Securities Available For Sale

12 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Securities Available For Sale

9.SECURITIES AVAILABLE FOR SALE

SWS Group owns shares of common stock of Westwood, which it classifies as securities available for sale.  In addition to the shares of common stock owned by SWS Group, the Bank owns U.S. government and government agency and municipal obligations that are available for sale.  The unrealized holding gains (losses), net of tax, related to these securities are recorded as a separate component of stockholders’ equity on the Consolidated Statements of Financial Condition.

At June 29, 2012, SWS Group also owned shares of common stock of U.S. Home Systems, Inc. (“USHS”).  On October 26, 2012, a special meeting of the stockholders of USHS was held requesting an affirmative vote of the stockholders to adopt a proposed acquisition agreement, among other proposals.  USHS announced on October 29, 2012 that the acquisition agreement between USHS and The Home Depot, Inc. was approved and that, as a result, all outstanding shares of its common stock, including the shares of USHS common stock held by SWS, would be purchased for a price of $12.50 per share.  SWS Group’s shares of USHS common stock were purchased in November 2012 and as a result, the Company recognized a realized gain of $3,550,000 in net gains on principal transactions and a $2,308,000 ( $3,550,000,net of tax) reclassification adjustment from accumulated other comprehensive income.

The following tables summarize the cost of equity securities, amortized cost of debt securities and market value of the investments at June 30, 2013 and June 29, 2012, and for the Bank at June 30, 2012, (dollars in thousands): 

		Original/	Gross	Gross	Gross
	Shares	Amortized	Unrealized	Unrealized	Realized	Market
	Held	Cost	Gains	Losses	Losses	Value
June 2013
Westwood common stock	3,405	$              7	$             170	$                -	$         (31)	$        146
Continuous unrealized loss less than
12 months:
U.S. government and government
agency obligations	N/A	479,970	138	(9,239)	-	470,869
Municipal obligations	N/A	29,289	-	(1,065)	-	28,224
Continuous unrealized loss for 12 months
or greater:
U.S. government and government
agency obligations	N/A	4,127	-	(90)	-	4,037
		$    513,393	$             308	$      (10,394)	$         (31)	$ 503,276

		Original/	Gross	Gross
	Shares	Amortized	Unrealized	Unrealized	Market
	Held	Cost	Gains	Losses	Value
June 2012
USHS	357,154	$           914	$          2,711	$                -	$      3,625
Westwood	4,216	7	150	-	157
U.S. government and government
agency obligations	N/A	299,762	1,525	(216)	301,071
Municipal obligations	N/A	2,963	-	(27)	2,936
		$     303,646	$          4,386	$          (243)	$  307,789

In fiscal 2013 and 2012, the Bank purchased U.S. government and government agency and municipal obligations securities at a cost of $319,836,000 and $384,730,000, including a net premium of $6,279,000 and $8,387,000, respectively.  The premium is amortized over the period from the date of purchase to the stated maturity date (weighted average of 4.51 years at June 30, 2013 and 4.04 years at June 30, 2012) using the interest method. 

During fiscal 2013 and 2012, the Bank recorded $1,868,000 and $744,000, respectively, in amortization of the premium and received $47,129,000 and $16,718,000, respectively, of principal and interest payments, recording $7,585,000 and $2,393,000, respectively, in interest income on these securities. 

In fiscal 2013 and 2012, the Bank sold $25,788,000 and $66,936,000, respectively, of the U.S. government and government agency obligations, recognizing gains of $100,000 and $557,000, respectively, in other revenue on the Consolidated Statements of Comprehensive Loss and $65,000 ($100,000 net of tax) and $362,000 ($557,000 net of tax), repectively, reclassification adjustments from accumulated other comprehensive income.

During fiscal 2013, municipal obligations of $495,000 matured and the issuer redeemed $41,500,000of U.S. government agency securities, purchased at a discount in fiscal 2012, at par, resulting in a gain of $20,000.

For the U.S. government and government agency obligations which were  in a continuous unrealized loss position for 12 months or longer as of June 30, 2013, the Bank reviewed the circumstances of the loss position and determined that a permanent impairment was not necessary.