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Hilltop Holdings' (HTH) Q4 Earnings Lag Estimates, Costs Down
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Hilltop Holdings Inc.’s (HTH - Free Report) fourth-quarter 2018 earnings per share of 30 cents missed the Zacks Consensus Estimate of 43 cents. However, the figure compares favorably with the prior-year quarter’s earnings of 14 cents per share (including the impact of Tax Act).
Results were primarily affected by a decrease in non-interest income. In addition, capital ratios deteriorated during the quarter. However, higher net interest income and lower expenses provided some support. Further, an improvement in overall asset quality was a positive.
Net income applicable to common stockholders for the quarter under review was $28.1 million, up from $13.4 million registered in the prior-year quarter.
Earnings per share for 2018 came in at $1.28, missing the Zacks Consensus Estimate of $1.44. The earnings figure also compares unfavorably with the prior-year tally of $1.36 (including the impact of Tax Act). Net income attributable to Hilltop Holdings for 2018 was $121.4 million, down from the prior-year figure of $132.5 million.
Revenues Down, Costs Decline
Net revenues for the quarter came in at $356.2 million, declining 10.8% year over year. The reported figure also lagged the Zacks Consensus Estimate of $367.4 million.
Net revenues for 2018 were $1.46 billion, down 10.3% year over year. The figure came in line with the Zacks Consensus Estimate.
Net interest income for the fourth quarter was $117.7 million, reflecting rise of 8.3% year over year. Net interest margin (taxable equivalent basis) was 3.76%, up 17 basis points (bps) from the prior-year quarter.
Non-interest income dipped 17.9% from the year-ago quarter to $238.5 million. The decline was due to a fall in all components except for mortgage loan origination fees.
Non-interest expenses decreased 5.4% year over year to $310.8 million in the fourth quarter. This downside can be attributed to a decline in all cost components except for professional services costs, net occupancy and equipment cost and loss and loss adjustment expenses.
Credit Quality: A Mixed Bag
During the quarter, the company reported provision for loan losses of $6.9 million compared to $5.5 million reported in the prior-year quarter.
Moreover, non-performing assets as a percentage of total assets were 0.45% at the end of the quarter, down 20 bps from the year-ago quarter. Furthermore, non-performing loans were nearly $33.9 million as of Dec 31, 2018, down from $45.6 million as of Dec 31, 2017.
Balance Sheet
As of Dec 31, 2018, Hilltop Holdings’ cash and due from banks was $644 million compared with $405.7 million at the prior-quarter end. Total shareholders’ equity was nearly $2 billion, marginally up from the end of the third quarter.
Total deposits were $8.5 billion, up 3% from the prior-quarter end figure.
Profitability Ratios Improve, Capital Ratios Deteriorate
Return on average assets at the end of the quarter was 0.86%, up from 0.41% witnessed in the prior-year quarter. Additionally, return on average equity was 5.76%, up from 2.78% in the year-earlier quarter.
Common equity tier 1 capital ratio was 16.58% as of Dec 31, 2018, down from 17.71% as of Dec 31, 2017. Moreover, total capital ratio was 17.47%, reflecting a decline from 18.78% reported in the prior-year quarter.
Our Take
Elevated expense levels owing to continued investments in franchise and inorganic growth strategy are likely to curb the company’s bottom-line growth. However, increasing loan demand and a strong balance sheet should keep supporting financials.
Hilltop Holdings Inc. Price, Consensus and EPS Surprise
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2019 (ended Dec 31) earnings came in at 65 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflected year-over-year growth of 10.2%.
Synovus Financial’s (SNV - Free Report) fourth-quarter earnings of 92 cents per share lagged the Zacks Consensus Estimate of 94 cents. However, the reported figure came in 27.8% higher than the prior-year tally.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
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Hilltop Holdings' (HTH) Q4 Earnings Lag Estimates, Costs Down
Hilltop Holdings Inc.’s (HTH - Free Report) fourth-quarter 2018 earnings per share of 30 cents missed the Zacks Consensus Estimate of 43 cents. However, the figure compares favorably with the prior-year quarter’s earnings of 14 cents per share (including the impact of Tax Act).
Results were primarily affected by a decrease in non-interest income. In addition, capital ratios deteriorated during the quarter. However, higher net interest income and lower expenses provided some support. Further, an improvement in overall asset quality was a positive.
Net income applicable to common stockholders for the quarter under review was $28.1 million, up from $13.4 million registered in the prior-year quarter.
Earnings per share for 2018 came in at $1.28, missing the Zacks Consensus Estimate of $1.44. The earnings figure also compares unfavorably with the prior-year tally of $1.36 (including the impact of Tax Act). Net income attributable to Hilltop Holdings for 2018 was $121.4 million, down from the prior-year figure of $132.5 million.
Revenues Down, Costs Decline
Net revenues for the quarter came in at $356.2 million, declining 10.8% year over year. The reported figure also lagged the Zacks Consensus Estimate of $367.4 million.
Net revenues for 2018 were $1.46 billion, down 10.3% year over year. The figure came in line with the Zacks Consensus Estimate.
Net interest income for the fourth quarter was $117.7 million, reflecting rise of 8.3% year over year. Net interest margin (taxable equivalent basis) was 3.76%, up 17 basis points (bps) from the prior-year quarter.
Non-interest income dipped 17.9% from the year-ago quarter to $238.5 million. The decline was due to a fall in all components except for mortgage loan origination fees.
Non-interest expenses decreased 5.4% year over year to $310.8 million in the fourth quarter. This downside can be attributed to a decline in all cost components except for professional services costs, net occupancy and equipment cost and loss and loss adjustment expenses.
Credit Quality: A Mixed Bag
During the quarter, the company reported provision for loan losses of $6.9 million compared to $5.5 million reported in the prior-year quarter.
Moreover, non-performing assets as a percentage of total assets were 0.45% at the end of the quarter, down 20 bps from the year-ago quarter. Furthermore, non-performing loans were nearly $33.9 million as of Dec 31, 2018, down from $45.6 million as of Dec 31, 2017.
Balance Sheet
As of Dec 31, 2018, Hilltop Holdings’ cash and due from banks was $644 million compared with $405.7 million at the prior-quarter end. Total shareholders’ equity was nearly $2 billion, marginally up from the end of the third quarter.
Total deposits were $8.5 billion, up 3% from the prior-quarter end figure.
Profitability Ratios Improve, Capital Ratios Deteriorate
Return on average assets at the end of the quarter was 0.86%, up from 0.41% witnessed in the prior-year quarter. Additionally, return on average equity was 5.76%, up from 2.78% in the year-earlier quarter.
Common equity tier 1 capital ratio was 16.58% as of Dec 31, 2018, down from 17.71% as of Dec 31, 2017. Moreover, total capital ratio was 17.47%, reflecting a decline from 18.78% reported in the prior-year quarter.
Our Take
Elevated expense levels owing to continued investments in franchise and inorganic growth strategy are likely to curb the company’s bottom-line growth. However, increasing loan demand and a strong balance sheet should keep supporting financials.
Hilltop Holdings Inc. Price, Consensus and EPS Surprise
Hilltop Holdings Inc. Price, Consensus and EPS Surprise | Hilltop Holdings Inc. Quote
Hilltop Holdings currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2019 (ended Dec 31) earnings came in at 65 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflected year-over-year growth of 10.2%.
Synovus Financial’s (SNV - Free Report) fourth-quarter earnings of 92 cents per share lagged the Zacks Consensus Estimate of 94 cents. However, the reported figure came in 27.8% higher than the prior-year tally.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>