Hilltop Holdings Inc. ( HTH Quick Quote HTH - Free Report) lost 5.4% in after-market trading following the release of its first-quarter 2022 results. Earnings of 28 cents per share missed the Zacks Consensus Estimate of 51 cents. The bottom line reflects an 80.8% plunge from the prior-year quarter’s $1.46. Results were negatively impacted by the decline in revenues. Moreover, loans and deposit balances witnessed a decline in the quarter. Profitability ratios also deteriorated. However, lower expenses aided results to some extent. Net income attributable to Hilltop Holdings was $22.3 million, down from $120.3 million recorded in the prior-year quarter. Revenues & Expenses Decline
Net revenues were $316.4 million, declining 39.5% year over year. The top line missed the Zacks Consensus Estimate of $368.1 million.
Net interest income declined 5.4% year over year to $99.99 million. The net interest margin (taxable-equivalent basis) was 2.37%, contracting 32 basis points (bps) from the prior-year quarter. Non-interest income was $216.4 million, down 48.2% year over year. The fall resulted from a decline in almost all fee income components, except for investment and securities advisory fees and commissions. Non-interest expenses fell 21.9% year over year to $286.4 million. The decline was due to a fall in all cost components except for net occupancy and equipment costs. As of Mar 31, 2022, net loans held for investment were $7.71 billion, down 1.1% from the end of the prior quarter. Total deposits were $12.67 billion, down 1.2% sequentially. Credit Quality: A Mixed Bag
In the reported quarter, provision for credit losses was $0.12 million against a reversal of credit losses of $5.1 million in the prior-year quarter. As of Mar 31, 2022, non-performing assets as a percentage of total assets were 0.25%, down 31 bps from the prior-year quarter.
Profitability Ratios Worsen, Capital Ratios Improve
Return on average assets at the end of the reported quarter was 0.53%, down from the prior-year quarter’s 2.90%. Also, the return on average equity was 3.60%, down from 20.58%.
Common equity tier 1 capital ratio was 21.27% as of Mar 31, 2022, up from 19.63% in the corresponding period of 2021. The total capital ratio was 23.85%, reflecting a rise from the year-ago period’s 22.96%. Share Repurchase Update
In the reported quarter, the company did not repurchase any shares.
Hilltop Holdings’ restructuring efforts to diversify business as a profitable banking operation are commendable. Supported by a solid balance sheet and liquidity position, the company is expected to sustain efficient capital deployment activities in the future, thus continuing to enhance shareholder value.
However, a persistent decline in margins and elevated expenses, stemming from continued investments in franchise, are likely to hurt the bottom line.
Hilltop Holdings currently carries a Zacks Rank #3 (Hold). You can see
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