Hilltop Holdings (HTH) Beats on Q4 Earnings as Costs Decline

Hilltop Holdings Inc.’s HTH fourth-quarter 2021 earnings from continuing operations of 78 cents per share handily outpaced the Zacks Consensus Estimate of 72 cents. The bottom line, however, reflects a 40% plunge from the prior-year quarter’s $1.30.

Results primarily benefited from a decline in expenses and higher provision benefits. Loans and deposit balances witnessed a rise in the quarter. However, lower revenues hurt results to some extent. Profitability ratios also deteriorated in the quarter under review.

Net income attributable to Hilltop Holdings was $62.2 million, down 46.6% from the prior-year quarter.

In 2021, earnings from continuing operations of $4.61 per share outpaced the Zacks Consensus Estimate of $4.52. The bottom line reflects a marginal rise from $4.58 per share recorded in 2020. Net income attributable to the company was $374.5 million, down 16.4% from 2020.

Revenues & Expenses Decline

Quarterly net revenues were $389.1 million, declining 29.9% year over year. The top line missed the Zacks Consensus Estimate of $414.4 million.

For 2021, net revenues were $1.83 billion, declining 13.3% year over year. The top line, however, met the Zacks Consensus Estimate.

Quarterly net interest income declined 2.9% year over year to $104.3 million. The net interest margin (taxable-equivalent basis) was 2.45%, contracting 27 basis points (bps) from the prior-year quarter.

Non-interest income was $284.8 million, down 36.4%. The fall resulted from a decline in almost all fee income components, except for investment and securities advisory fees and commissions.

Non-interest expenses fell 19.9% year over year to $322.2 million. The decline was due to a fall in all cost components.

As of Dec 31, 2021, net loans held for investment were $7.79 billion, up 4.6% from the end of the prior quarter. Total deposits were $12.82 billion, rising 5.7% sequentially.

Credit Quality Improves

In the reported quarter, provisions for credit losses were a benefit of $18.6 million, up from $3.5 million in the prior-year quarter. As of Dec 31, 2021, non-performing assets as a percentage of total assets were 0.29%, down 31 bps from the prior-year quarter.

Profitability Ratios Worsen, Capital Ratios Improve

Return on average assets at the end of the reported quarter was 1.41%, down from the prior-year quarter’s 2.83%. Also, the return on average equity was 9.93%, down from 20.56%.

Common equity tier 1 capital ratio was 21.22% as of Dec 31, 2021, up from 18.97% in the corresponding period of 2020. The total capital ratio was 23.75%, reflecting a rise from the year-ago period’s 22.34%.

Share Repurchase Update

In 2021, the company repurchased 3.63 million shares for $123.6 million.

Hilltop Holdings authorized a new share repurchase plan to buy back shares worth up to $100 million through January 2023.

Dividend Hike

Concurrent with the earnings release, the company announced a quarterly dividend of 15 cents per share, representing a hike of 25% from the prior payout. The dividend will be paid out on Feb 28 to shareholders of record as of Feb 15.

Our Take

Hilltop Holdings’ restructuring efforts to diversify business as a profitable banking operation are commendable. Supported by a solid balance sheet and liquidity position, the company is expected to sustain efficient capital deployment activities in the future, thus continuing to enhance shareholder value.

Hilltop Holdings Inc. Price, Consensus and EPS Surprise

Hilltop Holdings Inc. Price, Consensus and EPS Surprise

Hilltop Holdings Inc. price-consensus-eps-surprise-chart | Hilltop Holdings Inc. Quote

Hilltop Holdings currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Banks

Hancock Whitney Corporation’s HWC fourth-quarter 2021 adjusted earnings of $1.51 per share outpaced the Zacks Consensus Estimate of $1.35. The bottom line improved 29% from the prior-year quarter. HWC’s GAAP net income was $137.7 million, up 32.9% from the prior-year quarter.

Hancock Whitney’s results benefited from higher non-interest income, a fall in non-interest expenses and provision benefits. However, a decline in net interest income, reflecting lower interest rates, was the undermining factor.

Commerce Bancshares Inc.’s CBSH fourth-quarter 2021 earnings per share of 94 cents met the Zacks Consensus Estimate. The bottom line, however, declined 10.5% from the prior-year quarter. For CBSH, net income attributable to common shareholders was $114.9 million, down 11.5% year over year.

Commerce Bancshares’ results primarily benefited from an improvement in non-interest income, a slight rise in loan balances and provision benefits. However, an increase in non-interest expenses and a fall in net interest income were the major headwinds.

Bank OZK’s OZK fourth-quarter 2021 earnings per share of $1.17 surpassed the Zacks Consensus Estimate of 98 cents. The bottom line reflects growth of 25.8% from the year-earlier quarter’s number. OZK’s net income available to common shareholders was $149.8 million, up 24.3% from the year-ago quarter.

Bank OZK’s quarterly results were aided by an improvement in revenues, partly offset by higher expenses. The company also recorded provision benefits in the quarter.

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