Good day everyone and welcome to Hilltop Holdings Second Quarter 2024 Earnings 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. Please note this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Erik Yohe. 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 cost, the impact, and the potential impacts of inflation, stock repurchases, 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 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 turn the presentation over to Hilltop President and CEO, Jeremy Ford.

Thank you, Erik and good morning. For the second quarter, Hilltop reported net income of approximately $20 million, or $0.31 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 pretax 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-provisioned net revenue. During the quarter, PlainsCapital Bank generated $33 million of pretax 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-provisioned net revenue perspective. Moving to PrimeLending. We were pleased to see the positive pretax results from PrimeLending 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 PrimeLending well as we build a stronger franchise for the future. Looking forward, we believe the next few quarters will remain challenging to PrimeLending's profitability as origination volumes flow in their normal seasonal trends through the end of the year. In the second quarter, Hilltop Securities generated pretax income of $7 million on net revenues of $104 million for a pretax 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 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 sweep 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 1 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.

Thank you, Jeremy. I'll start on page five. As Jeremy noted, for the second quarter of 2024, Hilltop reported consolidated income attributable to common stockholders of $20.3 million, equating to $0.31 diluted share. Quarter's results included a year-over-year decline in net interest income of 12%, which was only modestly offset by growth in non-interest revenue and a decline in non-interest expenses. Further, Hilltop did experience a net negative migration in credit quality during the period, which impacted the allowance and provision expense during the quarter. Moving to page six to review the allowance for credit losses in more detail. Hilltop's allowance for credit losses increased during the quarter by $11 million to $115 million. As is noted in the graph, specific reserves increased in the period by $7.9 million. This increase was largely driven by the downgrades of two credits in our auto lending subsector of C&I to non-accrual. In both instances, the borrowers have experienced idiosyncratic issues in their businesses that have exacerbated their situations but have also been materially negatively impacted by higher interest rates and lower used car values over the last 12 to 18 months. Migration of these two credits increased allowance for loan loss in the period of approximately $8 million. Currently, our loan workout team is engaging with these clients in an effort to secure additional assets from the guarantors and put in place forbearance agreements to potentially minimize future losses related to these relationships. For additional reference materials regarding our auto lending portfolio, we have provided a slide on page 21 of this presentation that outlines the size of this portfolio, including recent trends and the allowance coverage maintained on this portfolio as of June 30. In addition to the specific reserves, negative migration in the collectively assessed portfolio increased the allowance for credit losses by $3.8 million. The negative migration impacts were driven by two multifamily loans and one office property in the portfolio. These properties have either not stabilized in terms of rental absorption or upon stabilization are not meeting key cash flow covenants. As we have in the most recent quarters, we have included in the appendix a summary of our CRE portfolio on page 20 of this presentation. As we've noted in the past, we continue to monitor the entire portfolio closely, focusing on areas that we believe may pose future risk to the bank. That said, we do expect that the ongoing cash flow challenges facing existing clients, as well as new projects driven by higher interest rates and ongoing inflation, could lead to further credit migration over time. As has been evident since the adoption of CECL, the allowance for credit losses can be volatile as it is impacted by economic assumptions as well as changes in the mix and makeup of the credit portfolio. We continue to believe that the allowance for credit losses could be volatile and that future changes in the allowance will be driven by net loan growth in the portfolio, credit migration trends and changes to the macroeconomic outlook over time. Given the current uncertainties regarding inflation, interest rates, the future outlook for GDP growth and unemployment, volatility could be heightened over the coming quarters. Turning to page seven. Net interest income in the second quarter equated to $104 million, including $2 million of purchase accounting accretion. Versus the prior year second quarter, net interest income decreased by $15 million, or 12%, driven primarily by higher yields on deposits and declining earning assets. During the second quarter, net interest margin increased versus the first quarter of 2024 by five basis points to 290 basis points. The improvement in NIM was largely driven by the return of higher cost broker deposits and was somewhat offset by the impact of lower cash levels at the bank. Our current rate outlook includes one rate decrease, which we have forecast in December of 2024. Based on this rate scenario, we expect that NIM levels will moderate at current levels, potentially drifting higher with additional rate reductions over time. Turning to page eight. In the chart, we highlight the approximately $6.5 billion of available liquidity sources that Hilltop maintained as of June 30. While we consider the Federal Reserve's discount window to be a source of liquidity, we do not plan to leverage that program under our internal liquidity modeling efforts and as such, it's noted below our other collateralized borrowing sources. Overall, collateralized liquidity sources remain very robust and are moving towards what we would deem more normal levels after the shocks which drove liquidity much higher during the COVID era. This is highlighted by the declining Fed deposit levels maintained on the balance sheet. As we've noted in past calls, we expect that this source of liquidity will be maintained at a level between $300 million and $750 million over time. Turning to page nine. Second quarter average total deposits are approximately $10.4 billion and a decline of approximately $845 million, or 7%, versus the second quarter of 2023. As we've noted in the past, we expected to reduce deposits from our broker/dealer and return any maturing brokered deposits that were brought on out of an abundance of caution when we saw certain banks were having liquidity issues last year. During the last 12 months, we've reduced broker/dealer sweep deposits by an average of $769 million and broker deposits by an average of $341 million. Given the magnitude of these changes, we are pleased with the growth in our non-broker/dealer and non-broker deposits over the past year, which approximates $280 million. On a linked quarter ending balance basis, deposits declined in the second quarter by $510 million, the result of the return of $151 million of broker deposits, normal outflows related to taxes and other distributions, and additional client migrations into treasuries and other off-balance sheet sweep products. As a result of our ongoing pricing efforts, interest-bearing deposit costs remained largely stable, increasing one basis point from the first quarter levels to 359 basis points during the second quarter. It is our expectation that interest-bearing deposit costs will remain relatively stable at these levels but could move modestly higher, driven by ongoing migration activity from our existing clients. Further, we remain focused on balancing our competitive position with our long-term customer relationships while we continue to focus on prudent management of net interest income over time. However, the current environment remains competitive and we expect that the intensity of competition for deposits will continue even after the Federal Reserve begins reducing short-term interest rates. Turning to page 10. Total non-interest income for the second quarter of 2024 equated to $193 million versus the same period in the prior year. Mortgage revenues remained relatively stable as modestly lower origination volumes were offset by improved gain on sale margins. While we believe revenues and production from the mortgage segment have stabilized at a lower level, we also feel it remains important to note the ongoing challenges in mortgage banking are a result of a combination of higher interest rates, lower home affordability, limited housing supply and the ongoing overcapacity in terms of mortgage originators, which remains restrictive to the market and continues to push back a recovery in margins and production volumes in our mortgage segment. Other key non-interest income line items netted to a small reduction versus the same period in the prior year levels and reflect a lower revenue and production from structured finance as lock volumes and secondary gains declined versus the same period prior year, coupled with lower activity and trading gains in fixed income services. These declines were largely offset by growth in our retail and clearing services businesses. As we've noted in the past, it's important to recognize that both the fixed income services and structured finance businesses at Hilltop Securities can be volatile from period to period as they're impacted by interest rates, overall market liquidity, volatility and production trends. And turning to page 11. Non-interest expenses decreased from the same period in the prior year by $11 million to $256.5 million. The decrease in expenses versus the prior year second quarter was driven by decreases in expenses other than variable compensation, largely at PrimeLending, whereby fixed costs declined by $14.4 million to $43 million in the second quarter. This reduction largely reflects the hard work that our mortgage team has done to reposition the business for the current environment, and we believe that these levels provide us with significant support for future growth and scalability. Looking forward, we expect the expenses other than variable compensation to remain relatively stable at current levels as we remain diligently focused on prudent growth of revenue producers, while continuing to gain efficiencies across our middle and back-office functions. Moving to page 12. Second-quarter average HFI loans equated to $7.9 billion. On a period-ending basis, HFI loans grew versus the first quarter of 2024 by $111 million, driven largely by growth in the mortgage warehouse lending business, which experienced growth of $82 million. In addition, the bank did grow its CRE lending business by $19 million in the second quarter. We expect loan growth to be challenged in the second half of the year as commercial clients remain cautious and new transactions require higher levels of equity investment before our loan facilities are accessed. Currently, we are expecting full-year average loans to remain consistent with 2023 levels, excluding mortgage warehouse lending and any retained mortgages from PrimeLending. Turning to page 13. Starting in the upper right chart, NPA levels have increased from the first quarter of 2024 by $39 million to $109 million. This increase includes the negative migration of the two auto note finance customers that I referenced earlier in my comments. The impact to NPAs from these two clients is approximately $65 million. Of note, on our prior call, we discussed the CRE loan that we had moved to held for sale during the first quarter and was being offered for sale through a prominent loan auction site. We were successful in the liquidation of this loan during the second quarter and therefore, approximately $32 million was removed from the NPA balances as of June 30. In addition, upon the final disposition of this loan, we recorded an aggregate net loss of approximately $3 million, $1.6 million of which was recorded in provision during the first quarter and an additional $1.4 million loss that was recorded as a net valuation adjustment to loans held for sale during the second quarter. It is important to note that our actual net charge-offs remain low, with this quarter's net losses totaling less than $100,000. While we're disappointed with the net migrations in the NPAs this quarter, we will remain diligent as we manage our portfolio and assess new credit opportunities in the future. As is shown on the graph at the bottom right of the page, the allowance for credit loss coverage at the bank ended the second quarter at 1.47%, including mortgage warehouse lending. Moving to page 14. As we move into the third quarter of 2024, there continues to be a lot of uncertainty in the market regarding interest rates, inflation, and the overall health of the economy. We are pleased with the work that our team has delivered to position our company for times like these, and our teammates across our franchise remain focused 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. As is noted in the table, our current outlook for 2024 reflects our current assessment of the economy and the markets where we participate. Further, as the market changes and we adjust our business to respond, we will provide updates to our outlook on future quarterly calls.

That concludes our prepared comments and we'll turn the call back to you for the Q&A section of the call. And we will take our first question from Stephen Scouten with Piper Sandler. Please go ahead. Your line is open.

Yeah. Good morning. Thanks everyone. I guess, and apologies I missed some of the prepared remarks here. But around the shift in the loan growth guidance, can you talk a little bit more about why you think that might be a little bit weaker than last quarter in the guide. I mean, it seemed like this quarter's growth was pretty strong, and seemingly this guide would imply kind of a decline in loans for the rest of the year. So, I'm just kind of curious what in particular might be driving that any paydowns and elevated paydowns or anything you expect. Thank you.

Will. I think, as I highlighted in my comments, the linked period growth was largely driven by our mortgage warehouse lending business, which made up 85% of the overall growth. And so as a result of that, that's seasonal. Obviously, the second quarter is principally the bulge period for that business, no different than we see at PrimeLending. And so, we expect that to, through the balance of the year move lower as it seasonally would, and as we would expect, because we don't see a kind of an impetus at this point for the mortgage business to break what have been historical seasonal trends, with the third, late third and fourth quarters being softer than the primary buying season, which is second quarter and early third quarter. So that's the principal driver. On the commercial side, while our pipelines are certainly up on a linked quarter basis, they're down year-on-year. And again, I think, as we've noted previously, from a lending perspective, the current structures with the current yields and pricing that's required, require our customers and investors to put in additional equity in the transactions, and it's simply taking them longer to burn through that and then access our overall notes. So, our view is we remain constructive on Texas as an overall market from an economic perspective, certainly relative to the national economy. But we also recognize that both structure, as well as some cautiousness around the economy, are going to continue to put pressure on reducing overall loan growth.

Got it. Okay. Helpful. And then, I guess, from a capital priority perspective, can you guys talk about what would be the most likely path for some of the excess capital that you have? I mean, obviously you bought back a little bit of stock each of the last two quarters, but the stock has moved appreciably higher since then. So just kind of curious if that changes the priorities and then, if any kind of updates on M&A conversations as a whole.

We don't have any significant changes in our priorities at this time. I believe we have performed well so far this year by returning money to shareholders through dividends and share repurchases. We will also remain attentive to the M&A market, which has not been very active over the past two years.

The only thing I was going to add is, as we think about capital and liquidity, we do have, as we've noted in all of our documents, about $150 million of senior debt coming due in the first quarter of next year, and then another $50 million of debt that's callable. So, we'll be evaluating capital and liquidity priorities kind of each quarter actively based on where the market is pricing wise, but also with an eye towards those debt redemptions next year.

Okay. Great. That's helpful, Will. And then, I guess, just lastly, around those, like you said, has not been active on the M&A front. Obviously, with the market kind of ripping the last month or so, everybody feels a little bit better. But do you think we could see any sort of more distressed or failed deals in your markets that might allow you to be more opportunistic, or what's kind of your view for how that may transpire, if you have one?

I believe that the stress caused by interest rates, deposit costs, and liquidity issues appears to be resolving itself. The only potential concern that may arise afterward could be related to credit. Overall, the Texas economy and the banking system seem to be quite strong right now, so there's not much immediate stress in the market.

Got it. Makes a lot of sense. Okay. Thanks, guys, for the time and the color. I appreciate it.

Yeah.

Thank you.

Next question comes from Woody Lay with KBW. Please go ahead.

Hey, good morning, guys.

Morning.

Looks like non-interest-bearing deposits were down a little bit in the quarter. Just any color you could give on what you saw on the deposit front during the quarter. Was there any seasonality behind that?

Yes, we've observed that customers with excess cash are seeking opportunities to invest their funds in interest-bearing accounts. Consequently, many have shifted their dollars into our money market and sweep products. Additionally, it is typical for Q2 to witness outflows of several hundred million dollars from non-interest-bearing accounts due to tax payments and other distributions like customer dividends. This seasonal effect tied to tax season and normal distributions is noteworthy. Nonetheless, the overall trend shows that customers are actively searching for higher yielding and secure products. Easily accessible options for net operating funds remain popular, and customers engage in this behavior daily. We anticipate that non-interest-bearing deposits may decline over the next six to twelve months if interest rates stay high and the Federal Reserve does not change its current stance.

Yeah. That's helpful. And then, just historically, I've sort of thought of the core bank as asset sensitive, but it sounds like just given some of those dynamics, you all think you might be a little bit more liability sensitive now.

Well, we said this in the past, we had peaked out about 18 months ago at 12% asset sensitive on a shock basis. On a shock balance sheet, a 100 basis point move, that's moved to about 5%. We expect to move that into the 2% to 4% level. So we still, on a shock basis, static balance sheet are modestly asset sensitive. But to your point, we've worked very diligently and positioned the balance sheet to be what we would need to be more neutral. So, as rates declined, we'd like to think we've done a lot of things to help protect our harbor, our NII over time, and we'll continue to do some of that. But again, we won't move likely to a full liability sensitive position. I'd expect you to see us move to a little closer to neutral and then hold from there.

Got it. And then lastly, if I look at the non-owner occupied office portfolio that you include in the appendix, it looks like the ACL on those loans was down in the quarter. Just any color on sort of what drove that decrease.

Yeah. We had a few credits, but one significant one that hadn't stabilized as of March 31, got stabilized as of June 30 and started to achieve cash flow. We're monitoring these credits pretty closely, so had reached stabilization and started to achieve and exceed their overall covenant levels. So that allowed them to be upgraded. That's really the nature of that change.

All right. Thanks for taking my questions.

Thank you.

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

Hey, good morning, everyone. Thanks for taking my questions. Hey, Will, I just wanted to get some color around the guidance for deposits on a full year basis to be down zero to 3%. I guess that's excluding the brokered and the sweep deposits. But it just seems like it's a fairly big lift just based on where total deposits were at the quarter. So, can you just provide some color as to the pieces, the core book, and then what you'd expect on the sweep to kind of get to that zero to 3%. How we should maybe think about average deposits holistically altogether. Thanks.

I believe that when we look at sweep deposits, which have been averaging around $750 million for the past few quarters, we anticipate that this will remain consistent. Therefore, I don’t expect significant changes there. We have nearly eliminated all of our broker deposits; the last amount, $151 million, was returned in the second quarter. As we review deposit growth trends, we see positive developments in our money market products and other interest-bearing accounts. CDs have remained steady or slightly increased. In terms of non-interest-bearing accounts, we are not experiencing customer loss but rather a migration of funds. Overall, our business is showing a year-on-year growth of approximately $280 million in the non-brokered area, and we expect to maintain this growth in our core business, which excludes brokered accounts. However, the growth will be somewhat hindered by non-interest-bearing accounts and potential reductions in that area.

Okay. Yeah. It's just because like, if I kind of look at where the second quarter average deposits were for the first half of the year versus the full year, I mean, you're about $600 million less. And it just seems to get to down just zero to 3%, it implies pretty big growth. So that's what I was trying to reconcile.

Yes, on a year-to-date average balance basis, we are down just under $600 million. If we adjust for the sweep deposits and broker deposits, the sweep deposits account for $575 million of that decrease. However, our core bank deposits have actually seen a modest increase on a full year average basis of about $160 million. This is what we are attempting to measure in our guidance.

Got it. Very helpful. I appreciate that. Moving to the auto slide on 21, it indicates that there are four relationships and I believe two of them were the issue this quarter. I understand there were some unique events, but could you provide more details about that and possibly some credit statistics, such as FICO scores? This portfolio resembles a subprime portfolio, and I'm trying to better understand how long your company has been in this business, why these credits have changed, and any background information you can share.

We want to highlight that there are four auto note financial relationships totaling $69 million that are currently in non-accrual status. This represents a significant portion of our non-accrual balance. Out of this, $65 million comes from two specific relationships we've mentioned. We've prioritized reducing our exposure in this area over time. We’ve been monitoring used car values, which rose sharply during the pandemic but have been decreasing quickly since then. As a result, our goal has been to lower our exposure. The chart on the upper left shows our progress in this regard. The two credits that affected us most this quarter faced difficulties due to higher interest rates and declining values. While we cannot detail the specifics of these credits, they encountered unique challenges that intensified the situation. Nevertheless, the overarching issues remain high interest rates and decreasing used car values, which have driven our decision to reduce our exposure to this portfolio. One of the credits has been with us for over 20 years, while the other has been a client for nearly 13 or 14 years. These are not new relationships; however, we aim to further decrease our exposure due to the current credit risks.

Appreciate that color, Will. And if I could just sneak one last one in on mortgage. It's been nice to see the progression the past two quarters on the gain on sale margin. Just either Jeremy or Will, if you can just remind us as rates, assuming they come down a few times and mortgage rates come down, I would assume that gain on sale margin would move up. But can you just remind us some of the mechanics there and any considerations we should be thinking about over the next couple of quarters? Thanks.

From the perspective of gain on sale, you are correct. Historically, as rates have decreased and the overall market volume, primarily driven by refinancing, has increased, gain on sale margins would rise. I want to emphasize the balance displayed on our PrimeLending slide, as it is important to understand the two revenue components. On a linked quarter basis shown on page 18, gain on sale increased by 12 basis points, while mortgage loan origination fees decreased by 13 basis points. This suggests that when rates have exceeded 7% at various times, it appears to have prompted customers to opt for buy-downs. Consequently, we would observe an increase in origination fees and a potential decline in gain on sale as rates drop. When rates decrease, gain on sale rises while origination fees tend to stabilize. Thus, our overall aggregate revenue has hovered consistently in the 365 to 380 basis point range. This trend indicates a shift from historical norms due to the extended period of zero interest rates, which has locked in a significant portion of our customers. Most of our customers hold mortgages under 5%, so even a 25 or 100 basis point cut by the Fed isn't likely to result in a substantial rebound in refinancing activity. There will be some improvement, as individuals with loans in the sevens or even eights may consider refinancing, but we anticipate the impact to be muted compared to what would typically occur during a rate reduction cycle, until the Fed reduces rates significantly to encourage those mortgages originated during the upcycle.

Very thorough answer, Will. Thank you for all the color. Appreciate it.

Our next question comes from Jordan Ghent with Stephens. Please go ahead.

Good morning. I have a question about the NII guidance. It has been lowered, but there is still a significant range of 6% to 10%. Since we are already halfway through the year, could you explain what factors are influencing this? Thank you.

Yes. Historically, we find that evaluating the midpoint of the range is a solid approach, even if the range is broad, as it helps to reflect our position. The primary factors affecting our overall Net Interest Income continue to stem from the repricing of deposits. The breadth of the range is attributed to that factor. As I mentioned, we only observed a one basis point rise in interest-bearing deposit costs during the period, which suggests we may have reached a peak. If the market becomes more competitive and deposit costs increase, we would then be at the lower end of our guidance. However, if the costs remain stable, we would be closer to the midpoint. Conversely, if we manage to reduce deposit costs significantly due to Federal Reserve actions or other influences, we could be near the higher end of the range. From our standpoint, deposit costs remain the most significant and variable factor in our overall Net Interest Income outlook. We aim to present reasonable scenarios in our guidance, and the midpoint has historically proven to be a good reference point.

Perfect. Thank you.

Thank you. And this does conclude the Q&A session as well as the Hilltop Holdings second quarter 2024 earnings conference call and webcast. Thank you for your participation, and you may disconnect at any time.