HTH 10-K & 10-Q changes, risk factors and insider trading

The following discussion sets forth what management currently believes could beare 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. OtherThe occurrence of any of the following risks, as well as other risks and uncertainties, including those not currently known to us, could also negatively impact our business, results of operations and financial condition.condition Thus,and could cause the followingtrading should not be considered a complete discussion of all of the risks and uncertainties we may face, and the order of their respective significance may change. Below is a summaryprice of our materialcommon riskstock factorsto withdecline aand moreyou detailedcould discussionlose following.all or part of your investment.

The estimates of fair value as of the consummation of each of the Bank Transactions were based on economic conditions at such time and on Bank management’s projections concerning both future economic conditions and the ability of the borrowers to continue to repay their loans. 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. Further, the allowance for credit losses established for new loans may prove to be inadequate to cover actual losses, especially if economic conditions worsen.

EventsHistorically, inhigh-profile early 2023 relating to thebank failures of certain banking entities have causedincreased generalmarket uncertainty and concernconcerns regarding the liquidity adequacy of the banking sector as a whole. Although we were not directly affected byDuring these bank failures,times, the resulting speed and ease inwith which news,news includingand social media commentary,commentary spread led depositors to withdraw or attempt to withdraw their funds from these and other financial institutions as well asand caused the stock prices of many financial institutions to become volatile. InAlthough 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.

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 attackscyber-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. Such cyber incidentsincidents, 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. We also utilize relationships with third parties to aid in a significant portion of our information systems, communications, data management and transaction processing. These third parties with which we do business may also be sources of cybersecurity or other technological risks, including operational errors, system interruptions or breaches, unauthorized disclosure of confidential information and misuse of intellectual property, and have experienced cyber attacks.cyber-attacks. Evolving technologies and the increased use of artificial intelligence and automation by third parties further increase the risk of cyber attackscyber-attacks and threats of cyber attackscyber-attacks against us or those third parties that we depend upon. If our third-party service providers encounter any of these issues, we could be exposed to disruption of service, reputationreputational damages, and litigation risk, any of which could have a material adverse effect on our business.

The continuedincreased occurrenceprevalence 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. For example, in 2018, the State of California adopted the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (“CPRACCPA”) 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. Other state privacy laws with similarities to the CCPA/CPRA,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. Iowa,Nineteen Indiana, and Tennesseestates have eachenacted recently passed their own generalcomprehensive consumer data privacy laws, all of which arewill expected tohave come into force laterby in2026. 2025Additionally, under the Gramm-Leach-Bliley Act of 1999 and 2026,Regulation andS-P, therefinancial haveinstitutions beenare ongoing discussions and proposals in the U.S. Congress with respectrequired to newprotect federal datathe privacy and security lawsof non-public personal information. The SEC adopted amendments to whichRegulation weS-P, wouldeffective becomestarting subjecton ifDecember enacted.3, 2025 that expand the requirements imposed on covered financial institutions, including by requiring the adoption of an incident response program, requiring covered institutions to provide notice in the event of certain data breaches within a specified time period, and imposing additional requirements regarding the engagement and oversight of service providers.

These newly effective, upcoming and evolving laws and regulations could result in increased operating expenses or increase our exposure to the risk of litigation or regulatory inquiries or proceedings.

Although we devote significant resources to maintain and regularly upgrade our systems and networks to safeguard critical business applications, there is no guarantee that these measures or any other measures can provide absolute security. 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 attacksextortions; and other events. In addition, our protective measures may not promptly detect intrusions, and we may experience losses or incur costs or other damage related to intrusions that go undetected or go undetected for significant periods of time, at levels that adversely affect our financial results or reputation. Further, because the methods used to cause cyber attackscyber-attacks change frequently, or in some cases cannot be recognized until launched, we may be unable to implement preventative measures or proactively address these methods until they are discovered. Cyber threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. For example, during the second quarter of 2018, we became the victim of a “spear phishing” attack on one of our employees in which we suffered a $4.0 million wire fraud loss and sensitive customer information was stolen. As a result of this attack, we incurred costs to provide identity protection services, including credit monitoring, to customers who may have been impacted and other legal and professional services, and may also incur expenses in the future including legal and professional expenses and claims for damages. Additional challenges are posed by external extremist parties, including foreign state actors, in some circumstances, as a means to promote political ends. 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,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. Such events could also cause interruptions or malfunctions in our operations. We maintain cyber risk insurance, but this insurance may not be sufficient to cover all of our losses from any future breaches of our systems.

As of December 31, 2024,2025, commercial real estate loans comprised approximately 40%41% of our banking segment’s loan portfolio. Commercial real estate loans generally involve a greater degree of credit risk than residential real estate loans because they typically have larger balances and are more affected by adverse conditions in the economy. Because 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. 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, thisour portfolio, which, accordingly, could have a material adverse effect on the Company’s business, financial condition and 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. Each of these factors may adversely affect our fees and costs.

The majority of our assets are monetary in nature and, as a result, we are subject to significant risk from changes in interest rates. Between August 2019 and March 2020, the Federal Open Market Committee of the Federal Reserve Board decreased its target range for the federal funds rate by 200 basis points, while between March 2022 and December 2023, it raised the target range for the federal funds rate by 525 basis points. Between September 2024 and December 2024,2025, the Federal Reserve Board decreased its target range for the federal funds rate by 100175 basis points and indicated that further changes may occur in 2025.points. Changes in interest rates have in the past and may continue to impact our net interest income in our banking segment in the future as well as the valuation of our assets and liabilities in each of our segments. Earnings in our banking segment are significantly dependent on our net interest income, which is the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. 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. In either event, if market interest rates should move contrary to our position, this “gap” may work against us, and our results of operations and financial condition may be adversely affected. Given the potential for an adverse impact on our net interest income associated with interest rate cycle transitions, we periodically evaluate our current “gap” position and determine whether a repositioning of the banking segment’s balance sheet is appropriate. Asymmetrical changes in interest rates, such as if short-term rates increase or decrease at a faster rate than long-term rates, can affect the slope of the yield curve. A continued inversion of the yield curve, as measured by the difference between 10-year U.S. 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.

Inflation rose sharply at the end of 2021 and continued rising into 20242025 at elevated levels. While thethere risehas inbeen moderation of inflation hascompared slowedto duringrecent years, the latteroverall halfrate of 2024,inflation inflationaryremains pressuresabove arethe stillU.S. expectedFederal toReserve’s remaintarget elevated throughout 2025.levels. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses. Consequently, the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely impact our results of operations and financial condition. Similarly, rising interest rates will negatively impact our mortgage business by making home mortgages more expensive for home buyers and by making mortgage refinancing transactions less likely, which would adversely impact our results of operations and financial condition in PrimeLending. Furthermore, a prolonged period of inflation could cause wages and other costs to Hilltop and its subsidiaries to increase, which could adversely affect our results of operations and financial condition.

Like most financial services companies, we significantly depend on technology to deliver our products and services and to otherwise conduct business. The financial services industry is continually undergoing rapid technology change with frequent introductions of new technology-driven products and services, including increased usage of artificial intelligence and automation. To remain technologically competitive and operationally efficient, we have either begun the significant investment in or have plans to invest in new technological solutions, substantial core system upgrades and other technology enhancements within each of our operating segments and corporate. Many of these solutions and enhancements have a significant duration, include phased implementation schedules, are tied to critical systems, and require substantial internal and external resources for design and implementation. Such external resources may be relied upon to provide expertise and support to help implement, maintain and/or service certainMany of our corecompetitors technologyhave solutions.greater resources to develop these and other new technologies without reliance on third-party vendors or developers, which can reduce their costs and exposure to third-party risks, which could put us at a competitive disadvantage.

We conduct our banking operations primarily in Texas. At December 31, 2024,2025, 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. Specifically, 28%,32%, 17%, 8%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. Accordingly, economic conditions in Texas have a significant impact on the ability of the Bank’s customers to repay loans, the value of the collateral securing loans, our ability to sell the collateral upon any foreclosure, and the stability of the Bank’s deposit funding sources. Natural disasters, such as Hurricane Harvey in 2017 and Winter Storm Uri in 2021, may also have an adverse impact on the foregoing conditions. Further, low crude oil prices may have a more profound effect on the economy of energy-dominant states such as Texas. The Bank has loans extended to businesses that depend on the energy industry including those within the exploration and production, oilfield services, pipeline construction, distribution and transportation sectors. 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. Moreover, natural disasters, such as Hurricane Harvey in 2017 and Winter Storm Uri, in 2021 may also have an adverse impact on local economic conditions.

We continue to refine our risk management techniques, strategies and assessment methods on an ongoing basis. However, ourOur 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. For example, we might fail to identify or anticipate particular risks, or the systems that we use, and that are used within our business segments generally, may not be capable of identifying certain risks. Certain of our strategies for managing risk are based upon observed historical market behavior. 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 exposure could limit our ability to manage risks. In addition, any risk management failures could cause our losses to be significantly greater than the historical measures indicate. Further, our quantified modeling does not take all risks into account. As a result, we also take a qualitative approach in reducing our risk, although our qualitative approach to managing those risks could also prove insufficient, exposing us to material unanticipated losses.

Climate change and certain regulations and responses thereto could adversely affect our business and performance, including indirectly through impacts on our customers.

We are a financial holding company engaged in the business of managing, controlling and operating our subsidiaries. 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.obligations Theand to pay dividends to our stockholders. PCC, the Bank and Securities Holdings are subject to significant regulatory restrictions limiting their ability to declare and pay dividends to us. 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.obligations or pay dividends to our stockholders.

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. Effective internal controls are necessary for us to provide timely and reliable financial reports and effectively prevent fraud. We have identified control deficiencies that constituted a material weakness in our internal controls and procedures in the past and may experience a material weakness in future years. If we fail to maintain adequate internal controls, our financial statements may not accurately reflect our financial condition. 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.securities and we could be subject to sanctions or investigations by the SEC or other regulatory authorities.

In light of continuing macroeconomic challenges in the mortgage industryindustry, givenincluding tight housing inventories and mortgage interest rate levels, our mortgage origination segment experienced lower-than-forecasted operating results during 2022 and 2023. These headwinds, coupled with inflationary pressures associated with compensation, occupancy and software costs within our business segments since 2022 have had, and are expected to continue to have, an adverse impact on our operating results during 2025. Given the potential impacts of the operating performance of our reporting segments and overall economic conditions, actual results may differ materially from our current estimates as the scope of such impacts evolves or if the duration of business disruptions is longer than currently anticipated.

We are dependent on our management team, and the loss of members of our seniorexisting executivemanagement officersteam or other key employees could impair our relationship with customers and adversely affect our business and financial results.

Our ability to attract and retain customers and conduct our business could be adversely affected to the extent our reputation is damaged. Reputational risk, or the risk to our business, earnings and capital from negative public opinion regarding our company, or financial institutions in general (such as thehistoric high-profile bank failures in the first half of 2023), is inherent in our business. 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. Negative public opinion could result from actual or alleged conduct in any number of activities or circumstances, including lending or foreclosure practices; sales practices; corporate governance and potential conflicts of interest; ethical failures or fraud, including alleged deceptive or unfair lending or pricing practices; regulatory compliance; protection of customer information; cyber attacks,cyber-attacks, whether actual, threatened, or perceived; negative news about us or the financial institutions industry generally; general company performance; or actions taken by government regulators and community organizations in response to such activities or circumstances. Evolving federal and state scrutiny of account onboarding, offboarding, and access to banking services could also increase our compliance and reputational risks and we could face criticism or penalties if regulators find our account actions insufficiently supported or discriminatory. Conflicting standards and rising public attention to alleged “debanking” may increase complaint volume, compliance costs, and reputational exposure and any of these developments could materially affect our business, financial condition, or results of operations. Furthermore, our failure to address, or the perception that we have failed to address, theseany of the foregoing issues appropriately could impact our ability to keep and attract customers and/or employees and could expose us to litigation and/or regulatory action, which could have an adverse effect on our business and results of operations.

In addition, stockholders, customers and other stakeholders have begun to consider how corporations are addressing environmental, social and governance (“ESG”) issues. Governments,regulators, investors, customers and the general public are increasingly focused on environmental, social and governance (“ESG”) practices and disclosures, and views about ESG are diverse and rapidly changing and have become a consideration in investment decisions. These shifts in investing priorities may result in adverse effects on the trading price of our common stock if investors determine that we have not made sufficient progress on ESG matters. We could also face potential negative ESG-related publicity in traditional media or social media if stockholders or other stakeholders determine that we have not adequately considered or addressed ESG matters. IfAt we,the same time, certain stakeholders have increasingly expressed or ourpursued relationshipsopposing views, legislation, and investment expectations with certainrespect customers,to vendorsESG initiatives, including the enactment or suppliers, became the subjectproposal of negative“anti-ESG” publicity,legislation ouror ability to attract and retain customers and employees, and our financial condition and results of operations, could be adversely impacted.policies.

Our indebtedness may affect our ability to operate our business,business and may have a material adverse effect on our financial condition and results of operations. We may incur additional indebtedness, including secured indebtedness.

At December 31, 2024,2025, on a consolidated basis, we had total deposits of $11.1$10.9 billion and other indebtedness of $1.2$0.8 billion, including $150.0 million in aggregate principal amount of 5% senior notes due 2025 (the “Senior Notes”), which have since been redeemed in full, $50.0 million aggregate principal amount of 5.75% fixed-to-floating rate subordinated notes due 2030 (the “2030 Subordinated Notes”) and $150.0 million aggregate principal amount of 6.125%our fixed-to-floating rate subordinated notes due 2035 (the “2035 Subordinated Notes” and, collectively with the 2030 Subordinated Notes, the “Subordinated Notes”).Notes. Our significant amount of indebtedness could have important consequences, such as:

Subject to the restrictions in the indentures governing the 2035 Subordinated Notes, we may incur significant additional indebtedness, including secured indebtedness. 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.

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. 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. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of existing or future debt agreements may restrict us from adopting some of these alternatives. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations, sell equity and/or negotiate with our lenders and other creditors to restructure the applicable debt in order to meet our debt service and other obligations. 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. Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due.

The indenturesindenture 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 indenturesindenture 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:

Any of these restrictions could limit our ability to plan for or react to market conditions and could otherwise restrict corporate activities. Any failure to comply with these covenants could result in a default under the indenturesindenture 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 indenturesindenture governing the 2035 Subordinated Notes. In addition, a default under the indenturesindenture governing the 2035 Subordinated Notes could trigger a cross default under the agreements governing our existing and future indebtedness. Our operating results may not be sufficient to service our indebtedness or to fund our other expenditures, and we may not be able to obtain financing to meet these requirements.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships. We have exposure to many different counterparties and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, credit unions, investment banks, mutual and hedge funds, and other institutional clients. As a result, defaults by, or even negative speculation about, one or more financial services institutions, or the financial services industry in general, have led to market-wide liquidity problems in the past and could lead to losses or defaults by us or by other institutions. For example, past high-profile bank failures during the first half of 2023 putcreated additional financial pressure and uncertainty onfor 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. In addition, our credit risk may be exacerbated when we hold collateral that cannot be realized or is liquidated at prices not sufficient to recover the full amount of the receivable due to us. Any such losses could be material and could materially and adversely affect our business, financial condition, results of operations or cash flows.

Our banking segment primarily competes with national, regional and community banks within various markets where the Bank operates. The banking business in Texas has remained competitive over the past several years, and we expect the level of competition we face to further increase. The Bank also faces competition from many other types of financial institutions, including savings and loan associations, savings banks, finance companies and credit unions. A number of these banks and other financial institutions have substantially greater resources and lending limits, larger branch systems and a wider array of banking services than we do. We also compete with other providers of financial services, such as money market mutual funds, brokerage and investment banking firms, consumer finance companies, pension trusts, governmental organizations and increasingly fintech companies, each of which may offer more favorable financing than we are able to provide. In addition, some of our non-bank competitors are not subject to the same extensive regulations that govern us. The banking business in Texas has remained competitive over the past several years, and we expect the level of competition weWe face to further increase. Competitioncompetition 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.area. Other factors encountered in competing for savings deposits areinclude convenient office locations, interest rates and fee structures of products offered. 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. 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 services. Our profitability depends on our ability to compete effectively in these markets. 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.

The financial advisory and investment banking industries also are intensely competitive industries and will likely remain competitive. 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. In addition to competition from firms currently in the industry, there has been increasing competition from others offering financial services, including automated trading and other services based on technological innovations. Our broker-dealer business competes on the basis of a number of factors, including the quality of advice and service, technology, product selection, innovation, reputation, client relationships and price. 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. Increased competition may result in reduced revenue and loss of market share. Further, as a strategic response to changes in the competitive environment, our broker-dealer business may from time to time make certain pricing, service or marketing decisions that also could materially and adversely affect our business and results of operations.

Our mortgage origination business faces vigorous competition from banks and other financial institutions, including large financial institutions as well as independent mortgage banking companies, commercial banks, savings banks and savings and loan associations. 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. The ability to attract and retain skilled mortgage origination professionals is critical to our mortgage origination business. 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.

Acquisitions by financial institutions are subject to approval by a variety of federal and state regulatory agencies. The process for obtaining these required regulatory approvals hascan becomevary substantiallymaterially moredepending difficulton a number of factors that are not in recentour years.control, including the leadership of the relevant agencies. 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 ActCRA issues, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations and other similar laws and regulations. We may fail to pursue, evaluate or complete strategic and competitively significant acquisition opportunities as a result of our inability, or perceived or anticipated inability, to obtain regulatory approvals in a timely manner, under reasonable conditions or at all. 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.

The U.S. Congress, state legislatures, and federal and state regulatory agencies frequently revise banking and securities laws, regulations and policies. For example, several aspects of the Dodd-Frank Act have affected our business, including, without limitation, increased capital requirements, increased mortgage regulation, restrictions on proprietary trading in securities, restrictions on investments in hedge funds and private equity funds, executive compensation restrictions, potential federal oversight of the insurance industry and disclosure and reporting requirements. Although the EGRRCPA is intended to ease the regulatory burden imposed by the Dodd-Frank Act with respect to company-run stress testing, resolution plans, the Volcker Rule, high volatility commercial real estate exposures, and real estate appraisals, at this time, itIt remains difficult to predict thehow fullcurrent extentor potential changes to which the Dodd-Frank Act, the EGRRCPA, the AML 2020 Act or the resultingapplicable rules and regulations will affect our business. 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.

We cannot predict whether or in what form any other proposed regulations or statutes will be adopted or the extent to which our business may be affected by any new regulation or statute. These changes become less predictable, yet more likely to occur, following the transition of power from one presidential administration to another, especially as occurred in 2025, when it involves a change in the governing political party. New agency leaders have different priorities and, as a result, there have been and will be a number of proposed changes to regulations, guidance or supervisory tactics that impact our business. 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. Additionally, under the current U.S. administration, a level of heightened uncertainty exists with respect to the future of the CFPB, including its structure, staffing, and responsibilities. It remains uncertain whether, or to what extent, changes at the CFPB will impact our business and the overall regulatory environment. We cannot predict whether future executive or legislative actions regarding the CFPB, consumer laws, and related regulations may impact the industry generally, including potential actions that state or other federal regulators may take in response to such executive or legislative actions.

We are subject to regulatory requirements specifying minimum amounts and types of capital that we must maintain. From time to time, the regulators change these regulatory capital adequacy guidelines. After the recent withdrawal of a previously proposed rule, the federal banking agencies are considering additional changes to the Basel III capital requirements. It is not clear how the proposed rule, if any, will impact Hilltop, PCC or the Bank. 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. The application of more stringent capital requirements for HilltopHilltop, PCC and PlainsCapitalthe 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.

In January 2024,2025, our board of directors authorized a new stock repurchase program through January 2025,2026, pursuant to which we arewere authorized to repurchase, in the aggregate, up to $75.0$100.0 million of our outstanding common stock.stock, which authorization was increased to $135.0 million in July 2025, and to $185.0 million in October 2025. During 2024,2025, we paid $19.9$184.0 million to repurchase an aggregate of 640,0425,705,205 shares of our common stock at an average price of $31.04$32.26 per share pursuant to the stock repurchase program. These shares were returned to the pool of authorized but unissued shares of common stock.

In January 2025,2026, our board of directors authorized a new stock repurchase program through January 2026,2027, pursuant to which we are authorized to repurchase, in the aggregate, up to $100.0$125.0 million of our outstanding common stock. 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.

The following discussion is intended to help the reader understand our results of operations and financial condition and is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements and the accompanying notes thereto commencing on page F-1. 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. 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,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. (a wholly owned subsidiary of Securities Holdings), references to “Momentum Independent Network” refer to Momentum Independent Network Inc. (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.

During 2024,2025, we paid an aggregate of $19.9$184.0 million to repurchase shares of our common stock,stock and declared and paid total common dividends of $44.3$45.4 million.

On January 25,30, 2024,2025, our board of directors authorized a new stock repurchase program through January 2025,2026, pursuant to which we arewere authorized to repurchase, in the aggregate, up to $75.0$100.0 million of our outstanding common stock.stock, which authorization was increased to $135.0 million in July 2025, and to $185.0 million in October 2025.

We present certain measures in our selected financial data that are not measures of financial performance recognized by GAAP. “Tangible book value per common share” is defined as our total stockholders’ equity reduced by goodwill and other intangible assets, divided by total common shares outstanding. “Tangible common equity to tangible assets” is defined as our total stockholders’ equity reduced by goodwill and other intangible assets, divided by total assets reduced by goodwill and other intangible assets. These measures are importantused by management, investors and analysts to investorsassess interested in changes from period to period in tangible common equity per share exclusiveuse of changes in intangible assets.equity. For companies such as ours that have engaged in business combinations, purchase accounting can result in the recording of significant amounts of goodwill and other intangible assets related to those transactions.

Senior Notes Redemption

On January 15, 2025 (the “Senior Notes Redemption Date”), we redeemed all of our outstanding 5% senior notes due 2025 (the “Senior Notes”) at a redemption price equal to the aggregate principal amount of $150 million, plus accrued and unpaid interest to, but excluding, the Senior Notes Redemption Date (collectively, the “Senior Notes Redemption Price”). The redemption of the Senior Notes was pursuant to the indenture, dated as of April 9, 2015 (the “Senior Notes Indenture”), between the Company and U.S. Bank National Association, as Trustee (solely in its capacity as trustee for the Senior Notes), which permitted the redemption of the Senior Notes beginning 90 days prior to April 15, 2025 (the maturity date of the Senior Notes). The Company irrevocably deposited with the trustee funds using cash on hand in an amount sufficient to pay the Senior Notes Redemption Price on the Senior Notes Redemption Date to satisfy and discharge its obligations under the Senior Notes and the Senior Notes Indenture.

Pending Merchant Bank Transaction

Our balance sheet, operating results and certain metrics during 2025 reflected uncertainty around general economic, market and business conditions that remain uncertain for 2026. The extent of the impacts of uncertain economic conditions on our financial performance that began in 2022, and have continued during 2024,2026 will depend in part on several developments outside of our control including, among others, changes in the political environment, the impact of tariffs and reciprocal tariffs, the timing and significance of further changes in U.S. Treasurytreasury yields and mortgage interest rates, and a volatile economic forecast. These economic conditions, coupled with exposure to changes in funding costs, inflationary pressures, changes in the political environment and international armed conflicts and their impact on supply chains.chains within our business segments during 2024 and 2025 have had, and are expected to continue to have, an adverse impact on our operating results during 2026.

Historically, high-profile banking failures have periodically increased market uncertainty and concerns associated with banking sector liquidity positions, increased regulatory scrutiny and underscored the importance of maintaining access to diverse sources of funding. In light of the abovethese events, we have continued our efforts to monitor deposit flows and balance sheet trends to ensure that our liquidity needs and financial flexibility are maintained. During 2023,2024, we increased interest-bearing deposit rates to address rising market interest rates and intense competition for liquidity to combat deposit outflows. Throughout 2023 and 2024, we experienced net interest margin compression reflecting deposit repricing activity and demand deposit migration into interest-bearing accounts. DepositDespite deposit costs remainedremaining elevated throughout 2024;2025, however,we took actions to reduce the interest paid on our deposits increased at a slower pace during the second, third and fourth quarters of 2024 as we reduced higher cost brokered deposits and our interest-bearing deposits yield flattened and market expectations for a decrease in the Federal Reserve funds emerged.deposits. Additionally, at December 31, 2024,2025, we continued to access core deposits from our Hilltop Securities Federal Deposit Insurance Corporation (“FDIC”) insured sweep program, while the Bank was not utilizing any of its Federal Home Loan Bank (“FHLB”) borrowing capacity.

MarketWe conditionsexpect andthat externaloverall factors may unpredictably impact the competitive landscape for deposits such as those experienced during the first quarter of 2023. Additionally, throughout 2023 and 2024, the market interest rate environment increased competition for liquidity and the premium at which liquidity was available to meet funding needs. Whiledeposit funding costs will continue to be influenced by various factors, includingincluding, but not limited to competitive pressures andpressures, broader economic conditions, withfuture the cumulative 100-basis point decreasechanges in the target range for the federal funds raterate, sincecustomer September 2024behavior and theour possibilityliquidity ofposition additional rate cuts in 2025, we anticipateat that our cost of deposits will begin to trend modestly downward.time. 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 withdrawalwithdrawals of deposits or to fund continuing operations. These sources may include proceeds from FHLB advances, sales of investment securities and loans, federal fund lines of credit with correspondent banks, securities sold under agreements to repurchase, brokered time deposits, borrowings from the Federal Reserve and borrowings under lines of credit with other financial institutions. Refer to the discussions in the “Segment Results – Banking Segment” and “Liquidity and Capital Resources – Banking Segment” sections that follow for more details regarding the Bank’s deposits, available liquidity and borrowing capacity at December 31, 2024.2025.

We expect uncertainties related to economic headwinds discussed above, the impact of interest rate movements on the shape and inversions of the yield curve, and the increasingcontinued costactive management of deposits and challengerelated forfunding depositscosts that persisted through 20232024 and 20242025, to continue in 2025.2026.

Continuing macroeconomic challenges related to mortgage loan origination volumes, customer sensitivity to interest rates and resulting demand for certain products have resulted in a challenging environment associated with ourthe reportingmortgage segments,origination segment’s short- and long-term financial condition, resulting in variability in theirits operating results.

The Company has two primary business units, PCC (banking and mortgage origination) and Securities Holdings (broker-dealer). Under accounting principles generally accepted in the United States (“GAAP”),GAAP, the Company’s units are comprised of three reportable business segments organized primarily by the core products offered to the segments’ respective customers: banking, broker-dealer and mortgage origination. Consistent with our historical segment operating results, we anticipate that future revenues will be driven primarily from the banking segment, with the remainder being generated by our broker-dealer and mortgage origination segments. Operating results for the mortgage origination segment have historically been more volatile than operating results for the banking and broker-dealer segments.

The broker-dealer segment includes the operations of Securities Holdings, which operates through its wholly owned subsidiaries Hilltop Securities, Momentum Independent Network and Hilltop Securities Asset Management, LLC. The broker-dealer segment generates a majority of its revenues from fees and commissions earned from investment advisory and securities brokerage services. Hilltop Securities is a broker-dealer registered with the Securities and Exchange Commission (the “SEC”) and the Financial Industry Regulatory Authority, Inc. (“FINRA”) and a member of the New York Stock Exchange. Momentum Independent Network is an introducing broker-dealer that is also registered with the SEC and FINRA. Hilltop Securities and Momentum Independent Network are both registered with the Commodity Futures Trading Commission as non-guaranteed introducing brokers and as members of the National Futures Association. 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.

We generate revenue from net interest income and from noninterest income. Net interest income represents the difference between the income earned on our assets, including our loans and investment securities, and our cost of funds, including the interest paid on the deposits and borrowings that are used to support our assets. Net interest income is a significant contributor to our operating results. Fluctuations in interest rates, as well as the amounts and types of interest-earning assets and interest-bearing liabilities we hold, affect net interest income. We generated $417.8$440.7 million in net interest income during 2024,2025, compared with net interest income of $466.8$417.8 million and $459.0$466.8 million during 20232024 and 2022,2023, respectively. The change in reportable business segment net interest income during 2024,2025, compared with 2023,2024, primarily reflected decreasessignificant improvements within ourcorporate and the banking and broker-dealermortgage origination segments.

In the aggregate, we generated $771.0$841.1 million, $729.0$771.0 million and $832.5$729.0 million in noninterest income during 2024,2025, 20232024 and 2022,2023, respectively. The increase in noninterest income during 2024,2025, compared with 2023,2024, was predominantly attributable, as noted in the segment results table previously presented, primarily due to increasesan increase in securitiespre-tax commissionsgains associated with merchant bank equity investment activity within corporate and feesincreased andnoninterest investment and securities advisory fees and commissions, and gains from derivative and trading portfolio activitiesincome within our broker-dealer segment,segment from increased investment banking, advisory and administrative fees partially offset by a net declinereduction in netprincipal gainstransactions, from sale of loans, other mortgage production incomecommission and mortgage loan origination fees within our mortgage origination segment.fees.

Income applicable to common stockholders during 20242025 was $165.6 million, or $2.64 per diluted share, compared with $113.2 million, or $1.74 per diluted share, comparedduring with2024, and $109.6 million, or $1.69 per diluted share, during 2023, and $113.1 million, or $1.60 per diluted share, during 2022.2023. Hilltop’s financial results during 2025 and 2024, compared with 2024 and 2023, includedrespectively, aare declinediscussed in netmore interestdetail income,below partially offset by a decline in the provision for credit lossesand within the bankingrespective segment,“Banking netSegment,” revenues“Broker-Dealer Segment,” “Mortgage Origination Segment” and noninterest expenses increased within the broker-dealer segment, and the mortgage origination“Corporate” segment hadresults decreasessections inthat both noninterest income and expenses.follow.

We present net interest margin and net interest income below on a taxable-equivalent basis.basis below. Net interest margin (taxable equivalent), a non-GAAP measure, is defined as taxable equivalent net interest income divided by average interest earning assets. Taxable equivalent adjustments are based on the applicable corporate federal income tax rate of 21% for all periods presented. The Company performs periodic reviews of the classification and categorization of the components impacting the calculation of net interest margin. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. 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.

On a consolidated basis, the changes in net interest income during 2024,2025, compared with 2023,2024, were primarily due to changesdecreased withincosts of deposits from rate decreases and decreased interest costs from the bankingredemption segmentof relatedcertain tonotes changespayable, inpartially theoffset ratesby earneddecreased orinterest paidincome onfrom interest-earningloans assetsheld for investment yields and interest-bearing liabilities.deposit yields from rate decreases. 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. The amount of expense and the corresponding level of allowance for credit losses for loans are based on our evaluation of the collectability of the loan portfolio based on historical loss experience, reasonable and supportable forecasts, and other significant qualitative and quantitative factors. Substantially all of our consolidated provision for (reversal of) credit losses is related to the banking segment. During 2025, the provision for credit losses was primarily driven by a build in the allowance related to specific reserves and higher net charge-offs, partially offset by changes in the U.S. economic outlook and portfolio changes associated with collectively evaluated loans, including changes in loan mix and risk rating grade migration since December 31, 2024. During 2024, the provision for credit losses reflected a build in the allowance related to specific reserves since December 31, 2023,reserves, significantly offset by both the change in the U.S. economic outlook and changes in the collectively evaluated loan portfolio. During 2023, the provision for credit losses reflected a significant build in the allowance related to loan portfolio changes since December 31, 2022 and a deteriorating outlook for commercial real estate markets. Refer to the discussion in the “Financial Condition – Allowance for Credit Losses on Loans” section that follows for more details regarding the significant assumptions and estimates involved in estimating credit losses.

Noninterest income increased during 2025, compared with 2024, primarily due to a pre-tax gain of $27.8 million associated with the sale of operations by a merchant bank equity investment in the first quarter of 2025, while other changes between periods included net increases within the broker-dealer segment’s public finance, wealth management and fixed income business lines, partially offset by a net decrease within the broker-dealer segment’s structured finance business line, and increases in net gains from sale of loans and other mortgage production income within our mortgage loan origination segment, partially offset by a decrease of mortgage loan origination fees within our mortgage origination segment. The increase in noninterest income during 2024, compared with 2023, was primarily due to net increases within the broker-dealer segment’s structured finance and public finance services business lines, an increase in pre-tax gains associated with the sale of merchant bank equity investments within corporate and increases in mortgage loan gains from sale of loans within ourthe mortgage origination segment, partially offset by declines in mortgage loan origination fees and other related income within the mortgage origination segment and declines within the broker-dealer segment’s fixed income services and wealth management business lines. The decrease in noninterest income during 2023, compared with 2022, was primarily due to decreases in total mortgage loan sales volume and average loan sales margin within our mortgage origination segment, partially offset by net increases within all of the broker-dealer segment’s business lines.

Noninterest expense increased during 2024,2025, compared with 2023,2024, primarily due to increases in both variable and non-variable compensation and other segment operating costs within our broker-dealer segment and an increase in variable compensation within our mortgage origination segment,segment and within corporate associated with the sale of certain merchant bank equity investments during 2025, partially offset by decreasesa decrease in non-variable compensation and other segment operating costs within our mortgage origination segment. We continuecontinued to experience increases in certain noninterest expenses during 20242025 and 2023,2024, compared with respective prior periods, including compensation, occupancy, and software costs, due to inflationary pressures. We expect such inflationary headwinds to continue and result in further increased fixed costs during 2025.2026.

The increase in income before income taxes during 2025, compared with 2024, was primarily due to an increase in net interest income and a decrease in noninterest expense, partially offset by an increase in the provision for credit losses. 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. 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. Changes to net interest income related to 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 are discussed in more detail below.

As discussed in more detail below, the banking segment’s cost of deposits increaseddecreased during 20242025 primarily due to continuedlower competitionrates foron liquidityinterest-bearing deposits on certain products and customersproduct seekingtiers higherin yieldsconjunction onwith deposits.rate Thereductions resultingby netthe interestFederal income spread compression has had, and is expectedReserve to continuelower the effective funds rate. We are continuing to have,actively amanage negativeour impact on banking segment operating results. While we expectoverall deposit costs duringand 2025anticipate potential opportunities to continuefurther tolower interest-bearing deposit rates. Future decisions on the costs of deposits will be driveninfluenced by various factors, includingincluding, but not limited to competitive pressures andpressures, broader economic conditions, withfuture the cumulative 100-basis point decreasechanges in the target range for the federal funds raterate, sincecustomer September 2024,behavior and theour possibilityliquidity ofposition additional rate cuts in 2025, we anticipateat that our cost of deposits will begin to trend modestly downward.time.

The decreasesincreases in net interest income,income during 2025, compared to 2024, as noted in the table above, were primarily driven by decreased funding costs on our deposit products from rate decreases, partially offset by decreased earnings on interest-earning assets, primarily loan and warehouse line of credit yields and investment securities. The decreases in net interest income during 2024, compared to 2023, were primarily driven by the increased funding costs on our deposit products from rate increases in 2023, the migration from non-interest-bearing deposits into interest-bearing products during the year over yearyear-over-year period, and decreases in average loans held for investment, investment securities and deposits held in other financial institutions, partially offset by increased earnings on interest-earning assets, primarily loan yields. The average rate paid on interest-bearing liabilities increased 24 basis points from 3.53% for 2023 to 3.77% for 2024, while the average yield on interest-earning assets increased 18 basis points from 5.40% for 2023 to 5.58% for 2024.

Additionally, within our banking segment, the composition of the deposit base and ultimate cost of funds on deposits and net interest income are affected by the level of market interest rates, the interest rates and products offered by competitors, the volatility of equity markets and other factors. Deposit products and pricing structures relative to the market are regularly evaluated to maintain competitiveness over time. As discussed above, our cost of deposits increaseddecreased during 2024,2025, compared to 2023.2024. While we expect such costs during 20252026 towill continue to be driveninfluenced by various factors, includingincluding, but not limited to competitive pressures andpressures, broader economic conditions, withfuture the cumulative 100-basis point decreasechanges in the target range for the federal funds raterate, sincecustomer September 2024behavior and theour possibilityliquidity ofposition additional rate cuts in 2025, we anticipateat that our cost of deposits will begin to trend modestly downward.time. The Bank’s deposit base primarily includes a combination of commercial, wealth, and public funds deposits, without a high level of industry concentration. At December 31, 2024,2025, total estimated uninsured deposits were $5.7$5.9 billion, or approximately 52%54% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $363.1$693.9 million and internal accounts of $302.8 million, were $5.3$4.9 billion, or approximately 48%45% of total deposits.

The banking segment’s provision for (reversal of) credit losses has been subject to significant year-over-year and quarterly changes primarily attributable to the effects of the changing economic outlook, macroeconomic forecast assumptions and resulting impact on reserves. Specifically, during 2025, the banking segment’s provision for credit losses was primarily driven by a build in the allowance related to specific reserves and higher net charge-offs, partially offset by changes in the U.S. economic outlook and portfolio changes associated with collectively evaluated loans, including changes in loan mix and risk rating grade migration since December 31, 2024. The net impact to the allowance of changes associated with individually evaluated loans during 2025 included a provision for credit losses of $13.5 million, while collectively evaluated loans during 2025 included a reversal of credit losses of $6.2 million. The change in the allowance during 2025 was also impacted by net charge-offs of $16.9 million. Of the $16.9 million of net charge-offs at December 31, 2025, $11.5 million was comprised of three credit relationships associated with commercial and industrial loans within the auto note financing industry subsector. 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. The net impact to the allowance of changes associated with individually evaluated loans during 2024 included a provision for credit losses of $15.2 million, while collectively evaluated loans during 2024 included a reversal of credit losses of $14.2 million. The change in the allowance during 2024 was also impacted by net charge-offs of $11.2 million. During 2023, the banking segment’s provision for credit losses reflected a build in the allowance related to loan portfolio changes since December 31, 2022 and a deteriorating outlook for commercial real estate markets. The net impact to the allowance of changes associated with collectively evaluated loans during 2023 included a provision for credit losses of $12.7 million, while individually evaluated loans included a provision for credit losses of $5.8 million. The change in the allowance during 2023 was also impacted by net charge-offs of $2.4 million. During 2022, the banking segment’s provision for credit losses was driven by a deteriorating U.S. economic outlook since December 31, 2021. The change in the allowance during 2022 was also impacted by net charge-offs of $4.2 million. The changes in the allowance for credit losses during the noted periods also reflected other factors including, but not limited to, loan growth, loan mix, and changes in risk grades and qualitative factors from the prior quarter. Refer to the discussion in the “Financial Condition – Allowance for Credit Losses on Loans” section that follows for more details regarding the significant assumptions and estimates involved in estimating credit losses.

The banking segment’s noninterest income decreasedincreased during 2025, compared with 2024, primarily due to the receipt of a legal restitution payment during the second quarter of 2025 that compensated the Bank for previously incurred losses, partially offset by a decrease in oil and gas management fees. Noninterest income during 2024, compared with 2023, decreased primarily due to valuation adjustments associated with the sale of a single loan from loans held for sale during the second quarter of 2024 and a decrease in oil and gas management fees, partially offset by an increase in service charges on depositor accounts. Noninterest income during 2023, compared with 2022, decreased primarily due to a decline in service charges on depositor accounts, oil and gas management fees and non-recurring income related to the Community Reinvestment Act of 1977 investment that occurred in 2022.

The banking segment’s noninterest expenses increaseddecreased during 2025, compared with 2024, primarily due to decreases in occupancy and equipment expenses and professional fees, partially offset by an increase in employees’ compensation and benefits. The decrease in professional fees during 2025 was driven by the settlement and receipt of $6.5 million during the first quarter of 2025 that reimbursed the Bank for legal fees previously incurred. Noninterest expenses during 2024, compared with 2023, increased primarily due to a long-lived asset impairment charge of $4.8 million associated with one of the Bank’s support facilities that management has the intent to sell. The facility was written down to the estimated fair value of the property less the estimated costs to sell. The sale of the facility is expected to be completed during the first quarter of 2025. Additionally, during 2024, the Bank incurred one-time compensation expenses associated with Bank leadership changes, partially offset by decreases in professional fees. Noninterest expenses during 2023, compared with 2022, decreased primarily due to decreases in compensation-related expenses, partially offset by an increase in FDIC assessment, professional fees and software related expenses.

The declineincreases in net revenue and income before income taxes during 2024,2025, compared with 2023, was primarily due to increases in segment compensation and other segment operating costs, partially offset by an increase in net revenue. The increase in net revenue during 2024, compared with 2023, was primarily due to improved period-over-periodnet resultsrevenues within our structured finance and public finance services business lines, partially offset by declines within ourservices, fixed income services and wealth management business lines.lines, Thepartially increaseoffset by a decline in thenet revenues within our structured finance business line’sline netand revenues was primarily due to an increaseincreases in tradingsegment gainscompensation from the U.S. Agency to-be-announced (“TBA”) business and commissions earned on commodities transactions.costs. The increase in net revenues in the broker-dealer segment’s public finance services business line was primarily due to improved fees earned from managedbanking assetsservices. The increase in fixed income services business line’s net revenues was primarily due to improved market conditions resulting in the increase in net revenues from fixed income sales and trading activities, in particular, from municipal advisory revenues.products. The increase in the wealth management business line’s net revenue decrease was driven by decreasesan increase in commissions earned from our FDIC sweep program on lower customer balances. These decreases were partially offset by improved advisory fees revenues generated from customer assets under management. The decrease in the structured finance business line’s net revenues in the broker-dealer segment’s fixed income services business line was primarily due to declinesa decrease in revenuestrading gains from netthe interestto-be-announced income(“TBA”) business partially offset by commissions earned on inventory positionscommodities and tradingsecuritized profits.mortgage-backed securities transactions. Income before income taxes for the year ended December 31, 2025 was impacted by the changes in net revenues as described above and a net increase in noninterest expense.

In the broker-dealer segment, interest is earned from securities lending activities, interest charged on customer margin loan balances and interest earned on investment securities used to support sales, underwriting and other customer activities. During 2025, compared with 2024, along with the increase in our stock lending activities, the broker-dealer segment experienced an increase in net interest earned on inventory positions within the fixed income services and structured finance business lines, partially offset by the net interest earned on our correspondent inventory positions. The decrease in net interest income during 2024, compared with 2023, was primarily due to the decrease in the net interest income from the fixed income services business line due to decreases in net interest earned on inventory positions. The increase in net interest income during 2023, compared with 2022, was primarily due to the increase in corporate interest, retail and clearing services business line revenues and the amount of interest received on a structured product investments offset by a decrease in net interest income from the fixed income services business line due to the increased cost to carry inventory positions.

SelectedThe following table provides selected information concerning the broker-dealer segment, including key performance indicators, followsindicators (dollars in thousands).

The mortgage lending business is subject to variables that can impact loan origination volume, including seasonal transaction volumes and interest rate fluctuations. Historically, the mortgage origination segment has experienced increased loan origination volume from purchases of homes during the spring and summer months, when more people tend to move and buy or sell homes. A decrease in mortgage interest rates tends to result in increased loan origination volume from refinancings, while an increase in mortgage interest rates tends to result in decreased loan origination volume from refinancings. While changes in mortgage interest rates have historically had a lesser impact on home purchases volume than on refinancing volume, net increases in mortgage interest rates since 2022 continued tohave negatively impactimpacted home purchase volume through 2024.2025. AThe effect of this trend was compounded by periods of broader economic uncertainty during that time. Mortgage interest rates fluctuated slightly during the first half of 2025, followed by a gradual and modest decline in mortgage rates experienced betweenduring the fourthsecond quarterhalf of 2023 and the third quarter of 2024 had a slight impact on loan origination volume in 2024, with a moderate increase in refinancings as a percentage of total loan origination volume.2025. During the fourth quarter of 2024,2025, average mortgage interest rates approacheddecreased levelscompared approximatingto average mortgage rates atduring the endfourth quarter of 2023.2024. See details regarding loan origination volume in the table below.

RecentCurrent 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. DuringBetween 2023,2023 and continuing through 2024,2025, certain events adverselyinitially impactedtriggered as early as 2022 have continued to challenge total mortgage market origination volumes because of their effect on the economy, including inflation, an increase in average interest rates during thesethis periodsperiod when compared to the average of the three years prior to 2023, the Federal Reserve’s actions and communications, and geopolitical events. These events haveand alsoongoing adverselyeconomic impacteduncertainty. During 2025, specific developments driving economic uncertainty include the willingnessUnited States government’s position on increasing tariffs on foreign imports and abilityreciprocal tariffs imposed by numerous United States foreign trading partners on United States exports and the government’s passage of thea mortgagecomprehensive origination segment’s customers to conduct mortgage transactions. Specifically, current home inventory shortagestax and affordabilityspending challenges are impacting customers’ abilities to purchase homes.bill. 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%4.5%. as of December 31, 2024 andThese were the first reductions since March 2022 when the target range was 0.25% - 0.50%. PrimeLending experienced a measurable increase in interest rate lock commitments (“IRLCs”) inBetween September 20242025 dueand toDecember 2025, the firstFederal rateReserve cut and a corresponding decrease in mortgage interest rates. However, despite the decreasetarget inrange for the federal funds rate sinceby Septemberanother 75 basis points to 3.5% - 3.75%. Since the rate cuts occurred during the later part of 2025, they had modest impact on total 2025 loan origination volumes. Despite the reduction in the federal fund rates during 2024, average mortgage interest rates increased during the first six months of 2025, when compared to the fourth quarter of 2024,2024. whichHowever, hamperedduring the last six months of 2025 average mortgage production.interest rates decreased to levels not observed since the first half of 2023. We expect loan production during the first quarter of 2026 to decrease compared to the fourth quarter of 2025, consistent with historical trends. During the third quarter of 2025, PrimeLending continuesreduced toa evaluateportion of its costunderwriting, structureloan fulfillment, operations and corporate headcount to address the current mortgage environment.market production challenges. Anticipated annual savings associated with these reductions approximate $4.4 million.

Consolidated income before income taxes during the three and six months ended MarchJune 31,30, 2026 included the following contributions from our reportable business segments.

During the threesix months ended MarchJune 31,30, 2026, we declared and paid total common dividends of $11.8$23.4 million.

On AprilJuly 23, 2026, our board of directors declared a quarterly cash dividend of $0.20$0.22 per common share, a 10% increase from the prior quarter, payable on MayAugust 22,21, 2026 to all common stockholders of record as of the close of business on MayAugust 8,7, 2026.

OnIn January 29, 2026, our board of directors authorized a new stock repurchase program through January 2027, pursuant to which we arewere originally authorized to repurchase, in the aggregate, up to $125.0 million of our outstanding common stock,stock. In July 2026, our board of directors authorized an increase to the aggregate amount of common stock we may repurchase under this program to $200.0 million, an increase of $75.0 million, which is inclusive of repurchases to offset dilution related to grants of stock-based compensation. During the threesix months ended MarchJune 31,30, 2026, we paid $47.5$94.5 million to repurchase an aggregate of 1,238,2162,488,216 shares of our common stock at an average price of $38.40$37.99 per share pursuant to the stock repurchase program. As a result of share repurchases during 2026, Hilltop has approximately $106 million of available share repurchase capacity through the expiration of the 2026 stock repurchase program in January 2027.

We present certain measures in our selected financial data that are not measures of financial performance recognized by GAAP. “Tangible book value per common share” is defined as our total stockholders’ equity reduced by goodwill and other intangible assets, divided by total common shares outstanding. “Tangible common equity to tangible assets” is defined as our total stockholders’ equity reduced by goodwill and other intangible assets, divided by total assets reduced by goodwill and other intangible assets. These measures are used by management, investors and analysts to assess the use of equity. For companies such as ours that have engaged in business combinations, purchase accounting can result in the recording of significant amounts of goodwill and other intangible assets related to those transactions. You should not view this disclosure as a substitute for results determined in accordance with GAAP, and our disclosure is not necessarily comparable to that of other companies that use non-GAAP measures. The following tabletables reconcilesreconcile these non-GAAP financial measures to the most comparable GAAP financial measures, “book value per common share” and “equity to total assets” (dollars in thousands, except per share data).

Our balance sheet, operating results and certain metrics during 2025 and the first quartersix months of 2026 reflected uncertainty around general economic, market and business conditions that we expect will remain uncertain for the remainder of 2026. The extent of the impacts of uncertain economic conditions on our financial performance during the remainder of 2026 will depend in part on developments outside of our control, including, among others, changes in political environment, the impact of tariffs and reciprocal tariffs, the timing and significance of further changes in U.S. Treasury yields and mortgage interest rates, and a volatile economic forecast. These conditions, coupled with exposure to changes in funding costs, inflationary pressures, elevated energy prices, and international armed conflicts and their impact on supply chains within our business segments during the first quartersix months of 2026 have had, and are expected to continue to have, an adverse impact on our operating results during the remainder of 2026.

Historically, high-profile banking failures periodically increase market uncertainty and concerns associated with banking sector liquidity positions, increase regulatory scrutiny and underscore the importance of maintaining access to diverse sources of funding. In light of these events, we have continued our efforts to monitor deposit flows and balance sheet trends to ensure that our liquidity needs and financial flexibility are maintained. During 2025, deposit costs remained elevated despite actions we took to reduce the interest paid on our interest-bearing deposits. Our cost of deposits decreased during the threesix months ended MarchJune 31,30, 2026, compared to the same period of 2025, as a result of the rate reductions since September 2025. Additionally, at MarchJune 31,30, 2026, we continued to access core deposits from our Hilltop Securities Federal Deposit Insurance Corporation (“FDIC”) insured sweep program, while the Bank was not utilizing any of its Federal Home Loan Bank (“FHLB”) borrowing capacity.

We expect that overall deposit funding costs will continue to be influenced by various factors, including, but not limited to competitive pressures, broader economic conditions, future changes in the target range for the federal funds rate, customer behavior and our liquidity position at that time. 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 sources may include proceeds from FHLB advances, sales of investment securities and loans, federal fund lines of credit with correspondent banks, securities sold under agreements to repurchase, brokered time deposits, borrowings from the Federal Reserve and borrowings under lines of credit with other financial institutions. Refer to the discussions in the “Segment Results – Banking Segment” and “Liquidity and Capital Resources – Banking Segment” sections that follow for more details regarding the Bank’s deposits, available liquidity and borrowing capacity at MarchJune 31,30, 2026.

We expect uncertainties related to economic headwinds discussed above, the impact of interest rate movements on the shape and inversions of the yield curve and the continued active management of deposits and related funding costs that persisted through 2025 and into the first quarterhalf of 2026, to continue during the remainder of 2026.

Continuing macroeconomic challenges related to mortgage loan origination volumes, customer sensitivity to interest rates and resulting demand for certain productsproducts, including recent shift in market expectations related to a prolonged elevated interest rate environment, have resulted in a challenging environment associated with the mortgage origination segment’s short- and long-term financial condition, resulting in variability in their operating results.

We generate revenue from net interest income and from noninterest income. Net interest income represents the difference between the income earned on our assets, including our loans and investment securities, and our cost of funds, including the interest paid on the deposits and borrowings that are used to support our assets. Net interest income is a significant contributor to our operating results. Fluctuations in interest rates, as well as the amounts and types of interest-earning assets and interest-bearing liabilities we hold, affect net interest income. We generated $112.1$227.9 million in net interest income during the threesix months ended MarchJune 31,30, 2026, compared with net interest income of $105.1$215.8 million during the threesix months ended MarchJune 31,30, 2025. The change in reportable business segment net interest income during the threesix months ended MarchJune 31,30, 2026, compared with the same period in 2025, primarily reflected improvements within the banking segment and corporate.

In the aggregate, we generated $188.4$388.4 million and $213.3$406.0 million in noninterest income during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease in noninterest income during the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025, was predominantly attributable, as noted in the segment results table previously presented, primarily due to a decrease in pre-tax gains associated with merchant bank equity investment activity within corporate, partially offset by increased noninterest income within our broker-dealer segment from principal transactions, commissions and fees and within our mortgage origination segment from net gains from sale of loans.

Income applicable to common stockholders during the three months ended MarchJune 31,30, 2026 was $37.8$36.5 million, or $0.64$0.63 per diluted share, compared to $42.1$36.1 million, or $0.65$0.57 per diluted share, during the three months ended MarchJune 31,30, 2025. Income applicable to common stockholders during the six months ended June 30, 2026 was $74.4 million, or $1.27 per diluted share, compared to $78.2 million, or $1.22 per diluted share, during the six months ended June 30, 2025. Hilltop’s financial results during the three and six months ended MarchJune 31,30, 2026, compared with the three and six months ended MarchJune 31,30, 2025, are discussed in more detail below and within the respective “Banking Segment,” “Broker-Dealer Segment,” “Mortgage Origination Segment” and “Corporate” segment results sections that follow.

Certain items included in net income for the three and six months ended MarchJune 31,30, 2026 and 2025 resulted from purchase accounting associated with the merger of PlainsCapital Corporation with and into a wholly owned subsidiary of Hilltop on November 30, 2012, the FDIC-assisted transaction whereby the Bank acquired certain assets and assumed certain liabilities of FNB, the acquisition of SWS Group, Inc. in a stock and cash transaction, and the acquisition of The Bank of River Oaks in an all-cash transaction (collectively, the “Bank Transactions”). Income before income taxes during the three months ended MarchJune 31,30, 2026 and 2025 included net accretion on earning assets and liabilities of $1.3$0.8 million and $1.1$0.5 million, respectively, and amortization of identifiable intangibles of $0.2 million and $0.3$0.2 million, respectively, related to the Bank Transactions. During the six months ended June 30, 2026 and 2025, income before income taxes included net accretion on earning assets and liabilities of $2.1 million and $1.6 million, respectively, and amortization of identifiable intangibles of $0.5 million and $0.5 million, respectively, related to the Bank Transactions.

During the three months ended MarchJune 31,30, 2026 and 2025, purchase accounting contributed 42 and 42 basis points, respectively, to our consolidated taxable equivalent net interest margin of 3.15%3.23% and 2.86%,3.04%, respectively. During the six months ended June 30, 2026 and 2025, purchase accounting contributed 3 and 3 basis points, respectively, to our consolidated taxable equivalent net interest margin of 3.19% and 2.95%, respectively The purchase accounting activity was primarily related to the accretion of discount of loans which totaled $1.3$0.8 million and $1.1$0.5 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $2.1 million and $1.6 million during the six months ended June 30, 2026 and 2025, respectively, associated with the Bank Transactions.

The tabletables below providesprovide additional details regarding our consolidated net interest income (dollars in thousands).

On a consolidated basis, the change in net interest income during the three and six months ended MarchJune 31,30, 2026, compared with the same periodperiods in 2025, waswere primarily due to decreased funding costs ofon our deposits from rate decreases, partially offset by decreasedlower yields on loans held for investment yield and interest-bearing deposits in other institutions yields from rate decreases. 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. The amount of expense and the corresponding level of allowance for credit losses for loans are based on our evaluation of the collectability of the loan portfolio based on historical loss experience, reasonable and supportable forecasts, and other significant qualitative and quantitative factors. Substantially all of our consolidated provision for (reversal of) credit losses is related to the banking segment. During the three months ended MarchJune 31,30, 2026, the reversal of credit losses was primarily driven by changes in the U.S. economic outlook associated with collectively evaluated loans and loan portfolio changes, including changes in loan mix and risk rating grade migration, partially offset by a build in the allowance related to specific reserves, within the banking segment since the prior quarter. The provision for credit losses during the six months ended June 30, 2026 was primarily driven by a build in the allowance related to specific reserves and net charge-offs, partially offset by changes in the U.S. economic outlook associated with collectively evaluated loans and loan portfolio changes, including changes in loan mix and risk rating grade migration, within the banking segment since the prior quarter.segment. Refer to the discussion under the heading “Financial Condition – Allowance for Credit Losses on Loans” for more details regarding the significant assumptions and estimates involved in estimating credit losses.

Noninterest income decreasedincreased during the three months ended MarchJune 31,30, 2026, compared with the same period in 2025, primarily due to net increases within our broker-dealer segment’s structured finance, wealth management and fixed income services business lines, partially offset a decrease within our mortgage origination segment due to multiple Settlement Agreement & Releases (the “Settlements”) whereby PrimeLending received an aggregate of $9.5 million from the respective parties in the second quarter of 2025. Noninterest income decreased during the six months ended June 30, 2026, compared with the same period in 2025, primarily due to the recognition within corporate of a pre-tax gain of $27.8$27.1 million associated with the sale of operations by a merchant bank equity investment in the first quarter of 2025,2025 and due to the decrease noted above within the mortgage origination, partially offset by net increases within the broker-dealer segment’s fixedstructured income services,finance, wealth management and structuredfixed financeincome business lines and an increase in net gains from sale of loans within our mortgage origination segment.lines.

Noninterest expense decreasedincreased during the three months ended MarchJune 31,30, 2026, compared with the same period in 2025, primarily due to an increase within our broker-dealer segment associated with increases in variable compensation expense and other segment operating costs, partially offset by a decrease in lender paid closing costs within our mortgage origination segment. Noninterest expense increased during the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in professional fees within our banking segment due to the settlement and receipt of $6.5 million during the first quarter of 2025 that reimbursed the Bank for legal fees previously incurred and an increase within our broker-dealer segment associated with increases in variable compensation expense and other segment operating costs, partially offset by a net decrease in employees’ compensation and benefits within corporate associated with the sale of a merchant bank equity investment in the first quarter of 2025, partially offset by an increase within our broker-dealer segment associated with increases in employees’ compensation and benefits.2025. During 2025 and through the firstsecond quarter of 2026, we continued to experience increases in certain noninterest expenses, compared with respective prior periods, including compensation, occupancy, and software costs, due to inflationary pressures. We expect such inflationary headwinds to continue during the remainder of 2026.

Effective income tax rates during the three months ended MarchJune 31,30, 2026 and 2025 were 22.6%24.2% and 22.7%,23.4%, respectively, and during the six months ended June 30, 2026 and 2025 were 23.4% and 23.1%, respectively. During each of the three and six months ended MarchJune 31,30, 2026 and 2025, the effective tax rate 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. During the three and six months ended June 30, 2025, the effective tax rate was higher than the applicable statutory rate primarily due to the impact of nondeductible compensation expense, other nondeductible expenses and other permanent adjustments, partially offset by investments in tax-exempt instruments.

The increasedecrease in income before income taxes during the three months ended MarchJune 31,30, 2026, compared with the same period in 2025, was primarily due to a decrease in the reversal of credit losses and an increase in noninterest expense, partially offset by an increase in net interest income. The increase in income before income taxes during the six months ended June 30, 2026, compared with the same period in 2025, was primarily due to an increase in net interest income and a decrease in the provision for credit losses, partially offset by an increase in noninterest expense. Changes to net interest income related to 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 are discussed in more detail below.

As discussed in more detail below, the banking segment's overall deposit costs decreased during the first quartersix months of 2026, primarily due to lower rates on interest-bearing deposits on certain products and product tiers in conjunction with rate reductions by the Federal Reserve to lower the effective funds rate towards the end of 2025. We are continuing to actively manage our overall deposit costs and will continue to seek opportunities to further lower interest-bearing deposit rates if they present themselves. Future decisions on the costs of deposits will continue to be influenced by various factors, including, but not limited to competitive pressures, broader economic conditions, future changes in the target range for the federal funds rate, customer behavior and our liquidity position at that time.

During the three months ended MarchJune 31,30, 2026 and 2025, purchase accounting contributed 53 and 3 basis points, respectively, to the banking segment’s taxable equivalent net interest margin of 3.39%3.42% and 2.97%,3.17%, respectively. During the six months ended June 30, 2026 and 2025, purchase accounting contributed 4 and 3 basis points, respectively, to the banking segment’s taxable equivalent net interest margin of 3.40% and 3.07%, respectively. These purchase accounting items are primarily related to accretion of discount of loans associated with the Bank Transactions presented in the Consolidated Operating Results section.

The tabletables below providesprovide additional details regarding our banking segment’s net interest income (dollars in thousands).

With regard to net interest income, as of MarchJune 31,30, 2026, 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. During a period of declining interest rates, being asset sensitive tends to result in a decrease in net interest income, but during a period of rising interest rates, being asset sensitive tends to result in an increase in net interest income. Given projected impacts on net interest income associated with the expected transition into the next phase of the interest rate cycle, we continue to evaluate our current GAP position, which may result in a repositioning of the banking segment towards a more neutral or liability sensitive balance sheet.

The increase in net interest income during the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, as noted in the table above, was driven by decreased funding costs on our deposit products from rate decreases. This decrease was partially offset by lower earnings on interest‑earning assets due to reduced balances and lower yields and by increased interest income from loans held for investment reflecting higher loan volumes. The average rate paid on interest-bearing liabilities decreased 6763 basis points from 3.23%3.19% for the threesix months ended MarchJune 31,30, 2025 to 2.56% for the threesix months ended MarchJune 31,30, 2026, while the average yield on interest-earning assets decreased 59 basis points from 5.20%5.26% for the threesix months ended MarchJune 31,30, 2025 to 5.15%5.17% for the threesix months ended MarchJune 31,30, 2026.

Our portfolio includes loans that periodically reprice or mature prior to the end of an amortized term. The extent and timing of this impact on interest income will ultimately be driven by the timing, magnitude and frequency of interest rate and yield curve movements, as well as changes in market conditions and timing of management strategies. At MarchJune 31,30, 2026, approximately $501$455 million of our floating rate loans held for investment remained at or below their applicable rate floor, exclusive of our mortgage warehouse lending program, of which approximately 18%16% are not scheduled to reprice for more than one year based upon agreed-upon terms. If interest rates were to continue to fall, the impact on our interest income for certain variable-rate loans would be limited by these rate floors. If interest rates rise, yields on the portion of our loan portfolio that remain at applicable rate floors would rise more slowly than increases in market interest rates, unless such loans are refinanced or repaid. Competition for loan growth could also continue to put pressure on new loan origination rates.

Additionally, within our banking segment, the composition of the deposit base and ultimate cost of funds on deposits and net interest income are affected by the level of market interest rates, the interest rates and products offered by competitors, the volatility of equity markets and other factors. 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 the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods ofin 2025. We expect such costs during the remainder of 2026 will continue to be influenced by various factors, including, but not limited to competitive pressures, broader economic conditions, future changes in the target range for the federal funds rate, customer behavior and our liquidity position at that time. The Bank’s deposit base primarily includes a combination of commercial, wealth and public funds deposits, without a high level of industry concentration. At MarchJune 31,30, 2026, total estimated uninsured deposits were $5.9$5.7 billion, or approximately 56%55% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $640.8$580.0 million and internal accounts of $448.2$388.6 million, were $4.8 billion, or approximately 46%45% of total deposits.

The banking segment retained approximately $54.9$58.7 million and $62.5$43.2 million in mortgage loans originated by the mortgage origination segment during the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $113.6 million and $105.7 million in mortgage loans originated by the mortgage origination segment during the six months ended June 30, 2026 and 2025, respectively. These loans are purchased by the banking segment at par. For origination services provided, the banking segment reimburses the mortgage origination segment for direct origination costs associated with these mortgage loans, in addition to payment of a correspondent fee. The correspondent fees are eliminated in consolidation. The determination of mortgage loan retention levels by the banking segment will 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.

The banking segment’s provision for (reversal of) credit losses has been subject to significant year-over-year and quarterly changes primarily attributable to the effects of changes in economic outlook, macroeconomic forecast assumptions and the resulting impact on reserves. During the three months ended MarchJune 31,30, 2026, the reversal of credit losses was primarily driven by changes in the U.S. economic outlook associated with collectively evaluated loans and loan portfolio changes, including changes in loan mix and risk rating grade migration, partially offset by a build in the allowance related to specific reserves, since the prior quarter. The provision for credit losses during the six months ended June 30, 2026 was primarily driven by a build in the allowance related to specific reserves and net charge-offs, partially offset by changes in the U.S. economic outlook associated with collectively evaluated loans and loan portfolio changes, including changes in loan mix and risk rating grade migration, within the banking segment since the prior quarter.migration. The net impact to the allowance of changes associated with individually evaluated loans during the three and six months ended MarchJune 31,30, 2026 included a provision for credit losses of $4.0$1.9 million and $5.9 million, respectively, while collectively evaluated loans during the three and six months ended MarchJune 31,30, 2026 included a reversal of credit losses of $2.3$2.9 million.million and $5.2 million, respectively. The change in the allowance for credit losses during the noted period also reflected other factors including, but not limited to, loan mix, and changes in loan balances and qualitative factors from the prior quarter. The changechanges in the allowance for credit losses during the three and six months ended MarchJune 31,30, 2026 waswere also impacted by net charge-offs of $4.3$3.2 million.million and $7.5 million, respectively. Refer to the discussion in the “Financial Condition – Allowance for Credit Losses on Loans” section that follows for more details regarding the significant assumptions and estimates involved in estimating credit losses.

During the three months ended MarchJune 31,30, 2025, the increasereversal in the provision forof credit losses was primarily driven by changes in the U.S. economic outlook associated with collectively evaluated loans, loan portfolio changes and net charge-offs, partially offset by a build in the allowance related to specific reserves, including changes in loan mix and risk rating grade migration, since the prior quarter. The provision for credit losses during the six months ended June 30, 2025 was primarily driven a build in the allowance related to loan portfolio changes and specific reserves, including changes in loan mix and risk rating grade migration, partially offset by net charge-offs and changes in the U.S. economic outlook associated with collectively evaluated loans within the banking segment since the prior quarter.loans. The net impact to the allowance of changes associated with collectively and individually evaluated loans during the three and six months ended MarchJune 31,30, 2025 included a provision for credit losses of $7.7$1.8 million and $1.7$3.4 million, respectively, while collectively evaluated loans during the three and six months ended June 30, 2025 included a reversal of credit losses of $9.1 million and $1.4 million, respectively. The changechanges in the allowance for credit losses during the noted periodperiods also reflected other factors including, but not limited to, loanthe growth,change in economic scenario, loan mixmix, and changes in riskloan gradesbalances and qualitative factors from the prior quarter. The change in the allowance for credit losses during the three and six months ended MarchJune 31,30, 2025 was also impacted by net charge-offs of $4.3$0.9 million.million and $5.2 million, respectively.

The banking segment’s noninterest expenseincome increased slightly during the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, primarily due to increases in professional fees, employees’ compensation and benefits and occupancy and equipment expenses. Thean increase in professionaltrust feesmanagement duringfees, 2026,significantly compared to the same period in 2025, was drivenoffset by the settlement and receipt of $6.5a millionlegal restitution payment during the firstsecond quarter of 2025 that reimbursedcompensated the Bank for legal fees previously incurred.incurred losses.

The increases in net revenue and income before income taxes for the three and six months ended MarchJune 31,30, 2026, compared with the same periodperiods in 2025, were primarily due to improved revenues within the fixed income services, wealth management and structured finance business lines. These increases were offset by a decrease in the public finance services business line. The increase in the fixed income business line’s net revenues was due primarily to improved revenue earned from sales activities in both taxable and municipal capital markets divisions. The increase in the wealth management business line’s net revenue was driven by an increase in asset management feesfee revenues generated from managed customer assets under management and earningstransactional oncommission over-the-counter securities transactions.revenues. The increase in the structured finance business line’s net revenues was primarily due to an increase in housing revenue period over period and an increase in commissions earned on the sale of agricultural insurance products and commodities transactions offset by a decrease in housing revenue period over period.transactions. The decrease in the public finance services business lines was due to a decrease in advisory fees. Income before income taxes for the three and six months ended MarchJune 31,30, 2026 waswere impacted by the increases in net revenue as described above and a net increase in noninterest expense.

Noninterest income increased during the three and six months ended MarchJune 31,30, 2026, compared with the same periodperiods in 2025, primarily due to increases in principal transactions, commissions and fees and investment banking, advisory and administrative fees.

Principal transactions, commissions and fees increased during the three and six months ended MarchJune 31,30, 2026, compared with the same periodperiods in 2025, primarily due to increases in commodities and over-the-counter sales commissions.commissions, Thisincome from hedging activities and an increase wasin offset by the overall decrease inhousing revenue fromperiod tradingover activities within our fixed income services business line due to a volatile market.period.

Investment banking advisory and administrative fees increased during the three and threesix months ended MarchJune 31,30, 2026, compared with the same periodperiods in 2025, primarily due to increases in fees earned from managed assets offset by a decrease in fees earned from public finance advisory services.

The increase in noninterest expense during the three and six months ended MarchJune 31,30, 2026, compared with the same periodperiods in 2025, waswere primarily due to increases in commissions,variable compensation, which waswere in line with the increaseincreases in commissionsproduction revenue earned period over period. TheThis increase in variable compensation expense was partially offset by decreases in occupancyemployee benefits, primarily employee health insurance and generalseverance expenses incurred in the prior year. Additionally, segment operating expenses.costs increased during the three and six months ended June 30, 2026, compared with the same periods in 2025, primarily due to increased legal and quotation costs.

The mortgage lending business is subject to variables that can impact loan origination volume, including seasonal transaction volumes and interest rate fluctuations. Historically, the mortgage origination segment has experienced increased loan origination volume from home purchases during the spring and summer months to varying degrees, when more people tend to move and buy or sell homes. A decrease in mortgage interest rates tends to result in increased loan origination volume from refinancings, while an increase in mortgage interest rates tends to result in decreased loan origination volume from refinancings. While changes in mortgage interest rates have historically had a lesser impact on home purchases volume than on refinancing volume, anthe sharp increase in average mortgage rates sinceduring 2022 haveand negativelytheir impactedcontinued elevation has adversely affected home purchase volume through the first quarterhalf of 2026. TheThis effect of this trendimpact was compoundedfurther amplified by periods of broader economic uncertainty during thatthe time.same period. See details regarding loan origination volume in the table below.

Recent trends, as well as typical historical patterns in loan origination volume from home purchases and refinancings because of movements in mortgage interest rates, may not be indicative of future loan origination volumes. During 2025 and through the first quarterhalf of 2026, certain events initially triggered as early as 2022 have continued to challenge total mortgage market origination volumes because of their effect on the broader economy. These factors include higher average interest rates during this period when compared to the average of the three years prior to 2023, actions and communications by the Federal Reserve and ongoing geopolitical events. Specifically, actions taken by the United States government during the first half of 2025 to increase tariffs on foreign imports and reciprocal tariffs imposed by multiple foreign trading partners on United States exports, the enactment of comprehensive tax and spending bill and international armed conflicts have compounded economic uncertainty. These events have adversely impacted the willingness and ability of some mortgage origination segment’s customers to conduct mortgage transactions. While prolonged shortages of home inventories have shown some improvement during 2025 and the first quarterhalf of 2026, affordability challenges, in addition to uncertainties about the economy, continue to negatively impact customers’ abilities to purchase homes. During the first quarter of 2026, average mortgage interest rates decreased compared to the first quarter of 2025. Between September 2025 and December 2025, the Federal Reserve reduced the target range for the federal funds rate by a cumulative 75 basis points to 3.5% - 3.75%. Following these rate reductions, mortgage interest rates declined slightly,slightly during the first quarter of 2026, which had a modest positive impact on loan origination volumes from refinancings during the first half of 2026. In June 2026, the Federal Reserve maintained the target range for the federal funds rate at 3.5% - 3.75% and revised its economic outlook to reflect reduced expectations for near-term interest rate reductions. As a result, market expectations have shifted toward a prolonged elevated interest rate environment, which may continue to adversely affect housing affordability and refinancing demand. Additionally, mortgage origination volumes may remain affected by economic uncertainty, interest rate volatility and consumer sentiment. During the second quarter of 2026.2026, mortgage interest rates increased but remained below second quarter 2025 mortgage interest rates. We expect loan production during the secondthird quarter of 2026 to improveapproximate primarilythe second quarter of 2026 due to seasonallythe highercontinuation of seasonal home purchase activity.

PrimeLending continues to evaluate its cost structure to address the current mortgage environment and we believe that ongoing cost-saving initiatives are critical to improving PrimeLending’s short- and long-term financial condition and operating results. Due to conditionschallenges and challengesconditions discussed in detail within this section of segment results, the mortgage origination segment experienced operating losses during the three and six months ended MarchJune 31,30, 2026 and 2025.2026. In light of current macroeconomic challenges in the mortgage industry, the fair value of the mortgage origination reporting unit may decline, and we may be required to record a goodwill impairment charge. These conditions will continue to be considered during future impairment evaluations of goodwill.

As a Government National Mortgage Association (“GNMA”) approved lender, we are subject to minimum capital, leverage, net worth and liquidity requirements established by the Department of Housing and Urban Development (“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 leverage ratio is below 6% (the “GNMA leverage ratio”). If this occurs, certain additional financial reporting submissions are required. During the first, third and fourth quarters of 2025, the operating loss ratios were below the 20% threshold, while during the second quarter of 2025, PrimeLending reported a HUD operating gain. During the first quarterand second quarters of 2026, the operating loss ratio was below the 20% threshold at 3.3%.3.3% and 2.9%, respectively. During 2025, PrimeLending received capital infusions from its parent company, PlainsCapital Bank, totaling $25 million and the GNMA leverage ratios remained above the required 6% during each quarter of 2025. During the first quarter of 2026, the GNMA leverage ratio remained above the required 6% at 7.3%.7.3%, Anywhile trendsduring requiringJune notification2026, toPrimeLending received a $5 million capital infusion from PlainsCapital Bank and the GNMA andleverage HUDratio areremained formally reported to those entities. While no capital infusions were received duringabove the firstrequired quarter6% ofat 2026,6.4%. Additional capital infusions are possiblelikely in future periods, including those in the near-term, based on various factors including PrimeLending’s financial performance.

In addition, as a Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“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”). During each quarter of 2025 and the first quarterand second quarters of 2026, the capital ratio, including the 2025 and 2026 capital infusions previously noted, exceeded the required 6%. FNMA and FHLMC may also monitor additional financial performance trends at their discretion, including risk-based analyses focused on loans that the mortgage origination segment is currently responsible for representations and warranties that agency loans sold meet certain requirements, including representations as to underwriting standards and the validity of certain borrower representations in connection with the loan. One FNMA discretionary performance trend monitors the change in adjusted net worth during the prior twelve months. FNMA’s acceptable threshold for this performance trend is less than minus 30%,30% but is only considered if a company has four consecutive quarterly losses. As of March 31, 2026, PrimeLending was not subject to this performance threshold since the Company reported an operating gain duringDuring the second quarter of 2025.2026, PrimeLending recognized four consecutive quarterly losses and the loss ratio was 0.5%. Any trends requiring notification to FNMA and FHLMC are formally reported to those entities.

AverageWhile average mortgage interest rates duringincreased between the first quarterand second quarters of 2026 experienced a decline from2026, the 2025second annualquarter 2026 average rates.rates were below second quarter and total year 2025 average rates, respectively. Although we anticipate a slightly higher percentage of refinancing volume relative to total loan origination volume during 2026, as compared to 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 limited lending through its affiliated business arrangements (“ABAs”). For the threesix months ended MarchJune 31,30, 2026, funded volume through ABAs was approximately 9%10% of the mortgage origination segment’s total loan volume. Currently, PrimeLending owns a greater than 50% membership interest in two ABAs. We expect total production within the ABA channel to increase to approximately 12%11% of loan volume of the mortgage origination segment during the remainder of 2026.

The mortgage origination segment’s total loan origination volume decreased 1.6% and increased 16.4%5.9%, respectively, during the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, while the loss before income taxes increased 162.8% and decreased 71.5%13.7%, respectively, during the same period.periods. The decrease in loss before income taxes during the three months ended MarchJune 31,30, 2026, compared to the income before income taxes during the same period in 2025, was primarily due to a decrease in other income, partially offset by decreases in lender paid closing costs, non-variable compensation and benefits and net interest expense. The decrease in the loss before income taxes during the six months ended June 30, 2026, compared to the same period in 2025, was primarily due to an increase in net gains from sale of loans and a decreasedecreases in non-variable compensation and benefits.benefits and lender paid closing costs. These positive changes were partially offset by a decrease in other income and an unfavorable change in the net fair value and related derivative activity associated with interest rate lock commitments,commitments and loans held for sale and an increase in variable compensation. The decrease in other income during both periods was attributable to the receipt by PrimeLending of $9.5 million under the Settlements during the second quarter of 2025.

Net interest expense was comprised of interest income earned on loans held for sale offset by interest incurred on warehouse lines of credit with the Bank, and related intercompany financing costs. Net interest expense decreased during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, primarily due to a decline in the negative net interest margin.

Net gains from sale of loans decreased 6.2% and increased 31.6%,10.6%, respectively, while total loans sales volume decreased 4.4% and increased 15.8%4.7%, respectively, during the three and six months ended MarchJune 31,30, 2026, compared with the same periodperiods in 2025. During the three months ended MarchJune 31,30, 2026, the decrease in net gains from sales of loans was primarily the result of the decrease in mortgage loan sale volume. During the six months ended June 30, 2026, the increase in net gains from sales of loans was the result of aan higherincrease in mortgage loan sale volume and an increase in average loan sale volume in addition to the increase in the mortgage loan sale volume.margin.

We consider the mortgage origination segment’s net gains from sale of loans margin, in basis points, to be a key performance measure. Net gains from mortgage loan sales margin is defined as net gains from sale of loans divided by mortgage loan sales volume. The net gains from sale of loans is central to the segment’s generation of income and may include loans sold to third parties and loans sold to and retained by the banking segment. 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 fees are included in the mortgage origination segment operating results, and the correspondent fees are eliminated in consolidation. 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 banking segment during the three months ended MarchJune 31,30, 2026 and 2025 were $54.9$58.7 million and $62.5$43.2 million, respectively, and $113.6 million and $105.7 million during the six months ended June 30, 2026 and 2025, respectively. 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 interest rate lock commitments (“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 decreaseincrease in net fair value of IRLCs and loans held for sale during the three and six months ended MarchJune 31,30, 2026, was primarily the result of aan decreaseincrease in the average value of individual IRLCs and loans held for sale during the period.periods. ThisIn decreaseaddition, wasduring partiallyMarch offset by2026, a $0.8 million positive fair value adjustment to approximately $20 million of loans held for sale that cannotcould not be sold through normal sale channels or arewere non-performing.non-performing was recorded. The sale of these loans iswas expectedcompleted toin closeJune during2026 theat secondan quarteramount that approximated their fair value as of March 31, 2026.

The mortgage origination segment sells substantially all mortgage loans it originates to various investors in the secondary market. In addition, the mortgage origination segment originates loans on behalf of the Bank. The mortgage origination segment’s determination of whether to retain or release servicing on mortgage loans it sells is impacted by, among other things, changes in mortgage interest rates, refinancing and market activity, and balance sheet positioning at Hilltop. During the three and six months ended MarchJune 31,30, 2026, PrimeLending retained servicing on approximately 7%9% and 8%, respectively, of loans sold, compared with approximately 6%4% and 5%, respectively, of loans sold during the same periodperiods in 2025. 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. The mortgage origination segment may, from time to time, manage its MSR asset through different strategies, including varying the percentage of mortgage loans sold, servicing released and opportunistically selling MSR assets. The mortgage origination segment has also retained servicing on certain loans sold to and retained by the banking segment. Gains and losses associated with such sales to the banking segment and the related MSR asset are eliminated in consolidation.

The mortgage origination segment uses derivative financial instruments, including U.S. Treasury bond futures and options and MBS commitments, to mitigate interest rate risk associated with its MSR asset. Changes in the net fair value of the MSR asset and the related derivatives are associated with normal customer payments, changes in discount rates, prepayment speed assumptions and customer payoffs. During the three months ended MarchJune 31,30, 2026 and 2025, changes in the net fair value of the MSR asset and the related derivatives resulted in net losses of $0.8$0.9 million and $0.3 million, respectively.respectively, and net losses of $1.7 million and $0.5 million, respectively, during the six months ended June 30, 2026 and 2025.

During the threefirst monthsquarter ended March 31,of 2025, the mortgage origination segment expensed $0.8 million for amounts paid to the purchasers of MSR assets for loans included in a 2024 sale which prepaid within a defined period of time outlined in the sale agreements. At MarchJune 31,30, 2025, the mortgage origination segment serviced approximately $477$536 million of loan volume, valued at $6.9$7.9 million. As of MarchJune 31,30, 2026, the mortgage origination segment serviced approximately $1.3$1.4 billion of loan volume, valued at $20.2$22.9 million. PrimeLending does not currently expect the level of MSR assets to be significant in the short-term.