Financial Data and Key Metrics Changes - Earnings per share for the March quarter was $1.39, an increase of $0.09 from the linked December quarter and up $0.40 from the March 2024 quarter [7] - Net interest margin for the quarter was 3.39%, compared to 3.15% for the same period last year and up from 3.36% in the previous quarter [7] - Net interest income increased by 3.5% quarter-over-quarter and 14.4% year-over-year due to higher average earning asset balances and net interest margin expansion [10] - Tangible book value per share rose to $40.37, an increase of $4.86 or nearly 14% year-over-year [13] Business Line Data and Key Metrics Changes - Gross loan balances decreased by $3.5 million compared to the December quarter but increased by $252 million year-over-year, reflecting almost 7% growth [11] - Deposit balances increased by approximately $51 million in the third quarter and rose by $275 million or about 7% year-over-year [11] - Nonperforming loans (NPLs) increased to $22 million, up $14 million from the previous quarter, totaling 0.55% of gross loans [14] Market Data and Key Metrics Changes - The agricultural segment showed signs of stress with farmers facing income pressures from declining commodity prices and higher input costs [21] - The company noted a shift in crop planning strategies among farmers, with a decline in corn acreage in favor of soybeans and rice due to market conditions [22] Company Strategy and Development Direction - The company is focusing on enhancing customer experience and business development through a newly created Chief Banking Officer position [41] - There are ongoing evaluations for performance improvement initiatives aimed at meeting customer needs more effectively [40] - The company remains open to M&A opportunities but anticipates a need for market stabilization before pursuing significant transactions [43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continuing positive trends in earnings and profitability through fiscal year 2025 [38] - The company is proactively addressing potential credit quality issues, particularly in the agricultural sector, by adjusting its allowance for credit losses [25][38] - Management acknowledged the potential for economic uncertainty impacting credit losses and reserves in future quarters [38] Other Important Information - The company has seen strong deposit growth primarily from core CDs, which have been renewed at lower rates, benefiting the net interest margin [12] - The allowance for credit losses was $54.9 million or 1.37% of gross loans, reflecting a slight increase from the previous quarter [36] Q&A Session Summary Question: What specifics can you provide on CDs rolling off and their replacement rates? - The company has about $215 million in CDs rolling off at a rate of 4.25%, to be replaced by current renewal rates averaging around 4.10% [48] Question: Are CDs the primary source of growth for funding in the coming months? - CDs are expected to increase as a percentage of the portfolio, especially as non-maturity deposit accounts roll off [51] Question: How are tariffs affecting commodity exports? - Management indicated that effective tariffs would negatively impact prices, but government price supports would mitigate exposure [54] Question: Can you provide insights on the net interest margin and renewal rates? - The run rate for net interest margin is around 3.40%, with renewal rates averaging between 7.25% to 7.50% [60][62] Question: What is the outlook on credit quality and borrower stress? - There are signs of stress among lower-end consumers and small businesses, but no broad-based deterioration is observed in the commercial real estate portfolio [72][74]

Financial Data and Key Metrics Changes - Hilltop reported net income of $42 million or $0.65 per diluted share for Q1 2025, with a return on average assets of 1.1% and return on average equity of 7.8% [5][16] - The common equity Tier one capital ratio stood at 21%, and tangible book value per share increased from year-end 2024 by $0.53 to $30 per share [14][15] Business Line Data and Key Metrics Changes - PlainsCapital Bank generated $40 million of pretax income on $13 billion of average assets, representing a return on average assets of 0.96% [6] - PrimeLending reported a pretax loss of $8 million, with origination volume increasing year-over-year to $1.7 billion, but faced a decline in mortgage origination fees [10][11] - Hilltop Securities generated pretax income of $9 million on net revenue of $109 million, with Public Finance Services seeing a 34% year-over-year increase in net revenues [11][12] Market Data and Key Metrics Changes - Average total deposit balances at PlainsCapital Bank decreased by approximately $89 million or 1% compared to Q4 2024, but increased by nearly $300 million year-over-year [8][21] - The bank experienced a one basis point compression in net interest margin to 2.97% [9] Company Strategy and Development Direction - The company plans to continue investing in its merchant banking platform and maintain a focus on growing customer deposits while managing deposit costs [13][15] - Management is actively monitoring operating expenses at PrimeLending and has reduced the fixed expense base by 12% year-over-year [10] Management Comments on Operating Environment and Future Outlook - Management expressed concerns about the ongoing volatility in the mortgage origination market and the impact of interest rates on affordability for homebuyers [10][11] - The company expects to see a modest improvement in economic conditions but acknowledges potential volatility due to inflation and tariffs [19][29] Other Important Information - Hilltop recognized a preliminary gain of $23.6 million from the sale of its investment in Mosier Energy Solutions, impacting net income positively [13][16] - The company returned $12 million to stockholders through dividends and repurchased $33 million in shares during the quarter [15] Q&A Session Summary Question: What was the size of the downgraded office credit? - The downgraded office credit was approximately $18 million, with positive migration in classified loans driven by smaller credits [32] Question: Can deposit costs move lower and improve NIM? - Management indicated that deposit costs have been reduced significantly, and while further reductions are possible, NIM has stabilized [33][34] Question: Should we expect a reversal of seasonal deposit outflows in Q2? - Management expects core customer deposits to rebuild after the tax season, leading to growth in deposits through the remainder of the year [44][45] Question: How were businesses impacted by bond market volatility? - The municipal portfolio was most impacted by volatility, but management is working to recover from the trading challenges faced [52] Question: What is the outlook for mortgage business and loan growth? - Management anticipates a slow and steady improvement in the mortgage business, while also focusing on right-sizing operations for the current market [55][56] Question: How much of the expense improvement was due to the insurance recovery? - The insurance recovery had a limited impact on overall expense guidance, which remains stable due to ongoing optimization efforts [63][64]

Financial Performance - Net income remained stable at $178 million in Q1 2025 compared to Q4 2024[4] - Net Interest Margin (NIM) increased by 5 bps to 3.40%[4] - Fully Taxable Equivalent (FTE) NIM expanded by 11 bps to 3.73%[4] - Earnings Per Share (EPS) increased to $2.56 from $2.51[4] Balance Sheet - Total deposits increased by $935 million, a 1.4% increase[6, 11] - Excluding P R public deposits, customer deposits increased by $776 million[11] - Loans held in portfolio increased by $146 million to $37,254 million[6] Credit Quality - Non-Performing Loans (NPLs) decreased by $37 million to $314 million[7, 11] - The NPL Ratio improved to 0.84% from 0.95% in Q4[7, 11] - Net Charge-Off (NCO) Ratio decreased to 0.53% from 0.74%[7, 11] Capital Actions - Repurchased $122 million of common stock at an average price of $96 24 per share[11] - Paid quarterly common stock dividend increased 13% to $0 70[11]