HTH's NII Increases 5.6% Y/Y in 1H26: Will the Uptrend Continue?

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HTH's NII Increases 5.6% Y/Y in 1H26: Will the Uptrend Continue? Zacks Equity Research Wed, September 2, 2026 at 10:17 AM EDT 3 min read HTH CFR-PB PB Hilltop Holdings ' HTH 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. Among HTH's close peers, let us see how Cullen/Frost Bankers CFR and Prosperity Bancshares PB 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. Over the past three months, HTH shares have gained 4.5% compared with the industry's 8.9% growth. 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 . Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hilltop Holdings Inc. (HTH) : Free Stock Analysis Report Cullen/Frost Bankers, Inc. (CFR) : Free Stock Analysis Report Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com).

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