Hilltop Holdings(HTH) - 2024 Q4 - Annual Report

Interest Rate Risk Management - The banking segment's net interest income is significantly influenced by interest rate changes, with a positive gap indicating potential increases in income if rates rise [626]. - The banking segment maintains a strategy to manage interest rate risk through asset/liability management policies, including the use of derivative instruments [625]. - Interest rate risk for the broker-dealer segment is managed by setting limits on the size and duration of positions and monitoring the length of time securities can be held [635]. - The company employs simulation analysis to assess the impact of interest rate changes on net interest income and economic value of equity, providing a more accurate picture than traditional gap analysis [629]. - The company continues to evaluate its interest rate risk position and may adjust its balance sheet to align with management's target rate risk position in the future [631]. - The company has established policies to manage interest rate risk within acceptable limits, focusing on mitigating potential losses [644]. Interest Rate Sensitivity - As of December 31, 2024, a 200 basis point increase in interest rates is projected to increase net interest income by $47,270,000 (11.49$170,230,000 (10.84%) [630]. - The total interest sensitive assets amount to $12,917,581,000, while total interest sensitive liabilities are$8,876,933,000, resulting in an interest sensitivity gap of $(1,463,151,000) [628]. - The banking segment's interest rate sensitivity indicates that it is asset sensitive overall, primarily due to loans that adjust to the Wall Street Journal Prime rate [627]. - A negative gap in interest rate sensitivity would generally lead to an increase in net interest income during falling interest rates, while a positive gap would adversely affect income [626]. - The estimated impact of a 200 basis point increase in interest rates on net interest income would be$28.8 million, representing a 6.56% increase [649]. - A 100 basis point increase in interest rates would result in a $13.6 million increase in net interest income, or 3.09$59.6 million decrease in net interest income, or 13.57% [649]. Debt Obligations - As of December 31, 2024, total debt obligations amounted to $350 million, all subject to fixed interest rates [645]. - The broker-dealer segment's total debt securities reached$451.6 million, with corporate obligations contributing $76.5 million [636]. - The weighted average yield for municipal obligations was 4.48$150 million of Senior Notes on January 15, 2025, using cash on hand [645].