Hilltop Holdings (HTH) risk factors, FY2025 10-K

Risks Related to our Business

1. 01Our allowances for credit losses for loans and debt securities may prove inadequate or we may be negatively affected by credit risk exposures. Also, future additions to our allowance for credit losses will reduce our future earnings37% rewritten
2. 02Adverse developments affecting the financial services industry, such as bank failures or concerns involving liquidity, may have a material effect on the Company’s operations46% rewritten
3. 03These newly effective, upcoming and evolving laws and regulations could result in increased operating expenses or increase our exposure to the risk of litigation or regulatory inquiries or proceedings23% rewritten
4. 04Our banking segment is subject to risk arising from conditions in the commercial real estate market and may be adversely affected by weaknesses in the commercial real estate market23% rewritten
5. 05Our business and results of operations may be adversely affected by unpredictable economic, market and business conditions
6. 06Our business is subject to interest rate risk, and fluctuations in interest rates may adversely affect our earnings, capital levels and overall results71% rewritten
7. 07Inflationary pressures and rising prices may affect our results of operations and financial condition34% rewritten
8. 08Our mortgage origination business is subject to fluctuations based upon seasonal and other factors and, as a result, our results of operations for any given quarter may not be indicative of the results that may be achieved for the full fiscal year
9. 09We are heavily reliant on technology, and a failure to effectively implement new technological solutions or enhancements to existing systems or platforms could adversely affect our business operations and the financial results of our operations72% rewritten
10. 10the risks and uncertainties associated with these solutions and initiatives, we may encounter significant adverse developments in the completion and implementation of these initiativesNew
11. 11Our geographic concentration may magnify the adverse effects and consequences of any regional or local economic downturn20% rewritten
12. 12An adverse change in real estate market values may result in losses in our banking segment and otherwise adversely affect our profitability
13. 13Our risk management processes may not fully identify and mitigate exposure to the various risks that we face, including interest rate, credit, liquidity and market risk
14. 14Our hedging strategies may not be successful in mitigating our exposure to interest rate risk
15. 15Our bank lending, margin lending, stock lending, securities trading and execution and mortgage purchase businesses are all subject to credit risk
16. 16We depend on our computer and communications systems and an interruption in service would negatively affect our business
17. 17Climate change and certain regulations and responses thereto could adversely affect our business and performance, including indirectly through impacts on our customers
18. 18We are heavily dependent on dividends from our subsidiaries22% rewritten
19. 19Our broker-dealer business is subject to various risks associated with the securities industry
20. 20Market fluctuations could adversely impact our broker-dealer business
21. 21Our investment advisory business may be affected if our investment products perform poorly
22. 22Our existing correspondents may choose to perform their own clearing services or move their clearing business to one of our competitors or exit the business
23. 23Several of our broker-dealer segment’s product lines rely on favorable tax treatment, and changes in federal tax law could impact the attractiveness of these products to our customers
24. 24Our mortgage origination segment is subject to investment risk on loans that it originates
25. 25If we fail to develop, implement and maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting in future periods may be adversely affected
26. 26We ultimately may write-off goodwill and other intangible assets resulting from business combinations
27. 27The value of our mortgage servicing rights portfolio fluctuates due to changes in interest rates, which may increase the volatility of our earnings81% rewritten
28. 28number of variables, including assumptions about the likelihood of prepayment by borrowers, and as a result, the value of our MSR assets fluctuates due to changes in interest rates, which may increase volatility of earningsNew
29. 29The accuracy of our financial statements and related disclosures could be affected if we are exposed to actual conditions different from the judgments, assumptions or estimates used in our critical accounting estimates43% rewritten
30. 30We are dependent on our management team, and the loss of members of our existing management team or other key employees could impair our relationship with customers and adversely affect our business and financial results
31. 31A decline in the market for municipal advisory services could adversely affect our business and results of operations
32. 32We are subject to losses due to fraudulent and negligent acts
33. 33Negative publicity regarding us, or financial institutions in general, could damage our reputation and adversely impact our business and results of operations59% rewritten
34. 34employees and could expose us to litigation and/or regulatory action, which could have an adverse effect on our business and results of operationsNew
35. 35We are subject to legal claims and litigation, including potential securities law liabilities, any of which could have a material adverse effect on our business
36. 36Because we may use a substantial portion of our remaining excess capital to make acquisitions or effect a business combination, we may become subject to risks inherent in pursuing and completing any such acquisitions or business combination
37. 37We may be subject to environmental liabilities in connection with the foreclosure on real estate assets securing the loan portfolio of our banking segment

Risks Related to Our Indebtedness

1. 38Our indebtedness may affect our ability to operate our business and may have a material adverse effect on our financial condition and results of operations. We may incur additional indebtedness, including secured indebtedness26% rewritten
2. 39We may not be able to generate sufficient cash to service all of our indebtedness, including the 2035 Subordinated Notes, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful
3. 40We cannot assure you that our business will generate sufficient cash flow from operations, or that we will be able to obtain financing in an amount sufficient to fund our liquidity needs
4. 41A reduction in our credit rating could adversely affect us or the holders of our securities
5. 42The indenture governing the 2035 Subordinated Notes contain, and any instruments governing future indebtedness would likely contain, restrictions that limit our flexibility in operating our business21% rewritten

Risks Related to our Industry

1. 43The soundness of other financial institutions could adversely affect our business
2. 44We face strong competition from other financial institutions and financial service companies, which may adversely affect our operations and financial condition24% rewritten

Legal and Regulatory Risks

1. 45Acquisitions may be delayed, impeded, or prohibited due to regulatory issues26% rewritten
2. 46We are subject to extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income29% rewritten
3. 47We may be subject to more stringent capital requirements in the future38% rewritten
4. 48The CFPB has issued “ability-to-repay” and “qualified mortgage” rules that may have a negative impact on our loan origination process and foreclosure proceedings, which could adversely affect our business, operating results, and financial condition

Risks Related to Our Common Stock

1. 49We may issue shares of preferred stock or additional shares of common stock to complete an acquisition or effect a combination or under an employee incentive plan after consummation of an acquisition or business combination, which would dilute the interests of our stockholders and likely present other risks
2. 50Our common stock price may experience substantial volatility, which may affect your ability to sell our common stock at an advantageous price
3. 51Existing circumstances may result in several of our directors having interests that may conflict with our interests
4. 52Our rights and the rights of our stockholders to take action against our directors and officers are limited
5. 53Our charter and bylaws contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock
6. 54FINRA. Any change in control (as defined under FINRA rules) of any of the Hilltop Broker-Dealers, including through acquisition, is subject to prior regulatory approval by FINRA which may delay, discourage or prevent an attempted acquisition or other change in control of such broker-dealers
7. 55In October 2016, we announced that our board of directors authorized a dividend program under which we intend to pay quarterly dividends on our common stock, subject to quarterly declarations by our board of directors. During 2025, we declared and paid cash dividends of $0.72 per common share87% rewritten
8. 56Our share repurchases in excess of issuances may be subject to a 1% nondeductible excise tax enacted by the Inflation Reduction Act of 2022, subject to certain limitationsNew
9. 57An investment in our common stock is not an insured deposit