HTH

Hilltop is a Texas-centric financial holding company (PlainsCapital Bank + Hilltop Securities broker-dealer + PrimeLending mortgage). FY2025 was a genuine earnings rebound: income attributable to Hilltop rose to $165.6M from $113.2M, and diluted EPS jumped to $2.64 from $1.74 (+51.7%). The balance sheet is the standout — common equity to assets of 13.69% and tangible common equity of 12.17% are conservative, book value per share is $36.42 (tangible $31.83), and management is returning capital aggressively: $184.0M of buybacks (shares down 8.3% YoY) plus $45.4M of dividends at a low 27% payout. At $39.05 the stock trades ~1.07x book / ~1.23x tangible book and 14.8x earnings — not demanding for a well-capitalized bank repurchasing stock near book value.

But the quality of the earnings jump deserves scrutiny. The MD&A shows the provision for credit losses was just $7.3M in 2025 versus $18.4M in 2023 — a benign-credit tailwind that flatters net income and won't repeat if Texas credit normalizes. ROE is only 7.6%, which is sub-par for a bank and the core reason the stock sits near book rather than at a premium; a ~1x multiple is what a 7-8% returner deserves. Segment detail confirms the mixed engine: banking contributed $193.2M of pretax income and the broker-dealer $67.6M, but the mortgage origination segment lost $17.5M pretax and the filing repeatedly flags 'a challenging environment' for mortgage origination tied to rates and volumes.