Hilltop Holdings Stock Dips Despite Q3 Earnings Beat on High Fee Income

Core Viewpoint - Hilltop Holdings Inc. reported third-quarter 2024 earnings of 46 cents per share, exceeding the Zacks Consensus Estimate of 39 cents, but reflecting a 19.3% decline from the prior-year quarter [1] Financial Performance - Net income attributable to common stockholders was $29.7 million, down 19.8$24.2 million [1] - Net revenues were $305.5 million, a decline of 2.2$302.3 million [2] - Net interest income (NII) decreased by 9.2% year over year to $105 million, slightly below the estimate of$106.6 million [2] - Non-interest income increased by 1.8% year over year to $200.4 million, surpassing the projected$192.5 million [2] - Non-interest expenses rose by 1.7% from the prior-year quarter to $264.3 million, higher than the estimate of$259.9 million [2] Loan and Deposit Trends - As of September 30, 2024, net loans held for investment were $7.9 billion, down 2.4$10.8 billion [3] Credit Quality - Hilltop Holdings recorded a reversal of provision for credit losses of $1.3 million in the third quarter, compared to a reversal of$40,000 in the prior-year quarter [4] - Non-performing assets as a percentage of total assets were 0.59%, an increase of 37 basis points from the year-ago quarter [4] Profitability and Capital Ratios - Return on average assets was 0.84%, down from 0.94% in the prior-year quarter, while return on average stockholders' equity decreased to 5.51% from 7.11% [5] - Common equity tier 1 capital ratio improved to 20.48% as of September 30, 2024, up from 18.60% in the corresponding period of 2023 [5] - Total capital ratio increased to 23.68%, compared to 21.54% in the year-ago period [5] Outlook - The company’s solid balance sheet, business restructuring efforts, and improving fee income, along with high rates and decent loan demand, are expected to support revenue growth [6]