Hilltop Holdings Inc. (HTH)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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The following discussion should be read in conjunction with the consolidated historical financial statements and notes appearing elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the financial information set forth in the tables herein.

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Unless the context otherwise indicates, all references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, to the “Company,” “we,” “us,” “our” or “ours” or similar words are to Hilltop Holdings Inc. and its direct and indirect wholly owned subsidiaries, references to “Hilltop” refer solely to Hilltop Holdings Inc., references to “PCC” refer to PlainsCapital Corporation (a wholly owned subsidiary of Hilltop), references to “Securities Holdings” refer to Hilltop Securities Holdings LLC (a wholly owned subsidiary of Hilltop), references to “Hilltop Securities” refer to Hilltop Securities Inc. (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.

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FORWARD-LOOKING STATEMENTS

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This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as amended by the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included in this Quarterly Report that address results or developments that we expect or anticipate will or may occur in the future, and statements that are preceded by, followed by or include, words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “might,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view” or “would” or the negative of these words and phrases or similar words or phrases, including statements related to our objectives and business strategy, expectations concerning our financial condition, our revenue, the sufficiency of our liquidity and sources of funding, assumptions with relating to market trends, operations and business, taxes, information technology expenses, the impact of cybersecurity incidents, capital levels, mortgage servicing rights (“MSR”) assets, stock repurchases, dividend payments, expectations concerning mortgage loan origination volume, servicer advances and interest rate compression, expected levels of refinancing as a percentage of total loan origination volume, projected losses on mortgage loans originated, total expenses, the effects of government regulation applicable to our operations, the impact of macroeconomic conditions, the appropriateness of, and changes in, our allowance for credit losses and provision for (reversal of) credit losses, expected future benchmark rates, anticipated investment yields, our expectations regarding accretion of discount on loans in future periods, the collectability of loans, and the outcome of litigation are forward-looking statements.

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These forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us at the time of this Quarterly Report. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If any of these events or risks or uncertainties occur, our business, business plan, financial condition, liquidity and results of operations may vary materially from those results expressed in our forward-looking statements. Certain factors that could cause actual results to differ include, among others:

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For a more detailed discussion of these and other factors that may affect our business and that could cause the actual results to differ materially from those anticipated in these forward-looking statements, see “Risk Factors” in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”), which was filed with the Securities and Exchange Commission (“SEC”) on February 13, 2026, this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other filings we have made with the SEC. We caution that the foregoing list of factors is not exhaustive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. All subsequent written and oral forward-looking statements concerning our business attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this Quarterly Report except to the extent required by federal securities laws.

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OVERVIEW

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We are a financial holding company registered under the Bank Holding Company Act of 1956. Our primary line of business is to provide business and consumer banking services from offices located throughout Texas through the Bank. We also provide an array of financial products and services through our broker-dealer and mortgage origination segments. The following includes additional details regarding the financial products and services provided by each of our primary business units.

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PCC. PCC is a financial holding company that provides, through its subsidiaries, traditional banking and wealth, investment and treasury management services primarily in Texas and residential mortgage loans throughout the United States.

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Securities Holdings. Securities Holdings is a holding company that provides, through its subsidiaries, investment banking and other related financial services, including municipal advisory, sales, trading and underwriting of taxable and tax-exempt fixed income securities, clearing, securities lending, structured finance and retail brokerage services throughout the United States.

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The following historical consolidated data for the periods indicated has been derived from our historical consolidated financial statements included elsewhere in this Quarterly Report (dollars and shares in thousands, except per share data).

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[Excerpt truncated for page length; source filing is linked above.]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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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 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.”

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Unless the context otherwise indicates, all references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to the “Company,” “we,” “us,” “our” or “ours” or similar words are to Hilltop Holdings Inc. and its direct and indirect wholly owned subsidiaries, references to “Hilltop” refer solely to Hilltop Holdings Inc., references to “PCC” refer to PlainsCapital Corporation (a wholly owned subsidiary of Hilltop), references to “Securities Holdings” refer to Hilltop Securities Holdings LLC (a wholly owned subsidiary of Hilltop), references to “Hilltop Securities” refer to Hilltop Securities Inc. (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.

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OVERVIEW

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We are a financial holding company registered under the Bank Holding Company Act of 1956. Our primary line of business is to provide business and consumer banking services from offices located throughout Texas through the Bank. We also provide an array of financial products and services through our broker-dealer and mortgage origination segments. The following includes additional details regarding the financial products and services provided by each of our primary business units.

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PCC. PCC is a financial holding company that provides, through its subsidiaries, traditional banking and wealth, investment and treasury management services primarily in Texas and residential mortgage loans throughout the United States.

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Securities Holdings. Securities Holdings is a holding company that provides, through its subsidiaries, investment banking and other related financial services, including municipal advisory, sales, trading and underwriting of taxable and tax-exempt fixed income securities, clearing, securities lending, structured finance and retail brokerage services throughout the United States.

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The following historical consolidated data for the periods indicated has been derived from our historical consolidated financial statements included elsewhere in this Annual Report (dollars and shares in thousands, except per share data).

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Consolidated income before income taxes during 2025 included the following contributions from our reportable business segments.

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

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

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During 2025, we paid $184.0 million to repurchase an aggregate of 5,705,205 shares of our common stock at an average price of $32.26 per share. During 2024, we paid $19.9 million to repurchase an aggregate of 640,042 shares of our common stock at an average price of $31.04 per share. These shares were repurchased under previous stock repurchase programs and returned to the pool of authorized but unissued shares of common stock.

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On January 29, 2026, our board of directors declared a quarterly cash dividend of $0.20 per common share, an 11% increase from the prior quarter, payable on February 27, 2026 to all common stockholders of record as of the close of business on February 13, 2026. Additionally, on January 29, 2026, our board of directors authorized a new stock repurchase program through January 2027, pursuant to which we are authorized to repurchase, in the aggregate, up to $125.0 million of our outstanding common stock. We commenced share repurchases under the stock repurchase program in the first quarter of 2026.

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Reconciliation and Management’s Explanation of Non-GAAP Financial Measures

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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 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.

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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 table reconciles 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).

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Recent Developments

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Notes Redemption

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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.

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On May 15, 2025 (the “2030 Subordinated Notes Redemption Date”), we redeemed all of our outstanding 5.75% Fixed-to-Floating Subordinated Notes due 2030 (the “2030 Subordinated Notes”) at a redemption price equal to the aggregate principal amount of $50 million, plus accrued and unpaid interest to, but excluding, the 2030 Subordinated Notes Redemption Date (collectively, the “2030 Subordinated Notes Redemption Price”). The redemption of the 2030 Subordinated Notes was pursuant to the First Supplemental Indenture, dated as of May 11, 2020 (the “First Supplemental Indenture”), to the Indenture, dated as of May 11, 2020, between the Company and U.S. Bank National Association, as Trustee, which permitted the redemption of the 2030 Subordinated Notes beginning on May 15, 2025 (the date on which the 2030 Subordinated Notes converted from fixed to floating rate). The Company irrevocably deposited with the Trustee funds using cash on hand in an amount sufficient to pay the 2030 Subordinated Notes Redemption Price on the 2030 Subordinated Notes Redemption Date to satisfy and discharge its obligations under the 2030 Subordinated Notes and the First Supplemental Indenture.

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Merchant Bank Transaction

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In January 2025, our merchant bank subsidiary entered into a definitive agreement to sell all of the capital stock of Moser Acquisition, Inc. to Atlas Energy Solutions Inc. (“Atlas”) for consideration including cash and Atlas common stock. On February 24, 2025, the sale of the operations associated with our approximate 30% aggregate interest in Moser Holdings, LLC, which owns Moser Acquisition, Inc., was consummated. Our aggregate interest in Moser Holdings, LLC included equity investments that were included, and will continue to be included, within other assets in the consolidated balance sheets until liquidation of Moser Holdings, LLC. An initial pre-tax gain of $30.5 million ($23.6 million net of tax) was recorded during the first quarter of 2025 based on our aggregate interest in Moser Holdings, LLC and reported primarily as a component of other noninterest income within the consolidated statements of operations. Subsequently, during 2025, we recorded additional net adjustments associated with our aggregate interest in Moser Holdings, LLC and the liquidation Atlas common stock that resulted in an aggregate pre-tax gain during 2025 of $27.8 million ($21.6 million net of tax). The gain is subject to change given customary post-closing adjustments and the liquidation of Moser Holdings, LLC.

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Settlement Agreement & Releases

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In April 2025, PrimeLending entered into multiple Settlement Agreement & Releases (the “Settlements”) related to a matter whereby PrimeLending received an aggregate of $9.5 million from the respective parties thereto. The full amount associated with the Settlements was recorded within other noninterest income in the consolidated statement of operations during the second quarter of 2025.

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Economic Environment

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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 during 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

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significance of further changes in U.S. treasury yields and mortgage interest rates, and a volatile economic forecast. These economic conditions, coupled with exposure to changes in funding costs, inflationary pressures, and international armed conflicts and their impact on supply 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.

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Uncertainty around general economic, market and business conditions impacts our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs. Significant judgment is required to estimate the severity and duration of the current economic uncertainties, as well as its potential impact on borrower cash flow. While all industries could experience volatility and adverse impacts, certain of our loan portfolio industry sectors and subsectors, including office buildings, retail, hotel/motel and auto note financing, have an increased level of risk given business and consumer sensitivity to interest rates and the size and permanence of tariffs. Refer to the discussions in the “Financial Condition – Loan Portfolio” and “Financial Condition – Allowance for Credit Losses” sections that follow for more details regarding the Bank’s loan portfolio and significant assumptions and estimates involved in estimating credit losses.

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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 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 2024, we increased interest-bearing deposit rates to address rising market interest rates and intense competition for liquidity to combat deposit outflows. Throughout 2024, we experienced net interest margin compression reflecting deposit repricing activity and demand deposit migration into interest-bearing accounts. Despite deposit costs remaining elevated throughout 2025, we took actions to reduce the interest paid on our interest-bearing deposits. Additionally, at December 31, 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.

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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 December 31, 2025.

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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 2024 and 2025, to continue in 2026.

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See “Item 1A. Risk Factors” for additional discussion of the potential adverse impacts of unpredictable economic, market and business conditions on our business, results of operations and financial condition.

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Asset Valuation

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At each reporting date between annual impairment tests, we consider potential indicators of impairment, including the condition of the economy and financial services industry; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the business segment; performance of our stock and other relevant events.

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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 the mortgage origination segment’s short- and long-term financial condition, resulting in variability in its operating results.

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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 are longer than currently anticipated. We further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and sensitivities performed. Accordingly, at the conclusion of the annual assessments, we determined that as of October 1, 2025 it was more likely than not that the fair value of goodwill and other intangible assets exceeded their respective carrying values. We continue to monitor developments regarding overall economic conditions, market capitalization, and any other triggering events or circumstances that may indicate an impairment in the future.

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To the extent future operating performance of our reporting segments remain challenged and below forecasted projections during 2026, significant assumptions such as expected future cash flows or the risk-adjusted discount rate used to estimate fair value are adversely impacted, or upon the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform impairment tests on our goodwill and other intangible assets, an impairment charge may be recorded for that period. In the event that we conclude that all or a portion of our goodwill and other intangible assets are impaired, a non-cash charge for the respective amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital or regulatory capital.

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Factors Affecting Results of Operations

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As a financial institution providing products and services through our banking, broker-dealer and mortgage origination segments, we are directly affected by general economic and market conditions, many of which are beyond our control and unpredictable. A key factor impacting our results of operations is changes in the level of interest rates in addition to twists in the shape of the yield curve with the magnitude and direction of the impact varying across the different lines of business. Other factors impacting our results of operations include, but are not limited to, fluctuations in volume and price levels of securities, inflation, political events, investor confidence, investor participation levels, legal, regulatory, and compliance requirements and competition. All of these factors have the potential to impact our financial position, operating results and liquidity. In addition, the recent economic and political environment has led to legislative and regulatory initiatives, both enacted and proposed, that could substantially change the regulation of the financial services industry and may significantly impact us.

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Acquisitions

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On November 30, 2012, we acquired PlainsCapital Corporation pursuant to a plan of merger whereby PlainsCapital Corporation merged with and into our wholly owned subsidiary (the “PlainsCapital Merger”), which continued as the surviving entity under the name “PlainsCapital Corporation”. Concurrent with the consummation of the PlainsCapital Merger, Hilltop became a financial holding company registered under the Bank Holding Company Act of 1956.

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On September 13, 2013, the Bank assumed substantially all of the liabilities, including all of the deposits, and acquired substantially all of the assets of Edinburg, Texas-based FNB from the FDIC, as receiver, and reopened former branches of FNB acquired from the FDIC under the “PlainsCapital Bank” name (the “FNB Transaction”).

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On January 1, 2015, we acquired SWS in a stock and cash transaction (the “SWS Merger”), whereby SWS’s broker-dealer subsidiaries became subsidiaries of Securities Holdings and SWS’s banking subsidiary, Southwest Securities, FSB, was merged into the Bank. On October 5, 2015, Southwest Securities, Inc. was renamed “Hilltop Securities Inc.”

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On August 1, 2018, we acquired privately-held, Houston-based BORO in an all-cash transaction (“BORO Acquisition”). In connection with the BORO Acquisition, we merged BORO into the Bank, and all customer accounts were converted to the PlainsCapital Bank platform.

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Segment Information

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The Company has two primary business units, PCC (banking and mortgage origination) and Securities Holdings (broker-dealer). Under 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.

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The banking segment includes the operations of the Bank. The banking segment primarily provides business and consumer banking services from offices located throughout Texas and generates revenue from its portfolio of earning assets. The Bank’s results of operations are primarily dependent on net interest income. The Bank also derives revenue from other sources, including service charges on customer deposit accounts and trust fees.

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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.

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The mortgage origination segment includes the operations of PrimeLending, which offers a variety of loan products and generates revenue predominantly from fees charged on the origination and servicing of loans and from selling these loans in the secondary market.

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Corporate includes certain activities not allocated to specific business segments. These activities include holding company financing and investing activities, merchant banking investment opportunities, and management and administrative services to support the overall operations of the Company.

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The eliminations of intercompany transactions are included in “All Other and Eliminations.” Additional information concerning our reportable business segments is presented in Note 27, “Segment and Related Information,” in the notes to our consolidated financial statements.

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The following table presents certain information about the continuing operating results of our reportable business segments (in thousands). This table serves as a basis for the discussion and analysis in the segment operating results sections that follow.

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Key Performance Indicators

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We utilize several key indicators of financial condition and operating performance to evaluate the various aspects of our business. In addition to traditional financial metrics, such as revenue and growth trends, we monitor several other financial measures and non-financial operating metrics to help us evaluate growth trends, measure the adequacy of our capital based on regulatory reporting requirements, measure the effectiveness of our operations and assess operational efficiencies. These indicators change from time to time as the opportunities and challenges in our businesses change.

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Performance ratios and asset quality ratios are typically used for measuring the performance of banking and financial institutions. We consider return on average stockholders’ equity, return on average assets and net interest margin to be important supplemental measures of operating performance that are commonly used by securities analysts, investors and other parties interested in the banking and financial industry. The net recoveries (charge-offs) to average loans outstanding ratio is also considered a key measure for our banking segment as it indicates the performance of our loan portfolio.

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In addition, we consider regulatory capital ratios to be key measures that are used by us, as well as banking regulators, investors and analysts, to assess our regulatory capital position and to compare our regulatory capital to that of other financial services companies. We monitor our capital strength in terms of both leverage ratio and risk-based capital ratios

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based on capital requirements administered by the federal banking agencies. The risk-based capital ratios are minimum supervisory ratios generally applicable to banking organizations, but banking organizations are widely expected to operate with capital positions well above the minimum ratios. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that, if undertaken, could have a material effect on our financial condition or results of operations.

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How We Generate Revenue

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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 $440.7 million in net interest income during 2025, compared with net interest income of $417.8 million and $466.8 million during 2024 and 2023, respectively. The change in reportable business segment net interest income during 2025, compared with 2024, primarily reflected significant improvements within corporate and the banking and mortgage origination segments.

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The other component of our revenue is noninterest income, which is primarily comprised of the following:

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In the aggregate, we generated $841.1 million, $771.0 million and $729.0 million in noninterest income during 2025, 2024 and 2023, respectively. The increase in noninterest income during 2025, compared with 2024, was predominantly attributable, as noted in the segment results table previously presented, primarily due to an increase in pre-tax gains associated with merchant bank equity investment activity within corporate and increased noninterest income within our broker-dealer segment from increased investment banking, advisory and administrative fees partially offset by a reduction in principal transactions, commission and fees.

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We also incur noninterest expenses in the operation of our businesses. Our businesses engage in labor intensive activities and, consequently, employees’ compensation and benefits represent the majority of our noninterest expenses.

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Consolidated Operating Results

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Income applicable to common stockholders during 2025 was $165.6 million, or $2.64 per diluted share, compared with $113.2 million, or $1.74 per diluted share, during 2024, and $109.6 million, or $1.69 per diluted share, during 2023. Hilltop’s financial results during 2025 and 2024, compared with 2024 and 2023, respectively, 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.

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Certain items included in net income during 2025, 2024 and 2023 resulted from purchase accounting associated with the PlainsCapital Merger, the FNB Transaction, the SWS Merger and the BORO Acquisition (collectively, the “Bank Transactions”). Income before income taxes during 2025, 2024 and 2023 included net accretion on earning assets and liabilities of $3.1 million, $5.1 million and $8.6 million, respectively, and amortization of identifiable intangibles of $1.0 million, $1.8 million and $2.9 million, respectively, related to the Bank Transactions.

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The information shown in the table below includes certain key performance indicators on a consolidated basis.

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We present net interest margin and net interest income on a taxable-equivalent 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.

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During 2025, 2024 and 2023, purchase accounting contributed 2, 4 and 6 basis points, respectively, to our consolidated taxable equivalent net interest margin of 3.00%, 2.83% and 3.09%, respectively. The purchase accounting activity is primarily related to the accretion of discount on loans which totaled $3.1 million, $5.1 million and $8.6 million during 2025, 2024 and 2023, respectively, associated with the Bank Transactions.

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

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The banking segment’s net interest margin exceeds our consolidated net interest margin shown above. Our consolidated net interest margin includes certain items that are not reflected in the calculation of our net interest margin within our banking segment and reduce our consolidated net interest margin, such as the borrowing costs of Hilltop and the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities, such as securities borrowed in the broker-dealer segment and securities loaned in the broker-dealer segment, including items related to securities financing operations that particularly decrease net interest margin. In addition, yields and costs on certain interest-earning assets, such as lines of credit extended to other operating segments by the banking segment, are eliminated from the consolidated financial statements.

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On a consolidated basis, the changes in net interest income during 2025, compared with 2024, were primarily due to decreased costs of deposits from rate decreases and decreased interest costs from the redemption of certain notes payable, partially offset by decreased interest income from loans held for investment yields and interest-bearing deposit yields from rate decreases. Refer to the discussion in the “Banking Segment” section that follows for more details on the

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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.

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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, significantly offset by both the change in the U.S. economic outlook and changes in the collectively evaluated loan portfolio. 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.

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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 the 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.

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Noninterest expense increased during 2025, compared with 2024, primarily due to increases in both variable and non-variable compensation within our broker-dealer segment and an increase in variable compensation within our mortgage origination segment and within corporate associated with the sale of certain merchant bank equity investments during 2025, partially offset by a decrease in other segment operating costs within our mortgage origination segment. We continued to experience increases in certain noninterest expenses during 2025 and 2024, compared with respective prior periods, including compensation, occupancy, and software costs, due to inflationary pressures. We expect such inflationary headwinds to continue during 2026.

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Effective income tax rates were 22.2%, 20.1% and 20.9% for 2025, 2024 and 2023, respectively. The effective tax rate for 2025 was higher than the applicable statutory rate primarily due to the impact of nondeductible expenses, nondeductible compensation expense and other permanent adjustments, partially offset by investments in tax-exempt instruments, state refund claims and return to provision adjustments. The effective tax rate for 2024 was lower than the applicable statutory rate primarily due to investments in tax-exempt instruments, state refund claims and return to provision adjustments, partially offset by the impact of nondeductible expenses, nondeductible compensation expense and other permanent adjustments.

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Segment Results

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Banking Segment

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The following table presents certain information about the operating results of our banking segment (in thousands).

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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. 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.

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As discussed in more detail below, the banking segment’s cost of deposits decreased during 2025 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. We are continuing to actively manage our overall deposit costs and anticipate potential opportunities to further lower interest-bearing deposit rates. Future decisions on the costs of deposits will 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.

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The information shown in the table below includes certain key indicators of the performance and asset quality of our banking segment.

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The banking segment presents net interest margin and net interest income in the following discussion and table below, on a taxable equivalent basis. 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 rates of 21% for all periods presented. The banking segment 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.

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During 2025, 2024 and 2023, purchase accounting contributed 3, 4 and 7 basis points, respectively, to the banking segment’s taxable equivalent net interest margin of 3.17%, 3.04% and 3.14%, respectively. These purchase accounting items are primarily related to accretion of discount on loans associated with the Bank Transactions presented in the Consolidated Operating Results section.

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

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The banking segment’s net interest margin exceeds our consolidated net interest margin. Our consolidated net interest margin includes certain items that are not reflected in the calculation of our net interest margin within our banking segment and reduce our consolidated net interest margin, such as the borrowing costs of Hilltop and the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities, such as securities borrowed in the broker-dealer segment and securities loaned in the broker-dealer segment, including items related to securities financing operations that particularly decrease net interest margin. In addition, yields and costs on certain interest-earning assets, such as lines of credit extended to other operating segments by the banking segment, are eliminated from the consolidated financial statements.

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The following table summarizes the changes in the banking segment’s net interest income for the periods indicated below, 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 (in thousands).

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With regard to net interest income, as of December 31, 2025, the banking segment maintained an asset sensitive rate risk position, meaning the amount of its interest-earning assets maturing or repricing within a given period exceeds the amount of its interest-bearing liabilities also maturing or repricing within that time period. 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.

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The increases in net interest 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-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.

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The average rate paid on interest-bearing liabilities decreased 70 basis points from 3.77% for 2024 to 3.07% for 2025, while the average yield on interest-earning assets decreased 32 basis points from 5.58% for 2024 to 5.26% for 2025.

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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 December 31, 2025, approximately $561 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 21% 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.

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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 2025, compared to 2024. While we expect such costs during 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 December 31, 2025, total estimated uninsured deposits were $5.9 billion, or approximately 54% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $693.9 million and internal accounts of $302.8 million, were $4.9 billion, or approximately 45% of total deposits.

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Refer to the discussion in the “Liquidity and Capital Resources – Banking Segment” section that follows for more detail regarding the Bank’s activities regarding deposits, available liquidity and borrowing capacity.

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To help mitigate net interest income spread volatility between our assets and liabilities, management maintains derivative trades, as either cash flow hedges or fair value hedges, that better align repricing characteristics. Despite having these hedges in place, changes in interest rates across the term structure may continue to impact net interest income and net interest margin. The impact of rate movements will change with the shape of the yield curve, including any changes in steepness or flatness and inversions at any points on the yield curve.

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During 2025, 2024 and 2023, the banking segment retained approximately $185.4 million, $124.3 million and $140.3 million, respectively, in mortgage loans originated by the mortgage origination segment. These 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.

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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

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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. 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.

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The banking segment’s noninterest income increased 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.

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The banking segment’s noninterest expenses decreased 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. Additionally, during 2024, the Bank incurred one-time compensation expenses associated with Bank leadership changes, partially offset by decreases in professional fees.

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Broker-Dealer Segment

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The following table provides additional details regarding our broker-dealer segment operating results (in thousands).

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The increases in net revenue and income before income taxes during 2025, compared with 2024, was primarily due to improved net revenues within our public finance services, fixed income services and wealth management business lines, partially offset by a decline in net revenues within our structured finance business line and increases in segment compensation 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 banking services. 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 products. The increase in the wealth management business line’s net revenue was driven by an increase in advisory fees revenues generated from customer assets under management. The decrease in the structured finance business line’s net revenues was primarily due to a decrease in trading gains from the to-be-announced (“TBA”) business partially offset by commissions earned on commodities and

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securitized 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.

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The increase in net revenue and the decline in income before income taxes during 2024, compared with 2023, was primarily due to improved period-over-period results within our structured finance and public finance services business lines, partially offset by declines within our fixed income services and wealth management business lines and increases in segment compensation costs. The increase in the structured finance business line’s net revenues was primarily due to an increase in trading gains from the TBA business and commissions earned on commodities transactions. The increase in net revenues in the broker-dealer segment’s public finance services business line was primarily due to fees earned from managed assets and municipal advisory revenues. The wealth management business line’s net revenue decrease was driven by decreases 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 net revenues in the broker-dealer segment’s fixed income services business line was primarily due to declines in revenues from net interest income earned on inventory positions and trading profits. Income before income taxes for the year ended December 31, 2024 was impacted by the changes in net revenues as described above and a net increase in noninterest expense.

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The broker-dealer segment is subject to interest rate risk as a consequence of maintaining inventory positions, trading in interest rate sensitive financial instruments and maintaining a matched stock loan book. Changes in interest rates are likely to have a meaningful impact on our overall financial performance. Our broker-dealer segment has historically earned a significant portion of its revenues from advisory fees upon the successful completion of client transactions, which could be adversely impacted by interest rate volatility. Rapid or significant changes in interest rates could adversely affect the broker-dealer segment’s bond trading, sales, underwriting activities and other interest spread-sensitive activities described below. The broker-dealer segment also receives administrative fees for providing money market and FDIC investment alternatives to clients, which tend to be sensitive to short-term interest rates. In addition, the profitability of the broker-dealer segment depends, to an extent, on the spread between revenues earned on customer loans and excess customer cash balances, and the interest expense paid on customer cash balances, as well as the interest revenue earned on trading securities, net of financing costs. The broker-dealer segment is also exposed to interest rate risk through its structured finance business line, which is dependent on mortgage loan production that tends to be adversely impacted by increasing interest rates, resulting in valuation-related adjustments.

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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.

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Noninterest income increased during 2025, compared with 2024, primarily due to increases in investment banking, advisory and administrative fees, partially offset by decreases in principal transactions, commissions and fees and other noninterest income. Noninterest income increased during 2024, compared with 2023, primarily due to increases in principal transactions, commissions and fees, investment banking, advisory and administrative fees and other noninterest income.

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Principal transactions, commissions and fees decreased during 2025, compared with 2024, primarily due to decreases in trading gains earned from our structured finance business line, partially offset by increases in commodities and insurance product sales commissions and earnings from our fixed income services line of business. Principal transactions, commissions and fees increased during 2024, compared with 2023, primarily due to an increase in the broker-dealer segment’s structured finance business line due to an increase in commissions earned on commodities transactions and increases in trading gains earned from structured finance trading activities. Buy-side demand improved resulting in increases in the structured finance business line for 2024, when compared to 2023. The increase in principal transactions, commissions and fees during 2024, compared with 2023, was partially offset by the decreases in the fixed income services and wealth management business lines. The decrease in the fixed income services business line was primarily due to

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decreased trading gains driven by municipal and taxable securities trading despite the increase in trading volumes. The declines in principal transactions, commissions and fees in the broker-dealer segment’s wealth management business line was due to decreases in FDIC sweep revenues and net clearing revenues, as well as a decline in commissions earned on insurance product sales.

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Investment banking advisory and administrative fees increased during 2025, compared with 2024, primarily due to increases in fees earned from managed assets and municipal advisory transactions. Investment banking advisory and administrative fees increased during 2024, compared with 2023, primarily due to increases in fees earned from managed assets and municipal advisory transactions.

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The increase in noninterest expenses during 2025, compared with 2024, was due to increases in segment compensation primarily from increased variable compensation, health insurance and severance costs. The increase in noninterest expenses during 2024, compared with 2023, was due to increases in segment compensation and other segment operating costs, primarily quotation expenses.

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

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Mortgage Origination Segment

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The following table presents certain information regarding the operating results of our mortgage origination segment (in thousands).

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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 have negatively impacted home purchase volume through 2025. The 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 during the second half of 2025. During the fourth quarter of 2025, average mortgage interest rates decreased compared to average mortgage rates during the fourth quarter of 2024. See details regarding loan origination volume in the table below.

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Current trends, as well as typical historical patterns in loan origination volume from purchases of homes or from refinancings because of movements in mortgage interest rates, may not be indicative of future loan origination volumes. Between 2023 and 2025, certain events initially triggered as early as 2022 have continued to challenge total mortgage market origination volumes because of their effect on the economy, including an increase in average interest rates during this period when compared to the average of the three years prior to 2023, the Federal Reserve’s actions and communications, geopolitical events and ongoing economic uncertainty. During 2025, specific developments driving economic uncertainty include the United States government’s position on increasing tariffs on foreign imports and reciprocal tariffs imposed by numerous United States foreign trading partners on United States exports and the government’s passage of a comprehensive tax and spending 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%. These were the first reductions since March 2022 when the target range was 0.25% - 0.50%. Between September 2025 and December 2025, the Federal Reserve cut the target range for the federal funds rate by another 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. However, during the last six months of 2025 average mortgage 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 reduced a portion of its underwriting, loan fulfillment, operations and corporate headcount to address current mortgage market production challenges. Anticipated annual savings associated with these reductions approximate $4.4 million.

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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 conditions and challenges discussed in detail within this section of segment results, the mortgage origination segment experienced operating losses during 2024 and 2025. While the mortgage origination segment reported income before income taxes during the second quarter of 2025, an operating loss would have been experienced if not for the receipt by PrimeLending of $9.5 million associated with the Settlements. In light of these current macroeconomic challenges in the mortgage industry including tight housing inventories and mortgage interest rate levels, the fair value of the mortgage origination reporting unit may decline, and we may be required to record a

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goodwill impairment charge. These conditions will continue to be considered during future impairment evaluations of goodwill.

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As a GNMA approved lender, we are subject to minimum capital, leverage, net worth and liquidity requirements established by HUD and GNMA, including timely reporting if a quarter’s operating loss exceeds more than 20% of its previous quarter or year-end net worth (the “operating loss ratio”) and/or if a quarter’s capital ratio is below 6% (the “GNMA leverage ratio”). If this occurs, certain additional financial reporting submissions are required. During the first quarter of 2024, the HUD operating loss ratio was 22.6%, while during the second quarter of 2024, PrimeLending reported a HUD operating gain. During the third and fourth quarters of 2024 and the first, third and fourth quarters of 2025, the operating loss ratios were below the 20% threshold at 14.4%, 16.6%, 12.9%, 10.3% and 7.3%, respectively. PrimeLending reported a HUD operating gain during the second quarter of 2025. During the first and second quarters of 2024, the GNMA leverage ratio was 5.56% and 4.41%, respectively. Including two $10 million capital infusions received by PrimeLending from its parent company, PlainsCapital Bank, between September and December 2024 totaling $20 million, the GNMA leverage ratio increased to 6.38% and 6.36% during the third and fourth quarters of 2024, respectively. During 2025, PrimeLending received additional capital infusions from PlainsCapital Bank totaling $25 million and the GNMA leverage ratio remained above the required 6% at 7.12%, 6.30%, 7.35% and 6.73% during each consecutive quarter of 2025, respectively. Any of these trends requiring notification to GNMA and HUD have been reported to those entities, respectively. Such capital infusions are possible in future periods, including those in the near-term, based on a range of factors including PrimeLending’s financial performance.

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In addition, as a FNMA and FHLMC approved lender, we are subject to certain minimum capital, net worth and liquidity requirements established by FNMA and FHLMC, including maintaining a minimum capital ratio of 6% (the “FNMA/FHLMC capital ratio”). The FNMA/FHLMC capital ratio exceeded the required 6%, for each quarter during 2025 and 2024, except during the second quarter of 2024, the capital ratio decreased to 5.52%. 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%, but is only considered if a company has four consecutive quarterly losses. During the first, second, third and fourth quarters of 2024, PrimeLending experienced four consecutive quarterly losses; the loss ratios during these periods were 37.5%, 28.9%, 23.9% and 13.7%, respectively. PrimeLending also recognized four consecutive quarterly losses during the first quarter of 2025, when the loss ratio was 10.5%. During the second quarter of 2025 PrimeLending reported an operating gain. PrimeLending reported a loss during both the third and fourth quarters of 2025. Any of these trends requiring notification to FNMA and FHLMC have been reported to those entities, respectively.

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The loss before income taxes decreased in 2025, compared with 2024. This decrease was primarily the result of decreases in noninterest expense and net interest expense, partially offset by a decline in noninterest income. The loss before income taxes decreased in 2024, compared with 2023. This decrease was primarily the result of a decrease in noninterest expense.

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Average interest rates during the latter part of 2025 experienced a gradual decline from the peak levels reached in 2022. Refinancing volume as a percentage of total origination volume was higher during 2025 at 14.1%, compared to 9.9%, during 2024. Although we anticipate the percentage of refinancing volume relative to total loan origination volume during 2026 will approximate 2025, an even higher refinance percentage could be driven by a slowing of purchase volume due to the negative impact on new and existing home sales resulting from existing home inventory shortages and affordability challenges related to new home construction, and/or an increase in all-cash buyers.

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The mortgage origination segment primarily originates its mortgage loans through a retail channel, with additional lending through its affiliated business arrangements (“ABAs”). For 2025, funded volume through ABAs was approximately 14% of the mortgage origination segment’s total loan volume. Currently, PrimeLending owns a greater than 50% interest in two ABAs. We expect total production within the ABA channel to continue to approximate 14% of loan volume of the mortgage origination segment during 2026.

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The following table provides further details regarding our mortgage loan originations and sales for the periods indicated below (dollars in thousands). Loan volumes associated with mortgage loan transactions facilitated between PrimeLending and third-party mortgage lenders when requested products are not offered by PrimeLending are included in mortgage loan origination units and volume and are not included in mortgage loan sales volume below.

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