Hilltop Holdings Inc.

Good morning, everyone, and welcome to the Hilltop Holdings first quarter 2021 earnings conference call and webcast. All participants will be in a listen-only mode. To gain assistance, please single a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Eric Yohe. Sir, please go ahead.

Thank you, operator. Before we get started, please note that certain statements during today's presentation that are not statements of historical fact, including statements concerning such items as our outlook, business strategy, future plans, financial condition, allowance for credit losses, the impact and potential impacts of COVID-19, stock repurchases and dividends, as well as such other items referenced in the preface of our presentation are forward-looking statements. These statements are based on management's current expectations concerning future events that by their nature are subject to risk and uncertainties. Our actual results, capital, liquidity, and financial condition may differ materially from these statements due to a variety of factors, including the precautionary statements referenced in our presentation and those included in our most recent annual report and quarterly report filed with the SEC. Please note that the information presented is preliminary and based upon data available at this time. Except to the extent required by law, we expressly disclaim any obligation to update earlier statements as a result of new information. Additionally, this presentation includes certain non-GAAP measures, including tangible common equity and tangible book value per share. A reconciliation of these measures to the nearest GAAP measure may be found in the appendix to this presentation which is posted on our website at ir.hilltop-holdings.com. With that, I would like to turn the presentation over to President and CEO, Jeremy Ford.

Thank you, Eric, and good morning. For the first quarter, Hilltop reported net income of $120 million, or $1.46 per diluted share, representing an increase from the first quarter of 2020 of $71 million, or $0.91 per diluted share. Return on average assets for the period was 2.9%, and return on average equity was 20.6%. These results do include a $5.1 million reversal of provision compared to the first quarter of last year when we had a provision expense of $34.5 million, as we introduced CECL and the outlook for credit in the economy looked to be deteriorating. Much of the momentum around mortgages from 2020 continued into this first quarter. Notwithstanding higher long-term interest rates and refinance volume slowing, the overall mortgage market remained strong, and our origination business was able to deliver $6.2 billion in volume, a 71% increase from Q1 2020. Driven by PPP loan balances, the bank's average loans for the first quarter increased 7% from prior year, and average deposits grew by $2.4 billion, or 26% from prior year as well. While pre-tax margin at the broker-dealer was down slightly from Q1 2020, we did see growth in the structured finance business, which also benefited from a strong mortgage market. In the public finance business, efforts to improve productivity and growth are showing positive returns, as net revenue increased 8% from the first quarter of 2020. During the period, Hilltop returned $50 million to shareholders through dividends and share repurchases. The $5 million of shares repurchased are part of the $75 million share authorization the Board granted in January. Liquidity and capital remain very strong, with a Tier 1 leverage ratio of 13% and a common equity Tier 1 capital ratio of 19.6% at quarter end. We continue to see improvements in economic trends, and during the quarter, we had payoffs and a return to contractual payments for a large portion of the modified loan portfolio. This portfolio, which at the end of June 2020 was $968 million, is now down to $130 million as of March 31st. Notably, all COVID-19 modified retail and restaurant loans are now off deferral programs. Our allowance for credit losses as of March 31st totaled $144.5 million, or 1.98% of the bank's loan portfolio. This reflects a reduction in the reserve balance of $4.5 million from the fourth quarter, which was driven primarily by positive shifts in the economic outlook. While the general economic outlook for the Texas economy has improved, the bank remains cautious and in constant communication with borrowers in certain higher risk segments of our hotel and office portfolios. These segments were more severely impacted by the pandemic and will take longer to recover. Moving to slide four. Plains Capital Bank had a solid quarter with a pre-tax income of $65 million, which includes the appermission provision recapture of $5.1 million. Also contributing to the increased pre-tax income from Q1 2020 was higher net interest income from lower deposit costs and PPP loan fees and interest income. Our bankers continue to work with small business customers on PPP programs, and as of March 31st, had funded approximately 1,100 loans totaling $178 million as part of the second round, bringing the total PPP loan balance to $492 million at period end. Prime Lending had another outstanding quarter and generated pre-tax income of $93 million, an increase of $53 million from Q1 2020. that was driven by both a $2.6 billion increase in origination volume and a gain on sale margin of 388 basis points. While rates increased towards the end of the quarter and margins tightened, we remain encouraged by the demand for mortgages across the country and by the prime lending team that continues to perform exceptionally while actively recruiting quality loan originators. For Hilltop Securities, they had a good quarter with pre-tax income of $18 million. The structured finance business had a strong start to the quarter with favorable volumes and spreads. Then the sudden rise in interest rates adversely impacted net revenue in March. Net revenue grew in public finance services compared to prior year from a modest increase in national interest and recruiting efforts. The fixed income services and wealth management businesses generated modestly lower net revenue than Q1 2020 levels. Overall, for Hilltop, this was an excellent quarter and a great start to the year. We believe our balance sheet is strong and our credit quality is sound. We are excited about the strategic direction and growth potential of our three businesses, and we are grateful for the talented leadership and dedicated teams we have across Hilltop. With that, I will now turn the presentation over to Will to talk about the financials.