Short-term Borrowings

12 Months Ended

Dec. 31, 2020

Short-term Borrowings

Short-term Borrowings

14. Short-term Borrowings

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

	December 31,
	2020		2019
Federal funds purchased	$	180,325	$	81,625
Securities sold under agreements to repurchase		237,856		612,125
Federal Home Loan Bank		—		600,000
Short-term bank loans		—		111,000
Commercial paper		277,617		19,260
	$	695,798	$	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).

	Year Ended December 31,
	2020			2019			2018
Average balance during the year	$	509,577		$	605,858		$	701,622
Average interest rate during the year		0.89	%		2.48	%		1.96	%
Maximum month-end balance during the year	$	714,507		$	693,750		$	849,568
	December 31,
	2020			2019
Average interest rate at end of year		0.25	%		1.97	%
Securities underlying the agreements at end of year:
Carrying value	$	237,913		$	612,515
Estimated fair value	$	262,554		$	661,023

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. At December 31, 2020, the Bank had available collateral of $4.4 billion, substantially all of which was blanket collateral. Other information regarding FHLB short-term borrowings is shown in the following tables (dollars in thousands).

	Year Ended December 31,
	2020			2019			2018
Average balance during the year	$	38,634		$	329,356		$	214,110
Average interest rate during the year		1.63	%		2.16	%		2.09	%
Maximum month-end balance during the year	$	150,000		$	700,000		$	675,000
		December 31,
		2020			2019
Average interest rate at end of year		—	%		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 short-term bank loan borrowings at December 31, 2020 and 2019 was 0.00% 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 December 31, 2020, the weighted average maturity of the CP Notes was 146 days at a rate of 1.23%, with a weighted average remaining life of 70 days. At December 31, 2020, the amount outstanding under these secured arrangements was $277.6 million, which was collateralized by securities held for firm accounts valued at $296.3 million.