힐톱 홀딩스(HTH) 2026년 3분기 실적 발표: 순이자이익(NII) 9% 증가

핵심 요약

• 힐탑 홀딩스(Hilltop Holdings)는 2026년 3분기 보통주 주주 귀속 당기순이익이 2,490만 달러(희석주당순이익 $0.44)를 기록했다고 발표했습니다. 평균자산수익률(ROA)은 0.67%, 평균자기자본수익률(ROE)은 4.7%였습니다.
• 순이자이익은 전년 동기 대비 9% 증가한 1억 2,200만 달러를 기록했습니다. 상업용 대출 성장, 안정적인 예금 비용, 대출 수익률 상승에 힘입어 연결 순이자마진(NIM)은 2분기 대비 12bp 상승한 3.33%를 기록했습니다.
• 플레인스캐피탈 은행(PlainsCapital Bank)은 4,400만 달러의 세전이익을 창출했습니다. 기말 투자목적 보유 대출은 전분기 대비 1억 3,400만 달러, 전년 동기 대비 5억 8,000만 달러(7%) 증가했습니다.
• 프라임렌딩(PrimeLending)은 모기지 금리 상승으로 인한 매수 활동 감소, 파이프라인 가치 평가 압박, 금리 확정(rate-lock) 규모의 18% 감소(22억 달러) 여파로 1,080만 달러의 세전손실을 기록했습니다.
• 금리 변동성으로 인해 모기지 및 브로커-딜러 부문 전반에서 약 1,600만 달러의 세전 시가평가 손실이 발생했습니다. 또한 힐탑은 약 2,100만 달러의 부정적인 기타포괄손익누계액(AOCI) 영향을 기록했습니다.
• 경영진은 주로 대출 성장을 통해 순이자이익이 소폭 증가할 것으로 예상하지만, 예금 비용 상승으로 인해 순이자마진은 보합세를 보이거나 3.33%를 소폭 하회할 수 있다고 밝혔습니다.

핵심 재무 데이터

사업 및 영업 실적

플레인스캐피탈 은행(PlainsCapital Bank)

플레인스캐피탈 은행은 4,400만 달러의 세전이익과 1.06%의 평균자산수익률을 기록했습니다. 안정적인 예금 비용과 대출 재조정(리프라이싱)에 힘입어 순이자마진은 전년 동기 대비 25bp 이상 상승한 3.49%에 달했습니다.

이번 분기 예금 잔액은 힐탑증권(HilltopSecurities)에서 스윕(sweep)된 예금 1억 달러 증가분을 포함해 5억 달러 증가했습니다. 전년 동기 대비 대출 증가분 중 약 3억 달러는 상업용 부동산이 차지했으며, 나머지는 주로 상공업 대출에서 발생했습니다.

은행은 1,010만 달러의 대손충당금 전입액을 기록했습니다. 그럼에도 경영진은 신용 여건이 경제, 인플레이션, 금리 불확실성의 영향을 여전히 받는다고 지적하면서도 포트폴리오 전반에 걸친 중대한 시스템적 위험은 예상하지 않는다고 밝혔습니다.

프라임렌딩(PrimeLending)

프라임렌딩은 1,080만 달러의 세전손실을 기록했습니다. 9월 중 평균 30년 만기 모기지 금리가 70bp 가까이 급등하는 등 모기지 금리가 대폭 상승함에 따라 매수 활동이 위축되고 파이프라인 내 대출의 공정가치가 감소했습니다.

금리 확정 규모는 전년 동기 대비 18% 감소한 22억 달러를 기록했습니다. 제3자 매각 대출의 매각유통마진(Gain-on-sale margin)은 26bp 하락한 200bp를 기록했습니다. 경영진은 7%에 육박하는 모기지 금리와 전반적인 주택 구매 능력 부담이 2027년까지 모기지 판매 활동에 부담을 줄 가능성이 크다고 밝혔습니다.

힐탑증권(HilltopSecurities)

힐탑증권은 순매출 1억 1,700만 달러, 세전이익 700만 달러를 기록하여 5.9%의 세전이익률을 나타냈습니다. 공공금융 서비스는 2025년 3분기와 유사한 3,700만 달러의 순매출을 올렸으며, 자산관리 매출은 전년 동기 수준을 상회했습니다.

구조화금융 및 채권 서비스는 장기채 변동성 확대와 헤지 효과성 감소로 압박을 받았습니다. 자기계정거래, 수수료 및 보수에는 모기지 트레이딩 파이프라인과 관련된 660만 달러의 세전 시가평가 손실이 포함되었습니다.

경영진 가이던스

• 힐탑의 내부 금리 전망은 2026년에 25bp의 추가 금리 인상이 한 차례 더 있을 것으로 가정합니다.
• 이 시나리오하에서 경영진은 주로 은행 부문의 대출 성장에 힘입어 순이자이익이 소폭 증가할 것으로 예상합니다.
• 경영진은 이자부 예금 비용이 증가함에 따라 연결 순이자마진이 보합세를 보이거나 잠재적으로 3.33%를 소폭 하회할 것으로 예상합니다.
• 모기지 창고 대출 및 보유 프라임렌딩 모기지를 제외한 2026년 전체 평균 은행 대출은 2025년 대비 7%~8% 성장할 것으로 예상됩니다.
• 플레인스캐피탈 은행은 4분기에 예금이 계절적으로 확대될 것으로 예상하며, 경영진은 2027년까지 긍정적인 예금 증가세를 내다보고 있습니다.
• 변동 보상을 제외한 비용은 지속적인 생산성 및 프로세스 효율성 이니셔티브에 힘입어 현재 수준 근처에서 비교적 안정적으로 유지될 것으로 예상됩니다.
• 프라임렌딩은 계절적 약세, 높은 장기 금리, 주택 구매 능력 제약으로 인해 4분기에도 어려움이 지속될 것으로 예상됩니다.

리스크 및 주시 사항

금리 변동성은 단기적으로 주요 리스크로 남아 있습니다. 이번 분기에는 헤지를 차감한 매도가능증권 포트폴리오의 가치 변화로 인해 약 1,600만 달러의 세전 시가평가 손실과 약 2,100만 달러의 부정적인 AOCI 영향이 포함되었습니다.

예금 금리가 경영진이 언급한 주기적 저점에 도달함에 따라 예금 유치 경쟁으로 인해 조달 비용이 상승할 수 있습니다. 회사는 또한 모기지 구매 능력 부담, 매각유통마진 축소, 금리 확정 활동 감소, 인플레이션, 지정학적 갈등 및 전반적인 경제 불확실성을 우려 요인으로 꼽았습니다.

신용 건전성은 전반적으로 안정적으로 유지되었으나, 대손충당금은 900만 달러 증가했습니다. 경영진은 부정적인 신용 등급 하락 및 차주별 이벤트를 계속 모니터링하고 있습니다.

애널리스트 Q&A 주요 내용

• 모기지 수익성: 경영진은 프라임렌딩이 생산성 높은 대출 담당자를 선별적으로 채용하는 한편 시장 상황에 맞춰 비용을 계속 조정할 것이라고 밝혔습니다. 회사는 수익성 개선으로 전환하는 데 계속 집중하고 있지만, 대출 승인 및 취급 여건은 계속 어려울 것으로 예상하고 있습니다.
• 순이자마진 전망: 대출 성장이 순이자이익을 뒷받침하겠지만, 단기 금리 상승으로 인해 예금 경쟁이 심화될 것으로 예상됩니다. 경영진은 대차대조표 성장이 전체 순이자이익을 증가시킨다면 순이자마진이 소폭 하락하는 것을 감수할 의향이 있습니다.
• 대출 모멘텀: 뱅커 채용과 시장 혼란에 힘입어 상업용 대출 파이프라인은 견조하게 유지되고 있습니다. 경영진은 4분기 전망에 예년보다 비정상적으로 높은 수준이 아닌 일반적인 수준의 대출 상환을 가정했다고 밝혔습니다.
• 자본 환원: 힐탑은 주가 상승과 금리 상승에 따른 잠재적 AOCI 압박을 반영해 3분기에 이전 두 분기 각각 5,000만 달러에서 줄어든 2,000만 달러 규모의 자사주를 매입했습니다. 회사는 승인 한도 내에 8,500만 달러가 남아 있었지만 한 분기 만에 전액을 집행할 것으로 예상하지는 않았습니다.
• 예금 성장: 힐탑은 시장 신규 진입자들이 제공하는 프로모션 및 티저 금리와의 경쟁을 인정하면서도 저비용, 소액 소매 핵심 예금 및 트레저리 서비스에 계속 집중하고 있습니다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Hello, everyone. Thank you for joining us, and welcome to Hilltop Holdings Second (sic) [ Third ] Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference call over to Matt Dunn. Matt, please go ahead.

Matthew Dunn

Thank you. Before we get started, please note that certain statements during today's presentation that are not statements of historical facts, 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 tangible book value per share. A reconciliation of these measures to the nearest GAAP measure may be found in the appendix to this presentation, which is posted on our website at ir.hilltop.com.

I'll now turn the presentation over to Jeremy Ford.

Jeremy Ford

Thank you, Matt, and good morning. For the third quarter, Hilltop reported net income of $24.9 million or $0.44 per diluted share. Return on average assets for the period was 0.67% and return on average equity was 4.7%. To summarize the lines of business, PlainsCapital Bank further realized growth in core loans and deposits while expanding net interest margin to deliver $44 million in pretax income.

PrimeLending reported a pretax loss of $11 million as the mortgage market worked through a drastic intra-quarter increase in mortgage rates. And HilltopSecurities delivered $7 million of pretax income as material interest rate volatility in the quarter pressured the trading business lines at the firm.

At PlainsCapital Bank, strong growth across our markets in both core loans and deposits drove an increase in net interest income and a resulting increase in pre-provision net revenue on a quarter-over-quarter and year-over-year basis. Offsetting this increase in pre-provision earnings was a $10.1 million provision for credit loss, which brought the bank's return on average assets to 1.06% for the quarter. The continued growth in core loans at the bank was accompanied by a healthy expansion in the loan pipeline during the third quarter as our markets continue to execute on banker recruiting and focused growth initiatives.

Net interest margin also expanded, increasing over 25 basis points on a year-over-year basis to 3.49%, driven by stable deposit costs and upward repricing of our loan portfolio. September's increase in the effective Fed funds rate did have an immediate impact on the yield generated on cash, but only marginally impacted the bank's results in the quarter. We expect there to be upward pressure on deposit costs going forward, which Will is going to speak to later in this presentation.

During the quarter, PlainsCapital Bank saw an increase in deposit balances of $500 million as both large balance customers and new granular depositors provided net growth. In the fourth quarter, we anticipate deposit balance to continue to seasonally expand. Notably, PlainsCapital Bank increased deposits swept over from HilltopSecurities during the third quarter by $100 million.

While the bank did realize a $10.1 million provision expense during the quarter, we remain positively inclined on the overall health of the loan portfolio. Will is going to provide further commentary on credit in his prepared remarks. The Texas economy continues to expand and provides a great operating environment for our bank. We believe our long-standing relationship-based approach to commercial banking will continue to allow us to drive long-term growth while maintaining strong credit standards.

Moving to PrimeLending, where the company reported a pretax loss of $10.8 million during the third quarter. The dramatic increase in interest rates, specifically during the month of September when 30-year average mortgage rates increased by nearly 70 basis points, put downward pressure on purchase activity across the market. Further, the sudden increase in rates negatively impacted the fair market value of loans within PrimeLending's existing pipeline.

While we actively manage a hedge book against this pipeline, the effectiveness of those hedges deteriorates when the size and velocity of an interest rate move mirrors that which occurred in the third quarter. Additionally, the affordability headwinds faced by homebuyers, such as homeowners insurance, property taxes and entry-priced inventory, continue to stress volumes. We remain focused on the controllable aspects of PrimeLending's business, namely achieving operating, recruiting and productivity goals as we work diligently to rightsize the business to best fit this persistently difficult market. We do expect the fourth quarter to remain challenged given the combination of the typically seasonally slow period and elevated long-term rates.

During the quarter, HilltopSecurities generated pretax income of $7 million on net revenue of $117 million for a pretax margin of 5.9%. Speaking to the business lines at HilltopSecurities, Public Finance Services realized another strong quarter of top-line results with $37 million of net revenue, which is in line with the third quarter of 2025. As we articulated during last quarter's call, we continue to see a robust municipal issuance market.

As a market leader within the public entity advisory world, we will continue to look for ways to expand our product offerings and function as a full-service solution provider to our valued clients. Both structured finance and fixed income services faced a very challenging market due to elevated volatility, specifically in September, in long-duration bonds. The size and speed of this move reduced the effectiveness of our hedging programs. And within structured finance, demand for prepayment-protected collateral weakened as the market's rate expectations shifted.

Finally, Wealth Management showed continued strength across the Retail and Clearing segments as top-line revenue was ahead of prior year third quarter. Given the expectation for higher Fed funds rate, we anticipate results will remain robust through the end of the year. The volatile interest rate market that HilltopSecurities faced during the third quarter pressured both top-line and bottom-line results and weighed on the firm's pretax margin. We do expect to see continued strength in the coming quarters from Public Finance and Wealth Management as customer activity within those segments remains healthy. As we finish the year, the more interest rate-sensitive segments of structured finance and fixed income services will continue to execute with prudence.

Moving to Page 4. Hilltop maintains strong capital levels with a common equity Tier 1 capital ratio of 18.3%. Additionally, our tangible book value per share realized a modest quarter-over-quarter decline to $32.20. During the quarter, we returned $33 million to stockholders, consisting of $12.6 million in dividends and $20 million in share repurchases.

Thank you. I'll now turn the presentation over to Will to discuss our financials in more detail.

William Furr

Thank you, Jeremy. I'll start on Page 5. As Jeremy noted, for the third quarter of 2026, Hilltop reported consolidated income attributable to common stockholders of $24.9 million, equating to $0.44 per diluted share. The quarter's results reflect both the impacts of the turbulent interest rate market and the resilience of Hilltop's diversified operating model. As it relates to interest rates, the directional shift in market perspective from potential declining short-term interest rates to a market decidedly pointing towards higher short-term interest rates occurred during July.

This shift, combined with the rise in 10-year yields to multiyear highs in September, created a confluence of events that yielded substantial valuation adjustments during the third quarter period. In both the broker-dealer and mortgage segments, we realized valuation marks related largely to the mortgage pipelines and other trading assets. In total, the mark-to-market losses capturing both rate and volume impacts that are reflected in the third quarter equated to approximately $16 million on a pretax basis.

In addition, Hilltop's reported negative AOCI impact equated to approximately $21 million, which reflects the impact of mark-to-market adjustments in the AFS securities portfolio net of hedges. The quarter also included net valuation gains of $4.6 million related to Hilltop's merchant banking portfolio investments. Through the volatility in the markets, Hilltop's diversified model continued to produce solid foundational results, highlighted with growth in net interest income of $10 million or 9% versus the prior year period. This was driven by commercial loan and deposit growth at the bank.

Lastly, the quarter was impacted by higher provision for credit loss expense, led by a build in the allowance, which I'll discuss as we turn to Page 6. Hilltop's allowance for credit losses increased during the quarter by $9 million to $94 million, resulting in a coverage ratio of ACL to loans HFI of 1.07%. As is noted in the graph, collective reserves related to the portfolio changes increased by $8 million.

This increase in the ACL reflected both the impact of net loan growth of $3.6 million and approximately $4.4 million related to the net impact of risk rating adjustments in the period. In addition to the ACL build, the allowance for unfunded reserves also increased in the period by $1.5 million. The expense for this change is reported in other noninterest expense.

While we recognize there continues to be volatility in the interest rate markets and ongoing conflict in the Middle East, midterm elections and other issues that could contribute to credit risk, we continue to monitor the portfolio closely, focusing on areas that we believe may pose future risk to the bank. While at any point we could have an idiosyncratic event with an existing client, we do not anticipate any significant systemic risk across the portfolio at this time.

Lastly, and as we've stated over time, the allowance for credit losses estimate can be volatile as the computations and assessment include, but are not limited to, the following: assumptions related to economic activity, inflation, interest rates, employment levels and specific credit activities within our portfolio, all of which can be volatile from period to period.

I'm turning to Page 7. Net interest income in the third quarter equated to $122 million, including approximately $830,000 of purchase accounting accretion. Versus the prior year third quarter, net interest income increased by $10 million or 9%, driven by improving deposit costs, coupled with growth in commercial loans. During the third quarter, net interest margin increased versus the second quarter of 2026 by 12 basis points to 333 basis points. The increase in NIM was largely driven by relatively stable deposit costs from period to period and improving loan yields, reflecting the positive impact of new business booked throughout the first 3 quarters of 2026.

Our current internal rate outlook anticipates one additional 25 basis point rate increase in 2026. Under this rate scenario, we expect that NII levels will continue to move modestly higher, largely driven by expected loan growth within our Banking segment. Additionally, we anticipate that interest-bearing deposit betas, which averaged approximately 74% through the most recent rate reduction cycle, will revert to our modeled betas of 55% to 60% during any prolonged rate increase cycle.

Turning to Page 8. Third quarter average total deposits are approximately $10.7 billion, reflecting growth in customer deposits across both interest-bearing and noninterest-bearing deposits. In addition, we're very pleased with the retention of our noninterest-bearing deposits over the last year and the work that our treasury services team continues to do to serve our clients and support the growth in our commercial deposit base each day.

Related to deposit rates, both interest-bearing deposit costs and the cost of total deposits remained relatively stable versus the second quarter of 2026 levels. As noted previously, given our current interest rate outlook, we do expect that interest-bearing deposit yields have reached their trough levels for the cycle and will likely trend higher with short-term market interest rates over time.

Turning to Page 9. Total noninterest income for the third quarter of 2026 equated to $187 million. Versus the same period in the prior year, mortgage revenues declined by $9 million, which includes the impact of mark-to-market losses on the pipeline during the quarter. These market valuation impacts were driven by higher market rates, causing hedge ineffectiveness and lower rate lock volumes, which declined 18% to $2.2 billion from the prior year period.

In addition, gain on sale margins for loans sold to third parties declined 26 basis points to 200 basis points as softness in demand has led to continued margin compression. With mortgage rates remaining near 7%, overall home affordability remains a challenge across the country, and we believe that these issues will negatively impact mortgage sales activity into 2027.

With that market perspective as the backdrop, the leadership team at PrimeLending is focused on continuing to optimize cost and productivity across the middle- and back-office functions, selectively expanding our client-facing sales team across the country and optimizing our pricing to support sustainable, profitable growth in the future. Principal transactions, commissions and fees declined from lower overall trading activity in municipals, derivatives and MBS during the quarter and includes $6.6 million in pretax mark-to-market valuation losses for the third quarter related to our mortgage trading pipeline.

While the trading market was volatile and generated significant swings in value throughout the quarter, the hedging program operated within our risk management framework. And if market conditions improve, we remain well positioned to benefit in future periods.

Turning to Page 10. Noninterest expenses declined from the same period in the prior year by $7.8 million to $264 million. The decline in expenses versus the prior year third quarter was driven by decreases in variable compensation, largely related to lower noninterest revenue production at the broker-dealer and in the mortgage origination segment. Looking forward, we expect that expenses other than variable compensation will remain relatively stable at current levels as we remain diligently focused on prudent growth of revenue producers while continuing to gain efficiencies across our middle and back-office functions.

I'm turning to Page 11. Third quarter average HFI loans equated to $8.7 billion. On a period-ending basis, HFI loans increased versus the second quarter of 2026 by $134 million, driven largely by new origination volume and the funding of prior commitments in commercial real estate. On an ending balance basis, loans have grown versus third quarter 2025 by $580 million or 7%. While commercial loans have maintained a positive growth trend, the market for funded loans remains intense with competitive pressures coming from both pricing and structure.

Based on performance year-to-date, our current pipeline levels and giving consideration to expected payoffs during the fourth quarter, we expect full year average total bank loans to increase by 7% to 8% from 2025 levels, excluding mortgage warehouse lending and any retained mortgages from PrimeLending.

Turning to Page 12. Starting in the upper right chart, NPA levels have declined from the second quarter of 2026 by $2 million to $60 million and continues to reflect generally positive trends in our held-for-investment loan portfolio.

Moving to the bottom left chart, net charge-offs for the quarter equated to $1.2 million or 6 basis points of the overall loan portfolio. As I remarked earlier, we do not anticipate any systemic exposure across our portfolio, but we remain vigilant in our assessment of risk and negative credit migration and are focused on early detection and aggressive workout when necessary.

As is shown on the graph at the bottom right of the page, the allowance for credit loss coverage at the bank ended the third quarter at 1.11%, including mortgage warehouse lending.

Turning to Page 13. As we enter the fourth quarter of 2026, there continues to be a lot of uncertainty in the market regarding interest rates, inflation and the overall health of the economy. Given these uncertainties, our teams remain focused on controlling what we can with a focus on producing quality outcomes for our clients, associates and the communities we serve.

As is noted in the table, our outlook for 2026 reflects our current assessment of the economy and the markets where we participate. Further, as the market changes and we adjust our business to respond, we will provide updates to our outlook on our future quarterly calls.

Operator, that concludes our prepared comments, and we'll turn the call back to you for the Q&A section of the call.

Operator

[Operator Instructions] Your first question comes from the line of Hannah Wynn with KBW.

질의응답

Hannah Wynn

I wanted to start on mortgage. I know you talked a lot in your prepared remarks about the weaker activity and pipelines that you saw this quarter related to the rate environment and that you expect this business to be under pressure through 2027. Just curious how we should think about the puts and takes for this business?

And if you could give a little more color on how you are seeing the pipelines from here? And then also on the expense side, if we should expect to see continued losses or if there's room to lower that expense base and move closer to a breakeven?

William Furr

Hannah, I think as we -- we'll address the last part there first from an interest -- noninterest expense perspective, we remain focused on productivity and adjusting the business to the current market environment. So while we do expect the origination market to remain challenged given where rates are and where affordability stands across the country, objectively, we're going to focus on kind of managing expenses to a level appropriate given where we believe the market conditions are headed.

On the pipeline side, again, we've seen as rates moved higher, we saw a pretty marked pullback in overall activity, as I noted in my comments around lock volume there, specifically in the later part of the third quarter. And we expect -- as we noted, we expect that to continue. That said, the team at Prime continues to be focused on recruiting top-performing LOs across the country. We are looking to kind of grow the business very, very thoughtfully in a profitable way as we go forward. But again, it's a challenging environment. And again, we're going to do everything in our power to drive toward profitability, but also support our LOs across the country to help them generate as much volume as they can.

Hannah Wynn

Great. That's very helpful. And then on the margin side, we saw the margin take a nice step up this quarter, which was great to see. Can you just talk about how much runway you still see from loan repricing and where you expect the margin to trend with here? I know you mentioned there was increased deposit competition and you expect those to go up. So just curious where you expect the overall NIM to go.

William Furr

Yes. So I think it's -- it will be a story of kind of 2 different metrics. I think from a net interest income perspective, we are seeing and we expect to continue to see kind of positive trajectory in overall revenue there. We moved to $122 million in the quarter, given where our loan growth trends has been as well as where our pipeline for commercial activity currently sits. We do continue to feel comfortable and confident in kind of the trajectory of NII, but the growth will be driven largely on the asset side as we think about kind of overall loan growth.

I did note that deposit costs likely have reached their trough period -- trough for this point in the cycle. We believe that to be true. And as short-term rates start to move higher, we do expect there'll be intense competition for deposits, and that will drive overall interest-bearing deposit costs likely higher.

And again, right now, currently from a competitive perspective, I think largely seeing rational activity, notwithstanding some new entrants in the market that have got some special offer rates. We're competing with that kind of every day. But overall, from a NIM perspective, we would expect to see NIM level out and potentially travel a little lower from these levels from the 3.33% level. But again, we would -- we will trade net interest income for modestly lower NIM as we go forward.

Operator

Your next question comes from the line of Matt Olney with Stephens.

Matt Olney

I wanted to ask more about the loan growth trends that we saw at the bank look really strong. Any more color on the drivers of that loan growth? I know there's lots of disruption in your markets. I'm curious if this is benefiting some of your volumes. And I think I heard Will mention expectations of some higher payoffs in the fourth quarter. Any more color there? I'm just curious if this momentum that we're seeing this year can continue into 2027.

William Furr

Thanks for the question. Yes, we've seen a positive trajectory in our commercial loans. As we noted, we've seen about 7% overall growth. That's largely driven by our regions across the state of Texas and the good work the teams are doing there. We have seen a lot of our growth, so about $300 million of growth come from our CRE portfolio and the balance from C&I.

And so as we look forward, again, the pipelines remain robust. The activity the team is generating is robust. We do feel like we're benefiting from some of the transitional activity in the market given some of the transactions that have executed. The team is actively and aggressively recruiting new bankers to the platform, and we've been successful in that endeavor. And so we're very positive on kind of where the bank is in terms of recruiting producers as well as the activity that our bankers have been able to produce.

On the payoff side, just to clean that up, well, the outlook considers what we would call a standard level of payoffs in the quarter. So nothing outsized expected in the fourth quarter. But nonetheless, we always try to consider that in our outlook. So again, solid momentum, a lot of good activity, pipelines are -- pipelines remain very strong. Recruiting has been a positive lift as well as the productivity of our bankers across the footprint. So on the loan and deposit side of the bank, we're pretty confident about where the trends are pointing.

Matt Olney

Okay. And then I guess, shifting over towards capital. We saw the repurchase activity this quarter, a little bit slower. Is this valuation driven, longer blackouts? Any color you can speak to as far as the buyback that we saw in the third quarter? And I think you still have quite a bit remaining in the authorization before it expires in January. What's the appetite to complete this authorization before expiration?

Jeremy Ford

Yes. I think that the third quarter, I think, shows good prudence and execution by us in that, the stock price was elevated. And also, we saw rates climbing and knew that they have an implication on AOCI. So that's why we only did $20 million in the quarter versus $50 million in the 2 prior quarters. And so we're going to go back and look at this quarter as well. We've got $85 million of authorization left. I don't think we'd be able to achieve that in 1 quarter, but we will be available to transact when the window opens.

Operator

Your next question comes from the line of Evan Yee with Raymond James.

Evan Yee

Just real quick, I know you touched on expenses a little bit, but could you shed some more color on what drove the improvement in the nonvariable expense outlook for the year and how we should think about that headed into next year? Just trying to appreciate the puts and takes there.

William Furr

Yes. So again, as we've looked at expenses, and we've said this for a series of quarters, I mean, our priorities are these. We're looking to continue to grow our productive sales resources across all of our businesses, and that's the broker-dealer, the mortgage business as well as the bank. And I think each team and the leadership team there is focused on doing that. But in that, we're also focused on driving productivity, both from enhanced leverage of some of the technology that's available to us, but also process improvement. And I think the team has been very good and prudent in managing that over the last couple of years.

And so we're very pleased we've been able to keep our expenses other than variable compensation stable now for a series of quarters. And again, where we are is we've made -- we continue to make progress on some initiatives that we've got across the organization, again, not named initiatives, but just the work the team is doing every day, and we believe expenses will be a little lower. So that is really what drove the change in the guidance. But again, it's -- it's kind of a foundational effort every day here to drive expenses and productivity while continuing to invest in productive resources for the organization.

Evan Yee

Okay. Great. And then switching over to the balance sheet. You had solid deposit growth this quarter. I appreciate that you reiterated your outlook for 2026, but could you provide any color on how we should think about that growth going into 2027?

William Furr

Yes. I think from a deposit growth perspective, we continue to be focused on growing low-cost and core granular deposits across our business. We are principally a commercially oriented bank. And so that starts with the treasury team and what I noted in my comments around their efforts to kind of further provide quality services to our customers, therefore, driving largely commercial deposits as well as being competitive from an interest rate perspective.

We've got a number of initiatives across the footprint to grow and engage more customers and grow our customer base from a deposit perspective. But again, I think that will remain competitive and has been probably the place we've seen as much competition as anything for the new entrants as it relates to kind of some of the M&A transactions that have occurred from offer rates and teaser rates and the like. So we see a positive trajectory in deposits, I think, going into 2027. But again, we'll update that guidance as we roll into the January meeting.

Operator

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.