HTH - Earnings call transcript Q1 2022

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Operator

Hello, everyone. And a warm welcome to the Hilltop Holdings First Quarter 2022 Earnings Conference Call and Webcast. My name is Bethany, and I'll be your operator today. [Operator Instructions] I will now pass the floor over to Erik Yohe, Executive Vice President at Hilltop Holdings. Eric, over to you.

Erik Yohe

operator. you, Thank

the future rate preface started, COVID-XX presentation and current changes get stock that, our including that based statements supply or repurchases and dividends business certain concerning credit items subject allowance and are Before the disruptions referenced of losses, are please are in not other chains, today's impact strategy, risks outlook, their by our that items forward-looking in impacts fact, well financial statements during condition, such for of as expectations we are potential and interest of as presentation events statements statements. as note uncertainties. such national plans, impacts or nature, to concerning These of statements future management's global historical the on

presentation actual differ may referenced variety factors, financial including results, the to reports our filed and materially with quarterly from and our those Please and capital, preliminary statements information a Our expressly extent by statements any due as statements most we recent of and condition precautionary annual included in liquidity these in note the update data a time. to upon to earlier presented obligation that information. required law, at is of result the new disclaim SEC. Except available the this based

turn that, Ford. to to which Jeremy now and includes I Additionally, With is measures including GAAP value nearest our book tangible the website equity to CEO, President share. presentation may and non-GAAP this per the this at reconciliation be common posted appendix presentation, certain these the presentation tangible found over will measure A of measures, ir.hilltop-holdings.com. on in

Jeremy Ford

Thank morning. good you, Erik, and

at was results, Hilltop strength of Bank share. was basis carried quarter's or generated The reported as challenging equity an X.X%. this average of resulted the mortgage on and pressures pretax income XX quarter, per period commercial loans points and $XXX and market the assets escalating retained average in $XX from Hilltop a assets, X% first PlainsCapital PrimeLending stability Bank quarter Securities loans diluted million for $XX.X return average and average earnings income core the the on a For Return on $X.XX net assets of annualized, or Average rate on resulting as mortgage increased in million bank return environment. and $XX million PlainsCapital X%. increased. of of at both balances interest billion

saw build, Worth primarily from elevated markets. in to markets. continues seek pipeline excess and our real loan continue deposits. banks commercial estate industry-wide the In Our particular, core outside in we to of in as expect Competition strength to liquidity Dallas, deploy growth, across though, all is Fort Austin growth we and

Bank cycles. So have we PlainsCapital credit we remain on to that allowed standards prosper our numerous believe through underwriting focused long-held adhering to

the deploying balances period-end the during decline balances. bank, decline billion or As from pre-pandemic peak deposits slight $XXX XX% the from a resulted nonperforming as to such, quarter, by Total by million customers of growth in points. XX% charge-off quality was average fourth basis improved quarter-over-quarter slightly The bank remain credit existing loans only well $X.X from and largely liquidity customers. deposit year-end and excess with lower balances X% outside to declining XXXX, Average $X ratio X CD as loans up elevated in but increased million net average than levels, to or due select from by year-over-year, or primarily XXXX. XX% compared deposit the of

Moving to PrimeLending.

mortgage fulfillment challenges optimize housing rates that pricing margin quarter, volumes accommodate rapid XXXX. dramatically heightened refinance home was - up stemming and the record significant we inventory interest built spark in and have rates, low seek swift experienced a price volumes This to as XXXX affordability market, capacity and The price in margin [ph] transition in from mounting a the from mortgage appreciation. rise reduced lenders to record compression,

similar is of on were industry origination volumes gain in sold due historical on periods with substantial While from to third loans prior challenged of margin to a down, and originated sale decline billion sale origination year, the basis to XX% relative XX%. volume the mortgage of projections volume the quick volume were parties points. PrimeLending XXX gain declined revenues $X.X line margins. which further PrimeLending with in in

the refinancing volume of declined volume from to percent period, same total as Over XX% a XX%.

the particularly monitor lower trends industry adjust year and fixed from coming closely the for recruit start will excess income expect strong months, team our finance laser-focused and market persist, rates Hilltop originators, as purchase-oriented remains Securities, pressure mortgage for in a and interest on expense It to has Therefore, base. activity. on competitive to while business been fixed In loan businesses. our business fiercely rise volume. our We the we to for capacity continues structured challenging the remaining

were in the interest With rates prior year. historic mortgage almost near to were income municipal capital the compared lows of term, for at the and responsible and volumes $XX entire in markets higher expectation million shortfall

finance base. and until current continue trading to inventory the challenging the and retail expect the wealth environment, our firm markets positive momentum this management to volatile businesses, carrying Securities seen maintain the grow and public talent customer prudent the environment, the as Given lower services Hilltop trading recover. from recruit top levels, is we has approach Despite we

and expect from sweep clearing revenue retail benefit environment. our also rising businesses We the to rate from deposit

by ratio XX.XX. Compared tangible at equity value Tier prior Moving to capital per and book result $XXX did per available-for-sale our value investment losses share by That since book unrealized share tangible within strong in in by to was year capital X% increase net increases maintained prior pretax to page purchased. $X.XX X. our as portfolio. interest a X%, a increased from Hilltop XX.X% quarter, rates decline period end, with million were or of levels of common a caused securities X our

AOCI, in relatively change the been per share of tangible value have book quarter-over-quarter. would impact our flat the Excluding

the During shareholders was bank the $XX.X of dividends grew quarter, positive. bank year quality. paid We the while the very In asset Hilltop summary, loans for start to improving million. core of

income fee spike from volatility. depressed interest and during in income our the rates businesses the market sharp However, fixed were quarter

rate punitive the our and our improve accretive of interest have persist market We rate short to significant The to expect rate more capital centric our will income mortgage uncertain increases with impacts increases interest stabilized with which believe should varying anticipation volatility to business to but bank, expected in markets businesses. the We term, our a be interest outlook. will fixed platforms.

turn strength our presentation ability our model, cycles I established in employee the with the endure base, financials. over diversified the our business businesses. of of discuss Will our to Moving forward, we will confident remain to industry to that, the compete value With now and

Will Furr

Thank you, start X. Jeremy. I'll on page

to million, reported As XXXX, income of Jeremy per discussed, attributable to quarter common for stockholders $XX Hilltop consolidated diluted of $X.XX share. equating the first

Before into around the to transfer to context Jeremy's and that we related AFS move further portfolio first we deck, Securities a provide executed comments I'd our quarter. like the additional during

the AFS unrealized losses first AOCI pretax does As portfolio in unrealized is an This loss in $XXX directly additional million accumulated and income reflected during impact quarter. not the Jeremy noted, statement. the

Securities $XXX Hilltop's of appropriate determination the to move time. mix equity portfolio quarter During $X.XX managing into on basis, value over million held-to-maturity potential flexibility ample was rates the and end, the AFS may book move impact and to to the in equating first reduces of At investment future. cost in is This Hilltop management the quarter, equated at size bank's it forward. securities our portfolio make review million AFS continue made value Management higher transfers the tangible HTM metrics sufficient of $XXX of to the which additional going billion, and and portfolio. allows book AFS book will

turning Now X. page to

an of over we ACL the This the note, ratio loans by the have we losses Further, migration likelihood loan million be outlook starting improvements yields of quarter, and provided some time. growth quarter of volatile macroeconomic saw will reflect credit During the slower trends from in that for U.S. total the improvement for Moody's and allowance the offset continue as certain economic periods, somewhat allowance portfolio, declined recession the future in of outlook losses NPLs believe by March the of first first increased across fourth a the economic in seen Allowance as first to was to XXXX. loan since SX last as in as to quarter to credit $XX we quarter industry portfolio the the an To changes net bank changes driven quarter. economic credit forecasts X.XX% XXXX. early could begin of be provided HFI as scenario. the

broad credit a in We as current updated have - what will forecast outlook to quarter continue set the economic any environment, losses periods. as the second during current determine the on well of economic allowance for impact may monitor future to

Turning the quarter interest X moved of rates fees quarter to XXXX accounting long-term commercial including customers including Further, $X.X Net interest accretion. book mortgage had page by warehouse during versus fourth to of income volumes. to positive interest X. in market, the held rate declined of On cash the lower of by PPP margin the accretion quarter, the intense Net lending, loans income. were by loans in originations, secure by were XXX first $XXX lower in credit as and levels. rising market million equated quarter impacted in which which basis yields fixed competitive growth overall decline higher purchase funding million mortgage yield $X.X HFI, avoid million, and pressures for XX interest banking commercial a the versus the lower, first quarter average remains levels fourth in impacted points Growth levels by basis impacts first fees X.XX%, primarily an impacts and and driven renewals cash by points of of and excess every related across driven sale time. were to points, on excess note, continued basis over which the somewhat and the lower loan PPP look both to in

we X. chart, scenario. sensitivity rate assuming basis the up position the asset-sensitive represents XX% highlight instantaneous the in XXX Hilltop, Turning an point asset which In of parallel to and shocks, of page approximately

parallel up As of from point to falls over scenario, assess gradual basis and we number positively increase rate instantaneous basis the risk, next XX shift the approximately each point by income if interest the $X a net Further, we in X%. note, the increase impacts ship we Of analysis to course an potential asset this sensitivity asset interest XXX XX scenarios. sensitivity months, a evaluate approximately million. of

to in loans moved of approximately million above reprice the and rate to the during basis the floor $XXX coming result a quarter, levels federal begin we rate to the loans funds levels, months. increase over higher As of expect point these or will XX first their

for accretion and PPP impact decline were approximately versus we in XXXX $XX expect to interest, purchase which the million million the and could XXXX, by levels. loan $XX $XX Lastly, that of related XXXX fees million

to noninterest Moving to Total the page of income first $XXX X. million. quarter XXXX for equated

or fees the more driven purchase shift volumes than $XXX by by in and First during decreased mortgage million in year saw million which more and a abrupt earlier evolving quarter X%, more the and $XXX refinance by than billion the prior expected. market decreased quarter, income quickly versus pattern quarter prior environment decreasing a volumes of year the Versus by declined substantially to quarter was reflected 'XX, previously and traditional the $X.X much moved cyclical we The mortgage-related we first it period. first purchase-focused and or was XX%. deeper banking, mortgage

more fees versus XXXX, in the same During prior margins the quarter basis negatively on the versus sharply points, through buydowns impacted XXX rate to in first pricing markets, well gain XX sale origination down as to reductions customer pay prevailing preference year. rate the across period the were as the Margins points interest a market. basis paying declined of by in

income we that Currently, margins and income lower services which driven million Other levels XX% challenging environment volumes declined volumes, from lock gain or X the by prior sold loans and by declined structured in trading for full volatility the the by expect year year pressure impacted to $XX and primarily fixed revenues important sale by seen period-to-period, period. is normalize and the income finance last versus this historically million a $XXX that in margins. parties decreased during XXXX declines It market volume production whereby mortgage year fixed high on competition average are drives as finance between basis recognize be to structured services interest conditions. third million, to tighter businesses average expect by We overall years contingent both XXX trends. and liquidity, they rates, points will volatile over as can margins be from $XX on full XXX for average under market

from prior which year quarter decreases page generation $XX in year million Turning in was the Difficulty] prior revenue XX to year by of in decline to XX. Non-interest million. versus expenses linked the $XXX lower period The decreased fee was PrimeLending, period. prior compensation same the variable in substantially expenses and the by approximately driven to to the compared [Technical

the as Additionally, particularly prior the $X.X year. on where consultancy compensation and expense efforts dropped year. reducing and mortgage declined prior we related last services declined focused years year-over-year from variable is on few the expenses of benefits as as million a noted over expenses, expenses production-related these expenses Professional versus volumes place the

will Looking within They'll middle on forward the resulting these increased last elevated fixed back software and we've aggressively and remain compensation, of expenses investments productivity expect front, impact inflation mitigate for the leveraging businesses. our headwinds, focused made manage years to offices. occupancy continuous that costs improvement, XXXX, the across few in over we some we

to are While business and businesses further capabilities exist, our continuing streamline support do accelerate the our of overall pressures these inflationary and adoption productivity. client we acquisition to digital

the robust. Average remained year $XXX page billion levels. first real forward both of commercial equated estate particular, quarter, the $X.X solid in and commercial XXXX, the XX. second from as first the increasing lending, half trends were closed our to approximately HFI by Turning the million in Continuing pipelines production to in loans from prior quarter,

we to newly in X% While growth be has for remains growth few quarters, loans. as commercial over loan very XXXX the funded average range last year full loan improved commercial the intense expect competition will the X% during

quarter points be and coming million first loans locked the average of to loans PlainsCapital FICO an months. LTVs and basis of to delivered the respectively. X.XX $XXX These average yield approximately had PrimeLending [ph] XX%, and During XXXX, of over of XXX

family Lastly, given PrimeLending continue month to of mortgages $XX originated our retain current million to liquidity million $XX X throughout to and expect per position, XXXX. we at a pace X between at

it retention believe this liability interest represents While is net in periods, than asset appropriate support for lower prior positioning, target income we liquidity the consumption XXXX. and of growth balance

Turning to page XX.

as the quality across in made $XXX,XXX. upper we During Further, in the the portfolio. graph first ongoing overall charge-offs quarter, show credit net continues improve the Hilltop the of recorded right, progress on to reducing NPAs

first As page, at losses is PPP of loans. as as the mortgage the in graph on lending, the well shown both right at X.XX%, ended bottom coverage the credit XXXX of the the allowance including bank quarter warehouse for

continue time. will lending, as lower to loans We warehouse PPP mortgage over maintain both that well as loss content believe

loans warehouse X.XX%. turning mortgage HFI and to the Excluding page total ACL equates loans, bank ratio bank's I'm PPP to now XX. to

$X.X billion were deposits of total increased average versus quarter by first the have XXXX. quarter billion First or approximately $XX.X and XX%

have lower with first to interest-bearing growth continued solid points. deposits drift to deposit XX average cost the of quarter yields basis year-over-year, addition In in [ph]

solid last costs the to years, costs deposit XXXX the X Reserve in the higher funds later rate adjusts if expect begin seen we Fed deposit do to the improvement Federal we've during see over rise year. While in

successful share deposit remain focused and levels services. growing These to XXXX. in that we wallet continue we efforts expect it While be will were into products and elevated, should base treasury on our they and our noted that client through deepening accelerate remain XXXX,

page XX. to Turning

in actions current Given markets within expectations to for XXXX and to during future materially profitable It we and volatility trading updating markets market the our performance the businesses, that quarters. future. capital support should the conditions, the in outlook growth we be expect this results first coming taken that noted, our that the challenges particularly the and will ongoing are economy quarter, could and impact overall the volatility be our reflect over expectations and change

and our we'll As the such, back updated during the prepared Q&A for appropriate call we provide you section comments, of will that quarterly concludes Operator, calls. where outlook turn to call. the our

Operator

Michael please Instructions] Our Michael, first go [Operator comes you. Thank ahead. Truist. Young question from at

Michael Young

morning. good Hey,

Jeremy Ford

Good morning.

Will Furr

Good morning.

Michael Young

mortgage back on capital. you built in actually did a guys auction. good start Obviously, just last years a to I on of over Dutch XXXX, bit Jeremy, modified the has capital. wanted excess up X know the boom I

X.X announced value. of it value book back I tangible at around book you tangible The value around think is X.X book completed kind of to tangible and stock today. to

this So kind just allocation and wanted at get capital point. returns your to on updated thoughts of

Jeremy Ford

Sure.

and authorized repurchase dividend excess and And So in we increased million we not of have we've share for billion paid we first repurchase any capital, look our $X.XX. dividend about that the $X as and well, quarter, do. under we our forward we'll to as in shares the year, $XXX market well, repurchase throughout else the of keeping to the mindful anything that shares. the we'll open to going there's And market if I think be authorization, year and did

Michael Young

Okay. And the was my in securities question business. second just

Just think we impacts trying hits rate of there municipal throughout that value TBA kind as were in this kind move of the through TBA originations forward and to onetime to higher pipeline? environment? And year fair any to

Jeremy Ford

ahead Go the on fair value?

Will Furr

Will. It's

the unrealized Those million, you portion. rates During and the marks some as approximately that's the all quarter, when had but quarter, we again, move during $X against. again, were unrealized do

pipeline is well as as of obviously, particular, pressure look volatility on what substantial rate puts in and forward, pipeline I in the that we think that matter. kind both rates for swings PrimeLending as

a quarter, robust was And so hedge the we it challenging to continue But maintain as position. revenue from again, monitor, during a we perspective.

the across country pressure HFA volumes, we've the is as also home interest your acceleration and I program. higher Obviously, question noted, on really payments. rates, is putting the homebuyer first-time inflation pressure a appreciation there, answer business, think to of on the putting

to focused and in on competitive that remain being our space. helping clients on - we customers be So

are pressure challenges volumes the in the that particular. finance However, business, structured affordability are it really present on is in putting overall

Michael Young

thoughts that rates. just originations slow guys still kind on then to And tend of municipal that any these seeing interest volume? there? of higher are volume you continuation at Does Or

Jeremy Ford

national first business. our underwriting XX% had quarter. seeing on down the in issuance That We're more impact was

municipal view ago. we advisory our it X Our doing business than - that And was still robust well. is months less is I'd say

for However, core the spending and infrastructure we being particularly constructive market. are our for Texas need

Michael Young

all That's me. Thanks. Okay. for

Jeremy Ford

Thank you.

Operator

The Brad Sandler. of Milsaps ahead. please from Piper next go question comes Brad,

Brad Milsaps

Hey, good morning.

Jeremy Ford

Brad.

Brad Milsaps

some with guidance. questions. maybe Thanks my NII the for I taking start to wanted of

growth NII planned that just additionally? of portfolio bond growing any of kind for either Just to guidance of looking include the there are curious, into key You're excess to you've the deployment got NII as that any wanted of was your of I this X% the cash? year. kind does a X% of out sense it relates to get growth drivers what liquidity behind

Will Furr

Will. Brad, - a a the - number into take it's we've going that. Yeah, outlook. I'll We'll kind drivers NII got of there's of

rate floors. rate the First, first their We we're talked floors. to about We movement that about. $XXX certainly monitoring million the moved with above had or

So start loan to you'll there. see repricing some

but growing excess a loans. investment we've usage continue million to that liquidity noted, higher the at of our are going $XX And quarter. We accelerate the month well. the $XX try mortgage will going from of then got, we're - to of yields the the there deployment versus moved $XX believe – as fourth million perspective, retain to the on, million to portfolio a on we $XX also have we As that modestly million going to

of into loans. and out So cash say, securities the rebalancing we're, I'd portfolio

second cycle to should we'll - of to as through that We to are model with approximately slower is couple year. the the of part improvements. beta increases and rate noted see know, this more expect our we'll the end to but then rates lower you that be of And our yield we is, for the that some to of time, move be seeing half continue, moves of And that pass last to Obviously, the we've year. expansion NIM then that expect through it's beta clients over in XX%. have first expectation deposit the rate also deposit start on the

Brad Milsaps

balance it million be in $X down for XX higher then the disclosed is And you that rate helpful. each be And you start hike? might just and for likely each points. through correct? that Would a rates on That's that, come only? go sheet, beginning that static That's the Great. to basis as

Will Furr

That you're is and balance sheet, a correct. static

of it basis view. XX So XX-month That's forward points a will larger. over move be the average

few more start first kind they'll of and to the be accretive So we to start then rate deposit moderate pass will as through.

Brad Milsaps

really were mean big know to just be end from I the expenses But actually question big appreciate inflationary things. you're my step-up Okay. even like Can in were your guidance X% down the you any of first more the it from like If color seems or quarter? to first on maths the Great. in where step-up be you imply And side pretty there of my looks you year-over-year the it just follow-up pressure. expense I drivers you of right, guidance, get on what non-variable on in would where in low big of And then that. a I it offer know, quarter. a based maybe here And quarter. kind expenses. to again, would mentioned maybe fixed starting pretty kind first the would X%

Will Furr

timing. is occurs in thing of living we first first through in later pass the generally quarter, adjustment quarter. cost one think merit the I Obviously, [ph] that a

this that kind mean, a - at as fully from first quarter. an perspective, perspective. the we're expect a contract-by-contract then And software basis in on So again, wasn't I looking reset, we'll on of occupancy a contracts from those

capacity maximizing we're evaluate noted. would I been - and to is modeling revenue required we're taking too, current of be has the all to given production to we're the and the productivity, accelerate the given and our accelerate a we're steps where I substantial second of levels. guiding here the late rightsizing where and level should say, ensure quarter pretty it business mean, businesses to or first some point, to starts quarter. it's that it late So – started to granular at But

certainly on And environment, our in the challenging managing businesses. of expenses so a working fee revenue face hard in we're

Brad Milsaps

hope queue. Okay. Great. in Thank you, guys. I'll the back

Jeremy Ford

Thanks.

Will Furr

Thank you.

Operator

The please Michael ahead. at Rose Raymond go from next comes question James. Michael,

Michael Rose

for questions. good taking my morning. Thanks Hey,

following some expenses. questions of Just up on Brad's on

You expense guided commentary would and Securities what base, any, these imply that for X% you levels? if broker-dealer any fees to just the Can just changes of on pretax mean margin Hilltop sort kind rebounding down the XX%. of the at from Thanks.

Will Furr

Yes.

think an I somewhere in a been. what would, across from more a and particular say speaking, more NIR from perspective. for - variable $X.XX That's revenue reduction, Hilltop perspective, I mean, [ph] historically dollar expect broker-dealer generally we globally and I'd we'd it's the recoup on between expect $X.XX compensation to

of So we pretax want be would think I we're to - to expect don't sort And think I rebound. guide that. towards we going a

think at point have, fixed those to stable, uncertainty. today, to stabilize which think we the when from businesses need we're Fed predict that margins. to which what to and there here markets more point, out markets and say is that businesses start more it's the - income difficult become more to At other the stabilization as occurs. there - today maybe we clarity are what sit creating some would other we But normalized back we'll here we needs both related issues I will geopolitical the exactly be of when move

Michael Rose

That's very helpful. Okay.

Jeremy Ford

it X%. was quarter first since XXXX, on the the bond I add to think was U.S. market for quarter where worst the just aggregate index the that, Michael, down, Sure,

think that structured this obviously, institutional that buyers. we've then stabilize, rate clarify as there really benefits struggling on-the-run way finance it the similarly, And a to was to XX% And the down more heal rate bit kind with get so had of Will's as of those yield then XX% income business, our with an then with comparative prepayment are to business the just payment good didn't inventory on starts the feature And assistance cash the outlook impact I capital the and clearly, borrowers people, it there. and environment the on back the earlier, mentioned of that protection markets. product other or quarter, a to businesses little lack And out feature prepayment track. they'll on of got these and good fixed collateral in are will really

So that episodic we'll just back - it but go cycle. for reason, through would this same come I into favor will

Michael Rose

very helpful appreciate That's color. I it.

to Just charge-off moving of kind outlook. the on

everything right that know, You guys that the noticed really kind direction. running of a function conservatism? of their you Because know, non-accruals, that? the cautious like Thanks. just if are changing Or but down kind your seems outlook it is just you It's charge-off are modestly? only is not in I you bringing and banks expectations, outperform other more of trending low that, could didn't change,

Jeremy Ford

the Yeah, out a very the think with quarter year. came in perspective. the - it's first way we the evaluate early that came out it, I We obviously of was strong from credit quality

items to that but can there pop up. kind continue improve, see As of we portfolio we always be noted, the

to continues earliness through of go would certainly the maintain the we any the we get together given year. would here, there Certainly, outperform we year outside, don't the opportunity expect and to but if as to it outperform So we it. guidance further, that the economy the hold shocks be

Michael Rose

last just maybe And me. one Perfect. for one

amount smidge? a down So it is bringing a sort around add of sort you're bit. noticed little going that's the to X to I thoughts any family production, X Thanks. down just just of I in but given assume - lower any

Jeremy Ford

$X kind of liability what We're we approximately loans from want, X fixed how as loan mix rate perspective on we want. at to much billion well the as kind of X those of So evaluate mortgage balance an exposure family we asset sheet today.

loan commercial side for on are now. a growth We've trends. seeing the quarters commercial lending couple sequentially We had improved of

just X portfolio forward. and try balancing we're perspective an commercial it's ensure growth remain so to - liability just asset family from And the securities loans, to going we the loan between balanced to X

the of really the that's gist so And adjustment.

Michael Rose

right. makes taking for it sense. Thanks my questions, All total guys. Yeah,

Jeremy Ford

Thank you.

Operator

next comes please Olney from Matt question Matt, The at Stephens. go ahead.

Matt Olney

Hey, guys. thanks. Good morning,

a characterized number think you've deeper and more expecting. slowdown the abrupt And that I been business mortgage of been you I in the through than know XQ that was cycles. mortgage you've

current curious your think basis XXX cycles. I'm seen respect cycles. you margin as gain points. don't to And think see guidance, XXX compared the any past I to to in specifically, on with you said low sale observations that previous in we've So cycle I levels

to So the Thanks. any comments and have versus trying past there? cycle appreciate just current cycles you

Jeremy Ford

rates cycles inventory I'll have X much supply appreciation it's topically it's built putting I home it interest home but over that's had you've margins. very think, gone environment and Will a and years. other fact make overcapacity of now just more challenging last been price up evaporated. you say, the And the and different a lot up buyers And refinancing here, and so now that the has on and in chime challenges like, than then affordability, pressure cash just really and

at team right kind pricing you cycles that of through you strategies, historically, Will? had when could incremental say like manufacture other now. this, but some would PrimeLending find it's volume hard really sales or to Our campaigns

Will Furr

environment but I think won't I outlook haven't say I to But pricing think refinance we we it. to overall agree the lever a and the XXX the rate I price reflects of for set Jeremy's with see to point, I certainly change increases continue the done competitive all and it's caused that very and abrupt in that, that. it. to XXX really really unprecedented, they've next hard, it's has And think very, nature the - pull seen to expect the

basis third gain point for, for is to sold obviously, parties. sold on parties. we sale The to a guidance So had again, loans we're loans XXX third guiding,

XXX, of So during to pretty again, because, we season the to of through the certainly that substantive selling equivalent there work growth the just we've the built of lot to here middle during there expect of in migration see year, and normal to really XXX a X-year outsized in for the mentioned, competition prior a up out Jeremy capacity as that lot was period. got, market the a

a that So a a series of kind where accelerating turn quarters. boom has you within cycle it the housing refinance It into of now of and housing had wasn't housing quarter an a normal slower kind within - was normalized didn't market. that market

Operator

go from Our question KBW. at ahead. next please comes Gailey Brady Brady,

Brady Gailey

guys. Good morning, Hey, thanks.

Jeremy Ford

Morning.

Brady Gailey

buyback about I you buyback? capital. the book could more It's the $XXX that under with this million million excess beyond question. mean, of of XX% get And stock on the wanted only is year company. than just tangible about $XXX I circle only to aggressive now your X% the back of value,

Jeremy Ford

we we sorry, issue. technical – I'm have were

question, your and - we increased year, Brady, If could. throughout we our answer last to authorization So yes, the year.

could And do we that. to evaluate right go we the a guidance So And continue now, open out. we'll it market. in to have

that. share limit go million think at to And will a have repurchases. trying of towards be, to that open We $XXX point, to this work market I up

Brady Gailey

line $XX as it All XX and and at $X that right. look I drop consolidated million like I mean line? was million dropped was year the look fee XX, be I tends at fee quarter, the item, volatile, driver other and this income to income of last And $XX other to pretty off What as million. then and that in the

Will Furr

resides. Yeah, trading that's and of and other where structured fixed gains finance losses income kind

Brady Gailey

and there desire tends be volatility volatile? picture is Like did to year bigger was basis that plan grow a a kind which it or performance? a effort And bank Longer earnings. your ago, know, help of basis then is [indiscernible] this reduce for longer you function question here ROA, look - I a just and is Or it how to such any desire there is outsized are XX your point maybe a the in just the are really quarter-to-quarter. to the it Hilltop. it what you I earnings right. bank volatile help term? the past, stream reduce a broker-dealer quarter. mean at points. an there got to smooth a XXX desire We All volatility a of term, ROA hey, Okay. in would growth, that see a the of, a know But company and I about we've going to mortgage is. be talked earnings

Jeremy Ford

it the - that's would the that think stabilize for thing overall earnings them I that, assets that collectively. had, we fee-based so that businesses talked desire good of as and about, that our we've we've a the and for simply outgrown to they've individually is increase us bank these

we greater bank, that durable the assets where yeah, a the we be, would model think and business think as So synergistic very could business are synergistic synergistic deposits well, better the the I the said, be is have we've provides drawl as core the very sweep the funding to And And that mortgage obviously, and Security [ph] is bank. that. for Hilltop strategy

Brady Gailey

what to the thinking how about bank, topic, on kind the I of to this business? in of means guys growth here an of that M&A kind maybe grow really a tough your just know point? And you side banking in although update about grow bank a markets notably for great it's about inorganic Texas. Maybe do environment to But on as M&A, that, you're at are what

Jeremy Ford

enhancing Well, have in and amount a billion we're right probably M&A. we obviously, of we right a interested where about we're our in good in in and to now, $X really several those, tracked still an $X the partner And something can deal and market, seeking in put the consideration. meaningful franchise that's billion pursuing banks assets interest bank cash

Brady Gailey

great. guys. Okay, Thank you,

Jeremy Ford

you. Thank

Operator

at follow-up Olney a Stephens. Matt, go from question have please ahead. Matt We

Matt Olney

Yeah. Thanks, guys.

macro much? you Just Thanks. following a I this with if offense offense guess of question. the And balance more given appreciate we to where sheet at to out. defense kind where play it cycle in time out guess is still could playing trying a this and I and can are are the is Or transactions the bank time to M&A Hilltop the some the I'm play playing of respect the competitors be Hilltop uncertainties not given specifically, as with think of strong there? some the Brady's up liquidity capital, how on

Jeremy Ford

buyer a bank insider of do who We've that think our can this a would and view in not on opportunities that's we we a grow with And all it lot of ownership, discount are because in we've be our be a a is that I environment capital. right and at to type got this probably lot environment, focus liquid think a if the time distressed I that, that transactions excess peers. for stock that a to bank good we're this Well, have going I opportunities, but us strong not to guess fit yeah, we transaction. that together got a that

Matt Olney

you. Thank Okay.

Operator

no have questions. further We

much concludes and call earnings the this Hilltop Thank conference So first for joining. XXXX Holdings very you quarter webcast.

You lines. may now disconnect your

Hilltop (HTH) 22 Apr 222022 Q1 Earnings call transcript