Hilltop Holdings Reports Strong Q1 2024 Earnings, Beating Expectations

Hilltop Holdings Inc., a Dallas-based bank, reported first-quarter profit of $27.7 million, or $0.42 per share, beating Wall Street expectations. The company's revenue was $391.2 million, with revenue net of interest expense at $285.2 million, also surpassing Street forecasts.

The strong results were attributed to robust returns from PlainsCapital Bank and Hilltop Securities, despite ongoing economic headwinds. PlainsCapital Bank generated $50 million in pre-tax income, with a return on average assets of 1.2%. However, loan growth was limited due to a pullback in the commercial lending market.

PrimeLending, Hilltop's mortgage origination subsidiary, reported a pre-tax loss of $16.5 million, impacted by a $7 million valuation adjustment on the mortgage servicing rights (MSR) asset. The elevated interest rate environment and tight housing market continue to impact mortgage origination volumes. However, the company's cost-cutting measures have helped improve results.

Hilltop Securities generated pre-tax income of $19 million on net revenues of $170 million, driven by the mortgage trading business and suite deposit products within Wealth Management. The company's credit loss improvement reflects its ability to make good loans in tough conditions.

Why this matters: Hilltop Holdings' Q1 2024 earnings demonstrate the resilience of its diverse business model in navigating economic challenges. The company's strong performance amid a difficult lending environment highlights its ability to adapt and generate profitability for shareholders.

In a conference call discussing the earnings results, Erik Yohe, Executive VP of Corporate Development, and Jeremy Ford, President and CEO of Hilltop Holdings Inc., expressed confidence in the company's long-term decision-making, strategic initiatives, and cost management efforts. Ford noted, "The Q1 results were a continuation of the market trends experienced throughout 2023." While Hilltop shares have upside potential, the near-term outlook remains clouded by macroeconomic factors beyond the bank's control, such as the Federal Reserve's rate movements and their impact on Treasury yields and mortgage rates.

Key Takeaways

• Hilltop Holdings reported Q1 2024 profit of $27.7M, beating Wall Street expectations.
• PlainsCapital Bank generated $50M in pre-tax income, but loan growth was limited.
• PrimeLending reported a $16.5M pre-tax loss due to a $7M MSR asset valuation adjustment.
• Hilltop Securities generated $19M in pre-tax income, driven by mortgage trading and wealth management.
• Hilltop's diverse business model demonstrated resilience amid economic challenges, but near-term outlook remains clouded.