Hilltop Holdings Inc.

Good day everyone and welcome to the Hilltop Holdings second quarter 2024 earnings conference call and webcast. At this time all participants are in a listen only mode. You will have the opportunity to ask questions during the question and answer session. You may register to ask questions by pressing the star and 1 on your telephone keypad. You may withdraw your question by pressing star 2. Please note this call is being recorded and it will be sending by should you need any assistance. It is now my pleasure to turn the conference over to Eric Yui. 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, credit risk, and trends in credit, allowance for credit losses, liquidity and sources of funding, funding costs, the impact and potential impacts of inflation, stock repurchases, dividends, and impact 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 Manchin'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 the preface of 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. 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.com. With that, I will now turn the presentation over to Hilltop President and CEO, Jeremy Ford.

Thank you, Eric, and good morning. For the second quarter, Hilltop reported net income of approximately $20 million, or 31 cents per diluted share. Return on average assets for the period was 0.6%, and return on average equity was 3.8%. Despite persistently high interest rates and an inverted yield curve, all three business segments posted profitable pre-tax operating results. Additionally, our continued emphasis on controlling funding and operating costs led to a quarter-over-quarter improvement in consolidated net interest margin and pre-provision net revenue. During the quarter, Plains Capital Bank generated $33 million of pre-tax income on $12.7 billion of assets, representing a return on average assets of 0.8%. Average loans at the bank rose by $44 million in the quarter, primarily due to an increase in mortgage warehouse lending. However, commercial lending continues to face pressure from elevated interest rates and robust competition in our primary lending markets. Our bank will maintain a prudent approach and uphold our lending standards, which we believe could restrict loan growth in the near term. Our average deposit balance declined 2% during the quarter, primarily due to the intentional runoff of $150 million in broker deposits. Excluding this decline in broker deposits, we did see an increase in our average interest-bearing deposits for the second straight quarter. Results in the quarter do include a provision for credit losses of $11 million, which is primarily attributable to specific reserves on two relationships that Will is going to discuss in further detail during his prepared remarks. We are proud of the 10 basis point expansion in the bank's net interest margin, from the first quarter to 3.1%, and we are encouraged by the trending of funding costs given the current rate environment. Overall, the bank performed well from a pre-provision net revenue perspective. Moving to prime lending. We were pleased to see the positive pre-tax results from prime lending during the quarter. Higher origination volumes during the normal buying season were encouraging. as was a gain on sale to third parties rate of 233 basis points, which was 12 basis points higher than in Q1. The cost-cutting measures discussed during previous quarterly reports have continued to benefit the business. Non-variable compensation and segment operating costs declined by $11 million compared to the second quarter of 2023. These were difficult but necessary changes within the business. and they will serve prime lending well as we build a stronger franchise for the future. Looking forward, we believe the next few quarters will remain challenging to prime lending's profitability as origination volumes flow in their normal seasonal trends through the end of the year. In the second quarter, Hilltop Securities generated pre-tax income of $7 million on net revenues of $104 million, or a pre-tax margin of 7%. Speaking to the business lines at Hilltop Securities, public finance services experienced a 3% increase in net revenues compared to last year. Revenues from municipal advisory fees increased by 24% on higher national issuance volumes, while the underwriting revenues declined by 54% from lower high yield underwriting opportunities during the period. Structured finance net revenues declined by $4.5 million from the second quarter of 2023 as origination volumes were depressed in the period. Lower activity levels in housing were driven by the continued shortage of affordable home supply and higher mortgage rates. Looking forward to the second half of the year, we anticipate TBA lock volumes to increase given the underlying dynamics of certain state housing clients renewing down payment assistance programs. In wealth management, net revenues declined by $2.4 million compared to last year's first quarter as balances in our FDIC suite program have declined. And our fixed income business remains pressured as the shape of the yield curve continues to act as a headwind on the business. Fixed income services saw revenue decline by $5.4 million compared to last year. Overall, Hilltop Securities saw positive performance in public finance services, while net revenues decreased in the other business lines. This highlights the firm's diverse suite of offerings to clients and ability to capitalize on opportunities as the market presents them. Moving to page four. Hilltop maintains robust capital levels with a common equity tier one capital ratio of 19.5%. Additionally, our tangible book value per share increased from year end 2023 by $0.28 to $28.63. During the period, we returned $21 million to shareholders with $11 million in dividends and $10 million in share repurchases. Thank you. Now I'll turn it over to Will to discuss our financials in more detail.