After another money-losing quarter for Primelending, Hilltop Holding's mortgage subsidiary through Plainscapital Bank, company management was cautiously optimistic about the future.
In the third quarter, the mortgage business lost $7.2 million on a pretax basis. While it did turn a pretax profit of
Volume was $2.3 billion, compared with $2.43 billion in the second quarter and $2.31 billion one year earlier. Margins for the third quarter were 234 basis points, compared with 228 basis points three months prior and 224 basis points one year ago.
Hilltop management believes revenues and production from the mortgage segment have begun to stabilize, said William Furr, executive vice president and chief financial officer, during the conference call.
Why Hilltop's management has mixed views on mortgage
"We also feel that it remains important to note the ongoing challenges in mortgage banking provide a combination of higher interest rates, home prices, insurance and taxes remain constrictive to overall market demand," Furr continued. "That said, even in the face of these challenges, we do believe that the overall mortgage market is slowly improving, and we expect that this improvement could continue into 2026."
Primelending's management is focused on cost optimization and improving productivity across the middle and back-office functions, as well as growing its client-facing sales team and optimizing pricing, all in support profitable growth in the future, Furr added.
Subdued origination volumes in the second quarter persisted into the following three months, a result of the industry-wide slump during the traditionally busy summer season, said Jeremy Ford, Hilltop's chairman, president and CEO on the call.
"While gain on sale margins did increase on a linked quarter basis, this was more than offset by a decline in origination fees," Ford said. "However, there were positive developments from the quarter as mortgage rates did modestly subside and home inventory saw a further reversion back towards more normalized levels."
How the industry forecast affects Primelending's outlook
The
In the fourth quarter, normally not a strong period, it is predicting $567 billion. This will be followed by $546 billion, $569 billion and $566 billion over the next three quarters, the MBA forecast said.
"Homebuyers do continue to face affordability challenges, and we expect heightened competition for mortgage origination volume to keep margins and fees under pressure," Hilltop's Ford said. "As we enter the seasonally slower fourth and first quarters of the year, we will continue to focus on reducing fixed expenses, while recruiting talented mortgage originators in order to restore stand-alone profitability at Primelending."
At the corporate level, third quarter net income attributable to Hilltop was $45.8 million, compared with $36.1 million for the period ended June 30, while last year it was $29.7 million.
