Good morning everyone and welcome to the Hilltop Holdings First Quarter Year 2021 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Erik 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 conditions, allowance for credit losses, the impact and potential impact 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 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 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, Erik, and good morning. For the first quarter 2021, Hilltop reported net income of $120 million, or $1.46 per diluted share, representing an increase from the first quarter 2020 of $71 million or $0.91 per diluted share. Return on average assets for the period were 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 entered into uncertainty and the outlook for credit in the economy looked to be deteriorating. Most of the momentum around mortgages from 2020 continued into this first quarter. Notwithstanding higher long-term interest rates and refinance volumes 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. The public financial business's efforts to improve productivity and growth are showing a positive return, as net revenue increased 8% from the first quarter 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 remained 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 improvement 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 31. Notably, all COVID-19 modified retail and restaurant loans are now off deferral programs. Our allowance for credit losses as of March 31, totaled $144.5 million or 1.98% of the bank 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. Our 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 4, PlainsCapital Bank had a solid quarter with a pre-tax income of $65 million, which includes the affirmation and 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. Our bankers continue to work with small business customers on the PPP program and as of March 31, had funded approximately 1100 loans totaling $178 million as part of the second round, bringing the total PPP loan balance to $492 million at period end. PrimeLending 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 million 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 PrimeLending 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. 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 insurance and recruiting efforts. The fixed income services and wealth management businesses generated modestly lower net revenues compared to 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 team we have across Hilltop. With that, I will now turn the presentation over to Will to talk about the financials.

Thank you, Jeremy. I'll start on Page 5. As Jeremy discussed, for the first quarter of 2021, Hilltop reported consolidated income attributable to common stockholders of about $120 million, recording a $1.46 per diluted share. During the first quarter, revenues related to purchase accounting were $4.9 million, and expenses were $1.3 million, resulting in a net purchase accounting pre-tax income of $3.6 million for the quarter. In the current period, purchase accounting expenses largely represent amortization of other intangible assets related to prior acquisitions. During the first quarter, the provision for credit losses reflected a net reversal of $5.1 million and included approximately $600,000 of net recoveries of previously written-off credits. The improvement in the current macroeconomic environment, as well as the outlook for continued improvements and key economic metrics, positively impacted the allowance for further losses during the quarter. Hilltop's quarter-end capital ratios remained strong with common equity Tier 1 of 19.63% and Tier 1 leverage ratio of 13.01%. Now moving to Page 6. Net interest income in the first quarter equated to $106 million, including $7.5 million of previously deferred PPP origination fees and purchase accounting accretion. Versus the prior year quarter, net interest income decreased by $4.7 million or 4%. Further, net interest margin declined versus the fourth quarter of 2020 by 2 basis points. In the current period, net interest margin benefitted from a recognition of deferred PPP origination fees, higher yields in stock loans, and lower deposit costs. Offsetting these benefits were lower loan, HFI, and HFS yields driven by market pricing and absolute yield flows in the mortgage market. Further, PCB's excess cash levels were better reserved, increasing by $365 million from the fourth quarter, putting additional pressure on the net interest margin. During the quarter, new loan commitments, including credit renewals, maintained an average book yield of 4%. This was stable compared to the fourth quarter of 2020. Total interest-bearing deposit costs declined by 8 basis points in the quarter, as we continued to lower customer deposit rates and returned broker deposits during the first quarter. We expect continued consumer CD maturities and additional broker deposit costs in the coming quarters, both of which support a steady decline in interest-bearing deposit costs. Given the current market conditions, we expect net interest income and net interest margin will remain pressured as overall market rates remain low, putting pressure on held-for-sale and commercial loan yields. Competition could remain aggressive over the coming quarters as we expect loan demand will remain below historical levels. Turning to Page 7. Total non-interest income for the first quarter of 2021 equated to $418 million. First quarter mortgage-related income and fees increased by $131 million versus the first quarter of 2020. During the first quarter of 2021, the environment in mortgage banking remained strong and our business outperformed our expectations in terms of origination volumes, principally driven by lower mortgage rates, which drove improved demand for both refinance and purchase mortgages. Versus the prior year quarter, purchase mortgage volumes increased by $561 million or 24%, and refinance volumes improved substantially, increasing by $2 billion or 156%. While volumes during the first quarter were strong relative to traditional seasonal trends, gain-on-sale margins did decline versus the fourth quarter of 2020 as the combination of lower loan-to-quarter market volumes, principally purchase mortgage volumes, competitive pressures, and product mix yielded a gain-on-sale margin of 388 basis points. We expect pressures on margins to persist throughout 2021 and we continue to expect full-year average margins to move within a range of 360 basis points to 385 basis points in favorable market conditions. Other income increased by $12 million, driven primarily by improvements in the Structured Finance business as the prior year period included a $16 million negative on a realized mark-to-market on the credit pipeline. As we have noted in the past, the Structured Finance and capital market businesses can evolve from period to period as they are impacted by interest rates, origination volume trends, and overall market liquidity. Turning to Page 8. Non-interest expenses increased in the same period in the prior year by $85 million to $367 million. The growth in expenses versus the prior year was driven by an increase in variable compensation of approximately $63 million at Hilltop Securities and PrimeLending. This increase in variable compensation was due to strong fee revenue growth in the quarter compared to the prior year period. The balance of the increase in compensation and benefit expenses was due to higher payroll taxes, salaries, and overtime expenses. Looking forward, we expect that our revenues will decline from the record levels of 2020, which will put pressure on our efficiency ratio. That said, we remain focused on continuous improvement, leveraging the investments we've made over the last few years to aggressively manage fixed costs, while we continue to further streamline our businesses and accelerate our digital transformation. Now moving to Page 9. Total average HFI loans grew by 5% versus the first quarter of 2020. Growth versus the same period of the prior year was driven by growth in PPP loans and higher balances in the mortgage warehouse lending business. In the period, banking loans, excluding PPP and mortgage warehouse lending, have declined modestly versus the prior year period as commercial loan demand has remained tepid throughout the pandemic. As we noted on the prior call, we are planning to retain between $30 million and $50 million per month of consumer mortgage loans originated by PrimeLending to help offset soft demand from our commercial clients. During the first quarter of 2021, PrimeLending lost approximately $146 million of loans to be retained by PlainsCapital over the coming months. These loans had an average yield of 287 basis points and an average FICO and LTV of 779% and 61% respectively. Moving to Page 10. First quarter credit trends continued to reflect the slow but steady recovery in the Texas economy, as the reopening of businesses continued to boost customer cash flows and there were fewer borrowers on active deferral programs. As of March 31st, we have approximately $130 million of loans on active deferral programs, down from $240 million at December 31. Further, the allowance for credit loans during the period loan ratio for the active deferral loans equates to 13.4% at March 31. As is shown in the graph at the bottom right of the page, the allowance for credit loss coverage, including both mortgage warehouse lending as well as PPP loans at the bank, ended the first quarter at 1.98%. We continue to believe that both mortgage warehouse lending and our PPP loans will maintain lower loss content over time. Excluding mortgage warehouse and PPP loans, the bank's ACL at the end of the period loans held for better ratio equated 2.38%. Turning to Page 11. First quarter average total deposits are approximately $11.4 billion, and have increased by $2.4 billion or 26% versus the first quarter of 2020. Throughout the pandemic, we've continued to experience abnormally strong deposit flows from our customers driven by government stimulus efforts and shifting client behaviors as customers remain cautious during these challenging times. Given our strong liquidity position and balance sheet profile, we are expecting to continue to manage maturing broker deposits. At March 31, Hilltop maintained $639 million of broker deposits at a blended yield of 34 basis points. Early broker deposits of $284 million will mature by June 30, 2021. These maturing broker deposits maintain an average yield of 47 basis points. While deposits remain elevated, it should be noted that we remain focused on growing our client base and deepening wallet share through the sales of our commercial treasury products and services and we remain focused on driving client acquisition efforts. Moving to Page 12. During the first quarter of 2021, PlainsCapital Bank generated solid profitability producing $65 million of pre-tax income during the quarter. The bank benefited from the reversal of credit losses of $5.2 million and the recognition of $7.5 million of previously deferred PPP origination fees. During the quarter, the bank's efficiency ratio dropped below 50% as the focus on managing expenses and improving income streams through our treasury management sales efforts is proving to be a successful combination. While we do not expect the efficiency ratio to remain below 50%, we do expect that the bank's efficiency will operate within a range of 50% to 55% over time. Moving to Page 13. PrimeLending generated a pre-tax profit of $93 million for the first quarter of 2021 driven by strong origination volumes that increased from this prior period by $2.6 billion or 71%. Further, the purchase percentage of the origination volume was 47% in the first quarter. While refinance remained above our expectations during the first quarter, we expect that the market will begin to shift to a more purchase-focused marketplace during the last three quarters of 2021. As noted earlier, gain-on-sales margins contracted during the first quarter, yet we continue to expect the full-year average range of 360 to 385 basis points is appropriate given our outlook on production, product mix, and competition. During the first quarter, PrimeLending closed on a bulk sale of $53 million in MSR value. Somewhat offsetting the impact of the bulk sale, the business continued to retain servicing at a rate of approximately 50%, which yielded a net MSR value at March 31 of $142 million, roughly stable with December 31 levels. We expect to continue retaining servicing at a rate of 30% to 50% of newly created servicing assets during 2021 subject to market conditions. We will also be looking to potentially execute additional bulk sales throughout the year if market participation remains robust. Moving to Page 14. Hilltop Securities delivered a pre-tax profit and margin of $18 million and 16.2%, respectively, in the first quarter of 2021, driven by Structured Finance and the Public Finance Services business. While activity was strong in the quarter, we have continued to execute on our growth plans, investing in bankers and sales professionals across the business to support additional product delivery, enhance our product offerings, and deliver our differentiated solutions to municipalities across the country. Moving to Page 15. In 2021, we are focused on remaining nimble as the pandemic continues to evolve to ensure the safety of our teammates and our clients. Further, our financial priorities for 2021 remain centered on delivering great customer service to our clients, attracting new customers to our franchise, supporting the communities where we serve, maintaining a moderate risk profile, and delivering long-term shareholder value. Given the current uncertainties in the marketplace, we're not providing specific financial guidance, but we are continuing to provide commentary as to our most current outlook for 2021 with the understanding that the business environment, including the impact of the pandemic, could remain volatile throughout the year. That said, we will continue to provide updates during our future quarterly calls.

Ladies and gentlemen, we will now start the question-and-answer session. Our first question today comes from Michael Young from Truist. Please proceed with your question.

Hey, good morning. Thanks for taking the question.

Hey, Michael?

Why don’t you maybe just start on the mortgage business, obviously that's going to be a swing factor this year with potentially lower revenue, lower gain-on-sale, but just on the expense side, I think in the comments you had made mention of sort of the fixed costs across the businesses being stable, but I would assume there's some opportunity there to bring the fixed costs down and obviously you know variable costs will move in accordance with how they have historically. So, any color to add there on the expense side for mortgage?

Yes, I think the mortgage business as we sit here we've made substantial investments in technology through our loan origination system, some of the digital activities we're launching and continue to launch as it relates to customer engagement. So, all those things are going to allow us to streamline and continue to make good progress on reducing the cost to originate a loan, specifically as it relates to our middle and back office functions. And again, I think to your point, our expectation is that those costs remain stable year-on-year, offsetting the inflationary costs that naturally occur in the business whether that be increased salaries through merit or escalators and real estate costs or otherwise. So, from our perspective, the ongoing benefits of the investments are going to help us offset inflation. We hope to exceed that but also maintain stable costs as volumes rationalize throughout the year.

Okay. And then maybe a broader question just on new growth or revenue opportunities, are you guys looking at any new business opportunities or new winning verticals that could help with revenue growth as we move into 2021 in a softer mortgage year?

Yes, I think as far as our business model and the companies and the things that we have, we're not looking to do anything differently and we're looking to grow each business. I wouldn't think there is any new vertical or anything different from what we're doing.

Okay. And then just last one, just on kind of, customer demand and appetite, you know I think you guys were still expressing a little bit of caution around credit quality in the back half of the year but are you seeing any potential signs of growth or new demand coming as well? I think a lot of banks kind of pointed to that. So, I just wanted to know if you guys are seeing that within your customer base or in your geography?

Well currently, commercial loan demand we think is soft, but we think there is optimism and we do feel like we have a pretty solid pipeline for where we're at today.

Okay. I'll step back, thanks.

Our next question comes from Michael Rose from Raymond James. Please go ahead with your question.

Hey guys, how are you doing?

Hey, how is it going?

All going well, thanks for asking. Just wanted to get a little color on the buyback, I know this question is kind of asked every quarter you guys have a ton of capital. Can you just kind of update us on your thoughts there? And maybe Jeremy, just your thoughts on M&A, just we've seen a fair amount of activity here in recent weeks and just wanted to see what your updated thoughts are? Thanks.

Sure. With regard to share repurchases, you know, we only repurchased $5 million in the first quarter that was largely due to limited open window period. And we have a $75 million repurchase authorization, so we have $70 million left that we can utilize before going back to the Board. And that expectation as we sit today, and we'll constantly evaluate where we feel like we are trading versus intrinsic value. And then on the M&A front, as we've all along stated, we do have separate capital that we want to deploy towards M&A. It's still a relatively healthy environment, which makes it easier to have conversations about yields. So, as I said last quarter, our focus is going to be on trying to find the right strategic partner and something that we think will really enhance our collective shareholder value.

That's helpful. Just switching to mortgage, so you guys reiterated the origination expectations for the year '17 to '20 yesterday the MBA, big upward revision to second quarter refi, and if I annualize what you guys did in the first quarter, it implies much higher than the guide. So I guess the thought is that we all know mortgage is going to come off at some point, but any thought as to why you wouldn't be at the upper end of that range? Thanks.

Yes. I think certainly the annualization effort would yield favorable outcomes. I think our view is, the next couple of quarters will start to normalize and become more, I would say, seasonal in trajectory as they rotate towards a more purchase-oriented market. Some of our considerations around how we think about it are the inventory challenges that are in the marketplace and the overall competitive challenges that we believe are going to emerge as volumes do come out of the market. So, we think the $17 billion to $20 billion is a reasonable range and we’d like to be at the top of that range. But again, there are some headwinds going forward albeit the market remains certainly on the purchase side, remains constructive. We think demand is reasonably strong, but the inventory challenges are real and present today.

I understood and that's good color. Finally from me, Jeremy, if you can just kind of walk us through the different pieces of the Fixed Income business and how the push and pull would be as rates rise, and then if the Fed actually does increase rates at some point down the road? Just trying to get at, because again I know there are puts and takes within the business on where rates are, but just trying to get an outlook for the expectations for that business over the next couple of quarters. Thanks.

For Hilltop Securities, you're talking about?

Yes, correct.

Okay great, yes sure. You know, I guess we have four primary business lines in that business. One is Public Finance Services and I think that just given the backdrop, we are positive on national issuance, and we've also had a lot of really strong recruiting. So we feel good about the growth of that business. What's really been the dominant revenue creator in Hilltop Securities has been Structured Finance, which is a mortgage-related business. And just like we mentioned, it followed a similar pattern as Prime did in the first quarter. So, I think that will tie the interest rates like the home purchase market will. Fixed Income Services, that's our municipal and taxable fixed income business and that will, we're enhancing a lot of capabilities there. I think we've got room to grow. That is subject to sudden changes in the direction of interest rates. And then Wealth Management is where we, when we have any kind of spread and short-term interest rates that falls straight to the bottom line. So, in the first quarter, its revenue was up $4.5 million, solely because of having 0% short-term rates.

That's great color. Thanks for taking my questions, guys.

Kind of the direction of interest rates is deferred as well. But I think in general, even if rates increase we're not seeing rates increase to such a level that would preclude public finance issuance or a lot of these first-time homebuyers in our Structured Finance business. We don't see a period of time before that short-term rates will increase and alleviate the pressure.

Our next question comes from Brad Millsaps from Piper Sandler. Please go ahead with your question.

Hey Brad.

Hey good morning. How are you? You got to address a lot of my questions. I did want to ask about the balance sheet, and kind of how you would expect to manage some of the existing excess liquidity and again on average, about $1.5 in cash, it didn't look like you grew the bond portfolio a lot in the first quarter, but just kind of curious how you think about managing that cash, particularly with the long growth dynamics you're talking about and also the PPP forgiveness on the horizon?

Yes, so you're also right. The excess cash is obviously top of mind for us. I think as we've said historically, we're not looking to take on excessive amounts of duration exposure right here. And so given where absolute rates are, although they have backed up since prior quarters, you saw the investment portfolio with the bank kind of end into the period about $2 billion. We expect that it will drift higher. I don't expect it to take a step function higher, but I do expect it to drift higher as we put somebody to work there in places where we feel like we don't have outside exposure. We are retaining the $30 million to $50 million. I think our expectation is we do the top end of that retention range of PrimeLending originated mortgages for the balance of the year notwithstanding stronger commercial demand we're expecting at this time. And then we do expect once again, during the second quarter and into the third and fourth, we expect commercial loan demand to pick up if that doesn't impact the curve. We will react and make some adjustments to the approach. But we're going to continue to be prudent and continue to make, I'd say marginal steps in terms of overall deployment. Lastly, I'd say, we tried to mention in my comments, we do have a series of broker deposits on the balance sheet. We expect those will mature and our expectations are that they will run off throughout the balance of this year. So, in terms of kind of overall liquidity and access to rationalization of broker deposits, as well as mortgage retention on the balance sheet, and then I'd say the securities portfolio drifting higher over the $2 billion level quarter-by-quarter.

Okay, great, that's helpful. And just to follow up on asset quality. I think you commented again this quarter in the slide deck that you expect the provision expense to potentially be elevated in the back half of the year. It seems like you guys have pretty massive reserves at 2% of loans, even higher if I were to maybe make some other adjustments. Just kind of curious how to square that with what's seemingly an improving economic picture and credit environment, with all the reserve building you've done in the past. I wonder if you could maybe frame up sort of what you believe would be an elevated provision expense in the back half given all those factors?

Yes, so, I think from a credit perspective, as you noted and we noted in our comments, we are seeing some rays of light and opportunity in certain portfolios, but continue to see challenges in others. As Jeremy mentioned in his comments, loans in active deferrals from a retail and restaurant perspective have now moved to zero, which is a substantial improvement from June of last year. What we're continuing to see are challenges in the hotel space as it relates to those properties that are principally business-oriented, those that are a little more destination-oriented which we do have some of those have outperformed, but those business-specific and business-targeted properties continue to be challenged. We have about $130 million in the wholesale portfolio of those active deferrals making up about $108 million of that. It's important to note. On top of that, we're looking at the office portfolio across the State of Texas. There are growing trends of vacancy and subletting going on. We remain cautious on that portfolio as well. So while there are clearly reasons to be more optimistic, there are also some places where we continue to have heightened focus on our credit measurement and evaluation. As it relates to charge-offs in the second half again, I think as we look at it, there’s an expectation that some of these loans on active deferral, once they run through this deferral window here, there will be tough decisions having to be made and that likely will yield some charge-offs in the second half of the year. We continue to be aggressive in working with our clients trying to help every client get through what has been an unprecedented environment. With that said, our expectation is there will be some charge-offs in the second half.

You know, kind of under that framework, I mean do you think you'd be in a position to sort of move general reserves to maybe some of these specific situations? Just trying to think about the P&L impact I suppose?

Yes, I think that's right. As you get more clarity into which properties and kind of which entities you will be more specific about, I think you'll see that articulated over time.

Okay, great, thank you guys.

Thank you.

Our next question comes from Matt Olny from Stephens. Please go ahead with your question.

Thanks for taking my question. I want to circle back on mortgage, and I think in the first quarter typically each year we see mortgage volumes build each consecutive month as we move into the spring selling season. But this year, obviously we have that the falling refi volumes. So curious if you can provide any commentary on volumes in recent months and what you're seeing more recently?

Yes, I'd say, through the first quarter as Jeremy mentioned in his comments, it was certainly seasonally high. We had a 47% purchase percentage, and so the refinance volume was high. We saw that start to decline in March as the tenure rate backed up for 160, 170 basis points and that would settle back in the 150s. But that portion of the volume is obviously very rate sensitive and we saw that pull back in the month of March and I think that's continued in April. We continue to believe that this market is going to roll forward and move towards a more purchase-oriented market, which from my perspective is strength of ours and how we've positioned our business over time. We do believe that refinance volume will be more challenged even in the second quarter, but certainly in the second half of the year.

Okay, thanks for that Will. And then on the gain-on-sale margins, I think what we're seeing from the marketplace, pretty considerable divergence of margins, getting hit a lot harder on the wholesale side versus retail. Do just remind us of your mix of wholesale versus retail on the mortgage side?

We're 100% retail. We don't have any wholesale or corresponding business.

Okay, could you provide an update on the strategy regarding the MSR? I noticed you carried out the sale in the first quarter. Did it have any significant impact on the financials during that quarter? Additionally, are you aiming to manage that asset around the $140 million level going forward?

Yes, so we did have a sale, we had a positive outcome there. I'll take you back a little to the last year. The strategy last year was to retain that servicing as the market for servicing really deteriorated to the point where there were periods of kind of no bid for servicing assets in the second and early third quarter last year. That has started to heal. You saw the MSR balance increase during the period of 2020 as a result of that strategy. We were able to do that because of our liquidity and balance sheet strength. So we were able to be opportunistic in doing that. It's not our long-term objective to have a $140 million and $150 million MSR asset. That will likely move lower over time. In my comments, I tried to note, we do expect to continue to execute additional bulk sales to the extent the market is there for that, and the market is robust and currently it has been favorable for that. Again, our target historically has been at a $50 million to $75 million range. It may travel a little higher than that for the balance of 2021, but again, objectively it is not a strategic objective of ours to maintain an outsized MSR. We believe the strategy that we executed last year and at the end of the first quarter has borne favorable outcomes, both in terms of price recognition and gains through some of these executed sales.

Okay, thanks for taking my question.

Yes.

And our next question comes from Woody Lay from KBW. Please go ahead with your question.

Hey, good morning, guys.

Good morning.

Good morning.

So on the PPP front, do you have the amount of net origination fees that are unearned at this point and expect to recognize over the forgiveness process?

As of March 31, it was about $13.9 million.

Okay, got it. And then last from me, could you just remind us of the average yield on these consumer mortgage loans that you plan to retain?

The other loans that were lost during the quarter will come on the balance sheet over the coming months with an average yield of 287 basis points.

Okay, great, thanks guys.

When that will, as with these periods now that mortgage rates are higher, we do expect that will drift over 3% on loss into the future and loans come on the balance sheet, but again, for the first quarter loss about 287 basis points.

Got it. That's helpful. All right, thanks guys.

Thank you.

Again ladies and gentlemen with that, we will conclude today's Hilltop Holdings first quarter 2021 earnings conference call and webcast. We do thank you for attending today's presentation. You may now disconnect your lines.