Short-term Borrowings

6 Months Ended

Jun. 30, 2022

Short-term Borrowings

Short-term Borrowings

9. Short-term Borrowings

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

	June 30,		December 31,
	2022		2021
Federal funds purchased	$	352,950	$	171,925
Securities sold under agreements to repurchase		180,645		191,547
Federal Home Loan Bank		—		—
Short-term bank loans		—		142,000
Commercial paper		289,054		353,972
	$	822,649	$	859,444

Federal Funds Purchased and Securities Sold under Agreements to Repurchase

Federal funds purchased and securities sold under agreements to repurchase generally mature one to ninety days from the transaction date, 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,
	2022			2021
Average balance during the period	$	477,533		$	339,545
Average interest rate during the period		0.67	%		0.36	%
	June 30,			December 31,
	2022			2021
Average interest rate at end of period		1.48	%		0.31	%
Securities underlying the agreements at end of period:
Carrying value	$	180,569		$	191,483
Estimated fair value	$	193,545		$	205,734

Federal Home Loan Bank (“FHLB”)

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. The Company had no FHLB short-term borrowings during the three and six months ended June 30, 2022 and 2021.

Short-Term Bank Loans

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 Company had no such borrowings at June 30, 2022.

Commercial Paper

Hilltop Securities uses the net proceeds (after deducting related issuance expenses) from the sale of two commercial paper programs 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, 2022, the weighted average maturity of the CP Notes was 160 days at a rate of 1.80%, with a weighted average remaining life of 70 days. At June 30, 2022, the aggregate amount outstanding under these secured arrangements was $289.1 million, which was collateralized by securities held for firm accounts valued at $315.3 million.