Why did HTH's Q4 2024 EPS drop sharply?

The EPS of HTH's Q4 2024 did not drop sharply. In fact, it increased from $0.44 to $0.55 compared to the previous year's fourth quarter, showing a robust financial performance despite some challenges. However, there are some nuances to consider: 1. **Net Interest Margin Compression**: The net interest margin (NIM) compressed by 7 basis points to 2.98% for the bank. This compression can negatively impact net interest income, which was $105.5 million for Q4 2024, representing a decline of 5.2% year-over-year. 2. **Average Loans Decline**: There was an approximate 1% decline in average loans during the quarter. This contraction can lead to reduced interest income, although it's important to note that the overall net interest income figure suggests that other factors may have influenced the outcome. 3. **Provision for Credit Losses Reversal**: The reversal of provisions for credit losses amounted to $5.7 million. This reversal, along with an increase in noninterest expenses within the banking segment, partially offset the declines in net interest income. 4. **Non-Interest Income Increase**: On the positive side, non-interest income increased by 9.3% year-over-year to $195.6 million, driven by a rise in most components except mortgage loan origination fees. This increase, along with higher deposits and an improvement in capital ratios, contributed to the overall financial performance. In summary, while there were challenges such as net interest margin compression and a decline in average loans, these were offset by factors like the reversal of credit losses and an increase in non-interest income, resulting in a reported EPS that showed improvement over the previous year.