Hilltop Holdings Inc.

Good morning. My name is Candice and I will be your conference operator today. At this time, I would like to welcome everyone to the Hilltops Holding fourth quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be question and answer. If you would like to ask a question during this time, simply press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. Thank you. I would now like to hand the conference over to Eric Yowie. Eric, you may begin.

Thank you. 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 or disruptions in the global or national supply chains, stock repurchases and dividends, and impacts of interest rate changes, 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 and quarterly reports 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 gap measure may be found in the appendix to this presentation, which is posted on our website at ir.hilltop-holdings.com. With that, I will now turn the presentation over to President and CEO, Jeremy Ford.

Thank you, Eric, and good morning. For the fourth quarter, Hilltop reported net income of $62 million, or 78 cents per diluted share. Return on average assets for the period was 1.4%, and return on average equity was 9.9%. This quarter carried forward many of the same themes we discussed in prior quarters, including improved credit quality, growth in our core loan book, the beginning of a more normalized and competitive mortgage market, and with the prospect of increasing rates in the near term, a softening in our fixed income businesses. Through it all, we continue to generate strong earnings and returns. Plains Capital Bank generated $68 million in pre-tax income and a return on average assets of 1.4% in Q4 2021. Average loans held for investment at Plains Capital Bank increased $122 million or 2% quarter over quarter as both core loans and retained mortgage balances grew. Importantly, the bank generated commercial loan growth despite elevated paydowns. The net loan growth was impacted by the continued runoff in PPP loans and a seasonal decline in national warehouse lending balances. Our remaining PPP balance was $78 million as of December 31, 2021. The average deposits increased by $460 million or 4% quarter over quarter. and by $1.2 billion or 10% year over year. As we continue to see growth in both interest bearing and non-interest bearing accounts, primarily from existing customers. For the full year, the bank generated $283 million in pre-tax income and a return on average assets of 1.55%. This was a fantastic year for Plains Capital Bank and reflected the excellent job the bank's leadership teams have done across the state by managing credit, taking care of existing customers and refocusing on new business growth. In spite of a tough year over year comparable due to record 2020 results, Q4 2021 was another strong quarter for Prime Lending as it generated $31 million in pre-tax income. The business originated $5 billion in volume with a gain on sale margin of loans sold to third parties of 362 basis points. Refinancing volume as a percent of total volume was stable from prior quarter at 29%, but did decline from 46% during the same period in 2020. We remain focused on optimizing pricing and margins, while still allowing our loan officers to be as competitive as possible in this increasingly tight market. Our purchase orientation, stable funding profile, exceptional lenders, and experienced leadership team who have managed through multiple cycles provide institutional advantages that should enable prime lending to outperform the broader mortgage market during what we believe will be a challenging time in the industry due to shrinking refinance volumes, limited inventory, and heightened competition. Overall, 2021 was another excellent year for prime lending. Capitalizing on the housing and mortgage market circumstances driven by the COVID-19 pandemic that started in early 2020 led the company to have its second best year ever, with funded volume of $23 billion and pre-tax income of $236 million. During the quarter, Hilltop Securities generated pre-tax income of $1.7 million on net revenue of $94.6 million, a decline in net revenues of $55.5 million or 37% compared to Q4 2020. The revenue shortfall was primarily driven by declines in our highest margin businesses. such as fixed income and structured finance. Specifically, mortgage revenues in structured finance fell by $34 million or 73% and fixed income services revenues fell by $18 million or 57%. Public finance revenue also declined by 7% year-over-year on lower issuance volume, which was in line with the broader industry declines. while wealth management revenues increased by 2% on stronger transactional and managed account fees. For the year, Hilltop Securities generated net revenues of $424 million and a pre-tax margin of 10.3%. The second half of the year was particularly challenging for our fixed income and housing businesses due to a slowdown in the mortgage industry combined with investor expectations of rising interest rates, economic uncertainty, and fear of inflation. Nevertheless, we believe that Hilltop Securities is in a position to grow once the operating environment for its businesses improves. We have added key infrastructure, producers, and leadership to broaden our capabilities and to expand our breadth of expertise in complementary businesses. We are focusing on diversifying and growing our revenue streams and have already made the necessary investments to support that. This will take time, but we are confident in Hilltop Security's leadership team and strategic direction. Collectively, the fourth quarter was a strong finish to an excellent year for Hilltop, with full year 2021 net income of $374 million, or $4.61 per diluted share. While 2021 was a volatile year with a tremendous amount of uncertainties, including COVID-19 variants, supply chain disruptions, and inflationary pressures, Hilltop's exceptional results reflect the strength of our diversified business model and the dedication of our talented people who are steadfast in taking care of our customers. Moving to page four. Hilltop maintains strong capital levels with a common equity tier one capital ratio of 21.2% at year end. And our tangible book value per share increased by 15% from Q4 2020 to $28.37. During 2021, Hilltop returned $163 million to shareholders through dividends and share repurchase efforts, representing approximately 43% of earnings to shareholders. This week, Hilltop Board of Directors declared a quarterly cash dividend of 15 cents per common share, a 25% increase from the prior quarter, and authorized a new stock repurchase program of $100 million through January 2023. With that, I will now turn the presentation over to Will to walk through the financials.