Hilltop Holdings Inc.

Good day, everyone, and welcome to today's Hilltop Holdings third quarter 2024 earnings conference call and webcast. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your telephone keypad. You may withdraw yourself from the queue by pressing star two. Please note this call is being recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Matt Dunn.

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, credit risks and trends in credit, allowance for credit losses, liquidity and sources of funding, funding costs, 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 risks 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. 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.com. I will now turn the presentation over to Hilltop President and CEO, Jeremy Ford.

Thank you, Matt, and good morning. For the third quarter, Hilltop reported net income of approximately $30 million, or 46 cents per diluted chair. Return on average assets for the period was 0.8% and return on average equity was 5.5%. Favorable operating results from the banking and broker dealer business units helped to produce a quarter over quarter increase in pre-provision net revenue and net income. While maintaining the balance between our consolidated earnings profile and strong liquidity position, Hilltop realized a quarter over quarter improvement in net interest income. primarily due to a growth in average earning assets. Though, consolidated net interest margin at Hilltop and net interest margin at the bank did experience modest compression in the quarter. We will comment further on the bank's NIM later in our prepared remarks. During the quarter, Plains Capital Bank generated $48 million of pre-tax income on $12.8 billion of average assets, representing a return on average assets of 1.14%. Average loans at the bank declined by $40 million in the quarter, primarily due to elevated levels of loan payoffs and a lower pull-through rate on the bank's loan pipeline from heightened competition across our footprint. However, as borrowers' expectations of declining interest rates grew, the bank saw an increase in client activity throughout the quarter and a corresponding growth in our loan pipelines. We expect it will take several quarters for increased borrower activity to materialize into an increase in funded loans held for investment. Our average deposit balance increased by 1% during the quarter, which was driven by an increase in core interest-bearing deposits for the third straight quarter. This growth was partially offset by a modest decline in non-interest-bearing deposits. Results in the quarter at Plains Capital Bank included a reversal of credit losses of $1.4 million. This recapture primarily due to positive credit migration in the loan portfolio and an improvement in collective economic conditions, though partially offset by changes in specific reserves. Will is going to provide further commentary on credit in his prepared remarks. The bank realized a five basis point compression in net interest margin from the second quarter to 3.05%. This change was primarily attributable to an increase in the cost of interest-bearing deposits and a mixed shift in average earning assets. Overall, the bank continues to perform well and has prudently managed liquidity and funding over the past handful of volatile quarters. We remain dedicated to responsibly growing our high-quality, relationship-based core loan portfolio as we move into an anticipated declining interest rate environment. Moving to prime lending, where the company reported a pre-tax loss of $8.7 million during the quarter. The quarter-over-quarter decline in operating results was driven by a reduction in origination volume of $72 million and a decline in the gain on sale margin of four basis points to 224 basis points. Further, the trend of downward pressure on loan origination fees as a percentage of origination volume continued through the third quarter. Additionally, Prime Lending recognized evaluation adjustment related to the MSR asset of $4.2 million during the third quarter, which negatively impacted its financial results. While there is increased optimism regarding industry-wide mortgage origination volumes for 2025, we believe the coming quarters will remain a challenging operating environment for prime lending as the business moves into the seasonally slower fourth and first quarters of the calendar year. In the third quarter, Hilltop Securities generated pre-tax income of $17 million on net revenues of $124 million for a pre-tax margin of 14%. speaking to the business lines at Hilltop Securities. Public finance services produced flat net revenues compared to the third quarter last year as municipal advisory fees increased by 4% on strong offering volumes. Structured finance net revenues increased by $4.4 million from the third quarter 2023. This year-over-year improvement was driven by expanded availability within down payment assistance programs from select state housing clients, which resulted in strong TBA lock volumes, and further by elevated buy side demand for call protected collateral. In wealth management, net revenues declined by $2.1 million compared to last year's third quarter, as balances in our FDIC sweep program continued to subside. The decline in sweep revenue was partially offset by an increase in investment in securities advisory fees within wealth management. Finally, while our fixed income business remains pressured due to challenging market conditions, the business unit did produce an increase in net revenues year-over-year of $3.1 million. Overall, Hilltop Securities had continued positive performance in public finance and a strong quarter from both the structured finance and wealth management business lines. The broker-dealer generated a year-over-year increase in net revenues and a low team's pre-tax margin. which reflects the firm's ability to perform well in a variety of rate environments and market conditions. Moving to page four. Hilltop maintains robust capital levels with a common equity tier one capital ratio of 20.5%. Additionally, our tangible book value per share increased from year end 2023 by 94 cents to $29.29. During the period, we returned $11 million to shareholders through dividends. Thank you, and now I will turn the presentation over to Will to discuss our financials in more detail.