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Hilltop Holdings (HTH) Q3 Earnings in Line, Revenues Beat

Zacks Equity Research

Hilltop Holdings Inc. HTH reported third-quarter 2016 operating earnings per share of 53 cents, in line with the Zacks Consensus Estimate. Earnings were also up 12.8% year over year. This upside came on the back of solid performance by the company’s units – PlainsCapital Bank, PrimeLending and HilltopSecurities. However, National Lloyds witnessed a seasonality effect on lower claims payable.

Net interest income declined 13.9% year over year to $99.2 million. Non-interest income increased 19.6% year over year to $354.5 million.

Hilltop incurred provision for loan losses of $4 million compared with $28 million in the year-ago quarter, reflecting an 85% year-over-year decrease. Total interest expenses came in at $16.1 million, up 5.2% from the year-ago quarter. Non-interest expenses increased 9.2% year over year to $364.1 million due to higher employee and compensation benefits.

The company’s operating revenues at the end of the third quarter were $454 million. The top line handily beat the Zacks Consensus Estimate of $425 million and also increased 10.2% year over year owing to growth in non-interest income.

Financial Update

As of Sep 30, 2016, Hilltop’s cash and due from banks was $528 million, down 19% from year-end 2015 but up 0.4% year over year.

As of Sep 30, 2016, total shareholders’ equity was $1.8 billion, up 6.4% from year-end 2015. The metric increased 7.7% year over year.

Total assets were $12.4 billion as of Sep 30, 2016. The metric was up 6.9 % from year-end 2015 and also increased 0.4% year over year.

Total liabilities increased 4% to $10.5 billion from the last-year quarter end. However, the metric dipped 1% year over year.

Hilltop’s annualized return on average assets at the end of the reported quarter were 1.7%, up 20 basis points (bps) year over year. Return on average equity at the end of the third quarter was 11.4%, up 44 bps from the prior-year quarter.

Profitability Metrics

As of Sep 30, 2016, Hilltop’s book value was $18.73 per share, up 7.9% year over year.  Net interest margin contracted to 4.5% at the end of the third quarter, down 127 bps from the last-year quarter end.

Share Repurchase and Divided Update:

The board of directors of Hilltop authorized a dividend program for the first time and declared a quarterly cash dividend of 6 cents per common share. The dividend is payable on Nov 30, to all common stockholders on record as of the close of business on Nov 15, 2016.

HILLTOP HLDGS Price, Consensus and EPS Surprise

 

HILLTOP HLDGS Price, Consensus and EPS Surprise | HILLTOP HLDGS Quote

Zacks Rank and Performance of Other Insurers

Hilltop presently carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among the other players from the finance sector that have reported their earnings so far, the bottom line of Alliance Data Systems Corporation ADS, Progressive Corp PGR and American Express Company AXP comfortably beat their respective Zacks Consensus Estimate.

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