Short-term Borrowings

6 Months Ended

Jun. 30, 2020

Short-term Borrowings

Short-term Borrowings

9. Short-term Borrowings

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

	June 30,		December 31,
	2020		2019
Federal funds purchased	$	135,650	$	81,625
Securities sold under agreements to repurchase		352,150		612,125
Federal Home Loan Bank		—		600,000
Short-term bank loans		15,000		111,000
Commercial paper		217,364		19,260
	$	720,164	$	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).

	Six Months Ended June 30,
	2020			2019
Average balance during the period	$	605,396		$	621,268
Average interest rate during the period		1.29	%		2.54	%
	June 30,			December 31,
	2020			2019
Average interest rate at end of period		0.48	%		1.97	%
Securities underlying the agreements at end of period:
Carrying value	$	360,743		$	612,515
Estimated fair value	$	386,732		$	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).

	Six Months Ended June 30,
	2020			2019
Average balance during the period	$	77,692		$	159,945
Average interest rate during the period		1.62	%		2.47	%
		June 30,			December 31,
		2020			2019
Average interest rate at end of period		—	%		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 June 30, 2020 and December 31, 2019 was 1.08% and 2.52%, respectively.

During the fourth quarter of 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 June 30, 2020, the weighted average maturity of the CP Notes was 139 days at a rate of 2.23%. At June 30, 2020, the aggregate amount outstanding under these secured arrangements was $217.4 million, which was collateralized by securities held for firm accounts valued at $120.4 million.