Shares of Hilltop Holdings Inc. HTH gained 2.5% in after-market hours on better-than-expected results. Its first-quarter 2025 earnings of 65 cents per share handily beat the Zacks Consensus Estimate of 28 cents. Moreover, the bottom line jumped 54.8% from the prior-year quarter.

The results benefited from higher net interest income (NII) and non-interest income. Also, higher loans and an improvement in capital ratios were the other positives. However, higher non-interest expenses and provisions alongside lower deposits were the spoilsports.

Net income attributable to common stockholders was $42.1 million, up 52.2% year over year. Our estimate for the metric was $17.9 million.

Hilltop Holdings’ Revenues Increase, Expenses Rise

Net revenues in the first quarter were $318.5 million, which rose 11.6% year over year. Further, the top line surpassed the Zacks Consensus Estimate of $283.9 million.

NII increased 1.4% year over year to $105.1 million. Our estimate for the metric was $102.3 million.

Net interest margin (NIM) (taxable-equivalent basis) was 2.86%, down 1 basis point (bps) year over year. We had expected NIM to be 2.67%.

Non-interest income was $213.3 million, up 17.5% year over year. The increase was driven by a rise in all the components except mortgage loan origination fees. We had projected the metric to be $180.7 million.

Non-interest expenses rose marginally from the prior-year quarter to $251.5 million. We projected total non-interest expenses to be $253.4 million.

As of March 31, 2025, net loans held for investment were $7.9 billion, up marginally sequentially. Total deposits were $10.8 billion, down 2.1% from the end of the previous quarter. Our estimates for net loans held for investment and total deposits were $8.3 billion and $11.6 billion, respectively.

Hilltop Holdings’ Credit Quality Deteriorates

In the first quarter of 2025, Hilltop Holdings recorded a provision for credit losses of $9.3 million, compared with a reversal of credit losses of $2.9 million from the prior-year quarter.

As of March 31, 2025, non-performing assets, as a percentage of total assets, were 0.56%, which increased 13 bps from the year-ago quarter.

HTH’s Profitability Ratios & Capital Ratios Improve

Return on average assets at the end of the reported quarter was 1.13%, up from the prior-year quarter’s 0.74%. The return on average stockholders’ equity was 7.82%, which increased from 5.23%.

The common equity tier 1 capital ratio was 21.29% as of March 31, 2025, up from 19.73% in the corresponding period of 2024. The total capital ratio was 24.59%, up from the year-ago period’s 22.79%.

Story Continues

Our Take on Hilltop Holdings

Hilltop Holdings’ business restructuring efforts and improving fee income, along with relatively high rates and decent loan demand, will aid the top line. However, subdued Mortgage Origination segment performance and deteriorating asset quality are woes. Nonetheless, a solid balance sheet enables sustainable capital distributions.

Hilltop Holdings Inc. Price, Consensus and EPS SurpriseHilltop Holdings Inc. Price, Consensus and EPS Surprise

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

Hilltop Holdings currently carries a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performances of Other Banks

East West Bancorp, Inc.’s EWBC first-quarter 2025 adjusted EPS of $2.09 beat the Zacks Consensus Estimate of $2.05. Moreover, the bottom line increased marginally from the prior-year quarter’s level. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

EWBC’s results were primarily aided by an increase in NII and non-interest income. Also, loan balances increased sequentially in the quarter. However, higher provisions and non-interest expenses alongside lower deposits were headwinds.

Capital One’s COF first-quarter 2025 adjusted earnings of $4.06 per share handily surpassed the Zacks Consensus Estimate of $3.66. The bottom line also compared favorably with $3.21 in the prior-year quarter.

COF’s results benefited from higher NII and non-interest income. Also, provisions declined during the quarter. However, the increase in expenses and lower loan balance were undermining factors.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Capital One Financial Corporation (COF):Free Stock Analysis Report

Hilltop Holdings Inc. (HTH):Free Stock Analysis Report

East West Bancorp, Inc. (EWBC):Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research