Affiliate Transactions

12 Months Ended

Jun. 30, 2013

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Affiliate Transactions

25. AFFILIATE TRANSACTIONS

Clients and correspondents of SWS have the option to invest in a savings account called Bank Insured Deposits at the Bank.  These funds are FDIC insured up to $250,000.  The funds are considered core deposits and are the primary funding source for the Bank.  The Bank’s total core deposits were $993,871,000 and $1,062,491,000 at June 30, 2013 and 2012, respectively.  At June 30, 2013 and June 29, 2012, clients of Southwest Securities had invested $878,434,000 and $930,741,000, respectively, in Bank Insured Deposits.

Two directors together with certain members of their families owned approximately 64% of a holding company that owned a local bank.  The Bank sold the local bank loan participations and at June 30, 2013 there were no loan participations outstanding with the local bank.  At June 30, 2012, the loan participations had outstanding balances of $1,404,000, which were collateralized by foreclosed property.  During the third quarter of fiscal 2013, the property collateralizing the foreclosed loan was sold for $4,339,000 resulting in a gain on sale of $43,000.  The holding company received $952,000 in proceeds from the sale.  Pursuant to participations agreements with the local bank, the Bank paid no interest and fees to the local bank in fiscal year 2013 and $98,000 and $137,000 in fiscal years 2012 and2011, respectively.  The interest rates on these participations were substantially the same as those participations sold by the Bank to unrelated banks.   

In the ordinary course of business, the Bank has transactions, including borrowings and deposits, with its executive officers, directors and their affiliates.  It is the policy of the Bank that such transactions are on the same terms, including interest rates and collateral requirements, as those prevailing at the time for comparable transactions with unaffiliated persons.  There were $3,358,000such loans at June 30, 2013 and no such loans at June 30, 2012.  The Bank recorded $203,000 and $21,000 of interest income on affiliate loans in fiscal year 2013 and 2011 and no interest income on affiliate loans in fiscal 2012.  Aggregate deposits from affiliates totaled approximately $1,664,000 and $3,908,000 at June 30, 2013 and 2012, respectively.