Segment Reporting

12 Months Ended

Jun. 29, 2012

Text Block [Abstract]

Segment Reporting

23.SEGMENT REPORTING

SWS operates the following four business segments: 

· Clearing: The clearing segment provides clearing and execution services (generally on a fully disclosed basis) for general securities broker/dealers, for bank affiliated firms and firms specializing in high volume trading.

· Retail Brokerage:  The retail brokerage segment includes retail securities products and services (equities, mutual funds and fixed income products), insurance products and managed accounts and encompasses the activities of the Company’s employee registered representatives and the Company’s independent representatives who are under contract with SWS Financial. 

· Institutional Brokerage:  The institutional brokerage segment serves institutional customers in securities lending, investment banking and public finance, fixed income sales and trading, proprietary trading and agency execution services.

· Banking:  The Bank offers traditional banking products and services and focuses on small business lending and short-term funding for mortgage bankers.

Clearing and institutional brokerage services are offered exclusively through Southwest Securities.  The Bank and its subsidiary comprise the banking segment.  Retail brokerage services are offered through Southwest Securities (the Private Client Group and the Investment Management Group departments), SWS Insurance and SWS Financial (which contracts with independent representatives for the administration of their securities business).

SWS's segments are managed separately based on types of products and services offered and their related client bases.  The segments are consistent with how the Company manages its resources and assesses its performance.  Management assesses performance based primarily on income before income taxes and net interest revenue (expense).  As a result, SWS reports net interest revenue (expense) by segment.  SWS's business segment information is prepared using the following methodologies:

· the financial results for each segment are determined using the same policies as those described in Note 1,Significant Accounting Policies;

· segment financial information includes the allocation of interest based on each segment’s earned interest spreads;

· information system and operational expenses are allocated based on each segment’s usage;

· shared securities execution facilities expenses are allocated to the segments based on production levels;

· money market fee revenue is allocated based on each segment’s average balances; and

· clearing charges are allocated based on clearing levels from each segment.

Intersegment balances are eliminated upon consolidation and have been applied to the appropriate segment.

The "other" category includes SWS Group, corporate administration and SWS Capital.  SWS Capital is a dormant entity that holds approximately $30,000 of assets.  SWS Group is a holding company that owns various investments.

The following table presents the Company’s operations by the segments outlined above for fiscal years 2013, 2012 and 2011:

(in thousands)	Clearing	Retail Brokerage	Institutional Brokerage	Banking	Other Consolidated Entities	Consolidated SWS Group, Inc.
June 30, 2013
Operating revenue	$   12,875	$      107,109	$          95,569	$       2,678	$             2,533	$         220,764
Net intersegment revenues	(725)	714	(227)	3,458	(3,220)	-
Net interest revenue	6,063	3,331	12,378	41,423	(12,306)	50,889
Net revenues	18,938	110,440	107,947	44,101	(9,773)	271,653
Non-interest expenses	19,419	107,942	87,081	31,359	36,155	281,956
Other gains (losses)	-	-	-	-	3,613	3,613
Depreciation and amortization	66	872	421	1,747	2,376	5,482
Net income (loss) before taxes	(481)	2,498	20,866	12,742	(42,315)	(6,690)
Assets (*)	260,824	212,001	1,836,469	1,269,308	36,093	3,614,695
June 29, 2012
Operating revenue	$   12,558	$      103,150	$         114,498	$       2,714	$            (1,299)	$         231,621
Net intersegment revenues	(770)	676	128	3,657	(3,691)	-
Net interest revenue	6,056	3,732	15,579	47,228	(10,793)	61,802
Net revenues	18,614	106,882	130,077	49,942	(12,092)	293,423
Non-interest expenses	20,368	108,788	90,423	42,626	33,484	295,689
Other gains (losses)	-	-	-	-	(3,674)	(3,674)
Depreciation and amortization	75	921	416	1,922	2,445	5,779
Net income (loss) before taxes	(1,754)	(1,906)	39,654	7,316	(49,250)	(5,940)
Assets (*)	279,367	203,916	1,600,659	1,306,653	71,564	3,462,159
June 24, 2011
Operating revenue	$   14,715	$      106,226	$         129,702	$         (838)	$             1,147	$         250,952
Net intersegment revenues	(864)	906	273	3,786	(4,101)	-
Net interest revenue	6,475	3,431	15,993	65,147	66	91,112
Net revenues	21,190	109,657	145,695	64,309	1,213	342,064
Non-interest expenses	20,689	108,301	99,444	110,639	36,445	375,518
Depreciation and amortization	859	938	573	2,436	2,412	7,218
Net income (loss) before taxes	501	1,356	46,251	(46,330)	(35,232)	(33,454)
Assets (*)	339,993	189,312	1,819,420	1,351,295	36,570	3,736,590

(*)  Assets are reconciled to total assets as presented in the June 30, 2013, June 29, 2012 and June 24, 2011 Consolidated Statements of Financial Condition as follows:

	June 30, 2013	June 29, 2012	June 24, 2011
Amount as presented above	$         3,614,695	$         3,462,159	$         3,736,590
Reconciling items:
Unallocated assets:
Cash	12,071	9,365	4,654
Receivables from brokers, dealers and clearing	81,378	44,780	31,929
organizations
Receivable from clients, net of allowances	51,437	17,231	12,002
Other assets	24,037	20,504	31,102
Unallocated eliminations	(3,245)	(7,196)	(14,120)
Total assets	$         3,780,373	$         3,546,843	$         3,802,157