Hilltop Holdings Stock Dips Despite Q3 Earnings Beat on High Fee Income

Hilltop Holdings Inc.’s HTH third-quarter 2024 earnings of 46 cents per share beat the Zacks Consensus Estimate of 39 cents. However, the bottom line declined 19.3% from the prior-year quarter.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Results benefited from higher non-interest income and a reversal of provisions. Higher deposits and an improvement in capital ratios were other positives. However, a decline in net interest income (NII), lower loans and a rise in expenses were spoilsports. In light of these negatives, shares of Hilltop Holdings declined 3% in the after-market trading hours.Net income attributable to common stockholders was $29.7 million, down 19.8% year over year. Our estimate for the metric was $24.2 million.Hilltop Holdings’ Revenues Decline, Expenses RiseNet revenues were $305.5 million, which declined 2.2% year over year. However, the top line surpassed the Zacks Consensus Estimate of $302.3 million.NII declined 9.2% year over year to $105 million. Our estimate for the metric was $106.6 million.The net interest margin (NIM) (taxable-equivalent basis) was 2.85%, down 19 basis points (bps) year over year. We had expected NIM to be 2.90%.Non-interest income was $200.4 million, up 1.8% year over year. The increase was driven by a rise in all the components except mortgage loan origination fees. We had projected the metric to be $192.5 million.Non-interest expenses rose 1.7% from the prior-year quarter to $264.3 million. We projected total non-interest expenses of $259.9 million.As of Sept. 30, 2024, net loans held for investment were $7.9 billion, down 2.4% sequentially. Total deposits were $10.8 billion, up 4% from the end of the previous quarter. Our estimates for net loans held for investment and total deposits were $8.1 billion and $11 billion, respectively.Hilltop Holdings’ Credit Quality: Mixed BagIn the third quarter of 2024, Hilltop Holdings recorded a reversal of provision for credit losses of $1.3 million, compared with a reversal of $40,000 from the prior-year quarter.As of Sept. 30, 2024, non-performing assets, as a percentage of total assets, were 0.59%, which increased 37 bps from the year-ago quarter.HTH’s Profitability Ratios Decline, Capital Ratios ImproveReturn on average assets at the end of the reported quarter was 0.84%, down from the prior-year quarter’s 0.94%. The return on average stockholders’ equity was 5.51%, which declined from 7.11%.The common equity tier 1 capital ratio was 20.48% as of Sept. 30, 2024, up from 18.60% in the corresponding period of 2023. The total capital ratio was 23.68%, up from the year-ago period’s 21.54%.Our Take on Hilltop HoldingsHilltop Holdings’ solid balance sheet, business restructuring efforts and improving fee income alongside high rates and decent loan demand will aid the top line. A solid liquidity position is another positive.Hilltop Holdings Inc. Price, Consensus and EPS Surprise Hilltop Holdings Inc. price-consensus-eps-surprise-chart | Hilltop Holdings Inc. QuoteHilltop Holdings currently carries a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.Performances of Other BanksProsperity Bancshares Inc.’s PB third-quarter 2024 adjusted earnings per share (EPS) of $1.34 beat the Zacks Consensus Estimate of $1.30. Moreover, the bottom line compared favorably with adjusted earnings of $1.21 in the prior-year quarter.PB’s results benefited from an increase in NII. Further, a rise in deposits and loans was another positive. Nevertheless, a fall in adjusted non-interest income and rising expenses were major headwinds. During the quarter, provisions remained stable.East West Bancorp, Inc.’s EWBC third-quarter 2024 adjusted EPS of $2.09 surpassed the Zacks Consensus Estimate of $2.05. Further, the bottom line increased by 3.5% from the prior-year quarter.EWBC’s results were aided by an increase in NII and non-interest income alongside lower non-interest expenses. Also, deposit and loan balances increased sequentially in the quarter. Provisions remained stable during the same time frame.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 Prosperity Bancshares, Inc. (PB): Free Stock Analysis Report East West Bancorp, Inc. (EWBC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks