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Hilltop Holdings Inc.

Hilltop Holdings Inc.HTHEarnings & Financial Report

NYSE · Financials · State Commercial Banks

Hilltop Holdings Inc. is a financial holding company based in Dallas, Texas. It offers financial products and banking services through three primary subsidiaries: PlainsCapital Bank, PrimeLending, and HilltopSecurities.

What changed in Hilltop Holdings Inc.'s 10-K — 2024 vs 2025

Top changes in Hilltop Holdings Inc.'s 2025 10-K

573 paragraphs added · 634 removed · 480 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

96 edited+23 added−73 removed145 unchanged
Below is a list of certain significant components that comprise the tiers of capital for Hilltop and PlainsCapital under Basel III. ​ Common equity Tier 1 capital: ● includes common stockholders’ equity (such as qualifying common stock and any related surplus, undivided profits, disclosed capital reserves that represent a segregation of undivided profits and foreign currency translation adjustments, excluding changes in other comprehensive income (loss) and treasury stock); ● includes certain minority interests in the equity capital accounts of consolidated subsidiaries; and ● excludes goodwill and various intangible assets. ​ Additional Tier 1 capital: ● includes certain qualifying minority interests not included in common equity Tier 1 capital; ● includes certain preferred stock and related surplus; ● includes certain subordinated debt; and ● excludes 50% of the insurance underwriting deduction. ​ Tier 2 capital: ● includes allowance for credit losses, up to a maximum of 1.25% of risk-weighted assets; ● includes minority interests not included in Tier 1 capital; and ● excludes 50% of the insurance underwriting deduction. ​ The following table summarizes the Basel III requirements. ​ ​ ​ ​ ​ Item Requirement Minimum common equity Tier 1 capital ratio 4.5 % Common equity Tier 1 capital conservation buffer 2.5 % Minimum common equity Tier 1 capital ratio plus capital conservation buffer 7.0 % Minimum Tier 1 capital ratio 6.0 % Minimum Tier 1 capital ratio plus capital conservation buffer 8.5 % Minimum total capital ratio 8.0 % Minimum total capital ratio plus capital conservation buffer 10.5 % ​ In order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers, Basel III also implemented a capital conservation buffer, which requires a banking organization to hold a buffer above its minimum risk-based capital requirements.
Below is a list of certain significant components that comprise the tiers of capital for Hilltop and PlainsCapital under Basel III. ​ 15 Table of Contents Common equity Tier 1 capital: ● includes common stockholders’ equity (such as qualifying common stock and any related surplus, undivided profits, disclosed capital reserves that represent a segregation of undivided profits and foreign currency translation adjustments, excluding changes in other comprehensive income (loss) and treasury stock); ● includes certain minority interests in the equity capital accounts of consolidated subsidiaries; and ● excludes goodwill and various intangible assets. ​ Additional Tier 1 capital: ● includes certain qualifying minority interests not included in common equity Tier 1 capital; ● includes certain preferred stock and related surplus; ● includes certain subordinated debt; and ● excludes 50% of the insurance underwriting deduction. ​ Tier 2 capital: ● includes allowance for credit losses, up to a maximum of 1.25% of risk-weighted assets; ● includes minority interests not included in Tier 1 capital; and ● excludes 50% of the insurance underwriting deduction. ​ The following table summarizes the Basel III requirements. ​ ​ ​ ​ ​ Item ​ ​ ​ Requirement ​ ​ ​ Minimum common equity Tier 1 capital ratio 4.5 % Common equity Tier 1 capital conservation buffer 2.5 % Minimum common equity Tier 1 capital ratio plus capital conservation buffer 7.0 % Minimum Tier 1 capital ratio 6.0 % Minimum Tier 1 capital ratio plus capital conservation buffer 8.5 % Minimum total capital ratio 8.0 % Minimum total capital ratio plus capital conservation buffer 10.5 % Minimum leverage ratio 4.0 % ​ In order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers, Basel III also implemented a capital conservation buffer, which requires a banking organization to hold a buffer above its minimum risk-based capital requirements.
We seek to distinguish ourselves from our competitors through our commitment to personalized customer service and responsiveness to customer needs while providing a range of competitive mortgage loan products and services. ​ Overall, competition among providers of financial products and services continues to increase as technological advances, including artificial intelligence and automation, have lowered the barriers to entry for financial technology companies, with consumers having the opportunity to select from a growing variety of traditional and nontraditional alternatives, including online checking, savings and brokerage accounts, online lending, online insurance underwriters, crowdfunding, digital wallets, and money transfer services.
We seek to distinguish ourselves from our competitors through our commitment to personalized customer service and responsiveness to customer needs while providing a range of competitive mortgage loan products and services. ​ We seek to distinguish ourselves from our competitors through our commitment to personalized customer service and responsiveness to customer needs while providing a range of competitive loan and deposit products and other financial services. ​ Overall, competition among providers of financial products and services continues to increase as technological advances, including artificial intelligence and automation, have lowered the barriers to entry for financial technology companies, with consumers having the opportunity to select from a growing variety of traditional and nontraditional alternatives, including online checking, savings and brokerage accounts, online lending, online insurance underwriters, crowdfunding, digital wallets, and money transfer services.
PrimeLending does not currently originate subprime loans (which it defines to be conventional and government loans that (i) are ineligible for sale to the Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”) or Government National Mortgage Association (“GNMA”), or (ii) do not comply with approved investor-specific underwriting guidelines). 10 Table of Contents ​ Geographic Dispersion of our Businesses ​ The Bank provides traditional banking and wealth, investment and treasury management services.
PrimeLending does not currently originate subprime loans (which it defines to be conventional and government loans that (i) are ineligible for sale to the Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”) or Government National Mortgage Association (“GNMA”), or (ii) do not comply with approved investor-specific underwriting guidelines). 11 Table of Contents ​ Geographic Dispersion of our Businesses ​ The Bank provides traditional banking and wealth, investment and treasury management services.
These activities involve borrowing securities to cover short sales and to complete transactions in which customers have failed to deliver securities by the required settlement date, and lending securities to other broker-dealers for similar purposes. 9 Table of Contents ​ Mortgage Origination ​ Our mortgage origination segment operates through a wholly owned subsidiary of the Bank, PrimeLending, which is a residential mortgage banker licensed to originate and close loans in all 50 states and the District of Columbia.
These activities involve borrowing securities to cover short sales and to complete transactions in which customers have failed to deliver securities by the required settlement date, and lending securities to other broker-dealers for similar purposes. 10 Table of Contents ​ Mortgage Origination ​ Our mortgage origination segment operates through a wholly owned subsidiary of the Bank, PrimeLending, which is a residential mortgage banker licensed to originate and close loans in all 50 states and the District of Columbia.
When the IMBs subsequently sell the loans to institutional investors in the secondary market—typically within 30 days of closing the transaction—the proceeds from the sale are used to pay down and therefore replenish their lines of credit. ​ 7 Table of Contents The Bank also offers construction financing for commercial, retail, office, industrial, warehouse, single-family and multi-family developments.
When the IMBs subsequently sell the loans to institutional investors in the secondary market—typically within 30 days of closing the transaction—the proceeds from the sale are used to pay down and therefore replenish their lines of credit. ​ 8 Table of Contents The Bank also offers construction financing for commercial, retail, office, industrial, warehouse, single-family and multi-family developments.
These segments reflect the manner in which operations are managed and the criteria used by our chief operating decision maker, our President and Chief Executive Officer, to evaluate segment performance, develop strategy and allocate resources. ​ 5 Table of Contents The following graphic reflects our current business segments. Corporate includes certain activities not allocated to specific business segments.
These segments reflect the manner in which operations are managed and the criteria used by our chief operating decision maker, our President and Chief Executive Officer, to evaluate segment performance, develop strategy and allocate resources. ​ 6 Table of Contents The following graphic reflects our current business segments. Corporate includes certain activities not allocated to specific business segments.
Many of our competitors have substantially greater financial resources, lending limits and branch networks than we do, and offer a broader range of products and services. 11 Table of Contents ​ Our banking segment primarily competes with national, regional and community banks within the various markets where the Bank operates.
Many of our competitors have substantially greater financial resources, lending limits and branch networks than we do, and offer a broader range of products and services. ​ 12 Table of Contents Our banking segment primarily competes with national, regional and community banks within the various markets where the Bank operates.
On June 21, 2010, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the FDIC jointly issued comprehensive final guidance on incentive compensation policies (the “Incentive Compensation Guidance”) intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
On June 21, 2010, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the FDIC to jointly issued comprehensive final guidance on incentive compensation policies (the “Incentive Compensation Guidance”) intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
At December 31, 2024, the Hilltop Broker-Dealers were in compliance with applicable net capital requirements. ​ The SEC, CFTC, FINRA and other regulatory organizations impose rules that require notification when net capital falls below certain predefined thresholds.
At December 31, 2025, the Hilltop Broker-Dealers were in compliance with applicable net capital requirements. ​ The SEC, CFTC, FINRA and other regulatory organizations impose rules that require notification when net capital falls below certain predefined thresholds.
The restrictions on loans to directors, executive officers, principal stockholders and their related interests (collectively referred to herein as “insiders”) contained in the Federal Reserve Act and Regulation O apply to all insured institutions and their subsidiaries and holding companies.
The restrictions on loans to directors, executive officers, principal shareholders and their related interests (collectively referred to herein as “insiders”) contained in the Federal Reserve Act and Regulation O apply to all insured institutions and their subsidiaries and holding companies.
The amendments will require certain broker-dealers that hold 24 Table of Contents customer cash and securities to perform their reserve computations for accounts of customers and proprietary accounts of broker-dealers daily rather than weekly as is currently required under Rule 15c3-3. Hilltop Securities currently performs its reserve computation on a weekly basis.
The amendments will require certain broker-dealers that hold customer cash and securities to perform their reserve computations for accounts of customers and proprietary accounts of broker-dealers daily rather than weekly as is currently required under Rule 15c3-3. Hilltop Securities currently performs its reserve computation on a weekly basis.
Broker-dealers are also subject to the privacy and anti-money laundering laws and regulations discussed herein. Additional legislation, changes in rules promulgated by the SEC, securities exchanges, self-regulatory 23 Table of Contents organizations or states or changes in the interpretation or enforcement of existing laws and rules often directly affect the method of operation and profitability of broker-dealers.
Broker-dealers are also subject to the privacy and anti-money laundering laws and regulations discussed herein. Additional legislation, changes in rules promulgated by the SEC, securities exchanges, self-regulatory organizations or states or changes in the interpretation or enforcement of existing laws and rules often directly affect the method of operation and profitability of broker-dealers.
Additionally, the Net Capital Rule and certain FINRA rules impose requirements that may have the effect of prohibiting or limiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to, and/or approval from, the SEC and FINRA for certain capital withdrawals. ​ Compliance with the net capital requirements may limit our operations and require a greater use of capital.
Additionally, the Net Capital Rule and certain FINRA rules impose requirements that may have the effect of prohibiting or limiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to, and/or approval from, the SEC and FINRA for certain capital withdrawals. ​ 22 Table of Contents Compliance with the net capital requirements may limit our operations and require a greater use of capital.
Item 1. Business . ​ General ​ Hilltop Holdings Inc. is a diversified, Texas-based financial holding company registered under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”). Our primary line of business is to provide business and consumer banking services from offices located throughout Texas through the Bank.
Item 1. Business . ​ General ​ Hilltop Holdings Inc. is a diversified, Texas-based financial holding company incorporated in Maryland and registered under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”). Our primary line of business is to provide business and consumer banking services from offices located throughout Texas through the Bank.
The FDIC may terminate its insurance of deposits if it finds that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. ​ The FDIC is required to maintain a designated reserve ratio of the deposit insurance fund (“DIF”) to insured deposits in the United States.
The FDIC may terminate its insurance of deposits if it finds that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. ​ The FDIC is required to maintain a designated reserve ratio of the DIF to insured deposits in the United States.
At December 31, 2024, we provided services to 99 financial organizations, including correspondent firms, correspondent broker-dealers, registered investment advisers, discount and full-service brokerage firms, and institutional firms. ​ Securities Lending. The securities lending group performs activities that include borrowing and lending securities for other broker-dealers, lending institutions, and internal clearing and retail operations.
At December 31, 2025, we provided services to 93 financial organizations, including correspondent firms, correspondent broker-dealers, registered investment advisers, discount and full-service brokerage firms, and institutional firms. ​ Securities Lending. The securities lending group performs activities that include borrowing and lending securities for other broker-dealers, lending institutions, and internal clearing and retail operations.
Beginning June 2020, the “best interest” standard requires a broker-dealer to make recommendations of securities transactions, or investment 25 Table of Contents strategies involving securities, to a retail customer without putting its financial interests ahead of the interests of a retail customer.
Beginning June 2020, the “best interest” standard requires a broker-dealer to make recommendations of securities transactions, or investment strategies involving securities, to a retail customer without putting its financial interests ahead of the interests of a retail customer.
At December 31, 2024, the Hilltop Broker-Dealers employed approximately 790 people and maintained 39 locations in 15 states. ​ Our broker-dealer segment has four primary lines of business: (i) public finance services, (ii) structured finance, (iii) fixed income services, and (iv) wealth management, which includes retail, clearing services and securities lending. 8 Table of Contents These lines of business and the respective services provided reflect the current manner in which the broker-dealer segment’s operations are managed. ​ Public Finance Services .
At December 31, 2025, the Hilltop Broker-Dealers employed approximately 790 people and maintained 39 locations in 16 states. ​ Our broker-dealer segment has four primary lines of business: (i) public finance services, (ii) structured finance, (iii) fixed income services, and (iv) wealth management, which includes retail, clearing services and securities lending. 9 Table of Contents These lines of business and the respective services provided reflect the current manner in which the broker-dealer segment’s operations are managed. ​ Public Finance Services .
The Bank has a presence in the large metropolitan markets in Texas and conducts substantially all of its banking operations in Texas. ​ Our broker-dealer services are provided through Hilltop Securities and Momentum Independent Network, which conduct business nationwide, with 84% of the broker-dealer segment’s net revenues during 2024 generated through locations in Texas, New York and California. ​ PrimeLending provides residential mortgage origination products and services from over 182 locations in 46 states.
The Bank has a presence in the large metropolitan markets in Texas and conducts substantially all of its banking operations in Texas. ​ Our broker-dealer services are provided through Hilltop Securities and Momentum Independent Network, which conduct business nationwide, with 82% of the broker-dealer segment’s net revenues during 2025 generated through locations in Texas, New York and California. ​ PrimeLending provides residential mortgage origination products and services from over 170 locations in 46 states.
Transactions between the Bank and its banking and nonbanking affiliates, including Hilltop, PrimeLending, and PCC, are subject to Sections 23A and 23B of the Federal Reserve Act, as implemented by the Federal Reserve Board’s Regulation W. ​ 18 Table of Contents In general, Section 23A imposes limits on the amount of such transactions, and also requires certain levels of collateral for loans to affiliated parties.
Transactions between the Bank and its affiliates, including Hilltop, PrimeLending, and PCC, are subject to Sections 23A and 23B of the Federal Reserve Act, as implemented by the Federal Reserve Board’s Regulation W. ​ In general, Section 23A imposes limits on the amount of such transactions, and also requires certain levels of collateral for loans to affiliated parties.
The primary sources of our deposits are residents of and businesses located in Texas. At December 31, 2024, the Bank employed approximately 1,000 people. ​ The table below sets forth a distribution of the banking segment’s loans, classified by portfolio segment.
The primary sources of our deposits are residents of and businesses located in Texas. At December 31, 2025, the Bank employed approximately 1,030 people. ​ The table below sets forth a distribution of the banking segment’s loans, classified by portfolio segment.
Securities Holdings is a holding company that provides, through its subsidiaries, investment banking and other related financial services, including municipal advisory, sales, trading and underwriting of taxable and tax-exempt fixed income securities, clearing, securities lending, structured finance and retail brokerage services throughout the United States. ​ At December 31, 2024, on a consolidated basis, we had total assets of $16.3 billion, total deposits of $11.1 billion, total loans, including loans held for sale, of $8.7 billion and stockholders’ equity of $2.2 billion. ​ Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “HTH.” ​ Our principal office is located at 6565 Hillcrest Avenue, Dallas, Texas 75205, and our telephone number at that location is (214) 855-2177.
Securities Holdings is a holding company that provides, through its subsidiaries, investment banking and other related financial services, including municipal advisory, sales, trading and underwriting of taxable and tax-exempt fixed income securities, clearing, securities lending, structured finance and retail brokerage services throughout the United States. ​ At December 31, 2025, on a consolidated basis, we had total assets of $15.8 billion, total deposits of $10.9 billion, total loans, including loans held for sale, of $9.2 billion and stockholders’ equity of $2.2 billion. ​ Our common stock is listed on the New York Stock Exchange (“NYSE”) and NYSE Texas under the symbol “HTH.” ​ Our principal office is located at 6565 Hillcrest Avenue, Dallas, Texas 75205, and our telephone number at that location is (214) 855-2177.
When the rules were fully phased-in in 2019, the minimum capital 16 Table of Contents requirements plus the capital conservation buffer should have exceeded the prompt corrective action well-capitalized thresholds. ​ During 2024, our eligible retained income was positive and our capital conservation buffer was greater than 2.5%, and therefore, we were not subject to limits on capital distributions or discretionary bonus payments.
When the rules were fully phased-in in 2019, the minimum capital requirements plus the capital conservation buffer should have exceeded the prompt corrective action well-capitalized thresholds. ​ During 2025, our eligible retained income was positive and our capital conservation buffer was greater than 2.5%, and therefore, we were not subject to limits on capital distributions or discretionary bonus payments.
Our underwriting practices include: ​ ● granting loans on a sound and collectible basis; ● obtaining a balance between maximum yield and minimum risk; ● ensuring that primary and secondary sources of repayment are adequate in relation to the amount of the loan; and ● ensuring that each loan is properly documented and, if appropriate, adequately insured. ​ PrimeLending also acts as a primary servicer for loans originated prior to sale and loans sold with servicing retained. ​ PrimeLending, including its ABAs, had a staff of approximately 1,409 people, including approximately 813 mortgage loan officers, as of December 31, 2024 that produced $8.6 billion in closed mortgage loan volume during 2024, 90.1% of which related to home purchases volume.
Our underwriting practices include: ​ ● granting loans on a sound and collectible basis; ● obtaining a balance between maximum yield and minimum risk; ● ensuring that primary and secondary sources of repayment are adequate in relation to the amount of the loan; and ● ensuring that each loan is properly documented and, if appropriate, adequately insured. ​ PrimeLending also acts as a primary servicer for loans originated prior to sale and loans sold with servicing retained. ​ PrimeLending, including its ABAs, had a staff of approximately 1,300 people, including approximately 800 mortgage loan officers, as of December 31, 2025 that produced $8.9 billion in closed mortgage loan volume during 2025, 85.9% of which related to home purchases volume.
The banking segment’s loan portfolio included $1.3 billion in warehouse lines of credit extended to PrimeLending and its affiliated business arrangements (“ABAs”), of which $0.8 billion was drawn at December 31, 2024.
The banking segment’s loan portfolio included $1.3 billion in warehouse lines of credit extended to PrimeLending and its affiliated business arrangements (“ABAs”), of which $0.9 billion was drawn at December 31, 2025.
As noted above in Net Capital Requirements , the Hilltop Broker-Dealers that hold customers’ funds and securities are subject to the SEC’s customer protection rule (Rule 15c3-3 under the Exchange Act), which generally provides that such broker-dealers maintain physical possession or control of all fully-paid securities and excess margin securities carried for the account of customers and maintain certain reserves of cash or qualified securities. ​ The SEC recently adopted amendments to Rule 15c3-3, which would be become effective as of March 14, 2025, and would have a compliance date of December 31, 2025.
As noted above in Net Capital Requirements , the Hilltop Broker-Dealers that hold customers’ funds and securities are subject to the SEC’s customer protection rule (Rule 15c3-3 under the Exchange Act), which generally provides that such broker-dealers maintain physical possession or control of all fully-paid securities and excess margin securities carried for the account of customers and maintain certain reserves of cash or qualified securities. ​ The SEC recently adopted amendments to Rule 15c3-3, which became effective as of March 14, 2025, and have a compliance date of June 30, 2026.
On July 27, 2023, the Federal Reserve, the FDIC, and the Office of the Comptroller issued a proposal, referred to as “Basel III Endgame,” that would result in significant changes to the U.S. regulatory capital rules for banking organizations with total consolidated assets of $100 billion or more.
On July 27, 2023, the federal banking agencies issued a proposal, referred to as “Basel III Endgame,” that would result in significant changes to the U.S. regulatory capital rules for banking organizations with total consolidated assets of $100 billion or more.
PrimeLending primarily originates its mortgage loans through a retail channel, with additional lending through its ABAs. During 2024, funded loan volume through ABAs was approximately 16% of the mortgage origination segment’s total loan volume.
PrimeLending primarily originates its mortgage loans through a retail channel, with additional lending through its ABAs. During 2025, funded loan volume through ABAs was approximately 14% of the mortgage origination segment’s total loan volume.
In the current era of heightened regulation of financial institutions, the Hilltop Broker-Dealers can expect to incur increasing compliance costs, along with the industry as a whole. ​ Mortgage Origination ​ PrimeLending and the Bank are subject to the rules and regulations of the CFPB, FHA, VA, FNMA, FHLMC and GNMA with respect to originating, processing, selling and servicing mortgage loans and the issuance and sale of mortgage-backed securities.
In the current era of heightened regulation of financial institutions, the Hilltop Broker-Dealers can expect to incur increasing compliance costs, along with the industry as a whole. ​ 24 Table of Contents Mortgage Origination ​ PrimeLending and the Bank are subject to a number of laws, rules and regulations with respect to originating, processing, selling and servicing mortgage loans and the issuance and sale of mortgage-backed securities, including regulations and rules issued by the CFPB, FHA, VA, FNMA, FHLMC and GNMA.
Other than these ten states, none of the states in which PrimeLending operated during 2024 represented more than 3% of PrimeLending’s origination volume. ​ Employees and Human Capital Resources At December 31, 2024 we employed approximately 3,616 full-time employees and less than 30 part-time employees. Our employees are not represented by any collective bargaining group.
Other than these ten states, none of the states in which PrimeLending operated during 2025 represented more than 2% of PrimeLending’s origination volume. ​ Employees and Human Capital Resources At December 31, 2025 we employed approximately 3,500 full-time employees and less than 50 part-time employees. Our employees are not represented by any collective bargaining group.
If a carrying broker-dealer meets the $500 million threshold of average total credits over such 12 months, then it must commence computing its reserve on a daily basis no later than six months thereafter (i.e., beginning no later than December 31, 2025).
If a carrying broker-dealer meets the $500 million threshold of average total credits over such 12 months, then it must commence computing its reserve on a daily basis no later than six months thereafter (i.e., beginning no later than June 30, 2026).
The Dodd-Frank Act, Gramm-Leach-Bliley Act, the Bank Holding Company Act and other federal laws subject financial and bank holding companies to particular restrictions on the types of activities in which they may 13 Table of Contents engage and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. ​ Changes of Control.
The Dodd-Frank Act, Gramm-Leach-Bliley Act, the Bank Holding Company Act and other federal laws subject financial and bank holding companies to particular restrictions on the types of activities in which they may engage and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. ​ Scope of Permissible Activities .
At December 31, 2024, our mortgage origination segment operated from over 182 locations in 46 states, originating 31.5%, 7.7% and 5.3%, respectively, of its mortgage loans (by dollar volume) from its Texas, California and South Carolina locations. The mortgage lending business is subject to variables that can impact loan origination volume, including seasonal and interest rate fluctuations.
At December 31, 2025, our mortgage origination segment operated from over 170 locations in 46 states, originating 30.2%, 7.8% and 5.6%, respectively, of its mortgage loans (by dollar volume) from its Texas, California and South Carolina locations. The mortgage lending business is subject to variables that can impact loan origination volume, including seasonal and interest rate fluctuations.
During 2024, an aggregate of 68% of PrimeLending’s origination volume was concentrated in ten states, with 44% concentrated in Texas, California and South Carolina, collectively.
During 2025, an aggregate of 67% of PrimeLending’s origination volume was concentrated in ten states, with 44% concentrated in Texas, California and South Carolina, collectively.
At December 31, 2024, approximately 36% of our current staff had been with us for ten years or more. ​ During 2024, women represented over 54% of Hilltop’s workforce, and 12% of the overall executive management team.
At December 31, 2025, approximately 39% of our current staff had been with us for ten years or more. ​ During 2025, women represented over 54% of Hilltop’s workforce, and 10% of the overall executive management team.
Hilltop’s actual capital amounts and ratios in accordance with Basel III exceeded the regulatory capital requirements including conservation buffer in effect at the end of the period. ​ At December 31, 2024, PlainsCapital had a total capital to risk-weighted assets ratio of 16.54%, Tier 1 capital to risk-weighted assets ratio of 15.35% and a common equity Tier 1 capital to risk-weighted assets ratio of 15.35%.
Hilltop’s actual capital amounts and ratios in accordance with Basel III exceeded the regulatory capital requirements including conservation buffer in effect at the end of the period. ​ At December 31, 2025, PlainsCapital had a total capital to risk-weighted assets ratio of 15.60%, Tier 1 capital to risk-weighted assets ratio of 14.49% and a common equity Tier 1 capital to risk-weighted assets ratio of 14.49%.
Loan volumes to be originated on behalf of and retained by the banking segment are evaluated each quarter. Loans sold to and retained by the Bank during 2024, 2023 and 2022 were $124 million, $140 million and $532 million, respectively.
Loan volumes to be originated on behalf of and retained by the banking segment are evaluated each quarter. Loans sold to and retained by the Bank during 2025, 2024 and 2023 were $185.4 million, $124.3 million and $140.3 million, respectively.
See also Note 27 in the notes to our consolidated financial statements included under Item 8, “Financial Statements and Supplementary Data.” ​ Banking ​ The banking segment includes the operations of the Bank, which, at December 31, 2024, had $13.4 billion in assets and total deposits of $11.3 billion.
See also Note 27 in the notes to our consolidated financial statements included under Item 8, “Financial Statements and Supplementary Data.” ​ Banking ​ The banking segment includes the operations of the Bank, which, at December 31, 2025, had $12.7 billion in assets and total deposits of $11.0 billion.
The commissions received from these third-party carriers are paid directly to the advisor. At December 31, 2024, we employed 92 registered representatives in 19 retail brokerage offices and had contracts with 166 independent retail representatives for the administration of their securities business. ​ Clearing Services .
The commissions received from these third-party carriers are paid directly to the advisor. At December 31, 2025, we employed 90 registered representatives in 20 retail brokerage offices and had contracts with 150 independent retail representatives for the administration of their securities business. ​ Clearing Services .
In addition, Regulation BI prohibits a broker-dealer and its associated persons from using the term “adviser” or “advisor” if the broker-dealer is not an RIA or the associated person is not a supervised person of an RIA. ​ Changing Regulatory Environment .
In addition, Regulation BI prohibits a broker-dealer and its associated persons from using the term “adviser” or “advisor” if the broker-dealer is not an RIA or the associated person is not a supervised person of an RIA. Furthermore, the U.S.
Section 956 of the Dodd-Frank Act requires the FDIC, the Federal Reserve Board, the OCC, the National Credit Union Administration, the FHFA, and the SEC to jointly prescribe regulations or guidelines with respect to incentive-based compensation practices at certain financial institutions that have $1 billion or more in assets.
Section 956 of the Dodd-Frank Act requires federal regulatory agencies, including the Federal Reserve Board, to jointly prescribe regulations or guidelines with respect to incentive-based compensation practices at certain financial institutions that have $1 billion or more in assets.
The rule, which became effective January 1, 2024, requires most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners—the persons who ultimately own or control the company, to FinCEN.
The rule, which became effective January 1, 2024, requires certain entities that are registered to do business in the United States to report information about their beneficial owners—the persons who ultimately own or control the company—to FinCEN.
At December 31, 2024, Hilltop Securities had total assets of $2.8 billion and net capital of $264.2 million, which was $258.1 million in excess of its minimum net capital requirement of $6.1 million.
At December 31, 2025, Hilltop Securities had total assets of $2.9 billion and net capital of $220.6 million, which was $214.4 million in excess of its minimum net capital requirement of $6.1 million.
Under the Bank Holding Company Act, Hilltop and PCC generally may not acquire a direct or indirect interest in, or control of more than 5% of, the voting shares of any company that is not a bank or bank holding company.
Under the Bank Holding Company Act, Hilltop and PCC generally may not acquire a direct or indirect interest in, or control 5% or more of, the voting shares of any company that is not a bank, bank holding company, or a company that engages in activities other than those that are closely related to banking or managing or controlling banks.
The first 12-month determination must be made beginning with the June 30, 2024 FOCUS Report and ending with the July 31, 2025 FOCUS Report.
The first 12-month determination must be made beginning with the January 1, 2025 FOCUS Report and ending with the December 31, 2025 FOCUS Report.
PrimeLending and the Bank are also subject to regulation by the Texas Department of Banking with respect to, among other things, the establishment of maximum origination fees on certain types of mortgage loan products. PrimeLending and the Bank are also subject to the provisions of the Dodd-Frank Act.
PrimeLending and the Bank are also subject to regulation by the Texas Department of Banking with respect to, among other things, the establishment of maximum origination fees on certain types of mortgage loan products. ​ The regulatory environment related to mortgage origination, processing, selling and servicing is subject to frequent change.
Certain of these recent proposals and changes are described below. ​ The Anti-Money Laundering Act of 2020 (the “AML 2020 Act”) was enacted as part of the National Defense Authorization Act for Fiscal Year 2021.
The Anti-Money Laundering Act of 2020 (the “AML 2020 Act”) was enacted as part of the National Defense Authorization Act for Fiscal Year 2021.
Insiders are subject to enforcement actions for knowingly accepting loans in violation of applicable restrictions.
Insiders are subject to enforcement actions for knowingly accepting loans in violation of applicable restrictions. ​ Restrictions on Distribution of Subsidiary Bank Dividends and Assets.
As a general matter, an investor is deemed to control a depository institution or other company if the investor owns or controls 25% or more of any class of voting stock or 33% or more of any class of stock (voting or non-voting), and in certain other circumstances, an investor may be presumed to control a depository institution or other company if the investor owns or controls less than 25% of any class of voting stock where certain other triggering factors exist.
As a general matter, an investor is deemed to control a depository institution or other company if the investor owns or controls 25% or more of any class of voting stock or 33% or more of the total equity of such other company, and in certain other circumstances, an investor may be presumed to control a depository institution or other company if the investor owns or controls less than 25% or more of any class of voting stock. ​ 14 Table of Contents Regulatory Restrictions on Dividends; Source of Strength .
The Federal Reserve Board’s Regulation Y, for example, generally requires a holding company to give the Federal Reserve Board prior notice of any redemption or repurchase of its equity securities, if the consideration to be paid, together with the consideration paid for any repurchases or redemptions in the preceding year, is equal to 10% or more of the company’s consolidated net worth.
Bank holding companies are not permitted to engage in unsafe and unsound banking practices and bank holding companies and their subsidiaries are subject to periodic reporting requirements, examinations, and prior notice or approvals from the Federal Reserve Board. ​ The Federal Reserve Board’s Regulation Y, generally requires a holding company to give the Federal Reserve Board prior notice of any redemption or repurchase of its equity securities, if the consideration to be paid, together with the consideration paid for any repurchases or redemptions in the preceding year, is equal to 10% or more of the company’s consolidated net worth.
The Bank has established a customer identification program pursuant to Section 326 of the USA PATRIOT Act and the Bank Secrecy Act, including obtaining beneficial ownership information on new legal entity customers and otherwise has implemented policies and procedures intended to comply 22 Table of Contents with the foregoing rules until such time as FinCEN adopts final regulations implementing the CTA, which is part of the AML 2020 Act.
The Bank has established a customer identification program pursuant to Section 326 of the USA PATRIOT Act and the Bank Secrecy Act, including obtaining beneficial ownership information on new legal entity customers and otherwise has implemented policies and procedures intended to comply with the foregoing rules until such time as FinCEN adopts final regulations implementing the CTA, which is part of the AML 2020 Act. ​ 20 Table of Contents We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute. ​ Incentive Compensation Guidance.
During 2024, 34% of our employees fell within the minority classification and approximately 39% of our employees were below the age of 45. ​ Hilltop has three employee-based councils, namely the Culture Council, Diversity Momentum Council and Women Momentum Council, each devoted to driving employee engagement and sponsoring events across the enterprise to promote social networking amongst all employees.
During 2025, 35% of our employees fell within the minority classification and approximately 38% of our employees were below the age of 45. ​ Hilltop has three employee-based councils, namely the Culture Council, Diversity Momentum Council and Women Momentum Council, each devoted to driving employee engagement and sponsoring events across the enterprise to promote social networking amongst all employees. ​ We are committed to offering transparency into our business activities and providing our stakeholders with key data supporting our sustainability.
The regulatory environment in which the Hilltop Broker-Dealers (including Hilltop Securities Asset Management, LLC) operate is subject to frequent change. Our business, financial condition and operating results may be adversely affected as a result of new or revised legislation or regulations imposed by the U.S. Congress, the SEC, FINRA or other U.S. and state governmental and regulatory authorities.
Our business, financial condition and operating results may be adversely affected as a result of new or revised legislation or regulations imposed by the U.S. Congress, the SEC, FINRA or other U.S. and state governmental and regulatory authorities.
We anticipate similar results during 2025. ​ At December 31, 2024, Hilltop had a total capital to risk-weighted assets ratio of 24.40%, Tier 1 capital to risk-weighted assets ratio of 21.23% and a common equity Tier 1 capital to risk-weighted assets ratio of 21.23%.
We anticipate similar results during 2026. ​ 16 Table of Contents At December 31, 2025, Hilltop had a total capital to risk-weighted assets ratio of 22.20%, Tier 1 capital to risk-weighted assets ratio of 19.70% and a common equity Tier 1 capital to risk-weighted assets ratio of 19.70%.
Broker-dealers are also subject to federal securities laws and SEC rules, as well as the laws and rules of the states in which a broker-dealer conducts business. While the SEC, the states, and the exchanges may conduct regulatory examinations, the Hilltop Broker-Dealers are members of, and are primarily subject to regulation, supervision and regular examination by FINRA.
While the SEC, the states, and the exchanges may conduct regulatory examinations, the Hilltop Broker-Dealers are members of, and are primarily subject to regulation, supervision and regular examination by FINRA.
The Bank is subject to the supervisory and enforcement authority by the CFPB with respect to federal consumer protection laws, including laws relating to fair lending and the prohibition of unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services. ​ The Bank is also an insured depository institution and, therefore, subject to regulation by the FDIC, although the Federal Reserve Board is the Bank’s primary federal regulator.
The Bank is subject to the supervisory and enforcement authority by the CFPB with respect to federal consumer protection laws, including laws relating to fair lending and the prohibition of unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services. ​ The Federal Reserve Board, the Texas Department of Banking, the CFPB and the FDIC have the power to enforce compliance with applicable banking statutes and regulations.
The requirements are similar but not identical to the AML requirements for broker-dealers. The date of compliance is January 1, 2026. Hilltop Securities Asset Management, LLC, Hilltop Securities and Momentum Independent Network will evaluate how the new AML rule affects their respective businesses. ​ CFTC Oversight .
The requirements are similar but not identical to the AML requirements for broker-dealers. The rule is scheduled to go into effect in January 2028. Hilltop Securities Asset Management, LLC, Hilltop Securities and Momentum Independent Network will evaluate how the new AML rule affects their respective businesses. ​ Bulk Data Rule . The U.S.
The loan operations of the Bank are also subject to federal laws and implementing regulations applicable to credit transactions, such as the Truth-In-Lending Act, the Home Mortgage Disclosure Act of 1975, the Equal Credit Opportunity Act, the Fair Credit Reporting Act of 1978, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act, the Dodd-Frank Act and rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
The loan operations of the Bank are also subject to federal laws and implementing regulations applicable to consumer transactions, such as the Truth In Lending Act, the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act, the Right to Financial Privacy Act, the Trust in Savings Act and the Electronic Funds Transfer Act.
Direct competition for deposits also comes from other commercial bank and thrift institutions, money market mutual funds and corporate and government securities that may offer more attractive rates than insured depository institutions are willing to pay. Competition for loans is based on factors such as interest rates, loan origination fees and the range of services offered by the provider.
Direct competition for deposits also comes from other commercial bank and thrift institutions, money market mutual funds and corporate and government securities that may offer more attractive rates than insured depository institutions are willing to pay.
The regulatory framework is intended primarily for the protection of customers and clients, and not for the protection of our stockholders or creditors. In many cases, the applicable regulatory authorities have broad enforcement power over bank holding companies, banks and their subsidiaries, including the power to impose substantial fines and other penalties for violations of laws and regulations.
In many cases, the applicable regulatory authorities have broad enforcement power over bank holding companies, banks and their subsidiaries, including the power to impose substantial fines and other penalties for violations of laws and regulations. The following discussion describes the material elements of the regulatory framework that applies to us and our subsidiaries.
Generally, subject to a narrow 19 Table of Contents exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized.
The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized.
Amounts advanced against the warehouse lines of credit are included in the table below, but are eliminated from net loans on our consolidated balance sheets. ​ ​ ​ ​ ​ ​ ​ ​ ​ Total % of Total ​ ​ Loans Held ​ Loans Held ​ ​ for Investment ​ for Investment Commercial real estate: ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 1,921,691 22.8 % Owner occupied ​ 1,435,945 17.0 % Commercial and industrial ​ 1,300,914 15.4 % Mortgage warehouse lending ​ ​ 241,026 ​ 2.9 % Construction and land development ​ 866,245 10.3 % 1-4 family residential ​ 1,792,602 21.3 % Consumer ​ 28,410 0.3 % ​ ​ ​ 7,586,833 ​ 90.0 % PrimeLending warehouse lines of credit ​ ​ 848,296 ​ 10.0 % Total loans held for investment ​ $ 8,435,129 100.0 % ​ ​ 6 Table of Contents Our lending policies seek to establish an asset portfolio that will provide a return on stockholders’ equity sufficient to maintain capital to assets ratios that meet or exceed established regulations.
Amounts advanced against the warehouse lines of credit are included in the table below, but are eliminated from net loans on our consolidated balance sheets. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ % of Total ​ ​ Loans Held ​ Loans Held ​ ​ for Investment ​ for Investment Commercial real estate: ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 2,121,087 23.9 % Owner occupied ​ 1,533,173 17.3 % Commercial and industrial ​ 1,269,378 14.3 % Mortgage warehouse lending ​ ​ 257,089 ​ 2.9 % Construction and land development ​ 894,011 10.1 % 1-4 family residential ​ 1,861,654 21.0 % Consumer ​ 31,027 0.3 % ​ ​ ​ 7,967,419 ​ 89.8 % PrimeLending warehouse lines of credit ​ ​ 906,011 ​ 10.2 % Total loans held for investment ​ $ 8,873,430 100.0 % ​ ​ 7 Table of Contents Our lending policies seek to establish an asset portfolio that will provide a return on stockholders’ equity sufficient to maintain capital to assets ratios that meet or exceed established regulations.
An undercapitalized institution is also generally prohibited from increasing its average total assets, making acquisitions, establishing any branches or engaging in any new line of business, except under an accepted capital restoration plan or with FDIC approval. The regulations also establish procedures for downgrading an institution to a lower capital category based on supervisory factors other than capital.
An undercapitalized institution is also generally prohibited from increasing its average total assets, making acquisitions, establishing any branches or engaging in any new line of business, except under an accepted capital restoration plan or with approval of the applicable federal banking agency.
The CRA requires, in connection with examinations of financial institutions, that federal banking regulators (in the Bank’s case, the Federal Reserve Board) evaluate the record of each financial institution in meeting the credit needs of its local community, including low and moderate-income neighborhoods. These facts are also considered in evaluating mergers, acquisitions and applications to open a branch or facility.
The CRA requires that federal banking regulators (in the Bank’s case, the Federal Reserve Board) evaluate the record of, and assign a rating to each financial institution in meeting the credit needs of its local community, including low and moderate-income neighborhoods.
Federal Reserve Board guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. ​ Final rules published by the Federal Reserve Board, the FDIC, and the OCC implemented the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act.
Federal Reserve Board guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. ​ Under Basel III, total capital consists of two tiers of capital, Tier 1 and Tier 2.
The Bank is subject to the USA PATRIOT Act, the Bank Secrecy Act and rules and regulations of FinCEN and the Office of Foreign Assets Control. These statutes and related rules and regulations impose requirements and limitations on specific financial transactions and account relationships intended to guard against money laundering and terrorism financing.
These statutes and related rules and regulations impose requirements and limitations on specific financial transactions and account relationships intended to guard against money laundering and terrorism financing.
It is the policy of the Federal Reserve Board that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.
It is the policy of the Federal Reserve Board that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. ​ In acting as a source of financial strength to its banking subsidiaries, a bank holding company is expected commit resources to their support, even during times when a holding company may not otherwise be inclined to provide it.
In addition, under the Incentive Compensation Guidance, a banking organization’s federal regulator may initiate enforcement action if the organization’s incentive compensation arrangements pose a risk to the safety and soundness of the organization.
In addition, under the Incentive Compensation Guidance, a banking organization’s federal regulator may initiate enforcement action if the organization’s incentive compensation arrangements pose a risk to the safety and soundness of the organization. ​ Privacy. Under the Gramm-Leach-Bliley Act, financial institutions are required to disclose their policies for collecting and protecting confidential information.
See “Risk Factors — We are subject to extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income.” ​ Privacy. Under the Gramm-Leach-Bliley Act, financial institutions are required to disclose their policies for collecting and protecting confidential information.
See “Risk Factors — We are subject to extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income.” ​ Federal Laws Applicable to Consumer Transactions .
The agencies consider PlainsCapital’s capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of individual banks and the banking system. ​ On January 1, 2019, PlainsCapital fully transitioned to the final rules that substantially amended the regulatory risk-based capital rules to implement the Basel III regulatory capital reforms.
The agencies consider PlainsCapital’s capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of individual banks and the banking system.
Subject to various exceptions, bank holding companies and their affiliates are generally prohibited from tying the provision of certain services, such as extensions of credit, to certain other services offered by a bank holding company or its affiliates. ​ Capital Adequacy Requirements and BASEL III .
Subject to various exceptions, banks are generally prohibited from tying the provision of certain services, such as extensions of credit, to certain other services offered by a bank holding company or its affiliates. 19 Table of Contents ​ Brokered Deposits . Under FDICIA, banks may be restricted in their ability to accept brokered deposits, depending on their capital classification.
The Federal Reserve Board and the Texas Department of Banking monitor the capital adequacy of PlainsCapital by using a combination of risk-based guidelines and leverage ratios.
Interest and other charges collected or contracted for by the Bank are subject to state usury laws and federal laws concerning interest rates. ​ Capital Requirements. The Federal Reserve Board and the Texas Department of Banking monitor the capital adequacy of PlainsCapital by using a combination of risk-based guidelines and leverage ratios.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) establishes a system of prompt corrective action to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking regulators have established five capital categories (“well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized”) in which all institutions are placed.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) establishes a system under which federal banking regulators have broad powers to take prompt corrective action to resolve the problems of undercapitalized financial institutions.
Further, our broker-dealer segment competes with discount brokerage firms, including fintech startups, that do not offer equivalent services but offer discounted prices and certain free services.
Further, our broker-dealer segment competes with discount brokerage firms, including fintech startups, that do not offer equivalent services but offer discounted prices and certain free services. ​ Our competitors in the mortgage origination business include large financial institutions as well as independent mortgage banking companies, commercial banks, savings banks, savings and loan associations and fintech companies.
Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third-party for use in telemarketing, direct mail marketing or other marketing to consumers. The Bank and all of its subsidiaries have established policies and procedures to comply with the privacy provisions of the Gramm-Leach-Bliley Act. ​ Federal Laws Applicable to Credit Transactions .
Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third-party for use in telemarketing, direct mail marketing or other marketing to consumers. Federal agencies have adopted regulations implementing the Gramm-Leach-Bliley Act, including the SEC’s Regulation S-P.
Provisions of the Volcker Rule and the final rules implementing the Volcker Rule also restrict certain activities provided by the Hilltop Broker-Dealers, including proprietary trading and sponsoring or investing in “covered funds.” ​ Regulation Best Interest (“Regulation BI”) and Form CRS Relationship Summary (“Form CRS”).
Provisions of the Volcker Rule and the final rules implementing the Volcker Rule also restrict certain activities provided by the Hilltop Broker-Dealers, including proprietary trading and sponsoring or investing in “covered funds.” ​ Regulation S-P. The SEC has adopted amendments to Regulation S-P that took effect on December 3, 2025.
Such support may be required at times when, absent this Federal Reserve Board policy, a holding company may not be inclined to provide it. As discussed herein, a bank holding company, in certain circumstances and subject to certain limitations, could be required to guarantee the capital plan of an undercapitalized banking subsidiary. ​ Scope of Permissible Activities .
As discussed herein, a bank holding company, in certain circumstances and subject to certain limitations, could be required to guarantee the capital plan of an undercapitalized banking subsidiary. ​ Safe and Sound Banking Practices .
The increase in assessment rate schedules increased the likelihood that the DIF ratio will reach the statutory minimum of 1.35% by the statutory deadline of September 30, 2028.
The increase in assessment rate schedules increased the likelihood that the DIF ratio will reach the statutory minimum of 1.35% by the statutory deadline of September 30, 2028. The Bank accrued $7.0 million of DIF assessments during 2025. ​ The Dodd-Frank Act permanently increased the standard maximum deposit insurance amount to $250,000.
In approving acquisitions or the addition of activities, the Federal Reserve Board considers, among other things, whether the acquisition or the additional activities can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh such possible adverse effects as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. ​ Notwithstanding the foregoing, the Gramm-Leach-Bliley Act, effective March 11, 2000, eliminated the barriers to affiliations among banks, securities firms, insurance companies and other financial service providers and permits bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature.
In approving acquisitions or the addition of activities, the Federal Reserve Board considers, among other things, whether the acquisition or the additional activities can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh such possible adverse effects as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. ​ If a bank holding company has elected to become an FHC, such as Hilltop and PCC, it may engage in a broader set of activities, including insurance underwriting and broker-dealer services as well as activities that are jointly determined by the Federal Reserve and the U.S.
Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed.
Under this system, the federal banking regulators have established five capital categories (“well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized”) in which all institutions are placed. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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If new debt is added to our current debt levels, the risks described above could increase. ​ We may not be able to generate sufficient cash to service all of our indebtedness, including the Subordinated Notes, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful. ​ Our ability to satisfy our debt obligations will depend upon, among other things: ​ ● our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control; and ● our future ability to refinance the Subordinated Notes, which depends on, among other things, our compliance with the covenants in the indentures governing the Subordinated Notes. ​ We cannot assure you that our business will generate sufficient cash flow from operations, or that we will be able to obtain financing in an amount sufficient to fund our liquidity needs. ​ If our cash flows and capital resources are insufficient to service our indebtedness, including the Subordinated Notes, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness, including the Subordinated Notes.
If new debt is added to our current debt levels, the risks described above could increase. ​ We may not be able to generate sufficient cash to service all of our indebtedness, including the 2035 Subordinated Notes, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful. ​ Our ability to satisfy our debt obligations will depend upon, among other things: ​ ● our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control; and ● our future ability to refinance the 2035 Subordinated Notes, which depends on, among other things, our compliance with the covenants in the indentures governing the 2035 Subordinated Notes. ​ We cannot assure you that our business will generate sufficient cash flow from operations, or that we will be able to obtain financing in an amount sufficient to fund our liquidity needs. ​ If our cash flows and capital resources are insufficient to service our indebtedness, including the 2035 Subordinated Notes, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness, including the 2035 Subordinated Notes.
Our continued financial success depends to a degree on factors beyond our control, including: ​ ● national and local economic conditions, such as the level and volatility of short-term and long-term interest rates, inflation, home prices, unemployment and under-employment levels, energy prices, bankruptcies, household income and consumer spending; ● the availability and cost of capital and credit; ● incidence of customer fraud; and ● federal, state and local laws affecting these matters. ​ The deterioration of any of these conditions, as we have experienced with past economic downturns, could adversely affect our consumer and commercial businesses and securities portfolios, our level of loan charge-offs and provision for credit losses, the carrying value of our deferred tax assets, the investment portfolio of our insurance segment, our capital levels and liquidity, our securities underwriting business and our results of operations. ​ Several factors could pose risks to the financial services industry, including tightening monetary policies by central banks, rising energy prices, trade wars, restrictions and tariffs; slowing growth in emerging economies; geopolitical matters, including international political unrest, disturbances and conflicts; acts of war and terrorism; pandemics; changes in interest rates; regulatory uncertainty; continued infrastructure deterioration; low oil prices; disruptions in global or national supply chains; and natural disasters.
Our continued financial success depends to a degree on factors beyond our control, including: ​ ● national and local economic conditions, such as the level and volatility of short-term and long-term interest rates, inflation, home prices, unemployment and under-employment levels, energy prices, bankruptcies, household income and consumer spending; ● the availability and cost of capital and credit; ● incidence of customer fraud; and ● federal, state and local laws affecting these matters. ​ The deterioration of any of these conditions, as we have experienced with past economic downturns, could adversely affect our consumer and commercial businesses and securities portfolios, our level of loan charge-offs and provision for credit losses, the carrying value of our deferred tax assets, the investment portfolio of our insurance segment, our capital levels and liquidity, our securities underwriting business and our results of operations. ​ Several factors could pose risks to the financial services industry, including tightening monetary policies by central banks, rising energy prices, trade wars, restrictions and tariffs (and uncertainty related thereto); slowing growth in emerging economies; geopolitical matters, including international political unrest, disturbances and conflicts; acts of war and terrorism; pandemics; changes in interest rates; regulatory uncertainty; continued infrastructure deterioration; low oil prices; disruptions in global or national supply chains; and natural disasters.
Our ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to fund capital and non-capital expenditures necessary to maintain the condition of our operating assets and properties, as well as to provide capacity for the growth of our business, depends on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and financial, business, competitive, legal and other factors. ​ Subject to the restrictions in the indentures governing the Subordinated Notes, we may incur significant additional indebtedness, including secured indebtedness.
Our ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to fund capital and non-capital expenditures necessary to maintain the condition of our operating assets and properties, as well as to provide capacity for the growth of our business, depends on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and financial, business, competitive, legal and other factors. ​ Subject to the restrictions in the indentures governing the 2035 Subordinated Notes, we may incur significant additional indebtedness, including secured indebtedness.
These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations, including our obligations under the Subordinated Notes. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time.
These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations, including our obligations under the 2035 Subordinated Notes. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time.
Moreover, if a property securing a mortgage loan on which we own the servicing rights is damaged, including from flooding, we may be responsible for repairs for uninsured damage. ​ 39 Table of Contents If we fail to develop, implement and maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting in future periods may be adversely affected. ​ The Sarbanes-Oxley Act and related rules and regulations require that management report annually on the effectiveness of our internal control over financial reporting and assess the effectiveness of our disclosure controls and procedures on a quarterly basis.
Moreover, if a property securing a mortgage loan on which we own the servicing rights is damaged, including from flooding, we may be responsible for repairs for uninsured damage. ​ 34 Table of Contents If we fail to develop, implement and maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting in future periods may be adversely affected. ​ The Sarbanes-Oxley Act and related rules and regulations require that management report annually on the effectiveness of our internal control over financial reporting and assess the effectiveness of our disclosure controls and procedures on a quarterly basis.
We may not be able to consummate those dispositions for fair market value or at all. The indentures governing the Subordinated Notes may restrict, or market or business conditions may limit, our ability to avail ourselves of some or all of these options.
We may not be able to consummate those dispositions for fair market value or at all. The indentures governing the 2035 Subordinated Notes may restrict, or market or business conditions may limit, our ability to avail ourselves of some or all of these options.
Our significant amount of indebtedness could have important consequences, such as: ​ ● limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or other debt service requirements or for other purposes; ● limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt; ● limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions; ● restricting us from making strategic acquisitions, developing properties or pursuing business opportunities; ● restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our and certain of our subsidiaries’ existing and future indebtedness, including, in the case of certain indebtedness of subsidiaries, certain covenants that restrict the ability of such subsidiaries to pay dividends or make other distributions to us; ● exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our or our subsidiaries’ debt instruments that could have a material adverse effect on our business, financial condition and operating results; ● increasing our vulnerability to a downturn in general economic conditions or a decrease in pricing of our products; and ● limiting our ability to react to changing market conditions in our industry and in our customers’ industries. ​ 44 Table of Contents In addition to our debt service obligations, our operations require substantial investments on a continuing basis.
Our indebtedness could have important consequences, such as: ​ ● limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or other debt service requirements or for other purposes; ● limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt; ● limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions; ● restricting us from making strategic acquisitions, developing properties or pursuing business opportunities; 39 Table of Contents ● restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our and certain of our subsidiaries’ existing and future indebtedness, including, in the case of certain indebtedness of subsidiaries, certain covenants that restrict the ability of such subsidiaries to pay dividends or make other distributions to us; ● exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our or our subsidiaries’ debt instruments that could have a material adverse effect on our business, financial condition and operating results; ● increasing our vulnerability to a downturn in general economic conditions or a decrease in pricing of our products; and ● limiting our ability to react to changing market conditions in our industry and in our customers’ industries. ​ In addition to our debt service obligations, our operations require substantial investments on a continuing basis.
Difficulties associated with potential acquisitions that may result from these factors could have a material adverse effect on our business, financial condition and results of operations. 47 Table of Contents ​ We are subject to extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income. ​ We are subject to extensive federal and state regulation and supervision, including that of the Federal Reserve Board, the Texas Department of Banking, the FDIC, the CFPB, the SEC and FINRA.
Difficulties 42 Table of Contents associated with potential acquisitions that may result from these factors could have a material adverse effect on our business, financial condition and results of operations. ​ We are subject to extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income. ​ We are subject to extensive federal and state regulation and supervision, including that of the Federal Reserve Board, the Texas Department of Banking, the FDIC, the CFPB, the SEC and FINRA.
Other state privacy laws with similarities to the CCPA/CPRA, such as the Texas Data Privacy and Security Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, the Oregon Consumer Data Privacy Act, the Montana Consumer Data Privacy Act, the Utah Consumer Privacy Act, the Virginia Consumer Data Privacy Act, came into force in 2023 and 2024.
Other state privacy laws with similarities to the CCPA, such as the Texas Data Privacy and Security Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, the Oregon Consumer Data Privacy Act, the Montana Consumer Data Privacy Act, the Utah Consumer Privacy Act, the Virginia Consumer Data Privacy Act, came into force in 2023 and 2024.
If our third-party service providers encounter any of these issues, we could be exposed to disruption of service, reputation damages, and litigation risk, any of which could have a material adverse effect on our business. ​ During the second quarter in 2023, a third-party vendor of the Bank confirmed that data specific to the Bank’s customers was likely obtained in a security incident targeting the vendor’s instance of the MOVEit Transfer Application.
If our third-party service providers encounter any of these issues, we could be exposed to disruption of service, reputational damages, and litigation risk, any of which could have a material adverse effect on our business. ​ During the second quarter in 2023, a third-party vendor of the Bank confirmed that data specific to the Bank’s customers was likely obtained in a security incident targeting the vendor’s instance of the MOVEit Transfer Application.
Fair value is determined as the present value of estimated future net servicing income, calculated based on a number of variables, including assumptions about the likelihood of prepayment by borrowers, and as a result, the value of our MSR assets fluctuates due to changes in interest rates, which may increase volatility of earnings. ​ The rising interest rate environment that began in 2022 and continued through 2023 resulted in an increased valuation of the MSR asset, however one of the principal risks associated with MSR assets is that in a declining interest rate environment, they will likely lose a substantial portion of their value as a result of higher than anticipated prepayments.
Fair value is determined as the present value of estimated future net servicing income, calculated based on a 35 Table of Contents number of variables, including assumptions about the likelihood of prepayment by borrowers, and as a result, the value of our MSR assets fluctuates due to changes in interest rates, which may increase volatility of earnings. ​ The rising interest rate environment that began in 2022 and continued through 2023 resulted in an increased valuation of the MSR asset, however one of the principal risks associated with MSR assets is that in a declining interest rate environment, they will likely lose a substantial portion of their value as a result of higher than anticipated prepayments.
For example, in 2018, the State of California adopted the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (“CPRA”) in 2023, which imposes requirements on companies operating in California and provides consumers with a private right of action if covered companies suffer a data breach related to their failure to implement reasonable security measures.
For example, in 2018, the State of California adopted the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (“CCPA”) in 2023, which imposes requirements on companies operating in California and provides consumers with a private right of action if covered companies suffer a data breach related to their failure to implement reasonable security measures.
The preferred stock may be issued, in one or more series, with the preferences and other terms designated by our board of directors that may delay or prevent a change in control of us, even if the change is in the best interests of stockholders. At December 31, 2024, no shares of preferred stock were outstanding. ​ Banking Laws .
The preferred stock may be issued, in one or more series, with the preferences and other terms designated by our board of directors that may delay or prevent a change in control of us, even if the change is in the best interests of stockholders. At December 31, 2025, no shares of preferred stock were outstanding. ​ Banking Laws .
Compliance with new laws and regulations has resulted and likely will continue to result in additional costs, which could be significant and may adversely impact our results of operations, financial condition, and liquidity. ​ The Bank received a “satisfactory” CRA rating in connection with its most recent CRA performance evaluation.
Compliance with new or changing laws and regulations has resulted and likely will continue to result in additional costs, which could be significant and may adversely impact our results of operations, financial condition, and liquidity. ​ The Bank received a “satisfactory” CRA rating in connection with its most recent CRA performance evaluation.
Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due. ​ A reduction in our credit rating could adversely affect us or the holders of our securities. ​ The credit rating agencies rating our indebtedness regularly evaluate us, and credit ratings are based on a number of factors, including our financial strength and ability to generate earnings, as well as factors not entirely within our control, including conditions affecting the financial services industry and the economy and changes in rating methodologies.
Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due. ​ 40 Table of Contents A reduction in our credit rating could adversely affect us or the holders of our securities. ​ The credit rating agencies rating our indebtedness regularly evaluate us, and credit ratings are based on a number of factors, including our financial strength and ability to generate earnings, as well as factors not entirely within our control, including conditions affecting the financial services industry and the economy and changes in rating methodologies.
Any regional or local economic downturn that affects Texas or, to a lesser extent, California, whether caused by recession, inflation, unemployment, changing oil prices, natural disasters, supply chain disruptions or other factors, may affect us and our profitability more significantly and more adversely than our competitors that are less geographically concentrated, and could have a material adverse effect on our results of operations and financial condition. ​ An adverse change in real estate market values may result in losses in our banking segment and otherwise adversely affect our profitability. ​ At December 31, 2024, 64% of the loan portfolio of our banking segment was comprised of loans with commercial or residential real estate as the primary component of collateral.
Any regional or local economic downturn that affects Texas or, to a lesser extent, California, whether caused by recession, inflation, unemployment, changing oil prices, natural disasters, supply chain disruptions or other factors, may affect us and our profitability more significantly and more adversely than our competitors that are less geographically concentrated, and could have a material adverse effect on our results of operations and financial condition. ​ An adverse change in real estate market values may result in losses in our banking segment and otherwise adversely affect our profitability. ​ At December 31, 2025, 66% of the loan portfolio of our banking segment was comprised of loans with commercial or residential real estate as the primary component of collateral.
Rapid or significant market fluctuations could adversely affect our business, financial condition, results of operations and cash flow. ​ 38 Table of Contents In addition, during periods of market disruption, it may be difficult to value certain assets if comparable sales become less frequent or market data becomes less observable.
Rapid or significant market fluctuations could adversely affect our business, financial condition, results of operations and cash flow. 33 Table of Contents ​ In addition, during periods of market disruption, it may be difficult to value certain assets if comparable sales become less frequent or market data becomes less observable.
The application of more stringent capital requirements for Hilltop and PlainsCapital could, among other things, adversely affect our results of operations and growth, require the raising of additional capital, restrict our ability to pay dividends or repurchase shares and result in regulatory actions if we were to be unable to comply with such requirements. ​ Periodically, the SEC adopts amendments to Rules 15c3-1 and 15c3-3 under the Exchange Act related to our broker-dealer segment.
The application of more stringent capital requirements for Hilltop, PCC and the Bank could, among other things, adversely affect our results of operations and growth, require the raising of additional capital, restrict our ability to pay dividends or repurchase shares and result in regulatory actions if we were to be unable to comply with such requirements. ​ Periodically, the SEC adopts amendments to Rules 15c3-1 and 15c3-3 under the Exchange Act related to our broker-dealer segment.
Hilltop conducts limited material business other than activities incidental to holding stock in the Bank and Securities Holdings. As a result, we rely substantially on the profitability of, and dividends from, these subsidiaries to pay our operating expenses and to pay interest on our debt obligations.
Hilltop conducts limited material business other than activities incidental to holding stock in PCC, the Bank and Securities Holdings. As a result, we rely substantially on the profitability of, and dividends from, these subsidiaries to pay our operating expenses and to pay interest on our debt obligations and to pay dividends to our stockholders.
If any of these personnel were to leave and compete with us, our business, financial condition, results of operations and growth could suffer. ​ A decline in the market for municipal advisory services could adversely affect our business and results of operations. ​ Our broker-dealer segment has historically earned a material portion of its revenues from advisory fees paid to it by its clients, in large part upon the successful completion of the client’s transaction.
If any of these personnel were to leave and compete with us, our business, financial condition, results of operations and growth could suffer. ​ 36 Table of Contents A decline in the market for municipal advisory services could adversely affect our business and results of operations. ​ Our broker-dealer segment has historically earned a material portion of its revenues from advisory fees paid to it by its clients, in large part upon the successful completion of the client’s transaction.
New issuances in the municipal market by cities, counties, school districts, state and other governmental agencies, airports, healthcare institutions, institutions of 41 Table of Contents higher education and other clients that the public finance services line of business serves can be subject to significant fluctuations based on factors such as changes in interest rates, property tax bases, budget pressures on certain issuers caused by uncertain economic times and other factors.
New issuances in the municipal market by cities, counties, school districts, state and other governmental agencies, airports, healthcare institutions, institutions of higher education and other clients that the public finance services line of business serves can be subject to significant fluctuations based on factors such as changes in interest rates, property tax bases, budget pressures on certain issuers caused by uncertain economic times and other factors.
Further, the allowance for credit losses established for new loans may prove to be inadequate to cover actual losses, especially if economic conditions worsen. ​ While Bank management endeavors to estimate the allowance to cover anticipated losses over the lives of our loan and debt security portfolios, no underwriting and credit monitoring policies and procedures that we could adopt to address credit risk could provide complete assurance that we will not incur unexpected losses.
Further, the allowance for credit losses established for new loans may prove to be inadequate to cover actual losses, especially if economic conditions worsen. ​ 25 Table of Contents While Bank management endeavors to estimate the allowance to cover anticipated losses over the lives of our loan and debt security portfolios, no underwriting and credit monitoring policies and procedures that we could adopt to address credit risk could provide complete assurance that we will not incur unexpected losses.
Our computer systems, software and networks may be adversely affected by cyber incidents such as unauthorized access; loss or destruction of data (including confidential client information); account takeovers; unavailability of service; computer viruses or other malicious code; cyber attacks; and other events.
Our computer systems, software and networks may be adversely affected by cyber incidents such as unauthorized access; loss or destruction of data (including confidential client information); account takeovers; unavailability of service; computer viruses or other malicious code; cyber-attacks; ransomware; cyber extortions; and other events.
The Bank and Securities Holdings are subject to significant regulatory restrictions limiting their ability to declare and pay dividends to us.
PCC, the Bank and Securities Holdings are subject to significant regulatory restrictions limiting their ability to declare and pay dividends to us.
Item 1A. Risk Factors . ​ The following discussion sets forth what management currently believes could be the material regulatory, market and economic, liquidity, legal and business and operational risks and uncertainties that could impact our business, results of operations and financial condition.
Item 1A. Risk Factors . ​ The following discussion sets forth what management currently believes are the material regulatory, market and economic, liquidity, legal and business and operational risks and uncertainties that could impact our business, results of operations and financial condition.
Regulatory approvals could be delayed, impeded, restrictively conditioned or denied due to existing or new regulatory issues we have, or may have, with regulatory agencies, including, without limitation, issues related to the Bank Holding Company Act, the Bank Merger Act, Bank Secrecy Act compliance, Community Reinvestment Act issues, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations and other similar laws and regulations.
Regulatory approvals could be delayed, impeded, restrictively conditioned or denied due to existing or new regulatory issues we have, or may have, with regulatory agencies, including, without limitation, issues related to the Bank Holding Company Act, the Bank Merger Act, Bank Secrecy Act compliance, CRA issues, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations and other similar laws and regulations.
At the conclusion of the annual assessment, we determined that as of October 1, 2024 it was more likely than not that the fair value of goodwill and other intangible assets exceeded their respective carrying values.
At the conclusion of the annual assessment, we determined that as of October 1, 2025 it was more likely than not that the fair value of goodwill and other intangible assets exceeded their respective carrying values.
Consequently, we also may need to make further investments to support the acquired or combined company and may have difficulty identifying and acquiring the appropriate resources. ​ 43 Table of Contents We may enter, through acquisitions or a business combination, into new lines of business or initiate new service offerings subject to the restrictions imposed upon us as a regulated financial holding company.
Consequently, we also may need to make further investments to support the acquired or combined company and may have difficulty identifying and acquiring the appropriate resources. ​ We may enter, through acquisitions or a business combination, into new lines of business or initiate new service offerings subject to the restrictions imposed upon us as a regulated financial holding company.
At December 31, 2024, an aggregate of 76% of the real estate loans in our loan portfolio, and included within the commercial real estate and 1-4 family residential portfolio segments, were secured by properties in Texas.
At December 31, 2025, an aggregate of 76% of the real estate loans in our loan portfolio, and included within the commercial real estate and 1-4 family residential portfolio segments, were secured by properties in Texas.
We apply statistical and other tools to these observations to quantify 36 Table of Contents our risk exposure. Any failures in our risk management techniques and strategies to accurately identify and quantify our risk exposure could limit our ability to manage risks.
We apply statistical and other tools to these observations to quantify our risk exposure. Any failures in our risk management techniques and strategies to accurately identify and quantify our risk 31 Table of Contents exposure could limit our ability to manage risks.
Even if we implement these procedures, however, we cannot assure you that we will be fully protected from a cybersecurity incident, the occurrence of which could adversely affect our reputation and financial condition. ​ Our banking segment is subject to risk arising from conditions in the commercial real estate market and may be adversely affected by weaknesses in the commercial real estate market. ​ As of December 31, 2024, commercial real estate loans comprised approximately 40% of our banking segment’s loan portfolio.
Even if we implement these procedures, however, we cannot assure you that we will be fully protected from a cybersecurity incident, the occurrence of which could adversely affect our reputation and financial condition. ​ Our banking segment is subject to risk arising from conditions in the commercial real estate market and may be adversely affected by weaknesses in the commercial real estate market. ​ As of December 31, 2025, commercial real estate loans comprised approximately 41% of our banking segment’s loan portfolio.
Such a charge would have no impact on tangible capital or regulatory capital. ​ The value of our mortgage servicing rights portfolio fluctuates due to changes in interest rates, which may increase the volatility of our earnings. ​ As a result of our mortgage servicing business, we have a portfolio of MSR assets, which we grew to historically elevated levels before selling the vast majority of our MSR assets, and at December 31, 2024, the mortgage origination segment’s MSR asset had a fair value of $5.9 million.
Such a charge would have no impact on tangible capital or regulatory capital. ​ The value of our mortgage servicing rights portfolio fluctuates due to changes in interest rates, which may increase the volatility of our earnings. ​ As a result of our mortgage servicing business, we have a portfolio of MSR assets, which we grew to historically elevated levels before selling the vast majority of our MSR assets, and at December 31, 2025, the mortgage origination segment’s MSR asset had a fair value of $17.5 million.
Accordingly, if the Bank and Securities Holdings are unable to make cash distributions to us, then we may be unable to satisfy our operating expense obligations or make interest payments on our debt obligations. ​ Our broker-dealer business is subject to various risks associated with the securities industry. ​ Our broker-dealer business is subject to uncertainties that are common in the securities industry.
Accordingly, if the Bank and Securities Holdings are unable to make cash distributions to us, then we may be unable to satisfy our operating expense obligations or make interest payments on our debt obligations or pay dividends to our stockholders. ​ Our broker-dealer business is subject to various risks associated with the securities industry. ​ Our broker-dealer business is subject to uncertainties that are common in the securities industry.
Our bylaws include a provision prohibiting holders that do not or have not owned, continuously for at least one year as of the record date of such proposed 50 Table of Contents meeting, capital stock representing at least 15% of the shares entitled to be voted at such proposed meeting, from calling a special meeting of stockholders.
Our bylaws include a provision prohibiting holders that do not or have not owned, continuously for at least one year as of the record date of such proposed meeting, capital stock representing at least 15% of the shares entitled to be voted at such proposed meeting, from calling a special meeting of stockholders.
The issuance of preferred stock could also result in a series of securities outstanding that would have preferences over the common stock with respect to dividends and in liquidation. 49 Table of Contents ​ Our common stock price may experience substantial volatility, which may affect your ability to sell our common stock at an advantageous price. ​ Price volatility of our common stock may affect your ability to sell our common stock at an advantageous price.
The issuance of preferred stock could also result in a series of securities outstanding that would have preferences over the common stock with respect to dividends and in liquidation. ​ Our common stock price may experience substantial volatility, which may affect your ability to sell our common stock at an advantageous price. ​ Price volatility of our common stock may affect your ability to sell our common stock at an advantageous price.
If one or more of these events occurs, it could result in the disclosure of confidential client or customer information, damage to our reputation with our clients, customers and the market, customer dissatisfaction, additional costs such as repairing systems or adding new personnel or protection technologies, regulatory penalties, fines, remediation costs, exposure to litigation and other financial losses to both us and our clients and customers.
If one or more of these events occurs, it could result in the disclosure of confidential client or customer information, damage to our reputation with our clients, customers and the market, customer dissatisfaction, additional costs such as repairing systems or adding new personnel or protection technologies for us and our customers, including credit monitoring, regulatory penalties, fines, remediation costs, exposure to litigation and other financial losses to both us and our clients and customers.
As of December 31, 2024, approximately 10% of our total loans’ rates are floored, with most expected to reprice to the loan’s contractual rate at the next reset date.
As of December 31, 2025, approximately 10% of our total loans’ rates are floored, with most expected to reprice to the loan’s contractual rate at the next reset date.
A failure by the banking segment to have adequate risk management policies, procedures and controls could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which, accordingly, could have a material adverse effect on the Company’s business, financial condition and results of operations. ​ 32 Table of Contents Our business and results of operations may be adversely affected by unpredictable economic, market and business conditions. ​ Our business and results of operations are affected by general economic, market and business conditions.
A failure by the banking segment to have adequate risk management policies, procedures and controls could result in an increased rate of delinquencies in, and increased losses from, our portfolio, which, accordingly, could have a material adverse effect on the Company’s business, financial condition and results of operations. ​ Our business and results of operations may be adversely affected by unpredictable economic, market and business conditions. ​ Our business and results of operations are affected by general economic, market and business conditions.
It is possible that the integration process could result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees.
It is possible that the integration process could result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and 38 Table of Contents employees.
Accordingly, you should be capable of affording the loss of any investment in our common stock. ​ Item 1B. Unresolved Staff Comments . ​ None. 51 Table of Contents
Accordingly, you should be capable of affording the loss of any investment in our common stock. ​ 46 Table of Contents Item 1B. Unresolved Staff Comments . ​ None. ​
We expect to periodically experience “gaps” in the interest rate sensitivities of our banking segment’s assets and liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa.
We expect to periodically experience “gaps” in the interest rate sensitivities of our banking segment’s assets and liabilities, meaning 28 Table of Contents that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa.
This could affect our growth, profitability and financial condition, including liquidity. ​ 45 Table of Contents The indentures governing the Subordinated Notes contain, and any instruments governing future indebtedness would likely contain, restrictions that limit our flexibility in operating our business. ​ The indentures governing the Subordinated Notes contain, and any instruments governing future indebtedness would likely contain, a number of covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: ​ ● dispose of, or issue voting stock of, certain subsidiaries; or ● incur or permit to exist any mortgage, pledge, encumbrance or lien or charge on the capital stock of certain subsidiaries. ​ Any of these restrictions could limit our ability to plan for or react to market conditions and could otherwise restrict corporate activities.
This could affect our growth, profitability and financial condition, including liquidity. ​ The indenture governing the 2035 Subordinated Notes contain, and any instruments governing future indebtedness would likely contain, restrictions that limit our flexibility in operating our business. ​ The indenture governing the 2035 Subordinated Notes contain, and any instruments governing future indebtedness would likely contain, a number of covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: ​ ● dispose of, or issue voting stock of, certain subsidiaries; or ● incur or permit to exist any mortgage, pledge, encumbrance or lien or charge on the capital stock of certain subsidiaries. ​ Any of these restrictions could limit our ability to plan for or react to market conditions and could otherwise restrict corporate activities.
An MSR is the right to service a mortgage loan – collect principal, 40 Table of Contents interest and escrow amounts – for a fee. We measure and carry all of our residential MSR assets using the fair value measurement method.
An MSR is the right to service a mortgage loan – collect principal, interest and escrow amounts – for a fee. We measure and carry all of our residential MSR assets using the fair value measurement method.
Any failure to comply with these covenants could result in a default under the indentures governing the Subordinated Notes. Upon a default, holders of the Subordinated Notes have the ability ultimately to force us into bankruptcy or liquidation, subject to the indentures governing the Subordinated Notes.
Any failure to comply with these covenants could result in a default under the indenture governing the 2035 Subordinated Notes. Upon a default, holders of the 2035 Subordinated Notes have the ability ultimately to force us into bankruptcy or liquidation, subject to the indenture governing the 2035 Subordinated Notes.
We may not be able to accurately predict the likelihood, nature and magnitude of such changes or how and to what extent such changes may affect our business. We also may not be able to adequately prepare for, or compensate for, the consequences of such changes.
We may 29 Table of Contents not be able to accurately predict the likelihood, nature and magnitude of such changes or how and to what extent such changes may affect our business. We also may not be able to adequately prepare for, or compensate for, the consequences of such changes.
Any change in control of our company is subject to prior regulatory approval under the Bank Holding Company Act or the Change in Bank Control Act, which may delay, discourage or prevent an attempted acquisition or change in control of us. ​ FINRA .
Any change in control of our company is subject to prior regulatory approval under the Bank Holding Company Act or the Change in Bank Control Act, which may delay, discourage or prevent an attempted acquisition or change in control of us. ​ 45 Table of Contents FINRA .
Any computer or communications system failure or decrease in computer system performance that causes interruptions in our operations could have a material adverse effect on our business, financial condition, results of operations or cash flows. ​ 37 Table of Contents Climate change could adversely affect our business and performance, including indirectly through impacts on our customers. ​ Concerns over the long-term impacts of climate change have led, and will continue to lead, to governmental efforts in the United States to mitigate those impacts.
Any computer or communications system failure or decrease in computer system performance that causes interruptions in our operations could have a material adverse effect on our business, financial condition, results of operations or cash flows. ​ 32 Table of Contents Climate change and certain regulations and responses thereto could adversely affect our business and performance, including indirectly through impacts on our customers. ​ Concerns over the long-term impacts of climate change have led, and will continue to lead, to governmental efforts in the United States to mitigate those impacts.
Specifically, 28%, 17%, 8% and 5% of the real estate loans were secured by properties located within the Dallas-Fort Worth, Austin, Houston and San Antonio markets, respectively. Substantially all of these loans are made to borrowers who live and conduct business in Texas.
Specifically, 32%, 17%, 6% and 5% of the real estate loans were secured by properties located within the Dallas-Fort Worth, Austin, Houston and San Antonio markets, respectively. Substantially all of these loans are made to borrowers who live and conduct business in Texas.
Any failure to predict and prepare for changes in interest rates, or adjust for the consequences of these changes, may adversely affect our earnings and capital levels and overall results of operations and financial condition. ​ 34 Table of Contents I nflationary pressures and rising prices may affect our results of operations and financial condition. ​ Inflation rose sharply at the end of 2021 and continued rising into 2024 at elevated levels.
Any failure to predict and prepare for changes in interest rates, or adjust for the consequences of these changes, may adversely affect our earnings and capital levels and overall results of operations and financial condition. ​ I nflationary pressures and rising prices may affect our results of operations and financial condition. ​ Inflation rose sharply at the end of 2021 and continued rising into 2025 at elevated levels.
We have incurred, and may continue to incur, expenses related to this incident, and we remain subject to risks and uncertainties as a result of the incident, including litigation and additional regulatory scrutiny. ​ The continued occurrence of cybersecurity incidents and threats thereof across a range of industries has resulted in increased legislative and regulatory scrutiny over cybersecurity and calls for additional data privacy laws and regulations at both the state and federal levels.
We have incurred, and may continue to incur, expenses related to this incident, and we remain subject to risks and uncertainties as a result of the incident, including litigation and additional regulatory scrutiny. ​ 26 Table of Contents The increased prevalence of cybersecurity incidents and threats thereof across a range of industries has resulted in increased legislative and regulatory scrutiny over cybersecurity and calls for additional data privacy laws and regulations at both the state and federal levels.
These assets are sensitive to any significant changes in related results of operations of the underlying businesses. ​ In light of continuing macroeconomic challenges in the mortgage industry given tight housing inventories and mortgage interest rate levels, our mortgage origination segment experienced lower-than-forecasted operating results during 2022 and 2023.
These assets are sensitive to any significant changes in related results of operations of the underlying businesses. ​ In light of continuing macroeconomic challenges in the mortgage industry, including tight housing inventories and mortgage interest rate levels, our mortgage origination segment experienced lower-than-forecasted operating results during 2025.
Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations.
Because 27 Table of Contents payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties by third-party lessees and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations.
Preferred stock could be issued with voting and conversion rights that could adversely affect the voting power of the shares of our common stock.
The rights of preferred stockholders may supersede the rights of common stockholders. Preferred stock could be issued with voting and conversion rights that could adversely affect the voting power of the shares of our common stock.
Any material misstatements could require a restatement of our consolidated financial statements, cause us to fail to meet our reporting obligations or cause investors to lose confidence in our reported financial information, leading to a decline in the market value of our securities. ​ We ultimately may write-off goodwill and other intangible assets resulting from business combinations. ​ As a result of purchase accounting in connection with acquisitions, our consolidated balance sheet at December 31, 2024, included goodwill of $267.4 million and other intangible assets, net of accumulated amortization, of $6.6 million.
Any material misstatements could require a restatement of our consolidated financial statements, cause us to fail to meet our reporting obligations or cause investors to lose confidence in our reported financial information, leading to a decline in the market value of our securities and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. ​ We ultimately may write-off goodwill and other intangible assets resulting from business combinations. ​ As a result of purchase accounting in connection with acquisitions, our consolidated balance sheet at December 31, 2025, included goodwill of $267.4 million and other intangible assets, net of accumulated amortization, of $5.6 million.
In addition, a default under the indentures governing the Subordinated Notes could trigger a cross default under the agreements governing our existing and future indebtedness.
In addition, a default under the indenture governing the 2035 Subordinated Notes could trigger a cross default under the agreements governing our existing and future indebtedness.
This proposal has not yet been finalized. ​ 48 Table of Contents If we fail to meet the minimum capital guidelines and other regulatory requirements as applicable to us, we or our subsidiaries may be restricted in the types of activities we may conduct, and we may be prohibited from taking certain capital actions, such as paying dividends and repurchasing or redeeming capital securities. ​ Failure to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our financial condition and results of operations.
If we fail to meet the minimum capital guidelines and other regulatory requirements as applicable to us, we or our subsidiaries may be restricted in the types of activities we may conduct, and we may be prohibited from taking certain capital actions, such as paying dividends and repurchasing or redeeming capital securities. ​ Failure to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our financial condition and results of operations.
Subject to limitations imposed by law or our articles of incorporation, our board of directors is empowered to determine the designation and number of shares constituting each series of preferred stock, as well as any designations, qualifications, privileges, limitations, restrictions or special or relative rights of additional series. The rights of preferred stockholders may supersede the rights of common stockholders.
Subject to limitations imposed by law or our articles of incorporation, 44 Table of Contents our board of directors is empowered to determine the designation and number of shares constituting each series of preferred stock, as well as any designations, qualifications, privileges, limitations, restrictions or special or relative rights of additional series.
Treasury bond yields and 3-month yields, could adversely 33 Table of Contents impact the net interest income of our banking segment as the spread between interest-earning assets and interest-bearing liabilities becomes further compressed. ​ As of December 31, 2024, approximately 58% of our loans were advanced to our customers on a variable or adjustable-rate basis and approximately 42% of our loans were advanced to our customers on a fixed-rate basis.
Treasury bond yields and 3-month yields, could adversely impact the net interest income of our banking segment as the spread between interest-earning assets and interest-bearing liabilities becomes further compressed. ​ As of December 31, 2025, approximately 61% of our loans were advanced to our customers on a variable or adjustable-rate basis and approximately 39% of our loans were advanced to our customers on a fixed-rate basis.
Increased pressure created by any current or future competitors, or by competitors of our broker-dealer business collectively, could materially and adversely affect our business and results of operations. Increased competition may result in reduced revenue and loss of market share.
Increased pressure created by any current or future competitors, or by competitors of our broker-dealer business collectively, could reduce revenue and loss of market share and could materially and adversely affect our business and results of operations.
During 2024, 31.5% and 7.7% of our mortgage loans originated (by dollar volume) were collateralized by properties located in Texas and California, respectively. Also, in our broker-dealer segment, 76% of public finance services net revenues were from entities located in Texas, and 87% of retail brokerage service net revenues were generated through locations in Texas and California.
During 2025, 30.2% and 7.8% of our mortgage loans originated (by dollar volume) were collateralized by properties located in Texas and California, respectively. Also, in our broker-dealer segment, 76% of public finance services net revenues were from entities located in Texas, and 88% of retail brokerage service net revenues were generated through locations in Texas and California.
For example, bank failures during the first half of 2023 put additional financial pressure and uncertainty on other financial institutions and led to increased regulatory scrutiny in the industry. Similar bank failures, or the perception thereof, could adversely affect our operations. Many of these transactions expose us to credit risk in the event of default of our counterparty or client.
For example, past high-profile bank failures created additional financial pressure and uncertainty for other financial institutions and led to increased regulatory scrutiny in the industry. Similar bank failures, or the perception thereof, could adversely affect our operations. Many of these transactions expose us to credit risk in the event of default of our counterparty or client.
Any such increase in our provision for (reversal of) credit losses or additional loan charge-offs could have a material adverse effect on our results of operations and financial condition. ​ Adverse developments affecting the financial services industry, such as bank failures or concerns involving liquidity, may have a material effect on the Company’s operations. ​ Events in early 2023 relating to the failures of certain banking entities have caused general uncertainty and concern regarding the liquidity adequacy of the banking sector as a whole.
Any such increase in our provision for (reversal of) credit losses or additional loan charge-offs could have a material adverse effect on our results of operations and financial condition. ​ Adverse developments affecting the financial services industry, such as bank failures or concerns involving liquidity, may have a material effect on the Company’s operations. ​ Historically, high-profile bank failures have increased market uncertainty and concerns regarding the liquidity adequacy of the banking sector as a whole.
Competition for deposits and in providing lending products and services to consumers and businesses in our market area continues to be competitive and pricing is important. Other factors encountered in competing for savings deposits are convenient office locations, interest rates and fee structures of products offered.
We face competition for deposits and in providing lending products and services to consumers and businesses in our market area. Other factors encountered in competing for savings deposits include convenient office locations, interest rates and fee structures of products offered.
As a result of this uncertainty, we face the potential for reputational risk, deposit outflows, increased costs and competition for liquidity, and increased credit risk which, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations. ​ Our operational systems and networks have been, and will continue to be, subject to an increasing risk of continually evolving cybersecurity or other technological risks, which could result in a loss of customer business, financial liability, regulatory penalties, damage to our reputation or the disclosure of confidential information. ​ We rely heavily on communications and information systems to conduct our business and maintain the security of confidential information and complex transactions, which subjects us to an increasing risk of cyber incidents and threats of cyber attacks from these activities due to a combination of new technologies and the increasing use of the Internet to conduct financial transactions, including the usage of artificial intelligence and automation, as well as a potential failure, interruption or breach in the security of these systems, including those that could result from attacks or planned changes, upgrades and maintenance of these systems.
Although we were not directly affected by these historical bank failures, in the future, events such as these bank failures or negative news or the public perception thereof, could have an adverse effect on our financial condition and results of operations, either directly or through an adverse impact on certain of our customers. ​ Our operational systems and networks have been, and will continue to be, subject to an increasing risk of continually evolving cybersecurity or other technological risks, which could result in a loss of customer business, financial liability, regulatory penalties, damage to our reputation or the disclosure of confidential information. ​ We rely heavily on communications and information systems to conduct our business and maintain the security of confidential information and complex transactions, which subjects us to an increasing risk of cyber incidents and threats of cyber-attacks from these activities due to a combination of new technologies and the increasing use of the Internet to conduct financial transactions, including the usage of artificial intelligence and automation, as well as a potential failure, interruption or breach in the security of these systems, including those that could result from attacks or planned changes, upgrades and maintenance of these systems.
Our broker-dealer business competes directly with numerous other financial advisory and investment banking firms, broker-dealers and banks, including large national and major regional firms and smaller niche companies, some of whom are not broker-dealers and, therefore, not subject to the broker-dealer regulatory framework.
This competition may reduce or limit our margins on banking services, reduce our market share and adversely affect our results of operations and financial condition. ​ Our broker-dealer business competes directly with numerous other financial advisory and investment banking firms, broker-dealers and banks, including large national and major regional firms and smaller niche companies, some of whom are not broker-dealers and, therefore, not subject to the broker-dealer regulatory framework.
Between September 2024 and December 2024, the Federal Reserve Board decreased its target range for the federal funds rate by 100 basis points and indicated that further changes may occur in 2025.
Between September 2024 and December 2025, the Federal Reserve Board decreased its target range for the federal funds rate by 175 basis points.
As a result, our results of operations and financial condition may be materially adversely affected by a decrease in real estate market values. ​ Our risk management processes may not fully identify and mitigate exposure to the various risks that we face, including interest rate, credit, liquidity and market risk. ​ We continue to refine our risk management techniques, strategies and assessment methods on an ongoing basis.
As a result, our results of operations and financial condition may be materially adversely affected by a decrease in real estate market values. ​ Our risk management processes may not fully identify and mitigate exposure to the various risks that we face, including interest rate, credit, liquidity and market risk. ​ Our risk management techniques and strategies (as well as those available to the market generally) may not be fully effective in mitigating our risk exposure in all economic market environments or against all types of risk.
Further, our ability to maintain an adequate control environment may be impacted. ​ The ultimate effect of any adverse development could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could materially affect us, including our control environment, operating efficiency, and results of operations. ​ Our geographic concentration may magnify the adverse effects and consequences of any regional or local economic downturn. ​ We conduct our banking operations primarily in Texas.
Although we take steps to mitigate 30 Table of Contents the risks and uncertainties associated with these solutions and initiatives, we may encounter significant adverse developments in the completion and implementation of these initiatives. ​ The ultimate effect of any adverse development could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could materially affect us, including our control environment, operating efficiency, and results of operations. ​ Our geographic concentration may magnify the adverse effects and consequences of any regional or local economic downturn. ​ We conduct our banking operations primarily in Texas.
We seek to distinguish ourselves from our competitors through our commitment to personalized customer service and responsiveness to customer needs while providing a range of competitive mortgage loan products and services. ​ Overall, competition among providers of financial products and services continues to increase as technological advances, including the rise of artificial intelligence and automation, have lowered the barriers to entry for financial technology companies, with consumers having the opportunity to select from a growing variety of traditional and nontraditional alternatives, including online checking, savings and brokerage accounts, online lending, online insurance underwriters, crowdfunding, digital wallets, and money transfer services.
Our mortgage origination segment competes on a number of factors including customer service, quality and range of products and services offered, price, reputation, interest rates, closing process and duration, and loan origination fees. ​ Overall, competition among providers of financial products and services continues to increase as technological advances, including the rise of artificial intelligence and automation, have lowered the barriers to entry for financial technology companies, with consumers having the opportunity to select from a growing variety of traditional and nontraditional alternatives, including online checking, savings and brokerage accounts, online lending, online insurance underwriters, crowdfunding, digital wallets, and money transfer services.
During 2024, we declared and paid cash dividends of $0.68 per common share. ​ In January 2024, our board of directors authorized a new stock repurchase program through January 2025, pursuant to which we are authorized to repurchase, in the aggregate, up to $75.0 million of our outstanding common stock.
During 2025, we declared and paid cash dividends of $0.72 per common share. ​ In January 2025, our board of directors authorized a stock repurchase program through January 2026, pursuant to which we were authorized to repurchase, in the aggregate, up to $100.0 million of our outstanding common stock, which authorization was increased to $135.0 million in July 2025, and to $185.0 million in October 2025.
Any such changes could subject our business to additional costs, limit the types of financial services and products we may offer and increase the ability of non-banks to offer competing financial services and products, among other things. ​ We may be subject to more stringent capital requirements in the future. ​ We are subject to regulatory requirements specifying minimum amounts and types of capital that we must maintain.
Any such changes could subject our business to additional costs, limit the types of financial services and products we may offer and increase the ability of non-banks to offer competing financial services and products, among other things.
Direct competition for savings deposits also comes from other commercial bank and thrift institutions, money market mutual funds and corporate and government securities that may offer more attractive rates than insured depository institutions are willing to pay.
Direct competition for savings deposits also comes from other commercial bank and thrift institutions, money market mutual funds and corporate and government securities that may offer more attractive rates than insured depository institutions are willing to pay. Competition for loans is based on factors such as interest rates, loan origination fees and the range of services offered by the provider.
If crude oil prices were to be depressed for an extended period, the Bank could experience weaker energy loan demand and increased losses within its energy and Texas-related loan portfolios.
If crude oil prices were to be depressed for an extended period, the Bank could experience weaker energy loan demand and increased losses within its energy and Texas-related loan portfolios. ​ In addition, mortgage origination fee income is dependent to a significant degree on economic conditions in Texas and California.
If we, or our relationships 42 Table of Contents with certain customers, vendors or suppliers, became the subject of negative publicity, our ability to attract and retain customers and employees, and our financial condition and results of operations, could be adversely impacted. ​ We are subject to legal claims and litigation, including potential securities law liabilities, any of which could have a material adverse effect on our business. ​ We face significant legal risks in each of the business segments in which we operate, and the volume of legal claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial service companies remains high.
To the extent we are subject to such activism, or we are unsuccessful in navigating competing stakeholder perspectives, it may require us to incur costs or may otherwise adversely impact our ability to attract and retain customers and employees, and our financial condition and results of operations. ​ We are subject to legal claims and litigation, including potential securities law liabilities, any of which could have a material adverse effect on our business. ​ We face significant legal risks in each of the business segments in which we operate, and the volume of legal claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial service companies remains high.
Such purchases may be subject to a nondeductible excise tax under the Inflation Reduction Act of 2022 equal to 1% of the fair market value of the shares repurchased, subject to certain limitations. ​ Any future declarations, amount and timing of any dividends and/or the amount and timing of such stock repurchases are subject to capital availability and the discretion of our board of directors, which must evaluate, among other things, whether cash dividends and/or stock repurchases are in the best interest of our stockholders and are in compliance with all applicable laws and any agreements containing provisions that limit our ability to declare and pay cash dividends and/or repurchase stock.
These shares were returned to the pool of authorized but unissued shares of common stock. ​ In January 2026, our board of directors authorized a new stock repurchase program through January 2027, pursuant to which we are authorized to repurchase, in the aggregate, up to $125.0 million of our outstanding common stock. ​ Our share repurchases in excess of issuances may be subject to a 1% nondeductible excise tax enacted by the Inflation Reduction Act of 2022, subject to certain limitations. ​ Any future declarations, amount and timing of any dividends and/or the amount and timing of such stock repurchases are subject to capital availability and the discretion of our board of directors, which must evaluate, among other things, whether cash dividends and/or stock repurchases are in the best interest of our stockholders and are in compliance with all applicable laws and any agreements containing provisions that limit our ability to declare and pay cash dividends and/or repurchase stock.
Although we were not directly affected by these bank failures, the resulting speed and ease in which news, including social media commentary, led depositors to withdraw or attempt to withdraw their funds from these and other financial institutions as well as caused the stock prices of many financial institutions to become volatile.
During these times, the speed and ease with which news and social media commentary spread led depositors to withdraw or attempt to withdraw their funds from these and other financial institutions and caused the stock prices of many financial institutions to become volatile.
If management’s assumptions and projections prove to be incorrect, however, the estimate of fair value may be higher than the actual fair value and we may suffer losses in excess of those estimated.
Generally, our nonperforming loans and other real estate owned (“OREO”) reflect operating difficulties of individual borrowers and weaknesses in the economies of the markets we serve. ​ If management’s assumptions and projections prove to be incorrect, however, the estimate of fair value may be higher than the actual fair value and we may suffer losses in excess of those estimated.
Adverse perceptions concerning our reputation or financial institutions in general could lead to difficulties in generating and maintaining accounts as well as in financing them. In particular, such negative perceptions could lead to decreases in the level of deposits that consumer and commercial customers and potential customers choose to maintain with us.
In particular, such negative perceptions could lead to decreases in the level of deposits that consumer and commercial customers and potential customers choose to maintain with us.
Such cyber incidents could result in failures or disruptions in our customer relationship management, securities trading, general ledger, deposits, computer systems, electronic underwriting servicing or loan origination systems; or unauthorized disclosure of confidential and non-public information maintained within our systems.
Such cyber incidents, which are becoming increasingly sophisticated through the use of techniques and tools-including artificial intelligence that circumvent security controls, evade detection and remove forensic evidence, or other disruption or failure in our information systems, could result in failures or disruptions in our customer relationship management, securities trading, general ledger, deposits, computer systems, electronic underwriting servicing or loan origination systems; or unauthorized disclosure of confidential and non-public information maintained within our systems.
During 2024, we paid $19.9 million to repurchase an aggregate of 640,042 shares of our common stock at an average price of $31.04 per share pursuant to the stock repurchase program.
During 2025, we paid $184.0 million to repurchase an aggregate of 5,705,205 shares of our common stock at an average price of $32.26 per share pursuant to the stock repurchase program.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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In 2024, additional assessments were completed utilizing the FFIEC Cybersecurity Assessment Tool and the Ransomware Self-Assessment Tool for the enterprise. ​ Engage Third-Parties on Risk Management ​ Recognizing the complexity and evolving nature of cybersecurity threats, Hilltop engages with a range of external experts, including cybersecurity assessors, consultants and auditors in evaluating and testing our risk management systems.
In 2024 and 2025, additional assessments were completed utilizing the FFIEC Cybersecurity Assessment Tool and the Ransomware Self-Assessment Tool for the enterprise. ​ Engage Third-Parties on Risk Management ​ Recognizing the complexity and evolving nature of cybersecurity threats, Hilltop engages with a range of external experts, including cybersecurity assessors, consultants and auditors in evaluating and testing our risk management systems.
Additionally, at least every two years, we engage a firm to perform a red-team exercise for a simulated cybersecurity event. ​ 52 Table of Contents Service Provider Oversight ​ HTH Procurement processes contract requests, contract renewals and onboard of vendors. Such process creates a single point of entry for all sourcing and contract requests.
Additionally, at least every two years, we engage a firm to perform a red-team exercise for a simulated cybersecurity event. ​ Service Provider Oversight ​ HTH Procurement processes contract requests, contract renewals and onboard of vendors. Such process creates a single point of entry for all sourcing and contract requests.
These partnerships enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices. Our collaboration with these third-parties includes regular audits, threat assessments, and consultation on security enhancements. In particular, each year we engage a firm to perform penetration testing.
These partnerships enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices. Our collaboration with these third-parties includes regular audits, threat assessments, and consultation on security enhancements. In particular, each year we 47 Table of Contents engage a firm to perform internal and external penetration testing.
The systems we utilize include safeguards to protect against or mitigate possible threats, as well as controls designed to ensure accountability, availability, integrity and confidentiality of the data. Security measures are implemented to guard against unauthorized access, alteration, disclosure or destruction of data and systems, including accidental loss and destruction.
The systems we utilize include safeguards that are designed to protect against or mitigate possible threats, as well as controls designed to address accountability, availability, integrity and confidentiality of the data. We have implemented security measures to guard against unauthorized access, alteration, disclosure or destruction of data and systems, including accidental loss and destruction.
The Risk Committee is central to the board of directors’ oversight of cybersecurity risks and bears the primary responsibility for this function. The Risk Committee is composed of board members with diverse expertise including, risk management assisting them to oversee cybersecurity risks.
The Risk Committee is central to the board of directors’ oversight of cybersecurity risks and bears the primary responsibility for this function. The Risk Committee is composed of board members with significant experience in risk management assisting them to oversee cybersecurity risks.
The Risk Committee also reviews all information security plans and policies, which are then recommended to the full board of directors for its review and approval. ​ 53 Table of Contents Management’s Role Managing Risk ​ Our CISO plays a pivotal role in informing the Risk Committee on cybersecurity risks and developments.
The Risk Committee also reviews all information security plans and policies, which are then recommended to the full board of directors for its review and approval. ​ 48 Table of Contents Management’s Role Managing Risk ​ Our CISO keeps the Risk Committee informed on cybersecurity risks and developments.
With over twenty years of experience in the field of cybersecurity, our CISO brings a wealth of expertise to his role. His background includes extensive experience in all facets of information technology and information security and is well-recognized within the industry.
Our CISO has over twenty years of experience in the field of cybersecurity and brings a wealth of expertise to his role. His background includes extensive experience in all facets of information technology and information security. ​ Our CISO is responsible for our Information Security Program and our information security leaders report directly to our CISO.
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity and availability of our data. ● Security Engineering plans, builds, and maintains technical controls and solutions that enhance our security posture that mitigate risk to the enterprise while assuring the integrity of the engineering design process. ​ Managing Material Cybersecurity Risks ​ As a part of our overall risk management strategy, Information Security Risk conducts risk assessments on the technology environment as well as application systems implemented to support the various business functions of Hilltop based on the Gramm-Leach-Bliley Act guidance.
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity and availability of our data. ● Security Engineering plans, builds, and maintains technical controls and solutions that enhance our security posture that mitigate risk to the enterprise while assuring the integrity of the engineering design process.
His in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies. ​ Our CISO is responsible for our Information Security Program and our information security leaders report directly to our CISO. We also maintain a standing committee, the Information Security Governance Committee, which consists of certain members of executive management, our CISO and information security leaders.
We also maintain a standing committee, the Information Security Governance Committee, which consists of certain members of executive management, our CISO and information security leaders.
Added
Within the Security Engineering department we maintain our Identity and Access Management team to ensure appropriate access to our systems is granted on a least-privileged basis through recurring User Access Reviews. ​ Managing Material Cybersecurity Risks ​ As a part of our overall risk management strategy, Information Security Risk conducts risk assessments on the technology environment as well as application systems implemented to support the various business functions of Hilltop based on the Gramm-Leach-Bliley Act guidance.

Item 2. Properties

Properties — owned and leased real estate

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Each of these locations is leased by Hilltop Securities. ​ Mortgage Origination. At December 31, 2024, our mortgage origination segment conducted business from over 182 locations in 46 states. Each of these locations is leased by PrimeLending. ​
Each of these locations is leased by Hilltop Securities. 49 Table of Contents ​ Mortgage Origination. At December 31, 2025, our mortgage origination segment conducted business from over 170 locations in 46 states. Each of these locations is leased by PrimeLending. ​
At December 31, 2024, our banking segment conducted business at 59 locations throughout Texas, including four support facilities. The Bank leases 35 banking locations, including its principal offices, and owns the remaining 24 banking locations. ​ 54 Table of Contents Broker-Dealer. At December 31, 2024, our broker-dealer segment conducted business from 39 locations in 15 states.
At December 31, 2025, our banking segment conducted business at 58 locations throughout Texas, including three support facilities. The Bank leases 35 banking locations, including its principal offices, and owns the remaining 23 banking locations. ​ Broker-Dealer. At December 31, 2025, our broker-dealer segment conducted business from 39 locations in 16 states.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings . ​ For a description of material pending legal proceedings, see the discussion set forth under the heading “Legal Matters” in Note 18 to our Consolidated Financial Statements, which is incorporated by reference herein. ​ Item 4. Mine Safety Disclosures . ​ Not applicable. 55 Table of Contents PART I I ​
Item 3. Legal Proceedings . ​ For a description of material pending legal proceedings, see the discussion set forth under the heading “Legal Matters” in Note 18 to our Consolidated Financial Statements, which is incorporated by reference herein. ​ Item 4. Mine Safety Disclosures . ​ Not applicable. 50 Table of Contents PART I I ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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See Item 1A, “Risk Factors — Risks Related to our Common Stock — There can be no assurance that we will continue to declare cash dividends or repurchase stock.” ​ Securities Authorized for Issuance under Equity Compensation Plans ​ The following table sets forth information at December 31, 2024 with respect to compensation plans under which shares of our common stock may be issued.
See Item 1A, “Risk Factors — Risks Related to our Common Stock — There can be no assurance that we will continue to declare cash dividends or repurchase stock.” ​ Securities Authorized for Issuance under Equity Compensation Plans ​ The following table sets forth information at December 31, 2025 with respect to compensation plans under which shares of our common stock may be issued.
In January 2025, our board of directors authorized a new stock repurchase program through January 2026, pursuant to which we are authorized to repurchase, in the aggregate, up to $100.0 million of our outstanding common stock, inclusive of repurchases to offset dilution related to grants of stock-based compensation.
In January 2026, our board of directors authorized a new stock repurchase program through January 2027, pursuant to which we are authorized to repurchase, in the aggregate, up to $125.0 million of our outstanding common stock, inclusive of repurchases to offset dilution related to grants of stock-based compensation.
With the adoption of the new stock repurchase plan in January 2025, the stock repurchase plan authorized in January 2024 expired. ​ Item 6. [Reserved]. ​
With the adoption of the new stock repurchase plan in January 2026, the stock repurchase plan authorized in January 2025 expired. ​ Item 6. [Reserved]. ​
During 2024, we declared and paid cash dividends of $0.68 per common share. On January 30, 2025, we announced that our board of directors increased our quarterly dividend to $0.18 per common share. Although we expect to continue to pay dividends, we may elect not to pay dividends.
During 2025, we declared and paid cash dividends of $0.72 per common share. On January 29, 2026, we announced that our board of directors increased our quarterly dividend to $0.20 per common share. Although we expect to continue to pay dividends, we may elect not to pay dividends.
Additional information concerning our stock-based compensation plans is presented in Note 20, Stock-Based Compensation, in the notes to our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity Compensation Plan Information ​ ​ ​ ​ Number of securities ​ ​ Number of securities ​ ​ ​ ​ remaining available for ​ ​ to be issued upon ​ Weighted-average ​ future issuance under ​ ​ exercise of ​ exercise price of ​ equity compensation plans ​ ​ outstanding options, ​ outstanding options, ​ (excluding securities Plan Category ​ warrants and rights ​ warrants and rights ​ reflected in first column) Equity compensation plans approved by security holders* — ​ $ — 1,416,696 ​ Total — ​ $ — 1,416,696 ​ ​ * Represents shares available for future issuance under the Hilltop Holdings Inc. 2020 Equity Incentive Plan (the “2020 Plan”). ​ 56 Table of Contents Issuer Repurchases of Equity Securities ​ The following table details our repurchases of shares of common stock during the three months ended December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 - October 31, 2024 — ​ $ — ​ — ​ $ 55,152,099 November 1 - November 30, 2024 — ​ ​ — ​ — ​ ​ 55,152,099 December 1 - December 31, 2024 — ​ ​ — ​ — ​ ​ 55,152,099 Total ​ — ​ $ — ​ — ​ ​ ​ (1) On January 25, 2024, we announced that our board of directors authorized a new stock repurchase program through January 2025, pursuant to which we are authorized to repurchase, in the aggregate, up to $75.0 million of our outstanding common stock, inclusive of repurchases to offset dilution related to grants of stock-based compensation.
Additional information concerning our stock-based compensation plans is presented in Note 20, Stock-Based Compensation, in the notes to our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity Compensation Plan Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ Number of securities ​ ​ ​ ​ remaining available for ​ ​ to be issued upon ​ Weighted-average ​ future issuance under ​ ​ exercise of ​ exercise price of ​ equity compensation plans ​ ​ outstanding options, ​ outstanding options, ​ (excluding securities Plan Category ​ warrants and rights ​ warrants and rights ​ reflected in first column) Equity compensation plans approved by security holders* — ​ $ — 1,309,749 ​ Total — ​ $ — 1,309,749 ​ ​ * Represents shares available for future issuance under the Hilltop Holdings Inc. 2020 Equity Incentive Plan. ​ 51 Table of Contents Issuer Repurchases of Equity Securities ​ The following table details our repurchases of shares of common stock during the three months ended December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ ​ ​ Total Number of Shares Purchased ​ ​ ​ Average Price Paid per Share ​ ​ ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ​ ​ ​ Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 - October 31, 2025 180,000 ​ $ 32.52 ​ 180,000 ​ $ 55,996,801 November 1 - November 30, 2025 1,139,995 ​ ​ 33.50 ​ 1,139,995 ​ ​ 17,808,789 December 1 - December 31, 2025 480,000 ​ ​ 34.78 ​ 480,000 ​ ​ 1,113,525 Total ​ 1,799,995 ​ $ 33.74 ​ 1,799,995 ​ ​ ​ (1) On January 30, 2025, we announced that our board of directors authorized a stock repurchase program through January 2026, pursuant to which we were authorized to repurchase, in the aggregate, up to $100.0 million of our outstanding common stock, which authorization was increased to $135.0 million in July 2025, and to $185.0 million in October 2025.
At February 12, 2025, there were 64,864,275 shares of our common stock outstanding with 293 stockholders of record. ​ In October 2016, we announced that our board of directors authorized a dividend program under which we pay quarterly dividends on our common stock, subject to quarterly declarations by our board of directors.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. ​ Securities, Stockholder and Dividend Information ​ Our common stock is listed on the New York Stock Exchange (“NYSE”) and NYSE Texas under the symbol “HTH.” At February 12, 2026, there were 59,449,557 shares of our common stock outstanding with 279 stockholders of record. ​ In October 2016, we announced that our board of directors authorized a dividend program under which we pay quarterly dividends on our common stock, subject to quarterly declarations by our board of directors.
Removed
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. ​ Securities, Stockholder and Dividend Information ​ Our common stock is listed on the New York Stock Exchange under the symbol “HTH”.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. [Reserved] ​ 57 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 57 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 109 Item 8. Financial Statements and Supplementary Data ​ 113
Item 6. [Reserved] ​ 52 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 52 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 104 Item 8. Financial Statements and Supplementary Data ​ 109

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Common equity includes common equity Tier 1 capital (common stockholders’ equity and certain minority interests in the equity capital accounts of consolidated subsidiaries, but excluding goodwill and various intangible assets) and additional Tier 1 capital (certain qualifying minority interests not included in common equity Tier 1 capital, certain preferred stock and related surplus, and certain subordinated debt). ​ We present net interest margin and net interest income below on a taxable-equivalent basis.
Common equity includes common equity Tier 1 capital (common stockholders’ equity and certain minority interests in the equity capital accounts of consolidated subsidiaries, but excluding goodwill and various intangible assets) and additional Tier 1 capital (certain qualifying minority interests not included in common equity Tier 1 capital, certain preferred stock and related surplus, and certain subordinated debt). ​ We present net interest margin and net interest income on a taxable-equivalent basis below.
Our consolidated net interest margin includes certain items that are not reflected in the calculation of our net interest margin within our banking segment and reduce our consolidated net interest margin, such as the borrowing costs of Hilltop and the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities, such as securities borrowed in the broker-dealer segment and securities loaned in the broker-dealer segment, including items related to securities financing operations that particularly decrease net interest margin.
Our consolidated net interest margin includes certain items that are not reflected in the calculation of our net interest margin within our banking segment and reduce our consolidated net interest margin, such as the borrowing costs of Hilltop and the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities, such as securities borrowed in the broker-dealer segment and securities loaned in the broker-dealer segment, including items related to securities financing operations that particularly decrease net interest margin.
Non-accrual loans at December 31, 2024 also included $3.7 million of loans secured by residential real estate which were classified as loans held for sale. At December 31, 2023, non-accrual loans included 40 commercial and industrial relationships with loans secured primarily by notes receivable, accounts receivable and equipment.
Non-accrual loans at December 31, 2024 also included $3.7 million of loans secured by residential real estate which were classified as loans held for sale. At December 31, 2023, non-accrual loans included 40 commercial and industrial relationships with loans secured primarily by accounts notes receivable, accounts receivable and equipment.
During 2023, we began increasing interest-bearing deposit rates to address rising market interest rates and intense competition for liquidity to combat deposit outflows. During 2024, our deposit funding costs increased due to continued competition for liquidity to combat deposit outflows.
During 2024, our deposit funding costs increased due to continued competition for liquidity to combat deposit outflows. During 2023, we began increasing interest-bearing deposit rates to address rising market interest rates and intense competition for liquidity to combat deposit outflows.
Hilltop Securities, Momentum Independent Network and Hilltop Securities Asset Management, LLC are investment advisers registered with the SEC under the Investment Advisers Act of 1940, as amended. ​ The mortgage origination segment includes the operations of PrimeLending, which offers a variety of loan products and generates revenue predominantly from fees charged on the origination and servicing of loans and from selling these loans in the secondary market. ​ Corporate includes certain activities not allocated to specific business segments.
Additionally, Hilltop Securities, Momentum Independent Network and Hilltop Securities Asset Management, LLC are investment advisers registered with the SEC under the Investment Advisers Act of 1940, as amended. ​ The mortgage origination segment includes the operations of PrimeLending, which offers a variety of loan products and generates revenue predominantly from fees charged on the origination and servicing of loans and from selling these loans in the secondary market. ​ Corporate includes certain activities not allocated to specific business segments.
See “Forward-Looking Statements.” ​ Unless the context otherwise indicates, all references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, to the “Company,” “we,” “us,” “our” or “ours” or similar words are to Hilltop Holdings Inc. and its direct and indirect wholly owned subsidiaries, references to “Hilltop” refer solely to Hilltop Holdings Inc., references to “PCC” refer to PlainsCapital Corporation (a wholly owned subsidiary of Hilltop), references to “Securities Holdings” refer to Hilltop Securities Holdings LLC (a wholly owned subsidiary of Hilltop), references to “Hilltop Securities” refer to Hilltop Securities Inc.
See “Forward-Looking Statements.” ​ Unless the context otherwise indicates, all references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to the “Company,” “we,” “us,” “our” or “ours” or similar words are to Hilltop Holdings Inc. and its direct and indirect wholly owned subsidiaries, references to “Hilltop” refer solely to Hilltop Holdings Inc., references to “PCC” refer to PlainsCapital Corporation (a wholly owned subsidiary of Hilltop), references to “Securities Holdings” refer to Hilltop Securities Holdings LLC (a wholly owned subsidiary of Hilltop), references to “Hilltop Securities” refer to Hilltop Securities Inc.
We continue to monitor developments regarding overall economic conditions, market capitalization, and any other triggering events or circumstances that may indicate an impairment in the future. ​ To the extent future operating performance of our reporting segments remain challenged and below forecasted projections during 2025, significant assumptions such as expected future cash flows or the risk-adjusted discount rate used to estimate fair value are adversely impacted, or upon the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform impairment tests on our goodwill and other intangible assets, an impairment charge may be recorded for that period.
We continue to monitor developments regarding overall economic conditions, market capitalization, and any other triggering events or circumstances that may indicate an impairment in the future. ​ To the extent future operating performance of our reporting segments remain challenged and below forecasted projections during 2026, significant assumptions such as expected future cash flows or the risk-adjusted discount rate used to estimate fair value are adversely impacted, or upon the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform impairment tests on our goodwill and other intangible assets, an impairment charge may be recorded for that period.
Loan volumes to be originated on behalf of and retained by the banking segment are expected to be impacted by, among other things, an ongoing review of the prevailing mortgage rates, balance sheet positioning at Hilltop and the banking segment’s outlook for commercial loan growth. ​ Noninterest income included changes in the net fair value of the mortgage origination segment’s IRLCs and loans held for sale and the related activity associated with forward commitments used by the mortgage origination segment to mitigate interest rate risk associated with its IRLCs and mortgage loans held for sale (“net fair value of IRLCs and loans held for sale”).
Loan volumes to be originated on behalf of and retained by the banking segment are expected to be impacted by, among other things, an ongoing review of the prevailing mortgage rates, balance sheet positioning at Hilltop and the banking segment’s outlook for commercial loan growth. ​ Noninterest income includes changes in the net fair value of the mortgage origination segment’s IRLCs and loans held for sale and the related activity associated with forward commitments used by the mortgage origination segment to mitigate interest rate risk associated with its IRLCs and mortgage loans held for sale (“net fair value of IRLCs and loans held for sale”).
The extent of the impacts of uncertain economic conditions on our financial performance that began in 2022 and have continued throughout 2024, and are expected to continue in 2025, will depend on several developments outside of our control, including, among others, changes in the political environment, the timing and significance of further changes in U.S. treasury yields and mortgage interest rates, changes in funding costs, inflationary pressures associated, and international armed conflicts and their impact on supply chains.
The extent of the impacts of uncertain economic conditions on our financial performance that began in 2022 and have continued throughout 2025, and are expected to continue in 2026, will depend on several developments outside of our control, including, among others, changes in the political environment, the timing and significance of further changes in U.S. treasury yields and mortgage interest rates, changes in funding costs, inflationary pressures associated, and international armed conflicts and their impact on supply chains.
The loss of one or more of our largest Bank customers, or a significant decline in our deposit balances due to ordinary course fluctuations related to these customers’ businesses, could adversely affect our liquidity and might require us to raise deposit rates to attract new deposits, purchase federal funds or borrow funds on a short-term basis to replace such deposits. 104 Table of Contents ​ Broker-Dealer Segment ​ The Hilltop Broker-Dealers finance their assets and operations primarily from their equity capital, short-term bank borrowings, interest-bearing and noninterest-bearing client credit balances, correspondent deposits, securities lending arrangements, repurchase agreement financing, commercial paper issuances and other payables, subject to their respective compliance with broker-dealer net capital and customer protection rules.
The loss of one or more of our largest Bank customers, or a significant decline in our deposit balances due to ordinary course fluctuations related to these customers’ businesses, could adversely affect our liquidity and might require us to raise deposit rates to attract new deposits, purchase federal funds or borrow funds on a short-term basis to replace such deposits. ​ Broker-Dealer Segment ​ The Hilltop Broker-Dealers finance their assets and operations primarily from their equity capital, short-term bank borrowings, interest-bearing and noninterest-bearing client credit balances, correspondent deposits, securities lending arrangements, repurchase agreement financing, commercial paper issuances and other payables, subject to their respective compliance with broker-dealer net capital and customer protection rules.
These activities include holding company financing and investing activities, merchant banking investment opportunities, and management and administrative services to support the overall operations of the Company. ​ The eliminations of intercompany transactions are included in “All Other and Eliminations.” Additional information concerning our reportable business segments is presented in Note 27, “Segment and Related Information,” in the notes to our consolidated financial statements. ​ The following table presents certain information about the continuing operating results of our reportable business segments (in thousands).
These activities include holding company financing and investing activities, merchant banking investment opportunities, and management and administrative services to support the overall operations of the Company. ​ The eliminations of intercompany transactions are included in “All Other and Eliminations.” Additional information concerning our reportable business segments is presented in Note 27, “Segment and Related Information,” in the notes to our consolidated financial statements. ​ 58 Table of Contents The following table presents certain information about the continuing operating results of our reportable business segments (in thousands).
While the mortgage origination segment sold loans prior to 2015, it does not anticipate experiencing significant losses in the future on loans originated prior to 2015 as a result of investor claims under these provisions of its sales contracts. ​ When a claim for indemnification of a loan sold is made by an agency, investor, or other party, the mortgage origination segment evaluates the claim and determines if the claim can be satisfied through additional documentation or other deliverables.
While the mortgage origination segment sold loans prior to 2016, it does not anticipate experiencing significant losses in the future on loans originated prior to 2016 as a result of investor claims under these provisions of its sales contracts. ​ When a claim for indemnification of a loan sold is made by an agency, investor, or other party, the mortgage origination segment evaluates the claim and determines if the claim can be satisfied through additional documentation or other deliverables.
(a wholly owned subsidiary of Securities Holdings, Hilltop Securities and Momentum Independent Network are collectively referred to as the “Hilltop Broker-Dealers”), references to the “Bank” refer to PlainsCapital Bank (a wholly owned subsidiary of PCC), references to “FNB” refer to First National Bank, references to “SWS” refer to the former SWS Group, Inc., references to “PrimeLending” refer to PrimeLending, a PlainsCapital Company (a wholly owned subsidiary of the Bank) and its subsidiaries as a whole. ​ 57 Table of Contents OVERVIEW ​ We are a financial holding company registered under the Bank Holding Company Act of 1956.
(a wholly owned subsidiary of Securities Holdings, Hilltop Securities and Momentum Independent Network are collectively referred to as the “Hilltop Broker-Dealers”), references to the “Bank” refer to PlainsCapital Bank (a wholly owned subsidiary of PCC), references to “FNB” refer to First National Bank, references to “SWS” refer to the former SWS Group, Inc., references to “PrimeLending” refer to PrimeLending, a PlainsCapital Company (a wholly owned subsidiary of the Bank) and its subsidiaries as a whole. ​ 52 Table of Contents OVERVIEW ​ We are a financial holding company registered under the Bank Holding Company Act of 1956.
In addition, PrimeLending has an available line of credit with an unaffiliated bank of up to $1.0 million, of which no borrowings were drawn at December 31, 2024. ​ PrimeLending owns a 100% membership interest in PrimeLending Ventures Management, LLC (“Ventures Management”) which holds a controlling ownership interest in and is the managing member of certain ABAs.
In addition, PrimeLending has an available line of credit with an unaffiliated bank of up to $1.0 million, of which no borrowings were drawn at December 31, 2025. ​ PrimeLending owns a 100% membership interest in PrimeLending Ventures Management, LLC (“Ventures Management”) which holds a controlling ownership interest in and is the managing member of certain ABAs.
We further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and sensitivities performed. Accordingly, at the conclusion of the annual assessments, we determined that as of October 1, 2024 it was more likely than not that the fair value of goodwill and other intangible assets exceeded their respective carrying values.
We further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and sensitivities performed. Accordingly, at the conclusion of the annual assessments, we determined that as of October 1, 2025 it was more likely than not that the fair value of goodwill and other intangible assets exceeded their respective carrying values.
(4) Annualized taxable equivalent. ​ With regard to net interest income, as of December 31, 2024, the banking segment maintained an asset sensitive rate risk position, meaning the amount of its interest-earning assets maturing or repricing within a given period exceeds the amount of its interest-bearing liabilities also maturing or repricing within that time period.
(4) Annualized taxable equivalent. ​ With regard to net interest income, as of December 31, 2025, the banking segment maintained an asset sensitive rate risk position, meaning the amount of its interest-earning assets maturing or repricing within a given period exceeds the amount of its interest-bearing liabilities also maturing or repricing within that time period.
The banking segment’s loan concentrations were within regulatory guidelines at December 31, 2024. ​ In addition, the Bank’s loan portfolio includes collateralized loans extended to businesses that depend on the energy industry, including those within the exploration and production, field services, pipeline construction and transportation sectors.
The banking segment’s loan concentrations were within regulatory guidelines at December 31, 2025. ​ In addition, the Bank’s loan portfolio includes collateralized loans extended to businesses that depend on the energy industry, including those within the exploration and production, field services, pipeline construction and transportation sectors.
At December 31, 2024, Hilltop Securities had credit arrangements with two unaffiliated banks, with maximum aggregate commitments of up to $425.0 million. These credit arrangements are used to finance securities owned, securities held for correspondent accounts, receivables in customer margin accounts and underwriting activities.
At December 31, 2025, Hilltop Securities had credit arrangements with two unaffiliated banks, with maximum aggregate commitments of up to $425.0 million. These credit arrangements are used to finance securities owned, securities held for correspondent accounts, receivables in customer margin accounts and underwriting activities.
Refer to the discussion in the “Banking Segment” section that follows for more details on the changes in net interest income, including the component changes in the volume of average interest-earning assets and interest-bearing liabilities and changes in the rates earned or paid on those items. ​ The provision for (reversal of) credit losses is determined by management as the amount necessary to maintain the allowance for credit losses at the amount of expected credit losses inherent within the loans held for investment portfolio.
Refer to the discussion in the “Banking Segment” section that follows for more details on the 62 Table of Contents changes in net interest income, including the component changes in the volume of average interest-earning assets and interest-bearing liabilities and changes in the rates earned or paid on those items. ​ The provision for (reversal of) credit losses is determined by management as the amount necessary to maintain the allowance for credit losses at the amount of expected credit losses inherent within the loans held for investment portfolio.
None of the available for sale debt securities held were past due at December 31, 2024. In addition, as of December 31, 2024, we evaluated our held to maturity debt securities, considering the current credit ratings and recognized losses, and determined the potential credit loss to be minimal.
None of the available for sale debt securities held were past due at December 31, 2025. In addition, as of December 31, 2025, we evaluated our held to maturity debt securities, considering the current credit ratings and recognized losses, and determined the potential credit loss to be minimal.
Model imprecision also exists in the allowance for credit losses estimation process due to the inherent time lag of available industry information and differences between expected and actual outcomes. ​ The provision for (reversal of) credit losses recorded through earnings, and reduced by the charge-off of loan amounts, net of recoveries, is the amount necessary to maintain the allowance for credit losses at the amount of expected credit losses inherent within the loans held for investment portfolio.
Model imprecision also exists in the allowance for credit losses estimation process due to the inherent time lag of available industry information and differences between expected and actual outcomes. ​ 103 Table of Contents The provision for (reversal of) credit losses recorded through earnings, and reduced by the charge-off of loan amounts, net of recoveries, is the amount necessary to maintain the allowance for credit losses at the amount of expected credit losses inherent within the loans held for investment portfolio.
See details regarding loan origination volume in the table below. ​ Recent trends, as well as typical historical patterns in loan origination volume from purchases of homes or from refinancings because of movements in mortgage interest rates, may not be indicative of future loan origination volumes.
See details regarding loan origination volume in the table below. ​ Current trends, as well as typical historical patterns in loan origination volume from purchases of homes or from refinancings because of movements in mortgage interest rates, may not be indicative of future loan origination volumes.
The banking segment does not generally participate in syndicated loan transactions and has no foreign loans in its portfolio. ​ A significant portion of the banking segment’s loan portfolio at December 31, 2024 consisted of commercial real estate loans secured by properties.
The banking segment does not generally participate in syndicated loan transactions and has no foreign loans in its portfolio. ​ A significant portion of the banking segment’s loan portfolio at December 31, 2025 consisted of commercial real estate loans secured by properties.
Guarantor analysis includes liquidity and cash flow evaluation based on the significance with which the guarantors are expected to serve as secondary repayment sources. ​ The Bank maintains a loan review department that reviews credit risk in response to both external and internal factors that potentially impact the performance of either individual loans or the overall loan portfolio.
Guarantor analysis includes liquidity and cash flow evaluation based on the significance with which the guarantors are expected to serve as secondary repayment sources. ​ 85 Table of Contents The Bank maintains a loan review department that reviews credit risk in response to both external and internal factors that potentially impact the performance of either individual loans or the overall loan portfolio.
These credit arrangements are provided on an “as offered” basis and are not committed lines of credit. In addition, Hilltop Securities has committed revolving credit facilities with two unaffiliated banks, with aggregate availability of up to $200.0 million.
These credit arrangements are provided on an “as offered” basis and are not committed lines of credit. In addition, Hilltop Securities has committed revolving credit facilities with two unaffiliated banks, with aggregate availability of up to $125.0 million.
The notional amounts of these forward commitments at December 31, 2024, 2023 and 2022 were $932.6 million, $1.0 billion and $1.2 billion, respectively, while the related estimated fair values were $6.4 million, ($10.2) million and $3.3 million, respectively. ​ Allowance for Credit Losses on Loans ​ For additional information regarding the allowance for credit losses, refer to the section captioned “Critical Accounting Estimates” included in this Form 10-K. ​ Loans Held for Investment ​ The Bank has lending policies in place with the goal of establishing an asset portfolio that will provide a return on stockholders’ equity sufficient to maintain capital to assets ratios that meet or exceed established regulations.
The notional amounts of these forward commitments at December 31, 2025, 2024 and 2023 were $1.0 billion, $0.9 billion and $1.0 billion, respectively, while the related estimated fair values were ($1.9) million, $6.4 million and ($10.2) million, respectively. ​ Allowance for Credit Losses on Loans ​ For additional information regarding the allowance for credit losses, refer to the section captioned “Critical Accounting Estimates” included in this Form 10-K. ​ Loans Held for Investment ​ The Bank has lending policies in place with the goal of establishing an asset portfolio that will provide a return on stockholders’ equity sufficient to maintain capital to assets ratios that meet or exceed established regulations.
The deposit pricing beta represents the change in interest-bearing deposit pricing in response to a change in market interest rates. The historical interest-bearing deposit pricing beta for the Bank, excluding deposits from our Hilltop Securities FDIC-insured sweep program and brokered deposits, has approximated 54% .
The deposit pricing beta represents the change in interest-bearing deposit pricing in response to a change in market interest rates. The historical interest-bearing deposit pricing beta for the Bank, excluding deposits from our Hilltop Securities FDIC-insured sweep program and brokered deposits, has approximated 58% .
In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 1A. Risk Factors” and elsewhere in this Annual Report.
In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 1A. Risk Factors” and elsewhere in this Annual Report.
The decrease in income before income taxes during 2023, compared with 2022, was primarily due to a decrease in net interest income and an increase in the provision for credit losses, partially offset by a decline in noninterest expense.
The decrease in income before income taxes during 2024, compared with 2023, was primarily due to a decline in net interest income and an increase in noninterest expense, partially offset by a decline in the provision for credit losses.
(2) Changes in the yields earned on loans held for investment, gross included a decline during 2024 of $3.6 million in accretion of discount on loans, compared with 2023, and a decrease of $1.9 million during 2023, compared with 2022.
(2) Changes in the yields earned on loans held for investment, gross included a decline during 2025 of $1.9 million in accretion of discount on loans, compared with 2024, and a decrease of $3.6 million during 2024, compared with 2023.
The Federal Reserve reduces the federal funds rate to support the economy to a 3.1% target by the fourth quarter of 2025 and a 2.5% target by the first quarter of 2026. ​ The impact of applying all of the assumptions of the upside economic scenario during the reasonable and supportable forecast period would have resulted in a decrease in the allowance for credit losses of approximately $21 million or a weighted average expected loss rate of 1.1% as a percentage of our total loan portfolio, excluding margin loans in the broker-dealer segment and the banking segment mortgage warehouse lending programs. ​ The impact of applying all of the assumptions of the downside economic scenario during the reasonable and supportable forecast period would have resulted in an increase in the allowance for credit losses of approximately $55 million or a weighted average expected loss rate of 2.1% as a percentage of our total loan portfolio, excluding margin loans in the broker-dealer segment and the banking segment mortgage warehouse lending programs. ​ This analysis relates only to the modeled credit loss estimates and is not intended to estimate changes in the overall allowance for credit losses as they do not reflect any potential changes in the adjustment to the quantitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these modeled lifetime loss estimates based on then-current circumstances and conditions. ​ Our allowance for credit losses reflects our best estimate of current expected credit losses, which is highly dependent on several assumptions, including the macroeconomic outlook, inflationary pressures and labor market conditions, international armed conflicts and their impact on supply chains, the U.S elections and other various fiscal and monetary policy decisions.
The Federal Reserve reduces the federal funds rate to support the economy to a 2.2% target by the fourth quarter of 2026 and a 1.8% target by the first quarter of 2027. ​ The impact of applying all of the assumptions of the upside economic scenario during the reasonable and supportable forecast period would have resulted in a decrease in the allowance for credit losses of approximately $16 million or a weighted average expected loss rate of 1.1% as a percentage of our total loan portfolio, excluding margin loans in the broker-dealer segment and the banking segment mortgage warehouse lending programs. ​ The impact of applying all of the assumptions of the downside economic scenario during the reasonable and supportable forecast period would have resulted in an increase in the allowance for credit losses of approximately $53 million or a weighted average expected loss rate of 2.1% as a percentage of our total loan portfolio, excluding margin loans in the broker-dealer segment and the banking segment mortgage warehouse lending programs. ​ This analysis relates only to the modeled credit loss estimates and is not intended to estimate changes in the overall allowance for credit losses as they do not reflect any potential changes in the adjustment to the quantitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these modeled lifetime loss estimates based on then-current circumstances and conditions. ​ Our allowance for credit losses reflects our best estimate of current expected credit losses, which is highly dependent on several assumptions, including the macroeconomic outlook, inflationary pressures and labor market conditions, international armed conflicts and their impact on supply chains, the U.S. elections and other various fiscal and monetary policy decisions.
As a result, the mortgage origination segment does not currently expect the level of MSR assets to be significant in the short-term. In addition to gains and losses generated by changes in the net fair value of the MSR asset and related derivatives, net servicing income of $8.6 million was recognized during 2024.
As a result, the mortgage origination segment does not currently expect the level of MSR assets to be significant in the short-term. In addition to gains and losses generated by changes in the net fair value of the MSR asset and related derivatives, net servicing income of $0.8 million and $8.6 million was recognized during 2025 and 2024, respectively.
Our capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. ​ In order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers, Basel III requires banking organizations to maintain a capital conservation buffer above minimum risk-based capital requirements measured relative to risk-weighted assets. ​ The following table shows PlainsCapital’s and Hilltop’s actual capital amounts and ratios in accordance with Basel III compared to the regulatory minimum capital requirements including conservation buffer ratio in effect at December 31, 2024 (dollars in thousands).
Our capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. ​ 98 Table of Contents In order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers, Basel III requires banking organizations to maintain a capital conservation buffer above minimum risk-based capital requirements measured relative to risk-weighted assets. ​ The following table shows PlainsCapital’s and Hilltop’s actual capital amounts and ratios in accordance with Basel III compared to the regulatory minimum capital requirements including conservation buffer ratio in effect at December 31, 2025 (dollars in thousands).
(2) Presented on a taxable equivalent basis with taxable equivalent adjustments based on the applicable corporate federal income tax rates of 21% for all periods presented. The adjustment to interest income was $0.6 million, $0.7 million and $0.8 million during 2024, 2023 and 2022, respectively. ​ The banking segment’s net interest margin exceeds our consolidated net interest margin.
(2) Presented on a taxable equivalent basis with taxable equivalent adjustments based on the applicable corporate federal income tax rates of 21% for all periods presented. The adjustment to interest income was $0.7 million, $0.6 million and $0.7 million during 2025, 2024 and 2023, respectively. ​ The banking segment’s net interest margin exceeds our consolidated net interest margin.
Future allowance for credit losses may vary considerably for these reasons. ​ 94 Table of Contents Allowance Activity ​ The following table presents the activity in our allowance for credit losses and selected credit metrics within our loan portfolio for the periods presented (in thousands).
Future allowance for credit losses may vary considerably for these reasons. ​ 90 Table of Contents Allowance Activity ​ The following table presents the activity in our allowance for credit losses and selected credit metrics within our loan portfolio for the periods presented (in thousands).
The critical accounting estimates, as summarized below, which we believe to be the most critical in preparing our consolidated financial statements relate to allowance for credit losses and goodwill and identifiable intangible assets. ​ Allowance for Credit Losses ​ The allowance for credit losses for loans represents management’s estimate of all expected credit losses over the expected contractual life of our existing loan portfolio.
The critical accounting estimates, as summarized below, which we believe to be the most critical in preparing our consolidated financial statements relate to allowance for credit losses and goodwill and identifiable intangible assets. ​ 102 Table of Contents Allowance for Credit Losses ​ The allowance for credit losses for loans represents management’s estimate of all expected credit losses over the expected contractual life of our existing loan portfolio.
In March and April 2023, as a result of three of the largest bank failures in U.S. history, the Federal Reserve implemented several liquidity programs to stabilize consumer and business confidence. The Federal Reserve continued to balance inflation expectations and labor market constraints with tighter financial conditions throughout 2023.
In March and April 2023, as a result of three of the largest bank failures in U.S. history, the Federal Reserve implemented several liquidity programs to stabilize consumer and business confidence. The Federal Reserve continued to balance 87 Table of Contents inflation expectations and labor market constraints with tighter financial conditions throughout 2023.
While we may complete transactions subject to the new excise tax, we do not expect the tax to have a material impact to our financial condition or results of operations. ​ Senior Notes due 2025 ​ On January 15, 2025 (three months prior to the maturity date of the Senior Notes) we redeemed, at our election, all of our outstanding Senior Notes at a redemption price equal to 100% of the principal amount of $150 million, plus accrued and unpaid interest to, but excluding, the Redemption Date using cash on hand, which also satisfied and discharged our obligations under the Senior Notes and the Senior Notes Indenture. ​ Subordinated Notes due 2030 and 2035 ​ On May 7, 2020, we completed a public offering of $50 million aggregate principal amount of 2030 Subordinated Notes and $150 million aggregate principal amount of 2035 Subordinated Notes that mature on May 15, 2030 and May 15, 2035, respectively.
While we may complete transactions subject to the excise tax, we do not expect the tax to have a material impact to our financial condition or results of operations. ​ Senior Notes due 2025 ​ On January 15, 2025 (three months prior to the maturity date of the Senior Notes) we redeemed, at our election, all of our outstanding Senior Notes at a redemption price equal to 100% of the principal amount of $150 million, plus accrued and unpaid interest to, but excluding, the Redemption Date using cash on hand, which also satisfied and discharged our obligations under the Senior Notes and the Senior Notes Indenture. ​ Subordinated Notes due 2030 and 2035 ​ On May 7, 2020, we completed a public offering of $50 million aggregate principal amount of 2030 Subordinated Notes and $150 million aggregate principal amount of 2035 Subordinated Notes with scheduled maturities on May 15, 2030 and May 15, 2035, respectively.
We monitor our capital strength in terms of both leverage ratio and risk-based capital ratios based on capital requirements administered by the federal banking agencies. The risk-based capital ratios are minimum supervisory ratios generally applicable to banking organizations, but banking organizations are widely expected to operate with capital positions well above the minimum ratios.
We monitor our capital strength in terms of both leverage ratio and risk-based capital ratios 59 Table of Contents based on capital requirements administered by the federal banking agencies. The risk-based capital ratios are minimum supervisory ratios generally applicable to banking organizations, but banking organizations are widely expected to operate with capital positions well above the minimum ratios.
The majority of floating rate loans carry an interest rate tied to a SOFR rate or The Wall Street Journal Prime Rate, as published in The Wall Street Journal. ​ 88 Table of Contents Broker-Dealer Segment ​ The loan portfolio of the broker-dealer segment consists primarily of margin loans to customers and correspondents that are due within one year.
The majority of floating rate loans carry an interest rate tied to a SOFR rate or The Wall Street Journal Prime Rate, as published in The Wall Street Journal. ​ Broker-Dealer Segment ​ The loan portfolio of the broker-dealer segment consists primarily of margin loans to customers and correspondents that are due within one year.
If future discounted cash flows become less than those projected by us, future impairment charges may become necessary that could have a materially adverse impact on our results of operations and financial condition in the period in which the write-off occurs. ​ 108 Table of Contents
If future discounted cash flows become less than those projected by us, future impairment charges may become necessary that could have a materially adverse impact on our results of operations and financial condition in the period in which the write-off occurs. ​
The guidelines for each individual portfolio segment set forth permissible and impermissible loan types. With respect to each loan type, the guidelines within the Bank’s loan policy provide minimum 89 Table of Contents requirements for the underwriting factors listed above. The Bank’s underwriting procedures also include an analysis of any collateral and guarantor.
The guidelines for each individual portfolio segment set forth permissible and impermissible loan types. With respect to each loan type, the guidelines within the Bank’s loan policy provide minimum requirements for the underwriting factors listed above. The Bank’s underwriting procedures also include an analysis of any collateral and guarantor.
The commercial paper notes (“CP Notes”) may be issued with maturities of 14 days to 270 days from the date of issuance. The CP Notes were issued under two separate programs, Series 2019-1 CP Notes and Series 2019-2 CP Notes, in maximum aggregate amounts of $300 million and $200 million, respectively.
The commercial paper notes (“CP Notes”) may be issued with maturities of 14 days to 270 days from the date of issuance. The CP Notes are issued under two separate programs, Series 2019-2 CP Notes and Series 2024-1 CP, in maximum aggregate amounts of $200 million and $300 million, respectively.
We assess the credit risk associated with certain commitments to extend credit and have recorded a liability related to such credit risk in our consolidated financial statements. ​ Standby letters of credit are written conditional commitments issued by us to guarantee the performance of a customer to a third-party.
We assess the credit risk associated with certain commitments to extend credit and have recorded a liability related to such credit risk in our consolidated financial statements. ​ 101 Table of Contents Standby letters of credit are written conditional commitments issued by us to guarantee the performance of a customer to a third-party.
At December 31, 2024, $200.0 million of our Subordinated Notes was outstanding. ​ Regulatory Capital ​ We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements may prompt certain actions by regulators that, if undertaken, could have a direct material adverse effect on our financial condition and results of operations.
At December 31, 2025, $150.0 million of our Subordinated Notes was outstanding. ​ Regulatory Capital ​ We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements may prompt certain actions by regulators that, if undertaken, could have a direct material adverse effect on our financial condition and results of operations.
In determining the allowance for credit 107 Table of Contents losses, we derive an estimated credit loss assumption from a model that categorizes loan pools based on loan type and internal risk rating or delinquency bucket. ​ When a loan moves to a substandard non-accrual or worse risk rating grade, it is removed from the collective evaluation allowance methodology and is subject to individual evaluation.
In determining the allowance for credit losses, we derive an estimated credit loss assumption from a model that categorizes loan pools based on loan type and internal risk rating or delinquency bucket. ​ When a loan moves to a substandard non-accrual or worse risk rating grade, it is removed from the collective evaluation allowance methodology and is subject to individual evaluation.
For origination services provided, the mortgage origination segment was reimbursed direct origination costs associated with loans retained by the banking segment, in addition to payment of a correspondent fee. The reimbursed origination costs and correspondent fee 79 Table of Contents are included in the mortgage origination segment operating results, and the correspondent fees are eliminated in consolidation.
For origination services provided, the mortgage origination segment was reimbursed direct origination costs associated with loans retained by the banking segment, in addition to payment of a correspondent fee. The reimbursed origination costs and correspondent fee are included in the mortgage origination segment operating results, and the correspondent fees are eliminated in consolidation.
Such capital infusions are likely in future periods, including those in the near-term, based on various factors including PrimeLending’s financial performance. ​ In addition, as a FNMA and FHLMC approved lender, we are subject to certain minimum capital, net worth and liquidity requirements established by FNMA and FHLMC, including maintaining a minimum capital ratio of 6% (the “FNMA/FHLMC capital ratio”).
Such capital infusions are possible in future periods, including those in the near-term, based on a range of factors including PrimeLending’s financial performance. ​ In addition, as a FNMA and FHLMC approved lender, we are subject to certain minimum capital, net worth and liquidity requirements established by FNMA and FHLMC, including maintaining a minimum capital ratio of 6% (the “FNMA/FHLMC capital ratio”).
Fluctuations in the net fair value of the MSR asset driven by net changes in long-term U.S. Treasury bond rates and the related derivatives used to hedge the MSR during the respective periods resulted in net losses of $3.2 million.
Fluctuations in the net fair value of the MSR asset driven by net changes in long-term U.S. Treasury bond rates and the related derivatives used to hedge the MSR during 2024 resulted in net losses of $3.2 million.
We consider total compensation as a percentage of net revenue to be a key performance measure and indicator of segment profitability. 75 Table of Contents (2) Pre-tax margin is defined as income before income taxes divided by net revenue.
We consider total compensation as a percentage of net revenue to be a key performance measure and indicator of segment profitability. (2) Pre-tax margin is defined as income before income taxes divided by net revenue.
Potential problem loans do not include purchased credit deteriorated (“PCD”) loans because PCD loans exhibited evidence of more than insignificant credit deterioration at acquisition that made it probable that all contractually required principal payments would not be collected. ​ At December 31, 2024, we had $166.9 million in potential problem loans, compared to $207.4 million at December 31, 2023 and $186.6 million at December 31, 2022.
Potential problem loans do not include purchased credit deteriorated (“PCD”) loans because PCD loans exhibited evidence of more than insignificant credit deterioration at acquisition that made it probable that all contractually required principal payments would not be collected. ​ At December 31, 2025, we had $124.9 million in potential problem loans, compared to $166.9 million at December 31, 2024 and $207.4 million at December 31, 2023.
Our policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements. ​ In the aggregate, the Bank had outstanding unused commitments to extend credit of $2.0 billion at December 31, 2024 and outstanding financial and performance standby letters of credit of $61.1 million at December 31, 2024. ​ Broker-Dealer Segment ​ The Hilltop Broker-Dealers execute, settle and finance various securities transactions that may expose the Hilltop Broker-Dealers to off-balance sheet risk in the event that a customer or counterparty does not fulfill its contractual obligations.
Our policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements. ​ In the aggregate, the Bank had outstanding unused commitments to extend credit of $2.2 billion at December 31, 2025 and outstanding financial and performance standby letters of credit of $108.5 million at December 31, 2025. ​ Broker-Dealer Segment ​ The Hilltop Broker-Dealers execute, settle and finance various securities transactions that may expose the Hilltop Broker-Dealers to off-balance sheet risk in the event that a customer or counterparty does not fulfill its contractual obligations.
Although we anticipate a slightly higher percentage of refinancing volume relative to total loan origination volume during 2025, as compared to 2024, an even higher refinance percentage could be driven by a slowing of purchase volume due to the negative impact on new and existing home sales resulting from existing home inventory shortages and affordability challenges related to new home construction, and/or an increase in all-cash buyers. ​ The mortgage origination segment primarily originates its mortgage loans through a retail channel, with additional lending through its affiliated business arrangements (“ABAs”).
Although we anticipate the percentage of refinancing volume relative to total loan origination volume during 2026 will approximate 2025, an even higher refinance percentage could be driven by a slowing of purchase volume due to the negative impact on new and existing home sales resulting from existing home inventory shortages and affordability challenges related to new home construction, and/or an increase in all-cash buyers. ​ The mortgage origination segment primarily originates its mortgage loans through a retail channel, with additional lending through its affiliated business arrangements (“ABAs”).
During 2024, 2023 and 2022, the mortgage origination segment retained servicing on approximately 7%, 18% and 25%, respectively, of loans sold. A reduction in third-party mortgage servicers purchasing mortgage servicing rights, even if modest, may result in PrimeLending increasing the rate of retained servicing on mortgage loans sold at any time.
During 2025, 2024 and 2023, the mortgage origination segment retained servicing on approximately 10%, 7% and 18%, respectively, of loans sold. A reduction in third-party mortgage servicers purchasing mortgage servicing rights, even if modest, may result in PrimeLending increasing the rate of retained servicing on mortgage loans sold at any time.
With respect to these securities, we considered the risk of credit loss to be negligible, and therefore, no allowance was recognized on the debt securities portfolio at December 31, 2024. ​ 85 Table of Contents The following table sets forth the estimated maturities of our debt securities, excluding trading securities, at December 31, 2024.
With respect to these securities, we considered the risk of credit loss to be negligible, and therefore, no allowance was recognized on the debt securities portfolio at December 31, 2025. ​ 81 Table of Contents The following table sets forth the estimated maturities of our debt securities, excluding trading securities, at December 31, 2025.
The resulting allowance for credit losses as a percentage of our total loan portfolio, excluding margin loans in the broker-dealer segment and banking segment mortgage warehouse lending programs, was 1.37%, 1.47% and 1.27% as of December 31, 2024, 2023 and 2022, respectively.
The resulting allowance for credit losses as a percentage of our total loan portfolio, excluding margin loans in the broker-dealer segment and banking segment mortgage warehouse lending programs, was 1.19%, 1.37% and 1.47% as of December 31, 2025, 2024 and 2023, respectively.
While changes in the U.S. economic outlook have been reflected in our current allowance at December 31, 2024, uncertainties that include, among others, the uncertain timing, duration and significance of further increases in market interest rates and a worsening macroeconomic forecast could adversely impact borrower cash flows and result in further increases in the allowance during future periods.
While changes in the U.S. economic outlook have been reflected in our current allowance at December 31, 2025, uncertainties that include, among others, the uncertain timing, duration and significance of further changes in market interest rates and an uncertain macroeconomic forecast could adversely impact borrower cash flows and result in further increases in the allowance during future periods.
Our businesses engage in labor intensive activities and, consequently, employees’ compensation and benefits represent the majority of our noninterest expenses. ​ Consolidated Operating Results ​ Income applicable to common stockholders during 2024 was $113.2 million, or $1.74 per diluted share, compared with $109.6 million, or $1.69 per diluted share, during 2023, and $113.1 million, or $1.60 per diluted share, during 2022.
Our businesses engage in labor intensive activities and, consequently, employees’ compensation and benefits represent the majority of our noninterest expenses. ​ Consolidated Operating Results ​ Income applicable to common stockholders during 2025 was $165.6 million, or $2.64 per diluted share, compared with $113.2 million, or $1.74 per diluted share, during 2024, and $109.6 million, or $1.69 per diluted share, during 2023.
In connection with the BORO Acquisition, we merged BORO into the Bank, and all customer accounts were converted to the PlainsCapital Bank platform. ​ Segment Information ​ The Company has two primary business units, PCC (banking and mortgage origination) and Securities Holdings (broker-dealer).
In connection with the BORO Acquisition, we merged BORO into the Bank, and all customer accounts were converted to the PlainsCapital Bank platform. ​ 57 Table of Contents Segment Information ​ The Company has two primary business units, PCC (banking and mortgage origination) and Securities Holdings (broker-dealer).
OREO increased from December 31, 2022 to December 31, 2023, primarily due to additions totaling $5.6 million, partially offset by disposals and valuation adjustments totaling $2.8 million. ​ Loans past due 90 days or more and still accruing at December 31, 2024, 2023 and 2022 were primarily comprised of loans held for sale and guaranteed by U.S. government agencies, including GNMA related loans subject to repurchase within our mortgage origination segment.
OREO decreased from December 31, 2023 to December 31, 2024, primarily due to disposals and valuation adjustments totaling $4.8 million, partially offset by additions totaling $2.5 million. ​ Loans past due 90 days or more and still accruing at December 31, 2025, 2024 and 2023 were primarily comprised of loans held for sale and guaranteed by U.S. government agencies, including GNMA related loans subject to repurchase within our mortgage origination segment.
At December 31, 2024, Hilltop Securities had no outstanding borrowings under its credit arrangements or its credit facilities. ​ Hilltop Securities uses the net proceeds (after deducting related issuance expenses) from the sale of two commercial paper programs for general corporate purposes, including working capital and the funding of a portion of its securities inventories.
At December 31, 2025, Hilltop Securities had no outstanding borrowings under its credit arrangements or its credit facilities. ​ 100 Table of Contents Hilltop Securities uses the net proceeds (after deducting related issuance expenses) from the sale of two commercial paper programs for general corporate purposes, including working capital and the funding of a portion of its securities inventories.
The effective tax rate for 2024 was lower than the applicable statutory rate primarily due to investments in tax-exempt instruments, state refund claims and return to provision adjustments, partially offset by the impact of nondeductible expenses, nondeductible compensation expense and other permanent adjustments.
The effective tax rate for 2025 was higher than the applicable statutory rate primarily due to the impact of nondeductible expenses, nondeductible compensation expense and other permanent adjustments, partially offset by investments in tax-exempt instruments, state refund claims and return to provision adjustments.
(2) Presented on a taxable equivalent basis with taxable equivalent adjustments based on the applicable corporate federal income tax rate of 21% for the periods presented. The adjustment to interest income was $2.5 million, $2.7 million and $1.6 million during 2024, 2023 and 2022, respectively. ​ The banking segment’s net interest margin exceeds our consolidated net interest margin shown above.
(2) Presented on a taxable equivalent basis with taxable equivalent adjustments based on the applicable corporate federal income tax rate of 21% for the periods presented. The adjustment to interest income was $3.2 million, $2.5 million and $2.7 million during 2025, 2024 and 2023, respectively. ​ The banking segment’s net interest margin exceeds our consolidated net interest margin shown above.
We believe that Hilltop’s liquidity is sufficient for the foreseeable future, with current short-term liquidity needs including operating expenses, redemption of debt obligations, interest on debt obligations, dividend payments to stockholders and potential stock repurchases. ​ As discussed in more detail below, we have the ability to redeem the 2030 Subordinated Notes, in whole or in part, beginning in May 2025, while all of our outstanding Senior Notes previously scheduled to mature in May 2025 were redeemed on January 15, 2025 using cash on hand. ​ Economic Environment ​ As previously discussed, operational and financial headwinds during 2023 and 2024 have had, and are expected to continue to have, an adverse impact on our operating results during 2025.
We believe that Hilltop’s liquidity is sufficient for the foreseeable future, with current short-term liquidity needs including operating expenses, redemption of debt obligations, interest on debt obligations, dividend payments to stockholders and potential stock repurchases. ​ As discussed in more detail below, our 2030 Subordinated Notes, previously scheduled to mature in May 2030, were redeemed on May 15, 2025 using cash on hand, and all of our outstanding Senior Notes previously scheduled to mature in April 2025 were redeemed on January 15, 2025 using cash on hand. ​ Economic Environment ​ As previously discussed, operational and financial headwinds during 2023, 2024 and 2025 have had, and are expected to continue to have, an adverse impact on our operating results during 2026.
In light of these macroeconomic challenges in the mortgage industry including tight housing inventories and mortgage interest rate levels, the fair value of the mortgage origination reporting unit may decline, and we may be required to record a goodwill impairment charge.
In light of these current macroeconomic challenges in the mortgage industry including tight housing inventories and mortgage interest rate levels, the fair value of the mortgage origination reporting unit may decline, and we may be required to record a 72 Table of Contents goodwill impairment charge.
Between September and December 2024, the Federal Reserve cut the target range for the federal funds rate by 100 basis points to 4.25% - 4.5% as of December 31, 2024 and were the first reductions since March 2022 when the target range was 0.25% - 0.50%.
Between September 2024 and December 2024, the Federal Reserve cut the target range for the federal funds rate by 100 basis points to 4.25% - 4.5%. These were the first reductions since March 2022 when the target range was 0.25% - 0.50%.
During 2024, the provision for credit losses reflected a build in the allowance related to specific reserves since December 31, 2023, significantly offset by both the change in the U.S. economic outlook and changes in the collectively evaluated loan portfolio.
During 2024, the provision for credit losses reflected a build in the allowance related to specific reserves, significantly offset by both the change in the U.S. economic outlook and changes in the collectively evaluated loan portfolio.
(4) The securities financing operations within our broker-dealer segment had the effect of lowering both net interest margin and taxable equivalent net interest margin by 24 basis points, 26 basis points and 21 basis points during 2024, 2023 and 2022, respectively.
(4) The securities financing operations within our broker-dealer segment had the effect of lowering both net interest margin and taxable equivalent net interest margin by 27 basis points, 24 basis points and 26 basis points during 2025, 2024 and 2023, respectively.
Global supply chains eased throughout 2023 and adjusted to the longer than expected Russia-Ukraine conflict; however, conflicts in the Middle East between Israel and Hamas and the U.S. and 91 Table of Contents Yemen added new uncertainties.
Global supply chains eased throughout 2023 and adjusted to the longer than expected Russia-Ukraine conflict; however, conflicts in the Middle East between Israel and Hamas and the U.S. and Yemen added new uncertainties.
During 2024, the decrease in the reserve for unfunded commitments was primarily due to decreases in commitment balances and loan expected loss rates. ​ Potential Problem Loans ​ Potential problem loans consist of loans that are performing in accordance with contractual terms but for which management has concerns about the ability of an obligor to continue to comply with repayment terms because of the 97 Table of Contents obligor’s potential operating or financial difficulties or whether repayment may depend on collateral or other risk mitigation.
During 2024, the decrease in the allowance for unfunded commitments was primarily due to decreases in commitment balances and loan expected loss rates, while during 2023, the increase in the allowance for unfunded commitments was due to increases in loan expected loss rates. ​ 93 Table of Contents Potential Problem Loans ​ Potential problem loans consist of loans that are performing in accordance with contractual terms but for which management has concerns about the ability of an obligor to continue to comply with repayment terms because of the obligor’s potential operating or financial difficulties or whether repayment may depend on collateral or other risk mitigation.
To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable equivalent basis in calculating net 68 Table of Contents interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. ​ During 2024, 2023 and 2022, purchase accounting contributed 4, 7 and 9 basis points, respectively, to the banking segment’s taxable equivalent net interest margin of 3.04%, 3.14% and 3.11%, respectively.
To provide more meaningful comparisons of net interest margins for all earning assets, we use net interest income on a taxable equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. ​ 64 Table of Contents During 2025, 2024 and 2023, purchase accounting contributed 3, 4 and 7 basis points, respectively, to the banking segment’s taxable equivalent net interest margin of 3.17%, 3.04% and 3.14%, respectively.
Specifically, during 2024, the banking segment’s provision for credit losses reflected a build in the allowance related to specific reserves since December 31, 2023, significantly offset by both the change in the U.S. economic outlook and changes in the collectively evaluated loan portfolio.
During 2024, the banking segment’s provision for 67 Table of Contents credit losses reflected a build in the allowance related to specific reserves since December 31, 2023, significantly offset by both the change in the U.S. economic outlook and changes in the collectively evaluated loan portfolio.
Our corporate treasury group is responsible for continuously 103 Table of Contents monitoring our liquidity position to ensure that our assets and liabilities are managed in a manner that will meet our short-term and long-term cash requirements.
Our corporate treasury group is responsible for continuously monitoring our liquidity position to ensure that our assets and liabilities are managed in a manner that will meet our short-term and long-term cash requirements.
Income before income taxes during 2024, 2023 and 2022 included net accretion on earning assets and liabilities of $5.1 million, $8.6 million and $10.8 million, respectively, and amortization of identifiable intangibles of $1.8 million, $2.9 million and $4.5 million, respectively, related to the Bank Transactions. ​ ​ The information shown in the table below includes certain key performance indicators on a consolidated basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2024 ​ 2023 ​ 2022 Return on average stockholders' equity (1) ​ 5.29 % ​ 5.31 % ​ 5.11 % Return on average assets (2) ​ 0.78 % ​ 0.71 % ​ 0.69 % Net interest margin (3) (4) ​ 2.81 % ​ 3.07 % ​ 2.87 % Leverage ratio (5) (end of year) ​ 12.57 % ​ 12.23 % ​ 11.47 % Common equity Tier 1 risk-based capital ratio (6) (end of year) ​ 21.23 % ​ 19.32 % ​ 18.23 % (1) Return on average stockholders’ equity is defined as consolidated income attributable to Hilltop divided by average total Hilltop stockholders’ equity.
Income before income taxes during 2025, 2024 and 2023 included net accretion on earning assets and liabilities of $3.1 million, $5.1 million and $8.6 million, respectively, and amortization of identifiable intangibles of $1.0 million, $1.8 million and $2.9 million, respectively, related to the Bank Transactions. ​ ​ 60 Table of Contents The information shown in the table below includes certain key performance indicators on a consolidated basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2025 ​ ​ ​ ​ 2024 ​ 2023 Return on average stockholders' equity (1) ​ 7.60 % ​ 5.29 % ​ 5.31 % Return on average assets (2) ​ 1.10 % ​ 0.78 % ​ 0.71 % Net interest margin (3) (4) ​ 2.98 % ​ 2.81 % ​ 3.07 % Leverage ratio (5) (end of year) ​ 12.78 % ​ 12.57 % ​ 12.23 % Common equity Tier 1 risk-based capital ratio (6) (end of year) ​ 19.70 % ​ 21.23 % ​ 19.32 % (1) Return on average stockholders’ equity is defined as consolidated income attributable to Hilltop divided by average total Hilltop stockholders’ equity.
An unexpected influx of withdrawals of deposits could adversely impact our ability to rely on 60 Table of Contents organic deposits to primarily fund our operations, potentially requiring greater reliance on secondary sources of liquidity to meet withdrawal deposits or to fund continuing operations.
An unexpected influx of withdrawals of deposits could adversely impact our ability to rely on organic deposits to primarily fund our operations, potentially requiring greater reliance on secondary sources of liquidity to meet withdrawals of deposits or to fund continuing operations.
These conditions will continue to be considered during future impairment evaluations of goodwill. ​ 76 Table of Contents As a GNMA approved lender, we are subject to certain HUD and GNMA minimum capital ratio reporting requirements, including timely reporting if a quarter’s operating loss exceeds more than 20% of its previous quarter or year-end net worth (the “operating loss ratio”) and/or if a quarter’s capital ratio is below 6% (the “GNMA capital ratio”).
These conditions will continue to be considered during future impairment evaluations of goodwill. ​ As a GNMA approved lender, we are subject to minimum capital, leverage, net worth and liquidity requirements established by HUD and GNMA, including timely reporting if a quarter’s operating loss exceeds more than 20% of its previous quarter or year-end net worth (the “operating loss ratio”) and/or if a quarter’s capital ratio is below 6% (the “GNMA leverage ratio”).
The decrease in potential problem loans from December 31, 2023 to December 31, 2024 was primarily attributable to decreases in commercial and industrial loans and construction and land development loans, partially offset by increases in 1-4 family residential loans, commercial real estate non-owner occupied loans and commercial real estate owner occupied loans.
The decrease in potential problem loans from December 31, 2024 to December 31, 2025 was primarily attributable to decreases in commercial real estate non-owner occupied loans, construction and land development loans, 1-4 family residential loans and commercial and industrial loans, partially offset by an increase in commercial real estate owner occupied loans.
Deposit products and pricing structures relative to the market are regularly evaluated to maintain competitiveness over time. As discussed above, our cost of deposits increased during 2024, compared to 2023.
Deposit products and pricing structures relative to the market are regularly evaluated to maintain competitiveness over time. As discussed above, our cost of deposits decreased during 2025, compared to 2024.
The impact of rate movements will change with the shape of the yield curve, including any changes in steepness or flatness and inversions at any points on the yield curve. ​ During 2024, 2023 and 2022, the banking segment retained approximately $124 million, $140 million and $532 million, respectively, in mortgage loans originated by the mortgage origination segment.
The impact of rate movements will change with the shape of the yield curve, including any changes in steepness or flatness and inversions at any points on the yield curve. ​ During 2025, 2024 and 2023, the banking segment retained approximately $185.4 million, $124.3 million and $140.3 million, respectively, in mortgage loans originated by the mortgage origination segment.
These securities are carried at amortized cost. ​ 83 Table of Contents The table below summarizes our securities portfolio (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 2022 Trading securities, at fair value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
These securities are carried at amortized cost. ​ 79 Table of Contents The table below summarizes our securities portfolio (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Trading securities, at fair value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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We are subject to the risk of loss that may result from the potential change in value of a financial instrument as a result of fluctuations in interest rates, market prices, investor expectations and changes in credit ratings of the issuer. ​ Our broker-dealer segment is exposed to interest rate risk as a result of maintaining inventories of interest rate sensitive financial instruments and other interest-earning assets including customer and correspondent margin loans and receivables and securities borrowing activities.
We are subject to the risk of loss that may result from the potential change in value of a financial instrument as a result of fluctuations in interest rates, market prices, investor expectations and changes in credit ratings of the issuer. ​ 106 Table of Contents Our broker-dealer segment is exposed to interest rate risk as a result of maintaining inventories of interest rate sensitive financial instruments and other interest-earning assets including customer and correspondent margin loans and receivables and securities borrowing activities.
During a period of rising interest rates, a negative GAP would tend to affect net interest income adversely, while a positive GAP would tend to result in an increase in net interest income. ​ 109 Table of Contents As illustrated in the table below, the banking segment is currently asset sensitive overall.
During a period of rising interest rates, a negative GAP would tend to affect net interest income adversely, while a positive GAP would tend to result in an increase in net interest income. ​ As illustrated in the table below, the banking segment is currently asset sensitive overall.
An integral component of our interest rate risk management strategy is our execution of forward commitments to sell MBSs to minimize the impact on earnings resulting from significant fluctuations in the fair value of mortgage loans held for sale and IRLCs caused by changes in interest rates. ​ As a result of our mortgage servicing business, we have a portfolio of retained MSR.
An integral component 107 Table of Contents of our interest rate risk management strategy is our execution of forward commitments to sell MBSs to minimize the impact on earnings resulting from significant fluctuations in the fair value of mortgage loans held for sale and IRLCs caused by changes in interest rates. ​ As a result of our mortgage servicing business, we have a portfolio of retained MSR.
To mitigate the risk of loss, we have established policies and procedures, which include guidelines on the amount of exposure to interest rate changes we are willing to accept. ​ Consolidated ​ At December 31, 2024, total debt obligations on our consolidated balance sheet, excluding short-term borrowings and unamortized debt issuance costs and premiums, were $350 million, and was all subject to fixed interest rates.
To mitigate the risk of loss, we have established policies and procedures, which include guidelines on the amount of exposure to interest rate changes we are willing to accept. ​ Consolidated ​ At December 31, 2025, total debt obligations on our consolidated balance sheet, excluding short-term borrowings and unamortized debt issuance costs and premiums, were $150 million, and was all subject to fixed interest rates.
Basis risk exists when different yield curves or pricing indices do not change at precisely the same time or in the same magnitude such that assets and liabilities with the same maturity are not all affected equally.
Basis risk exists when different yield curves or pricing indices do not change at precisely the same time or in the 104 Table of Contents same magnitude such that assets and liabilities with the same maturity are not all affected equally.
The timing and magnitude of future interest rate movements, along with changes to the balance 110 Table of Contents sheet composition, may impact projected changes in net interest income.
The timing and magnitude of future interest rate movements, along with changes to the balance sheet composition, may impact projected changes in net interest income.
On January 15, 2025, we redeemed our outstanding $150.0 million aggregate principal amount of Senior Notes using cash on hand. ​ As noted above within the discussion for each business segment, on a consolidated basis, our primary component of market risk is sensitivity to changes in interest rates.
On January 15, 2025 and May 15, 2025 we redeemed our outstanding $150.0 million aggregate principal amount of Senior Notes and our outstanding $50.0 million aggregate principal amount of 2030 Subordinated Notes, respectively, using cash on hand. ​ As noted above within the discussion for each business segment, on a consolidated basis, our primary component of market risk is sensitivity to changes in interest rates.
Refer to the discussion in the “Banking Segment” section above that provides more details regarding sources of interest rate risk and asset/liability management policies and procedures employed to manage our interest-earning assets and interest-bearing 112 Table of Contents liabilities, and potential future repositioning of our GAP position, thereby attempting to control the volatility of net interest income, without having to incur unacceptable levels of risk. ​ The table below shows the estimated impact of a range of changes in interest rates on net interest income on a consolidated basis (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in ​ Changes in ​ ​ Interest Rates ​ Net Interest Income ​ ​ (basis points) Amount Percent December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ $ 28,818 6.56 % ​ +100 ​ $ 13,560 3.09 % ​ -50 ​ $ (26,356) (6.00) % ​ -100 ​ $ (46,457) (10.58) % ​ -200 ​ $ (59,571) (13.57) % December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ $ 50,675 ​ 11.20 % ​ +100 ​ $ 26,814 ​ 5.92 % ​ -50 ​ $ (13,740) ​ (3.04) % ​ -100 ​ $ (27,726) ​ (6.13) % ​ -200 ​ $ (57,406) ​ (12.68) % ​ The projected changes in the table above were in compliance with established internal policy guidelines.
Refer to the discussion in the “Banking Segment” section above that provides more details regarding sources of interest rate risk and asset/liability management policies and procedures employed to manage our interest-earning assets and interest-bearing liabilities, and potential future repositioning of our GAP position, thereby attempting to control the volatility of net interest income, without having to incur unacceptable levels of risk. ​ The table below shows the estimated impact of a range of changes in interest rates on net interest income on a consolidated basis (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in ​ Changes in ​ ​ Interest Rates ​ Net Interest Income ​ ​ (basis points) ​ ​ ​ Amount ​ ​ ​ Percent ​ ​ ​ December 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ $ 39,702 8.45 % ​ +100 ​ $ 19,958 4.25 % ​ -50 ​ $ (8,485) (1.81) % ​ -100 ​ $ (16,910) (3.60) % ​ -200 ​ $ (25,981) (5.53) % December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ $ 28,818 ​ 6.56 % ​ +100 ​ $ 13,560 ​ 3.09 % ​ -50 ​ $ (26,356) ​ (6.00) % ​ -100 ​ $ (46,457) ​ (10.58) % ​ -200 ​ $ (59,571) ​ (13.57) % ​ The projected changes in the table above were in compliance with established internal policy guidelines.
Because of inherent limitations in interest rate GAP analysis, the banking segment uses multiple interest rate risk measurement techniques. Simulation analysis is used to subject the current repricing conditions to rising and falling interest rates in increments and decrements of 50 to 100 basis points to determine the effect on net interest income changes for the next twelve months.
Simulation analysis is used to subject the current repricing conditions to rising and 105 Table of Contents falling interest rates in increments and decrements of 50 to 100 basis points to determine the effect on net interest income changes for the next twelve months.
Also, unlike GAP analysis, simulation analysis takes into account the effect of embedded options in the securities and loan portfolios as well as any off-balance sheet derivatives. ​ The table below shows the estimated impact of a range of changes in interest rates on net interest income and on economic value of equity for the banking segment (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in ​ Changes in ​ ​ Changes in ​ Interest Rates ​ Net Interest Income ​ ​ Economic Value of Equity ​ (basis points) Amount Percent Amount Percent December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ $ 47,270 11.49 % ​ $ 170,230 10.84 % ​ +100 ​ $ 24,101 5.86 % ​ $ 99,348 6.33 % ​ -50 ​ $ (11,409) (2.77) % ​ $ (70,531) (4.49) % ​ -100 ​ $ (21,983) (5.34) % ​ $ (149,355) (9.51) % ​ -200 ​ $ (28,730) (6.99) % ​ $ (337,987) (21.53) % December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ $ 36,419 ​ 9.05 % ​ $ 228,115 ​ 15.12 % ​ +100 ​ $ 19,731 ​ 4.90 % ​ $ 139,016 ​ 9.22 % ​ -50 ​ $ (10,352) ​ (2.57) % ​ $ (97,002) ​ (6.43) % ​ -100 ​ $ (20,980) ​ (5.21) % ​ $ (210,224) ​ (13.94) % ​ -200 ​ $ (43,972) ​ (10.92) % ​ $ (455,595) ​ (30.20) % ​ The projected changes in the table above were in compliance with established internal policy guidelines and are based on numerous assumptions.
Also, unlike GAP analysis, simulation analysis takes into account the effect of embedded options in the securities and loan portfolios as well as any off-balance sheet derivatives. ​ The table below shows the estimated impact of a range of changes in interest rates on net interest income and on economic value of equity for the banking segment (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in ​ Changes in ​ ​ Changes in ​ Interest Rates ​ Net Interest Income ​ ​ Economic Value of Equity ​ (basis points) ​ ​ ​ Amount ​ ​ ​ Percent ​ ​ ​ ​ ​ ​ Amount ​ ​ ​ Percent December 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ $ 30,469 6.90 % ​ $ 166,983 8.96 % ​ +100 ​ $ 15,371 3.48 % ​ $ 93,199 5.00 % ​ -50 ​ $ (4,202) (0.95) % ​ $ (71,006) (3.81) % ​ -100 ​ $ (5,876) (1.33) % ​ $ (159,611) (8.56) % ​ -200 ​ $ (1,513) (0.34) % ​ $ (391,594) (21.01) % December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ $ 47,270 ​ 11.49 % ​ $ 170,230 ​ 10.84 % ​ +100 ​ $ 24,101 ​ 5.86 % ​ $ 99,348 ​ 6.33 % ​ -50 ​ $ (11,409) ​ (2.77) % ​ $ (70,531) ​ (4.49) % ​ -100 ​ $ (21,983) ​ (5.34) % ​ $ (149,355) ​ (9.51) % ​ -200 ​ $ (28,730) ​ (6.99) % ​ $ (337,987) ​ (21.53) % ​ The projected changes in the table above were in compliance with established internal policy guidelines and are based on numerous assumptions.
These projected changes are based on numerous assumptions of growth and changes in the mix of assets or liabilities. The projected changes in net interest income are being impacted by the heightened level of cash balances, which represent a significant portion of our asset sensitivity given simulation analysis assumptions/limitations.
The projected changes in net interest income are being impacted by the heightened level of cash balances, which represent a significant portion of our asset sensitivity given simulation analysis assumptions/limitations and may not necessarily reflect the 108 Table of Contents manner in which actual cash flows, yields and costs respond to changes in market interest rates.
The impact of rate movements will change with the shape of the yield curve, including any changes in steepness or flatness and inversions at any points on the yield curve. ​ Broker-Dealer Segment ​ Our broker-dealer segment is exposed to market risk primarily due to its role as a financial intermediary in customer transactions, which may include purchases and sales of securities, use of derivatives and securities lending activities, and in our trading activities, which are used to support sales, underwriting and other customer activities.
In addition, this analysis does not consider actions that management might employ in the future in response to changes in interest rates, as well as changes in earning asset and costing liability balances. ​ Broker-Dealer Segment ​ Our broker-dealer segment is exposed to market risk primarily due to its role as a financial intermediary in customer transactions, which may include purchases and sales of securities, use of derivatives and securities lending activities, and in our trading activities, which are used to support sales, underwriting and other customer activities.
Our funding sources are generally short-term with interest rates that can vary daily. ​ The following table categorizes the broker-dealer segment’s net trading securities which are subject to interest rate and market price risk (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ 1 Year ​ > 1 Year ​ > 5 Years ​ ​ ​ ​ ​ ​ ​ or Less ​ to 5 Years ​ to 10 Years ​ > 10 Years ​ Total ​ Trading securities, at fair value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal obligations ​ $ 141 ​ $ 24,307 ​ $ 37,711 ​ $ 181,917 ​ $ 244,076 ​ U.S. government and government agency obligations ​ ​ 3,860 ​ ​ (9,740) ​ ​ (19,510) ​ ​ 156,386 ​ ​ 130,996 ​ Corporate obligations ​ ​ 15,691 ​ ​ 17,994 ​ ​ 19,180 ​ ​ 23,650 ​ ​ 76,515 ​ Total debt securities ​ ​ 19,692 ​ ​ 32,561 ​ ​ 37,381 ​ ​ 361,953 ​ ​ 451,587 ​ Corporate equity securities ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Other ​ ​ 6,359 ​ ​ — ​ ​ — ​ ​ — ​ ​ 6,359 ​ ​ ​ $ 26,051 ​ $ 32,561 ​ $ 37,381 ​ $ 361,953 ​ $ 457,946 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average yield ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal obligations ​ ​ 0.01 % ​ 4.46 % ​ 4.40 % ​ 5.10 % ​ 4.48 % U.S. government and government agency obligations ​ ​ 4.21 % ​ 4.29 % ​ 3.72 % ​ 3.39 % ​ 3.56 % Corporate obligations ​ ​ 5.20 % ​ 5.78 % ​ 4.97 % ​ 4.66 % ​ 5.08 % ​ 111 Table of Contents Derivatives are used to support certain customer programs and hedge our related exposure to interest rate risks. ​ Our broker-dealer segment is engaged in various brokerage and trading activities that expose us to credit risk arising from potential non-performance from counterparties, customers or issuers of securities.
Our funding sources are generally short-term with interest rates that can vary daily. ​ The following table categorizes the broker-dealer segment’s net trading securities which are subject to interest rate and market price risk (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ 1 Year ​ > 1 Year ​ > 5 Years ​ ​ ​ ​ ​ ​ ​ or Less ​ to 5 Years ​ to 10 Years ​ > 10 Years ​ Total ​ Trading securities, at fair value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal obligations ​ $ 726 ​ $ 22,664 ​ $ 79,497 ​ $ 192,728 ​ $ 295,615 ​ U.S. government and government agency obligations ​ ​ 2,275 ​ ​ (5,047) ​ ​ (8,313) ​ ​ 229,960 ​ ​ 218,875 ​ Corporate obligations ​ ​ 13,396 ​ ​ 5,485 ​ ​ 10,360 ​ ​ 13,901 ​ ​ 43,142 ​ Total debt securities ​ ​ 16,397 ​ ​ 23,102 ​ ​ 81,544 ​ ​ 436,589 ​ ​ 557,632 ​ Corporate equity securities ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Other ​ ​ 21,786 ​ ​ — ​ ​ — ​ ​ — ​ ​ 21,786 ​ ​ ​ $ 38,183 ​ $ 23,102 ​ $ 81,544 ​ $ 436,589 ​ $ 579,418 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average yield ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal obligations ​ ​ 5.76 % ​ 5.40 % ​ 3.26 % ​ 5.21 % ​ 4.70 % U.S. government and government agency obligations ​ ​ 3.67 % ​ 2.11 % ​ 4.08 % ​ 5.84 % ​ 5.41 % Corporate obligations ​ ​ 3.44 % ​ 4.26 % ​ 5.45 % ​ 5.43 % ​ 4.73 % ​ Derivatives are used to support certain customer programs and hedge our related exposure to interest rate risks. ​ Our broker-dealer segment is engaged in various brokerage and trading activities that expose us to credit risk arising from potential non-performance from counterparties, customers or issuers of securities.
To help neutralize interest rate sensitivity, the banking segment has kept the terms of most of its borrowings under one year as shown in the following table (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ 3 Months or > 3 Months to > 1 Year to > 3 Years to ​ ​ ​ ​ ​ ​ Less ​ 1 Year ​ 3 Years ​ 5 Years ​ > 5 Years ​ Total Interest sensitive assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 4,229,642 ​ $ 1,313,646 ​ $ 1,761,407 ​ $ 640,709 ​ $ 470,810 ​ $ 8,416,214 ​ Securities ​ 455,319 ​ 184,913 ​ 422,634 ​ 318,743 ​ 910,247 ​ 2,291,856 ​ Federal funds sold and securities purchased under agreements to resell ​ 2,141,447 ​ — ​ — ​ — ​ — ​ 2,141,447 ​ Other interest sensitive assets ​ 8,495 ​ — ​ — ​ — ​ 59,569 ​ 68,064 ​ Total interest sensitive assets ​ 6,834,903 ​ 1,498,559 ​ 2,184,041 ​ 959,452 ​ 1,440,626 ​ 12,917,581 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest sensitive liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing checking ​ $ 6,891,795 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 6,891,795 ​ Savings ​ 221,667 ​ — ​ — ​ — ​ — ​ 221,667 ​ Time deposits ​ 670,162 ​ 383,586 ​ 144,354 ​ 50,939 ​ — ​ 1,249,041 ​ Notes payable and other borrowings ​ 514,430 ​ — ​ — ​ — ​ — ​ 514,430 ​ Total interest sensitive liabilities ​ 8,298,054 ​ 383,586 ​ 144,354 ​ 50,939 ​ — ​ 8,876,933 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest sensitivity gap ​ $ (1,463,151) ​ $ 1,114,973 ​ $ 2,039,687 ​ $ 908,513 ​ $ 1,440,626 ​ $ 4,040,648 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cumulative interest sensitivity gap ​ $ (1,463,151) ​ $ (348,178) ​ $ 1,691,509 ​ $ 2,600,022 ​ $ 4,040,648 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of cumulative gap to total interest sensitive assets ​ (11.33) % (2.70) % 13.09 % 20.13 % 31.28 % ​ ​ ​ ​ The positive GAP in the interest rate analysis indicates that banking segment net interest income would generally rise if rates increase.
To help neutralize interest rate sensitivity, the banking segment has kept the terms of most of its borrowings under one year as shown in the following table (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ ​ 3 Months or ​ ​ ​ > 3 Months to ​ ​ ​ > 1 Year to ​ ​ ​ > 3 Years to ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less ​ 1 Year ​ 3 Years ​ 5 Years ​ > 5 Years ​ Total Interest sensitive assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 4,680,271 ​ $ 1,429,230 ​ $ 1,653,881 ​ $ 670,094 ​ $ 426,707 ​ $ 8,860,183 ​ Securities ​ 379,209 ​ 214,782 ​ 486,765 ​ 375,573 ​ 821,490 ​ 2,277,819 ​ Federal funds sold and securities purchased under agreements to resell ​ 1,035,081 ​ — ​ — ​ — ​ — ​ 1,035,081 ​ Other interest sensitive assets ​ 14,319 ​ — ​ — ​ — ​ 59,790 ​ 74,109 ​ Total interest sensitive assets ​ 6,108,880 ​ 1,644,012 ​ 2,140,646 ​ 1,045,667 ​ 1,307,987 ​ 12,247,192 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest sensitive liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing checking ​ $ 6,627,225 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 6,627,225 ​ Savings ​ 225,612 ​ — ​ — ​ — ​ — ​ 225,612 ​ Time deposits ​ 633,762 ​ 441,221 ​ 83,496 ​ 7,965 ​ 73 ​ 1,166,517 ​ Notes payable and other borrowings ​ 219,528 ​ 30 ​ 106 ​ 158 ​ 826 ​ 220,648 ​ Total interest sensitive liabilities ​ 7,706,127 ​ 441,251 ​ 83,602 ​ 8,123 ​ 899 ​ 8,240,002 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest sensitivity gap ​ $ (1,597,247) ​ $ 1,202,761 ​ $ 2,057,044 ​ $ 1,037,544 ​ $ 1,307,088 ​ $ 4,007,190 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cumulative interest sensitivity gap ​ $ (1,597,247) ​ $ (394,486) ​ $ 1,662,558 ​ $ 2,700,102 ​ $ 4,007,190 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of cumulative gap to total interest sensitive assets ​ (13.04) % (3.22) % 13.58 % 22.05 % 32.72 % ​ ​ ​ ​ The positive GAP in the interest rate analysis indicates that banking segment net interest income would generally rise if rates increase.
Added
Because of inherent limitations in interest rate GAP analysis, the banking segment uses multiple interest rate risk measurement techniques.
Added
The impact of rate movements will change with the shape of the yield curve, including any changes in steepness or flatness and inversions at any points on the yield curve. Since the assumptions used relative to changes in interest rates are uncertain, the simulation analysis may not be indicative of actual results, particularly in times of stress and uncertainty.
Added
These projected changes are based on numerous assumptions of growth and changes in the mix of assets or liabilities.

Other HTH 10-K year-over-year comparisons