Hilltop Holdings Inc.

Good morning ladies and gentlemen and welcome to the Hilltop Holdings first quarter 2025 earnings conference call and webcast call. At this time all lines are in listen-only mode and following the presentation we will conduct a question and answer session. If at any time during this call you require immediate assistance please press star zero for the operator. This call is being recorded on Friday April 25th 2025 I would now like to turn the conference call over to Mr. Matt Dunn. Please go ahead.

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, stock repurchases, subsequent events, and impacts of interest rate changes, as well as such other items referenced in the preface of our presentation or 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 GAAP measure may be found in the appendix to this presentation, which is posted on our website at ir.hilltop.com. I'll now turn the call over to Jeremy Ford.

Thank you, Matt, and good morning. For the first quarter, Hilltop reported net income of $42 million. or $0.65 per diluted share. Return on average assets for the period was 1.1%, and return on average equity was 7.8%. Plains Capital Bank demonstrated its ability to maintain core customer balances while repricing interest-bearing deposits during the quarter. This enabled Hilltop to produce stable net interest income despite modest compression to the overall balance in earning assets. The broker-dealer recognized a strong quarter from the wealth and public finance business units while weathering a challenging fixed income market. As will be discussed further, the mortgage origination segment continues to be weighed down by ongoing constraints in the mortgage market that did not show signs of subsiding during the first quarter. However, Hilltop's robust capital and liquidity position did enable us to further compound tangible book value per share while returning capital to our stockholders. During the quarter, Plains Capital Bank generated $40 million of pre-tax income on $13 billion of average assets, representing a return on average assets of 0.96%. Average loans at the bank remained relatively stable in the quarter as construction loans and non-owner-occupied CRE loans increased in balance, though this was offset by a decline in C&I lending. The bank continued to see strong development in its loan production pipeline as demand from core customers across our markets remains healthy. Average total deposit balances at the bank decreased during the quarter primarily due to expected seasonal outflows and select large balance customers repositioning their excess liquidity. However, the trend of strong deposit growth did continue on a year-over-year basis as average core deposits at the bank increased by nearly $300 million. Results in the quarter at the bank included a $9 million provision for credit losses. This expense was primarily due to negative risk rating migration within the portfolio, as was partially offset by an improvement in economic conditions within the quarter. Will is going to provide further commentary on credit in his prepared remarks. The bank realized that one basis point compression in that interest margin from the fourth quarter to 2.97%. This relatively stable margin was primarily driven by a continued decline in the cost of interest-bearing deposits alongside the repricing of longer duration earning assets into today's relatively higher interest rate environment. Results at the bank did include a one-time insurance recovery that reduced non-interest expense by $6.5 million. Overall, the bank continued to show improvement in deposit pricing and loan pipeline growth, which illustrates the quality relationship-based banking model at Plains Capital Bank. Moving to prime lending, where the company reported a pre-tax loss of $8 million during the first quarter. As interest rates remain elevated and affordability challenges to home buyers persist across the country, origination volumes remain under pressure. Prime Lending did experience a modest increase in origination volume on a year-over-year basis to $1.7 billion during the seasonally slower first quarter home buying period. Gain on sale loans to third parties, including broker fees, increased by six basis points when compared to the fourth quarter. However, Prime Lending experienced a continued downward trend in mortgage origination fees and other related income, which decreased by five basis points quarter over quarter and 29 basis points year over year. Management at Prime Lending continues to actively monitor operating expenses and has reduced the fixed expense base by 12% year over year. However, as interest rates remain volatile and the mortgage origination market continues to present headwinds towards increased volumes, We will look to further evaluate the fixed cost structure of prime lending to ensure efficient operations that align with the current environment. In the fourth quarter, Hilltop Securities generated pre-tax income of $9 million on net revenue of $109 million for a pre-tax margin of 8%. Speaking to the business lines at Hilltop Securities. Public finance services produce a 34% year-over-year increase in net revenues on an increase in offerings of 11%. Structured finance net revenues declined $8 million from the first quarter of last year. This decline was driven by a comparatively strong 2024 that was the result of mortgage related business activity within a single state's market. In wealth management, Net revenues increased by $1 million compared to last year's first quarter as an increase in retail and wealth production fees more than offset a modest decline in sweep revenue from the firm's FDIC sweep program. Finally, the fixed income business continued to be under pressure as demand for middle market buyers remained subdued and demand for municipal bond products was muted during the quarter. the business unit had a decline in net revenue of $7 million when compared to the first quarter of 2024. Overall, Hilltop Securities realized strong results in the quarter from the public finance and wealth management business slides, but experienced a material decline in net revenues with the fixed income services line of business. While the broker-dealer's net revenues declined 7% year-over-year, pre-tax income declined by 51%, due to the mixed shift in net revenues between the business lines. During the quarter, Hilltop recognized two non-recurring items that impacted consolidated results. First, we announced in January, our merchant bank realized a preliminary gain on the sale from its investment in Moser Energy Solutions. This resulted in a positive impact in net income of $23.6 million, or 37 cents per diluted share. Our merchant bank team has worked hard over the past eight years, cultivating a portfolio of attractive investments and building a strong track record. This business is institutional to Hilltop, and we plan to continue to invest in the platform. Second, as I previously discussed when overviewing the bank results for the quarter, the bank recognized an insurance recovery that resulted in a positive impact in net income of $5 million, or $0.08 per diluted share. Moving to page four. Hilltop maintains strong capital levels with a common equity tier one capital ratio of 21%. Additionally, our tangible book value per share increased from year end 2024 by 53 cents to $30 a share. During the period, we returned $12 million to stockholders through dividends and repurchased $33 million in shares. Thank you. I will now turn the presentation over to Will to discuss our financials in more detail.