Hilltop Holdings Q1 Earnings Beat on Higher NII & Fee Income, Stock Up

Core Viewpoint - Hilltop Holdings Inc. reported better-than-expected first-quarter 2025 earnings, with a significant increase in net income and revenues, driven by higher net interest income and non-interest income, despite challenges from rising expenses and lower deposits [1][2][3]. Financial Performance - First-quarter 2025 earnings per share were 65 cents, exceeding the Zacks Consensus Estimate of 28 cents, and reflecting a 54.8% increase year-over-year [1] - Net income attributable to common stockholders was $42.1 million, up 52.2% from the prior year, surpassing the estimate of $17.9 million [2] - Net revenues reached $318.5 million, an 11.6% increase year-over-year, exceeding the Zacks Consensus Estimate of $283.9 million [3] - Non-interest income was $213.3 million, up 17.5% year-over-year, driven by increases across most components [4] Income and Expense Analysis - Net interest income increased by 1.4% year-over-year to $105.1 million, surpassing the estimate of $102.3 million [3] - Non-interest expenses rose slightly to $251.5 million, marginally below the projected $253.4 million [4] Loan and Deposit Trends - As of March 31, 2025, net loans held for investment were $7.9 billion, showing a slight sequential increase [5] - Total deposits were $10.8 billion, down 2.1% from the previous quarter, which was below the estimate of $11.6 billion [5] Credit Quality and Provisions - The company recorded a provision for credit losses of $9.3 million, compared to a reversal of credit losses of $2.9 million in the prior-year quarter [6] - Non-performing assets as a percentage of total assets increased to 0.56%, up 13 basis points year-over-year [6] Profitability and Capital Ratios - Return on average assets improved to 1.13%, up from 0.74% in the prior year [7] - Return on average stockholders' equity increased to 7.82%, compared to 5.23% in the previous year [7] - Common equity tier 1 capital ratio was 21.29%, up from 19.73% year-over-year, while the total capital ratio rose to 24.59% from 22.79% [7] Strategic Outlook - The company's restructuring efforts and improving fee income, along with favorable interest rates and decent loan demand, are expected to support revenue growth [8] - Challenges remain in the mortgage origination segment and asset quality, but a solid balance sheet allows for sustainable capital distributions [8]