Short-term Borrowings

3 Months Ended

Mar. 31, 2020

Short-term Borrowings

Short-term Borrowings

9. Short-term Borrowings

Short-term borrowings are summarized as follows (in thousands).

	March 31,		December 31,
	2020		2019
Federal funds purchased	$	199,095	$	81,625
Securities sold under agreements to repurchase		698,433		612,125
Federal Home Loan Bank		150,000		600,000
Short-term bank loans		250,500		111,000
Commercial paper		31,920		19,260
	$	1,329,948	$	1,424,010

Federal funds purchased and securities sold under agreements to repurchase generally mature daily, on demand, or on some other short-term basis. The Bank and the Hilltop Broker-Dealers execute transactions to sell securities under agreements to repurchase with both customers and other broker-dealers. Securities involved in these transactions are held by the Bank, the Hilltop Broker-Dealers or a third-party dealer.

Information concerning federal funds purchased and securities sold under agreements to repurchase is shown in the following tables (dollars in thousands).

	Three Months Ended March 31,
	2020			2019
Average balance during the period	$	732,954		$	654,117
Average interest rate during the period		1.78	%		2.63	%
	March 31,			December 31,
	2020			2019
Average interest rate at end of period		1.31	%		1.97	%
Securities underlying the agreements at end of period:
Carrying value	$	705,544		$	612,515
Estimated fair value	$	753,129		$	661,023

Federal Home Loan Bank (“FHLB”) short-term borrowings mature over terms not exceeding 365 days and are collateralized by FHLB Dallas stock, nonspecified real estate loans and certain specific commercial real estate loans. Other information regarding FHLB short-term borrowings is shown in the following tables (dollars in thousands).

	Three Months Ended March 31,
	2020			2019
Average balance during the period	$	153,736		$	4,167
Average interest rate during the period		1.63	%		2.65	%
		March 31,			December 31,
		2020			2019
Average interest rate at end of period		0.50	%		1.56	%

The Hilltop Broker-Dealers use short-term bank loans periodically to finance securities owned, margin loans to customers and correspondents and underwriting activities. Interest on the borrowings varies with the federal funds rate. The weighted average interest rate on the borrowings at March 31, 2020 and December 31, 2019 was 1.05% and 2.52%, respectively.

During 2019, Hilltop Securities initiated two commercial paper programs, in the ordinary course of its business, of which the net proceeds (after deducting related issuance expenses) from the sale will be used for general corporate purposes, including working capital and the funding of a portion of its securities inventories. The commercial paper notes (“CP Notes”) may be issued with maturities of 14 days to 270 days from the date of issuance. The CP Notes are issued under two separate programs, Series 2019-1 CP Notes and Series 2019-2 CP Notes, in maximum aggregate amounts of $300 million and $200 million, respectively. The CP Notes are not redeemable prior to maturity or subject to voluntary prepayment and do not bear interest, but are sold at a discount to par. The CP Notes are secured by a pledge of collateral owned by Hilltop Securities. As of March 31, 2020, the weighted average maturity of the CP Notes was 35 days at a rate of 1.50%. At March 31, 2020, the aggregate amount outstanding under these secured arrangements was $31.9 million, which was collateralized by securities held for firm accounts valued at $36.3 million.