Hilltop Holdings (NYSE:HTH) Inc. reported a 42.5% increase in earnings per share for Q3 2023, reaching 57 cents per share on Friday. This surge was largely attributed to lower expenses, a reversal in credit loss provisions, and restructuring efforts at PrimeLending. Despite these positive factors, the company faced challenges in its mortgage business, increased deposit costs, and lower loan and deposit balances which led to a decrease in net interest income (NII) and non-interest income.
The company's net income rose by 15.5% year over year to $37 million. However, net revenues decreased by 5.4% to $312.5 million, surpassing the Zacks Consensus Estimate. The NII dropped by 6.3% to $115.7 million, while non-interest income fell by 4.9% to $196.8 million due to reduced gains from loan sales and other sources.
Non-interest expenses were down by 9.9% to $260 million, largely due to decreased employee compensation and equipment costs. As of September 30, 2023, net loans held for investment stood at $8.1 billion (down 1.8%), while total deposits were marginally lower at $11.1 billion.
According to InvestingPro Data, the company's market cap stands at 1810M USD, with a P/E ratio of 17.76, and a price-to-book ratio of 0.88. These metrics indicate a relatively stable financial position. Despite the reported earnings per share increase, InvestingPro Tips suggests a declining trend in earnings per share, which may be a cause for concern for investors.
Hilltop Holdings recorded a provision benefit of $0.04 million compared with the prior-year quarter's $2.3 million, indicating improved credit quality. The return on average assets increased to 0.94%, up from the previous year's 0.79%. The common equity tier 1 capital ratio was reported at 18.60%, up from 17.45% in the corresponding period of 2022, while the total capital ratio stood at 21.54%, reflecting an increase from the year-ago period’s 20.07%.
Despite restructuring efforts at PrimeLending, Hilltop Holdings did not repurchase any shares in the quarter. The company currently carries a Zacks Rank #2 (Buy), while Zacks #1 Rank (Strong Buy) stocks are also available for investors. In contrast, Commerce Bancshares (NASDAQ:CBSH) Inc.'s Q3 2023 performance surpassed estimates, but Hancock Whitney (NASDAQ:HWC) Corp.'s performance declined year over year due to deposit outflows and higher provisions. Hilltop's non-performing assets as a percentage of total assets remained consistent with the previous year at 0.22%.
InvestingPro Tips also highlights that the company has raised its dividend for 7 consecutive years, which is a positive sign for investors looking for consistent returns. For more insights and tips, readers are encouraged to explore InvestingPro, which offers a wealth of additional tips and real-time metrics.
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