Hilltop Holdings(HTH) - 2025 Q4 - Annual Report

Interest Rate Sensitivity - The banking segment's total interest sensitive assets amount to $12,247,192,000, with loans comprising $8,860,183,000[620] - Interest sensitive liabilities total $8,240,002,000, with interest-bearing checking accounts at $6,627,225,000[620] - The interest sensitivity gap is $(1,597,247,000), indicating a negative gap, which may affect net interest income during rising interest rates[620] - The cumulative interest sensitivity gap shows a percentage of cumulative gap to total interest sensitive assets at (13.04)% for the 3-month period[620] - The banking segment is currently asset sensitive overall, with a significant portion of loans adjusting to the Wall Street Journal Prime rate[619] - Estimated impact of a 100 basis point increase in interest rates could significantly enhance net interest income for the banking segment[622] - As of December 31, 2025, a 200 basis point increase in interest rates is projected to result in a net interest income increase of $39,702 thousand, representing an 8.45% rise[639] - A 200 basis point decrease in interest rates could lead to a net interest income decline of $25,981 thousand, or 5.53% by December 31, 2025[639] Risk Management - The company is exposed to various risks including credit risk, operational risk, and interest rate risk, which could adversely affect financial performance[19] - The company maintains asset/liability management policies to control volatility in net interest income[617] - The company’s interest rate risk management strategy aims to manage exposure within acceptable limits, rather than eliminate it entirely[636] - The company continues to evaluate its interest rate risk position and may reposition its balance sheet to align with management's target rate risk position[623] Earnings Dependence - The banking segment's earnings are significantly dependent on net interest income, which is influenced by interest rate fluctuations[614] - The projected changes in net interest income are influenced by the heightened level of cash balances, which represent a significant portion of asset sensitivity[640] Segment Exposures - The broker-dealer segment's total debt securities amount to $557,632 thousand, with a significant portion subject to interest rate risk[629] - The mortgage origination segment is primarily exposed to interest rate risk, which could materially affect the volume of mortgage loan originations[632] - The broker-dealer segment is exposed to market risk due to fluctuations in interest rates, market prices, and credit ratings[625] - The company’s mortgage servicing rights (MSR) portfolio is sensitive to interest rate changes, which could lead to volatility in earnings[635] Financial Transactions - The company redeemed $150 million of Senior Notes and $50 million of Subordinated Notes in 2025, using cash on hand[637] - The company employs simulation analysis to assess the impact of interest rate changes on net interest income and economic value of equity[621]