Hilltop Holdings Inc. (NYSE:HTH) Q1 2024 Earnings Call Transcript

They continue to reach out and ask for higher rates in different products, whether it be sweep or otherwise. So we are going to continue to kind of work our way through that, but we do expect deposit rates are going to move higher and we expect that beta, as I noted earlier in my comments, to move up within that range of 66% to 70%. The other parts that we noted, we’ve got loans, which again, we’ve got some repricing that will occur on our fixed rate portfolio through the balance of the year. We think that’s a tailwind. We also think we’re allowing the securities portfolio to continue to run down and we expect that those cash flows will be reinvested in either cash or loans. Likely loans retained in our mortgage retention program. And so both of those are tailwinds, which cause us to believe that both NII and NIM are going to be pressured here for the coming quarters, maybe one or two quarters and then likely stabilizes and starts to move higher we believe in the fourth quarter.

So, those are really the largest drivers. As I noted, we started — restarted the retention of mortgage loans on the balance sheet in the first quarter. We’ll continue to do that. The average rate — coming on rate for those mortgages at this point and they’re all hybrid arm product is about 7% And so obviously, that’s a higher rate than cash earnings rates and certainly a higher rate than our securities portfolio as well. We’ll continue to do that at a modest level relative to our overall balance sheet, but again, I think that the current environment, the inverted yield curve, and Fed funds remaining, what we believe to be elevated levels for the vast majority of this year are going to continue to pressure NII and NIM.

Matt Olney: Okay, great details. Thanks guys. That’s all for me.

Will Furr: Thank you.

Operator: It appears that we have no further questions at this time. This does conclude the Hilltop earnings first quarter 2024 earnings call. Thank you for your participation. You may disconnect at any time.