.

Matthew Dunn
Head of Investor Relations

Thank you. Before we get started, please note that certain statements during today's presentation that are not statements of historical fact, including statements concerning such items as our outlook, business strategy, future plans, financial condition, credit risks and trends in credit, allowance for credit losses, liquidity and sources of funding, funding costs, dividends, stock repurchases, subsequent events and impacts of interest rate changes as well as such other items referenced in the preface of our presentation are forward-looking statements.

These statements are based on management's current expectations concerning future events that, by their nature, are subject to risks and uncertainties. Our actual results, capital, liquidity and financial condition may differ materially from these statements due to a variety of factors, including the precautionary statements referenced in the preface of our presentation and those included in our most recent annual and quarterly reports filed with the SEC. Please note that certain information presented is preliminary and based upon data available at this time. Except to the extent required by law, we expressly disclaim any obligation to update earlier statements as a result of new information.

Additionally, this presentation includes certain non-GAAP measures, including tangible common equity and