Hilltop's Q1 Earnings Sink on Lower Revs - Analyst Blog

Hilltop Holdings Inc. HTH reported first-quarter 2014 operating earnings per share of 26 cents, lagging both the Zacks Consensus Estimate of 32 cents and year-ago quarter figure of 39 cents. Consequently, net income plunged 26.5% year over year to $23.8 million, primarily due to fall in the top line.

Hilltop's total revenues grossed $261.9 million, declining 9% from $287.9 million in the year-ago quarter. Top line also missed the Zacks Consensus Estimate of $263 million. Net interest income rose 26.9% year over year to $85.4 million, while non-interest income plummeted 20.3% to $170.1 million.  

Hilltop incurred provision for loan losses of $3.2 million in the reported quarter, down from $13.0 million in the year-ago quarter. The total interest expense declined to $6.4 million from $7.3 million in the prior-year period, while non-interest expenses fell to $212.6 million from $215 million in the year-ago period.

Financial Update

As on Mar 31, 2014, Hilltop held cash and due from banks of $890 million, up from $713.1 million at 2013-end, along with a strong securities portfolio worth $1.33 billion, up from $1.26 billion at 2013-end.

Total shareholder equity came in at $1.36 billion at Mar 2014-end, up from $1.31 billion at 2013-end. Moreover, total assets appreciated to $9.03 billion from $8.90 billion at 2012-end.

Meanwhile, total liabilities increased to $7.68 billion from $7.59 billion at 2013-end. Total deposits fell to $6.66 billion from $6.72 billion at 2013-end. Operating cash flow edged down 3.6% year over year to $154.3 million.

At Mar 2014-end, Hilltop's insurance operations had a deposit in custody for various investments in State Insurance Departments with carrying values of $8.6 million, down from $9.4 million at 2013-end.

Profitability Metrics

At the end of Mar 2014, Hilltop's book value increased 8% year over year to $13.76 per share, whereas net interest margin improved slightly to 4.62% from 4.35% in the year-ago quarter. However, return on average shareholders' equity (ROE) decreased to 7.65% from 11.46% in the year-ago period.

Hilltop's risk-based Tier 1 capital ratio was 18.66% at the end of Mar 2014, up from 18.35% at 2013-end. Moreover, PlainsCapital Bank's risk-based Tier 1 capital ratio was pegged at 13.47% at the end of Mar 2014, marginally higher than 13.38% at the end of 2013.

Others

Hilltop now has a Zacks Rank #3 (Hold). Some better-ranked financial stocks include HCI Group Inc. HCI, Aspen Insurance Holdings Ltd. AHL and OneBeacon Insurance Group Ltd. OB. All these stocks sport a Zacks Rank #1 (Strong Buy).