Hilltop Holdings Inc.

Previous wording

Consolidated income before income taxes during the three months ended March 31, 2025 included the following contributions from our reportable business segments.

Current wording

Consolidated income before income taxes during the three and six months ended June 30, 2025 included the following contributions from our reportable business segments.

Previous wording

During the three months ended March 31, 2025, we declared and paid total common dividends of $11.6 million.

Current wording

During the six months ended June 30, 2025, we declared and paid total common dividends of $23.2 million.

Previous wording

In January 2025, our board of directors authorized a new stock repurchase program through January 2026, pursuant to which we are authorized to repurchase, in the aggregate, up to $100.0 million of our outstanding common stock, inclusive of repurchases to offset dilution related to grants of stock-based compensation. During the three months ended March 31, 2025, we paid $33.3 million to repurchase an aggregate of 1,046,540 shares of our common stock at an average price of $31.80 per share pursuant to the stock repurchase program.

Current wording

In January 2025, our board of directors authorized a new stock repurchase program through January 2026, pursuant to which we were originally authorized to repurchase, in the aggregate, up to $100.0 million of our outstanding common stock. In July 2025, our board of directors authorized, subject to non-objection from the Board of Governors of the Federal Reserve, an increase to the aggregate amount of common stock we may repurchase under this program to $135.0 million, which is inclusive of repurchases to offset dilution related to grants of stock-based compensation. During the six months ended June 30, 2025, we paid $68.2 million to repurchase an aggregate of 2,203,936 shares of our common stock at an average price of $30.94 per share pursuant to the stock repurchase program. As a result of share repurchases during 2025, Hilltop has approximately $67 million of available share repurchase capacity, subject to non-objection with respect to the additional $35.0 million, through the expiration of the 2025 stock repurchase program in January 2026.

Previous wording

On January 15, 2025 (the “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 Redemption Date (collectively, the “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 Redemption Price on the Redemption Date to satisfy and discharge its obligations under the Senior Notes and the Senior Notes Indenture.

Current wording

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.

Previous wording

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 noted transaction to sell 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. A preliminary 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 as a component of other noninterest income within the consolidated statements of operations. The preliminary gain is subject to change given customary post-closing adjustments, changes in the market value of the stock consideration included in transaction given certain restrictions, and liquidation of Moser Holdings, LLC.

Current wording

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 noted transaction to sell 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. A preliminary 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 reported as a component of other noninterest income within the consolidated statements of operations. During the second quarter of 2025, we recorded additional net downward adjustments associated with its aggregate interest in Moser Holdings, LLC and the liquidation of a portion of the Atlas common stock of $3.4 million that resulted in an aggregate preliminary pre-tax gain during 2025 of $27.1 million ($21.0 million net of tax). The preliminary gain is subject to change given customary post-closing adjustments, changes in the market value of the stock consideration included in transaction given certain restrictions, and the liquidation of Moser Holdings, LLC.

Previous wording

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 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 deposits costs remaining elevated during the first quarter of 2025, our cost of deposits decreased during the three months ended March 31, 2025, compared to the same period of 2024, as we took actions to reduce the interest paid on our interest-bearing deposits. Additionally, at March 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.

Current wording

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 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 deposits costs remaining elevated during the first and second quarters of 2025, our cost of deposits decreased during the six months ended June 30, 2025, compared to the same period of 2024, as we took actions to reduce the interest paid on our interest-bearing deposits. Additionally, at June 30, 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.

Previous wording

While funding costs will continue to be influenced by various factors, including competitive pressures, broader economic conditions, future changes in the target range for the federal funds rate, our customers’ appetite for higher yields on deposits, and our overall liquidity profile, we anticipate that our cost of deposits will continue to trend modestly downward. 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 March 31, 2025.

Current wording

While funding costs will continue to be influenced by various factors, including competitive pressures, broader economic conditions, future changes in the target range for the federal funds rate, our customers’ appetite for higher yields on deposits, and our overall liquidity profile. 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 June 30, 2025.

Previous wording

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 increased cost and challenge for deposits that persisted through 2024, to continue during 2025.

Current wording

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 increased cost and challenge for deposits that persisted through 2024, to continue during the remainder of 2025.

Previous wording

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 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

Current wording

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 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.

Previous wording

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. The change in reportable business segment net interest income during the three months ended March 31, 2025, compared with the same period in 2024, primarily reflected increases within our mortgage origination and corporate segments, partially offset by a slight decrease within our banking segment.

Current wording

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. The change in reportable business segment net interest income during the six months ended June 30, 2025, compared with the same period in 2024, primarily reflected a significant increase within our corporate segment.

Previous wording

In the aggregate, we experienced an increase in noninterest income during the three months ended March 31, 2025, compared to the same period in 2024, 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, increases in investment and securities advisory fees and commissions and securities commissions and fees, offset by decreases in trading gains earned from trading activities within our broker-dealer segment.

Current wording

In the aggregate, we experienced an increase in noninterest income during the six months ended June 30, 2025, compared to the same period in 2024, 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. Additionally, within our broker-dealer segment, noninterest income declined due to a reduction trading gains earned from trading activities, offset by increases in investment and securities advisory fees and commissions and securities commissions and fees.

Previous wording

Income applicable to common stockholders during the three months ended March 31, 2025 was $42.1 million, or $0.65 per diluted share, compared with $27.7 million, or $0.42 per diluted share, during the three months ended March 31, 2024. Hilltop’s financial results for the three months ended March 31, 2025, compared with the same period in 2024, included a significant preliminary gain associated with the sale of operations by a merchant bank equity investment within corporate, a significant increase in the provision for credit losses and a decrease in noninterest expenses within the banking segment, net revenues decreased and noninterest expenses increased within the broker-dealer segment, and the mortgage origination segment had a slight increase in net interest income and declines in net interest expense and noninterest expense.

Current wording

Hilltop’s financial results for the three months ended June 30, 2025, compared with the same period in 2024, included a reversal of credit losses and an increase in net interest income within the banking segment, net revenues and noninterest expenses increased within the broker-dealer segment, and the mortgage origination segment had declines in net interest expense, noninterest income and noninterest expense. During the six months ended June 30, 2025, compared with the same period in 2024, financial results included a significant preliminary gain associated with the sale of operations by a merchant bank equity investment within corporate, changes in the provision for credit losses and a decrease in noninterest expenses within the banking segment, net revenues declined and noninterest expenses increased within the broker-dealer segment, and the mortgage origination segment had declines in net interest expense and noninterest expense.

Previous wording

Certain items included in net income for the three months ended March 31, 2025 and 2024 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 March 31, 2025 and 2024 included net accretion on earning assets and liabilities of $1.1 million and $1.4 million, respectively, and amortization of identifiable intangibles of $0.3 million and $0.5 million, respectively, related to the Bank Transactions.

Current wording

Certain items included in net income for the three and six months ended June 30, 2025 and 2024 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 June 30, 2025 and 2024 included net accretion on earning assets and liabilities of $0.5 million and $2.0 million, respectively, and amortization of identifiable intangibles of $0.2 million and $0.5 million, respectively, related to the Bank Transactions. During the six months ended June 30, 2025 and 2024, income before income taxes included net accretion on earning assets and liabilities of $1.6 million and $3.4 million, respectively, and amortization of identifiable intangibles of $0.5 million and $1.0 million, respectively, related to the Bank Transactions.

Previous wording

We present net interest margin and net interest income 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 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.

Current wording

We present net interest margin and net interest income 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 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,

Previous wording

During the three months ended March 31, 2025 and 2024, purchase accounting contributed 4 and 4 basis points, respectively, to our consolidated taxable equivalent net interest margin of 2.86% and 2.87%, respectively. The purchase accounting activity was primarily related to the accretion of discount of loans which totaled $1.1 million and $1.3 million during the three months ended March 31, 2025 and 2024, respectively, associated with the Bank Transactions.

Current wording

During the three months ended June 30, 2025 and 2024, purchase accounting contributed 2 and 6 basis points, respectively, to our consolidated taxable equivalent net interest margin of 3.04% and 2.92%, respectively. During the six months ended June 30, 2025 and 2024, purchase accounting contributed 3 and 5 basis points, respectively, to our consolidated taxable equivalent net interest margin of 2.95% and 2.89%, respectively. The purchase accounting activity was primarily related to the accretion of discount of loans which totaled $0.5 million and $1.9 million during the three months ended June 30, 2025 and 2024, respectively, and $1.6 million and $3.2 million during the six months ended June 30, 2025 and 2024, respectively, associated with the Bank Transactions.

Previous wording

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

Current wording

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

Previous wording

On a consolidated basis, the change in net interest income during the three months ended March 31, 2025, compared with the same period in 2024, was primarily due to decreased loans held for investment yield from rate decreases and decreased costs of deposits from rate decreases offset by increased cost of deposits from the continued shift from noninterest-bearing deposits into interest-bearing products during the quarter-over-quarter period. 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.

Current wording

On a consolidated basis, the change in net interest income during the three and six months ended June 30, 2025, compared with the same periods in 2024, were primarily due to decreased loans held for investment yield from rate decreases, decreased costs of deposits from rate decreases and decreased interest costs from the redemption of certain notes payable, offset by increased cost of deposits fromthe shift from noninterest-bearing deposits into interest-bearing products. 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.

Previous wording

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 March 31, 2025, the provision for credit losses was primarily driven by a build in the allowance related to loan portfolio changes and specific reserves, including

Current wording

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 June 30, 2025, the reversal of 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

Previous wording

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. 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.

Current wording

changes in loan mix and risk rating grade migration, within the banking segment since the prior quarter. The provision for credit losses during the six months ended June 30, 2025 was primarily driven by 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. 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.

Previous wording

Noninterest income increased during the three months ended March 31, 2025, compared with the same period in 2024, primarily due to a preliminary pre-tax gain of $30.5 million being recorded in the first quarter of 2025 associated with the sale of operations by a merchant bank equity investment, while other changes between periods included net decreases within the broker-dealer segment’s structured finance and fixed income services business lines, partially offset by net increases within the broker-dealer segment’s public finance and wealth management business lines, 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.

Current wording

Noninterest income slightly decreased during the three months ended June 30, 2025, compared with the same period in 2024, primarily due to the receipt of $9.5 million by the mortgage origination segment associated with the Settlements 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, net decreases within the broker-dealer segment’s structured finance business line, partially offset by net increases within the broker-dealer segment’s public finance, wealth management and fixed income business lines, and a loss of $3.4 million associated with the sale of operations by the merchant bank equity investment in the first quarter of 2025, partially offset by gains of $2.8 million associated with certain other merchant bank equity investments. Noninterest income increased during the six months ended June 30, 2025 compared with the same period in 2024, primarily due to an updated preliminary pre-tax gain of $27.1 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 decreases within the broker-dealer segment’s structured finance and fixed income services business lines, partially offset by net increases within the broker-dealer segment’s public finance and wealth management business lines, 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.

Previous wording

Noninterest expense increased during the three months ended March 31, 2025, compared with the same period in 2024, primarily due to an increase in employees’ compensation and benefits within corporate, a net increase within our broker-dealer segment associated with increases in other segment operating costs, partially offset by a decrease in variable compensation, a net decrease within our mortgage origination segment driven by decreases in non-variable compensation and other segment costs, partially offset by an increase in variable compensation associated with increased mortgage loan originations. We have experienced an increase 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 and result in higher fixed costs during the remainder of 2025.

Current wording

Noninterest expense increased during the three months ended June 30, 2025, compared with the same period in 2024, primarily due to a net increase within our broker-dealer segment associated with increases in employees’ compensation and benefits, partially offset by a decrease in other segment operating costs, a net decrease within our mortgage origination segment driven by decreases in servicing expenses and other segment costs, partially offset by an increase in non-variable compensation and variable compensation associated with increased mortgage loan originations. Noninterest expense increased during the six months ended June 30, 2025, compared with the same period in 2024, primarily due to an increase in employees’ compensation and benefits within corporate, net increases within our broker-dealer segment associated with increases in employees’ compensation and benefits and other segment operating costs, a net decrease within our mortgage origination segment driven by decreases in servicing expenses, non-variable compensation and other segment costs, partially offset by an increase in variable compensation associated with increased mortgage loan originations. We have experienced an increase 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 and result in higher fixed costs during the remainder of 2025.

Previous wording

Effective income tax rates during the three months ended March 31, 2025 and 2024 were 22.7% and 22.5%, respectively. During the three months ended March 31, 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. The effective tax rate during the three months ended March 31, 2024, 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 the discrete impact of restricted stock vesting during the quarter and investments in tax-exempt instruments.

Current wording

Effective income tax rates during the three months ended June 30, 2025 and 2024 were 23.4% and 22.5%, respectively, and for the six months ended June 30, 2025 and 2024 were 23.1% and 22.5%, respectively. 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. During the three and six months ended June 30, 2024, 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 the discrete impact of restricted stock vesting during the quarter and investments in tax-exempt instruments.

Previous wording

The decrease in income before income taxes during the three months ended March 31, 2025, compared with the same period in 2024, was primarily due to a significant increase in the provision for credit losses and declines in net interest income and noninterest income, partially offset by lower noninterest expenses. The decrease in noninterest expense was driven by the settlement and receipt of funds during the first quarter of 2025 that reimbursed the Bank for legal fees previously incurred. 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.

Current wording

The increase in income before income taxes during the three months ended June 30, 2025, compared with the same period in 2024, was primarily due to a reversal of credit losses and increases in net interest income and noninterest income. The increase in income before income taxes during the six months ended June 30, 2025, compared to the same period in 2024, was primarily due to decreases in the provision for credit losses and noninterest expense and an increase in net interest income. This decrease in noninterest expense was driven by the settlement and receipt of funds during the first quarter of 2025 that reimbursed the Bank for legal fees previously incurred. 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.

Previous wording

As discussed in more detail below, the banking segment’s cost of deposits decreased during the first three months of 2025. The rate paid on interest-bearing deposits decreased during the three months ended March 31, 2025, partially offset by continued competition for liquidity and customers seeking higher yields on deposits. We are actively managing our overall deposit costs. Future decisions on the costs of deposits will be determined based on factors including, but not limited to future changes in the target range for the federal funds rate, our customers’ appetite for higher yields on deposits, and our overall liquidity profile.

Current wording

As discussed in more detail below, the banking segment’s cost of deposits decreased during the first six months of 2025. The rate paid on interest-bearing deposits decreased during the first half of 2025, partially offset by continued competition for liquidity and customers seeking higher yields on deposits. We are actively managing our overall deposit costs. Future decisions on the costs of deposits will be determined based on factors including, but not limited to future changes in the target range for the federal funds rate, our customers’ appetite for higher yields on deposits, and our overall liquidity profile.

Previous wording

During the three months ended March 31, 2025 and 2024, purchase accounting contributed 3 and 5 basis points, respectively, to the banking segment’s taxable equivalent net interest margin of 2.97% and 3.00%, 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.

Current wording

During the three months ended June 30, 2025 and 2024, purchase accounting contributed 3 and 7 basis points, respectively, to the banking segment’s taxable equivalent net interest margin of 3.17% and 3.10%, respectively. During the six months ended June 30, 2025 and 2024, purchase accounting contributed 3 and 6 basis points, respectively, to the banking segment’s taxable equivalent net interest margin of 3.07% and 3.05%, 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.

Previous wording

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

Current wording

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

Previous wording

The slight decrease in net interest income, as noted in the table above, was driven by decreased earnings on interest-earning assets, primarily loan yields and investment securities, significantly offset by the decreased funding costs on our deposit products from rate decreases. The average rate paid on interest-bearing liabilities decreased 67 basis points from 3.90% for the three months ended March 31, 2024 to 3.23% for the three months ended March 31, 2025, while the average yield on interest-earning assets decreased 38 basis points from 5.58% for the three months ended March 31, 2024 to 5.20% for the three months ended March 31, 2025.

Current wording

The increases in net interest income during the three and six months ended June 30, 2025, compared to the same periods in 2024, as noted in the table above, were driven by decreased earnings on interest-earning assets, primarily loan and warehouse line of credit yields and investment securities, significantly offset by the decreased funding costs on our deposit products from rate decreases. The average rate paid on interest-bearing liabilities decreased 70 basis points from 3.89% for the six months ended June 30, 2024 to 3.19% for the six months ended June 30, 2025, while the average yield

Previous wording

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 March 31, 2025, approximately $675 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 49% 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.

Current wording

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 June 30, 2025, approximately $491 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 61% 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.

Previous wording

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 months ended March 31, 2025, compared to the same period of 2024. While we expect such costs during the remainder of 2025 to continue to be driven by various factors, including, but not limited to future changes in the target range for the federal funds rate, our customers’ appetite for higher yields on deposits, and our overall liquidity profile, we anticipate that our cost of deposits will continue to trend modestly downward. The Bank’s deposit base primarily includes a combination of commercial, wealth and public funds deposits, without a high level of industry concentration. At March 31, 2025, total estimated uninsured deposits were $5.6 billion, or approximately 52% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $371.5 million and internal accounts of $485.8 million, were $4.8 billion, or approximately 44% of total deposits.

Current wording

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 June 30, 2025, compared to the same periods of 2024. We expect such costs during the remainder of 2025 to continue to be driven by various factors, including, but not limited to future changes in the target range for the federal funds rate, our customers’ appetite for higher yields on deposits, and our overall liquidity profile. The Bank’s deposit base primarily includes a combination of commercial, wealth and public funds deposits, without a high level of industry concentration. At June 30, 2025, total estimated uninsured deposits were $5.2 billion, or approximately 50% of total deposits, while estimated uninsured deposits, excluding collateralized deposits of $347.3 million and internal accounts of $420.7 million, were $4.5 billion, or approximately 43% of total deposits.

Previous wording

The banking segment retained approximately $62.5 million and $32.3 million in mortgage loans originated by the mortgage origination segment during the three months ended March 31, 2025 and 2024, 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.

Current wording

The banking segment retained approximately $43.2 million and $39.6 million in mortgage loans originated by the mortgage origination segment during the three months ended June 30, 2025 and 2024, respectively, and $105.7 million and $71.9 million in mortgage loans originated by the mortgage origination segment during the six months ended June 30, 2025 and 2024, 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.

Previous wording

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 March 31, 2025, the increase in the provision for credit losses was primarily driven by 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. The net impact to the allowance of changes associated with collectively and individually evaluated loans during the three months ended March 31, 2025 included a provision for credit losses of $7.7 million and $1.7 million, respectively. The change in the allowance for credit losses during the three months ended March 31, 2025 was also impacted by net charge-offs of $4.3 million. During the three months ended March 31, 2024, the reversal of credit losses reflected improvements to the U.S. economic outlook, offset by increases in specific reserves within the banking segment. The net impact to the allowance of changes associated with collectively evaluated loans during the three months ended March 31, 2024 included a reversal of credit losses of $7.0 million, while individually evaluated loans included a provision for credit losses of $4.1 million. The change in the allowance for credit losses during the three months ended March 31, 2024 was also impacted by net charge-offs of $4.3 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.

Current wording

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 June 30, 2025, the reversal of 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. The net impact to the allowance of changes associated with individually evaluated loans during the three and six months ended June 30, 2025 included a provision for credit losses of $1.8 million and $3.4 million, respectively, while collectively evaluated loans during the three and six

Previous wording

The banking segment’s noninterest expense decreased during the three months ended March 31, 2025, compared to the same period in 2024, primarily due to decreases in professional fees and occupancy and equipment expenses, partially offset by an increase in employees’ compensation and benefits. The decrease in professional fees 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.

Current wording

The banking segment’s noninterest expense increased during the three months ended June 30, 2025, compared to the same period in 2024, primarily due to occupancy and equipment expenses and professional fees, partially offset by a decrease in employees’ compensation and benefits. During the six months ended June 30, 2025, compared to the same period in 2024, noninterest expense declined primarily due to a decrease in professional fees, partially offset by an increase in employees’ compensation and benefits. The decrease in professional fees 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.

Previous wording

The decreases in net revenue and income before income taxes for the three months ended March 31, 2025, compared with the same period in 2024, were primarily due to declines in period-over-period results within our structured finance and fixed income services business lines, partially offset by improved results within our public finance services and wealth management business lines. The decrease in the structured finance business line’s net revenues was primarily due to a decrease in unrealized gains from the U.S. Agency to-be-announced (“TBA”) business partially offset by commissions earned on commodities transactions. The decrease in fixed income services business line’s net revenues

Current wording

The increase in net revenue and for the three months ended June 30, 2025, compared with the same period in 2024, was primarily due to improved results within our public finance services, fixed income services and wealth management business lines, partially offset by a period-over-period decrease in results within our structured finance business line. 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 the fixed income business line’s net revenues was due primarily to improved revenue earned on municipal trading activities. 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 U.S. Agency to-be-announced (“TBA”) business. Income before income taxes for the three months ended June 30, 2025 was impacted by the increases in net revenue as described above and a net increase in noninterest expenses.

Previous wording

was primarily due to market conditions resulting in the decrease in earnings from fixed income sales and trading activities, in particular, from municipal and credit products. 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 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, partially offset by fees earned from our FDIC sweep program on lower balances period-over-period. Income before income taxes was impacted by the decreases in net revenue as described above and a net increase in noninterest expenses.

Current wording

The decrease in net revenue and income before income taxes for the six months ended June 30, 2025, compared with the same period in 2024, were primarily due to declines in period-over-period results within our structured finance and fixed income services business lines, partially offset by improved results within our public finance services and wealth management business lines. 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 securitized mortgage-backed securities transactions. The decrease in fixed income services business line’s net revenues was primarily due to market conditions resulting in the decrease in earnings from fixed income sales and trading activities, in particular, from credit products, partially offset by the relative strength in municipal products. 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 the wealth management business line’s net revenue was driven by an increase in advisory fees revenues generated from customer assets under management, partially offset by fees earned from our FDIC sweep program on lower balances period-over-period. Income before income taxes for the six months ended June 30, 2025 was impacted by the decreases in net revenue as described above and a net increase in noninterest expenses.

Previous wording

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. 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 and resulting in valuation-related adjustments.

Current wording

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. 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 interest rate volatility that may result in valuation-related adjustments.

Previous wording

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. The decrease in net interest income during the three months ended March 31, 2025, compared with the same period in 2024, was primarily due to the decrease in net interest income from the wealth management business line from margin loan and stock borrowing activities, partially offset by an increase in net interest earned on inventory positions within the fixed income services business line.

Current wording

In the broker-dealer segment, interest is earned from securities lending activities, interest charged on customer margin loan balances and interest earned on trading securities used to support sales, underwriting and other customer activities. The increase in net interest income during the three and six months ended June 30, 2025, compared with the same periods in 2024, were primarily due to the increase in net interest income earned on inventory positions within the fixed income services business line.

Previous wording

Noninterest income decreased during the three months ended March 31, 2025, compared with the same period in 2024, due to a decrease in other income, partially offset by increases in securities commissions and fees and investment and securities advisory fees.

Current wording

Noninterest income increased during the three months ended June 30, 2025 and decreased during the six months ended June 30, 2025, compared with the same periods in 2024, due to a decrease in other income, partially offset by increases in securities commissions and fees and investment and securities advisory fees.

Previous wording

Securities commissions and fees increased during the three months ended March 31, 2025, compared with the same period in 2024, primarily due to an increase in commodities product sales commissions and brokerage services fees.

Current wording

Securities commissions and fees increased during the three and six months ended June 30, 2025, compared with the same periods in 2024, primarily due to an increase in commodities and insurance product sales commissions.

Previous wording

Investment and securities advisory fees and commissions increased during the three months ended March 31, 2025, compared with the same period in 2024, primarily due to increases in fees earned from managed assets and municipal advisory transactions.

Current wording

Investment and securities advisory fees and commissions increased during the three and six months ended June 30, 2025, compared with the same periods in 2024, primarily due to increases in fees earned from managed assets and public finance services.

Previous wording

The decrease in other noninterest income during the three months ended March 31, 2025, compared with the same period in 2024, was primarily due to decreases in trading gains earned from structured finance and fixed income services trading activities due to less favorable market conditions.

Current wording

The decrease in other noninterest income during the three and six months ended June 30, 2025, compared with the same periods in 2024, were primarily due to a reduction in trading gains earned from structured finance business line due to less favorable market conditions and a second quarter 2024 distribution received on investments that did not recur in the current period.