Thank you for standing by. My name is Jordan, and I'll be a conference operator today. At this time, I would like to welcome everyone to the Hilltop Holdings First Quarter 2026 Earnings Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press start, followed by the number one on your telephone t-pad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to 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 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 certain 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 will now turn the call over to Jeremy Ford.

Thank you, Matt, and good morning. For the first quarter, Hilltop reported net income of approximately $38 million dollars for 64 cents per diluted share return on average assets for the period was one percent and return on average equity was 7.1 percent to summarize the quarter plains capital bank reported a continued expansion in net interest margin while generating year-over-year growth in both core loans and core deposits prime lending narrowed its operating loss when compared to the first quarter of 2025, as the mortgage business benefited from higher origination volumes. And Hilltop Securities delivered strong earnings as net revenues across its business line showed good momentum to start the year. At Plains Capital Bank, a favorable 3.38% net interest margin and the continued execution on a robust loan pipeline helped to produce $47 million of pre-tax income and a 1.2% return on average assets for the quarter. Operating results at the bank were supported by active management of the deposit portfolio and a further remixing of earning assets into core loans. This combination led to an increase in net interest income of $8 million versus the first quarter of 2025. Results in the quarter included a $1.8 million provision expense. This was largely driven by a stressed auto note credit that we have discussed in prior quarters. Will is going to provide further commentary on credit in his prepared remarks. The bank is poised to deliver continued core loan growth as we seek to organically recruit talented bankers to our platform and expand on our existing customer base by offering value-enhancing products and services. Additionally, we expect to grow core deposits on a year-over-year basis. but we anticipate modest seasonal volatility in core deposit balances. We believe the backdrop of a healthy Texas economy and a constructive shape to the yield curve will continue to provide a favorable operating environment for Plains Capital Bank. Moving to prime lending, where the company reported a pre-tax loss of $2 million during the first quarter. The improvement in financial results was primarily driven by year-over-year increases in loan origination volumes and gain on sale margins, as well as cost structure enhancements that were implemented in 2025. However, overall profitability within the mortgage business remains under pressure from stubborn headwinds such as affordability and the interest rate lock-in effect. The spring and summer months historically drive elevated origination volumes at prime lending. However, persistent volatility in long-term interest rates creates greater uncertainty around second and third quarter production than in a typical year. Given the structural challenges that homebuyers currently face, we anticipate that overall volumes will be materially impacted by prevailing mortgage rates. We remain focused on achieving internal productivity metrics to best position the business for profitability in this prolonged mortgage cycle. During the quarter, Hilltop Securities generated pre-tax income of $15 million on net revenue of $116 million for a pre-tax margin of 12.7%. Speaking to the business lines at Hilltop Securities, Public Finance Services continued to produce solid top-line results as it delivered $23.6 million of net revenue, which is a modest decline versus last year's robust first quarter. Structured finance showed strength in a volatile interest rate environment as the business line delivered net revenue of $23.6 million, benefiting from a material increase in TBA lock volume on a year-over-year basis. In wealth management, results further improved versus the prior year's first quarter from higher advisory fees and transaction fees. We continue to see organic growth in the wealth business in the midst of a competitive operating environment. Finally, fixed income services delivered $14 million of net revenue, which was a 58% increase compared to the first quarter of 2025, primarily from strong sales volumes. Despite the highly volatile interest rate environment, Hilltop Securities produced a solid first quarter and improved pre-tax income by 60% on a year-over-year basis. The firm continues to add scale to our core competencies and deliver value to our clients. Moving to page four, Hilltop maintains strong capital levels with a common equity tier one capital ratio of 19.1%. Additionally, tangible book value per share increased to $31.97. During the period, we returned $11.8 million to stockholders through dividends and repurchased $47.5 million in shares. Thank you. And I'll now turn the presentation over to Will to discuss our financials in more detail.

Thank you, Jeremy. And I'll start on page 5. As Jeremy discussed, for the first quarter of 2026, Hilltop reported consolidated income attributable to common stockholders of $37.8 million, equating to 64 cents per diluted share. The quarter's results included 7 percent growth in net interest income, driven by ongoing efforts to manage deposit levels and costs, coupled with approximately 5% year-over-year average HFI loan growth at Plains Capital Bank. In addition, prime lending and hilltop securities delivered growth in fees, driven by improved origination volume and margins in mortgage, and improved fixed income trading results during the first quarter of 2026. I would like to remind all call participants that the prior year's first quarter results included $41.8 million of revenue and $28.8 million of net income related to the sale of the merchant banking investment and a legal recovery at Plains Capital Bank. Turning to page six, during the first quarter, Bill Topps' allowance for credit losses declined by 2.5 million dollars to 89 million this decline is largely attributable to a modest improvement in the overall credit quality of the portfolio including the net impact of positive credit rating migration payoff and new loan growth during the quarter while the economic condition impact during the first quarter was limited we do believe that the macroeconomic environment including the geopolitical landscape will continue to provide volatility and uncertainty in future periods as we've stated since the introduction of cecil we believe that the allowance for credit losses could be volatile and the 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 as of march 31st allowance for credit losses of 89 million dollars yields an acl the total loans hfi ratio of 106 basis points turning to page seven that interest income in the first quarter equated to 112 million dollars including 1.3 million dollars of purchase accounting accretion versus the prior year same period that interest income increased by seven million dollars or 6.7 percent reflecting our ongoing efforts to prudently lower deposit cost while continuing to focus on growing customer deposits and relationships across the franchise at this point in the rate cut cycle the team of plains capital bank has achieved an interest bearing deposit beta from the first 175 basis points of reductions from the federal reserve of 74 percent while we're pleased with these results to date we recognize that competitive intensity and pricing pressures could escalate in the future our current expectation for a through the cycle interest-bearing deposit beta is 60 to 65 percent in addition to the improved interest-bearing deposit beta outcome hilltop's overall asset mix has improved versus the prior year with average excess cash levels declining by approximately 1.1 billion while average hfi loans have grown by approximately 407 million we expect that this mixed shift will continue to benefit net interest income into the future quarters. Currently, our estimates for future NII and NIMS reflect our expectation that the Fed will execute two additional rate reductions in 2026. I'm turning to page 8. First quarter average total deposits were approximately 10.6 billion and have declined by approximately 82 million or less than one percent versus the fourth quarter of 2025 on an ending balance basis deposits declined by 347 million to 10.5 billion from the prior quarter ending balance level the decline in deposit balances reflects the expected outflows during the quarter from certain of our public entity and commercial clients specifically related to seasonal distributions our expectation is that deposits will stabilize and grow throughout the second half of 2026. Looking at the chart on the left of the page, we're very pleased with the stability in our non-interest-bearing deposits as our banking teams continue to focus on growing relationships including growth in our treasury management suite of products. During the quarter, total interest-bearing cost declined from the prior quarter by 20 basis points to 249 basis points as of march 31st given the current market conditions including a competitive operating environment we do expect that interest bearing deposit costs will begin to stabilize at these levels until we see additional movement from the federal reserve moving to page nine total non-interest income for the first quarter of 2026 equated to 188 million dollars first quarter mortgage-related income and fees increased by $5 million versus the first quarter of 2025, reflecting growth in loan origination volumes of 16 percent. While the mortgage market had begun to stabilize during the fourth quarter of 2025 and the beginning of the first quarter of 2026, the volatility created by concerns over the Iran conflict has impacted markets interest rates and slowed mortgage demand during the latter part of the first quarter. Given the uncertainty regarding the ongoing conflict and its impact on inflation yields and housing demand we are maintaining our mortgage production volume expectation at nine to ten billion dollars for the year in addition we expect the gain on sale margins will remain relatively stable at the current levels given these environmental challenges further revenue from principal transactions commissions and fees increased by 11.2 million dollars driven primarily by growth and fixed income services coupled with growth in wealth management and structured finance the most significant driver of the decline in revenue recorded in other non-interest income relates to the sale of merchant banking investment during the prior year same period which is noted on the slide equated to 41.8 million dollars it does remain important to recognize that both fixed income services and structured finance businesses fill top securities can be volatile from period to period, as they are impacted by interest rates, overall market liquidity, and production trends. Turning to page 10, non-interest expenses remained relatively stable from the same period in the prior year, declining by $3 million to $248 million. During the prior year's same period, expenses were impacted by $4.8 million, resulting from the net impact of the merchant banking investment sale and a recovery recorded in professional services. Looking forward, we expect expenses other than variable compensation will remain relatively stable as the ongoing focused efforts related to streamlining our operations and improving productivity continue to support lower headcount and improve throughput across our franchise, helping to offset the ongoing inflationary pressures that persist in the market. Turning to page 11, first quarter, average HFI loans equated to $8.3 billion, which grew by $218 million, or 2.7 percent, versus the fourth quarter levels. Continuing from 2025 and into the first quarter of 2026, we have continued to see solid activity across our commercial loan pipelines. Growth in the pipeline has been geographically dispersed, centered in commercial real estate lending. Further, while the most recent pipeline trends are encouraging, we are monitoring for any negative demand impacts resulting from the current conflict in the Middle East, higher interest rates, and higher oil and gas prices. Based on the current business flows, we are expecting full-year average HFI loan growth to range between 4% and 6%. As noted in prior quarters, we continue to retain mortgages originating prime lending and would expect to continue to do so in the coming quarters. Our expectation is that we will retain between 10 and 30 million dollars per month. I'm moving to page 12. First quarter's results include 4.3 million dollars of net charge-offs. This quarter's net charge-offs largely reflect the write-down of loans within the auto note finance credits that we've discussed over prior quarters. During the first quarter, the net charge-offs in the auto note portfolio equated to 3.6 million dollars. As shown in the chart the upper right of the page, non-performing assets increased modestly, driven largely by the negative migration of one credit in our commercial real estate portfolio. Regarding credit overall, we do not see any prevailing trends that cause undue concern in our portfolio. However, we do continue to monitor all aspects of the portfolio very closely as higher interest rates, international conflicts, and higher energy prices could have a negative impact on our clients over the coming quarters. Moving to phase 13. As we move to the second quarter of 2026, 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 current positioning of our balance sheet and the ongoing work that our team is executing each day to move our company forward through what has been an ever-changing operating environment. As is noted in the table our outlook for 2026 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 operator that concludes our prepared comments and we'll turn the call back to you for the q a section of the call at this time i'd like to remind everyone in order to ask a question Press start, then the number one on your telephone keypad.

We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Woody Lay from KBW. Your line is live.

Hi, this is Hannah Wynn in for Woody Lay. My first question is on the NII range that you gave.

I saw it bumped up this quarter from your previous guidance, and I was wondering if you could give a little color into this and where you're seeing loan yields come on. and also where you might expect this to change if we don't end up seeing a rate cut this year thanks hannah uh for the question well uh as we noted uh kind of in the prepared comments we're we've seen uh what we believe to be pretty solid uh loan growth we expect uh that loan growth to continue uh throughout the year uh we're also seeing um as we noted an improved deposit data the 74 percent through the cycle while we would expect that likely diminishes if there are additional Fed rate cuts. We're very pleased with kind of where that is positioned us. So that was the basis in large part for the increase in the guide. As it relates to overall loan yields, our going on loan yields during the quarter were about six and a half percent overall. So we view that as pretty favorable.

Okay, great. Thank you so much. And then my other question is on the capital front. I saw you guys were active again on buybacks this quarter and wondering where you expect this activity to continue and also where you would put M&A in your capital priorities right now.

This is Jeremy. Yeah, we were active. You know, I think we were being more consistent with our repurchases this past quarter. And we have an authorization of $125 million for the year. So, you know, we'll be, you know, market dependent. We'll be looking for, you know, us to be consistent in our share repurchase. And M&A is always available to us. We have the resources in the balance sheet. You know, I think that, so it would be a priority if we have the right strategic fit or if it was also a financially compelling transaction.

Great. Thank you so much for taking my questions.

Yeah, thanks.

Next question comes from the line of Matt Olney from Stevens. Your line is live.

Hey, thanks. Good morning, everybody. I want to dig more into your mortgage expectations for the remainder of the year. Will, I think you mentioned you're keeping the mortgage volume guidance for the full year unchanged. I guess some of the other – I think some of the other third parties have moved more cautious. The rates have increased in recent months. So, anything else you can share about your outlook here? And I see you're assuming some Fed cuts in the NII guidance. I'm curious if you're also assuming lower rates with your mortgage outlook.

Well, thanks for the question. You know, from a mortgage perspective, what we're kind of asserting here is we don't have clear visibility into um the buying season for the second second early part of the third quarter uh what we what we do see and we we noted in our comments was um you know more muted demand uh in march and and certainly uh directly after the conflict uh began uh began in uh overseas and so as a result of that you know we likely are moving you know we would say we're gonna we're still within the range. But if we, you know, historically we got, if you look through our guidance, it's kind of midpoint. And so as we see softness, you could move to the lower end. But that said, it all depends on how temporary kind of the effects are and how the overall market recovers once the conflict is resolved. So we're kind of cautiously optimistic there. And I know the team The team at Prime Lending continues to work hard to grow their business and originate mortgages for our customers. So that's the primary view there. As we get more clarity around the impacts and the longevity of the impacts, we'll provide more perspective next quarter.

Okay. Well, what about just specifically about your rate assumptions? I mean, we see the NII assumptions and the rate backdrop there. but what about the broker-dealer, the mortgage piece? Are you assuming any rate changes in other – is it kind of through the entire enterprise? Just any more color on your rate assumptions?

Yeah, so we – our current assessment is two additional rate cuts, and we apply that across all of our businesses consistently. We also apply that to all of our guidance consistently. So that is the basis. You know, I'd tell you, if we got no cuts and that was all that occurred, which is also, you know, a pretty static and sterile analysis, but if that occurred, you know, you could see NII move higher, you know, $8 to $10 million, and then we would see likely a slightly better or improved revenue perspective in Hilltop Securities as well.

Appreciate that. And then as far as the net of this margin, great margin performance this quarter. Looks like the driver interest-paring deposit cost went lower. Let's hope you could speak to any more drivers of the margin performance this quarter, and just how sustainable do you think these levels are?

Yeah, so I think from a deposit perspective, we feel good about the work the team has done, the 74% interest-paring deposit data through this point in the cycle. we feel very good about, and it's higher than we've historically modeled or experienced. That said, and we noted this, there continues to be kind of ongoing competitive intensity, and by virtue of that, we could see the need to increase deposit rates modestly. That said, we're going to be cautious and thoughtful about that because we are focused on growing overall relationships and deposit balances over time, and that's why I noted that our kind of through the cycle if we get some additional uh fed activity uh in terms of downward downward rates we'd expect to see that beta uh back back up to the 60 to 65 percent level uh and so that's how we're that's kind of how we're thinking about it as you as you look at nim um we do believe we've kind of gotten to you know a peak nim level given uh a consistent fed and so we've got nim you know flat to modestly down from here. And again, we feel good about the guidance we've provided on NII as it relates to both interest rates as well as our balance sheet positioning and our overall deposit cost.

Okay. Great. Thanks for taking my questions. Thanks.

Your final question comes from the line of Cole Martin from Raymond James. Your line is live.

Good morning. I'm on for micros this morning. Just on expenses, I was hoping you could talk through your non-variable expenses guide of zero to 2% and kind of what the puts and takes would be to really get to flat growth this year. And then also how much of that is technology driven? Thank you.

Yeah. So I think the guide really presumes, you know, I'd say normal inflationary increases in, you know, personnel-related expenses as well as our technology service provider cost. Those are in there. We are obviously making awful investments across the franchise to grow our bankers, our client-facing and customer-facing associate groups. And so that's really the basis of what would drive it higher. And we would expect it to be, you know, modestly higher on a year-over-year basis just given uh those investments that we're making obviously we continue to make investments in technology our data platforms uh the deployment of of ai were practical across our organization certainly is a key focus as well uh and those investments are are kind of considered in the in the guidance as well uh as we look forward so from an expense perspective we are very pleased with the work the team's been able to do to drive productivity throughout the organization and keep our expenses other than variable compensation relatively stable over the last couple of years. But we do continue to see inflation and we also expect to continue to make, again, investments in client-facing resources as well as technology to continue to position the organization to be successful into the future.

Great. Thank you. And then on deposits, I was hoping you could give a little bit of color on how much of an impact deposit the deposit competition has had and kind of where you see the health of the consumer going out through 2026.

Yeah, so I think deposit competition remains robust for sure. And what I would say is we've seen, you know, largely rational behavior, what we would call largely rational behavior by the competitive set through this portion of the rate cycle. so we've been able to operate within that. And so when I say rational, we don't see a lot of competitors offering rates that we would call irrationally high, even though there's certainly activity out there to kind of grow clients and teaser rates and the thing and the like. So from that perspective, we feel like, you know, the competitive intensity is still there.

It's pretty high, but that said, it seems rational at this point. great thank you for taking my questions thank you there are no further questions that concludes the question and answer session in today's call you may now disconnect