Primelending returned to the black in the second quarter, but ongoing housing market challenges look set to apply further downward pressure to the mortgage business' bottom line, leaders of its parent company warned.
Mortgage originations brought in $3.21 million of pre-tax income for Hilltop Holdings, parent company of Plainscapital Bank and Primelending, during the second quarter. The number improved from a $8.28 million loss three months earlier, which Hilltop attributed in part to
A nonrecurring legal settlement of $9.5 million also factored into second-quarter 2025 results.
Despite signs of improving profitability, leaders struck a cautious tone for the near-term outlook in home lending operations.
"Primelending's results continue to be negatively impacted by a highly competitive and challenging mortgage origination market," said Hilltop Holdings President and CEO Jeremy Ford during the company's earnings call.
"The industry-wide headwinds of elevated home prices, persistently high interest rates and overall affordability challenges have not alleviated," he added.
While
"The market has experienced some relief for our homebuyers, as existing-home listings have increased across the country. However, this has not coincided with improvement in affordability," Ford continued.
How Primelending's mortgage production fared
Still, Primelending managed to find profitability last quarter thanks to over $2.42 billion in origination volume, which was 39.6% higher than the $1.74 billion worth of activity in the prior three-month period. Origination production increased 2.2% on a year-over-year basis from $2.38 billion, with over 89% of recent volume attributed to home purchases..
Gain on sale margin stood at 228 basis points, rising from the past quarter when it came in at 224, but equaling the same level of one year ago.
Noninterest income from mortgage production, including fees and loan sales, totaled $80.7 million, rising from $67.7 million compared to the first quarter. Compared to a year ago, the noninterest income total was down from $92.9 million.
The annual decline came from industry competition that led to reduced income from origination fees, leading the company to look for cost savings elsewhere, Ford noted.
"Primelending's management team continues to focus on reducing expenses in order to ensure efficient operations within the context of the overall mortgage market," he said.
Mortgage income contributed to an overall positive quarter for the parent company, which posted second-quarter net income of $36.1 million attributable to Hilltop Holding shareholders. Profit was down 14.3% from $42.1 million in the first quarter. Hilltop's bottom line numbers surged 77.4% from $20.3 million one year earlier.
