Hilltop Holdings (HTH) Misses Q1 Earnings, Revenue Estimates
Zacks Investment Research | Apr 26, 2017 03:30AM ET
Hilltop Holdings Inc. (NYSE:HTH) recorded a negative earnings surprise of 20.6% in the first quarter of 2017. The company’s earnings per share of 27 cents lagged the Zacks Consensus Estimate of 34 cents and declined 3.6% year over year.
Lower net interest income and non-interest income affected the results. Further, the balance sheet and profitability ratios remained weak. However, the company witnessed lower expenses during the quarter.
Net income applicable to common stockholders came in at $26.4 million, down 4.1% year over year.
Revenue Decline More than Offsets Lower Costs
The company’s operating revenues for the quarter were $363.5 million, down 2% year over year. The figure also missed the Zacks Consensus Estimate of $393 million.
Net interest income for the quarter declined 1.9% year over year to $92.1 million. Net interest margin was 3.52%, up 15 basis points (bps) from the prior-year quarter.
Non-interest income fell 2.1% year over year to $271.4 million mainly due to lower income from sale of loans and other mortgage production income, reduced investment and securities advisory fees and commission income along with low insurance premium earned.
However, non-interest expenses reduced 1.4% year over year to $320.5 million, mainly attributable to lower occupancy and equipment expenses, loss adjustment expenses, policy acquisition and other underwriting expenses and other expenses.
Mixed Credit Quality
Provision for loan losses was $1.7 million, down roughly 50% year over year. Non-covered non-performing assets as a percentage of total assets was 0.28% compared with 0.24% in the prior-year quarter.
Non-covered non-performing loans were $28.8 million, up 6.4% year over year.
Weak Balance Sheet
As of Mar 31, 2017, Hilltop’s cash and due from banks was $545.9 million, up 18.4% sequentially. Further, total shareholders’ equity was $1.9 billion, almost flat compared with the prior month.
Further, total assets were $12.3 billion as of Mar 31, 2017, down 3.1% sequentially. Also, total liabilities declined 3.8% from the prior-quarter to $10.4 billion.
Profitability Weakens, Capital Ratios Improve
Hilltop’s annualized return on average assets at the end of the reported quarter was 0.88%, down from 0.96% recorded in the prior-year quarter. Additionally, return on average equity was 5.73%, down from 6.32%.
Common equity tier 1 capital was 19.03%, significantly up year over year. Also, total capital ratio was significantly up to 20.12% year over year.
Hilltop currently carries a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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