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It has been about a month since the last earnings report for Hilltop Holdings (HTH). Shares have added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hilltop Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hilltop Holdings Q4 Earnings Beat, Revenues & Costs Up
Hilltop Holdings’ fourth-quarter 2020 earnings from continuing operations of $1.30 per share surpassed the Zacks Consensus Estimate of $1.28. The bottom line reflects a significant rise from the prior-year quarter’s reported number.
Results for the quarter benefited from growth in revenues, partly offset by higher expenses. The balance sheet position remained strong. Moreover, the company recorded a reversal of credit losses, which was a major tailwind.
Net income applicable to common stockholders was $116.4 million, up significantly from $49.3 million recorded in the prior-year quarter.
For 2020, earnings from continuing operations of $4.58 per share lagged the Zacks Consensus Estimate of $4.68. However, the figure compares favorably with the prior-year earnings of $2.29. Net income applicable to common stockholders was $447.8 million, up 98.8% from 2019.
Revenues Improve, Expenses Rise
Quarterly net revenues were $555.3 million, up 48.3% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate of $524.5 million.
For the year, net revenues of $2.11 billion surpassed the Zacks Consensus Estimate of $2.08 billion. The top line increased 40.8% year over year.
NII for the quarter was $107.4 million, down 3.1% from the prior-year quarter. NIM (taxable equivalent basis) came in at 2.72%, contracting 59 basis points (bps).
Non-interest income surged 69.9% to $447.9 million. The upside resulted from an increase in all fee income components.
Non-interest expenses flared up 30.7% to $402.3 million. The rise was due to an increase in all cost components except for net occupancy and equipment costs.
Credit Quality: Mixed Bag
In the reported quarter, the company recorded reversal of credit losses of $3.5 million against provision for credit losses of $6.9 million in the prior-year quarter.
However, as of Dec 31, 2020, non-performing assets as a percentage of total assets was 0.60%, up from 0.37% recorded at the end of the prior-year quarter. Non-performing loans were $79.9 million, up from $38.3 million recorded in the comparable period of 2019.
Balance Sheet Strong
As of Dec 31, 2020, Hilltop Holdings’ cash and due from banks were $1.06 billion, down 16.8% from the prior quarter. Net loans held for investment were $7.54 billion, down 3.2%. Total deposits were $11.24 billion, down marginally.
Total shareholders’ equity was $2.35 billion, down 3.6%.
Profitability & Capital Ratios Improve
Return on average assets at the end of the reported quarter was 2.83%, up from the prior-year quarter’s 1.40%. Also, return on average equity was 20.56%, up from the year-earlier quarter’s 9.43%.
Common equity tier 1 capital ratio was 18.97% as of Dec 31, 2020, up from 16.70% in the corresponding period of 2019. Moreover, total capital ratio was 22.34%, reflecting a rise from the prior-year quarter’s 17.55%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 11.89% due to these changes.
At this time, Hilltop Holdings has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Hilltop Holdings has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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