Securities |
4. Securities The fair value of trading securities is summarized as follows (in thousands). | | | | | | | | | | September 30, | | December 31, | | | | 2024 | | 2023 | | U.S. Treasury securities | | $ | 127 | | $ | 3,736 | | U.S. government agencies: | | | | | | | | Bonds | | | 9,141 | | | 12,867 | | Residential mortgage-backed securities | | | 127,499 | | | 124,768 | | Collateralized mortgage obligations | | | 55,061 | | | 86,281 | | Other | | | 23,381 | | | 13,079 | | Corporate debt securities | | | 41,867 | | | 37,569 | | States and political subdivisions | | | 260,323 | | | 180,890 | | Private-label securitized product | | | 13,130 | | | 47,768 | | Other | | | 10,307 | | | 9,033 | | Totals | | $ | 540,836 | | $ | 515,991 | |
In addition to the securities shown above, the Hilltop Broker-Dealers enter into transactions that represent commitments to purchase and deliver securities at prevailing future market prices to facilitate customer transactions and satisfy such commitments. Accordingly, the Hilltop Broker-Dealers’ ultimate obligations may exceed the amount recognized in the financial statements. These securities, which are carried at fair value and reported as securities sold, not yet purchased in the consolidated balance sheets, had a value of $47.8 million and $34.9 million at September 30, 2024 and December 31, 2023, respectively. The amortized cost and fair value of available for sale and held to maturity securities are summarized as follows (in thousands). | | | | | | | | | | | | | | | Available for Sale | | | Amortized | | Unrealized | | Unrealized | | | | September 30, 2024 | | Cost | | Gains | | Losses | | Fair Value | U.S. Treasury securities | | $ | 4,990 | | $ | — | | $ | (228) | | $ | 4,762 | U.S. government agencies: | | | | | | | | | | | | | Bonds | | | 115,645 | | | 381 | | | (343) | | | 115,683 | Residential mortgage-backed securities | | | 358,539 | | | 449 | | | (29,321) | | | 329,667 | Commercial mortgage-backed securities | | | 204,089 | | | 744 | | | (6,673) | | | 198,160 | Collateralized mortgage obligations | | | 741,458 | | | 606 | | | (46,066) | | | 695,998 | Corporate debt securities | | | 29,408 | | | 215 | | | (537) | | | 29,086 | States and political subdivisions | | | 34,941 | | | 40 | | | (2,637) | | | 32,344 | Totals | | $ | 1,489,070 | | $ | 2,435 | | $ | (85,805) | | $ | 1,405,700 |
| | | | | | | | | | | | | | | Available for Sale | | | Amortized | | Unrealized | | Unrealized | | | | December 31, 2023 | | Cost | | Gains | | Losses | | Fair Value | U.S. Treasury securities | | $ | 4,985 | | $ | — | | $ | (368) | | $ | 4,617 | U.S. government agencies: | | | | | | | | | | | | | Bonds | | | 166,617 | | | 360 | | | (811) | | | 166,166 | Residential mortgage-backed securities | | | 389,160 | | | 25 | | | (39,315) | | | 349,870 | Commercial mortgage-backed securities | | | 200,236 | | | 468 | | | (8,958) | | | 191,746 | Collateralized mortgage obligations | | | 797,876 | | | 291 | | | (61,686) | | | 736,481 | Corporate debt securities | | | 25,919 | | | — | | | (1,501) | | | 24,418 | States and political subdivisions | | | 36,954 | | | 39 | | | (2,696) | | | 34,297 | Totals | | $ | 1,621,747 | | $ | 1,183 | | $ | (115,335) | | $ | 1,507,595 |
| | | | | | | | | | | | | | | Held to Maturity | | | Amortized | | Unrealized | | Unrealized | | | | September 30, 2024 | | Cost | | Gains | | Losses | | Fair Value | U.S. government agencies: | | | | | | | | | | | | | Residential mortgage-backed securities | | $ | 261,526 | | $ | — | | $ | (20,625) | | $ | 240,901 | Commercial mortgage-backed securities | | | 152,657 | | | — | | | (7,777) | | | 144,880 | Collateralized mortgage obligations | | | 263,546 | | | — | | | (30,857) | | | 232,689 | States and political subdivisions | | | 77,095 | | | 107 | | | (4,826) | | | 72,376 | Totals | | $ | 754,824 | | $ | 107 | | $ | (64,085) | | $ | 690,846 |
| | | | | | | | | | | | | | | Held to Maturity | | | Amortized | | Unrealized | | Unrealized | | | | December 31, 2023 | | Cost | | Gains | | Losses | | Fair Value | U.S. government agencies: | | | | | | | | | | | | | Residential mortgage-backed securities | | $ | 278,172 | | $ | — | | $ | (25,765) | | $ | 252,407 | Commercial mortgage-backed securities | | | 172,879 | | | — | | | (12,670) | | | 160,209 | Collateralized mortgage obligations | | | 284,208 | | | — | | | (37,189) | | | 247,019 | States and political subdivisions | | | 77,418 | | | 149 | | | (5,344) | | | 72,223 | Totals | | $ | 812,677 | | $ | 149 | | $ | (80,968) | | $ | 731,858 |
Additionally, the Company had unrealized net gains of $0.2 million and $0.3 million at September 30, 2024 and December 31, 2023, respectively, from equity securities with fair values of $0.3 million and $0.3 million held at September 30, 2024 and December 31, 2023, respectively. The Company recognized nominal net gains during the three months ended September 30, 2024 and 2023, respectively, and recognized nominal net losses and net gains of $0.1 million during the nine months ended September 30, 2024 and 2023, respectively, due to changes in the fair value of equity securities still held at the balance sheet date. During the three and nine months ended September 30, 2024 and 2023, net gains and losses recognized from equity securities sold were nominal. Information regarding available for sale and held to maturity securities that were in an unrealized loss position is shown in the following tables (dollars in thousands). | | | | | | | | | | | | | | | | | | | September 30, 2024 | | December 31, 2023 | | | Number of | | | | | Unrealized | | Number of | | | | | Unrealized | | | Securities | | Fair Value | | Losses | | Securities | | Fair Value | | Losses | Available for Sale | | | | | | | | | | | | | | | | | U.S. treasury securities: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | — | | $ | — | | $ | — | | — | | $ | — | | $ | — | Unrealized loss for twelve months or longer | | 1 | | | 4,762 | | | 228 | | 1 | | | 4,617 | | | 368 | | | 1 | | | 4,762 | | | 228 | | 1 | | | 4,617 | | | 368 | U.S. government agencies: | | | | | | | | | | | | | | | | | Bonds: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | — | | | — | | | — | | 4 | | | 28,988 | | | 103 | Unrealized loss for twelve months or longer | | 15 | | | 77,173 | | | 343 | | 20 | | | 112,502 | | | 708 | | | 15 | | | 77,173 | | | 343 | | 24 | | | 141,490 | | | 811 | Residential mortgage-backed securities: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | 13 | | | 7,804 | | | 448 | | 14 | | | 8,989 | | | 616 | Unrealized loss for twelve months or longer | | 107 | | | 305,146 | | | 28,873 | | 109 | | | 338,769 | | | 38,699 | | | 120 | | | 312,950 | | | 29,321 | | 123 | | | 347,758 | | | 39,315 | Commercial mortgage-backed securities: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | — | | | — | | | — | | 2 | | | 10,413 | | | 282 | Unrealized loss for twelve months or longer | | 20 | | | 196,733 | | | 6,673 | | 18 | | | 162,470 | | | 8,676 | | | 20 | | | 196,733 | | | 6,673 | | 20 | | | 172,883 | | | 8,958 | Collateralized mortgage obligations: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | 1 | | | 810 | | | 2 | | 2 | | | 11,560 | | | 22 | Unrealized loss for twelve months or longer | | 134 | | | 662,145 | | | 46,064 | | 138 | | | 709,571 | | | 61,665 | | | 135 | | | 662,955 | | | 46,066 | | 140 | | | 721,131 | | | 61,687 | Corporate debt securities: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | 1 | | | 8,618 | | | 537 | | 2 | | | 13,483 | | | 1,501 | Unrealized loss for twelve months or longer | | — | | | — | | | — | | — | | | — | | | — | | | 1 | | | 8,618 | | | 537 | | 2 | | | 13,483 | | | 1,501 | States and political subdivisions: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | — | | | — | | | — | | 10 | | | 7,023 | | | 55 | Unrealized loss for twelve months or longer | | 52 | | | 25,648 | | | 2,637 | | 50 | | | 20,857 | | | 2,640 | | | 52 | | | 25,648 | | | 2,637 | | 60 | | | 27,880 | | | 2,695 | Total available for sale: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | 15 | | | 17,232 | | | 987 | | 34 | | | 80,456 | | | 2,579 | Unrealized loss for twelve months or longer | | 329 | | | 1,271,607 | | | 84,818 | | 336 | | | 1,348,786 | | | 112,756 | | | 344 | | $ | 1,288,839 | | $ | 85,805 | | 370 | | $ | 1,429,242 | | $ | 115,335 |
| | | | | | | | | | | | | | | | | | | September 30, 2024 | | December 31, 2023 | | | Number of | | | | | Unrealized | | Number of | | | | | Unrealized | | | Securities | | Fair Value | | Losses | | Securities | | Fair Value | | Losses | Held to Maturity | | | | | | | | | | | | | | | | | U.S. government agencies: | | | | | | | | | | | | | | | | | Residential mortgage-backed securities: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | — | | $ | — | | $ | — | | — | | $ | — | | $ | — | Unrealized loss for twelve months or longer | | 45 | | | 240,901 | | | 20,625 | | 44 | | | 278,172 | | | 25,765 | | | 45 | | | 240,901 | | | 20,625 | | 44 | | | 278,172 | | | 25,765 | Commercial mortgage-backed securities: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | — | | | — | | | — | | — | | | — | | | — | Unrealized loss for twelve months or longer | | 27 | | | 144,880 | | | 7,777 | | 31 | | | 160,208 | | | 12,670 | | | 27 | | | 144,880 | | | 7,777 | | 31 | | | 160,208 | | | 12,670 | Collateralized mortgage obligations: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | — | | | — | | | — | | — | | | — | | | — | Unrealized loss for twelve months or longer | | 54 | | | 232,688 | | | 30,857 | | 54 | | | 247,019 | | | 37,189 | | | 54 | | | 232,688 | | | 30,857 | | 54 | | | 247,019 | | | 37,189 | States and political subdivisions: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | 11 | | | 6,223 | | | 56 | | 39 | | | 15,506 | | | 479 | Unrealized loss for twelve months or longer | | 158 | | | 58,520 | | | 4,770 | | 128 | | | 45,208 | | | 4,865 | | | 169 | | | 64,743 | | | 4,826 | | 167 | | | 60,714 | | | 5,344 | Total held to maturity: | | | | | | | | | | | | | | | | | Unrealized loss for less than twelve months | | 11 | | | 6,223 | | | 56 | | 39 | | | 15,506 | | | 479 | Unrealized loss for twelve months or longer | | 284 | | | 676,989 | | | 64,029 | | 257 | | | 730,607 | | | 80,489 | | | 295 | | $ | 683,212 | | $ | 64,085 | | 296 | | $ | 746,113 | | $ | 80,968 |
Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. The amortized cost and fair value of securities, excluding trading and equity securities, at September 30, 2024 are shown by contractual maturity below (in thousands). | | | | | | | | | | | | | | | Available for Sale | | Held to Maturity | | | Amortized | | | | | Amortized | | | | | | Cost | | Fair Value | | Cost | | Fair Value | Due in one year or less | | $ | 21,587 | | $ | 21,579 | | $ | — | | $ | — | Due after one year through five years | | | 63,709 | | | 63,311 | | | 3,823 | | | 3,693 | Due after five years through ten years | | | 54,250 | | | 53,730 | | | 49,427 | | | 47,044 | Due after ten years | | | 45,438 | | | 43,255 | | | 23,845 | | | 21,639 | | | | 184,984 | | | 181,875 | | | 77,095 | | | 72,376 | | | | | | | | | | | | | | Residential mortgage-backed securities | | | 358,539 | | | 329,667 | | | 261,526 | | | 240,901 | Commercial mortgage-backed securities | | | 204,089 | | | 198,160 | | | 152,657 | | | 144,880 | Collateralized mortgage obligations | | | 741,458 | | | 695,998 | | | 263,546 | | | 232,689 | | | $ | 1,489,070 | | $ | 1,405,700 | | $ | 754,824 | | $ | 690,846 |
The Company recognized net gains of $7.4 million and $9.4 million from its trading portfolio during the three months ended September 30, 2024 and 2023, respectively, and net gains of $27.4 million and $39.0 million during the nine months ended September 30, 2024 and 2023, respectively. In addition, the Hilltop Broker-Dealers realized net gains from structured product trading activities of $14.6 million and $8.2 million during the three months ended September 30, 2024 and 2023, respectively, and net gains from structured product trading activities of $55.4 million and $52.8 million during the nine months ended September 30, 2024 and 2023, respectively. The Company had no other realized gains and losses on securities during the three and nine months ended September 30, 2024 and nominal other realized losses on securities during the three and nine months ended September 30, 2023, respectively. All such realized gains and losses are recorded as a component of other noninterest income within the consolidated statements of operations. Securities with a carrying amount of $590.5 million and $537.2 million (with a fair value of $556.1 million and $503.1 million, respectively) at September 30, 2024 and December 31, 2023, respectively, were pledged by the Bank to secure public and trust deposits, federal funds purchased and securities sold under agreements to repurchase, and for other purposes as required or permitted by law. Substantially all of these pledged securities were included in the available for sale and held to maturity securities portfolios at September 30, 2024 and December 31, 2023. Mortgage-backed securities and collateralized mortgage obligations consist primarily of Government National Mortgage Association (“GNMA”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”) pass-through and participation certificates. GNMA securities are guaranteed by the full faith and credit of the United States, while FNMA and FHLMC securities are fully guaranteed by those respective United States government-sponsored agencies, and conditionally guaranteed by the full faith and credit of the United States.
|