Hilltop Holdings Inc. (HTH, Financial) has reported its first-quarter financial results, showcasing a robust performance despite facing several industry challenges. The company's net interest margin rose to 2.84% in the first quarter of 2025, up from 2.72% in the fourth quarter of 2024. This increase contributed to a boost in the book value per common share, climbing to $34.29 as of March 31, 2025, compared to $33.71 at the end of the previous year.
The company's capital strength was reflected in its Tier 1 leverage ratio, which stood at 12.86%, and a common equity tier 1 capital ratio of 21.29% on March 31. Hilltop's CEO, Jeremy Ford, credited the strong overall financial results to gains from the merchant banking segment, although he acknowledged the tough operating conditions.
PlainsCapital Bank, a key subsidiary, maintained resilient net interest income and net interest margins. However, its pre-tax income was adversely affected by a provision for credit losses amounting to $9.4 million. The challenging home buying landscape continued to impact PrimeLending's operations, particularly during the seasonally slow first quarter.
HilltopSecurities, another important arm of the business, encountered obstacles in its Fixed Income Services line, leading to a pre-tax margin of 8.5% for the broker-dealer segment.
Overall, Hilltop Holdings has demonstrated solid financial health and resilience, navigating through a challenging market while strengthening its financial position in the first quarter of 2025.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for Hilltop Holdings Inc (HTH, Financial) is $33.67 with a high estimate of $34.00 and a low estimate of $33.00. The average target implies an upside of 14.94% from the current price of $29.29. More detailed estimate data can be found on the Hilltop Holdings Inc (HTH) Forecast page.
Based on the consensus recommendation from 4 brokerage firms, Hilltop Holdings Inc's (HTH, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Hilltop Holdings Inc (HTH, Financial) in one year is $27.02, suggesting a downside of 7.75% from the current price of $29.29. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Hilltop Holdings Inc (HTH) Summary page.
HTH Key Business Developments
Release Date: January 31, 2025
- Net Income: $36 million or $0.55 per diluted share for Q4 2024.
- Return on Average Assets: 0.9% for the period.
- Return on Average Equity: 6.5% for the period.
- Plains Capital Bank Pre-Tax Income: $51 million on $13.3 billion of average assets.
- Average Loans Decline: Approximately 1% in the quarter.
- Average Deposit Increase: Nearly $600 million during the quarter.
- Provision for Credit Losses Reversal: $5.7 million.
- Net Interest Margin Compression: 7 basis points to 2.98% for the bank.
- Prime Lending Pre-Tax Loss: $9.9 million during the quarter.
- Hilltop Securities Pre-Tax Income: $20 million with net revenues of $125 million.
- Common Equity Tier 1 Capital Ratio: 21%.
- Tangible Book Value Per Share: Increased by $1.14 to $29.49.
- Dividends Returned to Stockholders: $11 million during the period.
- Allowance for Credit Losses: Decreased by $9.8 million to $101 million.
- Net Interest Income: $105.5 million for Q4 2024.
- Non-Interest Income: $196 million for Q4 2024.
- Non-Interest Expenses: Increased by $12 million to $263 million.
- Average HFI Loans: $7.9 billion for the fourth quarter.
- Net Charge-Offs: $3.9 million for Q4 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hilltop Holdings Inc (HTH, Financial) reported a net income of approximately $36 million for the fourth quarter of 2024, showing a positive financial performance.
- The company experienced growth in core deposits at PlainsCapital Bank, enhancing its liquidity position.
- Hilltop Holdings Inc (HTH) returned $64 million to stockholders, demonstrating a commitment to shareholder value.
- Hilltop Securities generated pre-tax income of $20 million with net revenues of $125 million, indicating strong performance in its business lines.
- The company maintained strong capital levels with a common equity tier one capital ratio of 21% and increased its tangible book value per share by $1.14 to $29.49.
Negative Points
- Prime Lending reported a pre-tax loss of $9.9 million during the fourth quarter, primarily due to a reduction in origination lock volumes.
- The net interest margin at PlainsCapital Bank experienced a compression of seven basis points from the third quarter to 2.98%.
- Hilltop Holdings Inc (HTH) recognized a negative valuation adjustment of $5 million related to an owned office facility intended for sale.
- The fixed income business at Hilltop Securities faced challenging market conditions, resulting in a decline in net revenues of $10 million compared to the fourth quarter of 2023.
- The company anticipates continued challenges in the mortgage market, which may negatively impact Prime Lending's operating results in the first quarter of 2025.
