10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2013

OR

[    ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ______

Commission file number 000-19483

SWS GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	75-2040825
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1201 Elm Street, Suite 3500, Dallas, Texas	75270
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (214) 859-1800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes     X      No ______

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).       Yes    X       No _____

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer____	Accelerated filer __X__
Non-accelerated filer ____ (Do not check if a smaller reporting company)	Smaller reporting company ____

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

   Yes _______            No __X____

As of February 3, 2014, there were 33,068,118 shares of the registrant's common stock, $0.10 par value, outstanding. 

SWS GROUP, INC. AND SUBSIDIARIES

INDEX

Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition
	December 31, 2013 (unaudited) and June 30, 2013	2
Consolidated Statements of Comprehensive (Loss) Income
	For the three and six-months ended December 31, 2013 and 2012 (unaudited)	2
Consolidated Statements of Cash Flows
	For the six-months ended December 31, 2013 and 2012 (unaudited)	2
Notes to Consolidated Financial Statements (unaudited)		2
Item 2. Management's Discussion and Analysis of Financial Condition		2
	and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2
Item 4. Controls and Procedures		2
Part II. OTHER INFORMATION
Item 1. Legal Proceedings		2
Item 1A. Risk Factors		2
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds		2
Item 3. Defaults Upon Senior Securities		2
Item 4. Mine Safety Disclosure		2
Item 5. Other Information		2
Item 6. Exhibits		2
SIGNATURES		2
EXHIBIT INDEX		2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SWS Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

December 31, 2013 and June 30, 2013

(In thousands, except par values and share amounts)

	December	June
	(Unaudited)
Assets
Cash and cash equivalents	$                     121,130	$                        111,046
Restricted cash and cash equivalents	30,049	30,047
Assets segregated for regulatory purposes	174,614	164,737
Receivable from brokers, dealers and clearing organizations	1,807,189	1,698,474
Receivable from clients, net of allowance	266,573	286,446
Loans, net (including $35,333 of loans measured at fair value at December
31, 2013 and $13,757 at June 30, 2013)	528,217	608,583
Securities owned, at fair value	236,202	209,633
Securities held to maturity	14,595	17,423
Securities purchased under agreements to resell	73,381	51,996
Goodwill	7,552	7,552
Securities available for sale	580,291	503,276
Other assets	90,869	91,160
	$                  3,930,662	$                     3,780,373
Liabilities and Stockholders’ Equity
Short-term borrowings	$                       75,000	$                        131,500
Payable to brokers, dealers and clearing organizations	1,675,572	1,532,971
Payable to clients	366,569	335,655
Deposits	994,765	993,719
Securities sold under agreements to repurchase	62,314	37,012
Securities sold, not yet purchased, at fair value	155,103	134,735
Drafts payable	26,445	28,889
Advances from Federal Home Loan Bank (the “FHLB”)	98,251	97,565
Long-term debt, net	85,350	83,102
Stock purchase warrants (“warrants”)	24,288	24,197
Other liabilities	53,541	65,742
	$                  3,617,198	$                     3,465,087
Commitments and contingencies
Stockholders’ equity:
Preferred stock of $1.00 par value.  Authorized 100,000 shares;
none issued	-	-
Common stock of $0.10 par value.  Authorized 60,000,000 shares,
issued 33,312,140 and outstanding 32,747,990 shares at December 31,
2013; issued 33,312,140 and outstanding 32,629,213 shares at
June 30, 2013	3,331	3,331
Additional paid-in capital	323,963	325,030
Accumulated deficit	(1,377)	(3,361)
Accumulated other comprehensive loss – unrealized holding loss, net of
tax of $(5,176) at December 31, 2013 and $(2,963) at June 30, 2013	(9,391)	(5,334)
Deferred compensation, net	3,203	3,352
Treasury stock (564,150 shares at December 31, 2013 and 682,927
shares at June 30, 2013, at cost)	(6,265)	(7,732)
Total stockholders’ equity	313,464	315,286
Total liabilities and stockholders’ equity	$                  3,930,662	$                     3,780,373

See accompanying Notes to Consolidated Financial Statements.

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SWS Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE  (LOSS) INCOME

For the three and six-months ended December 31, 2013 and 2012

(In thousands, except share and per share amounts)

(Unaudited)

	For the Three-Months Ended		For the Six-Months Ended
	December 31,	December 31,	December 31,	December 31,
	2013	2012	2013	2012
Revenues:
Net revenues from clearing operations	$                2,213	$                2,177	$                4,506	$                4,316
Commissions	29,788	31,367	60,311	63,690
Interest	22,054	23,271	43,228	49,896
Investment banking, advisory and administrative fees	10,084	11,495	21,399	22,165
Net gains on principal transactions	7,465	11,170	15,640	19,652
Other	8,331	5,577	14,894	11,762
Total revenue	79,935	85,057	159,978	171,481
Interest expense	11,449	9,712	22,497	22,027
Net revenues	68,486	75,345	137,481	149,454
Non-interest expenses:
Commissions and other employee compensation	48,766	52,002	101,329	106,261
Occupancy, equipment and computer service costs	7,729	7,563	15,481	15,260
Communications	3,362	3,335	6,710	6,554
Floor brokerage and clearing organization charges	1,073	939	2,185	1,962
Advertising and promotional	612	737	1,262	1,405
(Recapture) provision for loan loss	(2,825)	(1,450)	(3,291)	(1,450)
Other	6,442	8,370	12,290	16,460
Total non-interest expenses	65,159	71,496	135,966	146,452
Other gains (losses):
Unrealized (loss) gain on warrants valuation	(2,058)	11,761	(91)	3,576
Income before income tax (benefit) expense	1,269	15,610	1,424	6,578
Income tax (benefit) expense	(391)	5,241	(559)	1,853
Net income	1,660	10,369	1,983	4,725
Other comprehensive loss:
Net gains (losses) recognized in other comprehensive
loss net of tax of $296 and $0 for the
three-months ended, December 31, 2013,
and 2012, respectively and $(99) and $0 for
the six-months ended December 31, 2013
and 2012, respectively, on cash flow hedging	549	-	(183)	-
Net losses recognized in other comprehensive loss,
net of tax of $(2,091) and $(1,529) for the
three-months ended December 31, 2013 and
2012, respectively, and $(2,113) and $(295) for
the six-months ended December 31, 2013 and
2012, respectively, on available for sale securities	(3,849)	(2,833)	(3,874)	(535)
Net loss recognized in other
comprehensive (loss) income	(3,300)	(2,833)	(4,057)	(535)
Comprehensive (loss) income	$               (1,640)	$                7,536	$               (2,074)	$                4,190
Earnings per share – basic
Net income	$                  0.05	$                  0.32	$                  0.06	$                  0.14
Weighted average shares outstanding – basic	32,955,629	32,827,652	32,943,875	32,813,910
Earnings per share – diluted
Net income	$                  0.05	$                  0.09	$                  0.06	$                  0.13
Weighted average shares outstanding – diluted	32,955,629	50,218,956	32,943,875	50,205,214

See accompanying Notes to Consolidated Financial Statements.

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SWS Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six-months ended December 31, 2013 and 2012

(In thousands)

(Unaudited)

	For the Six-Months Ended
	December 31, 2013	December 31, 2012
Cash flows from operating activities:
Net income	$                 1,983	$                 4,725
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization	2,721	2,741
Accretion of discount on long-term debt	2,248	1,939
Amortization of deferred debt issuance costs	246	246
Increase (decrease) in fair value of warrants	91	(3,576)
Amortization of premiums /discounts on loans purchased	(21)	(72)
Amortization of premiums /discounts on investment securities	1,218	969
Amortization of prepayment penalty on advances from FHLB	23	11
Provision for doubtful accounts on receivables from customers	480	480
Recapture of loan loss and write downs on real estate
owned (“REO”)	(3,090)	(524)
Deferred income tax (benefit) expense	(404)	4,719
Allowance for deferred tax asset	(222)	-
Deferred compensation for deferred compensation plan and
restricted stock plans	(1,830)	(328)
Gain on sale of loans	(304)	(63)
Loss on fixed assets transactions	26	3
Gain on sale of available for sale investment securities	-	(3,645)
(Gain) loss on sale of REO and other repossessed  assets	(364)	657
Gain on issuer’s redemption of investment securities	-	(7)
Equity in earnings of unconsolidated ventures	(200)	(1,018)
Dividend received on investments	(10)	(9)
Gain on fair value option of loans	(195)	-
Gain on interest rate swaps	(509)	-
Change in operating assets and liabilities:
Increase in assets segregated for regulatory purposes	(9,877)	(32,365)
Net change in broker, dealer and clearing organization accounts	33,886	(48,220)
Net change in client accounts	50,307	73,737
Increase in securities owned	(26,569)	(110,634)
Increase in securities purchased under agreements to resell	(21,385)	(8,249)
Decrease (increase) in other assets	737	(2,714)
(Decrease) increase in drafts payable	(2,444)	8,360
Increase in securities sold, not yet purchased	20,368	15,782
Decrease in other liabilities	(10,247)	(8,149)
Net cash provided by (used in) operating activities	36,663	(105,204)
(continued)

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(continued)	December 31, 2013	December 31, 2012
Cash flows from investing activities:
Purchase of fixed assets and capitalized improvements on REO	$                (2,507)	$                (1,858)
Proceeds from the sale of fixed assets and real estate	5,664	12,361
Loan originations and purchases	(1,276,189)	(3,328,411)
Loan repayments	1,354,275	3,347,562
Purchase of investment securities	(123,846)	(88,157)
Proceeds from the issuer’s redemption of investment securities	-	12,000
Cash received on investments	27,009	23,794
Proceeds from the sale of loans held for investment	3,417	-
Proceeds from the sale of FHLB stock	-	428
Purchases of FHLB stock	(45)	-
Proceeds from the sale /maturity of available for sale securities	15,235	29,116
Cash paid to unwind interest rate swap position	(12)	-
Net cash provided by investing activities	3,001	6,835
Cash flows from financing activities:
Payments on short-term borrowings	(3,033,297)	(1,193,000)
Cash proceeds from short-term borrowings	2,976,797	1,306,500
Increase (decrease) in deposits	1,046	(15,596)
Advances from the FHLB	5,540	-
Payments on advances from the FHLB	(4,877)	(6,427)
Fee payment for FHLB restructuring	-	(166)
Cash proceeds on securities sold under agreements to repurchase	25,302	4,849
Proceeds related to deferred compensation plan	197	135
Purchase of treasury stock related to deferred compensation plan	(288)	(121)
Net cash (used in) provided by financing activities	(29,580)	96,174
Net increase (decrease) in cash and cash equivalents	10,084	(2,195)
Cash and cash equivalents at beginning of period	111,046	81,826
Cash and cash equivalents at end of period	$             121,130	$               79,631
Supplemental schedule of non-cash investing and financing activities:
Grants of restricted stock	$                 2,071	$                    676
Foreclosures on loans	$                 2,674	$               10,891
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$               19,768	$               26,919
Income taxes	$                         -	$                         -

See accompanying Notes to Consolidated Financial Statements.

6

SWS Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Three and Six-Months Ended December 31, 2013 and 2012

(Unaudited)

GENERAL AND BASIS OF PRESENTATION

The interim consolidated financial statements as of December 31, 2013, and for the three and six-months ended December 31, 2013 and 2012, are unaudited; however, in the opinion of management, these interim statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial position, results of operations and cash flows.  These financial statements should be read in conjunction with the audited consolidated financial statements and related notes as of and for the fiscal year ended June 30, 2013 filed on September 6, 2013 on the Annual Report on Form 10-K(the “Fiscal 2013 Form 10-K”).  Amounts as of June 30, 2013 are derived from the audited consolidated financial statements filed on the Fiscal 2013 Form 10-K.  All significant inter-company balances and transactions have been eliminated upon consolidation. 

The consolidated financial statements include the accounts of SWS Group, Inc. (“SWS Group”) and the consolidated active subsidiaries listed below (collectively with SWS Group, “SWS” or the “Company”).  Each of the subsidiaries listed below are 100% owned.

Southwest Securities, Inc.	"Southwest Securities"
SWS Financial Services, Inc.	"SWS Financial"
Southwest Financial Insurance Agency, Inc.
Southwest Insurance Agency, Inc.	collectively, “SWS Insurance”
SWS Banc Holding, Inc.	"SWS Banc"
Southwest Securities, FSB	"Bank"

Southwest Securities is a New York Stock Exchange ("NYSE") member broker/dealer.  Southwest Securities and SWS Financial are members of the Financial Industry Regulatory Authority (“FINRA”).  Southwest Securities and SWS Financial are also registered with the Securities and Exchange Commission (the "SEC") as broker/dealers under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and as registered investment advisers under the Investment Advisers Act of 1940, as amended.

SWS Insurance holds insurance agency licenses in 44 states for the purpose of facilitating the sale of insurance and annuities for Southwest Securities and its correspondents.  The Company retains no underwriting risk related to the insurance and annuity products that SWS Insurance sells. 

The Bank is a federally chartered savings bank regulated by the Office of the Comptroller of the Currency ("OCC").  The Board of Governors of the Federal Reserve System (“FRB”) supervises and regulates SWS Group and SWS Banc.  SWS Banc is a wholly- owned subsidiary of SWS Group and became the sole shareholder of the Bank in 2004.   

Reclassifications.“Investment banking, advisory and administrative fees” on the Consolidated Statements of Comprehensive (Loss) Income of $748,000 and $1,624,000for the three and six-months ended December 31, 2012 were reclassified to conform to the fiscal 2014 presentation.  In previous periods the amounts were presented in “Net gains on principal transactions” on the Consolidated Statements of Comprehensive (Loss) Income.

Change in Fiscal Year End and Consolidated Financial Statements. On May 23, 2013, the Board of Directors of the Company, acting on the recommendation of the Federal Reserve Bank of Dallas, approved a change to the Company’s fiscal year end from the last Friday of June to June 30th.  This change was effective for the Company’s fiscal year ended June 30, 2013.   Because the transition period was less than one month, no transition report was filed with the SEC.  

Prior to June 30, 2013, the quarterly consolidated financial statements of SWS were preparedas ofthe last Friday of the month, except for the second fiscal quarter which was prepared as of December 31, 2012, and the Bank’s financial statements were prepared on the last day of the quarter.  Any individually material transactions were reviewed and recorded in the appropriate quarterly period.

Acquisition Proposal.On January 9, 2014, the Company received an unsolicited acquisition proposal from Hilltop Holdings, Inc. (“Hilltop”) to acquire all of the outstanding shares of SWS Group common stock that Hilltop does not already own for $7.00 per share,  withtheconsideration to be paid50%in cash and 50%in Hilltop common stock.  On February 3, 2014, the Company announced that its Board of Directors formed a Special Committee, comprised of independent directors not affiliated with Hilltop, Oak Hill Capital Partners III, L.P. (“OHCP”) and Oak Hill Capital Management Partners III, L.P. (collectively with OHCP, “Oak Hill”), to, among other things, carefully evaluate Hilltop’s unsolicited proposal and make a recommendation to the Company’s Board of Directors. There can be no assurance that a transaction with Hilltop or any other party will be approved or consummated.

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Update of Significant Accounting Policies.  A summary of the Company’s significant accounting policies is included in “Note 1.Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in the Company’s Fiscal 2013 Form 10-K.   Except as discussed herein, there have been no significant accounting changes since June 30, 2013.

Accounting Pronouncements.  The Financial Accounting Standards Board (“FASB”) and the SEC recently issued the following accounting pronouncements, which areapplicable to SWS.  Any other new accounting pronouncements that are not specifically identified in our disclosures are not applicable to SWS: 

Accounting Standards Update (“ASU”) 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”).”  In July 2013, the FASB issued ASU 2013-11 which explicitly states the guidance for the presentation of unrecognized tax benefits when a net operating loss carryforward, similar tax loss, or a tax credit carryforward exits.  This pronouncement clarifies the presentation of the unrecognized tax benefit as there is not currently a standard industry practice.  This pronouncement states an unrecognized tax benefit, or portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to the deferred tax asset for a net operating loss carryforward, a similar loss, or a tax credit carryforward.  The presentation is limited if the net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date due to tax law or the entity does not recognize its deferred tax asset.  In addition, the unrecognized tax benefit should be presented as a liability separate from the deferred tax asset.  The adoption of ASU 2013-11 will not impact the Company’s results of operations or financial position, but will impact the Company’s disclosures about the presentation of the deferred tax liability and asset.  ASU 2013- 11 is effective for annual reporting periods beginning after December 15, 2013; the Company’s first quarter of fiscal 2015.  The Company is in the process of evaluating the impact of ASU 2013-11 on its financial statements and processes.

ASU 2014-4, “Receivables—Troubled Debt Restructuring by Creditors (“ASU 2014-04”).”  In January 2014, the FASB issued ASU 2014-04 to clarify that when an in substance repossession or  foreclosure occurs,   a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.  ASU 2014-  04 is effective for annual reporting periods beginning after December 15, 2014; the Company’s first quarter of fiscal 2016.  The Company is in the process of evaluating the impact of ASU 2014-04 on its financial statements and processes.

CASH AND CASH EQUIVALENTS

For the purposes of the Consolidated Statements of Cash Flows, SWS considers cash to include cash on hand and in bank accounts.  In addition, SWS considers funds due from banks and interest bearing deposits in other banks to be cash. Highly liquid debt instruments purchased with maturities of three months or less, when acquired, are considered to be cash equivalents.  The Federal Deposit Insurance Corporation (“FDIC”) insures deposit accounts up to $250,000.  At December 31, 2013 and June 30, 2013, cash balances included $87,509,000 and $37,833,000,  respectively, thatwere not federally insured because they exceeded federal insurance limits.  This at-risk amount is subject to fluctuation on a daily basis, but management does not believe there is significant risk on these deposits.

The Bank is required to maintain reserve balances on hand or with the Federal Reserve Bank of Dallas.  At December 31, 2013 and June 30, 2013, these reserve balances amounted to $1,748,000 and$1,649,000, respectively.

RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents represents funds received from Hilltopand Oak Hill upon completion of the $100,000,000,  five year, unsecured credit agreement from Hilltop and Oak Hill (the “Credit Agreement”) that was entered into on July 29, 2011. The Company is required to keep these funds in a restricted account until the Company’s Board of Directors, Hilltop and Oak Hill determine the amount(s) to be distributed to the Company’s subsidiaries.  See additional discussion in, “Debt Issued with Stock Purchase Warrants”.  Upon approval of the Board of Directors, Hilltop and Oak Hill, SWS Group contributed $20,000,000 of this cash in the second quarter of fiscal 2012 to the Bank as capital, loaned Southwest Securities $20,000,000 in the third quarter of fiscal 2012 to use in general operations by reducing Southwest Securities’ use of short-term borrowings for the financing of its day-to-day cash management needs, reduced its intercompany payable to Southwest Securities by $20,000,000 and contributed $10,000,000 in capital to Southwest Securities in the fourth quarter of fiscal 2012.  On March 28, 2013, the $20,000,000 loan from SWS Group to Southwest Securities was repaid and the Company’s Board of Directors, Hilltop and Oak Hill approved a $20,000,000 capital contribution to Southwest Securities.  At December 31, 2013, the remaining $30,000,000was held in a restricted account at SWS Group to be used for general corporate purposes.On January 8, 2014, the remaining $30,000,000 was loaned to Southwest Securities to use in general operationsby reducing Southwest Securities’ use of short-term borrowings for the financing of its day-to-day cash management needs.   Restricted cash and cash equivalents are

8

excluded from cash and cash equivalents in the Consolidated Statements of Financial Condition and Consolidated Statements of Cash Flows.  The Company holds restricted cash and cash equivalents in money market funds.

ASSETS SEGREGATED FOR REGULATORY PURPOSES

AtDecember  31, 2013, SWS held cash of approximately  $174,614,000 segregated in special reserve bank accounts for the exclusive benefit of customers under Rule 15c3-3 of the Exchange Act.SWS had no reserve deposits in special reserve bank accounts for the Proprietary Accounts of Introducing Brokers (the "PAIB") at December31, 2013.  

At June 30, 2013, SWS held cash of approximately $164,737,000 segregated in special reserve bank accounts for the exclusive benefit of customers under Rule 15c3-3 of the Exchange Act.    SWS had no reserve deposits in special reserve bank accounts for the PAIB at June 30, 2013.  

RECEIVABLE FROM AND PAYABLE TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS

At December  31, 2013 and June 30, 2013, SWS had receivable from and payable to brokers, dealers and clearing organizations related to the following (in thousands):

	December 31, 2013	June 30, 2013
Receivable:
Securities failed to deliver	$               6,226	$                9,708
Securities borrowed	1,720,673	1,546,376
Correspondent broker/dealers	37,034	45,435
Clearing organizations	27,373	25,285
Other	15,883	71,670
	$        1,807,189	$         1,698,474
Payable:
Securities failed to receive	$             14,275	$              39,024
Securities loaned	1,640,922	1,471,319
Correspondent broker/dealers	12,474	16,352
Other	7,901	6,276
	$        1,675,572	$         1,532,971

SWS participates in the securities borrowing and lending business by borrowing and lending securities other than those of its clients.  SWS obtains or releases collateral as prices of the underlying securities fluctuate.  Both of these activities are reported on a gross basis by counterparty.  The following table provides information about these receivables and related collateral amounts at  December  31, 2013 and June 30, 2013.

December 31, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Securities Borrowed	$              1,720,673	$                              -	$                   1,720,673	$     (1,720,673)	$                -	$                -
Securities Loaned (1)	1,640,922	-	1,640,922	(1,640,922)	-	-

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June 30, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Securities Borrowed	$              1,546,376	$                              -	$                   1,546,376	$     (1,546,376)	$                -	$                -
Securities Loaned (1)	1,471,319	-	1,471,319	(1,471,319)	-	-

____________________

(1)Under securities lending agreements, SWS had repledged $1,619,010,000 and $1,452,911,000 at December 31, 2013 and June 30, 2013, respectively.

LOANS AND ALLOWANCE FOR PROBABLE LOAN LOSSES

The Bank grants loans to customers primarily within Texas and New Mexico.  Although the Bank has a diversified loan portfolio, a substantial portion of its portfolio is dependent upon the general economic conditions in Texas and New Mexico.

Loans receivable at December 31, 2013 and June 30, 2013 are summarized as follows and include unamortized discounts and premiums and deferred loan fees and costs of $968,000 and $997,000 at December 31, 2013 and June 30, 2013, respectively (in thousands):

	December 31, 2013	June 30, 2013
Loans measured at fair value:
Commercial real estate	$                4,047	$                2,662
Multifamily	31,286	11,095
	35,333	13,757
Other loans receivable:
Residential construction	731	1,367
Lot and land development	5,998	8,988
1-4 family	144,738	233,947
Commercial real estate	186,522	213,452
Multifamily	91,917	88,738
Commercial loans	69,690	58,718
Consumer loans	2,736	1,959
	502,332	607,169
	537,665	620,926
Allowance for probable loan losses	(9,448)	(12,343)
	$            528,217	$            608,583

At December 31, 2013 and June 30, 2013, the 1-4 family loans included $89,583,000 and $174,037,000, respectively, of purchased mortgage loans held for investment.  The loans, which are subject to policies and procedures governing credit underwriting standards and funding requirements, consisted of participations in newly originated residential loans from various mortgage bankers nationwide purchased at par.

10

The analysis of the allowance for loan losses for the three and six-months ended December 31, 2013 and 2012 and the recorded investment in loans receivable at December 31, 2013 and 2012 were as follows (in thousands):

	Three-Months Ended December 31, 2013
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                  30	$                285	$           1,075	$             3,073	$           2,585	$             5,147	$               11	$       12,206
Charge-offs	-	-	-	(35)	-	(47)	-	(82)
Recoveries	5	3	9	116	-	16	-	149
Net recoveries (charge-offs)	5	3	9	81	-	(31)	-	67
(Recapture) provision charged
to operations	(29)	(164)	235	(85)	308	(3,098)	8	(2,825)
Balance at end of period	$                    6	$                124	$           1,319	$             3,069	$           2,893	$             2,018	$               19	$         9,448
Ending balance: individually
evaluated for impairment	$                    -	$                  33	$             251	$                   1	$                   -	$                161	$                  -	$            446
Ending balance: collectively
evaluated for impairment	$                    6	$                  91	$           1,068	$             3,068	$           2,893	$             1,857	$               19	$         9,002
Financing receivables:
Balance at end of period	$                731	$             5,998	$       144,738	$         186,522	$         91,917	$           69,690	$          2,736	$     502,332
Ending balance: individually
evaluated for impairment	$                578	$                995	$           7,880	$             7,159	$                   -	$             4,514	$                  -	$       21,126
Ending balance: collectively
evaluated for impairment	$                153	$             5,003	$       136,858	$         179,363	$         91,917	$           65,176	$          2,736	$     481,206

11

	Three-Months Ended December 31, 2012
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                187	$                975	$            3,205	$           10,591	$             2,819	$            3,106	$                9	$             20,892
Charge-offs	-	-	(12)	(410)	-	(680)	-	(1,102)
Recoveries	17	54	13	20	-	188	5	297
Net (charge-offs) recoveries	17	54	1	(390)	-	(492)	5	(805)
(Recapture) provision charged to
operations	(69)	(355)	(447)	(2,433)	(988)	2,850	(8)	(1,450)
Balance at end of period	$                135	$                674	$            2,759	$             7,768	$             1,831	$            5,464	$                6	$             18,637
Ending balance:  individually
evaluated for impairment	$                  23	$                177	$               347	$             1,179	$                    -	$            2,157	$                 -	$               3,883
Ending balance:  collectively
evaluated for impairment	$                112	$                497	$            2,412	$             6,589	$             1,831	$            3,307	$                6	$             14,754
Financing receivables:
Balance at end of period	$             2,216	$           11,458	$        438,097	$         257,514	$           48,654	$          64,179	$         1,704	$           823,822
Ending balance:  individually
evaluated for impairment	$                632	$             2,294	$          10,909	$           14,755	$                    -	$            4,317	$                 -	$             32,907
Ending balance:  collectively
evaluated for impairment	$             1,584	$             9,164	$        427,188	$         242,759	$           48,654	$          59,862	$         1,704	$           790,915

12

	Six-Months Ended December 31, 2013
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                  49	$                374	$           1,528	$             3,290	$           3,567	$             3,530	$                 5	$       12,343
Charge-offs	-	(4)	(97)	(51)	-	(67)	-	(219)
Recoveries	63	10	61	439	-	42	-	615
Net recoveries (charge-offs)	63	6	(36)	388	-	(25)	-	396
(Recapture) provision charged
to operations	(106)	(256)	(173)	(609)	(674)	(1,487)	14	(3,291)
Balance at end of period	$                    6	$                124	$           1,319	$             3,069	$           2,893	$             2,018	$               19	$         9,448

	Six-Months Ended December 31, 2012
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                350	$             1,310	$            3,235	$           10,628	$             2,866	$            4,004	$                9	$             22,402
Charge-offs	-	(182)	(163)	(1,113)	-	(1,608)	-	(3,066)
Recoveries	36	187	69	83	-	371	5	751
Net (charge-offs) recoveries	36	5	(94)	(1,030)	-	(1,237)	5	(2,315)
(Recapture) provision charged to
operations	(251)	(641)	(382)	(1,830)	(1,035)	2,697	(8)	(1,450)
Balance at end of period	$                135	$                674	$            2,759	$             7,768	$             1,831	$            5,464	$                6	$             18,637

13

As of December 31, 2013 and 2012, the ratio of loan loss allowance to ending loan balance, excluding purchased mortgage loans held for investment and loans measured at fair value, was 2.29% and 4.10%, respectively.  There was no loan loss allowance for purchased mortgage loans held for investment because they are held on average for 25 days or less, which substantially reduces credit risk.

Loans receivable on non-accrual status as of December 31, 2013 and June 30, 2013 were as follows (in thousands):

	December 31, 2013	June 30, 2013
Residential construction	$                  573	$                601
Lot and land development	992	2,418
1-4 family	6,485	7,792
Commercial real estate	4,076	7,611
Commercial loans	3,891	4,024
	$             16,017	$           22,446

Loans are classified as non-performing when they are 90 days or more past due as to principal or interest or when reasonable doubt exists as to timely collectibility.  The Bank uses a standardized review process to determine which loans should be placed on non-accrual status.  At the time a loan is placed on non-accrual status, previously accrued and uncollected interest is reversed against interest income.  Interest income on non-accrual loans is subsequently recognized to the extent cash payments are received for loans where full collection is likely.  For loans where full collection is not likely, interest payments are applied to the outstanding principal and interest income is only recognized if full payment is made.  The average recorded investment in non-accrual loans for the six-months endedDecember 31, 2013 and the twelve-months ended June 30, 2013 was approximately $18,552,000 and $25,516,000, respectively.  There was $1,000 and $8,000 of interest income recorded on the non-accrual loans, prior to being placed on non-accrual status, in the three and six-months ended December 31, 2013 and no interest income for the three-months ended December 31, 2012, and approximately $15,000 in the six-months ended December 31, 2012.

The following tables highlight the Bank’s recorded investment and unpaid principal balance for impaired loans by type as well as the related allowance, average recorded investment and interest income recognized as of December 31, 2013 and June 30, 2013 (in thousands):

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
December 31, 2013
With no related allowance recorded:
Residential construction	$               578	$               746	$                    -	$               407	$                    -
Lot and land development	45	168	-	40	-
1-4 family	6,276	8,024	-	5,217	5
Commercial real estate	7,145	8,151	-	6,261	93
Commercial loans	3,958	4,008	-	4,242	5
	18,002	21,097	-	16,167	103

13

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
December 31, 2013
With an allowance recorded:
Residential construction	$                   -	$                   -	$                   -	$              179	$                   -
Lot and land development	950	1,080	33	1,558	-
1-4 family	1,604	1,633	251	2,928	31
Commercial real estate	14	21	1	2,629	-
Commercial loans	556	619	161	3,036	15
	3,124	3,353	446	10,330	46

December 31, 2013
Total
Residential construction	$               578	$               746	$                    -	$               586	$                    -
Lot and land development	995	1,248	33	1,598	-
1-4 family	7,880	9,657	251	8,145	36
Commercial real estate	7,159	8,172	1	8,890	93
Commercial loans	4,514	4,627	161	7,278	20
	$          21,126	$          24,450	$               446	$          26,497	$               149

June 30, 2013
With no related allowance recorded:
Residential construction	$               383	$               471	$                    -	$               438	$                    -
Lot and land development	102	324	-	807	-
1-4 family	5,818	7,712	-	7,674	17
Commercial real estate	9,006	12,239	-	7,785	167
Commercial loans	4,430	5,092	-	1,582	26
	19,739	25,838	-	18,286	210

14

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
June 30, 2013
With an allowance recorded:
Residential construction	$               222	$               283	$                 23	$               191	$                    -
Lot and land development	2,326	2,543	233	1,879	-
1-4 family	3,543	3,870	178	6,398	67
Commercial real estate	3,265	4,188	105	10,048	15
Commercial loans	3,037	3,032	2,090	2,288	129
	12,393	13,916	2,629	20,804	211

June 30, 2013
Total
Residential construction	$               605	$               754	$                 23	$               629	$                    -
Lot and land development	2,428	2,867	233	2,686	-
1-4 family	9,361	11,582	178	14,072	84
Commercial real estate	12,271	16,427	105	17,833	182
Commercial loans	7,467	8,124	2,090	3,870	155
	$          32,132	$          39,754	$            2,629	$          39,090	$               421

____________________

(1) The difference between the unpaid principal balance and the recorded investment of impaired loans with no related allowance recorded is primarily comprised of partial charge-offs that were previously recognized.

(2) Represents the average recorded investment for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013, respectively.

(3) Represents interest income recognized on impaired loans for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013, respectively.

15

The Bank prepares a criticized and classified loan report that it uses to assist in calculating an adequate allowance for loan losses.  The following tables summarize this report and highlight the overall quality of the Bank’s financing receivables as of December 31, 2013 and June 30, 2013 (in thousands):

	Pass	Special Mention(1)	Substandard(2)	Total
December 31, 2013
Loans measured at fair value:
Commercial real estate	$           4,047	$                   -	$                     -	$             4,047
Multifamily	31,286	-	-	31,286
	35,333	-	-	35,333
Other loans receivable:
Residential construction	158	-	573	731
Lot and land development	4,689	-	1,309	5,998
1-4 family	137,964	38	6,736	144,738
Commercial real estate	156,321	3,512	26,689	186,522
Multifamily	91,917	-	-	91,917
Commercial loans	63,459	878	5,353	69,690
Consumer loans	2,736	-	-	2,736
	457,244	4,428	40,660	502,332
	$       492,577	$           4,428	$           40,660	$         537,665

	Pass	Special Mention(1)	Substandard(2)	Total
June 30, 2013
Loans measured at fair value:
Commercial real estate	$           2,662	$                   -	$                     -	$             2,662
Multifamily	11,095	-	-	11,095
	13,757	-	-	13,757
Other loans receivable:
Residential construction	766	-	601	1,367
Lot and land development	5,605	-	3,383	8,988
1-4 family	225,434	234	8,279	233,947
Commercial real estate	171,085	7,631	34,736	213,452
Multifamily	88,046	-	692	88,738
Commercial loans	47,680	1,324	9,714	58,718
Consumer loans	1,959	-	-	1,959
	540,575	9,189	57,405	607,169
	$       554,332	$           9,189	$           57,405	$         620,926

____________________

(1) These loans are currently protected by the current sound worth and paying capacity of the obligor, but have a potential weakness that would create a higher credit risk.

(2) These loans exhibit well-defined weaknesses that could jeopardize the ultimate collection of all or part of the debt.  Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged.  They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.  Loss potential, while existing in the aggregate for substandard assets, does not have to exist in individual assets classified as “Substandard.” 

16

The following tables highlight the age of the Bank’s past due financing receivables as of December 31, 2013 and June 30, 2013 (in thousands):

	30-59 Days Past Due	60-89 Days Past Due	90 Days and Greater Past Due	Total Past Due	Current	Total Financing Receivables	Recorded Investment > 90 Days and Accruing
December 31, 2013
Loans measured at fair value:
Commercial real estate	$           -	$         -	$           -	$           -	$      4,047	$           4,047	$                  -
Multifamily	-	-	-	-	31,286	31,286	-
	-	-	-	-	35,333	35,333	-
Other loans receivable:
Residential construction	-	-	-	-	731	731	-
Lot and land development	315	-	-	315	5,683	5,998	-
1-4 family	2,036	416	1,821	4,273	140,465	144,738	-
Commercial real estate	2,591	1,352	3,961	7,904	178,618	186,522	-
Multifamily	-	-	-	-	91,917	91,917	-
Commercial loans	378	124	3,676	4,178	65,512	69,690	-
Consumer loans	2	-	-	2	2,734	2,736	-
	5,322	1,892	9,458	16,672	485,660	502,332	-
	$    5,322	$  1,892	$    9,458	$  16,672	$  520,993	$       537,665	$                  -

	30-59 Days Past Due	60-89 Days Past Due	90 Days and Greater Past Due	Total Past Due	Current	Total Financing Receivables	Recorded Investment > 90 Days and Accruing
June 30, 2013
Loans measured at fair value:
Commercial real estate	$           -	$         -	$           -	$           -	$      2,662	$           2,662	$                  -
Multifamily	-	-	-	-	11,095	11,095	-
	-	-	-	-	13,757	13,757	-
Other loans receivable:
Residential construction	-	-	-	-	1,367	1,367	-
Lot and land development	173	370	80	623	8,365	8,988	-
1-4 family	914	234	2,816	3,964	229,983	233,947	-
Commercial real estate	1,396	1,153	4,826	7,375	206,077	213,452	-
Multifamily	692	-	-	692	88,046	88,738	-
Commercial loans	750	3,812	135	4,697	54,021	58,718	-
Consumer loans	-	-	-	-	1,959	1,959	-
	3,925	5,569	7,857	17,351	589,818	607,169	-
	$    3,925	$  5,569	$    7,857	$  17,351	$  603,575	$       620,926	$                  -

In certain circumstances, the Bank modifies the terms of its loans to a troubled borrower.  Modifications may include extending the maturity date, reducing the stated interest rate, rescheduling future cash flows or some combination thereof.  The Bank accounts for the modification as a troubled debt restructuring (“TDR”). 

Loans that have been modified in a TDR continue to be considered restructured until paid in full.  These loans, including loans restructured in the prior 12 months that defaulted during the period, are individually evaluated for impairment taking into consideration payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  A specific allowance for an impaired loan that has been modified in a TDR is established when the loan’s fair value is lower than its recorded investment.  In addition, the historical loss rates of loans modified in TDRs, by portfolio segment, are factored into the formula utilized to determine the general allowance for probable loan losses. 

17

The table below presents the recorded investment in loans modified in TDRs as of December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013	June 30, 2013
Residential construction	$                        578	$                     605
Lot and land development	1,186	4,927
1-4 family	5,890	7,690
Commercial real estate	3,146	4,574
Commercial	552	497
	$                   11,352	$                18,293

The allowance for loan losses associated with loans modified in TDRs as of December 31, 2013 and June 30, 2013, was $445,000 and $447,000, respectively.  The recorded investment includes $5,132,000 and $6,685,000 of loans on accrual status as of December 31, 2013 and June 30, 2013, respectively.  Loans modified in TDRs are placed on accrual status when a reasonable period of payment performance by the borrower demonstrates the ability and capacity to meet the restructured terms.

The following table summarizes the financial effects of loan modifications accounted for as TDRs that occurred during the three and six- months ended December 31, 2013 and 2012 (dollars in thousands):

	Three-Months Ended December 31, 2013			Six-Months Ended December 31, 2013
	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)
Commercial	-	$                         -	$                        -	1	$                    168	$                   168
	-	$                         -	$                        -	1	$                    168	$                   168

	Three-Months Ended December 31, 2012			Six-Months Ended December 31, 2012
	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)
Residential construction	4	$                     648	$                    648	4	$                    648	$                    648
Lot and land development	-	-	-	7	3,228	3,228
1-4 family	4	895	882	5	1,308	1,295
Commercial real estate	2	96	96	2	96	96
Commercial	1	213	213	1	213	213
	11	$                  1,852	$                  1,839	19	$                 5,493	$                  5,480

____________

(1) Post-modification balances include direct charge-offs recorded at the time of modification.      

18

The table below summarizes the type of loan modifications made and the post modification outstanding recorded investment for TDRs during the three and six-months ended December 31, 2013 and 2012 (in thousands):

	Amount of TDR Loan Modifications
Type of Modification	Three-Months Ended December 31, 2013	Six-Months Ended December 31, 2013
Rescheduled future cash flows	$                               -	$                           168
	$                               -	$                           168

	Amount of TDR Loan Modifications
Type of Modification	Three-Months Ended December 31, 2012	Six-Months Ended December 31, 2012
Maturity date extension	$                               -	$                           114
Reduction of the stated interest rate	60	60
Rescheduled future cash flows	-	705
Combination of maturity date extension
and rescheduling of future cash flows	701	2,646
Combination of maturity date extension
and reduction of the stated interest rate	-	26
Combination of maturity date extension,
reduction of the stated interest rate,
and rescheduling of future cash flows	1,078	1,929
	$                       1,839	$                         5,480

Loan modifications accounted for as TDRs within the previous 12 months that subsequently defaulted (a payment default is defined as a loan 60 days or more past due) during the three and six-months ended December 31, 2013 and 2012 are summarized in the following table (dollars in thousands):

	Three-Months Ended December 31, 2013		Six-Months Ended December 31, 2013
	Number of Contracts	Recorded Investment	Number of Contracts	Recorded Investment
1-4 family	2	$             272	2	$             272

	Three-Months Ended December 31, 2012		Six-Months Ended December 31, 2012
	Number of Contracts	Recorded Investment	Number of Contracts	Recorded Investment
1-4 family	2	$          1,896	2	$          1,896

The Bank has elected to measure certain loans at fair value.  See discussion in “Note 1(x). Fair Value of Financial Instruments” and“Note 1(g). Loans and Allowance for Loan Losses”in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.  The Bank recognized interest income on loans measured at fair value separately from other changes in fair value.  As of December 31, 2013, there were no loans measured at fair value on non-accrual status or 90 days or more past due and still accruing. 

19

The following tables summarize the amortized cost, gross unrealized gains and losses and the fair value of loans measured at fair value at December 31, 2013 and June 30, 2013 for the Bank (in thousands): 

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains (1)	Losses (1)	Value
December 31, 2013
Commercial real estate	$        4,131	$                -	$            (84)	$     4,047
Multifamily	31,152	165	(31)	31,286
	$      35,283	$           165	$          (115)	$   35,333

		Gross
	Amortized	Unrealized	Fair
	Cost	Losses (1)	Value
June 30, 2013
Commercial real estate	$        2,787	$            (125)	$      2,662
Multifamily	11,115	(20)	11,095
	$      13,902	$            (145)	$    13,757

____________

(1)  Unrealized gains (losses) are recorded in other revenues on the Consolidated Statements of Comprehensive (Loss) Income.

SECURITIES OWNED AND SECURITIES SOLD, NOT YET PURCHASED

Securities owned and securities sold, not yet purchased at December  31, 2013 and June 30, 2013 consisted of the following (in thousands):

	December 31, 2013	June 30, 2013
Securities owned:
Corporate equity securities	$                      1,200	$                      1,520
Municipal obligations	56,182	30,116
U.S. government and government agency obligations	73,883	41,529
Corporate obligations	82,896	127,899
Other	22,041	8,569
	$                  236,202	$                  209,633
Securities sold, not yet purchased:
Municipal obligations	$                             -	$                           10
U.S. government and government agency obligations	76,735	54,086
Corporate obligations	78,368	80,639
	$                  155,103	$                  134,735

Securities owned and securities sold, not yet purchased are carried at fair value.  See additional discussion in “Fair Value of Financial Instruments”.

Some of these securities were pledged to secure short-term borrowings (see “Short-Term Borrowings”) and as security deposits at clearing organizations for the Company’s clearing business.  At December  31, 2013 and June 30, 2013, securities pledged as security deposits at clearing organizations were $6,749,000 and $3,000,000, respectively.

Included in the balance of Securities owned-U.S. government and government agency obligations at December 31, 2013, are $949,000 of “to-be-announced” securities (“TBAs”). TBAs are purchase and sale agreements of forward mortgage-backed securities whose collateral remains to-be-announced until just prior to the trade settlement. The TBAs are accounted for as derivatives underAccounting Standards Codification (“ASC”) 815  “Derivatives and Hedging.” The Company does not

20

apply hedge accounting for these TBA securities.  Accordingly, the securities are carried at fair value with unrealized and realized gains recorded in net gains on principal transactions on the Consolidated Statements of Comprehensive (Loss) Income.  All of the Company’s derivative transactions are entered into in order to facilitate customer transactions. 

In addition to the above activities related to TBAs, the Company also enters into TBAs in order to assist clients (generally small to mid-size mortgage loan originators) in hedging the interest rate risk associated with the mortgages owned by the clients.  In general, the Company will enter into a TBA purchase agreement with the client.  The Company will then immediately enter into a TBA sale agreement with identical terms and the same settlement date with a separate counter-party.  The Company earns revenue through a commission charged to the customer.  Because the Company has purchased and sold the same security, it is no longer exposed to market movements of the underlying TBA.  At December 31, 2013, the Company had unsettled TBA purchase contracts and offsetting TBA sale agreements in the notional amount of $543,317,000.

SECURITIES HELD TO MATURITY

Securities held to maturity consisted of the following (in thousands):

	December 31, 2013	June 30, 2013
Government National Mortgage
Association ("GNMA") Securities	$                     14,595	$                     17,423

In March 2011, the Bank purchased GNMA securities at a cost of $35,525,000, including a premium of $525,000.  The premium is amortized over the period from the date of purchase to the stated maturity date (15 years) of the GNMA securities using the interest method.  These securities are classified as held to maturity and are accounted for at amortized cost.  The weighted average yield on this investment is expected to be 2.4% and the weighted average maturity is expected to be 2.2 years. 

The Bank recorded $21,000 and$41,000 in amortization of the premiums during the three and six-months ended December 31,  2013, respectively.  During the three and six-months ended December 31,  2013, the Bank received $1,223,000 and$3,025,000 of principal and interest payments, respectively, recording $113,000 and$238,000 in interest, respectively.

The Bank recorded $32,000 and$61,000 in amortization of the premiums during the three and six-months ended December 31, 2012, respectively.  During the three and six-months ended December31, 2012, the Bank received $2,306,000 and$4,488,000 of principal and interest payments, respectively, recording $172,000 and$359,000 in interest, respectively. 

The amortized cost, estimated fair value and unrecognized holding gain of securities held to maturity at December  31, 2013, by contractual maturity date, are shown below (in thousands).  Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties. 

	Securities Held to Maturity
	Amortized Cost	Fair Value	Unrecognized Holding gain
Due after ten years	$                     14,595	$                     14,982	$                          387

SECURITIES PURCHASED/SOLD UNDER AGREEMENTS TO RESELL/REPURCHASE

At December  31, 2013 and June 30, 2013, SWS held reverse repurchase agreements collateralized by U.S. government and government agency obligations and securities sold under repurchase agreements.  These securities are reported on a gross basis in the Consolidated Statements of Financial Condition. 

Securities sold under repurchase agreements, which are secured borrowings, generally mature within one to four days from the transaction date.  Securities sold under repurchase agreements are reflected at the amount of cash received in connection with the transactions.  The Company may be required to provide additional collateral based on the fair value of the underlying securities.  The Company monitors the fair value of the underlying securities on a daily basis. Interest on these amounts is accrued and is included in the Consolidated Statements of Financial Condition in other liabilities.

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The following table provides information about these instruments and any related collateral amounts at December 31, 2013 and June 30, 2013. 

December 31, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Reverse
Repurchase
Agreements	$                  73,381	$                              -	$                       73,381	$         (72,866)	$                -	$            515
Repurchase
Agreements	62,314	-	62,314	(62,314)	-	-

June 30, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Reverse
Repurchase
Agreements	$                  51,996	$                              -	$                       51,996	$         (51,808)	$                -	$            188
Repurchase
Agreements	37,012	-	37,012	(37,012)	-	-

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SECURITIES AVAILABLE FOR SALE

SWS Group owns shares of common stock of Westwood Group, Inc. (“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.

The following tables summarize the cost of equity securities, amortized cost of debt securities and market value of these investments at December  31, 2013 and June 30, 2013 (dollars in thousands): 

		Original/	Gross	Gross	Gross
	Shares	Amortized	Unrealized	Unrealized	Realized	Market
	Held	Cost	Gains	Losses	Losses	Value
December 2013
Westwood common stock	2,219	$              7	$           220	$                 -	$             (90)	$         137
Continuous unrealized loss less than
12 months:
U.S. government and government
agency obligations	N/A	531,733	229	(14,321)	-	517,641
Municipal obligations	N/A	44,262	85	(1,160)	-	43,187
Continuous unrealized loss for 12
months or greater:
U.S. government and government
agency obligations	N/A	19,727	-	(1,125)	-	18,602
Municipal obligations	N/A	727	-	(3)	-	724
		$   596,456	$           534	$      (16,609)	$             (90)	$   580,291

		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

In fiscal 2014 and 2013, the Bank purchased U.S. government and government agency and municipal obligations securities at a cost of $123,696,000 and $319,836,000, including a net premium of $1,093,000 and $6,279,000, respectively.  The premium is amortized over the period from the date of purchase to the stated maturity date (weighted average of 4.48 years at December  31, 2013 and 4.04 years at June 30, 2013) using the interest method. 

During the three and six-months ended December 31, 2013, the Bank recorded $597,000 and $1,177,000, respectively, in amortization of the premium and received $14,188,000 and $30,075,000, respectively, of principal and interest payments, recording $3,000,000 and $5,853,000, respectively, in interest income on these securities.  During the three and six-months ended December 31, 2012, the Bank recorded $515,000 and $908,000, respectively, in amortization of the premium and received

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$13,040,000 and $21,156,000, respectively, of principal and interest payments, recording $1,955,000 and $3,593,000, respectively, in interest income on these securities.

During the first half of fiscal 2014, U.S. government and municipal obligations of $15,235,000 matured and during the first half of fiscal 2013, the issuer redeemed $12,000,000 of U.S. government agency securities, purchased at a discount, at par, resulting in a gain of $7,000 in fiscal 2013.

During the second quarter of fiscal 2013, 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 from the sale of shares of U.S. Home Systems, Inc. (USHS) common stock owned by SWS Group at June 29, 2012.  Also, during the second quarter of fiscal 2013, the Bank sold $24,557,000 in securities, recognizing a gain of $95,000 in other revenue and a $62,000  ($95,000, net of tax) reclassification adjustment from accumulated other comprehensive income.

INVESTMENTS AND VARIABLE INTEREST ENTITIES

Investments. 

SWS has interests in four investment partnerships that it accounts for under the equity method, which approximates fair value.  One is a limited partnership venture capital fund in which SWS has invested $5,000,000.  Based on a review of the fair value of this limited partnership interest, SWS determined that its share of the investments made by the limited partnership should be valued at $517,000 as of December 31, 2013 and $513,000 as of June 30, 2013.  SWS did not record a loss or gain on this investment for the three-months ended December 31, 2013 and 2012, respectively, and recorded net gains of $4,000 and $32,000 for the six-months ended December 31, 2013 and 2012, respectively. In August 2012, SWS received cash distributions of $170,000 from this investment.  The limited partnership venture capital fund has entered into an agreement with the Small Business Administration (“SBA”) for a self-liquidation plan.

Two investments are limited partnership equity funds to which the Bank has commitments of $3,000,000 and $2,000,000, respectively, and are considered cost effective ways of meeting its obligations under the Community Reinvestment Act of 1977 ("CRA").  As of December 31, 2013 and June 30, 2013, the Bank’s recorded investments in these partnerships were $4,028,000 and $3,782,000, respectively.  During the three and six-months ended December 31, 2013, the Bank recorded net gains of $199,000 and $246,000, respectively, related to these investments.  In comparison, during the three and six-months ended December 31, 2012, the Bank recorded net gains of $936,000 and $986,000, respectively, related to these investments.  During the second quarter of fiscal 2014, the Bank received no cash distributions and during the second quarter of fiscal2013, the Bank received $1,932,000, from these investments. 

On January 28, 2009, the Bank executed a $4,500,000 loan agreement with one of the partnerships.  The loan was amended on November 16, 2009 to increase the note amount to $5,000,000.  The loan was renewed on September 26, 2012 with a maturity date of January 2, 2013.  At December 31, 2012, the loan was paid in full.  The Bank earned approximately $55,000 and $111,000 in interest income for the three and six-months ended December 31, 2012, respectively, on the loan.   

On December 31, 2012, the Bank executed a new $5,000,000 loan agreement with one of the partnerships with a maturity date of December 31, 2015.  At December 31, 2013, the outstanding balance was $2,688,000.  The loan bears interest at a rate of 4.25% per annum and interest is due monthly. The Bank earned approximately $31,000 and $56,000 in interest income for the three and six-months ended December 31, 2013, respectively, on this loan.

In April 2012, the Bank acquired an interest in a private investment fund to obtain additional credit for its obligations under the CRA.  The Bank has committed to invest $3,000,000 in the fund and to date, has contributed $330,000 in the fund, including pursuant to a capital call on November 12, 2013 that resulted in the Bank investing $150,000.  For the three-months ended December 31, 2013, no amounts were recorded to reflect a change in market value.  For the six-months ended December 31, 2013, the Bank recorded net losses of $50,000.  There were no net gains or losses recorded by the Bank for the three and six-months ended December 31, 2012.  The recorded investment in this fund was $162,000 and $62,000 at December 31, 2013 and June 30, 2013, respectively.

The Company’s investments in and the Bank’s loans to these funds are subject to the Volcker Rule provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The final provisions of the Volcker Rule were issued in December 2013, with an effective date of April 1, 2014 and a compliance date of July 21, 2015.  Based on management’s interpretation of the final provisions of the rule, the Bank’s investments would be excluded from the definition of a “covered” fund as these investments would meet the definition of “public welfare investment” funds that are “designed primarily to promote the public welfare.” Currently, the Bank invests in these funds as a cost effective way of meeting its obligations under the CRA. One of these investments also meets the definition of a small business investment company.  According to the rule, the Company’s ownership interest in any “covered” fund would be limited to 3% of the total ownership of the fund.   The provisions of the rule would also limit the aggregate ownership of all investments in “covered” funds to 3% of Tier 1 capital of the bank holding company.  After the compliance date of July 21, 2015, the Company can request an additional two year extension from the FRB to divest “covered” fund investments to the allowable ownership levels.  Currently, the Company’s ownership percentages in the limited partnership venture capital fund, one of the limited partnership equity funds and the private investment fund are greater than 3% of the total ownership of the fund.  The aggregate ownership of all investments is less than 3% of Tier 1 capital of the bank holding

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company.  Management continues to study the final Volcker Rule to ensure that the Company will be in compliance prior to the compliance date of July 21, 2015.

Variable Interest Entities. 

The Company’s variable interest entity (“VIE”) policies are discussed in “Note 10. Investments and Variable Interest Entities” in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.

The loans to commercial borrowers noted in the table below meet the definition of a VIE because the legal entities have a total equity investment at risk that is not sufficient to permit the entity to finance its activities without additional subordinated financial support; however, the Company is not the primary beneficiary of the legal entities.  The Company has customary lender’s rights and remedies, as provided in the related promissory notes and loan agreements, but does not have the power to direct the activities of the legal entities that most significantly impact the borrowers’ economic performance.  In addition, the Company has not provided the borrowers with any form of support outside of the contractual loan obligations.  Accordingly, the entities are not consolidated in the Company’s financial statements.

The following table presents the carrying amount and maximum exposure to loss associated with the Company’s variable interests in unconsolidated VIEs as of December  31, 2013 and June 30, 2013 (dollars in thousands):

	December 31, 2013			June 30, 2013
	Number of VIEs	Carrying Amount of Assets	Maximum Exposure to Loss	Number of VIEs	Carrying Amount of Assets	Maximum Exposure to Loss
Loans to commercial
borrowers	11	$      5,703	$        4,336	17	$    10,639	$        9,072

The carrying amount of the Company’s recorded investment in these loans is included in loans, net of allowance for loan losses in the Consolidated Statements of Financial Condition.  See additional discussion in  “Loans and Allowance for Probable Loan Losses” for information related to the loans modified in TDRs.

REO AND OTHER REPOSSESSED ASSETS

REO and other repossessed assets are valued at the lower of cost or market, less a selling discount and are included in other assets in the Consolidated Statements of Financial Condition.  For those investments where the REO is valued at market, the value is determined by third party appraisals or if the REO is subject to a sales contract, by the accepted sales amount.  In addition, under certain circumstances, the Bank adjusts appraised values to more accurately reflect the economic conditions of the area at the time of valuation or to reflect changes in market value occurring subsequent to the appraisal date.  There were no subsequent write-downs required to reflect current fair value for the three-months ended December 31, 2013 and $201,000 for the six-months ended December 31, 2013 and $367,000 and $926,000of subsequent write-downs were required for the three and six-months ended December 31, 2012, respectively.

SERVICING ASSETS

During fiscal 2014 and 2013, the Bank sold $3,151,000 of SBA loans resulting in a gain of $264,000 and $17,664,000 of SBA loans resulting in a gain of $2,253,000, respectively.  In addition, during the three-months ended December 31, 2013, the Bank, in connection with the fiscal 2014 sales, recorded a servicing asset of $70,000.  At December 31, 2013 and June 30, 2013,the servicing assets had a value of $436,000and $412,000, respectively.  The Bank accounts for its servicing rights in accordance with ASC 860-50,“Servicing Assets and Liabilities,” at amortized cost.   The codification requires that servicing rights acquired through the origination of loans, which are sold with servicing rights retained, are recognized as separate assets.   Servicing assets are recorded as the difference between the contractual servicing fees and adequate compensation for performing the servicing, and are periodically reviewed and adjusted for any impairment.  The amount of impairment recognized, if any, is the amount by which the servicing assets exceed their fair value.  For the six-months ended December 31, 2013, the Bank recorded impairment charges for these servicing assets of $33,000.  There were no impairment charges for the three-months ended December 31, 2013 or the three and six-months ended December 31, 2012.  Fair value of the servicing assets is estimated using discounted cash flows based on current market interest rates.  See “Note 1(x). Fair Value of Financial Instruments” in the Notes to the Consolidated Financial Statement in the Fiscal 2013 Form 10-Kand “Fair Value Financial Instruments”.  Servicing rights are amortized in proportion to and over the period of the related net servicing income.

INTEREST RATE SWAPS

The Company’s interest rate swap policies are discussed in “Note 1(m). Interest Rate Swaps in Cash Flow Hedging Relationships” in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.

In fiscal 2013 and the first half of fiscal 2014,  the Bank entered into forward-start interest rate swaps to mitigate risk from its exposure to variability in interest payments on the Bank’s variable rate deposits.  The Bank’s forward-start interest rate swapsexchange fixed for variable interest payments beginning at a pre-specified date in the future according to the terms of the swap

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agreements and are designated as cash flow hedges.  As of December  31, 2013 and June 30, 2013, the notional amount of interest rate swap agreements designated as cash flow hedging instruments was $140,000,000with a net fair value of $1,856,000, and $100,000,000 with a net fair value of $1,789,000, respectively, included in other assets and other liabilities, on the Consolidated Statements of Financial Condition. During the three-months ended December 31, 2013, the Bank recognized net gains of $349,000 in other revenue as a result of cash flow hedging ineffectiveness on the Consolidated Statements of Comprehensive (Loss) Income.

In addition, interest rate swapsare used by the Bank to manage interest rate risk on certain fixed rate loans funded with variable rate deposits which exposes the Bank to potential variability in its net interest margin.  These fixed rate loans include terms matching the interest rate swapsand are recorded at fair value under the fair value option election.  See discussion in “Loans and Allowance for Probable Loan Losses” for information regarding these loans valued at fair value.  As of December 31, 2013 and June 30, 2013, the notional amount of interest rate swapsoutstanding related to fixed rate loan transactions was $35,300,000 with a net fair value of $317,000, and $13,902,000 with a fair value of $145,000, respectively, included in other assets and other liabilities on the Consolidated Statements of Financial Condition.  During the three-months ended December 31, 2013, the Bank paid its counterparty $12,000 to terminate one interest rate swap.   

For the three and six-months ended December 31, 2013, net gains recognized in other revenue on the Consolidated Statements of Comprehensive (Loss) Income as a result of changes in fair value of the interest rate swaps,not designated as cash flow hedges, were $351,000 and $160,000, respectively.  As the Bank did not invest in interest rate swaps at December 31, 2012, there were no gains or losses recognized for the three and six-months ended December 31, 2012.

SHORT-TERM BORROWINGS

Brokerage. 

Uncommitted lines of credit

Southwest Securities has credit arrangements with commercial banks, which include broker loan lines up to $425,000,000.  These lines of credit are used primarily to finance securities owned, securities held for correspondent broker/dealer accounts, receivables in customers’ margin accounts and underwriting activities.  These lines may also be used to release pledged collateral against day loans. These credit arrangements are provided on an “as offered” basis and are not committed lines of credit.  These arrangements can be terminated at any time by the lender. Any outstanding balance under these credit arrangements is due on demand and bears interest at rates indexed to the federal funds rate (0.07% at December  31, 2013 and 0.07% at June 30, 2013). The total amount of borrowings available under these lines of credit is reduced by the amount available under the options trading unsecured letter of credit, referenced below.  At December  31, 2013, the amount outstanding under these secured arrangements was $75,000,000, which was collateralized by securities held for firm accounts valued at $126,783,000.  At June 30, 2013, the amount outstanding under these secured arrangements was $86,500,000, which was collateralized by securities held for firm accounts valued at $120,568,000. 

At December  31, 2013 and June 30, 2013, Southwest Securities had a $20,000,000 unsecured line of credit that is due on demand and bears interest at rates indexed to the federal funds rate.  This credit arrangement is provided on an “as offered” basis and is not a committed line of credit.  The total amount of borrowings available under this line of credit is reduced by the amount outstanding on the line and under any unsecured letters of credit at the time of borrowing.  At December  31, 2013 and June 30, 2013, there were no amounts outstanding on this line.  At December  31, 2013 and June 30, 2013, the total amount available for borrowing was $20,000,000.

Committed lines of credit

On January 28, 2011, Southwest Securities entered into an agreement with an unaffiliated bank for a $45,000,000 committed revolving credit facility.  The commitment fee is 37.5 basis points per annum, and when drawn, the interest rate is equal to the federal funds rate plus 125 basis points.  The agreement provides that Southwest Securities must maintain a tangible net worth of at least $150,000,000.  The agreement was renewed on January 23, 2014 and has the same terms as the initial agreement.  As of December  31, 2013,there were no outstanding amounts under the committed revolving credit facility and as of June 30, 2013, there was$45,000,000outstanding.  The secured borrowing was collateralized by securities with a value of $68,605,000 at June 30, 2013.

Letters of credit

At both December  31, 2013 and June 30, 2013, SWS had an irrevocable letter of credit agreement pledged to support customer open options positions with an options clearing organization.  Until drawn, the letter of credit bears interest at a rate of 0.5% per annum and is renewable semi-annually.  If drawn, the letter of credit bears interest at a rate of 0.5% per annum plus a fee.  At December  31, 2013 and June 30, 2013, the maximum amount available under this letter of credit agreement was $75,000,000.  At December  31, 2013, the Company had no outstanding, undrawn letters of credit.  At June 30, 2013, the Companyhad outstanding, undrawn letters of credit of $50,000,000, bearing interest at a rate of 0.5% per annum.  Since there is no outstanding balance on the letters of credit, there is no collateral pledged at December 31, 2013.  The letter of credit was fully collateralized by marketable securities held in client and non-client margin accounts with a value of $71,035,000 at June 30, 2013. 

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The Company also pledges customer securities to the Option Clearing Corporation to support open customer positions.  At December 31, 2013, the Company had pledged $86,418,000 to support these open customer positions.

In addition to using customer securities to collateralize short-term borrowings, SWS also loans client securities as collateral in conjunction with SWS’s securities lending activities.  At December  31, 2013, approximately $342,160,000 of client securities under customer margin loans was available to be pledged, of which SWS had pledged $21,912,000 under securities loan agreements.  At June 30, 2013, approximately $329,013,000 of client securities under customer margin loans was available to be pledged, of which SWS had pledged $18,408,000 under securities loan agreements.  

Banking. 

In the second quarter of fiscal 2010, the Bank entered into a secured line of credit agreement with the Federal Reserve Bank of Dallas.  This line of credit is secured by the Bank's commercial loan portfolio.  This line is due on demand and bears interest at a rate equal to the federal funds target rate plus 50 basis points.  At December  31, 2013 and June 30, 2013, the total amount available under this line was $36,627,000 and $28,267,000, respectively.  There was no amount outstanding at December  31, 2013 and June 30, 2013.

DEPOSITS

The Bank’s deposits at December  31, 2013 and June 30, 2013 consisted of the following (dollars in thousands):

	December 31, 2013			June 30, 2013
	Amount	Percent		Amount	Percent
Noninterest bearing demand accounts	$         56,665	5.7	%	$         55,221	5.5	%
Interest bearing demand accounts	8,652	0.9		7,723	0.8
Savings accounts	881,970	88.6		883,229	88.9
Limited access money market accounts	19,433	2.0		17,212	1.7
Certificates of deposit, less than $100,000	16,617	1.7		17,829	1.8
Certificates of deposit, $100,000 and greater	11,428	1.1		12,505	1.3
	$       994,765	100.0	%	$       993,719	100.0	%

The weighted average interest rate on the Bank’s deposits was approximately 0.04% at both December  31, 2013 and June 30, 2013, respectively. 

At December  31, 2013, scheduled maturities of certificates of deposit were as follows (in thousands):

	1 Year or Less	> 1 Year Through 2 Years	> 2 Years Through 3 Years	> 3 Years Through 4 Years	Thereafter	Total
Certificates of deposit, less than $100,000	$   12,284	$      3,382	$         410	$         185	$           356	$   16,617
Certificates of deposit, $100,000 and greater	7,862	2,680	683	203	-	11,428
	$   20,146	$      6,062	$      1,093	$         388	$           356	$   28,045

The Bank is funded primarily by core deposits, with interest- bearing savings accounts from Southwest Securities’ customers making up a significant source of these deposits.

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ADVANCES FROM THE FEDERAL HOME LOAN BANK

At December  31, 2013 and June 30, 2013, advances from the FHLB were due as follows (in thousands):

	December 31, 2013	June 30, 2013
Maturity:
Due in one year	$               14,344	$            15,486
Due in two years	3,732	1,859
Due in five years	50,986	48,956
Due in seven years	14,856	12,809
Due in ten years	4,822	8,424
Due in twenty years	9,620	10,163
	98,360	97,697
Restructuring prepayment penalty	(109)	(132)
	$               98,251	$            97,565

The advances from the FHLB had interest rates ranging from less than 1% to 6% and were collateralized by approximately $191,000,000 in qualifying loans at December  31, 2013 (calculated at September  30, 2013).  The weighted average interest rate was 2.6% at December  31, 2013.  At June 30, 2013 (calculated at March 31, 2013), the advances from the FHLB had interest rates from less than 1% to 6% and were collateralized by approximately $181,000,000 in qualifying loans.  The weighted average interest rate was 2.7% at June 30, 2013.

During the second quarter of fiscal 2013, the Bank restructured a portion of its fixed-rate FHLB advances with lower-cost FHLB advances.  Upon restructuring, the Bank incurred a $166,000 prepayment penalty, which is being amortized using the effective interest method over the contractual term of the restructured advances.  Amortization expense for the three and six-months ended December 31, 2013 was $11,000 and $23,000.  Amortization expense for the three and six-months ended December 31, 2012 was $11,000.

At December  31, 2013, the Bank had net borrowing capacity with the FHLB of $92,568,000.

DEBT ISSUED WITH STOCK PURCHASE WARRANTS

On March 20, 2011, the Company entered into a Funding Agreement (the “Funding Agreement”) with Hilltop and Oak Hill.  On July 29, 2011, after receipt of stockholder and regulatory approval, the Company completed the following transactions contemplated by the Funding Agreement:

· entered into a $100,000,000,  five year, unsecured credit agreement with Hilltop and Oak Hill that accrues interest at a rate of 8% per annum;

· issued warrants to Hilltop and Oak Hill allowing each to purchase up to 8,695,652 shares of the Company’s common stock; and

· granted Hilltop and Oak Hill certain rights, including certain registration rights, preemptive rights, and the right for each to appoint one person to the Company’s Board of Directors for so long as each owns 9.9% or more of all of the outstanding shares of the Company’s common stock or securities convertible into at least 9.9% of the Company’s outstanding common stock.

On July 29, 2011, in connection with the loans made by Hilltop and Oak Hill under the Credit Agreement, the Company issued a warrant to Hilltop to purchase up to 8,695,652 shares of common stock (and in certain cases described below, shares of Non-Voting Perpetual Participating Preferred Stock, Series A(the “Series A Preferred Stock”) and warrants to Oak Hill to purchase up to 8,695,652 shares of common stock (and in certain cases described below, shares of Series A Preferred Stock).  These warrants are exercisable for five years and have a fixed exercise price of $5.75 per share, subject to standard anti-dilution adjustments for extraordinary corporate transactions, such as stock splits, dividends and combinations, the issuance of stock purchase rights, debt or asset distributions (including cash), tender offers or exchange offers and entry into certain business combinations. In addition, the warrants have a weighted average anti-dilution adjustment in the event the Company issues shares of common stock at less than 90% of the market price of the common stock on the date prior to the pricing of such shares. For each of Hilltop and Oak Hill, the warrants represent approximately 17% of the Company’s common stock for each investor as of December  31, 2013 (assuming that the warrants are exercised in full).

The warrants provide that the Company would only issue shares of Series A Preferred Stock upon the exercise of warrants if it is necessary to prevent Hilltop or Oak Hill from owning or being deemed to own shares of the Company’s common stock in excess of

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the “Ownership Limit” provided in the warrants. The “Ownership Limit” is 24.9% of any class of the securities of the Company or such level that Hilltop or Oak Hill reasonably determines would prevent them from being deemed to control the Company for purposes of the federal banking laws and regulations specified in the warrants. No shares of Series A Preferred Stock are issued or outstanding at December  31, 2013 and June 30, 2013. For additional discussion concerning the Series A Preferred Stock see the discussion in“Preferred Stock.”

The warrants are recorded as a liability in the Consolidated Statements of Financial Condition at fair value.  Initial and subsequent valuations of the warrants use a binomial valuation model.  At initial valuation, July 29, 2011, the closing stock price was $5.45 per share yielding a fair value of $24,136,000.  At December  31, 2013 and June 30, 2013,  the closing stock prices used in the binomial valuation model were $6.08 and $5.45, respectively, and the warrants were valued at $24,288,000 and $24,197,000, respectively. The change in fair value for the three and six-months ended December 31, 2013 of $2,058,000 and $91,000, respectively, was reflected as an unrealized loss on warrants valuation on the Consolidated Statements of Comprehensive (Loss) Income.  The change in fair value for the three and six-months ended December 31, 2012 of $11,761,000 and $3,576,000, respectively, was reflected as an unrealized gain on warrants valuation on the Consolidated Statements of Comprehensive (Loss) Income.  The warrants are classified as Level 3 in the fair value hierarchy as disclosed in “Fair Value of Financial Instruments.”

The loan is recorded as a liability with an 8% interest rate, a five year term and an effective interest rate of 14.9%.  At July 29, 2011, the discount on the loan was initially valued at $24,136,000 and is being accreted using the effective interest method.  For the three and six-months ended December 31, 2013, the Company recorded $1,145,000 and $2,248,000, respectively, in accretion expense on the discount. In comparison, for the three and six-months ended December 31, 2012, the Company recorded $987,000 and $1,939,000, respectively, in accretion expense on the discount.  The resulting long-term debt balance at December 31, 2013 and June 30, 2013 was $85,350,000 and $83,102,000, respectively.  For both the three and six-months ended December 31, 2013 and December 31, 2012, the cash portion of the interest expense paid on the loan to Hilltop and Oak Hill was $2,000,000 and $4,000,000, respectively.

At July 29, 2011, legal and accounting fees, printing costs and other expenses associated with the loan and warrants totaled $2,459,000 and are being amortized on a straight-line method, which approximates the effective interest method, over the term of the loan.  For both the three and six-months ended December 31, 2013 and December 31, 2012,  interest expense charged to operations was $123,000 and $246,000, respectively.

The Company recorded total interest expense for this obligation for the three and six-months ended December 31, 2013 on the Consolidated Statements of Comprehensive (Loss)Income of $3,268,000 and $6,494,000, respectively, while total interest expense for this obligation for the three and six-months ended December 31, 2012 was $3,110,000 and $6,185,000, respectively. 

The Credit Agreement contains customary financial covenants which require the Company to, among other things:

· maintain a tangible net worth at least equal to the sum of $275,000,000 and 20% of cumulative consolidated net income (as defined in the Credit Agreement) for each fiscal quarter for which consolidated net income is positive;

· maintain a minimum unrestricted cash balance (as defined in the Credit Agreement) of at least $4,000,000;

· maintain an excess net capital balance at Southwest Securities of at least $100,000,000 as of the end of each calendar month; and

· maintain a total risk-based capital ratio, Tier I risk-based capital ratio and leverage ratio for the Bank that ensures the Bank is considered well capitalized or is required by federal law or regulation or action or directive by the Federal Reserve Board.

In addition, the covenants limit the Company’s and certain of the Company’s subsidiaries’ ability to, among other things:

· incur additional indebtedness;

· dispose of or acquire certain assets;

· pay dividends on the Company’s capital stock;

· make investments, including acquisitions; and

· enter into transactions with affiliates.

The Company was in compliance with the financial covenants under the Credit Agreement as of December 31, 2013.  Should the Company determine it needs additional debt at SWS Group, the Company would require regulatory approval and approval from Hilltop and Oak Hill.

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INCOME TAXES 

Income tax (benefit)expense for the three and six-months ended December 31, 2013 andDecember 31, 2012 (effective rate of

-30.8% and 33.6%in the three-month periods ended December 31, 2013 and 2012,  respectively, and -39.3% and 28.2% in the six-months ended December 31, 2013 and 2012, respectively) differs from the amount that would otherwise have been calculated by applying the federal corporate tax rate (35% in fiscal years 2014 and 2013) to income (loss) before income tax (benefit) expense and is comprised of the following (in thousands):

	Three-Months Ended		Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Income tax expense at the statutory rate	$                  444	$              5,463	$                 499	$              2,302
Tax exempt interest	(195)	(258)	(466)	(504)
Tax exempt income from company-owned
life insurance ("COLI")	(233)	99	(533)	(107)
State income taxes, net of federal tax benefit	(132)	(370)	(12)	(349)
Non-deductible meals and entertainment	35	42	65	79
Non-deductible compensation	57	266	46	516
Valuation allowance	(367)	-	(156)	-
Other, net	-	(1)	(2)	(84)
	$                 (391)	$              5,241	$                (559)	$              1,853

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The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities as of December  31, 2013 and June 30, 2013 are presented below (in thousands):

	December 31, 2013	June 30, 2013
Deferred tax assets:
Employee compensation plans	$                9,695	$            11,378
Net operating loss carryforward	11,440	10,507
Allowance for probable loan losses	3,151	3,400
Securities available for sale	5,703	3,589
Bad debt reserve	2,103	2,177
Deferred rent	1,919	1,631
State taxes	909	909
Investment in unconsolidated ventures	643	909
Deferred income on loans	693	810
REO	287	139
Long-term debt	177	-
Other	1,105	513
Gross deferred tax assets	37,825	35,962
Valuation allowance	(30,648)	(30,870)
Net deferred tax assets	7,177	5,092
Deferred tax liabilities:
Interest rate swaps in cash flow hedging relationships	$                  (528)	$                (626)
Fixed assets, net	(448)	(426)
Investment in unconsolidated ventures	-	(120)
Long-term debt	-	(82)
Other	(498)	(249)
Total gross deferred tax liabilities	(1,474)	(1,503)
Net deferred tax assets – included in other assets on the
Consolidated Statements of Financial Condition	$                5,703	$              3,589

At June 30, 2013, the Company established an allowance for deferred tax assets associated with all of its deferred tax assets, except for the Bank’s securities available for sale.  Based on activity in the current period, theallowance decreased$222,000 from June 30, 2013 to December 31, 2013.Despite the valuation allowance, these assets remain available to offset future taxable income.

Management did not establish a valuation allowance for the deferred tax asset generated on the Bank’s unrealized losses of its securities available for sale of $5,703,000, because the Bank currently has the intent and ability to hold these securities until they recover in value.  We intend to maintain a valuation allowance with respect to our deferred tax assets, other than the Bank’s securities available for sale, until sufficient positive evidence exists to support its reduction or reversal.

The Company had a deferred tax asset for net operating losses for federal income tax purposes of approximately $11,440,000and $10,507,000at December  31, 2013 and June 30, 2013, respectively.  In order to utilize the operating loss carryforwards, the Company must generate sufficient taxable income within the applicable carryforward period.  If certain substantial changes in the Company’s ownership occur, there would be an annual limitation on the amount of the carryforwards that could be utilized.

At December 31, 2013, the Company had approximately $135,000 of unrecognized tax benefits.  The Company’s net liability for unrecognized tax benefits decreased $160,000 from June 30, 2013 to December 31, 2013 primarily due to the reversal of positions from the completion of tax audits and expirations of statutes of limitations.  While the Company expects that the net liability for uncertain tax positions will change during the next 12 months, the Company does not believe that the change will have a significant impact on its consolidated financial position or results of operations. 

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The Company recognizes interest and penalties on income taxes in income tax expense. Included in the net liability is accrued interest and penalties of $27,000 and $9,000, net of federal expense and benefit, respectively,as of December 31, 2013 and June 30, 2013, respectively.  For the three and six-months ended December  31, 2013, the Company recognized approximately $(22,000) and$18,000, net of federal (benefit) expense, respectively, in interest and penalties in income tax expense, while for the three and six-months ended December 31, 2012, the Company recognized approximately $216,000 and $195,000, net of federal benefit, respectively, in interest and penalties in income tax expense. The total amount of unrecognized income tax benefits that, if recognized, would reduce income tax expense was approximately $108,000 and $286,000as of December  31, 2013 and June 30, 2013, respectively. 

With limited exception, SWS is no longer subject to U.S. federal, state or local tax audits by taxing authorities for years preceding 2010.  The examination of the Company’s federal tax returns for 2008 through 2011has concluded with no material adjustments.  The Joint Committee completed its review with no exceptions, thereby concluding the matter. 

REGULATORY CAPITAL REQUIREMENTS

Brokerage.At December 31, 2013 and June 30, 2013, the net capital position of Southwest Securities was as follows (in thousands):

	December 31, 2013		June 30, 2013
Net capital	$           153,885		$        141,112
Less:  required net capital	6,574		6,843
Excess net capital	$           147,311		$        134,269
Net capital as a percent of aggregate debit items	46.8	%	41.2	%
Net capital in excess of 5% aggregate debit items	$           137,451		$        124,005

At December 31, 2013 and June 30, 2013, the net capital position of SWS Financial was as follows (in thousands):

	December 31, 2013	June 30, 2013
Net capital	$                 316	$             713
Less:  required net capital	250	250
Excess net capital	$                   66	$             463

For more information, see the discussion in “Note 18. Regulatory Capital Requirements”in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K. 

Banking. The Bank is subject to various regulatory capital requirements administered by federal agencies.  Quantitative measures, established by regulation to ensure capital adequacy, require maintaining minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in 12 CFR 165 and 12 CFR 167) to risk-weighted assets (as defined) and of Tier I (core) capital (as defined) to adjusted assets (as defined).  Federal statutes and OCC regulations have established five capital categories for federal savings banks: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. The federal banking agencies have jointly specified by regulation the relevant capital level for each category. An institution is defined as well-capitalized when its total risk-based capital ratio is at least 10.00%, its Tier I risk-based capital ratio is at least 6.00%, its Tier I (core) capital ratio is at least 5.00%, and it is not subject to any federal supervisory order or directive to meet a specific capital level.At December  31, 2013, the Bank was deemed to be well capitalized.

Until terminated on January 14, 2013, the Bank was restricted by and subject to the Order to Cease and Desist, Order No. WN-11-003, effective on February 4, 2011 (the “Order”), originally issued bythe Office of Thrift Supervision and then administered by the OCC.  In connection with the termination of the Order on January 14, 2013, the Bank committed to the OCC that the Bank would, among other things:  (i) adhere to the Bank’s written business and capital plan as amended from time to time and (ii) maintain a Tier I (core) capital ratio at least equal to nine percent (9%) and a total risk-based capital ratio of at least twelve percent (12%).

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The Bank’s capital amounts and ratios at December  31, 2013 and June 30, 2013 were as follows (dollars in thousands):

	Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31, 2013
Total risk-based capital	$       183,794	27.4	%	$      53,603	8.0	%	$      67,004	10.0	%
Tier I risk-based capital	175,405	26.2		26,802	4.0		40,203	6.0
Tier I (core) capital	175,405	13.8		50,961	4.0		63,702	5.0
	Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio		Amount	Ratio		Amount	Ratio
June 30, 2013
Total risk-based capital	$       181,909	24.9	%	$      58,465	8.0	%	$      73,081	10.0	%
Tier I risk-based capital	172,734	23.6		29,233	4.0		43,849	6.0
Tier I (core) capital	172,734	13.5		51,081	4.0		63,851	5.0

EMPLOYEE BENEFITS

Restricted Stock Plan.During the first six-months of fiscal 2014, the Board of Directors approved grants to various officers and employees totaling 199,891 shares of restricted stock with a weighted average market value of $5.64 per share.  During the first six-months of fiscal 2013,the Board of Directors approved grants to various officers and employees totaling 65,079 shares of restricted stock with a weighted average market value of $4.84 per share.  As a result of these grants, SWS recorded deferred compensation in additional paid in capital of approximately $1,443,000.  For the three and six-months ended December 31, 2013 SWS recognized compensation expense related to restricted stock grants of approximately $274,000 and $380,000, respectively.  For the three and six-months ended December 31, 2012, SWS recognized compensation expense related to restricted stock grants of approximately $266,000 and $608,000, respectively. 

Upon vesting of the shares granted under the Company’s restricted stock plans, the grantees may choose to sell a portion of their vested shares to the Company to cover the tax liabilities arising from the vesting.

During the six-months ended December 31, 2013, the Company repurchased 1,094 shares of common stock with a market value of approximately $6,100, at an average price of $5.55 per share, in connection with income tax withholding obligations arising from vesting of restricted stock awards.  During the six-months ended December 31, 2012, the Company repurchased 4,647 shares of common stock with a market value of approximately $27,000 or an average price of $5.78 per share, in connection with income tax withholding obligations arising from vesting of restricted stock awards.

At December  31, 2013, the total number of shares outstanding under the Restricted Stock Plan was 417,137 and the total number of shares available for future issuance was 2,383,016.

REPURCHASE OF TREASURY STOCK

Periodically, SWS repurchases shares of common stock under a plan approved by the Board of Directors.  Prior to February 28, 2013, SWS was authorized to repurchase 500,000 shares of common stock from time to time in the open market.  During fiscal year 2013, SWS Group did not repurchase any shares of common stock under this plan. As of December  31, 2013, the Company was not authorized to repurchase shares of common stock under a repurchase plan and did not intend to repurchase any shares of common stock.  Any repurchase of shares of common stock by the Company would require approval from the Company’s Board of Directors, Hilltop, Oak Hill and regulatory authorities.

The trustee under the deferred compensation plan periodically purchases the Company’s common stock in the open market in accordance with the terms of the plan.  This stock is classified as treasury stock in the consolidated financial statements, but

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participates in dividends declared by SWS.  The plan purchased 50,000 shares during the six-months ended December 31, 2013 at a cost of $288,000, or $5.76 per share.  The plan purchased 20,675 shares during the six-months ended December 31, 2012 at a cost of $121,000, or $5.86 per share.  During the six-months ended December 31, 2013 and December 31, 2012, 31,532 and 18,068 shares, respectively, were sold or distributed pursuant to the plan. 

PREFERRED STOCK

On March 17, 2011 in conjunction with the transaction with Hilltop and Oak Hill, the Board of Directors created the Series A Preferred Stock, par value $1.00 per share.  The Company has 17,400 authorized shares of Series A Preferred Stock, and no shares wereissued or outstanding at December  31, 2013 and June 30, 2013.  If any shares of Series A Preferred Stock are issued, the Series A Preferred Stock will not be entitled to vote with the common stock and will be convertible into shares of common stock at a fixed conversion ratio of 1,000 shares of common stock for each share of Series A Preferred Stock outstanding.  The conversion ratio is subject to certain anti-dilution adjustments for extraordinary corporate transactions, such as stock splits, dividends and combinations, the issuance of stock purchase rights, debt or asset distributions (including cash), tender offers or exchange offers and entry into a shareholder rights plan. Each share of Series A Preferred Stock would automatically convert into shares of common stock if such shares were transferred by Hilltop or Oak Hill to a non-affiliate. See additional discussion concerning the Series A Preferred Stock in“Debt Issued with Stock Purchase Warrants.”

INTEREST INCOME AND INTEREST EXPENSE

For the three and six-months ended December  31, 2013 and 2012, the components of interest income and expense were as follows (in thousands):

	For the Three-Months Ended		For the Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Interest income:
Customer margin accounts	$                2,255	$                 2,139	$                4,498	$                4,279
Assets segregated for regulatory purposes	33	32	65	60
Stock borrowed	8,764	6,752	16,743	16,746
Loans	6,757	10,307	13,768	21,114
Bank investments	2,855	1,576	5,412	3,233
Other	1,390	2,465	2,742	4,464
	$              22,054	$               23,271	$              43,228	$              49,896
Interest expense:
Customer funds on deposit	$                     29	$                     58	$                     67	$                   113
Stock loaned	6,553	4,775	12,755	12,283
Deposits	91	123	185	270
Federal Home Loan Bank	649	683	1,317	1,433
Long-term debt	3,268	3,110	6,494	6,185
Other	859	963	1,679	1,743
	11,449	9,712	22,497	22,027
Total net interest revenue	$              10,605	$               13,559	$              20,731	$              27,869

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EARNINGS PER SHARE (“EPS”)

The following reconciles the weighted average shares outstanding used in the basic and diluted EPS computations for the three and six-months ended December 31, 2013 and 2012 (in thousands, except share and per share amounts):

	Three-Months Ended		Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Net income	$                1,660	$              10,369	$                1,983	$                4,725
Interest expense on long-term debt	-	2,022	-	4,020
Unrealized gain on warrant valuation	-	(7,645)	-	(2,324)
Adjusted net income	$                1,660	$                4,746	$                1,983	$                6,421
Weighted average shares outstanding – basic	32,955,629	32,827,652	32,943,875	32,813,910
Effect of dilutive securities	-	17,391,304	-	17,391,304
Weighted average shares outstanding – diluted	32,955,629	50,218,956	32,943,875	50,205,214
Earnings per share – basic
Net income	$                  0.05	$                  0.32	$                  0.06	$                  0.14
Earnings per share – diluted
Net income	$                  0.05	$                  0.09	$                  0.06	$                  0.13

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (paid or unpaid) are treated as participating securities and are factored into the calculation of EPS, except in periods with a net loss, when they are excluded.

For the three and six-months ended December 31, 2013, the warrants to acquire 17,391,304 shares of common stock were anti-dilutive and were excluded from the calculation of diluted weighted average shares outstanding and diluted EPS.

The Company did not declare a dividend during the six-months ended December 31, 2013 and 2012. 

On a quarterly basis, the Board of Directors determines whether the Company will pay a cash dividend.  The payment and rate of dividends on the Company’s common stock is subject to several factors including limitations imposed by the terms of the Credit Agreement with Hilltop and Oak Hill, regulatory approval, operating results, the Company’s financial requirements, and the availability of funds from the Company’s subsidiaries, including the broker/dealer subsidiaries, which may be subject to restrictions under the net capital rules of the SEC and FINRA, and the Bank, which may be subject to restrictions by federal banking agencies. Specifically, the Credit Agreement with Hilltop and Oak Hill only allows the Company to pay a quarterly cash dividend of $0.01 per share when the Company is not in default of any terms of the Credit Agreement.  The Company currently intends to retain earnings to fund operations and does not plan to pay dividends on its common stock in the near future.

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 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 employees that are 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

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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”in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K;

· 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 $20,000 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 the three and six-months ended December 31, 2013 and  2012:

	UNAUDITED FINANCIAL INFORMATION
(in thousands)	Clearing	Retail Brokerage	Institutional Brokerage	Banking	Other Consolidated Entities	Consolidated SWS Group, Inc.
Three-months ended
December 31, 2013
Operating revenue	$     3,752	$        27,159	$          24,690	$       1,592	$                688	$           57,881
Net intersegment revenues	(180)	180	(11)	828	(817)	-
Net interest revenue	1,549	912	2,575	8,872	(3,303)	10,605
Net revenues	5,301	28,071	27,265	10,464	(2,615)	68,486
Non-interest expenses	3,962	25,068	21,316	5,140	9,673	65,159
Other losses	-	-	-	-	(2,058)	(2,058)
Depreciation and amortization	5	231	78	373	676	1,363
Net income (loss) before taxes	1,339	3,003	5,949	5,324	(14,346)	1,269
Three-months ended
December 31, 2012
Operating revenue	$     3,233	$        25,284	$          29,368	$          694	$             3,207	$           61,786
Net intersegment revenues	(166)	145	(170)	865	(674)	-
Net interest revenue	1,488	840	3,190	11,077	(3,036)	13,559
Net revenues	4,721	26,124	32,558	11,771	171	75,345
Non-interest expenses	4,836	25,596	23,219	8,799	9,046	71,496
Other gains	-	-	-	-	11,761	11,761
Depreciation and amortization	17	219	108	435	570	1,349
Net income (loss) before taxes	(115)	528	9,339	2,972	2,886	15,610

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	UNAUDITED FINANCIAL INFORMATION
(in thousands)	Clearing	Retail Brokerage	Institutional Brokerage	Banking	Other Consolidated Entities	Consolidated SWS Group, Inc.
Six-months ended
December 31, 2013
Operating revenue	$     7,007	$        55,942	$          50,622	$       1,873	$             1,306	$         116,750
Net intersegment revenues	(359)	359	(11)	1,680	(1,669)	-
Net interest revenue	2,968	1,967	4,646	17,678	(6,528)	20,731
Net revenues	9,975	57,909	55,268	19,551	(5,222)	137,481
Non-interest expenses	8,863	52,655	43,114	13,032	18,302	135,966
Other losses	-	-	-	-	(91)	(91)
Depreciation and amortization	11	452	163	784	1,311	2,721
Net income (loss) before taxes	1,112	5,254	12,154	6,519	(23,615)	1,424
Assets (*)	254,852	224,261	2,064,521	1,264,071	40,050	3,847,755
Six-months ended
December 31, 2012
Operating revenue	$     6,496	$        52,481	$          59,080	$          760	$             2,768	$         121,585
Net intersegment revenues	(353)	348	(59)	1,761	(1,697)	-
Net interest revenue	3,183	1,709	6,373	22,644	(6,040)	27,869
Net revenues	9,679	54,190	65,453	23,404	(3,272)	149,454
Non-interest expenses	9,599	53,343	46,189	19,151	18,170	146,452
Other gains	-	-	-	-	3,576	3,576
Depreciation and amortization	34	438	209	866	1,194	2,741
Net income (loss) before taxes	80	847	19,264	4,253	(17,866)	6,578
Assets (*)	312,038	229,419	1,511,605	1,285,053	65,265	3,403,380

(*)  Assets are reconciled to total assets as presented in the December  31, 2013 and 2012 Consolidated Statements of Financial Condition as follows (in thousands):

	December 31, 2013	December 31, 2012
Amount as presented above	$         3,847,755	$         3,403,380
Reconciling items:
Unallocated assets:
Cash	19,473	24,302
Receivables from brokers, dealers and clearing
organizations	22,109	45,078
Receivable from clients, net of allowances	22,173	24,943
Other assets	29,136	19,353
Unallocated eliminations	(9,984)	(3,003)
Total assets	$         3,930,662	$         3,514,053

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COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments and Contingencies. 

Litigation.  In the general course of its brokerage business and the business of clearing for other brokerage firms, SWS Group and/or its subsidiaries have been named as defendants in various lawsuits and arbitration proceedings.  These claims allege, among other things, violations of various federal and state securities laws.  The Bank is also involved in certain legal claims and actions arising in the ordinary course of business.  Management believes that resolution of these claims will not result in any material adverse effect on SWS’s consolidated financial condition, results of operations or cash flows.

The Company has been named as a defendant in three lawsuits related to a $35,000,000 bond offering that was 40% underwritten by M.L. Stern & Co., LLC.  SWS Group purchased M.L. Stern & Co., LLC in 2008.  The offering took place in November 2005, and the lawsuit was filed in November 2009. 

The lawsuits are in the discovery stage and the ultimate amount of liability associated with them cannot currently be determined.  However, the Company believes it is at least reasonably possible that a loss related to this matter will be incurred.  At December  31, 2013 and June 30, 2013, the Company had a recorded liability of approximately $1,000,000 related to this matter.

Contingency.  In February 2011, a limited partnership venture capital fund in which the Company invested received a proposed assessment of transferee liability from the Internal Revenue Service (“IRS”) for the tax period ended December 31, 2005.  The proposed assessment is approximately $8,000,000, not including penalties of approximately $3,000,000.  The Company would be responsible for approximately $1,870,000 of the proposed assessment including penalties based on its partnership interest.  Interest is also accruing on this proposed assessment.  As of December 31, 2013, the Company has not accrued an amount on the financial statements due to the uncertainty regarding the proposed assessment.  The matter relates to certain transactions that occurred during 2005 concerning one of the limited partnership venture capital fund’s subsidiaries.  The limited partnership venture capital fund engaged tax counsel and filed a Letter of Protest with the IRS in April 2011.  Management of the limited partnership venture capital fund believes that the ultimate outcome will be favorable; however, the limited partnership venture capital fund can give no assurance that it will prevail. 

Venture Capital Fund. The Bank has committed to invest $3,000,000 and $2,000,000 in two limited partnership equity funds.  These commitments end in fiscal 2017 and fiscal 2020, respectively, unless the limited partners elect to terminate the commitment period at an earlier date in accordance with the terms of the partnership agreement.  Also,  in April 2012, the Bank acquired an interest in a private investment fund to obtain additional credit for its obligations under the CRA.  The Bank has committed to invest $3,000,000 in the fund.  As of December  31, 2013, $330,000 in contributions have been made by the Bank to this fund.  The commitment in the private investment fund expires in fiscal 2022 with the possibility of two one-year extensions.

Underwriting.Through its participation in underwriting corporate and municipal securities, SWS could expose itself to material risk that securities SWS has committed to purchase cannot be sold at the initial offering price.  Federal and state securities laws and regulations also affect the activities of underwriters and impose substantial potential liabilities for violations in connection with sales of securities by underwriters to the public.  At December  31, 2013, the Company had $368,000of potential liabilities due under outstanding underwriting arrangements.

Guarantees. The Bank faces the risk of credit loss under commitments to extend credit and stand-by letters of credit up to the contractual amount of these instruments in the event of breach by the other party to the instrument.  The Bank uses the same credit policies in making commitments and conditional obligations as it does for instruments reported on the Consolidated Statements of Financial Condition.

As of December  31, 2013, the Bank had issued stand-by letters of credit in the amount of $137,000.  The recourse provision of the letters of credit allows the amount of the letters of credit to become a part of the fully collateralized loans with total repayment as a first lien.  The collateral on these letters of credit consists of real estate, certificates of deposit, equipment, accounts receivable or furniture and fixtures.

In the ordinary course of business, the Bank enters into loan agreements where the Bank commits to lend a specified amount of money to a borrower. At any point in time, there could be amounts that have not been advanced on the loan to the borrower, representing unfunded commitments, as well as amounts that have been disbursed but repaid, which are available for re-borrowing under a revolving line of credit. As of December  31, 2013, the Bank had commitments of $53,313,000 relating to revolving lines of credit and unfunded commitments. In addition, as of December  31, 2013, the Bank had approved unfunded new loans in the amount of $18,495,000.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require the payment

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of a fee.  Since many of the commitments are expected to expire unused, the total Bank’s commitments do not necessarily represent future cash requirements.  The Bank evaluates the customer’s creditworthiness on a case-by-case basis.  The amount and type of collateral obtained, if deemed necessary by the Bank upon extension of credit, varies and is based on management’s credit evaluation of the counterparty.  The Bank did not incur any significant losses on its commitments in the first six-months of fiscal 2014.  In addition, management does not believe the Bank will incur material losses as a result of its outstanding commitments at December  31, 2013.

The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies counterparties against potential losses caused by the breach of those representations and warranties.  These indemnification obligations generally are standard contractual indemnities and are entered into in the normal course of business.  The maximum potential amount of future payments that the Company could be required to make under these indemnities cannot be estimated.  However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the consolidated financial statements for these indemnities.

Southwest Securities is a member of multiple exchanges and clearinghouses.  Under the membership agreements, members are generally required to guarantee the performance of other members.  Additionally, if a member becomes unable to satisfy its obligations to the clearinghouse, other members would be required to meet shortfalls.  To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral.  SWS’s maximum potential liability under these arrangements cannot be quantified.  However, the potential for the Company to be required to make payments under these arrangements is unlikely.  Accordingly, the Company has not recorded any contingent liability in the consolidated financial statements for these arrangements.

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 $994,968,000 and $993,871,000 at December  31, 2013 and June 30, 2013, respectively.  At December  31, 2013 and June 30, 2013, clients of Southwest Securities had invested $876,537,000 and $878,434,000, respectively, in Bank Insured Deposits.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s fair value policies are discussed in “Note 1(x). Fair Value of Financial Instruments”  in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.

Recurring Fair Value Measurements.

The following tables summarize by level within the fair value hierarchy “Loans measured at fair value,” “Securities owned, at fair value,”“Securities available for sale,” “Interest Rate Swaps”, “Securities sold, not yet purchased, at fair value” and “Warrants” which were measured at fair value on a recurring basis at December 31, 2013 and June 30, 2013.

(in thousands)	Level 1	Level 2	Level 3	Total
December 31, 2013
ASSETS
Loans measured at fair value
Loans measured at fair value	$            -	$             -	$  35,333	$          35,333
	$            -	$             -	$  35,333	$          35,333
Securities owned, at fair value
Corporate equity securities	$       700	$             -	$       500	$            1,200
Municipal obligations	-	56,182	-	56,182
U.S. government and government agency obligations	11,246	62,637	-	73,883
Corporate obligations	-	82,816	80	82,896
Other	982	21,059	-	22,041
	$  12,928	$ 222,694	$       580	$        236,202
Securities available for sale
Westwood common stock	$       137	$             -	$            -	$               137
U.S. government and government agency obligations	-	536,243	-	536,243
Municipal obligations	-	43,911	-	43,911
	$       137	$ 580,154	$            -	$        580,291
Interest Rate Swaps
Interest Rate Swaps	$            -	$     2,173	$            -	$            2,173
	$            -	$     2,173	$            -	$            2,173
LIABILITIES
Securities sold, not yet purchased, at fair value
U.S. government and government agency obligations	$  39,861	$   36,874	$            -	$          76,735
Corporate obligations	-	78,368	-	78,368
	$  39,861	$ 115,242	$            -	$        155,103
Warrants
Warrants	$            -	$             -	$  24,288	$          24,288
	$            -	$             -	$  24,288	$          24,288
Net assets (liabilities)	$ (26,796)	$ 689,779	$  11,625	$        674,608

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(in thousands)	Level 1	Level 2	Level 3	Total
June 30, 2013
ASSETS
Loans measured at fair value
Loans measured at fair value	$            -	$     13,757	$            -	$          13,757
	$            -	$     13,757	$            -	$          13,757
Securities owned, at fair value
Corporate equity securities	$       895	$               -	$       625	$            1,520
Municipal obligations	-	30,116	-	30,116
U.S. government and government agency obligations	3,300	38,229	-	41,529
Corporate obligations	-	127,779	120	127,899
Other	692	7,877	-	8,569
	$    4,887	$   204,001	$       745	$        209,633
Securities available for sale
Westwood common stock	$       146	$               -	$            -	$               146
U.S. government and government agency obligations	-	474,906	-	474,906
Municipal obligations	-	28,224	-	28,224
	$       146	$   503,130	$            -	$        503,276
Interest Rate Swaps
Interest Rate Swaps	$            -	$       1,934	$            -	$            1,934
	$            -	$       1,934	$            -	$            1,934
LIABILITIES
Securities sold, not yet purchased, at fair value
Municipal obligations	$            -	$            10	$            -	$                 10
U.S. government and government agency obligations	45,415	8,671	-	54,086
Corporate obligations	-	80,639	-	80,639
	$  45,415	$     89,320	$            -	$        134,735
Warrants
Warrants	$            -	$               -	$  24,197	$          24,197
	$            -	$               -	$  24,197	$          24,197
Net assets (liabilities)	$ (40,382)	$   633,502	$ (23,452)	$        569,668

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The following table provides a reconciliation of the beginning and ending balances for the major classes of assets and (liabilities) measured at fair value using significant unobservable inputs (Level 3):

(in thousands)	Loans	Corporate Equity Securities	Corporate Obligations	Warrants	Total
Ending balance at June 30, 2013	$              -	$                625	$             120	$    (24,197)	$    (23,452)
Redemption/sale of security		(50)	-	-	(50)
Unrealized loss		-	(32)	-	(32)
Decrease in warrants valuation
(unrealized gain)		-	-	1,967	1,967
Ending balance at September 30, 2013	$              -	$                575	$               88	$    (22,230)	$    (21,567)
Redemption/sale of security		(75)			(75)
Unrealized loss	-	-	(8)	-	(8)
Transfers from Level 2 to Level 3	35,333	-	-	-	35,333
Increase in warrants valuation
(unrealized loss)	-	-	-	(2,058)	(2,058)
Ending balance at December 31, 2013	$     35,333	$                500	$               80	$    (24,288)	$     11,625

At the end of each respective quarterly reporting period, the Company recognizes transfers of financial instruments between levels.  During the three and six-months ended December 31, 2013, the Company transferred the loans measured at fair value from level 2 to level 3 due to a lack of observable data to support a level 2 valuation. 

Changes in unrealized gains (losses) and realized gains (losses) for corporate obligations and corporate equity securities are presented in net gains on principal transactions on the Consolidated Statements of Comprehensive (Loss) Income.  Changes in unrealized gain (loss) for the warrants are presented in unrealized gain (loss) on warrants valuation on the Consolidated Statements of Comprehensive (Loss) Income.The total realized loss included in earnings related to assets and liabilities still held for the three and six-months ended December 31, 2012 was $702,000.  The total unrealized loss included in earnings related to assets and liabilities still held for the three and six-months ended December 31, 2013 was $2,066,000 and $2,098,000, respectively.The total unrealized gains included in earnings related to assets and liabilities still held for the three and six-months ended December 31, 2013 was $4,000 and $2,162,000, respectively. In comparison, the total unrealized gain included in earnings related to assets and liabilities still held for the three and six-months ended December 31, 2012 was $11,761,000 and $3,576,000, respectively. 

The following table highlights, for each asset and liability measured at fair value on a recurring basis and categorized within Level 3 of the fair value hierarchy, the significant unobservable inputs used in the fair value measurement as of December  31, 2013 (dollars in thousands):

Asset/Liability	Fair  Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted-Average)
Loans measured at fair value
Loans measured at fair value	$     35,333	Discounted cash flow	Discount Rate	4.35%-5.37% (4.77%)
Securities owned, at fair value
Corporate equity securities- auction rate preferred	500	Analysis of comparable securities	N/A	N/A
Corporate obligations	80	Discounted cash flow	N/A	N/A
Warrants
Warrants	24,288	Binomial Model	Derived Volatility	46% - 52% (46%)

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The loans are independently valued quarterly using a discounted cash flow model which factors in the relevant contractual loan terms and then present valued back to a market-based discount rate.  The market based discount rate is based on how the subject loans would be priced as of the valuation date and therefore include normal credit loss expectations, given the underlying underwriting standards including loan to value ratio and debt coverage ratios for the subject portfolio.  The rate at which the loans are discounted is based upon London Interbank Offered Rate (LIBOR) Bank preferential return and terms of the loan. 

At December  31, 2013, the Company held 20 auction rate preferred securities that, based on observed values of comparable securities, were valued at their par value of $500,000.  Since June 2010, the Company has held up to $1,800,000 in Level 3 auction rate preferred securities, of which $1,375,000 have been redeemed at par.  The remaining $500,000 of auction rate preferred securities are similar to those that were previously redeemed, and the Company anticipates that the remaining securities will also be redeemed at par.  While a liquidity discount has been considered for these securities, the Company does not believe a discount is warranted.  To the extent these securities are redeemed at a price below par, the Company would consider revaluing any remaining securities at a discounted price.

The Company holds $3,505,000 of corporate obligation bonds currently valued at $80,000.  The corporate bonds are valued using a discounted cash flow model with observable market data, however, due to the distressed nature of these bonds, the Company has determined that these bonds should be valued at Level 3.

The warrants issued to Hilltop and Oak  Hill are valued quarterly using a binomial model that considers the following variables: price and volatility of the Company’s stock, treasury yield, annual dividend and the remaining life of the warrants.  The derived volatility estimate considers both the historical and implied forward volatility of the Company’s common stock.  The primary drivers of the value of the warrants are the price and volatility of the Company’s common stock.  As the volatility and/or stock price increase, the value of the warrants increase as well.  The movement of these two variables will amplify or offset one another depending on the direction and velocity of their movements.  In addition, the warrants will lose time value as they near their contractual expiration date.

Non-Recurring Fair Value Measurements.

Certain financial and non-financial instruments are not measured at fair value on an ongoing basis but are subject to fair value measurement in certain circumstances; for example, when there is evidence of impairment or in other situations where the lower of cost or fair value method of accounting is applied.

The following table summarizes by level within the fair value hierarchy the Company’s financial and non-financial instruments which were measured at fair value on a non-recurring basis at December  31, 2013 and June 30, 2013 (in thousands):

December 2013	Level 1	Level 2	Level 3	Total
Impaired loans (1)	$            -	$            -	$   11,288	$   11,288
REO	-	-	7,355	7,355
Impaired servicing assets	-	-	436	436
	$            -	$            -	$   19,079	$   19,079
June 2013
Impaired loans (1)	$            -	$            -	$   20,086	$   20,086
REO	-	-	10,165	10,165
	$            -	$            -	$   30,251	$   30,251

_____________

(1)   Includes certain impaired loans measured at fair value through the allocation of specific valuation allowances or principal charge-offs.

For the six-months ended December  31, 2013 and the year endedJune 30, 2013, adjustments to the fair value of impaired loans resulted in a charge to earnings as a provision for loan loss of $134,000 and $3,718,000, respectively.  For the six-months ended December 31, 2013 and the year ended June 30, 2013, adjustments to the fair value of REO property held at December 31, 2013 and June 30, 2013, respectively, resulted in a charge to earnings as a write-down of REOs of $199,000 and $1,396,000, respectively.  For the six-months ended December 31, 2013, adjustments to the fair value of servicing assets resulted in a charge to earnings as an impairment for servicing assets of $33,000.

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Other Fair Value Disclosures.

The Company’s fair value policies for instruments measured at fair value in accordance with the disclosure requirements of ASC 820  “Fair Value Measurements and Disclosures” are discussed in “Note 1(x). Fair Value of Financial Instruments – Other Fair Value Disclosures”  in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K. The recorded amounts, fair value and level of fair value hierarchy of the Company’s financial instruments at December  31, 2013 and June 30, 2013 were as follows (in thousands):

		December 31, 2013		June 30, 2013
	Level	Recorded Value	Fair Value	Recorded Value	Fair Value
Financial assets:
Cash and cash equivalents	1	$   121,130	$    121,130	$    111,046	$    111,046
Restricted cash and cash equivalents	1	30,049	30,049	30,047	30,047
Securities held to maturity:
GNMA securities	2	14,595	14,982	17,423	17,965
Loans, net:
Purchase mortgage loans held for investment	3	89,583	89,430	174,037	173,738
Other loans held for  investment	3	403,301	446,568	420,789	437,916
Servicing assets	3	436	436	412	414
Financial liabilities:
Short-Term Borrowings	1	75,000	75,000	131,500	131,500
Deposits:
Deposits with no stated maturity	2	966,720	962,054	963,385	959,578
Time deposits	2	28,045	28,331	30,334	30,736
Advances from FHLB	2	98,251	99,621	97,565	100,408
Long-term debt	3	85,350	95,817	83,102	86,822

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

SWS Group, Inc. (“SWS Group”) (together with its subsidiaries, “we,” “us,” “SWS” or the “company”) is engaged in full-service securities brokerage and full-service commercial banking.  For the six-months ended December  31, 2013, 87% of our total revenues were generated by our full-service brokerage business and 13% of our total revenues were generated by our commercial banking business.  While brokerage and banking revenues are dependent upon trading volumes and interest rates, which may fluctuate significantly, a large portion of our expenses remain fixed.  Consequently, net operating results can vary significantly from period to period. 

Our business is also subject to substantial governmental regulation and changes in legal, regulatory, accounting, tax and compliance requirements, which may have a substantial impact on our business and results of operations.  We also face substantial competition in each of our lines of business.  See Forward-Looking StatementsandRisk Factorsin our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on September 6, 2013 (the “Fiscal 2013 Form 10-K”).

We operate through four segments grouped primarily by products, services and customer base:  clearing, retail, institutional and banking.

Clearing.We provide clearing and execution services for other broker/dealers (predominantly on a fully disclosed basis).  Our clientele includes securities broker/dealers and firms specializing in high-volume trading.  We currently support a wide range of clearing clients, including discount and full-service brokerage firms, registered investment advisors and institutional firms.  In addition to clearing trades, we tailor our services to meet the specific needs of our clearing correspondents ("correspondents") and offer products and services such as recordkeeping, trade reporting, accounting, general back-office support, securities and margin lending, reorganization assistance and custody of securities. 

Revenues in this segment are generated primarily through transaction charges to our correspondent firms for clearing their trades.  Revenue is also earned from various fees and other processing charges as well as through net interest income on correspondent customer balances.

Retail.We offer retail securities (such as equities, mutual funds and fixed income products), insurance products and managed accounts through the activities of our employees that are registered representatives and our independent contractors.  As a securities broker, we extend margin credit on a secured basis to our retail customers in order to facilitate securities transactions.  This segment generates revenue primarily through commissions charged on securities transactions, fees from managed accounts and the sale of insurance products as well as net interest income from retail customer balances. 

Institutional.We serve institutional customers in the areas of securities borrowing and lending, municipal finance, sales, trading and underwriting of taxable and tax-exempt fixed income securities and equity trading.  Our securities borrowing and lending business includes borrowing and lending securities for other broker/dealers, lending institutions, and our own clearing and retail operations.  Our municipal finance operations assist public bodies in originating, syndicating and distributing securities of municipalities and political subdivisions.   

Our fixed income sales and trading group specializes in trading and underwriting U.S. government and government agency bonds, corporate bonds, municipal bonds, mortgage-backed, asset-backed and commercial mortgage-backed securities and structured products.  The clients of our fixed income group include corporations, insurance companies, banks, mutual funds, money managers and other institutions.  Our equity trading department focuses on executing equity and option orders on an agency basis for clients.  We also have a portfolio trading group that executes large institutional portfolio trades. 

Revenues in the institutional segment are derived from the net interest spread on stock loan transactions, commissions, and trading income from fixed income and equity products and investment banking, and underwriting fees from corporate and municipal securities transactions. 

Banking.  We offer traditional banking products and services.  We specialize in three primary areas, business banking, focusing on industrial and small business lending, commercial real estate lending 

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and mortgage purchase.  We originate the majority of our loans internally, and we believe this business model helps us build more valuable relationships with our customers. 

The Bank earns substantially all of its net revenues on the spread between the rates charged to customers on loans and the interest rates paid to depositors as well as interest income from investments. 

The Bank has committed to the Office of the Comptroller of the Currency ("OCC")that the Bank will, among other things:  (i) adhere to the Bank’s written business and capital plan as amended from time to time; and (ii) maintain a Tier I capital ratio at least equal to nine percent (9%) of adjusted total assets and a total risk-based capital ratio of at least twelve percent (12%).

The "other" category includes SWS Group, corporate administration and SWS Capital Corporation, which is a dormant entity. 

Loan from Hilltop and Oak Hill

In March 2011, we entered into a Funding Agreement (the “Funding Agreement”) with Hilltop Holdings, Inc. (“Hilltop”) and Oak Hill Capital Partners III, L.P. (“OHCP”) and Oak Hill Capital Management Partners III, L.P. (collectively with OHCP, “Oak Hill”).  On July 29, 2011, after receipt of stockholder and regulatory approval, we completed the following transactions contemplated by the Funding Agreement:

· entered into a $100.0 million, five year, unsecured credit agreementwith Hilltop and Oak Hill that accrues interest at 8% per annum (the “Credit Agreement”);

· issued warrants to Hilltop and Oak Hill allowing each to purchase up to 8,695,652 shares of our common stock at an exercise price of $5.75 per share (subject to anti-dilution adjustments), representing approximately 17% of the outstanding common stock of the company for each investor (assuming the warrants are exercised in full); and

· granted Hilltop and Oak Hill certain rights, including certain registration rights, preemptive rights, and the right for each to appoint one person to our Board of Directors (“BOD”) for so long as each owns 9.9% or more of the outstanding shares of our common stock or securities convertible into at least 9.9% of our outstanding common stock.  Mr. Gerald J. Ford and Mr. J. Taylor Crandall have been appointed and elected as directors of SWS Group on behalf of Hilltop and Oak Hill, respectively, pursuant to this right.

We entered into this transaction with Hilltop and Oak Hill to ensure that the Bank would maintain adequate capital ratios under an Order to Cease and Desist and could continue to reduce classified assets in a strategic and efficient manner, as well as to ensure that the broker/dealer business lines would operate without disruption.  See “Debt Issued with Stock Purchase Warrants” in the Notes to the Consolidated Financial Statements contained in this report for additional discussion on the loan from Hilltop and Oak Hill. 

The funds advanced pursuant to the Credit Agreement with Hilltop and Oak Hill were recorded on our Consolidated Statements of Financial Condition as restricted cash.  We are required to keep these funds in a restricted account until our BOD, Hilltop and Oak Hill determine the amount(s) to be distributed to our subsidiaries.  Upon the approval of the BOD, Hilltop and Oak Hill, SWS Group contributed $20.0 million of this cash to the Bank as capital in the second quarter of fiscal 2012, loaned $20.0 million to Southwest Securities in the third quarter of fiscal 2012 to use in general operations by reducing Southwest Securities’ use of short-term borrowings for the financing of the company’s day-to-day cash management needs, paid $20.0 million toward its intercompany payable to Southwest Securities and contributed $10.0 million in capital to Southwest Securities in the fourth quarter of fiscal 2012.  On March 28, 2013, the $20.0 million loan from SWS Group to Southwest Securities was repaid and the company’s BOD, Hilltop and Oak Hill approved, and SWS Group contributed, $20.0 million of cash as a capital contribution to Southwest Securities.  At December 31, 2013, the remaining $30.0 million was being held in a restricted account at SWS Group to be used for general corporate purposes, subject to the approval of the BOD, Hilltop and Oak Hill.  On January 8, 2014, the remaining $30.0 million was loaned to Southwest Securities to use in general operations upon approval by the BOD, Hilltop and Oak Hillwhich reduced Southwest Securities’ use of short-term borrowings for the financing of its day-to-day cash management needs.

On January 9, 2014, we received an unsolicited acquisition proposal from Hilltop to acquire all of the outstanding shares of SWS Group common stock that Hilltop does not already own for $7.00 per share, with the consideration to be paid 50% in cash and 50% in Hilltop common stock.  On February 3, 2014, we announced that our BOD formed a Special Committee, comprised of independent directors not affiliated with Hilltop or Oak Hill, to, among other things, carefully evaluate Hilltop’s unsolicited proposal and make a recommendation to our BOD.  There can be no assurance that a transaction with Hilltop or any other party will be approved or consummated. 

Business Environment

Performance in the financial services industry in which we operate is highly correlated to the overall strength of the economy and financial market activity.  Overall market conditions are a product of many factors, which are beyond our control and can be

46

unpredictable.  These factors may affect the financial decisions made by investors, including their level of participation in the financial markets, which may in turn, affect our business results.  With respect to financial market activity, our profitability is sensitive to a variety of factors, including the volatility of the equity and fixed income markets, the level and shape of various yield curves, the volume of trading in securities, the value of our customers’ assets under management, the demand for loans, the value of real estate in our market areas and the current political environment. 

As of December 31, 2013, equity market indices were up versus a year ago with the Dow Jones Industrial Average (the “DJIA”) up 26.5%, the Standard & Poor’s 500 Index (“S&P 500”) up 29.6% and the NASDAQ Composite Index (“NASDAQ”) up 38.32%.  The DJIA closed at 16,576.66 on December 31, 2013 up from 13,104.14 and 14,909.60 on December 31, 2012 and June 30, 2013, respectively.  While the indices showed improvement and reached record closing prices that have not been reached since 2008, the average daily trading volume on the NYSE decreased 9% as compared to the same period of our prior fiscal year.  The continued uncertainty in the economic environment, with the federal government shutdown in October 2013 and the required implementation by businesses and individuals of the Affordable Care Act, continued low levels of workforce participation and high unemployment rates, contributed to volatility during the first six months of fiscal 2014.  For our clearing, retail, and institutional segments, in particular our institutional segment, the uncertainty about the Federal Reserve’s plans for monetary easing has added to the volatility in interest rates and fixed income inventory valuations.  For our banking segment, this uncertainty creates issues in its approach and timing of mitigation of interest rate risk in a rising interest rate environment.

Continued economic and regulatory uncertainty also created a challenging operating environment for us during the three and six-months ended December 31, 2013.  The national unemployment rate, which was approximately 6.7% at the end of December  2013, was down from a high of 10.0% at the end of December 2009, and 7.6% at the end of June 2013, but remains at historically high levels.  The Board of Governors of the Federal Reserve System (“FRB”) reduced the federal funds target rate to 0 - 0.25% on December 16, 2008 and announced in January 2013 that it anticipated that rates were unlikely to increase as long as the unemployment rate remained above 6.5%, the short-term inflation rate was projected to be no more than 0.5% above the Federal Open Market Committee’s 2% longer-run goal, and longer-term inflation expectations continue to be stable.

The disruptions and developments in the world economy and the credit markets over the past three years resulted in a range of actions by the U.S. and foreign governments to attempt to bring liquidity and order to the financial markets and to prevent an extended recession in the world economy. For more details regarding some of the actions taken by U.S. and foreign governments, see the discussion under Business-Regulation contained in our Fiscal 2013 Form 10-K.

Government intervention in the markets for the past several years has created artificially low short-term interest rates.  Public announcements by the FRB regarding timing of reduced intervention or increased interest rates has led to substantial volatility in the fixed income markets.  This volatility has produced and could continue to produce material changes in the value of our fixed income trading portfolio. 

Texas, along with the rest of the country, has experienced distress in residential and commercial real estate values as well as elevated unemployment rates since the last calendar quarter of 2010.  Real estate values, along with unemployment statistics, have improved; however, with the improvement, competition in the banking business has increased as loan demand is not yet robust. 

Regulatory Environment

The SEC recently adopted amendments, most of which were effective October 2013, to its financial responsibility rules, including changes to the net capital rule, the customer protection rule, the record-keeping rules and the notification rules applicable to our broker/dealer subsidiaries. We are currently evaluating the impact of these amendments on our broker/dealer subsidiaries; however, based on our current analyses, we do not believe they will have a material adverse effect on any of our broker/dealer subsidiaries.

The final provisions of the Volcker Rule of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) were issued December 10, 2013, with an effective date of April 1, 2014 and a compliance date of July 21, 2015.  Many of our broker/dealer’s securities trading and investment activities are subject to these final provisions.  The Volcker Rule provision of the Dodd-Frank Act requires the federal financial regulatory agencies to adopt rules that prohibit banks, bank holding companies, and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (including hedge funds and private equity funds), subject to certain exceptions.  The final rules are highly complex, and many aspects of their application remain uncertain.  We are evaluating the effect of these provisions on our business activities as well as on our financial statements, processes, procedures and risk management.

Based on management’s interpretation of the final provisions of the rule, the Bank’s equity method investments would be excluded from the definition of a “covered” fund as these investments would meet the definition of “public welfare investment” funds that are “designed primarily to promote the public welfare.” Currently, the Bank invests in these funds as a cost effective way of meeting its obligations under the Community Reinvestment Act of 1977 (“CRA”). One of these investments also meets the definition of a small business investment company.  According to the rule, the Company’s ownership interest in any “covered” fund would be limited to 3% of the total ownership of the fund.The provisions of the rule would also limit the aggregate

47

ownership of all investments in “covered” funds to 3% of Tier 1 capital of the bank holding company.  After the compliance date of July 21, 2015,  we can request for an additional two year extension from the FRB, if necessary, to divest “covered” fund investments to the allowable ownership levels.  Currently, our ownership percentages in the limited partnership venture capital fund, one of the limited partnership equity funds and the private investment fund are greater than 3% of the total ownership of the fund.  The aggregate ownership of all investments is less than 3% of Tier 1 capital of the bank holding company.

In addition, at December 31, 2013, the Bank’s investment portfolio does not contain other securities subject to the Volcker Rule such as collateralized loan obligations (CLO’s) and non-agency collateralized mortgage obligations (CMO’s).

Impact of Economic Environment

Brokerage:  Volatility in the U.S. credit and mortgage markets, low interest rates and reduced volume in the U.S. stock markets continue to have an adverse effect on several aspects of our brokerage business, including depressed net interest margins, reduced liquidity and lower trading volumes.

Exposure to European Sovereign Debt

We have no exposure to European sovereign debt or direct exposure to European banks.  However, we do participate in securities lending with U.S. subsidiaries of several European banks.  Receivables from securities lending are secured by collateral equal to 102% of the market value of the underlying securities, and the collateral is adjusted daily to maintain the 102% margin.

Net Interest Margins

Historically, the profitability of our brokerage business has been highly dependent upon net interest income.  We earn net interest income on the spread between the interest rates earned and paid on customer and correspondent balances as well as from our securities lending business.  With interest rates at historically low levels, the spread we are able to earn has been reduced, primarily from the extremely low yields on our portfolio of assets segregated for regulatory purposes.  Additionally, the spread in our securities lending business has declined.  Lastly, because the yields on money market funds have declined significantly, revenue sharing arrangements with our primary money market fund providers have been substantially reduced.  We do not expect any significant changes in these dynamics until short-term interest rates rise.

We have taken actions to mitigate the impact of this margin contraction by renegotiating arrangements with our clearing customers, changing the mix of our assets segregated for regulatory purposes and developing new business in our securities lending portfolio.  Despite these actions, profits from net interest remain substantially below historical levels.

Liquidity

Dislocation in the credit markets has led to increased liquidity risk.  All but $45.0 million of our borrowing arrangements are uncommitted lines of credit and, as such, can be reduced or eliminated at any time by the lenders extending the credit.  While we have not experienced any reductions in our uncommitted borrowing capacity, over the past three years, our lenders have taken actions that indicate their concerns about extending liquidity in the marketplace.  These actions included reduced advance rates for certain security types, more stringent requirements for collateral eligibility, higher interest rates and pre-funding of daily settlements.  Should our lenders take any actions that negatively impact the terms of our lending arrangements, the cost of conducting our business could increase and our volume of business could be limited. 

The volatility in the U.S. stock markets has also impacted our liquidity through increased margin requirements at our clearing houses.  These margin requirements are determined by the clearing houses through a combination of risk formulas that are periodically adjusted to reflect perceived risk in the market.  To the extent we are required to post cash or other collateral to meet these requirements, we will have less liquidity to finance our other business.  We expect these margin requirements mayincrease over the next 12-18 months.

Valuation of Securities

We regularly trade mortgage, asset-backed and other types of fixed income securities.  We monitor our trading limits daily to ensure that these securities are maintained at levels we consider prudent given current market conditions.  We price these securities using a third-party pricing service and we review the prices monthly to ensure reasonable valuations.  At December 31, 2013, we held mortgage and asset-backed securities of approximately $22.4 million included in securities owned, at fair value on the Consolidated Statements of Financial Condition.  Included in this balance are approximately $0.9 million of long inventory in to-be-announced (“TBA”) securities, which are government agency mortgage-backed securities whose collateral remain unknown until just prior to the trade settlement.

Bank:  Shortly after closing the Hilltop and Oak Hill transaction, we contributed $20.0 million in capital to the Bank.   We believe the $20.0 million capital contribution provided the Bank with a sound foundation and with flexibility to accelerate the reduction of classified assets.

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The Bank continued to reduce classified assets in the quarter ended December 31, 2013.  Classified assets were $48.0 million at December 31, 2013, down from $67.6 million at June 30, 2013.  Classified assets as a percentage of total capital plus the allowance for loan losses was 27.2% at December 31, 2013 and 37.4% at June 30, 2013.  Non-performing assets (a subset of classified assets) decreased to $26.9 million at December 31, 2013 from $38.0 million at June 30, 2013.  The Bank has significantly reduced classified assets and improved performance over the past five quarters, but the reduction in classified assets could slow and additional loans could be moved to problem status should the economic environment worsen. 

The Bank’s loan loss allowance at December 31, 2013 was $9.4 million, or 2.29% of loans held for investment, excluding purchased mortgage loans held for investment and loans measured at fair value, as compared to $12.3 million, or 2.85% of loans held for investment, excluding purchased mortgage loans held for investment and loans measured at fair value, at June 30, 2013 and $18.6 million, or 4.10% at December 31, 2012.

The Tier I (core) capital ratio was 13.8% and the total risk-based capital ratio was 27.4% at December 31, 2013, as compared to 13.5% and 24.9%, respectively, at June 30, 2013 (without giving effect to the Basel III final rules).  With the stability of these capital ratios, the Bank’s management has focused on diversifying the balance sheet by reducing loan concentrations and building an investment portfolio.  In conjunction with building the security investment portfolio, the Bank entered into $140.0 million of interest rate swaps to reduce deposit cost variability by focusing on protecting earnings in a rising interest rate environment.  The Bank plans to continue implementing this strategy, along with other balance sheet considerations, to manage interest rate risk.

The Bank is focused on implementing and executing its business plan, which includes the continued diversification of the balance sheet and conservative growth strategies. The Bank’s available for sale investment portfolio was $580.2 million and $503.1 million at December 31, 2013 and June 30, 2013, respectively.    The Bank plans to continue to manage a tiered investment portfolio designed to provide cash flows for loan originations.  At December 31, 2013 and June 30, 2013, the Bank’s mortgage purchase program loan balance was $89.6 million and $174.0 million, respectively.  These loans are held for investment on average for 25 days or less, which substantially limits credit risk. 

The primary funding source for the Bank’s balance sheet growth is core deposits from Southwest Securities’ brokerage customers.  These core deposits provide the Bank with a stable and low cost funding source.  At December 31, 2013 and June 30, 2013, the Bank had $876.5 million and $878.4 million, respectively, in funds on deposit from customers of Southwest Securities, representing approximately 88.1% and 88.4%, respectively, of the Bank’s total deposits.

Events and Transactions

A description of material events and transactions impacting our results of operations in the periods presented are discussed below: 

Employee reduction.  Due to our decline in revenue for the past three fiscal years, management determined that expense reductions were needed in order to improve operating results and execute our strategic business plan.  As a result, we reduced the number of our employees by approximately 7% during the three-months ended September 30, 2013 and recorded approximately $1.2 million in severance expense for three-months ended September 30, 2013 in commissions and other employee compensation on the Consolidated Statements of Comprehensive (Loss) Income.  While we continue to monitor our staffing needs, we do not anticipate any additional headcount reductions at this time.

Warrant valuation.The warrants issued to Hilltop and Oak Hill are presented as liabilities carried at fair value on the Consolidated Statement of Financial Condition.  During the six-months ended December 31, 2013, the value of these warrants increased primarily due to the increase in the market value of our common stock.  Our stock price increased from $5.45 at June 30, 2013 to $6.08 at December 31, 2013.  The increase in the stock price, combined with other factors, resulted in an unrealized pre-tax loss of $91,000 for the six-months ended December 31, 2013.  For the three-months ended December 31, 2013, the increase in the stock price, combined with other factors, resulted in an unrealized pre-tax loss of $2.1 million. 

During the six-months ended December 31, 2012, the value of these warrants decreased due to a decrease in the stock price from $5.33 at June 29, 2012 to $5.29at December 31, 2012.  The decrease in the stock price, combined with other factors,  resulted in an unrealized pre-tax gain of $3.6 million for the six-months ended December 31, 2012. For the three-months ended December 31, 2012, the decrease in our stock price, combined with other factors resulted in an unrealized pre-tax gain of $11.8 million.

Recapture in allowance for loan loss. The quality of the Bank’s assets continued to improve in the second quarter of fiscal 2014 and 2013 resulting in a $2.8 million and $1.5 million recapture of our provision for loan loss for the three-months ended December 31, 2013 and 2012, respectively.

Hurricane Sandy.  On October 29, 2012, the east coast of the United States was hit by Hurricane Sandy.  As a result of this hurricane, the equity markets were closed for two days with no trading occurring during those two days, which negatively impacted our results for the three-months ended December 31, 2012.

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Auction rate security.Since fiscal 2010, we held an auction rate municipal bond at 95.7% of par.  As a result of a trade in a similar security at a value less than par and related market conditions, we determined that our security should be written down to 92.5% of par in the first quarter of fiscal 2013.  This resulted in a $702,000 write down at September 28, 2012,with no additional write-downs in the second quarter of fiscal 2013.  During the third quarter of fiscal 2013, we sold this security with no gain or loss recognized on the transaction.

RESULTS OF OPERATIONS

Consolidated

Net income for the three and six-months ended December 31, 2013 was $1.7 million and $2.0 million, respectively, as compared to net income for the three and six-months ended December 31, 2012 of  $10.4 million and $4.7 million, respectively.  The three and six-months ended December 31, 2013 and 2012 contained 64 and 128 trading days and 62 and 125 trading days, respectively. 

Southwest Securities was custodian for $31.5 billion and $29.6 billion in total customer assets at December 31, 2013 and 2012, respectively.

The following is a summary of increases (decreases) in categories of net revenues and operating expenses for the three and six-months ended December 31, 2013 compared to the three and six-months ended December 31, 2012 (dollars in thousands):

	Three- Months			Six- Months
	Ended			Ended
	Amount	Percent		Amount	Percent
Net revenues:
Net revenues from clearing operations	$          36	2	%	$        190	4	%
Commissions	(1,579)	(5)		(3,379)	(5)
Net interest	(2,954)	(22)		(7,138)	(26)
Investment banking, advisory and administrative fees	(1,411)	(12)		(766)	(3)
Net gains on principal transactions	(3,705)	(33)		(4,012)	(20)
Other	2,754	49		3,132	27
	$    (6,859)	(9)	%	$  (11,973)	(8)	%

Operating expenses:
Commissions and other employee compensation	$    (3,236)	(6)	%	$    (4,932)	(5)	%
Occupancy, equipment and computer service costs	166	2		221	1
Communications	27	1		156	2
Floor brokerage and clearing organization charges	134	14		223	11
Advertising and promotional	(125)	(17)		(143)	(10)
Provision for loan loss	(1,375)	95		(1,841)	>100
Unrealized net gain/loss on warrant valuation	13,819	>(100)		3,667	>(100)
Other	(1,928)	(23)		(4,170)	(25)
	7,482	13		(6,819)	(5)
Pre-tax income	$  (14,341)	(92)	%	$    (5,154)	(78)	%

Three-Months Ended:

Net revenues decreased $6.9 million for the three-months ended December 31, 2013 as compared to the same period of the prior fiscal year. Net gains on principal transactions generated $3.7 million of the decrease primarily due to a  $3.5 million decrease in the other segment from a$3.6 million realized gain recognized in the second quarter of fiscal 2013 from the sale of our shares of U.S. Home Systems, Inc. (“USHS”) common stock.

Net interest revenues were down $3.0 million primarily driven by a $2.2 million decrease in net interest revenue in our banking segment due to a 32% decrease in average loan balances and a 70 basis point decrease in net interest yield as compared to the same period of the prior fiscal year.  The institutional segment contributed an additional $0.6 million of the decrease in net interest revenue primarily due to a $1.0 million decrease in interest earned on taxable and non-taxable securities from a reduction in net interest spreads, offset by a $0.2 million increase in our interest expense on short-term borrowings.  Net interest income from our stock lending business increased $0.2 million primarily due to a 50% increase in average balances which overcame an 11 basis point decrease in our average net interest spread.

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Commissions revenue decreased $1.6 million primarily due to a $2.2 million decrease in commissions revenue in the institutional segment offset by a $0.7 million increase in commissions revenue in the retail segment as compared to the prior year comparable quarter.  The decrease in the institutional segment was due primarily to a decline in portfolio trading transaction volume in the second quarter of fiscal 2014 compared to the second quarter of fiscal 2013.  The increase in commissions revenue in the retail segment was generated by our private client group (“PCG”) and independent registered representative group (“SWS Financial”) from increased customer activity.

Additionally, investment banking, advisory and administrative fees decreased $1.4 million primarily due to a $2.2 million decrease in fees earned by our institutional segment.  This $2.2 million decrease was due to a $1.5 million decrease in taxable fixed income underwriting fees, and a $1.2 million decrease in corporate finance fees as we exited this business in the fourth quarter of fiscal 2013, offset by a $0.6 million increase in municipal finance fees.  The $2.2 million decrease in the institutional segment was offset by a $0.9 million increase in advisory fees in our retail segment, which was generated by both our PCG and SWS Financial divisions. 

Other revenues increased $2.8 million.  The increase was primarily due to our banking segment which recorded a $0.9 million increase, our other segment which also recorded a $0.9 million increase and our clearing segment which recorded a $0.5 million increase.  The increase in the banking segment was due to a $0.3 million increase in gains on sale of Small Business Administration (“SBA”) loans, a $0.7 million increase in gains on our interest rate swap transactions, a $0.7 million decrease in net losses on the sale of real estate owned (“REO”), offset by a $0.7 million decrease in the gains recognized on the valuation of the Bank’s equity method investments.  The increase in other revenue in our other segment was primarily due to a $0.9 million increase in value in our deferred compensation plan investments.  The $0.5 million increase in our clearing segment was due to servicing fees income received from a third party administrator.   

Operating expenses increased $7.5 million for the three-months ended December 31,  2013 as compared to the same period of the prior fiscal year.  The largest component of this increase was the $13.8million change in the value of the warrants held by Hilltop and Oak Hill. We recognized a $2.1 million loss on the warrant valuation for the three-months ended December 31, 2013 and an  $11.8 million gain on the warrant valuation for the three-months ended December 31, 2012. 

Offsetting the increased expense from the valuation of the warrants was a $3.2 million decrease in commissions and other employee compensation, primarily due to the $2.3 million decrease in salaries resulting from staff reductions and $0.8 million in incentive compensation due to a decrease in overall net revenues.  Additionally, other expenses decreased $1.9 million for the three-months ended December 31, 2013 as compared to the same period of the prior fiscal year primarily due to a $0.5 million decrease in professional service fees, a $0.4 million decrease in REO expense, a $0.4 million decrease in the REO loss provision and a $0.3 million decrease in Bank regulatory fees.

Lastly, the Bank’s loan loss recapture increased $1.4 million primarily due to the pay-off in the current period of an outstanding balance of a commercial loan for which the Bank had recorded a $2.1 million specific allowance reserve.

Six-Months Ended:

Net revenues decreased $12.0 million for the six-months ended December 31, 2013 as compared to the same period of the prior fiscal year. Net interest revenue decreased $7.1 million primarily driven by a $5.0 million decrease in net interest revenue in our banking segment due to a 32% decrease in our average loan balance and a 60 basis point decrease in net interest yield at the Bank as compared to the same period of the prior fiscal year.  Net interest revenue in the institutional segment decreased $1.7 million primarily due to a $1.5 million reduction of interest earned on taxable and non-taxable securities due to a reduction in net interest spreads.  In addition, net interest in the stock loan business was down $0.5 million primarily due to a 19 basis point decrease in our average net interest spread partially offset by a 35% increase in our average stock borrowed portfolio balances.

Net gains on principal transactions decreased $4.0 million primarily due to the recognition of a $3.6 million realized gain in the second quarter of fiscal 2013 related to the sale of our shares of USHS common stock which was reflected in the other segment.

Lastly, commissions revenue decreased $3.4 million primarily due to a $4.8 million decrease in the institutional segment, which was offset by a $1.5 million increase in commissions revenue in the retail segment.  The decrease in commissions revenue in the institutional segment was due to a lower portfolio trading transaction volume in the first half of fiscal 2014 compared to the same period of fiscal 2013.  The increase in retail commissions revenue was due primarily to increased customer activity in our PCG group.

Other revenues increased $3.1 million.  This increase was primarily related to our banking segment with a $1.1 million increase, our other segment with a $1.2 million increase and a $1.0 million increase in third party servicing fee income which was split between our clearing and retail segments.  The increase in the banking segment was due to a $0.2 million increase in gains on sale of SBA loans, a $0.7 million increase in gains on our interest rate swap transactions, a $1.0 million decrease in net losses on the sale of REO, offset by a $0.8 million decrease in the gains recognized on the valuation of the Bank’s equity method investments.  The increase in other revenue in our other segment was primarily due to a $1.2 million increase in value in our deferred compensation plan investments.

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Operating expenses decreased $6.8 million for the six-months ended December 31, 2013 as compared to the same period of the prior fiscal year.  The largest components of this decrease was a $5.0 million decrease in commissions and other employee compensation, which was primarily due to a $3.1 million decrease in incentive compensation due to a decline in overall company performance and a $1.9 million decrease in employee salaries primarily resulting from the staff reductions in the first three-months of fiscal 2014. 

Other expenses decreased $4.2 million primarily due to a $0.8 million decrease in legal and general operational expenses, a $0.8 million decrease in REO expenses, a $0.7 million decrease in the REO loss provision, a $0.6 million decrease in Bank regulatory fees, a $0.6 million decrease in professional services and a $0.4 million decrease in outside services at the Bank.

Lastly, the Bank’s loan loss recapture increased $1.8 millionprimarily due to the pay-off in the current period of an outstanding balance of a commercial loan for which the Bank had recorded a $2.1 million specific allowance reserve.

Offsetting these operating expense reductions, we recorded $3.7  million of additional expense related to the warrant valuation.  We recognized a $91,000loss on the warrant valuation for the six-months ended December 31, 2013 and a $3.6 million gain on the warrant valuation for the six-months ended December 31, 2012.

Net Interest Income

We generate net interest income from our brokerage segments and our banking segment.  Net interest income from the brokerage segments is dependent upon the level of customer and stock loan balances as well as the spread between the rates we earn on those assets compared to the cost of funds.  Net interest is the primary source of income for the Bank and represents the amount by which interest and fees generated by earning assets exceed the cost of funds.  The Bank’s cost of funds consists primarily of interest paid to the Bank’s depositors on interest-bearing accounts and long-term borrowings with the FHLB.  Net interest income from our brokerage, corporate and banking segments were as follows for the three and six-months ended December 31, 2013 and 2012 (in thousands):

	Three-Months Ended		Six-Months Ended
	December 31,	December 31,	December 31,	December 31,
	2013	2012	2013	2012
Brokerage	$              4,999	$                5,519	$              9,544	$            11,266
Bank	8,872	11,077	17,678	22,644
SWS Group(1)	(3,266)	(3,037)	(6,491)	(6,041)
Net interest	$            10,605	$              13,559	$            20,731	$            27,869

__________

(1)  Consists primarily of interest expense under the Credit Agreement with Hilltop and Oak Hill.

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Average balances of interest earning assets and interest-bearing liabilities in our brokerage operations were as follows (in thousands):

	Three-Months Ended		Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Average interest-earning assets:
Customer margin balances	$             241,000	$            237,000	$             243,000	$             236,000
Assets segregated for regulatory purposes	204,000	200,000	195,000	196,000
Stock borrowed	1,949,000	1,300,000	1,872,000	1,387,000

Average interest-bearing liabilities:
Customer funds on deposit,
including short credits	$             355,000	$            344,000	$             354,000	$             338,000
Stock loaned	1,865,000	1,248,000	1,774,000	1,345,000

Net interest revenue generated by each segment is reviewed in detail in the segment analysis below.

Income Tax Benefit

For the three-months ended December 31, 2013, income tax benefit (effective rate of -30.8%) differed from the amount that would have otherwise been calculated by applying the federal corporate tax rate (35%) to income before income tax benefit (expense) due to the value of company-owned life insurance (“COLI”), tax exempt interest and adecrease in our deferred tax valuation allowance. 

For the six-months ended December 31, 2013, income tax benefit (effective rate of -39.3%) differed from the amount that would have otherwise been calculated by applying the federal corporate tax rate (35%) to income before income tax benefit (expense) due to the value of company-owned life insurance (“COLI”) and tax exempt interest. 

See further discussion regarding reconciliation of the effective tax rate and the federal corporate tax rate in “Income Taxes” in the Notes to the Consolidated Financial Statements contained in this report.

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Segment Information

The following is a summary of net revenues and pre-tax income (loss) by segment for the three and six-months ended December 31, 2013 as compared to the three and six-months ended December 31, 2012 (dollars in thousands):

	Three-Months Ended
	December 31,	December 31,	Increase/
	2013	2012	Decrease	% Change
Net revenues:
Clearing	$              5,301	$              4,721	$           580	12	%
Retail	28,071	26,124	1,947	7
Institutional	27,265	32,558	(5,293)	(16)
Banking	10,464	11,771	(1,307)	(11)
Other	(2,615)	171	(2,786)	>(100)
Total	$            68,486	$            75,345	$       (6,859)	(9)	%
Pre-tax income (loss):
Clearing	$              1,339	$               (115)	$         1,454	>100	%
Retail	3,003	528	2,475	>100
Institutional	5,949	9,339	(3,390)	(36)
Banking	5,324	2,972	2,352	79
Other	(14,346)	2,886	(17,232)	>(100)
Total	$              1,269	$            15,610	$     (14,341)	(92)	%

	Six-Months Ended
	December 31,	December 31,	Increase/
	2013	2012	Decrease	% Change
Net revenues:
Clearing	$              9,975	$              9,679	$           296	3	%
Retail	57,909	54,190	3,719	7
Institutional	55,268	65,453	(10,185)	(16)
Banking	19,551	23,404	(3,853)	(16)
Other	(5,222)	(3,272)	(1,950)	(60)
Total	$          137,481	$          149,454	$     (11,973)	(8)	%
Pre-tax income (loss):
Clearing	$              1,112	$                   80	$         1,032	>100	%
Retail	5,254	847	4,407	>100
Institutional	12,154	19,264	(7,110)	(37)
Banking	6,519	4,253	2,266	53
Other	(23,615)	(17,866)	(5,749)	(32)
Total	$              1,424	$              6,578	$       (5,154)	(78)	%

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Clearing. 

Three-Months Ended:

The following is a summary of the results for the clearing segment for the three-months ended December 31, 2013 as compared to the three-months ended December 31, 2012 (dollars in thousands):

	Three-Months Ended
	December 31,	December 31,
	2013	2012	% Change
Net revenue from clearing	$                2,213	$              2,177	2	%
Net interest	1,549	1,488	4
Other	1,539	1,056	46
Net revenues	5,301	4,721	12
Operating expenses	3,962	4,836	(18)
Pre-tax income (loss)	$                1,339	$                (115)	>100	%
Daily average customer margin
balance	$            108,000	$           101,000	7	%
Daily average customer funds
on deposit	$            178,000	$           178,000	-	%

Total correspondent clearing customer assets under custody were $16.2 billion and $14.9 billion at December 31, 2013 and 2012, respectively.

The following table reflects the number of client transactions processed for the three-months ended December 31, 2013 and 2012 and the number of correspondents at the end of each period.

	Three-Months Ended
	December 31, 2013	December 31, 2012
Tickets for high-volume trading firms	11,000	101,423
Tickets for general securities broker/dealers	170,319	156,749
Total tickets	181,319	258,172
Correspondents	146	146

For the three-months ended December 31, 2013, net revenues in the clearing segment increased 12%  and clearing fee revenues increased 2%. Other revenues and net interest revenue increased 46% and 4%, respectively, compared to the three-months ended  December 31, 2012. 

The 2% increase in clearing fee revenue was primarily due to a 9% increase in the number of general securities tickets processed and an increase in the overall revenue per ticket.  Revenue per ticket increased approximately 45% from $8.43 for the three-months ended December 31, 2012 to $12.21 for the three-months ended December 31, 2013.  The change in the mix of tickets processed led to an increase in revenue per ticket as fees charged to high-volume trading firms are discounted substantially from the fees charged to general securities broker/dealers.  Management believes that the increase in clearing volume for general security broker/dealers corresponds with improved conditions in the equity markets.  For the three-months ended December 31, 2013 compared to the three-months ended December 31, 2012, tickets processed for high-volume trading firms decreased 89%.  One-half of this decline was due to the loss of one correspondent through a broker/dealer withdrawal.

The increase in other revenues was primarily due to a $0.5 million increase in third party servicing fee income. 

Operating expenses decreased 18% for the three-months ended December 31, 2013 as compared to the same period last fiscal year primarily due to a 19%  decrease in operations and information technology expenses and reduced overall compensation expenses.

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Six-Months Ended:

The following is a summary of the results for the clearing segment for the six-months ended December 31, 2013 as compared to the six-months ended December 31, 2012 (dollars in thousands):

	Six-Months Ended
	December 31,	December 31,
	2013	2012	% Change
Net revenue from clearing	$                4,505	$              4,316	4	%
Net interest	2,968	3,183	(7)
Other	2,502	2,180	15
Net revenues	9,975	9,679	3
Operating expenses	8,863	9,599	(8)
Pre-tax income	$                1,112	$                   80	>100	%
Daily average customer margin
balance	$            104,000	$           103,000	1	%
Daily average customer funds
on deposit	$            354,000	$           350,000	1	%

The following table reflects the number of client transactions processed for the six-months ended December 31, 2013 and 2012.

	Six-Months Ended
	December 31, 2013	December 31, 2012
Tickets for high-volume trading firms	21,559	194,311
Tickets for general securities broker/dealers	341,245	314,258
Total tickets	362,804	508,569

For the six-months ended December 31, 2013, net revenues in the clearing segment increased 3% while clearing fee revenues increased  4%. Other revenues increased 15% andnet interest revenue decreased 7% compared to the six-months ended December 31, 2012. 

The 4% increase in clearing fee revenue was primarily due to a 9% increase in the number of general securities tickets processed and an increase in the revenue per ticket.  Revenue per ticket increased approximately 46% from $8.49 for the six-months ended December 31, 2012 to $12.42 for thesix-months ended December 31, 2013.  The change in the mix of tickets processed led to an increase in revenue per ticket as fees charged to high-volume trading firms are discounted substantially from the fees charged to general securities broker/dealers.  Management believes that the increase in clearing volume for general security broker/dealers corresponds with improved conditions in the equity markets.  For the six-months ended December 31, 2013 compared to the six-months ended December 31, 2012, tickets processed for high-volume trading firms decreased 89%.  One-half of this decline was due to the loss of one correspondent through a broker/dealer withdrawal.

The increase in other revenue was primarily driven by a $0.5 million increase in third party servicing fee income.

Operating expenses decreased 8% for the six-months ended December 31, 2013 as compared to the same period last fiscal year primarily due to a 6%  decrease in other expenses.  The decrease in other expenses was mainly attributed to a 3% decrease in operations and information technology expenses and reduced overall compensation expenses.

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Retail. 

Three-Months Ended:

The following is a summary of the results for the retail segment for the three-months ended December 31, 2013 as compared to the three-months ended December 31, 2012 (dollars in thousands):

	Three-Months Ended
	December 31,	December 31,
	2013	2012	% Change
Net revenues:
Private Client Group (PCG)
Commissions	$              12,495	$              12,008	4	%
Advisory fees	2,909	2,247	29
Insurance products	1,155	806	43
Other	301	73	>100
Net interest revenue	626	541	16
	17,486	15,675	12
Independent registered
representatives (SWS Financial)
Commissions	5,703	5,549	3
Advisory fees	1,008	912	11
Insurance products	2,029	2,551	(20)
Other	440	248	77
Net interest revenue	286	299	(4)
	9,466	9,559	(1)
Other
Commissions	131	107	22
Advisory fees	527	381	38
Insurance products	347	378	(8)
Other	114	24	>100
	1,119	890	26
Total	28,071	26,124	7
Operating expenses	25,068	25,596	(2)
Pre-tax income	$                3,003	$                   528	>100	%
Daily average customer margin balances	$            129,000	$            134,000	(4)	%
Daily average customer funds on deposit	$            126,000	$            114,000	11	%
PCG representatives	160	165	(3)	%
SWS Financial representatives	280	308	(9)	%

Net revenues in the retail segment increased 7% for the three-months ended December 31, 2013 as compared to the same period in the last fiscal year.  Improvement in PCG accounted for most of the additional revenues reflecting the underlying improvement in retail client activity and success in retaining key producers.  Advisory fees were up in all areas of the retail business due to a 27% increase in assets under managementresulting in a $0.9 million increase in advisory fees, which included a $0.7 million increase in our PCG division.  In addition, commissions revenue increased 4% in our PCG group and 3% for SWS Financial.    Other revenues also increased $0.5 million for the three-months ended December 31, 2013 as compared to the same period in the last fiscal year primarily due to a $0.4 million increase in third party servicing fee income.

Total customer assets were $14.8 billion at December 31, 2013 and $13.6 billion at December 31, 2012.  Assets under management were $1.1 billion at December 31, 2013 versus $865.0 million at December 31, 2012.

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Operating expenses decreased 2% for the three-months ended December 31, 2013 as compared to the same period last fiscal year primarily due to a $0.3 million decrease in legal expenses.

Six-Months Ended:

The following is a summary of the results for the retail segment for the six-months ended December 31, 2013 as compared to the six-months ended December 31, 2012 (dollars in thousands):

	Six-Months Ended
	December 31,	December 31,
	2013	2012	% Change
Net revenues:
PCG
Commissions	$              26,207	$              24,503	7	%
Advisory fees	5,760	4,288	34
Insurance products	2,595	1,792	45
Other	380	179	>100
Net interest revenue	1,403	1,111	26
	36,345	31,873	14
SWS Financial
Commissions	11,932	12,219	(2)
Advisory fees	1,957	1,820	8
Insurance products	4,227	5,367	(21)
Other	687	507	36
Net interest revenue	564	598	(6)
	19,367	20,511	(6)
Other
Commissions	251	217	16
Advisory fees	1,032	768	34
Insurance products	769	746	3
Other	145	75	93
	2,197	1,806	22
Total	57,909	54,190	7
Operating expenses	52,655	53,343	(1)
Pre-tax income	$                5,254	$                   847	>100	%
Daily average customer margin balances	$            136,000	$            130,000	5	%
Daily average customer funds on deposit	$            259,000	$            224,000	16	%

Net revenues in the retail segment increased 7% for the six-months ended December 31, 2013 as compared to the same period in the last fiscal year.  Improvement in PCG accounted for most of the additional revenues reflecting underlying improvement in retail client activity and success in retaining key producers.  Advisory fees were up in all areas of the retail business due to a 27% increase in assets under management.  In addition, commissions revenue increased 7% in our PCG group but decreased 2% for SWS Financial.  Overall, there was a $1.9 million increase in advisory fees due primarily to the 34% increase in PCG advisory fee revenues and a 15% increase in advisory fees for the other retail entities.  Other revenues also increased $0.5 million for the six-months ended December 31, 2013 as compared to the same period in the last fiscal year primarily due to a $0.4 million increase in third party servicing fee income.

Operating expenses decreased 1% for the six-months ended December 31, 2013 as compared to the same period last fiscal year.  This decrease was primarily due to a $1.0 million decrease in legal expenses offset by a $0.6 million increase in commissions and

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other employee compensation on higher revenues.  While overall compensation expense was up 2%, the relative mix of revenues between PCG and SWS Financial resulted in a lower blended compensation ratio, improving segment profitability.

Institutional. 

Three-Months Ended:

The following is a summary of the results for the institutional segment for the three-months ended December 31, 2013 as compared to the three-months ended December 31, 2012 (dollars in thousands):

	Three-Months Ended
	December 31,	December 31,
	2013	2012	% Change
Net revenues:
Commissions
Taxable fixed income	$              6,811	$              7,254	(6)	%
Municipal finance	2,441	2,519	(3)
Portfolio trading	2,174	3,890	(44)
	11,426	13,663	(16)
Investment banking fees
Taxable fixed income	756	2,294	(67)
Municipal finance	4,928	4,376	13
Corporate finance	-	1,230	(100)
	5,684	7,900	(28)
Net gains on principal
transactions
Taxable fixed income	3,172	5,071	(37)
Municipal finance	4,158	2,568	62
Other	(8)	(5)	60
	7,322	7,634	(4)
Other	258	171	51
Net interest revenue
Stock loan	2,211	1,977	12
Other	364	1,213	(70)
Total	27,265	32,558	(16)
Operating expenses	21,316	23,219	(8)
Pre-tax income	$              5,949	$              9,339	(36)	%
Taxable fixed income
representatives	30	35	(14)	%
Municipal distribution
representatives	23	25	(8)	%

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Average balances of interest-earning assets and interest-bearing liabilities for the institutional segment for the three-months ended December 31, 2013 as compared to the three-months ended December 31, 2012 were as follows (in thousands):

	Three-Months Ended
	December 31,	December 31,
	2013	2012
Daily average interest-earning assets:
Stock borrowed	$         1,949,000	$        1,300,000
Daily average interest-bearing liabilities:
Stock loaned	$         1,865,000	$        1,248,000

The following table sets forth the number and aggregate dollar amount of new municipal bond underwritings conducted by Southwest Securities for the three-months ended December 31, 2013 and 2012:

	Three-Months Ended
	December 31,	December 31,
	2013	2012
Number of Issues	116	167
Aggregate Amount of Offerings	$       6,060,216,000	$       10,018,732,000

Net revenues from the institutional segment decreased 16% while pre-tax income was down 36% for the three-months ended December 31, 2013 as compared to the three-months ended December 31, 2012.  Commissions revenues decreased $2.2 million, primarily driven by a $1.7 million decrease in portfolio trading volumes during the three-months ended December 31, 2013 as compared to the same period in the prior fiscal year.  Investment banking, advisory and administrative fees decreased $2.2 million primarily due to a $1.5 million decrease in underwriting fees earned by our taxable fixed income group and a $1.2 million reduction in corporate finance fees as we exited the business during the fourth quarter of fiscal year 2013.  These reductions were offset by a $0.6 million increase in fees earned by our municipal finance department, primarily our public finance group, due to a more favorable mix in public finance deal flow.  Net interest revenue decreased $0.6 million primarily due to a $1.0 million decrease in interest earned on our taxable and non-taxable securities offset by a $0.2 million increase in our interest expense on short-term borrowings.  Additionally, we experienced a $0.2 million increase in net interest income from our stock lending business.  The increase in net interest income from our stock lending business was due primarily to the 50% increase in our average quarterly stock borrow balance, offset by an 11 basis point decrease in the average net interest spread in our stock loan business. 

Operating expenses decreased 8%  in the second quarter of fiscal 2014 as compared to second quarter of fiscal 2013, primarily due to a $2.4 million decrease in compensation expenses due to weaker segment revenues.

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Six-Months Ended:

The following is a summary of the results for the institutional segment for the six-months ended December 31, 2013 as compared to the six-months ended December 31, 2012 (in thousands):

	Six-Months Ended
	December 31,	December 31,
	2013	2012	% Change
Net revenues:
Commissions
Taxable fixed income	$             12,903	$            13,243	(3)	%
Municipal finance	5,054	5,331	(5)
Portfolio trading	3,893	8,095	(52)
	21,850	26,669	(18)
Investment banking fees
Taxable fixed income	1,869	4,808	(61)
Municipal finance	10,908	9,076	20
Corporate finance	-	1,354	(100)
	12,777	15,238	(16)
Net gains on principal
transactions
Taxable fixed income	5,609	9,463	(41)
Municipal finance	9,915	7,402	34
Other	(10)	(19)	(47)
	15,514	16,846	(8)
Other	481	327	47
Net interest revenue
Stock loan	3,988	4,463	(11)
Other	658	1,910	(66)
Total	55,268	65,453	(16)
Operating expenses	43,114	46,189	(7)
Pre-tax income	$             12,154	$            19,264	(37)	%

Average balances of interest-earning assets and interest-bearing liabilities for the institutional segment for the six-months ended December 31, 2013 as compared to the six-months ended December 31, 2012 were as follows (in thousands):

	Six-Months Ended
	December 31,	December 31,
	2013	2012
Daily average interest-earning assets:
Stock borrowed	$         1,872,000	$        1,387,000
Daily average interest-bearing liabilities:
Stock loaned	$         1,774,000	$        1,345,000

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The following table sets forth the number and aggregate dollar amount of new municipal bond underwritings conducted by Southwest Securities for the six-months ended December 31, 2013 and 2012:

	Six-Months Ended
	December 31,	December 31,
	2013	2012
Number of Issues	298	322
Aggregate Amount of Offerings	$     23,065,290,000	$       26,642,673,000

Net revenues from the institutional segment decreased 16% while pre-tax income was down 37% for the six-months ended December 31, 2013 as compared to the six-months ended December 31, 2012.  Commissions revenue decreased $4.8 million primarily driven by a $4.2 million decrease in the portfolio trading business on lower trading volumes when compared to the same period in the prior fiscal year.  Investment banking, advisory and administrative fees decreased $2.5 million primarily due to a $2.9 million reduction in underwriting fees earned by our taxable fixed income group.  In addition, corporate finance fees were down $1.4 million as we exited the business in the fourth quarter of fiscal 2013.  These reductions were partially offset by a $1.8 million increase in municipal finance fees during the period primarily in our public finance group due to a more favorable mix in public finance deal flow.  Net interest revenue decreased $1.7 million primarily due to a $1.5 million decrease in interest earned on our taxable and non-taxable securities offset by a $0.4 million increase in our interest expense on short-term borrowings.  In addition, net interest income from our stock lending business was also down due to a 19 basis point decrease in the average net interest spread, which was partially offset by a 35% increase in our average stock lending balances.  Net gains on principal transactions decreased $1.3 million primarily due to a $3.9 million decrease in our taxable fixed income gains partially offset by a $2.5 million increase in municipal finance trading gains.  The decrease in the taxable fixed income trading gains was primarily the result of an ongoing challenging market environment during the first half of fiscal 2014, as compared to the more robust market environment during the first half of fiscal 2013. 

Operating expenses decreased 7% during the first half of fiscal 2014, primarily due to a $4.3 million decrease in compensation expense due to weaker segment revenues, which was partially offset by a $0.6 million increase in operations and technology expense and a $0.5 million increase in quotation costs. 

Banking.  

Three-Months Ended:

The following is a summary of the results for the banking segment for the three-months ended December 31, 2013 as compared to the three-months ended December 31, 2012 (dollars in thousands):

	Three-Months Ended
	December 31,	December 31,
	2013	2012	% Change
Net revenues:
Net interest revenue	$              8,872	$               11,077	(20)	%
Other	1,592	694	>100
Total net revenues	10,464	11,771	(11)
Operating expenses	5,140	8,799	(42)
Pre-tax income	$              5,324	$                 2,972	79	%

For the three-months ended December 31, 2013 as compared to the three-months ended December 31, 2012, the Bank’s net revenues decreased 11% due primarily to a $2.2 million reduction in net interest revenues.  This reduction in net interest revenues was primarily due to a 32% decrease in average loan balances, as well as a 70 basis point decrease in the net yield on interest-earning assets.  Excess cash generated from loan repayments was reinvested in an investment portfolio with lower comparable yields, which was the main driver of the overall reduction in yield.  Other revenue increased $0.9 million due primarily to a $0.7 million decrease in net losses on the sale of REO, a $0.7 million increase in earnings from interest rate swap transactions and a $0.3 million increase in gains on SBA loan sales offset by a $0.7 million decrease in the gains recognized on the valuation of the Bank’s equity method investments.

The Bank’s operating expenses decreased $3.7 million, or 42%, for three-months ended December 31, 2013 compared to the three-months ended December 31, 2012 and was primarily attributable to the $0.8 million decrease in commissions and other employee compensation and a $1.4 million increase in the Bank’s loan loss recapture for the three-months ended December 31,  2013

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primarily due to the pay-off of an outstanding balance of a commercial loan for which the Bank had recorded a $2.1 million specific allowance reserve.Additionally, other operating expenses decreased $1.4 million for the three-months ended December 31, 2013 compared to the three-months ended December 31, 2012 due primarily to a $0.8 million decrease in REO related expenses, including a $0.4 million decrease in the REO loss provision,a $0.3 million decrease in regulatory fees and a $0.2 million decrease in outside services.    The decreases in REO expense and the REO loss provision was related to the continued improvement in classified assets.  As classified assets decrease, the expenses related to managing and disposing of these assets also decreases.  The decrease in Bank regulatory fees was related to the overall improvement at the Bank.

Net Interest Income

The following table sets forth an analysis of the Bank’s net interest income by each major category of interest-earning assets and interest-bearing liabilities for the three-months ended December 31, 2013 and 2012 (dollars in thousands):

	Three-Months Ended
	December 31, 2013				December 31, 2012
		Interest				Interest
	Average	Income/	Yield/		Average	Income/	Yield/
	Balance	Expense(*)	Rate		Balance	Expense(*)	Rate
Assets:
Interest-earning assets:
Loans:
Residential construction	$            755	$              2	1.1	%	$         2,804	$            29	4.1	%
Lot and land development	7,172	321	17.8		13,438	258	7.6
1-4 family	135,508	1,733	5.1		385,319	4,861	5.0
Commercial real estate and
multifamily	316,980	4,026	5.0		305,634	4,246	5.5
Commercial	68,120	657	3.8		65,250	881	5.4
Consumer	1,713	18	4.2		1,888	32	6.6
Total loans	530,248	6,757			774,333	10,307
Investments:
Money market	57,186	62	0.4		24,959	31	0.5
U.S. government and government
agency obligations – held to
maturity	15,159	91	2.4		22,825	134	2.3
U.S. government and government
agency obligations – available for
sale	541,252	2,492	1.8		346,404	1,354	1.6
Municipal obligations – available
for sale	42,312	159	1.5		-	-	-
Interest bearing deposits in banks	1,604	-	-		5,016	1	0.1
Federal reserve funds	62,762	47	0.3		84,951	53	0.3
Investments – other	4,705	4	0.3		3,405	3	0.4
Total interest-earning assets	$  1,255,228	$       9,612	3.0	%	$  1,261,893	$     11,883	3.7	%
Non interest-earning assets:
Cash and due from banks	3,034				3,458
Other assets	17,733				42,021
	$  1,275,995				$  1,307,372
Liabilities and Stockholder’s Equity:
Interest-bearing liabilities:
Certificates of deposit	$       28,414	$            63	0.9	%	$       33,935	$            86	1.0	%
Money market accounts	19,663	3	0.1		19,625	2	0.1
Interest-bearing demand accounts	8,996	2	0.1		9,326	1	0.1
Savings accounts	883,806	23	-		948,355	34	-
Federal Home Loan Bank advances	98,837	649	2.6		63,892	683	4.2
	$  1,039,716	$          740	0.3	%	$  1,075,133	$          806	0.3	%

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	Three-Months Ended
	December 31, 2013				December 31, 2012
		Interest				Interest
	Average	Income/	Yield/		Average	Income/	Yield/
	Balance	Expense(*)	Rate		Balance	Expense(*)	Rate
Non interest-bearing liabilities:
Non interest-bearing demand
accounts	$       55,468				$       56,311
Other liabilities	11,921				5,279
	1,107,105				1,136,723
Stockholder’s equity	168,890				170,649
	$  1,275,995				$  1,307,372
Net interest income		$        8,872				$      11,077
Net yield on interest-earning assets			2.8	%			3.5	%

__________

(*)  Loan fees included in interest income for the three-months ended December 31, 2013 and 2012 were $354 and $654, respectively.

A number of factors, including interest rate trends, changes in the U.S. economy, competition and the scheduled maturities and interest rate sensitivity of the loan portfolios and deposits, affect the interest rate spreads earned by the Bank.

The following table sets forth a summary of the changes in the Bank’s interest income and interest expense resulting from changes in volume and rate (in thousands):

	Three-Months Ended
	December 31, 2013 as compared to December 31, 2012
	Total	Attributed to
	Change	Volume	Rate	Mix
Interest income:
Loans:
Residential construction	$              (27)	$              (21)	$              (22)	$                16
Lot and land development	63	(120)	343	(160)
1-4 family	(3,128)	(3,152)	67	(43)
Commercial real estate and
multifamily	(220)	158	(364)	(14)
Commercial	(224)	39	(252)	(11)
Consumer	(14)	(3)	(12)	1
Investments:
Money market	31	40	(4)	(5)
U.S. government and
government agency obligations  –
held to maturity	(43)	(45)	2	-
U.S. government and government
agency obligations – available
for sale	1,138	762	241	135
Municipal obligation – available
for sale	159	-	-	159
Interest bearing deposits in banks	(1)	(1)	(1)	1
Federal reserve funds	(6)	(14)	11	(3)
Investments – other	1	1	-	-
	$          (2,271)	$          (2,356)	$                  9	$                76

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	Three-Months Ended
	December 31, 2013 as compared to December 31, 2012
	Total	Attributed to
	Change	Volume	Rate	Mix
Interest expense:
Certificates of deposit	$              (23)	$              (14)	$              (11)	$                  2
Money market accounts	1	-	1	-
Interest bearing deposits in banks	1	-	1	-
Savings accounts	(11)	(2)	(9)	-
Federal Home Loan Bank
advances	(34)	373	(263)	(144)
	(66)	357	(281)	(142)
Net interest income	$          (2,205)	$          (2,713)	$              290	$              218

Six-Months Ended:

The following is a summary of the results for the banking segment for the six-months ended December 31, 2013 as compared to the six-months ended December 31, 2012 (dollars in thousands):

	Six-Months Ended
	December 31,	December 31,
	2013	2012	% Change
Net revenues:
Net interest revenue	$            17,678	$               22,644	(22)	%
Other	1,873	760	>100
Total net revenues	19,551	23,404	(16)
Operating expenses	13,032	19,151	(32)
Pre-tax income	$              6,519	$                 4,253	53	%

For the six-months ended December 31, 2013 as compared to the six-months ended December 31, 2012, the Bank’s net revenues decreased $3.9 million due primarily to a $5.0 million reduction in net interest revenues offset by a $1.1 million increase in other revenues.  The reduction in net interest revenues was primarily due to the 32% decrease in average loan balances, as well as a 60 basis point decrease in the net yield on interest earning assets.  Excess cash generated from loan repayments was reinvested in an investment portfolio with lower comparable yields, which was the main driver of the overall reduction in yield.  The increase in other revenue was due to a $1.0 million decrease in net losses on the sale of REO, a $0.7 million increase in earnings from interest rate swap transactions and a $0.2 million increase in gains on SBA loan sales offset by a $0.8 million decrease in the gains recognized on the valuation of the Bank’s equity method investments. 

The Bank’s operating expenses decreased $6.1 million for the six-months ended December 31, 2013 compared to the six-months ended December 31, 2012.  The expense reduction was primarily attributable to a $1.4 million decrease in commissions and other employee compensation and a $1.8 million increase in the Bank’s loan loss recapture for the six-months ended December 31, 2013.  Additionally, other operating expenses decreased $2.7 million for the six-months ended December 31, 2013 compared to the six-months ended December 31, 2012.  The decrease was primarily due to a $1.5 million decrease in REO related expenses, including a $0.7 million decrease in the REO loss provision, a $0.6 million decrease in the Bank’s regulatory fees and a $0.4 million decrease in outside service fees. The decreases in REO expense and the REO loss provision was related to the continued improvement in classified assets.  As classified assets decrease, the expenses related to managing and disposing of these assets also decreases.  The decrease in Bank regulatory fees was related to the overall improvement at the Bank.

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Net Interest Income

The following table sets forth an analysis of the Bank’s net interest income by each major category of interest-earning assets and interest-bearing liabilities for the six-months ended December 31, 2013 and 2012 (dollars in thousands):

	Six-Months Ended
	December 31, 2013				December 31, 2012
		Interest				Interest
	Average	Income/	Yield/		Average	Income/	Yield/
	Balance	Expense(*)	Rate		Balance	Expense(*)	Rate
Assets:
Interest-earning assets:
Loans:
Residential construction	$            999	$             13	2.6	%	$         3,088	$             71	4.6	%
Lot and land development	7,804	454	11.5		15,168	465	6.1
1-4 family	154,899	3,931	5.0		384,340	9,712	5.0
Commercial real estate and
multifamily	313,388	8,016	5.1		318,921	8,901	5.5
Commercial	65,778	1,313	4.0		73,720	1,903	5.1
Consumer	1,793	41	4.5		1,944	62	6.3
Total loans	544,661	13,768			797,181	21,114
Investments:
Money market	41,662	95	0.5		24,346	62	0.5
U.S. government and government
agency obligations – held to
maturity	15,872	191	2.4		23,875	288	2.4
U.S. government and government
agency obligations – available for
sale	527,067	4,737	1.8		343,721	2,773	1.6
Municipal obligations – available
for sale	35,856	269	1.5		-	-	-
Interest bearing deposits in banks	1,623	-	-		3,631	-	-
Federal reserve funds	79,023	112	0.3		76,908	103	0.3
Investments – other	4,684	8	0.3		3,473	7	0.4
Total interest-earning assets	$  1,250,448	$      19,180	3.1	%	$  1,273,135	$      24,347	3.8	%
Non interest-earning assets:
Cash and due from banks	3,124				3,668
Other assets	19,338				41,938
	$  1,272,910				$  1,318,741
Liabilities and Stockholder’s Equity:
Interest-bearing liabilities:
Certificates of deposit	$       29,234	$           131	0.9	%	$       34,842	$           179	1.0	%
Money market accounts	18,641	5	0.1		22,239	6	0.1
Interest-bearing demand accounts	8,560	3	0.1		9,165	3	0.1
Savings accounts	884,601	46	-		954,111	82	-
Federal Home Loan Bank advances	98,790	1,317	2.6		65,796	1,433	4.3
Other financed borrowings	5	-	-		-	-	-
	$  1,039,831	$        1,502	0.3	%	$  1,086,153	$        1,703	0.3	%

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	Six-Months Ended
	December 31, 2013				December 31, 2012
		Interest				Interest
	Average	Income/	Yield/		Average	Income/	Yield/
	Balance	Expense(*)	Rate		Balance	Expense(*)	Rate
Non interest-bearing liabilities:
Non interest-bearing demand
accounts	$       53,822				$       55,743
Other liabilities	11,426				6,459
	1,105,079				1,148,355
Stockholder’s equity	167,831				170,386
	$  1,272,910				$  1,318,741
Net interest income		$       17,678				$       22,644
Net yield on interest-earning assets			2.9	%			3.5	%

__________

(*)  Loan fees included in interest income for the six-months ended December 31, 2013 and 2012 were $785 and $1,326, respectively.

The following table sets forth a summary of the changes in the Bank’s interest income and interest expense resulting from changes in volume and rate (in thousands):

	Six-Months Ended
	December 31, 2013 as compared to December 31, 2012
	Total	Attributed to
	Change	Volume	Rate	Mix
Interest income:
Loans:
Residential construction	$              (58)	$              (48)	$              (31)	$                21
Lot and land development	(11)	(226)	417	(202)
1-4 family	(5,781)	(5,798)	42	(25)
Commercial real estate and
multifamily	(885)	(154)	(744)	13
Commercial	(590)	(205)	(431)	46
Consumer	(21)	(5)	(17)	1
Investments:
Money market	33	44	(6)	(5)
U.S. government and
government agency obligations  –
held to maturity	(97)	(96)	(1)	-
U.S. government and government
agency obligations – available
for sale	1,964	1,479	316	169
Municipal obligation – available
for sale	269	-	-	269
Federal reserve funds	9	3	6	-
Investments – other	1	2	(1)	-
	$          (5,167)	$          (5,004)	$            (450)	$              287

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	Six-Months Ended
	December 31, 2013 as compared to December 31, 2012
	Total	Attributed to
	Change	Volume	Rate	Mix
Interest expense:
Certificates of deposit	$              (48)	$              (29)	$              (23)	$                  4
Money market accounts	(1)	(1)	-	-
Savings accounts	(36)	(6)	(32)	2
Federal Home Loan Bank
advances	(116)	719	(556)	(279)
	(201)	683	(611)	(273)
Net interest income	$          (4,966)	$          (5,687)	$              161	$              560

Other.

Three-Months Ended:

The following discusses the financial results for SWS Group, corporate administration and SWS Capital Corporation.

Pre-tax loss from the other segment was $14.3 million for three-months ended December 31, 2013 compared to pre-tax income of $2.9 million for the three-months ended December 31, 2012.  The primary driver of the $17.2 million increase in the pre-tax loss was related to the change in warrant valuation resulting in a $13.8 million increase in expense in the second quarter of fiscal 2014 compared to the second quarter of fiscal 2013.  We recorded a $2.0 million unrealized loss on the valuation of the warrants held by Hilltop and Oak  Hill for the three-months ended December 31, 2013 compared to an  $11.8 million unrealized gain on the valuation for the warrants held by Hilltop and Oak Hill for the three-months ended December 31, 2012.

Net revenues decreased $2.8 million for three-months ended December 31, 2013 compared to the three-months ended December 31, 2012.  The decrease was primarily due to a $3.4 million reduction in net gains on principal transactions as the second quarter of fiscal 2013 included a $3.6 million gain recognized from the sale of our shares of USHS common stock.  This decrease was partially offset by a $0.9 million increase in the value of our deferred compensation plan’s investments. 

Overall operating expenses increased $0.6 million for the three-months ended December 31, 2013 as compared to the three-months ended December 31, 2012 primarily due to a $1.0 million increase in expenses related to the increase in the value of our deferred compensation plan investments which were partially offset by a $0.5 million decrease in professional services fees.

Six-Months Ended:

Pre-tax loss from the other segment was $23.6 million for the six-months ended December 31, 2013 compared to a pre-tax loss of $17.9 million for the six-months ended December 31, 2012.  The primary driver of the $5.7 million increase in the pre-tax loss was related to the change in warrant valuation resulting in a $3.7 million increase in expense in the first half of fiscal 2014 compared to the first half of fiscal 2013.  We recorded a $91,000 unrealized loss on the valuation of the warrants held by Hilltop and Oak  Hill for the six-months ended December 31, 2013 compared to a $3.6 million unrealized gain on the valuation for the warrants held by Hilltop and Oak  Hill for the six-months ended December 31, 2012. 

Net revenues decreased $2.0 million for the six-months ended December 31, 2013 compared to the six-months ended December 31, 2012.The decrease was primarily due to a $2.8 million increase in net gains on principal transactions as the first half of fiscal 2013 included a $3.6 million gain recognized from the sale of our shares of USHS common stock offset by a $0.7 million loss related to our auction rate security owned.  Net interest expense increased $0.5 million primarily due to a $0.3 million increase in the long-term debt discount’s accretion expense.  The value of our deferred compensation plan’s investments increased by $1.2 million during the first half of fiscal 2014 compared to the last year offsetting a portion of the decrease.

Overall operating expenses increased $0.1 million for the six-months ended December 31, 2013 compared to the six-months ended December 31, 2012 primarily due to a $1.3 million increase in expenses related to the increase in the value of our deferred compensation plan investments offset by a $1.3 million decrease in executive and administrative compensation expense savings.

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FINANCIAL CONDITION

Investments

In fiscal 2013, the Bank implemented an investment strategy to diversify its balance sheet, absorb excess liquidity, and maximize interest income through investment in a conservative securities portfolio.  The securities portfolio is structured to provide cash flows to ensure that adequate funds are available for new loan originations.

The book value of the Bank’s investment portfolio at December 31, 2013 and June 30, 2013 was as follows (in thousands):

	December 31, 2013	June 30, 2013
Government-sponsored enterprises—
held to maturity securities	$                14,595	$                17,423
Government-sponsored enterprises—
FHLB stock	4,709	4,657
Government-sponsored enterprises—
available for sale securities	536,243	474,906
Municipal obligations—
available for sale securities	43,911	28,224
Equity method investments	4,190	3,844
	$               603,648	$               529,054

Loans and Allowance for Probable Loan Losses

The Bank grants loans to customers primarily within Texas and New Mexico.  In the ordinary course of business, the Bank also purchases mortgage loans that have been originated in various areas of the United States.  Although the Bank has a diversified loan portfolio, a substantial portion of its portfolio is dependent upon the general economic conditions in Texas and New Mexico.  Substantially all of the Bank’s loans are collateralized with real estate.

The allowance for loan losses is maintained to absorb management’s estimate of probable loan losses inherent in the loan portfolio at each reporting date.  The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management determines the collection of principal is remote.  Subsequent recoveries are recorded through the allowance.  The determination of an adequate allowance is inherently subjective, as it requires estimates that are susceptible to significant revision as additional information becomes available or circumstances change. 

The allowance for loan losses consists of a specific and a general allowance component. 

The specific component provides for estimated probable losses for loans identified as impaired.  A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts of principal and interest when due according to the contractual terms of the loan agreement.  Management considers the borrower’s financial condition, payment status, historical payment record and any adverse situations affecting the borrower’s ability to repay when evaluating whether a loan is deemed impaired.  Loans that experience insignificant payment delays and shortfalls generally are not classified as impaired. Management determines the significance of payment delays and shortfalls on a case-by-case basis taking into consideration all circumstances surrounding the loan and the borrower, including the length of delay, the reasons for the delay, the borrower’s prior payment record and the amount of shortfall in relation to the principal and interest outstanding. 

A specific reserve is recorded when and to the extent (i) the present value of expected future cash flows discounted at the loan’s original effective rate, (ii) the fair value of collateral if the loan is collateral-dependent or (iii) the observable market price of the impaired loan is lower than its recorded investment.  If the fair value of collateral is used to measure impairment of a collateral-dependent loan and repayment is dependent on the sale of the collateral, the fair value is adjusted to incorporate estimated costs to sell.  Impaired loans that are collateral-dependent are primarily measured for impairment using the fair value of the collateral as determined by third party appraisals using the income approach, recent comparable sales data or a combination thereof.  In certain instances it is necessary for management to adjust the appraised value, less estimated costs to sell, to reflect changes in fair value occurring subsequent to the appraisal date.  Management considers a guarantor’s capacity and willingness to perform, when appropriate, and the borrower’s resources available for repayment when measuring impairment. 

The general allowance provides for estimated and probable losses inherent in the remainder of the Bank’s loan portfolio.  The general allowance is determined through a statistical calculation based on the Bank's historical loss experience adjusted for certain qualitative factors as deemed appropriate by management.  The statistical calculation is conducted on a disaggregated basis for groups of homogeneous loans with similar risk characteristics (product types).  The historical loss element is calculated

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as the average ratio of charge-offs, net of recoveries, to the average recorded investment for the current and previous seven quarters.  During the second quarter of fiscal 2014, management changed from using the current and the previous five quarters in the calculation to the current and the previous seven quarters for a more conservative approach and to be more indicative of the current economic outlook.  Management adjusts the historical loss rates to reflect changes in the real estate market, current market environment for commercial loans, credit quality to reflect increased credit risk not captured in the historical loss, significant concentrations of product types and trends in portfolio volume to capture additional risk of loss associated with concentrations of criticized and classified loans in the total loan portfolio.  Prevailing economic conditions and specific industry trends are taken into consideration when establishing the adjustments to historical loss rates.

Certain types of loans, such as option adjustable rate mortgage (“ARM”) products, junior lien mortgages, high loan-to-value ratio mortgages, single family interest only loans, sub-prime loans, and loans with initial "teaser" rates, can have a greater risk of non-collection than other loans.  At December 31, 2013, the Bank had $7.5 million in junior lien mortgages. These loans represented less than 2% of the Bank’s total loans at December 31, 2013.  At December 31, 2013, the Bank did not have any exposure to sub-prime loans or loans with initial teaser rates and had no single family interest only loans.

At December 31, 2013, the Bank’s loan portfolio included a total of $1.0 million in loans with high loan-to-value ratios.  High loan-to-value ratios are defined by regulation and range from 75%-90% depending on the type of loan.  At December 31, 2013, all of these loans were 1-4 single family or lot loans to home builders in North Texas.  We addressed the additional risk in these loans in our allowance calculation primarily through our review of the real estate market deterioration adjustment to the historical loss ratio. Additionally, at December 31, 2013, the Bank had no loans with a high loan-to-value ratio that were deemed impaired.  Regulatory guidelines suggest that high loan-to-value ratio loans should not exceed 100% of total capital.  At December 31, 2013, the Bank’s high loan-to-value ratio loans represented less than 1% of total capital.

We obtain appraisals on real estate loans at the time of origination from third party appraisers approved by the Bank’s BOD. We may also obtain additional appraisals when the borrower’s performance indicates it may default.  After a loan default and foreclosure, we obtain new appraisals to determine the fair value of the foreclosed asset. We obtain updated appraisals on foreclosed properties on an annual basis, or more frequently if required by market conditions, until we sell the property. 

Management reviews the loan loss computation methodology on a quarterly basis to determine if the factors used in the calculation are appropriate. In the past four years, because our problem loans and losses were concentrated in real estate related loans, we paid particular attention to real estate market deterioration and the concentration of capital in our real estate related loans. Improvement or additional deterioration in the residential and commercial real estate markets may have an impact on these factors in future quarters. To the extent we underestimate the impact of these risks, our allowance for loan losses could be materially understated.

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Loans receivable, including loans measured at fair value, at December 31, 2013 and June 30, 2013 are summarized as follows (in thousands):

	December 31, 2013	June 30, 2013
Residential
Purchased mortgage loans
held for investment	$                 89,583	$              174,037
1-4 family	55,155	59,910
	144,738	233,947
Lot and land development
Residential land	599	3,102
Commercial land	5,399	5,886
	5,998	8,988
Residential construction	731	1,367
Commercial construction	3,549	1,668
Commercial real estate	187,020	214,446
Multifamily	123,203	99,833
Commercial loans	69,690	58,718
Consumer loans	2,736	1,959
	537,665	620,926
Allowance for probable loan loss (*)	(9,448)	(12,343)
	$               528,217	$              608,583

__________

(*)  There is no allowance for probable loan loss for loans measured at fair value or purchased mortgage loans held for investment.  Purchase mortgage loans held for investment are held on average for 25 days or less, substantially reducing credit risk.

The decrease in purchased mortgage loans held for investment from June 30, 2013 to December  31, 2013 was representative of an overall decline in the first half of fiscal 2014 in the mortgage industry’s production levels.  The nature of purchased mortgage loans held for investment business is volatile and subject to significant variation depending on interest rates, competition and general economic conditions.

The following table shows the scheduled maturities of certain loan categories at December  31, 2013, and segregates those loans with fixed interest rates from those with floating or adjustable rates (in thousands):

	1 year	1-5	Over 5
	or less	years	years	Total
Commercial construction, commercial
real estate and multifamily	$     46,417	$   134,262	$   133,093	$   313,772
Commercial loans	34,403	23,379	11,908	69,690
Residential construction loans	51	680	-	731
Total	$     80,871	$   158,321	$   145,001	$   384,193
Amount of loans based upon:
Floating or adjustable interest rates	$     72,030	$     86,120	$     72,128	$   230,278
Fixed interest rates	8,841	72,201	72,873	153,915
Total	$     80,871	$   158,321	$   145,001	$   384,193

We maintain an internally classified loan list that helps us assess the overall quality of the loan portfolio and the adequacy of the allowance for loan losses.  Loans on this list are classified as substandard, doubtful or loss based on probability of repayment, collateral valuation and related collectibility.  This list is used to identify loans that are considered non-performing.

We classify loans as non-performing when they are 90 days or more past due as to principal or interest or when reasonable doubt exists as to timely collectability.  The Bank uses a standardized review process to determine which non-performing loans should be placed on non-accrual status.  At the time a loan is placed on non-accrual status, we reverse previously accrued and uncollected interest against interest income.  We recognize interest income on non-accrual loans to the extent we receive cash payments for the loans with respect to which ultimate full collection is likely.  For loans where full collection is not likely, we apply interest payments to the outstanding principal and we recognize income only if full payment is made.   

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Non-performing assets and classified loans as of December 31, 2013 and June 30, 2013 were as follows (dollars in thousands):

	December 31, 2013	June 30, 2013
Loans accounted for on a non-
accrual basis
1-4 family	$                6,485	$               7,792
Lot and land development	992	2,418
Residential construction	573	601
Commercial real estate	4,076	7,611
Commercial loans	3,891	4,024
	16,017	22,446
Non-performing loans as a
percentage of total loans	3.0%	3.6%
REO
1-4 family	1,669	1,801
Lot and land development	1,967	4,008
Commercial real estate	3,226	4,065
Commercial loans	493	291
	7,355	10,165
Performing troubled debt
restructuring (*)	3,544	5,349
Non-performing assets	$              26,916	$             37,960
Non-performing assets as a
percentage of total assets	2.1%	3.0%
Current classified assets
1-4 family	$                     99	$                  223
Lot and land development	317	965
Multifamily	-	692
Commercial real estate	19,536	22,616
Commercial loans	1,147	5,114
	21,099	29,610
Total classified assets
1-4 family	8,405	10,080
Lot and land development	3,276	7,391
Multifamily	-	692
Residential construction	573	601
Commercial real estate	29,915	38,801
Commercial loans	5,846	10,005
	$              48,015	$             67,570

__________

(*) The remaining balance of loans modified as a troubled debt restructuring is included in non-performing loans.  See discussion of the Bank’s troubled debt restructuring loans in “Loans and Allowance for Probable Loan Loss” in the Notes to the Consolidated Financial Statements contained in this report.

Approximately $226,000, $305,000, $445,000,and $703,000 of gross interest income would have been recorded in the three and six-months ended December 31, 2013 and 2012, respectively, had the non-accrual loans been recorded in accordance with their original terms.  There was $1,000 and $8,000 of interest income recorded on the non-accrual loans, prior to being placed on non-accrual status, in the three and six-months ended December 31, 2013 and no interest income for the three-months ended December 31, 2012, and approximately $15,000 in the six-months ended December 31, 2012. 

The Bank has managed the growth in REO and non-performing assets and reduced these loans and properties by preparing an asset-by-asset plan for each asset category.  Management’s focus on the continued reduction of these asset classes may have a material impact on the Bank’s future results of operations.

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Total classified assets to Bank capital plus allowance for loan loss was 27.2% at December  31, 2013.  Classified assets decreased $19.6 million from June 30, 2013 and substantially all classified loans by collateral location are in Texas.  Bank management continues to be focused on reducing the classified asset ratio through the disposal of these assets.  Depending on the method used, the Bank may be required to record additional write-downs of these assets.  While management is diligently working to dispose of these assets quickly, lack of demand for certain property types, length of sales cycle and manpower limitations will impact the time required to ultimately reduce the classified assets to a more acceptable level.

The following table presents an analysis of REO for the three and six-months ended December 31, 2013 and 2012 (in thousands):

	Three-Months Ended		Six-Months Ended
	December 31,	December 31,	December 31,	December 31,
	2013	2012	2013	2012
Balance at beginning of period	$               5,721	$             32,488	$             10,165	$              32,257
Foreclosures	2,270	8,405	2,674	10,891
Sales	(636)	(11,105)	(5,283)	(13,006)
Write-downs	-	(367)	(201)	(926)
Other	-	-	-	205
Balance at end of period	$               7,355	$             29,421	$               7,355	$              29,421

The following table presents the Bank’s classified assets as of December  31, 2013 by year of origination of the loan (in thousands):

			Performing
	Non-		Troubled	Current
Year	Performing		Debt	Classified
Originated	Loans	REO	Restructuring	Assets	Total
Fiscal 2008 or prior	$            5,371	$      4,548	$                    358	$         7,130	$           17,407
Fiscal 2009	1,303	1,518	-	7,948	10,769
Fiscal 2010	8,534	1,289	1,343	4,571	15,737
Fiscal 2011	411	-	35	1,255	1,701
Fiscal 2012	398	-	108	9	515
Fiscal 2013	-	-	1,700	138	1,838
Fiscal 2014	-	-	-	48	48
	$          16,017	$      7,355	$                 3,544	$       21,099	$           48,015

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The following table presents an analysis of the allowance for probable loan losses for the three and six-months ended December 31, 2013 and 2012 (dollars in thousands):

	Three-Months Ended		Six-Months Ended
	December 31,	December 31,	December 31,	December 31,
	2013	2012	2013	2012
Balance at beginning of period	$               12,206	$               20,892	$               12,343	$               22,402
Continuing operations:
Charge-offs:
Lot and land development	-	-	(4)	(182)
1-4 family	-	(12)	(97)	(163)
Commercial real estate	(35)	(410)	(51)	(1,113)
Commercial loans	(47)	(680)	(67)	(1,608)
Total charge-offs	(82)	(1,102)	(219)	(3,066)
Recoveries:
Residential construction	5	17	63	36
Lot and land development	3	54	10	187
1-4 family	9	13	61	69
Commercial real estate	116	20	439	83
Commercial loans	16	188	42	371
Consumer loans	-	5	-	5
Total recoveries	149	297	615	751
Net (charge-offs) recoveries	67	(805)	396	(2,315)
(Recapture) provision charged
to operations	(2,825)	(1,450)	(3,291)	(1,450)
	(2,758)	(2,255)	(2,895)	(3,765)
Balance at end of period	$                 9,448	$               18,637	$                 9,448	$               18,637
Ratio of net charge-offs during the period
to average loans outstanding during the
period	-0.01%	0.10%	-0.07%	0.29%

With the continued challenging economic environment and persistent high unemployment rates, the Bank frequently reviews and updates its processes and procedures for the extension of credit, allowance for loan loss computation and internal asset review and classification.  Recent changes include more stringent underwriting guidelines for loan-to-value ratios, guarantor’s financial condition, owner-occupied versus investor loans and speculative versus custom construction.  The Bank currently requires more extensive documentation and data than it did in prior years in order to reclassify existing non-performing loans as performing loans.  The Bank is also updating appraisals more frequently, including for performing loans, to serve as an early indicator of loan deterioration. 

As a result of the current economic environment, the Bank significantly limited the growth of its loan portfolio in fiscal 2011 and 2012 in order to allocate the time, resources and capital necessary to support the existing loan portfolio.  During fiscal 2013, the Bank reestablished marketing efforts to implement a conservative loan growth plan which we believe will enhance our core earnings in future years.  Through the second quarter of fiscal 2014, the Bank has continued these marketing efforts in order to grow the Bank’s loan portfolio.

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The allowance for probable loan losses by type of loans as of December 31, 2013 and June 30, 2013 was as follows (dollars in thousands):

	December 31, 2013					June 30, 2013
				Percent					Percent
		Percent		of the			Percent		of the
		of loans		allowance			of loans		allowance
		to total		for loan			to total		for loan
	Amount	loans		loss		Amount	loans		loss
Residential construction	$           6	0.1	%	0.1	%	$         49	0.2	%	0.4	%
Lot and land development	124	1.1		1.3		374	1.4		3.0
1-4 family	1,319	26.9		14.0		1,528	37.7		12.4
Commercial real estate	3,069	35.5		32.5		3,290	34.8		26.7
Multifamily	2,893	22.9		30.6		3,567	16.1		28.9
Commercial loans	2,018	13.0		21.3		3,530	9.5		28.6
Consumer loans	19	0.5		0.2		5	0.3		-
	$     9,448	100.0	%	100.0	%	$   12,343	100.0	%	100.0	%

At December 31, 2013, approximately 32.5% of the Bank’s loan loss allowance was allocated to its commercial real estate loan portfolio while the Bank’s commercial real estate loan portfolio represented approximately 35.5% of its total loan portfolio.  This was up from June 30, 2013 when approximately 26.7% of the Bank’s loan loss allowance was allocated to its commercial real estate loan portfolio.  Commercial real estate loans tend to be individually larger than residential loans and deterioration in this portfolio can lead to volatility in earnings.   At December 31, 2013, the loan loss allowance related to multifamily loans was 30.6% as compared to multifamily loans constituting 22.9% of the Bank’s total loan portfolio.  The larger allocation of the allowance to multifamily loans reflects the recent growth in this portfolio. 

Additionally, at December 31, 2013, approximately 21.3% of the Bank’s loan loss allowance was allocated to its commercial loans portfolio, while the Bank’s commercial loan portfolio represented approximately 13.0% of its total loan portfolio.  This decrease from June 30, 2013 was due primarily to the approximately $2.1 million payment received on an outstanding loan for which the Bank had a specific impairment reserve recorded.

The Bank’s written loan policies address specific underwriting standards for commercial real estate loans.  These policies include loan to value requirements, cash flow requirements, acceptable amortization periods and appraisal guidelines.  In addition, specific covenants, unique to each relationship, may be used where deemed appropriate to further protect the lending relationship.  Collateral in the commercial real estate portfolio varies from owner-occupied properties to investor properties.  We periodically review the portfolio for concentrations by industry as well as geography.  All commercial relationships are stress tested at the time of origination and major relationships are then stress tested on an annual basis.

Deposits

Average deposits and the average interest rate paid on the deposits for the three and six-months ended December 31, 2013 can be found in the discussion of the Bank’s net interest income under the caption  "Results of Operations-Segment Information-Banking."

The Bank had $11.4 million and $12.5 million in certificates of deposit of $100,000 or greater at December  31, 2013 and June 30, 2013, respectively.  The Bank is funded primarily by deposits from SWS’s brokerage customers, which are classified as core deposits.  These core deposits provide the Bank with a stable and low cost funding source.  The Bank also utilizes long-term Federal Home Loan Bank (“FHLB”) borrowings to match long-term fixed rate loan funding.  At December  31, 2013, the Bank had $876.5 million in funds on deposit from customers of Southwest Securities, representing approximately 88% of the Bank’s total deposits.

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Short-Term Borrowings and Advances from FHLB

The following table represents short-term borrowings and advances from the FHLB that were due within one year during the three and six-months ended December 31, 2013 and 2012 (dollars in thousands):

	Three-Months Ended December 31,						Six-Months Ended December 31,
	2013			2012			2013			2012
		Interest			Interest			Interest			Interest
	Amount	Rate		Amount	Rate		Amount	Rate		Amount	Rate
At end of period	$    14,344	3.93	%	$    14,061	4.10	%	$    14,344	3.93	%	$       14,061	4.10	%
Average balance during period	14,398	3.93	%	14,524	4.10	%	14,480	3.93	%	14,792	4.20	%
Maximum month-end balance during year	14,453	-		16,429	-		14,615	-		16,704	-

LIQUIDITY AND CAPITAL RESOURCES

Management believes that our current assets and available liquidity are adequate to meet our liquidity needs over the next 12 months.  However, our forecast may not prove to be accurate or we may need to raise additional capital.  As a result, from time to time, management evaluates various opportunities to supplement the company’s sources of liquidity and capital.  In fiscal 2012, this evaluation led to our entering into the Credit Agreement with Hilltop and Oak Hill, as discussed below.  Should we determine we need to obtain additional long-term debt at SWS Group, regulatory approval and approval from Hilltop and Oak Hill would be required.

Credit Agreement

On July 29, 2011, we entered into a Credit Agreement with Hilltop and Oak Hill pursuant to which we obtained a $100.0 million, five year, unsecured loan that accrues interest at a rate of 8% per annum.  In addition, we issued warrants to Hilltop and Oak Hill allowing each to purchase up to 8,695,652 shares of common stock at an exercise price of $5.75 per share (subject to anti-dilution adjustments), representing approximately 17% of the common stock of our company per investor as of July 29, 2011 (assuming the warrants are exercised in full).  The Credit Agreement contains restrictions and covenants that we must adhere to as long as the unsecured loan is outstanding.  As of December  31, 2013, SWS Group had utilized $70.0 million of the $100.0 million by (i) contributing $20.0 million in capital to the Bank to promote growth in the Bank’s loan portfolio, (ii) reducing SWS Group’s intercompany payable to Southwest Securities by $20.0 million and (iii) contributing $30.0 million in capital to Southwest Securities.  On January 8, 2014, the remaining $30.0 million was loaned to Southwest Securities to use in general operations by reducing Southwest Securities’ use of short-term borrowings for the financing of its day-to-day cash management needs.  See “Debt Issued with Stock Purchase Warrants” in the Notes to the Consolidated Financial Statements contained in this report.

Brokerage

A substantial portion of our assets are highly liquid in nature and consist mainly of cash or assets that are readily convertible into cash.  Our equity capital, short-term bank borrowings, interest bearing and non-interest bearing client credit balances, correspondent deposits and other payables finance these assets.  We maintain an allowance for doubtful accounts that represents amounts that are necessary in the judgment of management to adequately absorb losses from known and inherent risks in receivables from clients, clients of correspondents and correspondents. The highly liquid nature of our assets provides us with flexibility in financing and managing our anticipated operating needs.  Management believes that the present liquidity position of the brokerage businesses is adequate to meet its needs over the next 12 months.

Short-Term Borrowings. At December  31, 2013, we had short-term borrowing availability under broker loan lines, a $20.0 million unsecured line of credit, an irrevocable letter of credit agreement, and a $45.0 million revolving committed credit facility, each of which is described below.

Broker Loan Lines.  At December  31, 2013, we had uncommitted broker loan lines of up to $425.0 million.  These lines of credit are used primarily to finance securities owned, securities held for correspondent broker/dealer accounts and receivables in customers’ margin accounts.  These lines may also be used to release pledged collateral against day loans.  These credit arrangements are provided on an "as offered" basis, are not committed lines of credit and can be terminated at any time by the lender.  Any outstanding balances under these credit arrangements are due on demand and bear interest at rates indexed to the federal funds rate.  At December  31, 2013, $75.0 million was outstanding under these secured arrangements, which was collateralized by securities held for firm accounts valued at $126.8 million.  Our ability to borrow additional funds is limited by our eligible collateral.

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Unsecured Line of Credit.  We also have a $20.0 million unsecured line of credit that is due on demand and bears interest at rates indexed to the federal funds rate. This credit arrangement is provided on an "as offered" basis and is not a committed line of credit.  The total amount of borrowings available under this line of credit is reduced by the amount outstanding under any unsecured letters of credit at the time of borrowing.  At December  31, 2013, we had no outstanding unsecured letters of credit, there were no amounts outstanding on this line, and we had $20.0 million available for borrowing under this line of credit.

Letter of Credit Agreement.  At December  31, 2013, we had an irrevocable letter of credit agreement aggregating $75.0 million pledged to support our open options positions with an options clearing organization.  Until drawn, the letter of credit bears interest of 0.5% per annum.  If drawn, the letter of credit bears interest at a rate of 0.5% per annum plus a fee.  The letter of credit agreement is renewable semi-annually.  At December  31, 2013, we had no outstanding undrawn letters of credit.  This letter of credit had no collateral balance at December 31, 2013 as there is no outstanding undrawn letters of credit. 

We also pledge customer securities to the Options Clearing Corporation to support open customer positions.  At December 31, 2013, we had pledged $86.4 million to support these open customer positions.

Revolving Committed Credit Facility.On January 28, 2011, Southwest Securities entered into a $45.0 million committed revolving credit facility with an unaffiliated bank.  The commitment fee for the credit facility is 0.375% per annum and, when drawn, the interest rate is equal to the federal funds rate plus 125 basis points.  The agreement was renewed on January 23, 2014 and has the same terms as the initial agreement.  The credit facility requires Southwest Securities to maintain tangible net worth of $150.0 million.  As of December  31, 2013, there was no outstanding balance under this credit facility.

Net Capital Requirements.Our broker/dealer subsidiaries are subject to the requirements of the SEC relating to liquidity, capital standards and the use of client funds and securities.  The amount of the broker/dealer subsidiaries’ net assets that may be distributed to the parent of the broker/dealer is subject to restrictions under applicable net capital rules.  Historically, we have operated in excess of the minimum net capital requirements.  See “Regulatory Capital Requirements” in the Notes to the Consolidated Financial Statements contained in this report.

Secured Borrowings.  We participate in transactions involving securities sold under repurchase agreements (“repos”), which are secured borrowings that we record in our statement of financial condition as other liabilities.  These securities generally mature within one to four days from the transaction date.  Securities sold under repurchase agreements are reflected at the amount of cash received in connection with the transactions.  We may be required to provide additional collateral based on the fair value of the underlying securities.

Banking

Liquidity is monitored daily to ensure the Bank’s ability to meet deposit withdrawals, maintain reserve requirements and otherwise sustain operations.  The Bank’s liquidity is maintained in the form of readily marketable loans and investment securities, balances with the FHLB, Federal Reserve Bank of Dallas, federal funds sold to correspondent banks and vault cash.  At December  31, 2013, the Bank had net borrowing capacity from the FHLB of $92.6 million.  In addition, at December  31, 2013, the Bank had the ability to borrow up to $36.6 million in funds from the Federal Reserve Bank of Dallas under its secondary credit program.   

In the second quarter of fiscal 2010, the Bank entered into a secured line of credit agreement with the Federal Reserve Bank of Dallas.  This line of credit is secured by the Bank's commercial loan portfolio.  This line is due on demand and bears interest at a rate of 50 basis points over the federal funds target rate.  At December  31, 2013, there were no amounts outstanding under this line of credit.

The Bank’s asset and liability management policy is intended to manage interest rate risk.  The Bank manages the periodic repricing of its interest-earning assets and its interest-bearing liabilities.  Overall interest rate risk is monitored through reports showing both sensitivity ratios, a simulation model, and existing "GAP" data.  (See the Bank’s GAP analysis in "-Risk Management-Market Risk-Interest Rate Risk-Banking.")  At December  31, 2013, $876.5 million of the Bank’s deposits were from the brokerage customers of Southwest Securities.  Current events in the securities markets could impact the amount of these funds available to the Bank.

Capital Requirements.The Bank is subject to various regulatory capital requirements administered by federal agencies.  Quantitative measures, established by regulation to ensure capital adequacy, require maintaining minimum amounts and ratios of total and Tier I capital (as defined in 12 CFR 165 and 12 CFR 167) to risk-weighted assets (as defined) and of Tier I (core) capital (as defined) to adjusted assets (as defined) (without giving effect to the Basel III final rule).  At December 31, 2013, the Bank had a total risk-based capital ratio of 27.4% and the Bank had a Tier I (core) capital ratio of 13.8%.  At December 31, 2013, the Bank had a Tier I risk-based capital ratio of 26.2%  Under federal law, the OCC may require the Bank to apply other measures of risk-weight or capital ratios that the OCC deems appropriate.  In connection with the termination of the Order to Cease and Desist, Order No. WN-11-003, effective on February 4, 2011,on January 14, 2013, the Bank committed to the OCC

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that the Bank would, among other things, maintain a Tier I capital ratio at least equal to 9% of adjusted total assets and a total risk-based capital ratio of at least 12%.

The Bank has historically met all of its capital adequacy requirements.  As of December  31, 2013, the Bank met all capital requirements to which it was subject and satisfied the requirements to be defined as well-capitalized.

Off-Balance Sheet Arrangements

We generally do not enter into off-balance sheet arrangements, as defined by the SEC.  However, our broker/dealer subsidiaries enter into transactions in the normal course of business that expose us to off-balance sheet risk.  See “Note 27. Financial Instruments with Off-Statement of Financial Condition Risk” in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.

Cash Flow

Net cash provided by operating activities totaled $36.7 million for the six-months ended December 31, 2013 compared to net cash used in operating activities of $105.2 million for the six-months ended December 31, 2012.   The net cash provided by operating activities for the six-months ended December 31, 2013 was due to the $84.2 million decrease in net receivable from client accounts and other broker, dealer and clearing organizations offset by a $21.4 million increase in securities purchased under agreements to resell and a $26.6 million increase in our securities owned inventory.  

Net cash provided by investing activities was $3.0 million and $6.8 million for the six-months ended December 31, 2013 and 2012, respectively. Proceeds from cash received at the Bank from loan pay-downs net of originations of $78.1 million, along with $5.7 million in proceeds from the sale of REO were used to increase the Bank’s net investment portfolio by $74.6 million. 

Net cash used in financing activities totaled $29.6 million for the six-months ended December 31, 2013 compared to net cash provided by financing activities of $96.2 million for the six-months ended December 31, 2012.  The primary driver of the cash used in financing activities was a decrease in net cash proceeds from short-term borrowings offset by increases in cash proceeds from repurchase agreements, the FHLB and an increase in deposits at the Bank. 

We expect that cash flows provided by operating activities and short-term borrowings will be the primary source of working capital for the next 12 months.

Treasury Stock

We periodically repurchase our shares of common stock. We currently have not approved a repurchase plan, and any such plan would require, in addition to BOD approval, the approval of Hilltop, Oak Hill and regulatory authorities.

The trustee under our deferred compensation plan periodically purchases shares of our common stock in the open market in accordance with the terms of the plan.  This stock is classified as treasury stock in our consolidated financial statements, but participates in future dividends declared by us.  During the six-months ended December 31, 2013, the plan purchased approximately 50,000 shares of common stock at a cost of approximately $288,000, or $5.76 per share, and approximately 31,500 shares were sold or distributed to participants pursuant to the plan. 

As restricted stock grants vest, grantees may sell a portion of their vested shares to us to cover the tax liabilities arising from vesting.  As a result, in the six-months ended December 31, 2013, we repurchased approximately 1,100 shares of common stock with a market value of approximately $6,000, or an average of $5.55 per share, to cover tax liabilities. 

Inflation

Our financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).  GAAP requires us to measure our financial position and operating results primarily in terms of historic dollars.  Changes in the relative value of money due to inflation or recession are generally not considered under GAAP.  Our assets are primarily monetary, consisting of cash, securities inventory and receivables from customers and broker/dealers.  These monetary assets are generally liquid and turn over rapidly and, consequently, are not significantly affected by inflation.  The rate of inflation affects various expenses of the company, such as employee compensation and benefits, communications, and occupancy and equipment, which may not be readily recoverable in the price of our services.  The rate of inflation can also have a significant impact on securities prices and on investment preferences by our customers, generally.  In management’s opinion, changes in interest rates affect the financial condition of a financial services firm to a greater degree than changes in the inflation rate.  While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate.  Interest rates are highly sensitive to many factors that are beyond our

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control, including changes in the expected rate of inflation, the influence of general and local economic conditions and the monetary and fiscal policies of the United States government, its agencies and various other governmental regulatory authorities among other things.

RISK MANAGEMENT

In an effort to assist the company in managing enterprise risk, and at the Board of Director’s request, the company engaged a firm to perform an analysis of the company’s enterprise risk management processin 2010.  During fiscal 2011, based on the Board of Director’s recommendations, we initiated an enterprise risk management program and formed anenterprise risk management committee.  Enterprise risk is viewed as the threat from an event, action of loss of opportunity that, if it occurs or has occurred, may adversely affect any, or any combination of, our company objectives, business strategies, business model, regulatory compliance, reputation and existence.  The committee works with our various departments and committees to manage our enterprise risk management program and reports the results of this work to the Audit Committee of the BOD on a quarterly basis.  During fiscal 2013, we hired a full time risk manager for the consolidated group who serves as the primary liaison with our risk management consultants.  We continue to utilize the consultants to improve risk management processes, procedures and reporting.

We manage risk exposure through the involvement of various levels of management.  We establish, maintain and regularly monitor maximum positions by industry and issuer in both trading and inventory accounts.  Current and proposed underwriting, banking and other commitments are subject to due diligence reviews by senior management, as well as professionals in the appropriate business and support units.  The Bank seeks to reduce the risk of significant adverse effects of market rate fluctuations by minimizing the difference between rate-sensitive assets and liabilities, referred to as "GAP," and maintaining an interest rate sensitivity position within a particular timeframe.  Credit risk related to various financing activities is reduced by the industry practice of obtaining and maintaining collateral.  We monitor our exposure to counterparty risk through the use of credit information, the monitoring of collateral values and the establishment of credit limits.  We have established various other risk management committees that are responsible for reviewing and managing risk related to interest rates, trading positions, margin and other credit risk and risks from capital market transactions.

CREDIT RISKS

A description of the credit risk for our brokerage and banking segments is as follows:

Brokerage.  Credit risk arises from the potential nonperformance by counterparties, customers or debt security issuers.  We are exposed to credit risk as a trading counterparty and as a stock loan counterparty to dealers and customers, as a holder of securities and as a member of clearing organizations.  We have established credit risk committees to review our credit exposure in our various business units.  These committees are composed of senior management of the company.  Credit exposure is also associated with customer margin accounts, which are monitored daily.  We monitor exposure to individual securities and perform sensitivity analysis on a regular basis in connection with our margin lending activities.  We adjust our margin requirements if we believe our risk exposure is not appropriate based on market conditions. 

Banking.  Credit risk is the possibility that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms and is inherent in all types of lending.  The Bank has developed and continues to update its policies and procedures to provide a process for managing credit risk.  These policies and procedures include underwriting guidelines, credit and collateral tracking and detailed loan approval procedures. The Bank also maintains a detailed loan review process to monitor the quality of its loan portfolio. The Bank makes loans to customers primarily within Texas and New Mexico.  The Bank also purchases mortgage loans, which have been originated in other areas of the United States.  Although the Bank has a diversified loan portfolio, a substantial portion of its portfolio is dependent upon the general economic conditions in Texas and New Mexico. Policies and procedures, which are in place to manage credit risk, are designed to be responsive to changes in these economic conditions.

Operational Risk

Operational risk refers generally to risk of loss resulting from our operations, including but not limited to, improper or unauthorized execution and processing of transactions, deficiencies in our operating systems, and inadequacies or breaches in our control processes.  We operate in diverse markets and rely on the ability of our employees and systems to process large numbers of transactions.  In order to mitigate and control operational risk, we have developed and continue to update specific policies and procedures that are designed to identify and manage operational risk at appropriate levels.  We also use periodic self-assessments and internal audit examinations as further review of the effectiveness of our controls and procedures in mitigating our operational risk. 

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Legal Risk 

Legal risk includes the risk of non-compliance with applicable legal and regulatory requirements.  We are subject to extensive regulation in the different jurisdictions in which we conduct business.  We have established procedures based on legal and regulatory requirements that are designed to reasonably ensure compliance with applicable statutory and regulatory requirements.  We also have established procedures that are designed to ensure that executive management’s policies relating to conduct, ethics and business practices are followed.  In connection with our business, we have various procedures addressing significant issues such as regulatory capital requirements, sales and trading practices, new products, use and safekeeping of customer funds and securities, granting credit, collection activities, money laundering, privacy and record keeping.

Market Risk 

Market risk generally represents the risk of loss that may result from the potential change in value of a financial instrument as a result of fluctuations in interest rates, market prices, investor expectations and changes in credit ratings of the issuer.  Our exposure to market risk is directly related to our role as a financial intermediary in customer-related transactions and to our proprietary trading activities and securities lending activities.

Interest Rate Risk. A description of the interest rate risk for our brokerage and banking segments is as follows:

Brokerage.  Interest rate risk is a consequence of maintaining inventory positions and trading in interest rate sensitive financial instruments and maintaining a matched stock loan book.  Our fixed income activities also expose us to the risk of loss related to changes in credit spreads.  Credit spread risk arises from the potential that changes in an issuer’s credit rating or credit perception could affect the value of financial instruments.

Banking.  Our primary emphasis in interest rate risk management for the Bank is the matching of assets and liabilities of similar cash flow and re-pricing time frames.  This matching of assets and liabilities reduces exposure to interest rate movements and aids in stabilizing positive interest spreads.  We strive to structure our balance sheet as a natural hedge by matching floating rate assets with variable short term funding and by matching fixed rate liabilities with similar longer term fixed rate assets.  The Bank has established percentage change limits in both interest margin and net portfolio value.  To verify that the Bank is within the limits established for interest margin, the Bank prepares an analysis of net interest margin based on various shifts in interest rates.  To verify that the Bank is within the limits established for net portfolio value, the Bank analyzes data prepared using internal modeling data for net portfolio value.  These analyses are conducted on a quarterly basis for the Bank’s BOD. 

The following table illustrates the estimated change in net interest margin based on shifts in interest rates of positive 300 basis points to negative 100 basis points:

Hypothetical Change in Interest Rates	Projected Change in Net Interest Margin
+300	-28.21%
+200	-18.55%
+100	-9.13%
0	0.00%
-100	-7.14%

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The following GAP Analysis table indicates the Bank’s interest rate sensitivity position at December  31, 2013 (in thousands):

	Repricing Opportunities
	0-6 months	7-12 months	1-3 years	3+ years
Earning assets:
Loans-gross	$      354,278	$         34,420	$      84,189	$     64,778
Securities and FHLB stock	27,150	21,907	36,404	513,997
Interest-bearing deposits	98,141	-	-	-
Total earning assets	479,569	56,327	120,593	578,775
Interest-bearing liabilities:
Transaction accounts and savings	910,055	-	-	-
Certificates of deposit	11,098	9,047	7,155	745
Borrowings	12,526	1,812	8,709	75,204
Total interest-bearing liabilities	933,679	10,859	15,864	75,949
GAP	$    (454,110)	$         45,468	$    104,729	$   502,826
Cumulative GAP	$    (454,110)	$      (408,642)	$   (303,913)	$   198,913

Market Price Risk.  We are exposed to market price risk as a result of making markets and taking proprietary positions in securities.  Market price risk results from changes in the level or volatility of prices, which affect the value of securities or instruments that derive their value from a particular stock or bond, a basket of stocks or bonds or an index. 

The following table categorizes “Securities owned, at fair value” net of “Securities sold, not yet purchased, at fair value,” which are in our securities owned and securities sold, not yet purchased, portfolios,  “Restricted cash and cash equivalents”, and “Securities available for sale” in our available-for-sale portfolio which are subject to interest rate and market price risk at December  31, 2013 (dollars in thousands):

	Years to Maturity
	1 or less	1 to 5	5 to 10	Over 10	Total
Trading securities, at fair value
Municipal obligations	$           46	$      6,466	$    10,914	$    38,756	$    56,182
U.S. government and government
agency obligations	6,749	(507)	(8,925)	(169)	(2,852)
Corporate obligations	(5,657)	(13,723)	3,566	20,342	4,528
Total debt securities	$      1,138	$     (7,764)	$      5,555	$    58,929	$    57,858
Corporate equity securities	-	-	-	1,200	1,200
Other	22,041	-	-	-	22,041
	$    23,179	$     (7,764)	$      5,555	$    60,129	$    81,099

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	Years to Maturity
	1 or less		1 to 5		5 to 10		Over 10		Total
Weighted average yield
Municipal obligations	1.30	%	1.71	%	2.94	%	5.03	%	4.24	%
U.S. government and government
agency obligations	0.04		1.25		2.93		3.11		2.54
Corporate obligations	1.19		2.08		3.93		4.83		3.15
Restricted cash and cash equivalents
Restricted cash and cash equivalents	$   30,049		$             -		$            -		$             -		$   30,049
Available-for-sale securities, at fair
value
Securities available for sale	$   44,484		$   60,910		$   33,083		$ 441,814		$ 580,291

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses and related disclosures.  We review our estimates on an on-going basis.  We base our estimates on our experience and on various other assumptions that we believe to be reasonable under the circumstances.  Actual results may differ from these estimates under different assumptions or conditions.  Our accounting policies and methodology used in establishing estimates have not changed materially since June 30, 2013.  See Fiscal 2013 Form 10-K for a discussion of our critical accounting policies. 

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FORWARD- LOOKING STATEMENTS

From time to time we make statements (including some contained in this report) that predict or forecast future events, depend on future events for their accuracy, or otherwise contain "forward-looking" information and constitute “forward-looking statements” within the meaning of applicable U.S. securities laws.  Such statements are generally identifiable by terminology such as “plans,” “expects,” “estimates,” “budgets,” “intends,” “anticipates,” “believes,” “projects,” “indicates,” “targets,” “objective,” “could,” “should,” “may” or other similar words.  By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Readers should not place undue reliance on forward-looking statements and should recognize that such statements are predictions of future results, which may not occur as anticipated.    Actual results may differ materially as a result of various factors, some of which are outside of our control, including:

· the interest rate environment;

· the volume of trading in securities;

· the liquidity in capital markets;

· the volatility and general level of securities prices and interest rates;

· the ability to meet regulatory capital requirements administered by federal agencies;

· the level of customer margin loan activity and the size of customer account balances;

· the demand for real estate in Texas, New Mexico and the national market;

· the credit-worthiness of our correspondents, trading counterparties and of our banking and margin customers;

· the demand for investment banking services;

· general economic conditions, especially in Texas and New Mexico, and investor sentiment and confidence;

· the value of collateral securing the loans we hold;

· competitive conditions in each of our business segments;

· changes in accounting, tax and regulatory compliance requirements;

· changes in federal, state and local tax rates;

· the ability to attract and retain key personnel;

· the availability of borrowings under credit lines, credit agreements and credit facilities;

· the potential misconduct or errors by our employees or by entities with whom we conduct business;

· the ability of borrowers to meet their contractual obligations and the adequacy of our allowance for loan losses; and

· the potential for litigation and other regulatory liability.

Our future operating results also depend on our operating expenses, which are subject to fluctuation due to:

· variations in the level of compensation expense incurred as a result of changes in the number of total employees, competitive factors or other market variables;

· variations in expenses and capital costs, including depreciation, amortization and other non-cash charges incurred to maintain our infrastructure; and

· unanticipated costs which may be incurred from time to time in connection with litigation, regulation and compliance, loan analyses and modifications or other contingencies.

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Other factors, risks and uncertainties that could cause actual results to differ materially from our expectations discussed in this report include those factors described in this report under the headings “Overview,” “Risk Management,” “Risk Factors” and “Critical Accounting Policies and Estimates,” in the Fiscal 2013 Form 10-K under the heading Risk Factors and our other reports filed with and available from the SEC.  Our forward-looking statements are based on current beliefs, assumptions and expectations.  All forward-looking statements speak only as of the date on which they are made and, except as required by law, we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is hereby incorporated by reference from “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Risk Management.”

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under to the Exchange Act) as of December 31, 2013.  Based on such evaluation, our management, including our principal executive officer and principal financial officer, has concluded that, as of December 31, 2013, our disclosure controls and procedures were effective for the purpose of ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the periods specified in the SEC’s rules and forms.

Change in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the six-months ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

84

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings 

In the general course of our brokerage business and the business of clearing for other brokerage firms, we have been named as defendants in various pending lawsuits and arbitration and regulatory proceedings.  These claims allege violations of various federal and state securities laws, among other matters.  The Bank is also involved in certain claims and legal actions arising in the ordinary course of business.  We believe that resolution of these claims will not result in a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.

Item 1A.  Risk Factors

There have been no material changes from the risk factors disclosed in the Fiscal 2013 Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.  Defaults upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

None.

Item 6.  Exhibits

The exhibits required to be furnished pursuant to Item 6 are listed in the Exhibit Index filed herewith, which Exhibit Index is incorporated herein by reference.

85

SIGNATURES

Pursuant to the requirements of  the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SWS Group, Inc.
	(Registrant)
February 6, 2014	/S/ James H. Ross
(Date)	(Signature)
	James H. Ross
	Director, President and Chief Executive Officer
	(Principal Executive Officer)

February6, 2014	/S/ J. Michael Edge
(Date)	(Signature)
	J. Michael Edge
	Chief Financial Officer
	(Principal Financial Officer)
February 6, 2014	/S/ Laura Leventhal
(Date)	(Signature)
	Laura Leventhal
	Chief Accounting Officer
	(Principal Accounting Officer)

86

SWS, GROUP INC. AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit Number
3.1	Restated Certificate of Incorporation of the Registrant incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed October 15, 2009
3.2	Restated By-laws of the Registrant incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed March 7, 2012
3.3	Certificate of Designations of Non-Voting Perpetual Participating Preferred Stock, Series A of SWS Group, Inc. incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed August 1, 2011
4.1	Warrant to purchase up to 8,695,652 shares of Common Stock, issued on July 29, 2011 to Hilltop Holdings Inc. incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed August 1, 2011
4.2	Warrant to purchase up to 8,419,148 shares of Common Stock, issued on July 29, 2011 to Oak Hill Capital Partners III, L.P. incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed August 1, 2011
4.3	Warrant to purchase up to 276,504 shares of Common Stock, issued on July 29, 2011 to Oak Hill Capital Management Partners III, L.P. incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed August 1, 2011
4.4	Investor Rights Agreement dated as of July 29, 2011 among SWS Group, Inc., Hilltop Holdings Inc., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed August 1, 2011
31.1*	Chief Executive Officer Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Chief Financial Officer Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Chief Executive Officer Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Chief Financial Officer Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from SWS Group, Inc.’s quarterly report on Form 10-Q for the quarter ended December 31, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition as of December 31, 2013 and June 30, 2013; (ii) Consolidated Statements of Comprehensive (Loss) Income for the three and six-months ended December 31, 2013 and 2012; (iii) Consolidated Statements of Cash Flows for the six-months ended December 31, 2013 and 2012; and (v) Notes to Consolidated Financial Statements

__________________

* Filed herewith

87

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, James H. Ross, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SWS Group, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

February 6, 2014	/S/ James H. Ross
Date	James H. Ross
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, J. Michael Edge, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of SWS Group, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

February 6, 2014	/S/ J. Michael Edge
Date	J. Michael Edge
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION FURNISHED PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report of SWS Group, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James H. Ross, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.  

Date:February 6, 2014	/S/ James H. Ross
	James H. Ross
	Chief Executive Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION FURNISHED PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report of SWS Group, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, J. Michael Edge, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.  

Date:February 6, 2014	/S/ J. Michael Edge
	J. Michael Edge
	Chief Financial Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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Securities Held To Maturity (Tables)

6 Months Ended

Dec. 31, 2013

Securities Held To Maturity [Abstract]

Schedule Of Held To Maturity Securities

	December 31, 2013	June 30, 2013
Government National Mortgage
Association ("GNMA") Securities	$                     14,595	$                     17,423

Schedule Of Amortized Cost And Estimated Fair Value Of Securities Held To Maturity

	Securities Held to Maturity
	Amortized Cost	Fair Value	Unrecognized Holding gain
Due after ten years	$                     14,595	$                     14,982	$                          387

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Fair Value Of Financial Instruments (Financial And Non-Financial Instruments Measured At Fair Value On A Non-Recurring Basis) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Jun. 30, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 11,288	[1]	$ 20,086	[1]
REO	7,355		10,165
Impaired servicing assets	436		412
Fair Value Assets Measured on Non Recurring Basis, Total	19,079		30,251
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		[1]		[1]
REO
Impaired servicing assets
Fair Value Assets Measured on Non Recurring Basis, Total
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		[1]		[1]
REO
Impaired servicing assets
Fair Value Assets Measured on Non Recurring Basis, Total
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	11,288	[1]	20,086	[1]
REO	7,355		10,165
Impaired servicing assets	436
Fair Value Assets Measured on Non Recurring Basis, Total	$ 19,079		$ 30,251

[1] Includes certain impaired loans measured at fair value through the allocation of specific valuation allowances or principal charge-offs.

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Assets Segregated for Regulatory Purposes (Narrative) (Detail) (USD $)	Dec. 31, 2013	Jun. 30, 2013
Disclosure Assets Segregated For Regulatory Purposes Narrative [Abstract]
Cash segregated in special reserve bank accounts	$ 174,614,000	$ 164,737,000
Reserve deposits in special reserve bank account for PAIB	$ 0	$ 0

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Earnings (Loss) Per Share ("EPS") (Tables)

6 Months Ended

Dec. 31, 2013

Earnings (Loss) Per Share ("EPS") [Abstract]

Summary of Basic and Diluted EPS Computations

	Three-Months Ended		Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Net income	$                1,660	$              10,369	$                1,983	$                4,725
Interest expense on long-term debt	-	2,022	-	4,020
Unrealized gain on warrant valuation	-	(7,645)	-	(2,324)
Adjusted net income	$                1,660	$                4,746	$                1,983	$                6,421
Weighted average shares outstanding – basic	32,955,629	32,827,652	32,943,875	32,813,910
Effect of dilutive securities	-	17,391,304	-	17,391,304
Weighted average shares outstanding – diluted	32,955,629	50,218,956	32,943,875	50,205,214
Earnings per share – basic
Net income	$                  0.05	$                  0.32	$                  0.06	$                  0.14
Earnings per share – diluted
Net income	$                  0.05	$                  0.09	$                  0.06	$                  0.13

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Securities Owned And Securities Sold, Not Yet Purchased (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items]
U.S. government and government agency obligations	$ 73,883	$ 41,529
Securities pledged as security deposits at clearing organization	6,749	3,000
TBAs [Member]
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items]
U.S. government and government agency obligations	949
TBA Sale Agreements [Member]
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items]
Notional amount of TBA sale agreements	$ 543,317

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Receivable From And Payable To Brokers, Dealers And Clearing Organizations (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Receivable From And Payable To Brokers, Dealers And Clearing Organizations [Abstract]
Repledged collateral	$ 1,619,010	$ 1,452,911

XML

Investments And Variable Interest Entities (Narrative) (Detail) (USD $)	3 Months Ended	6 Months Ended		1 Months Ended			3 Months Ended		6 Months Ended						3 Months Ended		6 Months Ended						3 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2013 item	Aug. 31, 2012 Venture Capital Funds [Member]	Dec. 31, 2013 Venture Capital Funds [Member] item	Jun. 30, 2013 Venture Capital Funds [Member]	Dec. 31, 2013 Limited Partnership [Member] item	Dec. 31, 2012 Limited Partnership [Member]	Dec. 31, 2013 Limited Partnership [Member] item	Dec. 31, 2012 Limited Partnership [Member]	Dec. 31, 2013 Limited Partnership [Member] Limited Partnership Equity Fund One [Member]	Dec. 31, 2013 Limited Partnership [Member] Limited Partnership Equity Fund Two [Member]	Dec. 31, 2013 Limited Partnership [Member] Limited Partnership Equity Funds [Member]	Jun. 30, 2013 Limited Partnership [Member] Limited Partnership Equity Funds [Member]	Dec. 31, 2013 Loan Agreement With Limited Partnership [Member]	Dec. 31, 2012 Loan Agreement With Limited Partnership [Member]	Dec. 31, 2013 Loan Agreement With Limited Partnership [Member]	Dec. 31, 2012 Loan Agreement With Limited Partnership [Member]	Sep. 26, 2012 Loan Agreement With Limited Partnership [Member]	Nov. 16, 2009 Loan Agreement With Limited Partnership [Member]	Jan. 29, 2009 Loan Agreement With Limited Partnership [Member] item	Jan. 28, 2009 Loan Agreement With Limited Partnership [Member]	Dec. 31, 2013 Investments In Private Investment Funds [Member]	Nov. 12, 2013 Investments In Private Investment Funds [Member]	Jun. 30, 2013 Investments In Private Investment Funds [Member]	Apr. 30, 2012 Investments In Private Investment Funds [Member]
Schedule of Equity Method Investments [Line Items]
Number of investment partnerships			4		1		2		2												1
Aggregate commitment for limited partnership equity fund					$ 5,000,000						$ 3,000,000	$ 2,000,000														$ 3,000,000
Value of interest in investment funds					517,000	513,000																	162,000		62,000
Net gain (loss) on equity method investment equity funds	(702,000)	(702,000)					199,000	936,000	246,000	986,000													50,000
Cash distributions from investment				170,000						1,932,000
Bank investments from aggregate commitment													4,028,000	3,782,000									330,000	150,000
Loan agreement executed																5,000,000		5,000,000				4,500,000
Increase in note amount post loan amendment																				5,000,000
Bank loan outstanding balance															2,688,000		2,688,000
Bank loan interest rate floor																	4.25%
Interest income earned															$ 31,000	$ 55,000	$ 56,000	$ 111,000
Loan maturity date															Dec. 31, 2015		Dec. 31, 2015		Jan. 02, 2013

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Segment Reporting (Summary Of Operating Information By Segments) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2013		Dec. 31, 2012		Jun. 30, 2013
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	$ 79,935		$ 85,057		$ 159,978		$ 171,481
Net revenues	68,486		75,345		137,481		149,454
Non-interest expenses	65,159		71,496		135,966		146,452
Other gains (losses)	(2,058)		11,761		(91)		3,576
Net income (loss) before taxes	1,269		15,610		1,424		6,578
Total assets	3,930,662		3,514,053		3,930,662		3,514,053		3,780,373
Operating Segments [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	57,881		61,786		116,750		121,585
Net interest revenue	10,605		13,559		20,731		27,869
Net revenues	68,486		75,345		137,481		149,454
Non-interest expenses	65,159		71,496		135,966		146,452
Other gains (losses)	(2,058)		11,761		(91)		3,576
Depreciation and amortization	1,363		1,349		2,721		2,741
Net income (loss) before taxes	1,269		15,610		1,424		6,578
Total assets	3,847,755	[1]	3,403,380	[1]	3,847,755	[1]	3,403,380	[1]
Clearing [Member] | Operating Segments [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	3,752		3,233		7,007		6,496
Net interest revenue	1,549		1,488		2,968		3,183
Net revenues	5,301		4,721		9,975		9,679
Non-interest expenses	3,962		4,836		8,863		9,599
Depreciation and amortization	5		17		11		34
Net income (loss) before taxes	1,339		(115)		1,112		80
Total assets	254,852	[1]	312,038	[1]	254,852	[1]	312,038	[1]
Clearing [Member] | Net Intersegment Revenue [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	(180)		(166)		(359)		(353)
Retail Brokerage [Member] | Operating Segments [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	27,159		25,284		55,942		52,481
Net interest revenue	912		840		1,967		1,709
Net revenues	28,071		26,124		57,909		54,190
Non-interest expenses	25,068		25,596		52,655		53,343
Depreciation and amortization	231		219		452		438
Net income (loss) before taxes	3,003		528		5,254		847
Total assets	224,261	[1]	229,419	[1]	224,261	[1]	229,419	[1]
Retail Brokerage [Member] | Net Intersegment Revenue [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	180		145		359		348
Institutional Brokerage [Member] | Operating Segments [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	24,690		29,368		50,622		59,080
Net interest revenue	2,575		3,190		4,646		6,373
Net revenues	27,265		32,558		55,268		65,453
Non-interest expenses	21,316		23,219		43,114		46,189
Depreciation and amortization	78		108		163		209
Net income (loss) before taxes	5,949		9,339		12,154		19,264
Total assets	2,064,521	[1]	1,511,605	[1]	2,064,521	[1]	1,511,605	[1]
Institutional Brokerage [Member] | Net Intersegment Revenue [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	(11)		(170)		(11)		(59)
Banking [Member] | Operating Segments [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	1,592		694		1,873		760
Net interest revenue	8,872		11,077		17,678		22,644
Net revenues	10,464		11,771		19,551		23,404
Non-interest expenses	5,140		8,799		13,032		19,151
Depreciation and amortization	373		435		784		866
Net income (loss) before taxes	5,324		2,972		6,519		4,253
Total assets	1,264,071	[1]	1,285,053	[1]	1,264,071	[1]	1,285,053	[1]
Banking [Member] | Net Intersegment Revenue [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	828		865		1,680		1,761
Other Consolidated Entities [Member] | Operating Segments [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	688		3,207		1,306		2,768
Net interest revenue	(3,303)		(3,036)		(6,528)		(6,040)
Net revenues	(2,615)		171		(5,222)		(3,272)
Non-interest expenses	9,673		9,046		18,302		18,170
Other gains (losses)	(2,058)		11,761		(91)		3,576
Depreciation and amortization	676		570		1,311		1,194
Net income (loss) before taxes	(14,346)		2,886		(23,615)		(17,866)
Total assets	40,050	[1]	65,265	[1]	40,050	[1]	65,265	[1]
Other Consolidated Entities [Member] | Net Intersegment Revenue [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating revenue	$ (817)		$ (674)		$ (1,669)		$ (1,697)

[1] (*) Assets are reconciled to total assets as presented in the December 31, 2013 and 2012 Consolidated Statements of Financial Condition as follows (in thousands):December 31, 2013December 31, 2012Amount as presented above$         3,847,755 $         3,403,380 Reconciling items:Unallocated assets:Cash 19,473  24,302 Receivables from brokers, dealers and clearing organizations 22,109  45,078 Receivable from clients, net of allowances 22,173  24,943 Other assets 29,136  19,353 Unallocated eliminations (9,984) (3,003)Total assets$         3,930,662 $         3,514,053

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Regulatory Capital Requirements (Tables)

6 Months Ended

Dec. 31, 2013

The Bank's Capital Amounts and Ratios

	Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31, 2013
Total risk-based capital	$       183,794	27.4	%	$      53,603	8.0	%	$      67,004	10.0	%
Tier I risk-based capital	175,405	26.2		26,802	4.0		40,203	6.0
Tier I (core) capital	175,405	13.8		50,961	4.0		63,702	5.0
	Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio		Amount	Ratio		Amount	Ratio
June 30, 2013
Total risk-based capital	$       181,909	24.9	%	$      58,465	8.0	%	$      73,081	10.0	%
Tier I risk-based capital	172,734	23.6		29,233	4.0		43,849	6.0
Tier I (core) capital	172,734	13.5		51,081	4.0		63,851	5.0

Southwest Securities [Member]

Net Capital Position

	December 31, 2013		June 30, 2013
Net capital	$           153,885		$        141,112
Less:  required net capital	6,574		6,843
Excess net capital	$           147,311		$        134,269
Net capital as a percent of aggregate debit items	46.8	%	41.2	%
Net capital in excess of 5% aggregate debit items	$           137,451		$        124,005

SWS Financial Services, Inc. [Member]

Net Capital Position

	December 31, 2013	June 30, 2013
Net capital	$                 316	$             713
Less:  required net capital	250	250
Excess net capital	$                   66	$             463

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Commitments, Contingencies and Guarantees

6 Months Ended

Dec. 31, 2013

Commitments, Contingencies and Guarantees [Abstract]

Commitments, Contingencies And Guarantees

COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments and Contingencies. 

Litigation.  In the general course of its brokerage business and the business of clearing for other brokerage firms, SWS Group and/or its subsidiaries have been named as defendants in various lawsuits and arbitration proceedings.  These claims allege, among other things, violations of various federal and state securities laws.  The Bank is also involved in certain legal claims and actions arising in the ordinary course of business.  Management believes that resolution of these claims will not result in any material adverse effect on SWS’s consolidated financial condition, results of operations or cash flows.

The Company has been named as a defendant in three lawsuits related to a $35,000,000 bond offering that was 40% underwritten by M.L. Stern & Co., LLC.  SWS Group purchased M.L. Stern & Co., LLC in 2008.  The offering took place in November 2005, and the lawsuit was filed in November 2009. 

The lawsuits are in the discovery stage and the ultimate amount of liability associated with them cannot currently be determined.  However, the Company believes it is at least reasonably possible that a loss related to this matter will be incurred.  At December  31, 2013 and June 30, 2013, the Company had a recorded liability of approximately $1,000,000 related to this matter.

Contingency.  In February 2011, a limited partnership venture capital fund in which the Company invested received a proposed assessment of transferee liability from the Internal Revenue Service (“IRS”) for the tax period ended December 31, 2005.  The proposed assessment is approximately $8,000,000, not including penalties of approximately $3,000,000.  The Company would be responsible for approximately $1,870,000 of the proposed assessment including penalties based on its partnership interest.  Interest is also accruing on this proposed assessment.  As of December 31, 2013, the Company has not accrued an amount on the financial statements due to the uncertainty regarding the proposed assessment.  The matter relates to certain transactions that occurred during 2005 concerning one of the limited partnership venture capital fund’s subsidiaries.  The limited partnership venture capital fund engaged tax counsel and filed a Letter of Protest with the IRS in April 2011.  Management of the limited partnership venture capital fund believes that the ultimate outcome will be favorable; however, the limited partnership venture capital fund can give no assurance that it will prevail. 

Venture Capital Fund. The Bank has committed to invest $3,000,000 and $2,000,000 in two limited partnership equity funds.  These commitments end in fiscal 2017 and fiscal 2020, respectively, unless the limited partners elect to terminate the commitment period at an earlier date in accordance with the terms of the partnership agreement.  Also,  in April 2012, the Bank acquired an interest in a private investment fund to obtain additional credit for its obligations under the CRA.  The Bank has committed to invest $3,000,000 in the fund.  As of December  31, 2013, $330,000 in contributions have been made by the Bank to this fund.  The commitment in the private investment fund expires in fiscal 2022 with the possibility of two one-year extensions.

Underwriting.Through its participation in underwriting corporate and municipal securities, SWS could expose itself to material risk that securities SWS has committed to purchase cannot be sold at the initial offering price.  Federal and state securities laws and regulations also affect the activities of underwriters and impose substantial potential liabilities for violations in connection with sales of securities by underwriters to the public.  At December  31, 2013, the Company had $368,000of potential liabilities due under outstanding underwriting arrangements.

Guarantees. The Bank faces the risk of credit loss under commitments to extend credit and stand-by letters of credit up to the contractual amount of these instruments in the event of breach by the other party to the instrument.  The Bank uses the same credit policies in making commitments and conditional obligations as it does for instruments reported on the Consolidated Statements of Financial Condition.

As of December  31, 2013, the Bank had issued stand-by letters of credit in the amount of $137,000.  The recourse provision of the letters of credit allows the amount of the letters of credit to become a part of the fully collateralized loans with total repayment as a first lien.  The collateral on these letters of credit consists of real estate, certificates of deposit, equipment, accounts receivable or furniture and fixtures.

In the ordinary course of business, the Bank enters into loan agreements where the Bank commits to lend a specified amount of money to a borrower. At any point in time, there could be amounts that have not been advanced on the loan to the borrower, representing unfunded commitments, as well as amounts that have been disbursed but repaid, which are available for re-borrowing under a revolving line of credit. As of December  31, 2013, the Bank had commitments of $53,313,000 relating to revolving lines of credit and unfunded commitments. In addition, as of December  31, 2013, the Bank had approved unfunded new loans in the amount of $18,495,000.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee.  Since many of the commitments are expected to expire unused, the total Bank’s commitments do not necessarily represent future cash requirements.  The Bank evaluates the customer’s creditworthiness on a case-by-case basis.  The amount and type of collateral obtained, if deemed necessary by the Bank upon extension of credit, varies and is based on management’s credit evaluation of the counterparty.  The Bank did not incur any significant losses on its commitments in the first six-months of fiscal 2014.  In addition, management does not believe the Bank will incur material losses as a result of its outstanding commitments at December  31, 2013.

The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies counterparties against potential losses caused by the breach of those representations and warranties.  These indemnification obligations generally are standard contractual indemnities and are entered into in the normal course of business.  The maximum potential amount of future payments that the Company could be required to make under these indemnities cannot be estimated.  However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the consolidated financial statements for these indemnities.

Southwest Securities is a member of multiple exchanges and clearinghouses.  Under the membership agreements, members are generally required to guarantee the performance of other members.  Additionally, if a member becomes unable to satisfy its obligations to the clearinghouse, other members would be required to meet shortfalls.  To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral.  SWS’s maximum potential liability under these arrangements cannot be quantified.  However, the potential for the Company to be required to make payments under these arrangements is unlikely.  Accordingly, the Company has not recorded any contingent liability in the consolidated financial statements for these arrangements.

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Investments And Variable Interest Entities (Carrying Amount And Maximum Exposure To Loss Associated With The Company's Variable Interests In Unconsolidated VIEs) (Detail) (Loans To Commercial Borrowers [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Dec. 31, 2013 entity	Jun. 30, 2013 entity
Loans To Commercial Borrowers [Member]
Schedule of Variable Interest Entities for Loans to Commercial Borrowers [Line Items]
Number of VIEs	11	17
Carrying Amount of Assets	$ 5,703	$ 10,639
Maximum Exposure to Loss	$ 4,336	$ 9,072

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Securities Held To Maturity (Schedule Of Securities Held To Maturity) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Securities Held To Maturity [Abstract]
Government National Mortgage Association ("GNMA") Securities	$ 14,595	$ 17,423

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Debt Issued With Stock Purchase Warrants (Narrative) (Detail) (USD $)	0 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 29, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013
Class of Warrant or Right [Line Items]
Unsecured loan	$ 100,000,000
Term of loan	5 years
Minimum ownership percentage of outstanding shares for appointment of Director	9.90%
Minimum ownership percentage of convertible securities for appointment of Director	9.90%
Weighted average anti-dilution rate				90.00%
Warrants as a percentage of common stock				17.00%
Ownership limit of securities				24.90%
Series A preferred stock issued		0		0		0
Closing stock price	$ 5.45			$ 6.08		$ 5.45
Fair value of warrants	24,136,000	24,288,000		24,288,000		24,197,000
Unrealized loss on warrants valuation		2,058,000	(11,761,000)	91,000	(3,576,000)
Stated loan interest rate	8.00%
Effective loan interest rate	14.90%
Discount on the loan	24,136,000
Accretion expense on the discount		1,145,000	987,000	2,248,000	1,939,000
Long term debt		85,350,000		85,350,000		83,102,000
Interest expense on the loan		123,000	123,000	246,000	246,000
Legal, accounting, printing costs and other expenses associated with the loan and warrants	2,459,000
Minimum tangible net worth		275,000,000		275,000,000
Percentage of net tangible worth of consolidated net income				20.00%
Minimum unrestricted cash balance		4,000,000		4,000,000
Excess net capital balance		100,000,000		100,000,000
Series A Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Series A preferred stock issued		0		0		0
Series A preferred stock outstanding		0		0		0
Hilltop [Member]
Class of Warrant or Right [Line Items]
Warrants issuance	8,695,652
Oak Hill [Member]
Class of Warrant or Right [Line Items]
Warrants issuance	8,695,652
OakHill and Hilltop [Member]
Class of Warrant or Right [Line Items]
Term of warrants, years	5 years
Fixed exercise price warrants	$ 5.75
Interest expense on the loan		2,000,000	4,000,000	2,000,000	4,000,000
Debt Issued With Stock Purchase Warrants [Member]
Class of Warrant or Right [Line Items]
Total Interest expense on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)		$ 3,268,000	$ 3,110,000	$ 6,494,000	$ 6,185,000

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Receivable From And Payable To Brokers, Dealers And Clearing Organizations (Securities Borrowing And Lending Business, Receivables And Related Collateral) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Jun. 30, 2013
Receivable From And Payable To Brokers, Dealers And Clearing Organizations [Abstract]
Securities Borrowed, Gross amounts of recognized assets/liabilities	$ 1,720,673		$ 1,546,376
Securities Borrowed, Gross amounts offset in the statement of financial position
Securities Borrowed, Net amounts of assets presented in the statement of financial position	1,720,673		1,546,376
Securities Borrowed, Gross amounts not offset in the statement of financial position, Financial instruments	(1,720,673)		(1,546,376)
Securities Borrowed, Gross amounts not offset in the statement of financial position, Collateral
Securities Borrowed, Gross amounts not offset in the statement of financial position, Net Amount
Securities Loaned, Gross amounts of recognized assets/liabilities	1,640,922	[1]	1,471,319	[1]
Securities Loaned, Gross amounts offset in the statement of financial position		[1]		[1]
Securities Loaned, Net amounts of assets presented in the statement of financial position	1,640,922	[1]	1,471,319	[1]
Securities Loaned, Gross amounts not offset in the statement of financial position, Financial instruments	(1,640,922)	[1]	(1,471,319)	[1]
Securities Loaned, Gross amounts not offset in the statement of financial position, Collateral		[1]		[1]
Securities loaned, Gross amounts not offset in the statement of financial position				[1]
Repledged collateral	$ 1,619,010		$ 1,452,911

[1] Under securities lending agreements, SWS had repledged $1,619,010,000 and $1,452,911,000 at December 31, 2013 and June 30, 2013, respectively.

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Fair Value Of Financial Instruments (Summary Of Fair Value Hierarchy) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013	Jul. 29, 2011
Loans measured at fair value	$ 35,333	$ 13,757
Securities available for sale	580,291	503,276
Securities sold, not yet purchased, at fair value	155,103	134,735
Warrants	24,288	24,197	24,136
Fair Value, Measurements, Recurring [Member]
Loans measured at fair value	35,333	13,757
Securities owned, at fair value	236,202	209,633
Securities available for sale	580,291	503,276
Interest Rate Swaps	2,173	1,934
Securities sold, not yet purchased, at fair value	155,103	134,735
Warrants	24,288	24,197
Net assets (liabilities)	674,608	569,668
Loans Measured At Fair Value [Member] | Fair Value, Measurements, Recurring [Member]
Loans measured at fair value	35,333	13,757
Corporate Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	1,200	1,520
Municipal Obligations [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	56,182	30,116
Securities available for sale	43,911	28,224
Securities sold, not yet purchased, at fair value		10
U.S. Government and Government Agency Obligations | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	73,883	41,529
Securities available for sale	536,243	474,906
Securities sold, not yet purchased, at fair value	76,735	54,086
Corporate Obligations [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	82,896	127,899
Securities sold, not yet purchased, at fair value	78,368	80,639
Other [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	22,041	8,569
Westwood Stock | Fair Value, Measurements, Recurring [Member]
Securities available for sale	137	146
Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member]
Interest Rate Swaps	2,173	1,934
Warrants [Member] | Fair Value, Measurements, Recurring [Member]
Warrants	24,288	24,197
Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	12,928	4,887
Securities available for sale	137	146
Securities sold, not yet purchased, at fair value	39,861	45,415
Net assets (liabilities)	(26,796)	(40,382)
Level 1 [Member] | Corporate Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	700	895
Level 1 [Member] | U.S. Government and Government Agency Obligations | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	11,246	3,300
Securities sold, not yet purchased, at fair value	39,861	45,415
Level 1 [Member] | Other [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	982	692
Level 1 [Member] | Westwood Stock | Fair Value, Measurements, Recurring [Member]
Securities available for sale	137	146
Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Loans measured at fair value		13,757
Securities owned, at fair value	222,694	204,001
Securities available for sale	580,154	503,130
Interest Rate Swaps	2,173	1,934
Securities sold, not yet purchased, at fair value	115,242	89,320
Net assets (liabilities)	689,779	633,502
Level 2 [Member] | Loans Measured At Fair Value [Member] | Fair Value, Measurements, Recurring [Member]
Loans measured at fair value		13,757
Level 2 [Member] | Municipal Obligations [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	56,182	30,116
Securities available for sale	43,911	28,224
Securities sold, not yet purchased, at fair value		10
Level 2 [Member] | U.S. Government and Government Agency Obligations | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	62,637	38,229
Securities available for sale	536,243	474,906
Securities sold, not yet purchased, at fair value	36,874	8,671
Level 2 [Member] | Corporate Obligations [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	82,816	127,779
Securities sold, not yet purchased, at fair value	78,368	80,639
Level 2 [Member] | Other [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	21,059	7,877
Level 2 [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member]
Interest Rate Swaps	2,173	1,934
Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Loans measured at fair value	35,333
Securities owned, at fair value	580	745
Warrants	24,288	24,197
Net assets (liabilities)	11,625	(23,452)
Level 3 [Member] | Loans Measured At Fair Value [Member]
Loans measured at fair value	35,333
Level 3 [Member] | Loans Measured At Fair Value [Member] | Fair Value, Measurements, Recurring [Member]
Loans measured at fair value	35,333
Level 3 [Member] | Corporate Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	500	625
Level 3 [Member] | Corporate Obligations [Member]
Securities owned, at fair value	80
Level 3 [Member] | Corporate Obligations [Member] | Fair Value, Measurements, Recurring [Member]
Securities owned, at fair value	80	120
Level 3 [Member] | Warrants [Member]
Warrants	24,288
Level 3 [Member] | Warrants [Member] | Fair Value, Measurements, Recurring [Member]
Warrants	$ 24,288	$ 24,197

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Securities Available For Sale (Narrative) (Detail) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended	3 Months Ended
	Mar. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 US Governments, State and Municipal Obligation Member [Member]	Dec. 31, 2012 US Governments, State and Municipal Obligation Member [Member]	Dec. 31, 2013 US Governments, State and Municipal Obligation Member [Member]	Dec. 31, 2012 US Governments, State and Municipal Obligation Member [Member]	Jun. 30, 2013 US Governments, State and Municipal Obligation Member [Member]	Dec. 31, 2012 Common Stock of U.S. Home Systems, Inc. [Member]	Dec. 31, 2012 Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities purchased by bank	$ 35,525,000					$ 123,696,000		$ 123,696,000		$ 319,836,000
Net premium on U.S. government and government agency and municipal obligations securities	525,000					1,093,000		1,093,000		6,279,000
Net premium amortization period	15 years							4 years 5 months 23 days		4 years 15 days
Amortization of the premium		21,000	32,000	41,000	61,000	597,000	515,000	1,177,000	908,000
Principal and interest payments received		1,223,000	2,306,000	3,025,000	4,488,000	14,188,000	13,040,000	30,075,000	21,156,000
Interest income		113,000	172,000	238,000	359,000	3,000,000	1,955,000	5,853,000	3,593,000
Proceeds from the sale of available for sale investment securities								15,235,000
Gain on sale of U.S. government and government obligations					3,645,000
Redemption of securities									12,000,000
Gain on redemption of securities										7,000
Net realized gains on principal transactions											3,550,000
Reclassification adjustment from AOCI, before tax											2,308,000	62,000
Reclassification adjustment from AOCI, net of tax											3,550,000	95,000
Proceeds from sale of securities												24,557,000
Other revenue		$ 8,331,000	$ 5,577,000	$ 14,894,000	$ 11,762,000							$ 95,000

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Deposits (Scheduled Maturities Of Certificates Of Deposit) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Remaining Contract Maturity Of Fair Value Of Liabilities [Line Items]
1 Year or Less	$ 20,146
> 1 Year Through 2 Years	6,062
> 2 Years Through 3 Years	1,093
> 3 Years Through 4 Years	388
Thereafter	356
Total	28,045
Certificates of Deposit Less Than $100,000 [Member]
Remaining Contract Maturity Of Fair Value Of Liabilities [Line Items]
1 Year or Less	12,284
> 1 Year Through 2 Years	3,382
> 2 Years Through 3 Years	410
> 3 Years Through 4 Years	185
Thereafter	356
Total	16,617
Certificates of Deposit $100,000 and Greater [Member]
Remaining Contract Maturity Of Fair Value Of Liabilities [Line Items]
1 Year or Less	7,862
> 1 Year Through 2 Years	2,680
> 2 Years Through 3 Years	683
> 3 Years Through 4 Years	203
Total	$ 11,428

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Servicing Assets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Jun. 30, 2013
Servicing Assets [Abstract]
SBA loans sold		$ 3,151	$ 17,664
Gain on sale of SBA loans		264	2,253
Servicing asset recorded	70
Servicing assets	436	436	412
Impairment of servicing assets	$ 33	$ 33

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Advances From The Federal Home Loan Bank (Narrative) (Detail) (USD $)	3 Months Ended	6 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013
Advances From The Federal Home Loan Bank [Abstract]
Interest range, FHLB	1.00%	1.00%		1.00%
Interest range, FHLB	6.00%	6.00%		6.00%
Collateral value	$ 191,000,000	$ 191,000,000		$ 181,000,000
Weighted average interest rate	2.60%	2.60%		2.70%
Prepayment penalty due to restructuring of FHLB advances	166,000	166,000
Amortization of prepayment penalty on advances from FHLB	11,000	23,000	11,000
Borrowing capacity with the FHLB		$ 92,568,000

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Securities Available For Sale (Summary Of Cost Of Equity Securities, Amortized Cost Of Debt Securities And Market Value Of Investments) (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Original/Amortized Cost	$ 596,456	$ 513,393
Gross Unrealized Gains	534	308
Gross Unrealized Losses	(16,609)	(10,394)
Gross Realized Losses	(90)	(31)
Market Value	580,291	503,276
Westwood [Member]
Schedule of Available-for-sale Securities [Line Items]
Shares Held	2,219	3,405
Original/Amortized Cost	7	7
Gross Unrealized Gains	220	170
Gross Realized Losses	(90)	(31)
Market Value	137	146
US Government And Government Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Continuous unrealized loss less than 12 months, Original/Amortized Cost	531,733	479,970
Continuous unrealized loss for12 months or greater, Original/Amortized Cost	19,727	4,127
Continuous unrealized loss less than 12 months, Gross Unrealized Gains	229	138
Continuous unrealized loss less than 12 months, Gross Unrealized Losses	(14,321)	(9,239)
Continuous unrealized loss for12 months or greater, Gross Unrealized Losses	(1,125)	(90)
Continuous unrealized loss less than 12 months, Market Value	517,641	470,869
Continuous unrealized loss for 12 months or greater, Market Value	18,602	4,037
Municipal Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Continuous unrealized loss less than 12 months, Original/Amortized Cost	44,262	29,289
Continuous unrealized loss for12 months or greater, Original/Amortized Cost	727
Continuous unrealized loss less than 12 months, Gross Unrealized Gains	85
Continuous unrealized loss less than 12 months, Gross Unrealized Losses	(1,160)	(1,065)
Continuous unrealized loss for12 months or greater, Gross Unrealized Losses	(3)
Continuous unrealized loss less than 12 months, Market Value	43,187	28,224
Market Value	$ 724

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Securities Owned And Securities Sold, Not Yet Purchased (Summary Of Fair Value Of Securities Owned And Securities Sold) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Securities owned:
Corporate equity securities	$ 1,200	$ 1,520
Municipal obligations	56,182	30,116
U.S. government and government agency obligations	73,883	41,529
Corporate obligations	82,896	127,899
Other	22,041	8,569
Total securities owned	236,202	209,633
Securities sold, not yet purchased:
Municipal obligations		10
U.S. government and government agency obligations	76,735	54,086
Corporate obligations	78,368	80,639
Total securities sold, not yet purchased	$ 155,103	$ 134,735

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Income Taxes

6 Months Ended

Dec. 31, 2013

Income Taxes [Abstract]

Income Taxes

INCOME TAXES 

Income tax (benefit)expense for the three and six-months ended December 31, 2013 andDecember 31, 2012 (effective rate of

-30.8% and 33.6%in the three-month periods ended December 31, 2013 and 2012,  respectively, and -39.3% and 28.2% in the six-months ended December 31, 2013 and 2012, respectively) differs from the amount that would otherwise have been calculated by applying the federal corporate tax rate (35% in fiscal years 2014 and 2013) to income (loss) before income tax (benefit) expense and is comprised of the following (in thousands):

	Three-Months Ended		Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Income tax expense at the statutory rate	$                  444	$              5,463	$                 499	$              2,302
Tax exempt interest	(195)	(258)	(466)	(504)
Tax exempt income from company-owned
life insurance ("COLI")	(233)	99	(533)	(107)
State income taxes, net of federal tax benefit	(132)	(370)	(12)	(349)
Non-deductible meals and entertainment	35	42	65	79
Non-deductible compensation	57	266	46	516
Valuation allowance	(367)	-	(156)	-
Other, net	-	(1)	(2)	(84)
	$                 (391)	$              5,241	$                (559)	$              1,853

The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities as of December  31, 2013 and June 30, 2013 are presented below (in thousands):

	December 31, 2013	June 30, 2013
Deferred tax assets:
Employee compensation plans	$                9,695	$            11,378
Net operating loss carryforward	11,440	10,507
Allowance for probable loan losses	3,151	3,400
Securities available for sale	5,703	3,589
Bad debt reserve	2,103	2,177
Deferred rent	1,919	1,631
State taxes	909	909
Investment in unconsolidated ventures	643	909
Deferred income on loans	693	810
REO	287	139
Long-term debt	177	-
Other	1,105	513
Gross deferred tax assets	37,825	35,962
Valuation allowance	(30,648)	(30,870)
Net deferred tax assets	7,177	5,092
Deferred tax liabilities:
Interest rate swaps in cash flow hedging relationships	$                  (528)	$                (626)
Fixed assets, net	(448)	(426)
Investment in unconsolidated ventures	-	(120)
Long-term debt	-	(82)
Other	(498)	(249)
Total gross deferred tax liabilities	(1,474)	(1,503)
Net deferred tax assets – included in other assets on the
Consolidated Statements of Financial Condition	$                5,703	$              3,589

At June 30, 2013, the Company established an allowance for deferred tax assets associated with all of its deferred tax assets, except for the Bank’s securities available for sale.  Based on activity in the current period, theallowance decreased$222,000 from June 30, 2013 to December 31, 2013.Despite the valuation allowance, these assets remain available to offset future taxable income.

Management did not establish a valuation allowance for the deferred tax asset generated on the Bank’s unrealized losses of its securities available for sale of $5,703,000, because the Bank currently has the intent and ability to hold these securities until they recover in value.  We intend to maintain a valuation allowance with respect to our deferred tax assets, other than the Bank’s securities available for sale, until sufficient positive evidence exists to support its reduction or reversal.

The Company had a deferred tax asset for net operating losses for federal income tax purposes of approximately $11,440,000and $10,507,000at December  31, 2013 and June 30, 2013, respectively.  In order to utilize the operating loss carryforwards, the Company must generate sufficient taxable income within the applicable carryforward period.  If certain substantial changes in the Company’s ownership occur, there would be an annual limitation on the amount of the carryforwards that could be utilized.

At December 31, 2013, the Company had approximately $135,000 of unrecognized tax benefits.  The Company’s net liability for unrecognized tax benefits decreased $160,000 from June 30, 2013 to December 31, 2013 primarily due to the reversal of positions from the completion of tax audits and expirations of statutes of limitations.  While the Company expects that the net liability for uncertain tax positions will change during the next 12 months, the Company does not believe that the change will have a significant impact on its consolidated financial position or results of operations. 

The Company recognizes interest and penalties on income taxes in income tax expense. Included in the net liability is accrued interest and penalties of $27,000 and $9,000, net of federal expense and benefit, respectively,as of December 31, 2013 and June 30, 2013, respectively.  For the three and six-months ended December  31, 2013, the Company recognized approximately $(22,000) and$18,000, net of federal (benefit) expense, respectively, in interest and penalties in income tax expense, while for the three and six-months ended December 31, 2012, the Company recognized approximately $216,000 and $195,000, net of federal benefit, respectively, in interest and penalties in income tax expense. The total amount of unrecognized income tax benefits that, if recognized, would reduce income tax expense was approximately $108,000 and $286,000as of December  31, 2013 and June 30, 2013, respectively. 

With limited exception, SWS is no longer subject to U.S. federal, state or local tax audits by taxing authorities for years preceding 2010.  The examination of the Company’s federal tax returns for 2008 through 2011has concluded with no material adjustments.  The Joint Committee completed its review with no exceptions, thereby concluding the matter. 

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Fair Value Of Financial Instruments (Tables)

6 Months Ended

Dec. 31, 2013

Fair Value Of Financial Instruments [Abstract]

Summary Of Fair Value Hierarchy

(in thousands)	Level 1	Level 2	Level 3	Total
December 31, 2013
ASSETS
Loans measured at fair value
Loans measured at fair value	$            -	$             -	$  35,333	$          35,333
	$            -	$             -	$  35,333	$          35,333
Securities owned, at fair value
Corporate equity securities	$       700	$             -	$       500	$            1,200
Municipal obligations	-	56,182	-	56,182
U.S. government and government agency obligations	11,246	62,637	-	73,883
Corporate obligations	-	82,816	80	82,896
Other	982	21,059	-	22,041
	$  12,928	$ 222,694	$       580	$        236,202
Securities available for sale
Westwood common stock	$       137	$             -	$            -	$               137
U.S. government and government agency obligations	-	536,243	-	536,243
Municipal obligations	-	43,911	-	43,911
	$       137	$ 580,154	$            -	$        580,291
Interest Rate Swaps
Interest Rate Swaps	$            -	$     2,173	$            -	$            2,173
	$            -	$     2,173	$            -	$            2,173
LIABILITIES
Securities sold, not yet purchased, at fair value
U.S. government and government agency obligations	$  39,861	$   36,874	$            -	$          76,735
Corporate obligations	-	78,368	-	78,368
	$  39,861	$ 115,242	$            -	$        155,103
Warrants
Warrants	$            -	$             -	$  24,288	$          24,288
	$            -	$             -	$  24,288	$          24,288
Net assets (liabilities)	$ (26,796)	$ 689,779	$  11,625	$        674,608

(in thousands)	Level 1	Level 2	Level 3	Total
June 30, 2013
ASSETS
Loans measured at fair value
Loans measured at fair value	$            -	$     13,757	$            -	$          13,757
	$            -	$     13,757	$            -	$          13,757
Securities owned, at fair value
Corporate equity securities	$       895	$               -	$       625	$            1,520
Municipal obligations	-	30,116	-	30,116
U.S. government and government agency obligations	3,300	38,229	-	41,529
Corporate obligations	-	127,779	120	127,899
Other	692	7,877	-	8,569
	$    4,887	$   204,001	$       745	$        209,633
Securities available for sale
Westwood common stock	$       146	$               -	$            -	$               146
U.S. government and government agency obligations	-	474,906	-	474,906
Municipal obligations	-	28,224	-	28,224
	$       146	$   503,130	$            -	$        503,276
Interest Rate Swaps
Interest Rate Swaps	$            -	$       1,934	$            -	$            1,934
	$            -	$       1,934	$            -	$            1,934
LIABILITIES
Securities sold, not yet purchased, at fair value
Municipal obligations	$            -	$            10	$            -	$                 10
U.S. government and government agency obligations	45,415	8,671	-	54,086
Corporate obligations	-	80,639	-	80,639
	$  45,415	$     89,320	$            -	$        134,735
Warrants
Warrants	$            -	$               -	$  24,197	$          24,197
	$            -	$               -	$  24,197	$          24,197
Net assets (liabilities)	$ (40,382)	$   633,502	$ (23,452)	$        569,668

Reconciliation Of Major Classes of Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs

(in thousands)	Loans	Corporate Equity Securities	Corporate Obligations	Warrants	Total
Ending balance at June 30, 2013	$              -	$                625	$             120	$    (24,197)	$    (23,452)
Redemption/sale of security		(50)	-	-	(50)
Unrealized loss		-	(32)	-	(32)
Decrease in warrants valuation
(unrealized gain)		-	-	1,967	1,967
Ending balance at September 30, 2013	$              -	$                575	$               88	$    (22,230)	$    (21,567)
Redemption/sale of security		(75)			(75)
Unrealized loss	-	-	(8)	-	(8)
Transfers from Level 2 to Level 3	35,333	-	-	-	35,333
Increase in warrants valuation
(unrealized loss)	-	-	-	(2,058)	(2,058)
Ending balance at December 31, 2013	$     35,333	$                500	$               80	$    (24,288)	$     11,625

Significant Unobservable Inputs

Asset/Liability	Fair  Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted-Average)
Loans measured at fair value
Loans measured at fair value	$     35,333	Discounted cash flow	Discount Rate	4.35%-  5.37% (  4.77%  )
Securities owned, at fair value
Corporate equity securities- auction rate preferred	500	Analysis of comparable securities	N/A	N/A
Corporate obligations	80	Discounted cash flow	N/A	N/A
Warrants
Warrants	24,288	Binomial Model	Derived Volatility	46% - 52%  (46%)

Financial And Non-Financial Instruments Measured At Fair Value On A Non-Recurring Basis

December 2013	Level 1	Level 2	Level 3	Total
Impaired loans (1)	$            -	$            -	$   11,288	$   11,288
REO	-	-	7,355	7,355
Impaired servicing assets	-	-	436	436
	$            -	$            -	$   19,079	$   19,079
June 2013
Impaired loans (1)	$            -	$            -	$   20,086	$   20,086
REO	-	-	10,165	10,165
	$            -	$            -	$   30,251	$   30,251

_____________

(1)   Includes certain impaired loans measured at fair value through the allocation of specific valuation allowances or principal charge-offs.

Recorded Amounts, Fair Value And Level Of Fair Value Hierarchy Of Financial Instruments

		December 31, 2013		June 30, 2013
	Level	Recorded Value	Fair Value	Recorded Value	Fair Value
Financial assets:
Cash and cash equivalents	1	$   121,130	$    121,130	$    111,046	$    111,046
Restricted cash and cash equivalents	1	30,049	30,049	30,047	30,047
Securities held to maturity:
GNMA securities	2	14,595	14,982	17,423	17,965
Loans, net:
Purchase mortgage loans held for investment	3	89,583	89,430	174,037	173,738
Other loans held for  investment	3	403,301	446,568	420,789	437,916
Servicing assets	3	436	436	412	414
Financial liabilities:
Short-Term Borrowings	1	75,000	75,000	131,500	131,500
Deposits:
Deposits with no stated maturity	2	966,720	962,054	963,385	959,578
Time deposits	2	28,045	28,331	30,334	30,736
Advances from FHLB	2	98,251	99,621	97,565	100,408
Long-term debt	3	85,350	95,817	83,102	86,822

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Investments And Variable Interest Entities (Tables)

6 Months Ended

Dec. 31, 2013

Investments And Variable Interest Entities [Abstract]

Carrying Amount And Maximum Exposure To Loss Associated With The Company's Variable Interests In Unconsolidated VIEs

	December 31, 2013			June 30, 2013
	Number of VIEs	Carrying Amount of Assets	Maximum Exposure to Loss	Number of VIEs	Carrying Amount of Assets	Maximum Exposure to Loss
Loans to commercial
borrowers	11	$      5,703	$        4,336	17	$    10,639	$        9,072

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Securities Purchased/Sold Under Agreements to Resell/Repurchase (Reverse Repurchase Agreements And Repurchase Agreements) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Securities Purchased /Sold Under Agreements To Resell/Repurchase [Abstract]
Reverse Repurchase Agreements, Gross amounts of recognized assets/liabilities	$ 73,381	$ 51,996
Reverse Repurchase Agreements, Net amounts of assets presented in the statement of financial position	73,381	51,996
Reverse Repurchase Agreements, Gross amounts not offset in the statement of financial position, Financial instruments	(72,866)	(51,808)
Reverse Repurchase Agreements, Gross amounts not offset in the statement of financial position, net of collateral	515	188
Repurchase Agreements, Gross amounts of recognized assets/liabilities	62,314	37,012
Repurchase Agreements, Net amounts of assets presented in the statement of financial position	62,314	37,012
Repurchase Agreements, Gross amounts not offset in the statement of financial position, Financial instruments	(62,314)	(37,012)
Repurchase Agreements, Gross amounts not offset in the statement of financial position, Net Amount

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Employee Benefits (Narrative) (Detail) (USD $)	3 Months Ended	6 Months Ended			6 Months Ended		3 Months Ended	6 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2013 Shares Repurchased In Connection With Income Tax Withholding Obligations [Member]	Dec. 31, 2012 Shares Repurchased In Connection With Income Tax Withholding Obligations [Member]	Dec. 31, 2013 Restricted Stock [Member]	Dec. 31, 2013 Restricted Stock [Member]	Dec. 31, 2012 Restricted Stock [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Restricted stock award grants, shares								199,891	65,079
Restricted stock award, weighted average market value per share								$ 5.64	$ 4.84
Deferred compensation for restricted stock recorded in additional paid in capital							$ 1,443,000	$ 1,443,000
Deferred compensation expense	266,000	608,000					274,000	380,000
Common shares purchased by deferred compensation plan					1,094	4,647
Common stock value purchased by deferred compensation plan			$ 6,265,000	$ 7,732,000	$ 6,100	$ 27,000
Common stock price per share, purchased by deferred compensation plan					$ 5.55	$ 5.78
Total number of shares outstanding under the Restricted Stock Plan			417,137
Total number of shares available for restricted stock plan future grants			2,383,016

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Loans And Allowance For Probable Loan Losses (Tables)

6 Months Ended

Dec. 31, 2013

Loans And Allowance For Probable Loan Losses [Abstract]

Summary Of Loans Receivable

	December 31, 2013	June 30, 2013
Loans measured at fair value:
Commercial real estate	$                4,047	$                2,662
Multifamily	31,286	11,095
	35,333	13,757
Other loans receivable:
Residential construction	731	1,367
Lot and land development	5,998	8,988
1-4 family	144,738	233,947
Commercial real estate	186,522	213,452
Multifamily	91,917	88,738
Commercial loans	69,690	58,718
Consumer loans	2,736	1,959
	502,332	607,169
	537,665	620,926
Allowance for probable loan losses	(9,448)	(12,343)
	$            528,217	$            608,583

Analysis of Allowance for Probable Loan Losses and Recorded Investment in Loans Receivable

	Three-Months Ended December 31, 2013
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                  30	$                285	$           1,075	$             3,073	$           2,585	$             5,147	$               11	$       12,206
Charge-offs	-	-	-	(35)	-	(47)	-	(82)
Recoveries	5	3	9	116	-	16	-	149
Net recoveries (charge-offs)	5	3	9	81	-	(31)	-	67
(Recapture) provision charged
to operations	(29)	(164)	235	(85)	308	(3,098)	8	(2,825)
Balance at end of period	$                    6	$                124	$           1,319	$             3,069	$           2,893	$             2,018	$               19	$         9,448
Ending balance: individually
evaluated for impairment	$                    -	$                  33	$             251	$                   1	$                   -	$                161	$                  -	$            446
Ending balance: collectively
evaluated for impairment	$                    6	$                  91	$           1,068	$             3,068	$           2,893	$             1,857	$               19	$         9,002
Financing receivables:
Balance at end of period	$                731	$             5,998	$       144,738	$         186,522	$         91,917	$           69,690	$          2,736	$     502,332
Ending balance: individually
evaluated for impairment	$                578	$                995	$           7,880	$             7,159	$                   -	$             4,514	$                  -	$       21,126
Ending balance: collectively
evaluated for impairment	$                153	$             5,003	$       136,858	$         179,363	$         91,917	$           65,176	$          2,736	$     481,206

	Three-Months Ended December 31, 2012
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                187	$                975	$            3,205	$           10,591	$             2,819	$            3,106	$                9	$             20,892
Charge-offs	-	-	(12)	(410)	-	(680)	-	(1,102)
Recoveries	17	54	13	20	-	188	5	297
Net (charge-offs) recoveries	17	54	1	(390)	-	(492)	5	(805)
(Recapture) provision charged to
operations	(69)	(355)	(447)	(2,433)	(988)	2,850	(8)	(1,450)
Balance at end of period	$                135	$                674	$            2,759	$             7,768	$             1,831	$            5,464	$                6	$             18,637
Ending balance:  individually
evaluated for impairment	$                  23	$                177	$               347	$             1,179	$                    -	$            2,157	$                 -	$               3,883
Ending balance:  collectively
evaluated for impairment	$                112	$                497	$            2,412	$             6,589	$             1,831	$            3,307	$                6	$             14,754
Financing receivables:
Balance at end of period	$             2,216	$           11,458	$        438,097	$         257,514	$           48,654	$          64,179	$         1,704	$           823,822
Ending balance:  individually
evaluated for impairment	$                632	$             2,294	$          10,909	$           14,755	$                    -	$            4,317	$                 -	$             32,907
Ending balance:  collectively
evaluated for impairment	$             1,584	$             9,164	$        427,188	$         242,759	$           48,654	$          59,862	$         1,704	$           790,915

	Six-Months Ended December 31, 2013
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                  49	$                374	$           1,528	$             3,290	$           3,567	$             3,530	$                 5	$       12,343
Charge-offs	-	(4)	(97)	(51)	-	(67)	-	(219)
Recoveries	63	10	61	439	-	42	-	615
Net recoveries (charge-offs)	63	6	(36)	388	-	(25)	-	396
(Recapture) provision charged
to operations	(106)	(256)	(173)	(609)	(674)	(1,487)	14	(3,291)
Balance at end of period	$                    6	$                124	$           1,319	$             3,069	$           2,893	$             2,018	$               19	$         9,448

	Six-Months Ended December 31, 2012
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                350	$             1,310	$            3,235	$           10,628	$             2,866	$            4,004	$                9	$             22,402
Charge-offs	-	(182)	(163)	(1,113)	-	(1,608)	-	(3,066)
Recoveries	36	187	69	83	-	371	5	751
Net (charge-offs) recoveries	36	5	(94)	(1,030)	-	(1,237)	5	(2,315)
(Recapture) provision charged to
operations	(251)	(641)	(382)	(1,830)	(1,035)	2,697	(8)	(1,450)
Balance at end of period	$                135	$                674	$            2,759	$             7,768	$             1,831	$            5,464	$                6	$             18,637

Loans Receivable on Non-Accrual Status

	December 31, 2013	June 30, 2013
Residential construction	$                  573	$                601
Lot and land development	992	2,418
1-4 family	6,485	7,792
Commercial real estate	4,076	7,611
Commercial loans	3,891	4,024
	$             16,017	$           22,446

Recorded Investment and Unpaid Principal Balance for Impaired Loans by Type and Related Allowance, Average Recorded Investment and Interest Income Recognized

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
December 31, 2013
With no related allowance recorded:
Residential construction	$               578	$               746	$                    -	$               407	$                    -
Lot and land development	45	168	-	40	-
1-4 family	6,276	8,024	-	5,217	5
Commercial real estate	7,145	8,151	-	6,261	93
Commercial loans	3,958	4,008	-	4,242	5
	18,002	21,097	-	16,167	103

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
December 31, 2013
With an allowance recorded:
Residential construction	$                   -	$                   -	$                   -	$              179	$                   -
Lot and land development	950	1,080	33	1,558	-
1-4 family	1,604	1,633	251	2,928	31
Commercial real estate	14	21	1	2,629	-
Commercial loans	556	619	161	3,036	15
	3,124	3,353	446	10,330	46

December 31, 2013
Total
Residential construction	$               578	$               746	$                    -	$               586	$                    -
Lot and land development	995	1,248	33	1,598	-
1-4 family	7,880	9,657	251	8,145	36
Commercial real estate	7,159	8,172	1	8,890	93
Commercial loans	4,514	4,627	161	7,278	20
	$          21,126	$          24,450	$               446	$          26,497	$               149

June 30, 2013
With no related allowance recorded:
Residential construction	$               383	$               471	$                    -	$               438	$                    -
Lot and land development	102	324	-	807	-
1-4 family	5,818	7,712	-	7,674	17
Commercial real estate	9,006	12,239	-	7,785	167
Commercial loans	4,430	5,092	-	1,582	26
	19,739	25,838	-	18,286	210

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
June 30, 2013
With an allowance recorded:
Residential construction	$               222	$               283	$                 23	$               191	$                    -
Lot and land development	2,326	2,543	233	1,879	-
1-4 family	3,543	3,870	178	6,398	67
Commercial real estate	3,265	4,188	105	10,048	15
Commercial loans	3,037	3,032	2,090	2,288	129
	12,393	13,916	2,629	20,804	211

June 30, 2013
Total
Residential construction	$               605	$               754	$                 23	$               629	$                    -
Lot and land development	2,428	2,867	233	2,686	-
1-4 family	9,361	11,582	178	14,072	84
Commercial real estate	12,271	16,427	105	17,833	182
Commercial loans	7,467	8,124	2,090	3,870	155
	$          32,132	$          39,754	$            2,629	$          39,090	$               421

____________________

(1) The difference between the unpaid principal balance and the recorded investment of impaired loans with no related allowance recorded is primarily comprised of partial charge-offs that were previously recognized.

(2) Represents the average recorded investment for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013, respectively.

(3) Represents interest income recognized on impaired loans for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013, respectively.

Summary of Overall Quality of the Bank's Financing Receivables, Excluding Loans Held For Sale

	Pass	Special Mention(1)	Substandard(2)	Total
December 31, 2013
Loans measured at fair value:
Commercial real estate	$           4,047	$                   -	$                     -	$             4,047
Multifamily	31,286	-	-	31,286
	35,333	-	-	35,333
Other loans receivable:
Residential construction	158	-	573	731
Lot and land development	4,689	-	1,309	5,998
1-4 family	137,964	38	6,736	144,738
Commercial real estate	156,321	3,512	26,689	186,522
Multifamily	91,917	-	-	91,917
Commercial loans	63,459	878	5,353	69,690
Consumer loans	2,736	-	-	2,736
	457,244	4,428	40,660	502,332
	$       492,577	$           4,428	$           40,660	$         537,665

	Pass	Special Mention(1)	Substandard(2)	Total
June 30, 2013
Loans measured at fair value:
Commercial real estate	$           2,662	$                   -	$                     -	$             2,662
Multifamily	11,095	-	-	11,095
	13,757	-	-	13,757
Other loans receivable:
Residential construction	766	-	601	1,367
Lot and land development	5,605	-	3,383	8,988
1-4 family	225,434	234	8,279	233,947
Commercial real estate	171,085	7,631	34,736	213,452
Multifamily	88,046	-	692	88,738
Commercial loans	47,680	1,324	9,714	58,718
Consumer loans	1,959	-	-	1,959
	540,575	9,189	57,405	607,169
	$       554,332	$           9,189	$           57,405	$         620,926

____________________

(1) These loans are currently protected by the current sound worth and paying capacity of the obligor, but have a potential weakness that would create a higher credit risk.

(2) These loans exhibit well-defined weaknesses that could jeopardize the ultimate collection of all or part of the debt.  Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged.  They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.  Loss potential, while existing in the aggregate for substandard assets, does not have to exist in individual assets classified as “Substandard.” 

Age of Bank's Past due Financing Receivables

	30-59 Days Past Due	60-89 Days Past Due	90 Days and Greater Past Due	Total Past Due	Current	Total Financing Receivables	Recorded Investment > 90 Days and Accruing
December 31, 2013
Loans measured at fair value:
Commercial real estate	$           -	$         -	$           -	$           -	$      4,047	$           4,047	$                  -
Multifamily	-	-	-	-	31,286	31,286	-
	-	-	-	-	35,333	35,333	-
Other loans receivable:
Residential construction	-	-	-	-	731	731	-
Lot and land development	315	-	-	315	5,683	5,998	-
1-4 family	2,036	416	1,821	4,273	140,465	144,738	-
Commercial real estate	2,591	1,352	3,961	7,904	178,618	186,522	-
Multifamily	-	-	-	-	91,917	91,917	-
Commercial loans	378	124	3,676	4,178	65,512	69,690	-
Consumer loans	2	-	-	2	2,734	2,736	-
	5,322	1,892	9,458	16,672	485,660	502,332	-
	$    5,322	$  1,892	$    9,458	$  16,672	$  520,993	$       537,665	$                  -

	30-59 Days Past Due	60-89 Days Past Due	90 Days and Greater Past Due	Total Past Due	Current	Total Financing Receivables	Recorded Investment > 90 Days and Accruing
June 30, 2013
Loans measured at fair value:
Commercial real estate	$           -	$         -	$           -	$           -	$      2,662	$           2,662	$                  -
Multifamily	-	-	-	-	11,095	11,095	-
	-	-	-	-	13,757	13,757	-
Other loans receivable:
Residential construction	-	-	-	-	1,367	1,367	-
Lot and land development	173	370	80	623	8,365	8,988	-
1-4 family	914	234	2,816	3,964	229,983	233,947	-
Commercial real estate	1,396	1,153	4,826	7,375	206,077	213,452	-
Multifamily	692	-	-	692	88,046	88,738	-
Commercial loans	750	3,812	135	4,697	54,021	58,718	-
Consumer loans	-	-	-	-	1,959	1,959	-
	3,925	5,569	7,857	17,351	589,818	607,169	-
	$    3,925	$  5,569	$    7,857	$  17,351	$  603,575	$       620,926	$                  -

Recorded Investment in Loans Modified in TDRs

	December 31, 2013	June 30, 2013
Residential construction	$                        578	$                     605
Lot and land development	1,186	4,927
1-4 family	5,890	7,690
Commercial real estate	3,146	4,574
Commercial	552	497
	$                   11,352	$                18,293

Financial Effects of Loan Modifications Accounted for as TDRs

	Three-Months Ended December 31, 2013			Six-Months Ended December 31, 2013
	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)
Commercial	-	$                         -	$                        -	1	$                    168	$                   168
	-	$                         -	$                        -	1	$                    168	$                   168

	Three-Months Ended December 31, 2012			Six-Months Ended December 31, 2012
	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)
Residential construction	4	$                     648	$                    648	4	$                    648	$                    648
Lot and land development	-	-	-	7	3,228	3,228
1-4 family	4	895	882	5	1,308	1,295
Commercial real estate	2	96	96	2	96	96
Commercial	1	213	213	1	213	213
	11	$                  1,852	$                  1,839	19	$                 5,493	$                  5,480

____________

(1)Post-modification balances include direct charge-offs recorded at the time of modification.

The Type and the Post Modification Outstanding Recorded Investment of Loan modifications Made for TDRs

	Amount of TDR Loan Modifications
Type of Modification	Three-Months Ended December 31, 2013	Six-Months Ended December 31, 2013
Rescheduled future cash flows	$                               -	$                           168
	$                               -	$                           168

	Amount of TDR Loan Modifications
Type of Modification	Three-Months Ended December 31, 2012	Six-Months Ended December 31, 2012
Maturity date extension	$                               -	$                           114
Reduction of the stated interest rate	60	60
Rescheduled future cash flows	-	705
Combination of maturity date extension
and rescheduling of future cash flows	701	2,646
Combination of maturity date extension
and reduction of the stated interest rate	-	26
Combination of maturity date extension,
reduction of the stated interest rate,
and rescheduling of future cash flows	1,078	1,929
	$                       1,839	$                         5,480

Loan Modifications Accounted for as TDRs Within the Previous 12 Months that Subsequently Defaulted

	Three-Months Ended December 31, 2013		Six-Months Ended December 31, 2013
	Number of Contracts	Recorded Investment	Number of Contracts	Recorded Investment
1-4 family	2	$             272	2	$             272

	Three-Months Ended December 31, 2012		Six-Months Ended December 31, 2012
	Number of Contracts	Recorded Investment	Number of Contracts	Recorded Investment
1-4 family	2	$          1,896	2	$          1,896

Summary Of Unamortized Cost, Gross Unrealized Gains And Losses And The Fair Value Of Loans Measured At Fair Value

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains (1)	Losses (1)	Value
December 31, 2013
Commercial real estate	$        4,131	$                -	$            (84)	$     4,047
Multifamily	31,152	165	(31)	31,286
	$      35,283	$           165	$          (115)	$   35,333

		Gross
	Amortized	Unrealized	Fair
	Cost	Losses (1)	Value
June 30, 2013
Commercial real estate	$        2,787	$            (125)	$      2,662
Multifamily	11,115	(20)	11,095
	$      13,902	$            (145)	$    13,757

____________

(1)  Unrealized gains (losses) are recorded in other revenues on the Consolidated Statements of Comprehensive (Loss) Income.

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Cash And Cash Equivalents (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Cash And Cash Equivalents [Abstract]
Cash balances not federally insured	$ 87,509	$ 37,833
Balances on hand or with the Federal Reserve Bank	$ 1,748	$ 1,649

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Loans And Allowance For Probable Loan Losses (The Type And The Post Modification Outstanding Recorded Investment Of Loan Modifications Made For TDRs) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Dec. 31, 2012	Dec. 31, 2013		Dec. 31, 2012
Loans And Allowance For Probable Loan Losses [Abstract]
Maturity date extension				$ 114
Reduction of the stated interest rate	60			60
Rescheduled future cash flows		168		705
Combination of maturity date extension and rescheduling of future cash flows	701			2,646
Combination of maturity date extension and reduction of the stated interest rate				26
Combination of maturity date extension, reduction of the stated interest rate, and rescheduling of future cash flows	1,078			1,929
Post-Modification Outstanding Recorded Investment	$ 1,839	$ 168	[1]	$ 5,480

[1] Post-modification balances include direct charge-offs recorded at the time of modification.

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Fair Value Of Financial Instruments (Significant Unobservable Inputs) (Detail) (USD $) In Thousands, unless otherwise specified				6 Months Ended
	Dec. 31, 2013	Jun. 30, 2013	Jul. 29, 2011	Dec. 31, 2013 Level 3 [Member] Loans Measured At Fair Value [Member]	Dec. 31, 2013 Level 3 [Member] Corporate Equity Securities-Auction Rate Preferred [Member]	Dec. 31, 2013 Level 3 [Member] Corporate Obligations [Member]	Dec. 31, 2013 Level 3 [Member] Warrants [Member]	Dec. 31, 2013 Level 3 [Member] Minimum Loans Measured At Fair Value [Member]	Dec. 31, 2013 Level 3 [Member] Minimum Warrants [Member]	Dec. 31, 2013 Level 3 [Member] Maximum Loans Measured At Fair Value [Member]	Dec. 31, 2013 Level 3 [Member] Maximum Warrants [Member]	Dec. 31, 2013 Level 3 [Member] Weighted Average Loans Measured At Fair Value [Member]	Dec. 31, 2013 Level 3 [Member] Weighted Average Warrants [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loans measured at fair value	$ 35,333	$ 13,757		$ 35,333
Securities owned, at fair value					500	80
Fair value of warrants	$ 24,288	$ 24,197	$ 24,136				$ 24,288
Valuation Technique(s)				Discounted cash flow	Analysis of comparable securities	Discounted cash flow	Binomial Model
Unobservable Inputs				Discount Rate			Derived Volatility
Volatility rate								4.35%	46.00%	5.37%	52.00%
Weighted Average Volatility Rate												4.77%	46.00%

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Loans And Allowance For Probable Loan Losses (Schedule Of Loans Receivable On Non-Accrual Status) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable on non-accrual	$ 16,017	$ 22,446
Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable on non-accrual	573	601
Lot And Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable on non-accrual	992	2,418
1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable on non-accrual	6,485	7,792
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable on non-accrual	4,076	7,611
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable on non-accrual	$ 3,891	$ 4,024

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Interest Income And Interest Expense (Tables)

6 Months Ended

Dec. 31, 2013

Interest Income And Interest Expense [Abstract]

Interest Income And Interest Expense

	For the Three-Months Ended		For the Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Interest income:
Customer margin accounts	$                2,255	$                 2,139	$                4,498	$                4,279
Assets segregated for regulatory purposes	33	32	65	60
Stock borrowed	8,764	6,752	16,743	16,746
Loans	6,757	10,307	13,768	21,114
Bank investments	2,855	1,576	5,412	3,233
Other	1,390	2,465	2,742	4,464
	$              22,054	$               23,271	$              43,228	$              49,896
Interest expense:
Customer funds on deposit	$                     29	$                     58	$                     67	$                   113
Stock loaned	6,553	4,775	12,755	12,283
Deposits	91	123	185	270
Federal Home Loan Bank	649	683	1,317	1,433
Long-term debt	3,268	3,110	6,494	6,185
Other	859	963	1,679	1,743
	11,449	9,712	22,497	22,027
Total net interest revenue	$              10,605	$               13,559	$              20,731	$              27,869

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Restricted Cash And Cash Equivalents

6 Months Ended

Dec. 31, 2013

Restricted Cash And Cash Equivalents [Abstract]

Restricted Cash And Cash Equivalents

RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents represents funds received from Hilltopand Oak Hill upon completion of the $100,000,000,  five year, unsecured credit agreement from Hilltop and Oak Hill (the “Credit Agreement”) that was entered into on July 29, 2011. The Company is required to keep these funds in a restricted account until the Company’s Board of Directors, Hilltop and Oak Hill determine the amount(s) to be distributed to the Company’s subsidiaries.  See additional discussion in, “Debt Issued with Stock Purchase Warrants”.  Upon approval of the Board of Directors, Hilltop and Oak Hill, SWS Group contributed $20,000,000 of this cash in the second quarter of fiscal 2012 to the Bank as capital, loaned Southwest Securities $20,000,000 in the third quarter of fiscal 2012 to use in general operations by reducing Southwest Securities’ use of short-term borrowings for the financing of its day-to-day cash management needs, reduced its intercompany payable to Southwest Securities by $20,000,000 and contributed $10,000,000 in capital to Southwest Securities in the fourth quarter of fiscal 2012.  On March 28, 2013, the $20,000,000 loan from SWS Group to Southwest Securities was repaid and the Company’s Board of Directors, Hilltop and Oak Hill approved a $20,000,000 capital contribution to Southwest Securities.  At December 31, 2013, the remaining $30,000,000was held in a restricted account at SWS Group to be used for general corporate purposes.On January 8, 2014, the remaining $30,000,000 was loaned to Southwest Securities to use in general operationsby reducing Southwest Securities’ use of short-term borrowings for the financing of its day-to-day cash management needs.   Restricted cash and cash equivalents are excluded from cash and cash equivalents in the Consolidated Statements of Financial Condition and Consolidated Statements of Cash Flows.  The Company holds restricted cash and cash equivalents in money market funds.

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Loans And Allowance For Probable Loan Losses (Schedule Of Recorded Investment And Unpaid Principal Balance For Impaired Loans) (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Dec. 31, 2013		Jun. 30, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	$ 21,126	[1]	$ 32,132	[1]
Unpaid Principal Balance	24,450	[1]	39,754	[1]
Related Allowance	446		2,629
Average Recorded Investment	26,497	[2]	39,090	[2]
Interest Income Recognized	149	[3]	421	[3]
Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	578	[1]	605	[1]
Unpaid Principal Balance	746	[1]	754	[1]
Related Allowance			23
Average Recorded Investment	586	[2]	629	[2]
Lot And Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	995	[1]	2,428	[1]
Unpaid Principal Balance	1,248	[1]	2,867	[1]
Related Allowance	33		233
Average Recorded Investment	1,598	[2]	2,686	[2]
1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	7,880	[1]	9,361	[1]
Unpaid Principal Balance	9,657	[1]	11,582	[1]
Related Allowance	251		178
Average Recorded Investment	8,145	[2]	14,072	[2]
Interest Income Recognized	36	[3]	84	[3]
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	7,159	[1]	12,271	[1]
Unpaid Principal Balance	8,172	[1]	16,427	[1]
Related Allowance	1		105
Average Recorded Investment	8,890	[2]	17,833	[2]
Interest Income Recognized	93	[3]	182	[3]
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	4,514	[1]	7,467	[1]
Unpaid Principal Balance	4,627	[1]	8,124	[1]
Related Allowance	161		2,090
Average Recorded Investment	7,278	[2]	3,870	[2]
Interest Income Recognized	20	[3]	155	[3]
With No Related Allowance Recorded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	18,002	[1]	19,739	[1]
Unpaid Principal Balance	21,097	[1]	25,838	[1]
Average Recorded Investment	16,167		18,286	[2]
Interest Income Recognized	103	[3]	210	[3]
With No Related Allowance Recorded | Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	578	[1]	383	[1]
Unpaid Principal Balance	746	[1]	471	[1]
Average Recorded Investment	407		438	[2]
With No Related Allowance Recorded | Lot And Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	45	[1]	102	[1]
Unpaid Principal Balance	168	[1]	324	[1]
Average Recorded Investment	40		807	[2]
With No Related Allowance Recorded | 1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	6,276	[1]	5,818	[1]
Unpaid Principal Balance	8,024	[1]	7,712	[1]
Average Recorded Investment	5,217		7,674	[2]
Interest Income Recognized	5	[3]	17	[3]
With No Related Allowance Recorded | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	7,145	[1]	9,006	[1]
Unpaid Principal Balance	8,151	[1]	12,239	[1]
Average Recorded Investment	6,261		7,785	[2]
Interest Income Recognized	93	[3]	167	[3]
With No Related Allowance Recorded | Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	3,958	[1]	4,430	[1]
Unpaid Principal Balance	4,008	[1]	5,092	[1]
Average Recorded Investment	4,242		1,582	[2]
Interest Income Recognized	5	[3]	26	[3]
With an Allowance Recorded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	3,124	[1]	12,393
Unpaid Principal Balance	3,353	[1]	13,916
Related Allowance	446		2,629
Average Recorded Investment	10,330	[2]	20,804	[2]
Interest Income Recognized	46	[3]	211	[3]
With an Allowance Recorded | Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment			222
Unpaid Principal Balance			283
Related Allowance			23
Average Recorded Investment	179	[2]	191	[2]
With an Allowance Recorded | Lot And Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	950	[1]	2,326
Unpaid Principal Balance	1,080	[1]	2,543
Related Allowance	33		233
Average Recorded Investment	1,558	[2]	1,879	[2]
With an Allowance Recorded | 1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	1,604	[1]	3,543
Unpaid Principal Balance	1,633	[1]	3,870
Related Allowance	251		178
Average Recorded Investment	2,928	[2]	6,398	[2]
Interest Income Recognized	31	[3]	67	[3]
With an Allowance Recorded | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	14	[1]	3,265
Unpaid Principal Balance	21	[1]	4,188
Related Allowance	1		105
Average Recorded Investment	2,629	[2]	10,048	[2]
Interest Income Recognized			15	[3]
With an Allowance Recorded | Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	556	[1]	3,037
Unpaid Principal Balance	619	[1]	3,032
Related Allowance	161		2,090
Average Recorded Investment	3,036	[2]	2,288	[2]
Interest Income Recognized	$ 15	[3]	$ 129	[3]

[1] The difference between the unpaid principal balance and the recorded investment of impaired loans with no related allowance recorded is primarily comprised of partial charge-offs that were previously recognized.

[2] Represents the average recorded investment for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013, respectively.

[3] Represents interest income recognized on impaired loans for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013, respectively.

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Deposits (Tables)

6 Months Ended

Dec. 31, 2013

Deposits [Abstract]

Bank Core Deposits

	December 31, 2013			June 30, 2013
	Amount	Percent		Amount	Percent
Noninterest bearing demand accounts	$         56,665	5.7	%	$         55,221	5.5	%
Interest bearing demand accounts	8,652	0.9		7,723	0.8
Savings accounts	881,970	88.6		883,229	88.9
Limited access money market accounts	19,433	2.0		17,212	1.7
Certificates of deposit, less than $100,000	16,617	1.7		17,829	1.8
Certificates of deposit, $100,000 and greater	11,428	1.1		12,505	1.3
	$       994,765	100.0	%	$       993,719	100.0	%

Scheduled Maturities Of Certificates of Deposit

	1 Year or Less	> 1 Year Through 2 Years	> 2 Years Through 3 Years	> 3 Years Through 4 Years	Thereafter	Total
Certificates of deposit, less than $100,000	$   12,284	$      3,382	$         410	$         185	$           356	$   16,617
Certificates of deposit, $100,000 and greater	7,862	2,680	683	203	-	11,428
	$   20,146	$      6,062	$      1,093	$         388	$           356	$   28,045

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Preferred Stock

6 Months Ended

Dec. 31, 2013

Preferred Stock [Abstract]

Preferred Stock

PREFERRED STOCK

On March 17, 2011 in conjunction with the transaction with Hilltop and Oak Hill, the Board of Directors created the Series A Preferred Stock, par value $1.00 per share.  The Company has 17,400 authorized shares of Series A Preferred Stock, and no shares wereissued or outstanding at December  31, 2013 and June 30, 2013.  If any shares of Series A Preferred Stock are issued, the Series A Preferred Stock will not be entitled to vote with the common stock and will be convertible into shares of common stock at a fixed conversion ratio of 1,000 shares of common stock for each share of Series A Preferred Stock outstanding.  The conversion ratio is subject to certain anti-dilution adjustments for extraordinary corporate transactions, such as stock splits, dividends and combinations, the issuance of stock purchase rights, debt or asset distributions (including cash), tender offers or exchange offers and entry into a shareholder rights plan. Each share of Series A Preferred Stock would automatically convert into shares of common stock if such shares were transferred by Hilltop or Oak Hill to a non-affiliate. See additional discussion concerning the Series A Preferred Stock in“Debt Issued with Stock Purchase Warrants.”

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Repurchase Of Treasury Stock

6 Months Ended

Dec. 31, 2013

Repurchase Of Treasury Stock [Abstract]

Repurchase Of Treasury Stock

REPURCHASE OF TREASURY STOCK

Periodically, SWS repurchases shares of common stock under a plan approved by the Board of Directors.  Prior to February 28, 2013, SWS was authorized to repurchase 500,000 shares of common stock from time to time in the open market.  During fiscal year 2013, SWS Group did not repurchase any shares of common stock under this plan. As of December  31, 2013, the Company was not authorized to repurchase shares of common stock under a repurchase plan and did not intend to repurchase any shares of common stock.  Any repurchase of shares of common stock by the Company would require approval from the Company’s Board of Directors, Hilltop, Oak Hill and regulatory authorities.

The trustee under the deferred compensation plan periodically purchases the Company’s common stock in the open market in accordance with the terms of the plan.  This stock is classified as treasury stock in the consolidated financial statements, but participates in dividends declared by SWS.  The plan purchased 50,000 shares during the six-months ended December 31, 2013 at a cost of $288,000, or $5.76 per share.  The plan purchased 20,675 shares during the six-months ended December 31, 2012 at a cost of $121,000, or $5.86 per share.  During the six-months ended December 31, 2013 and December 31, 2012, 31,532 and 18,068 shares, respectively, were sold or distributed pursuant to the plan. 

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Interest Income And Interest Expense (Schedule Of Components Of Interest Income And Expense) (Detail) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Interest expense	$ 11,449,000	$ 9,712,000	$ 22,497,000	$ 22,027,000
Total net interest revenue	10,605,000	13,559,000	20,731,000	27,869,000
Interest Income [Member]
Customer margin accounts	2,255,000	2,139,000	4,498,000	4,279,000
Assets segregated for regulatory purposes	33,000	32,000	65,000	60,000
Stock borrowed	8,764,000	6,752,000	16,743,000	16,746,000
Loans	6,757,000	10,307,000	13,768,000	21,114,000
Bank investments	2,855,000	1,576,000	5,412,000	3,233,000
Other	1,390,000	2,465,000	2,742,000	4,464,000
Interest income	22,054,000	23,271,000	43,228,000	49,896,000
Interest Expense [Member]
Customer funds on deposit	29,000	58,000	67,000	113,000
Stock loaned	6,553,000	4,775,000	12,755,000	12,283,000
Deposits	91,000	123,000	185,000	270,000
Federal Home Loan Bank	649,000	683,000	1,317,000	1,433,000
Long-term debt	3,268,000	3,110,000	6,494,000	6,185,000
Other	859,000	963,000	1,679,000	1,743,000
Interest expense	$ 11,449,000	$ 9,712,000	$ 22,497,000	$ 22,027,000

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Receivable From And Payable To Brokers, Dealers And Clearing Organizations (Schedule Of Payable To Brokers, Dealer And Clearing Organizations) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Jun. 30, 2013
Receivable:
Securities failed to deliver	$ 6,226		$ 9,708
Securities borrowed	1,720,673		1,546,376
Correspondent broker/dealers	37,034		45,435
Clearing organizations	27,373		25,285
Other	15,883		71,670
Receivable from brokers, dealers and clearing organizations	1,807,189		1,698,474
Payable:
Securities failed to receive	14,275		39,024
Securities loaned	1,640,922	[1]	1,471,319	[1]
Correspondent broker/dealers	12,474		16,352
Other	7,901		6,276
Payable to brokers, dealers and clearing organizations	$ 1,675,572		$ 1,532,971

[1] Under securities lending agreements, SWS had repledged $1,619,010,000 and $1,452,911,000 at December 31, 2013 and June 30, 2013, respectively.

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Advances From The Federal Home Loan Bank (Tables)

6 Months Ended

Dec. 31, 2013

Advances From The Federal Home Loan Bank [Abstract]

Advances From The Federal Home Loan Bank

	December 31, 2013	June 30, 2013
Maturity:
Due in one year	$               14,344	$            15,486
Due in two years	3,732	1,859
Due in five years	50,986	48,956
Due in seven years	14,856	12,809
Due in ten years	4,822	8,424
Due in twenty years	9,620	10,163
	98,360	97,697
Restructuring prepayment penalty	(109)	(132)
	$               98,251	$            97,565

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Interest Income And Interest Expense

6 Months Ended

Dec. 31, 2013

Interest Income And Interest Expense [Abstract]

Interest Income and Interest Expense

INTEREST INCOME AND INTEREST EXPENSE

For the three and six-months ended December  31, 2013 and 2012, the components of interest income and expense were as follows (in thousands):

	For the Three-Months Ended		For the Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Interest income:
Customer margin accounts	$                2,255	$                 2,139	$                4,498	$                4,279
Assets segregated for regulatory purposes	33	32	65	60
Stock borrowed	8,764	6,752	16,743	16,746
Loans	6,757	10,307	13,768	21,114
Bank investments	2,855	1,576	5,412	3,233
Other	1,390	2,465	2,742	4,464
	$              22,054	$               23,271	$              43,228	$              49,896
Interest expense:
Customer funds on deposit	$                     29	$                     58	$                     67	$                   113
Stock loaned	6,553	4,775	12,755	12,283
Deposits	91	123	185	270
Federal Home Loan Bank	649	683	1,317	1,433
Long-term debt	3,268	3,110	6,494	6,185
Other	859	963	1,679	1,743
	11,449	9,712	22,497	22,027
Total net interest revenue	$              10,605	$               13,559	$              20,731	$              27,869

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Earnings (Loss) Per Share ("EPS")

6 Months Ended

Dec. 31, 2013

Earnings (Loss) Per Share ("EPS") [Abstract]

Earnings (Loss) Per Share ("EPS")

EARNINGS PER SHARE (“EPS”)

The following reconciles the weighted average shares outstanding used in the basic and diluted EPS computations for the three and six-months ended December 31, 2013 and 2012 (in thousands, except share and per share amounts):

	Three-Months Ended		Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Net income	$                1,660	$              10,369	$                1,983	$                4,725
Interest expense on long-term debt	-	2,022	-	4,020
Unrealized gain on warrant valuation	-	(7,645)	-	(2,324)
Adjusted net income	$                1,660	$                4,746	$                1,983	$                6,421
Weighted average shares outstanding – basic	32,955,629	32,827,652	32,943,875	32,813,910
Effect of dilutive securities	-	17,391,304	-	17,391,304
Weighted average shares outstanding – diluted	32,955,629	50,218,956	32,943,875	50,205,214
Earnings per share – basic
Net income	$                  0.05	$                  0.32	$                  0.06	$                  0.14
Earnings per share – diluted
Net income	$                  0.05	$                  0.09	$                  0.06	$                  0.13

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (paid or unpaid) are treated as participating securities and are factored into the calculation of EPS, except in periods with a net loss, when they are excluded.

For the three and six-months ended December 31, 2013, the warrants to acquire 17,391,304 shares of common stock were anti-dilutive and were excluded from the calculation of diluted weighted average shares outstanding and diluted EPS.

The Company did not declare a dividend during the six-months ended December 31, 2013 and 2012. 

On a quarterly basis, the Board of Directors determines whether the Company will pay a cash dividend.  The payment and rate of dividends on the Company’s common stock is subject to several factors including limitations imposed by the terms of the Credit Agreement with Hilltop and Oak Hill, regulatory approval, operating results, the Company’s financial requirements, and the availability of funds from the Company’s subsidiaries, including the broker/dealer subsidiaries, which may be subject to restrictions under the net capital rules of the SEC and FINRA, and the Bank, which may be subject to restrictions by federal banking agencies. Specifically, the Credit Agreement with Hilltop and Oak Hill only allows the Company to pay a quarterly cash dividend of $0.01 per share when the Company is not in default of any terms of the Credit Agreement.  The Company currently intends to retain earnings to fund operations and does not plan to pay dividends on its common stock in the near future.

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Cash And Cash Equivalents

6 Months Ended

Dec. 31, 2013

Cash And Cash Equivalents [Abstract]

Cash And Cash Equivalents

CASH AND CASH EQUIVALENTS

For the purposes of the Consolidated Statements of Cash Flows, SWS considers cash to include cash on hand and in bank accounts.  In addition, SWS considers funds due from banks and interest bearing deposits in other banks to be cash. Highly liquid debt instruments purchased with maturities of three months or less, when acquired, are considered to be cash equivalents.  The Federal Deposit Insurance Corporation (“FDIC”) insures deposit accounts up to $250,000.  At December 31, 2013 and June 30, 2013, cash balances included $87,509,000 and $37,833,000, respectively, thatwere not federally insured because they exceeded federal insurance limits.  This at-risk amount is subject to fluctuation on a daily basis, but management does not believe there is significant risk on these deposits.

The Bank is required to maintain reserve balances on hand or with the Federal Reserve Bank of Dallas.  At December 31, 2013 and June 30, 2013, these reserve balances amounted to $1,748,000 and$1,649,000, respectively.

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Segment Reporting

6 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Reporting

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 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 employees that are 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”in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K;

· 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 $20,000 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 the three and six-months ended December 31, 2013 and  2012:

	UNAUDITED FINANCIAL INFORMATION
(in thousands)	Clearing	Retail Brokerage	Institutional Brokerage	Banking	Other Consolidated Entities	Consolidated SWS Group, Inc.
Three-months ended
December 31, 2013
Operating revenue	$     3,752	$        27,159	$          24,690	$       1,592	$                688	$           57,881
Net intersegment revenues	(180)	180	(11)	828	(817)	-
Net interest revenue	1,549	912	2,575	8,872	(3,303)	10,605
Net revenues	5,301	28,071	27,265	10,464	(2,615)	68,486
Non-interest expenses	3,962	25,068	21,316	5,140	9,673	65,159
Other losses	-	-	-	-	(2,058)	(2,058)
Depreciation and amortization	5	231	78	373	676	1,363
Net income (loss) before taxes	1,339	3,003	5,949	5,324	(14,346)	1,269
Three-months ended
December 31, 2012
Operating revenue	$     3,233	$        25,284	$          29,368	$          694	$             3,207	$           61,786
Net intersegment revenues	(166)	145	(170)	865	(674)	-
Net interest revenue	1,488	840	3,190	11,077	(3,036)	13,559
Net revenues	4,721	26,124	32,558	11,771	171	75,345
Non-interest expenses	4,836	25,596	23,219	8,799	9,046	71,496
Other gains	-	-	-	-	11,761	11,761
Depreciation and amortization	17	219	108	435	570	1,349
Net income (loss) before taxes	(115)	528	9,339	2,972	2,886	15,610

	UNAUDITED FINANCIAL INFORMATION
(in thousands)	Clearing	Retail Brokerage	Institutional Brokerage	Banking	Other Consolidated Entities	Consolidated SWS Group, Inc.
Six-months ended
December 31, 2013
Operating revenue	$     7,007	$        55,942	$          50,622	$       1,873	$             1,306	$         116,750
Net intersegment revenues	(359)	359	(11)	1,680	(1,669)	-
Net interest revenue	2,968	1,967	4,646	17,678	(6,528)	20,731
Net revenues	9,975	57,909	55,268	19,551	(5,222)	137,481
Non-interest expenses	8,863	52,655	43,114	13,032	18,302	135,966
Other losses	-	-	-	-	(91)	(91)
Depreciation and amortization	11	452	163	784	1,311	2,721
Net income (loss) before taxes	1,112	5,254	12,154	6,519	(23,615)	1,424
Assets (*)	254,852	224,261	2,064,521	1,264,071	40,050	3,847,755
Six-months ended
December 31, 2012
Operating revenue	$     6,496	$        52,481	$          59,080	$          760	$             2,768	$         121,585
Net intersegment revenues	(353)	348	(59)	1,761	(1,697)	-
Net interest revenue	3,183	1,709	6,373	22,644	(6,040)	27,869
Net revenues	9,679	54,190	65,453	23,404	(3,272)	149,454
Non-interest expenses	9,599	53,343	46,189	19,151	18,170	146,452
Other gains	-	-	-	-	3,576	3,576
Depreciation and amortization	34	438	209	866	1,194	2,741
Net income (loss) before taxes	80	847	19,264	4,253	(17,866)	6,578
Assets (*)	312,038	229,419	1,511,605	1,285,053	65,265	3,403,380

(*)  Assets are reconciled to total assets as presented in the December  31, 2013 and 2012 Consolidated Statements of Financial Condition as follows (in thousands):

	December 31, 2013	December 31, 2012
Amount as presented above	$         3,847,755	$         3,403,380
Reconciling items:
Unallocated assets:
Cash	19,473	24,302
Receivables from brokers, dealers and clearing
organizations	22,109	45,078
Receivable from clients, net of allowances	22,173	24,943
Other assets	29,136	19,353
Unallocated eliminations	(9,984)	(3,003)
Total assets	$         3,930,662	$         3,514,053

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Short-Term Borrowings (Narrative) (Detail) (USD $)	6 Months Ended	12 Months Ended
	Dec. 31, 2013	Jun. 30, 2013
Short-term Debt [Line Items]
Amount of unsecured letters of credit outstanding		$ 50,000,000
Minimum tangible net worth	275,000,000
Unsecured Credit Facility
Short-term Debt [Line Items]
Total amount available for borrowing	20,000,000	20,000,000
Letters Of Credit [Member]
Short-term Debt [Line Items]
Interest rate of letter of credit	0.50%
Maximum amount available under letter of credit agreement	75,000,000
Letter of credit collateralized marketable securities		71,035,000
Unsecured Revolving Credit Facility
Short-term Debt [Line Items]
Available client securities under customer margin loans to be pledged	342,160,000	329,013,000
Pledged customer securities	21,912,000	18,408,000
Commercial Banking
Short-term Debt [Line Items]
Federal funds rate plus basis points	0.005
Total amount available for borrowing	36,627,000	28,267,000
Southwest Securities [Member] | Uncommitted Credit Facility
Short-term Debt [Line Items]
Broker loan lines	425,000,000
Federal funds rate	0.07%	0.07%
Amount outstanding under credit agreements	75,000,000	86,500,000
Value of collateralized securities	126,783,000	120,568,000
Southwest Securities [Member] | Unsecured Credit Facility
Short-term Debt [Line Items]
Broker loan lines	20,000,000
Amount of unsecured letters of credit outstanding	0	0
Southwest Securities [Member] | Committed Lines Of Credit [Member]
Short-term Debt [Line Items]
Amount of unsecured letters of credit outstanding	0
Agreement with an unaffiliated bank secured, uncommitted revolving credit	45,000,000
Commitment fee	0.00375
Federal funds rate plus basis points	0.0125
Minimum tangible net worth	150,000,000
Collateral of secured borrowings		68,605,000
Outstanding amount of letters of credit		45,000,000
Option Clearing Corporation [Member]
Short-term Debt [Line Items]
Pledged customer securities	$ 86,418,000

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Securities Purchased /Sold Under Agreements To Resell/Repurchase (Tables)

6 Months Ended

Dec. 31, 2013

Securities Purchased /Sold Under Agreements To Resell/Repurchase [Abstract]

Reverse Repurchase Agreements And Repurchase Agreements

December 31, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Reverse
Repurchase
Agreements	$                  73,381	$                              -	$                       73,381	$         (72,866)	$                -	$            515
Repurchase
Agreements	62,314	-	62,314	(62,314)	-	-

June 30, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Reverse
Repurchase
Agreements	$                  51,996	$                              -	$                       51,996	$         (51,808)	$                -	$            188
Repurchase
Agreements	37,012	-	37,012	(37,012)	-	-

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Restricted Cash And Cash Equivalents (Details) (USD $)	0 Months Ended			3 Months Ended	0 Months Ended	3 Months Ended
	Jul. 29, 2011	Dec. 31, 2013	Jun. 30, 2013	Dec. 29, 2011 Southwest Securities, FSB [Member]	Mar. 28, 2013 Southwest Securities [Member]	Jun. 29, 2012 Southwest Securities [Member]	Mar. 29, 2012 Southwest Securities [Member]	Jan. 31, 2014 Subsequent Event [Member] Southwest Securities [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash and cash equivalents	$ 100,000,000	$ 30,049,000	$ 30,047,000
Maturity period of unsecured credit agreement	5 years
Capital contribution				20,000,000	20,000,000	10,000,000
Intercompany loans provided							20,000,000	30,000,000
Reduction in intercompany payable						20,000,000
Repayment of loan					20,000,000
Restricted account to be used for general corporate purposes		$ 30,000,000

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Securities Held To Maturity (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Securities Held To Maturity [Abstract]
GNMA securities at cost	$ 35,525
GNMA securities premium	525
Premium amortization period	15 years
Weighted average yield	2.40%
Weighted average maturity	2 years 2 months 12 days
Amortization of the premium		21	32	41	61
Principal and interest payments received		1,223	2,306	3,025	4,488
Interest income recorded		$ 113	$ 172	$ 238	$ 359

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Consolidated Statements Of Financial Condition (USD $)	Dec. 31, 2013	Jun. 30, 2013
Assets
Cash and cash equivalents	$ 121,130,000	$ 111,046,000
Restricted cash and cash equivalents	30,049,000	30,047,000
Assets segregated for regulatory purposes	174,614,000	164,737,000
Receivable from brokers, dealers and clearing organizations	1,807,189,000	1,698,474,000
Receivable from clients, net of allowances	266,573,000	286,446,000
Loans, net (including $35,333 of loans measured at fair value at December 31, 2013 and $13,757 at June 30, 2013)	528,217,000	608,583,000
Securities owned, at fair value	236,202,000	209,633,000
Securities held to maturity	14,595,000	17,423,000
Securities purchased under agreements to resell	73,381,000	51,996,000
Goodwill	7,552,000	7,552,000
Securities available for sale	580,291,000	503,276,000
Other assets	90,869,000	91,160,000
Total assets	3,930,662,000	3,780,373,000
Liabilities and Stockholders' Equity
Short-term borrowings	75,000,000	131,500,000
Payable to brokers, dealers and clearing organizations	1,675,572,000	1,532,971,000
Payable to clients	366,569,000	335,655,000
Deposits	994,765,000	993,719,000
Securities sold under agreements to repurchase	62,314,000	37,012,000
Securities sold, not yet purchased, at fair value	155,103,000	134,735,000
Drafts payable	26,445,000	28,889,000
Advances from Federal Home Loan Bank (the "FHLB")	98,251,000	97,565,000
Long-term debt, net	85,350,000	83,102,000
Stock purchase warrants ("warrants")	24,288,000	24,197,000
Other liabilities	53,541,000	65,742,000
Total liabilities	3,617,198,000	3,465,087,000
Commitments and contingencies
Stockholders' equity:
Preferred stock of $1.00 par value. Authorized 100,000 shares; none issued
Common stock of $0.10 par value. Authorized 60,000,000 shares, issued 33,312,140 and outstanding 32,747,990 shares at December 31, 2013; issued 33,312,140 and outstanding 32,629,213 shares at June 30,2013	3,331,000	3,331,000
Additional paid-in capital	323,963,000	325,030,000
Accumulated deficit	(1,377,000)	(3,361,000)
Accumulated other comprehensive income - unrealized holding loss, net of tax of $(5,176) at December 31, 2013 and $(2,963) at June 30, 2013	(9,391,000)	(5,334,000)
Deferred compensation, net	3,203,000	3,352,000
Treasury stock (564,150 shares at December 31, 2013 and 682,927 shares at June 30, 2013, at cost)	(6,265,000)	(7,732,000)
Total stockholders' equity	313,464,000	315,286,000
Total liabilities and stockholders' equity	$ 3,930,662,000	$ 3,780,373,000

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Income Taxes (Tables)

6 Months Ended

Dec. 31, 2013

Income Taxes [Abstract]

Summary Of Income Tax Expense (Benefit)

	Three-Months Ended		Six-Months Ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Income tax expense at the statutory rate	$                  444	$              5,463	$                 499	$              2,302
Tax exempt interest	(195)	(258)	(466)	(504)
Tax exempt income from company-owned
life insurance ("COLI")	(233)	99	(533)	(107)
State income taxes, net of federal tax benefit	(132)	(370)	(12)	(349)
Non-deductible meals and entertainment	35	42	65	79
Non-deductible compensation	57	266	46	516
Valuation allowance	(367)	-	(156)	-
Other, net	-	(1)	(2)	(84)
	$                 (391)	$              5,241	$                (559)	$              1,853

Schedule Of Tax Effects Of Temporary Differences That Give Rise To Deferred Tax Assets And Deferred Tax Liabilities

	December 31, 2013	June 30, 2013
Deferred tax assets:
Employee compensation plans	$                9,695	$            11,378
Net operating loss carryforward	11,440	10,507
Allowance for probable loan losses	3,151	3,400
Securities available for sale	5,703	3,589
Bad debt reserve	2,103	2,177
Deferred rent	1,919	1,631
State taxes	909	909
Investment in unconsolidated ventures	643	909
Deferred income on loans	693	810
REO	287	139
Long-term debt	177	-
Other	1,105	513
Gross deferred tax assets	37,825	35,962
Valuation allowance	(30,648)	(30,870)
Net deferred tax assets	7,177	5,092
Deferred tax liabilities:
Interest rate swaps in cash flow hedging relationships	$                  (528)	$                (626)
Fixed assets, net	(448)	(426)
Investment in unconsolidated ventures	-	(120)
Long-term debt	-	(82)
Other	(498)	(249)
Total gross deferred tax liabilities	(1,474)	(1,503)
Net deferred tax assets – included in other assets on the
Consolidated Statements of Financial Condition	$                5,703	$              3,589

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Regulatory Capital Requirements (Summary Of Bank's Capital Amounts And Ratios) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Regulatory Capital Requirements [Abstract]
Actual Amount, Total risk-based capital	$ 183,794	$ 181,909
Actual Amount, Tier I risk-based capital	175,405	172,734
Actual Amount,Tier I (core) capital	175,405	172,734
Actual Ratio, Total risk-based capital	27.40%	24.90%
Actual Ratio, Tier I risk-based capital	26.20%	23.60%
Actual Ratio, Tier I (core) capital	13.80%	13.50%
For Capital Adequacy Purposes Amount, Total risk-based capital	53,603	58,465
For Capital Adequacy Purposes Amount, Tier I risk-based capital	26,802	29,233
For Capital Adequacy Purposes Amount, Tier I (core) capital	50,961	51,081
For Capital Adequacy Purposes Ratio, Total risk-based capital	8.00%	8.00%
For Capital Adequacy Purposes Ratio, Tier I risk-based capital	4.00%	4.00%
For Capital Adequacy Purposes Ratio,Tier I (core) capital	4.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Total risk-based capital	67,004	73,081
To Be Well Capitalized Under Prompt Corrective Action Provisions, Tier I risk-based capital	40,203	43,849
To Be Well Capitalized Under Prompt Corrective Action Provisions, Tier I (core) capital	$ 63,702	$ 63,851
To Be Well Capitalized Under Prompt Corrective Action Provisions, Total risk-based capital	10.00%	10.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Tier I risk-based capital	6.00%	6.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Tier I (core) capital	5.00%	5.00%

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Fair Value Of Financial Instruments (Recorded Amounts, Fair Value And Level Of Fair Value Hierarchy Of Financial Instruments) (Detail) (USD $)	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012	Jun. 29, 2012	Jul. 29, 2011
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 121,130,000	$ 111,046,000	$ 79,631,000	$ 81,826,000
Restricted cash and cash equivalents	30,049,000	30,047,000			100,000,000
GNMA securities	14,595,000	17,423,000
Short-term borrowings	75,000,000	131,500,000
Servicing assets	436,000	412,000
Short Term Borrowings	75,000,000	131,500,000
Time deposits	28,045,000
Advances from FHLB	98,251,000	97,565,000
Long-term debt	85,350,000	83,102,000
Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Servicing assets
Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Servicing assets
Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Servicing assets	436,000
Recorded Value [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	121,130,000	111,046,000
Restricted cash and cash equivalents	30,049,000	30,047,000
Short-term borrowings	75,000,000	131,500,000
Short Term Borrowings	75,000,000	131,500,000
Recorded Value [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
GNMA securities	14,595,000	17,423,000
Deposits with no stated maturity	966,720,000	963,385,000
Time deposits	28,045,000	30,334,000
Advances from FHLB	98,251,000	97,565,000
Recorded Value [Member] | Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Purchase mortgage loans held for investment	89,583,000	174,037,000
Other loans held for investment	403,301,000	420,789,000
Servicing assets	436,000	412,000
Long-term debt	85,350,000	83,102,000
Fair Value [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	121,130,000	111,046,000
Restricted cash and cash equivalents	30,049,000	30,047,000
Short-term borrowings	75,000,000	131,500,000
Short Term Borrowings	75,000,000	131,500,000
Fair Value [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
GNMA securities	14,982,000	17,965,000
Deposits with no stated maturity	962,054,000	959,578,000
Time deposits	28,331,000	30,736,000
Advances from FHLB	99,621,000	100,408,000
Fair Value [Member] | Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Purchase mortgage loans held for investment	89,430,000	173,738,000
Other loans held for investment	446,568,000	437,916,000
Servicing assets	436,000	414,000
Long-term debt	$ 95,817,000	$ 86,822,000

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net income	$ 1,983	$ 4,725
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	2,721	2,741
Accretion of discount on long-term debt	2,248	1,939
Amortization of deferred debt issuance costs	246	246
Increase (decrease) in fair value of warrants	91	(3,576)
Amortization of premiums /discounts on loans purchased	(21)	(72)
Amortization of premiums /discounts on investment securities	1,218	969
Amortization of prepayment penalty on advances from FHLB	23	11
Provision for doubtful accounts on receivables from customers	480	480
Recapture of loan loss and write downs on real estate owned ("REO")	(3,090)	(524)
Deferred income tax (benefit) expense	(404)	4,719
Allowance for deferred tax asset	(222)
Deferred compensation for deferred compensation plan and restricted stock plans	(1,830)	(328)
Gain on sale of loans	(304)	(63)
Loss on fixed assets transactions	26	3
Gain on sale of available for sale investment securities		(3,645)
(Gain) loss on sale of REO and other repossessed assets	(364)	657
Gain on issuer's redemption of investment securities		(7)
Equity in earnings of unconsolidated ventures	(200)	(1,018)
Dividend received on investments	(10)	(9)
Gain of fair value option of loans	(195)
Gain on interest rate swaps	(509)
Change in operating assets and liabilities:
Increase in assets segregated for regulatory purposes	(9,877)	(32,365)
Net change in broker, dealer and clearing organization accounts	33,886	(48,220)
Net change in client accounts	50,307	73,737
Increase in securities owned	(26,569)	(110,634)
Increase in securities purchased under agreements to resell	(21,385)	(8,249)
Decrease (increase) in other assets	737	(2,714)
Increase (decrease) in drafts payable	(2,444)	8,360
Increase in securities sold, not yet purchased	20,368	15,782
Decrease in other liabilities	(10,247)	(8,149)
Net cash provided by (used in) operating activities	36,663	(105,204)
Cash flows from investing activities:
Purchase of fixed assets and capitalized improvements on REO	(2,507)	(1,858)
Proceeds from the sale of fixed assets and real estate	5,664	12,361
Loan originations and purchases	(1,276,189)	(3,328,411)
Loan repayments	1,354,275	3,347,562
Purchase of investment securities	(123,846)	(88,157)
Proceeds from the issuer's redemption of investment securities		12,000
Cash received on investments	27,009	23,794
Proceeds from the sale of loans held for sale	3,417
Proceeds from the sale of FHLB stock		428
Purchases of FHLB stock	(45)
Proceeds from the sale/maturity of available for sale securities	15,235	29,116
Cash paid to unwind interest rate swap position	(12)
Net cash provided by investing activities	3,001	6,835
Cash flows from financing activities:
Payments on short-term borrowings	(3,033,297)	(1,193,000)
Cash proceeds from short-term borrowings	2,976,797	1,306,500
Increase (decrease) in deposits	1,046	(15,596)
Advances from the FHLB	5,540
Payments on advances from the FHLB	(4,877)	(6,427)
Fee payment for FHLB restructuring		(166)
Cash proceeds on securities sold under agreements to repurchase	25,302	4,849
Proceeds related to deferred compensation plan	197	135
Purchase of treasury stock related to deferred compensation plan	(288)	(121)
Net cash (used in) provided by financing activities	(29,580)	96,174
Net increase (decrease) in cash and cash equivalents	10,084	(2,195)
Cash and cash equivalents at beginning of period	111,046	81,826
Cash and cash equivalents at end of period	121,130	79,631
Supplemental schedule of non-cash investing and financing activities:
Grants of restricted stock	2,071	676
Foreclosures on loans	2,674	10,891
Cash paid during the year for:
Interest	19,768	26,919
Income taxes

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Regulatory Capital Requirements (Schedule Of Net Capital Position Of Southwest Securities) (Detail) (Southwest Securities [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Southwest Securities [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Net Capital, Total	$ 153,885	$ 141,112
Less: required net capital	6,574	6,843
Excess net capital	147,311	134,269
Net capital as a percent of aggregate debit items	46.80%	41.20%
Net capital in excess of 5% aggregate debit items	$ 137,451	$ 124,005

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Loans And Allowance For Probable Loan Losses (Summary Of Loans Receivable) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	$ 537,665	$ 620,926	$ 823,822
Allowance for probable loan losses	(9,448)	(12,343)
Loans, net	528,217	608,583
Loans Measured At Fair Value [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	35,333	13,757
Residential Construction [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees			2,216
Lot And Land Development [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees			11,458
1-4 Family [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees			438,097
Commercial Real Estate [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees			257,514
Multifamily [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees			48,654
Commercial Loans [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees			64,179
Consumer Loans [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees			1,704
Loans Measured At Fair Value [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	35,333	13,757
Loans Measured At Fair Value [Member] | Commercial Real Estate [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	4,047	2,662
Loans Measured At Fair Value [Member] | Multifamily [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	31,286	11,095
Other Loans Receivable [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	502,332	607,169
Other Loans Receivable [Member] | Residential Construction [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	731	1,367
Other Loans Receivable [Member] | Lot And Land Development [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	5,998	8,988
Other Loans Receivable [Member] | 1-4 Family [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	144,738	233,947
Other Loans Receivable [Member] | Commercial Real Estate [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	186,522	213,452
Other Loans Receivable [Member] | Multifamily [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	91,917	88,738
Other Loans Receivable [Member] | Commercial Loans [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	69,690	58,718
Other Loans Receivable [Member] | Consumer Loans [Member]
Loans receivable:
Loans receivable, net of premiums, discounts and deferred fees	$ 2,736	$ 1,959

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Preferred Stock (Narrative) (Detail) (USD $)	Dec. 31, 2013	Jun. 30, 2013
Equity [Line Items]
Preferred Stock ,par value	$ 1.00	$ 1.00
Authorized shares of series A preferred stock	100,000	100,000
Preferred Stock, issued	0	0
Series A Preferred Stock [Member]
Equity [Line Items]
Preferred Stock ,par value	$ 1.00
Authorized shares of series A preferred stock	17,400	17,400
Preferred Stock, issued	0	0
Preferred Stock, outstanding	0	0
Preferred stock convertible into shares of common stock at a fixed conversion ratio	1,000

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Fair Value Of Financial Instruments

6 Months Ended

Dec. 31, 2013

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s fair value policies are discussed in “Note 1(x). Fair Value of Financial Instruments”  in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.

Recurring Fair Value Measurements.

The following tables summarize by level within the fair value hierarchy “Loans measured at fair value,” “Securities owned, at fair value,”“Securities available for sale,” “Interest Rate Swaps”, “Securities sold, not yet purchased, at fair value” and “Warrants” which were measured at fair value on a recurring basis at December 31, 2013 and June 30, 2013.

(in thousands)	Level 1	Level 2	Level 3	Total
December 31, 2013
ASSETS
Loans measured at fair value
Loans measured at fair value	$            -	$             -	$  35,333	$          35,333
	$            -	$             -	$  35,333	$          35,333
Securities owned, at fair value
Corporate equity securities	$       700	$             -	$       500	$            1,200
Municipal obligations	-	56,182	-	56,182
U.S. government and government agency obligations	11,246	62,637	-	73,883
Corporate obligations	-	82,816	80	82,896
Other	982	21,059	-	22,041
	$  12,928	$ 222,694	$       580	$        236,202
Securities available for sale
Westwood common stock	$       137	$             -	$            -	$               137
U.S. government and government agency obligations	-	536,243	-	536,243
Municipal obligations	-	43,911	-	43,911
	$       137	$ 580,154	$            -	$        580,291
Interest Rate Swaps
Interest Rate Swaps	$            -	$     2,173	$            -	$            2,173
	$            -	$     2,173	$            -	$            2,173
LIABILITIES
Securities sold, not yet purchased, at fair value
U.S. government and government agency obligations	$  39,861	$   36,874	$            -	$          76,735
Corporate obligations	-	78,368	-	78,368
	$  39,861	$ 115,242	$            -	$        155,103
Warrants
Warrants	$            -	$             -	$  24,288	$          24,288
	$            -	$             -	$  24,288	$          24,288
Net assets (liabilities)	$ (26,796)	$ 689,779	$  11,625	$        674,608

(in thousands)	Level 1	Level 2	Level 3	Total
June 30, 2013
ASSETS
Loans measured at fair value
Loans measured at fair value	$            -	$     13,757	$            -	$          13,757
	$            -	$     13,757	$            -	$          13,757
Securities owned, at fair value
Corporate equity securities	$       895	$               -	$       625	$            1,520
Municipal obligations	-	30,116	-	30,116
U.S. government and government agency obligations	3,300	38,229	-	41,529
Corporate obligations	-	127,779	120	127,899
Other	692	7,877	-	8,569
	$    4,887	$   204,001	$       745	$        209,633
Securities available for sale
Westwood common stock	$       146	$               -	$            -	$               146
U.S. government and government agency obligations	-	474,906	-	474,906
Municipal obligations	-	28,224	-	28,224
	$       146	$   503,130	$            -	$        503,276
Interest Rate Swaps
Interest Rate Swaps	$            -	$       1,934	$            -	$            1,934
	$            -	$       1,934	$            -	$            1,934
LIABILITIES
Securities sold, not yet purchased, at fair value
Municipal obligations	$            -	$            10	$            -	$                 10
U.S. government and government agency obligations	45,415	8,671	-	54,086
Corporate obligations	-	80,639	-	80,639
	$  45,415	$     89,320	$            -	$        134,735
Warrants
Warrants	$            -	$               -	$  24,197	$          24,197
	$            -	$               -	$  24,197	$          24,197
Net assets (liabilities)	$ (40,382)	$   633,502	$ (23,452)	$        569,668

The following table provides a reconciliation of the beginning and ending balances for the major classes of assets and (liabilities) measured at fair value using significant unobservable inputs (Level 3):

(in thousands)	Loans	Corporate Equity Securities	Corporate Obligations	Warrants	Total
Ending balance at June 30, 2013	$              -	$                625	$             120	$    (24,197)	$    (23,452)
Redemption/sale of security		(50)	-	-	(50)
Unrealized loss		-	(32)	-	(32)
Decrease in warrants valuation
(unrealized gain)		-	-	1,967	1,967
Ending balance at September 30, 2013	$              -	$                575	$               88	$    (22,230)	$    (21,567)
Redemption/sale of security		(75)			(75)
Unrealized loss	-	-	(8)	-	(8)
Transfers from Level 2 to Level 3	35,333	-	-	-	35,333
Increase in warrants valuation
(unrealized loss)	-	-	-	(2,058)	(2,058)
Ending balance at December 31, 2013	$     35,333	$                500	$               80	$    (24,288)	$     11,625

At the end of each respective quarterly reporting period, the Company recognizes transfers of financial instruments between levels.  During the three and six-months ended December 31, 2013, the Company transferred the loans measured at fair value from level 2 to level 3 due to a lack of observable data to support a level 2 valuation. 

Changes in unrealized gains (losses) and realized gains (losses) for corporate obligations and corporate equity securities are presented in net gains on principal transactions on the Consolidated Statements of Comprehensive (Loss) Income.  Changes in unrealized gain (loss) for the warrants are presented in unrealized gain (loss) on warrants valuation on the Consolidated Statements of Comprehensive (Loss) Income.The total realized loss included in earnings related to assets and liabilities still held for the three and six-months ended December 31, 2012 was $702,000.  The total unrealized loss included in earnings related to assets and liabilities still held for the three and six-months ended December 31, 2013 was $2,066,000 and $2,098,000, respectively.The total unrealized gains included in earnings related to assets and liabilities still held for the three and six-months ended December 31, 2013 was $4,000 and $2,162,000, respectively.  In comparison, the total unrealized gain included in earnings related to assets and liabilities still held for the three and six-months ended December 31, 2012 was $11,761,000 and $3,576,000, respectively. 

The following table highlights, for each asset and liability measured at fair value on a recurring basis and categorized within Level 3 of the fair value hierarchy, the significant unobservable inputs used in the fair value measurement as of December  31, 2013 (dollars in thousands):

Asset/Liability	Fair  Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted-Average)
Loans measured at fair value
Loans measured at fair value	$     35,333	Discounted cash flow	Discount Rate	4.35%-  5.37% (  4.77%  )
Securities owned, at fair value
Corporate equity securities- auction rate preferred	500	Analysis of comparable securities	N/A	N/A
Corporate obligations	80	Discounted cash flow	N/A	N/A
Warrants
Warrants	24,288	Binomial Model	Derived Volatility	46% - 52%  (46%)

The loans are independently valued quarterly using a discounted cash flow model which factors in the relevant contractual loan terms and then present valued back to a market-based discount rate.  The market based discount rate is based on how the subject loans would be priced as of the valuation date and therefore include normal credit loss expectations, given the underlying underwriting standards including loan to value ratio and debt coverage ratios for the subject portfolio.  The rate at which the loans are discounted is based upon London Interbank Offered Rate (LIBOR) Bank preferential return and terms of the loan. 

At December  31, 2013, the Company held 20 auction rate preferred securities that, based on observed values of comparable securities, were valued at their par value of $500,000.  Since June 2010, the Company has held up to $1,800,000 in Level 3 auction rate preferred securities, of which $1,375,000 have been redeemed at par.  The remaining $500,000 of auction rate preferred securities are similar to those that were previously redeemed, and the Company anticipates that the remaining securities will also be redeemed at par.  While a liquidity discount has been considered for these securities, the Company does not believe a discount is warranted.  To the extent these securities are redeemed at a price below par, the Company would consider revaluing any remaining securities at a discounted price.

The Company holds $3,505,000 of corporate obligation bonds currently valued at $80,000.  The corporate bonds are valued using a discounted cash flow model with observable market data, however, due to the distressed nature of these bonds, the Company has determined that these bonds should be valued at Level 3.

The warrants issued to Hilltop and Oak Hill are valued quarterly using a binomial model that considers the following variables: price and volatility of the Company’s stock, treasury yield, annual dividend and the remaining life of the warrants.  The derived volatility estimate considers both the historical and implied forward volatility of the Company’s common stock.  The primary drivers of the value of the warrants are the price and volatility of the Company’s common stock.  As the volatility and/or stock price increase, the value of the warrants increase as well.  The movement of these two variables will amplify or offset one another depending on the direction and velocity of their movements.  In addition, the warrants will lose time value as they near their contractual expiration date.

Non-Recurring Fair Value Measurements.

Certain financial and non-financial instruments are not measured at fair value on an ongoing basis but are subject to fair value measurement in certain circumstances; for example, when there is evidence of impairment or in other situations where the lower of cost or fair value method of accounting is applied.

The following table summarizes by level within the fair value hierarchy the Company’s financial and non-financial instruments which were measured at fair value on a non-recurring basis at December  31, 2013 and June 30, 2013 (in thousands):

December 2013	Level 1	Level 2	Level 3	Total
Impaired loans (1)	$            -	$            -	$   11,288	$   11,288
REO	-	-	7,355	7,355
Impaired servicing assets	-	-	436	436
	$            -	$            -	$   19,079	$   19,079
June 2013
Impaired loans (1)	$            -	$            -	$   20,086	$   20,086
REO	-	-	10,165	10,165
	$            -	$            -	$   30,251	$   30,251

_____________

(1)   Includes certain impaired loans measured at fair value through the allocation of specific valuation allowances or principal charge-offs.

For the six-months ended December  31, 2013 and the year endedJune 30, 2013, adjustments to the fair value of impaired loans resulted in a charge to earnings as a provision for loan loss of $134,000 and $3,718,000, respectively.  For the six-months ended December 31, 2013 and the year ended June 30, 2013, adjustments to the fair value of REO property held at December 31, 2013 and June 30, 2013, respectively, resulted in a charge to earnings as a write-down of REOs of $199,000 and $1,396,000, respectively.  For the six-months ended December 31, 2013, adjustments to the fair value of servicing assets resulted in a charge to earnings as an impairment for servicing assets of $33,000.

Other Fair Value Disclosures.

The Company’s fair value policies for instruments measured at fair value in accordance with the disclosure requirements of ASC 820  “Fair Value Measurements and Disclosures” are discussed in “Note 1(x). Fair Value of Financial Instruments – Other Fair Value Disclosures”  in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K. The recorded amounts, fair value and level of fair value hierarchy of the Company’s financial instruments at December  31, 2013 and June 30, 2013 were as follows (in thousands):

		December 31, 2013		June 30, 2013
	Level	Recorded Value	Fair Value	Recorded Value	Fair Value
Financial assets:
Cash and cash equivalents	1	$   121,130	$    121,130	$    111,046	$    111,046
Restricted cash and cash equivalents	1	30,049	30,049	30,047	30,047
Securities held to maturity:
GNMA securities	2	14,595	14,982	17,423	17,965
Loans, net:
Purchase mortgage loans held for investment	3	89,583	89,430	174,037	173,738
Other loans held for  investment	3	403,301	446,568	420,789	437,916
Servicing assets	3	436	436	412	414
Financial liabilities:
Short-Term Borrowings	1	75,000	75,000	131,500	131,500
Deposits:
Deposits with no stated maturity	2	966,720	962,054	963,385	959,578
Time deposits	2	28,045	28,331	30,334	30,736
Advances from FHLB	2	98,251	99,621	97,565	100,408
Long-term debt	3	85,350	95,817	83,102	86,822

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Loans And Allowance For Probable Loan Losses (Recorded Investment In Loans Modified In TDRs) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Financing Receivable, Modifications [Line Items]
Recorded Investment in Loans Modified in Trouble Debt Restructuring	$ 11,352	$ 18,293
Residential Construction [Member]
Financing Receivable, Modifications [Line Items]
Recorded Investment in Loans Modified in Trouble Debt Restructuring	578	605
Lot And Land Development [Member]
Financing Receivable, Modifications [Line Items]
Recorded Investment in Loans Modified in Trouble Debt Restructuring	1,186	4,927
1-4 Family [Member]
Financing Receivable, Modifications [Line Items]
Recorded Investment in Loans Modified in Trouble Debt Restructuring	5,890	7,690
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Recorded Investment in Loans Modified in Trouble Debt Restructuring	3,146	4,574
Commercial Loans [Member]
Financing Receivable, Modifications [Line Items]
Recorded Investment in Loans Modified in Trouble Debt Restructuring	$ 552	$ 497

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Deposits

6 Months Ended

Dec. 31, 2013

Deposits [Abstract]

Deposits

DEPOSITS

The Bank’s deposits at December  31, 2013 and June 30, 2013 consisted of the following (dollars in thousands):

	December 31, 2013			June 30, 2013
	Amount	Percent		Amount	Percent
Noninterest bearing demand accounts	$         56,665	5.7	%	$         55,221	5.5	%
Interest bearing demand accounts	8,652	0.9		7,723	0.8
Savings accounts	881,970	88.6		883,229	88.9
Limited access money market accounts	19,433	2.0		17,212	1.7
Certificates of deposit, less than $100,000	16,617	1.7		17,829	1.8
Certificates of deposit, $100,000 and greater	11,428	1.1		12,505	1.3
	$       994,765	100.0	%	$       993,719	100.0	%

The weighted average interest rate on the Bank’s deposits was approximately 0.04% at both December  31, 2013 and June 30, 2013, respectively. 

At December  31, 2013, scheduled maturities of certificates of deposit were as follows (in thousands):

	1 Year or Less	> 1 Year Through 2 Years	> 2 Years Through 3 Years	> 3 Years Through 4 Years	Thereafter	Total
Certificates of deposit, less than $100,000	$   12,284	$      3,382	$         410	$         185	$           356	$   16,617
Certificates of deposit, $100,000 and greater	7,862	2,680	683	203	-	11,428
	$   20,146	$      6,062	$      1,093	$         388	$           356	$   28,045

The Bank is funded primarily by core deposits, with interest- bearing savings accounts from Southwest Securities’ customers making up a significant source of these deposits.

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Receivable From And Payable To Brokers, Dealers And Clearing Organizations (Tables)

6 Months Ended

Dec. 31, 2013

Receivable From And Payable To Brokers, Dealers And Clearing Organizations [Abstract]

Receivable From And Payable To Brokers, Dealers And Clearing Organizations

	December 31, 2013	June 30, 2013
Receivable:
Securities failed to deliver	$               6,226	$                9,708
Securities borrowed	1,720,673	1,546,376
Correspondent broker/dealers	37,034	45,435
Clearing organizations	27,373	25,285
Other	15,883	71,670
	$        1,807,189	$         1,698,474
Payable:
Securities failed to receive	$             14,275	$              39,024
Securities loaned	1,640,922	1,471,319
Correspondent broker/dealers	12,474	16,352
Other	7,901	6,276
	$        1,675,572	$         1,532,971

Securities Borrowed And Loaned, Offset And Not Offset In Statement Of Financial Position

December 31, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Securities Borrowed	$              1,720,673	$                              -	$                   1,720,673	$     (1,720,673)	$                -	$                -
Securities Loaned (1)	1,640,922	-	1,640,922	(1,640,922)	-	-

June 30, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Securities Borrowed	$              1,546,376	$                              -	$                   1,546,376	$     (1,546,376)	$                -	$                -
Securities Loaned (1)	1,471,319	-	1,471,319	(1,471,319)	-	-

____________________

(1)Under securities lending agreements, SWS had repledged $1,619,010,000 and $1,452,911,000 at December 31, 2013 and June 30, 2013, respectively.

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Repurchase Of Treasury Stock (Details) (USD $)			6 Months Ended
	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2013 Deferred Compensation Plan [Member]	Dec. 31, 2012 Deferred Compensation Plan [Member]
Equity, Class of Treasury Stock [Line Items]
Stock repurchase program expiration date	Feb. 28, 2013
Shares authorized to be repurchased	500,000
Common shares purchased by deferred compensation plan			50,000	20,675
Common stock value purchased by deferred compensation plan	$ 6,265,000	$ 7,732,000	$ 288,000	$ 121,000
Common stock price per share, purchased by deferred compensation plan			$ 5.76	$ 5.86
Common stock sold or distributed pursuant to the plan			31,532	18,068

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Debt Issued With Stock Purchase Warrants

6 Months Ended

Dec. 31, 2013

Debt Issued With Stock Purchase Warrants [Abstract]

Debt Issued With Stock Purchase Warrants

DEBT ISSUED WITH STOCK PURCHASE WARRANTS

On March 20, 2011, the Company entered into a Funding Agreement (the “Funding Agreement”) with Hilltop and Oak Hill.  On July 29, 2011, after receipt of stockholder and regulatory approval, the Company completed the following transactions contemplated by the Funding Agreement:

· entered into a $100,000,000,  five year, unsecured credit agreement with Hilltop and Oak Hill that accrues interest at a rate of 8% per annum;

· issued warrants to Hilltop and Oak Hill allowing each to purchase up to 8,695,652 shares of the Company’s common stock; and

· granted Hilltop and Oak Hill certain rights, including certain registration rights, preemptive rights, and the right for each to appoint one person to the Company’s Board of Directors for so long as each owns 9.9% or more of all of the outstanding shares of the Company’s common stock or securities convertible into at least 9.9% of the Company’s outstanding common stock.

On July 29, 2011, in connection with the loans made by Hilltop and Oak Hill under the Credit Agreement, the Company issued a warrant to Hilltop to purchase up to 8,695,652 shares of common stock (and in certain cases described below, shares of Non-Voting Perpetual Participating Preferred Stock, Series A(the “Series A Preferred Stock”) and warrants to Oak Hill to purchase up to 8,695,652 shares of common stock (and in certain cases described below, shares of Series A Preferred Stock).  These warrants are exercisable for five years and have a fixed exercise price of $5.75 per share, subject to standard anti-dilution adjustments for extraordinary corporate transactions, such as stock splits, dividends and combinations, the issuance of stock purchase rights, debt or asset distributions (including cash), tender offers or exchange offers and entry into certain business combinations. In addition, the warrants have a weighted average anti-dilution adjustment in the event the Company issues shares of common stock at less than 90% of the market price of the common stock on the date prior to the pricing of such shares. For each of Hilltop and Oak Hill, the warrants represent approximately 17% of the Company’s common stock for each investor as of December  31, 2013 (assuming that the warrants are exercised in full).

The warrants provide that the Company would only issue shares of Series A Preferred Stock upon the exercise of warrants if it is necessary to prevent Hilltop or Oak Hill from owning or being deemed to own shares of the Company’s common stock in excess of the “Ownership Limit” provided in the warrants. The “Ownership Limit” is 24.9% of any class of the securities of the Company or such level that Hilltop or Oak Hill reasonably determines would prevent them from being deemed to control the Company for purposes of the federal banking laws and regulations specified in the warrants. No shares of Series A Preferred Stock are issued or outstanding at December  31, 2013 and June 30, 2013. For additional discussion concerning the Series A Preferred Stock see the discussion in“Preferred Stock.”

The warrants are recorded as a liability in the Consolidated Statements of Financial Condition at fair value.  Initial and subsequent valuations of the warrants use a binomial valuation model.  At initial valuation, July 29, 2011, the closing stock price was $5.45 per share yielding a fair value of $24,136,000.  At December  31, 2013 and June 30, 2013,  the closing stock prices used in the binomial valuation model were $6.08 and $5.45, respectively, and the warrants were valued at $24,288,000 and $24,197,000, respectively. The change in fair value for the three and six-months ended December 31, 2013 of $2,058,000 and $91,000, respectively, was reflected as an unrealized loss on warrants valuation on the Consolidated Statements of Comprehensive (Loss) Income.  The change in fair value for the three and six-months ended December 31, 2012 of $11,761,000 and $3,576,000, respectively, was reflected as an unrealized gain on warrants valuation on the Consolidated Statements of Comprehensive (Loss) Income.  The warrants are classified as Level 3 in the fair value hierarchy as disclosed in “Fair Value of Financial Instruments.”

The loan is recorded as a liability with an 8% interest rate, a five year term and an effective interest rate of 14.9%.  At July 29, 2011, the discount on the loan was initially valued at $24,136,000 and is being accreted using the effective interest method.  For the three and six-months ended December 31, 2013, the Company recorded $1,145,000 and $2,248,000, respectively, in accretion expense on the discount. In comparison, for the three and six-months ended December 31, 2012, the Company recorded $987,000 and $1,939,000, respectively, in accretion expense on the discount.  The resulting long-term debt balance at December 31, 2013 and June 30, 2013 was $85,350,000 and $83,102,000, respectively.  For both the three and six-months ended December 31, 2013 and December 31, 2012, the cash portion of the interest expense paid on the loan to Hilltop and Oak Hill was $2,000,000 and $4,000,000, respectively.

At July 29, 2011, legal and accounting fees, printing costs and other expenses associated with the loan and warrants totaled $2,459,000 and are being amortized on a straight-line method, which approximates the effective interest method, over the term of the loan.  For both the three and six-months ended December 31, 2013 and December 31, 2012,  interest expense charged to operations was $123,000 and $246,000, respectively.

The Company recorded total interest expense for this obligation for the three and six-months ended December 31, 2013 on the Consolidated Statements of Comprehensive (Loss)Income of $3,268,000 and $6,494,000, respectively, while total interest expense for this obligation for the three and six-months ended December 31, 2012 was $3,110,000 and $6,185,000, respectively. 

The Credit Agreement contains customary financial covenants which require the Company to, among other things:

· maintain a tangible net worth at least equal to the sum of $275,000,000 and 20% of cumulative consolidated net income (as defined in the Credit Agreement) for each fiscal quarter for which consolidated net income is positive;

· maintain a minimum unrestricted cash balance (as defined in the Credit Agreement) of at least $4,000,000;

· maintain an excess net capital balance at Southwest Securities of at least $100,000,000 as of the end of each calendar month; and

· maintain a total risk-based capital ratio, Tier I risk-based capital ratio and leverage ratio for the Bank that ensures the Bank is considered well capitalized or is required by federal law or regulation or action or directive by the Federal Reserve Board.

In addition, the covenants limit the Company’s and certain of the Company’s subsidiaries’ ability to, among other things:

· incur additional indebtedness;

· dispose of or acquire certain assets;

· pay dividends on the Company’s capital stock;

· make investments, including acquisitions; and

· enter into transactions with affiliates.

The Company was in compliance with the financial covenants under the Credit Agreement as of December 31, 2013.  Should the Company determine it needs additional debt at SWS Group, the Company would require regulatory approval and approval from Hilltop and Oak Hill.

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Loans And Allowance For Probable Loan Losses (Loan Modifications Accounted For As TDRs Within The Previous 12 Months That Subsequently Defaulted) (Detail) (1-4 Family [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013 contract	Dec. 31, 2012 contract	Dec. 31, 2013 contract	Dec. 31, 2012 contract
1-4 Family [Member]
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items]
Number of Contracts	2	2	2	2
Recorded Investment	$ 272	$ 1,896	$ 272	$ 1,896

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Fair Value Of Financial Instruments (Narrative) (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended			6 Months Ended		12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized loss recognized			$ 702		$ 702
Unrealized loss included in earnings related to assets and liabilities	2,066			2,098
Unrealized gain included in earnings related to assets and liabilities	4	1,967		2,162
Number of auction rate preferred securities	20			20
Auction rate preferred securities	500			500
Adjustments to fair value on impaired loans				134		3,718
Adjustments to the fair value of REO				199		1,396
Impairment of servicing assets	33			33
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Auction rate preferred securities	1,800			1,800
Auction rate preferred securities - redeemed	1,375			1,375
Level 3 [Member] | Anticipated Redeemed At Par [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Auction rate preferred securities	500			500
Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized gain included in earnings related to assets and liabilities		1,967	11,761		3,576
Corporate Obligations [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities owned, at cost	3,505			3,505
Securities owned, at fair value	$ 80			$ 80

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General And Basis Of Presentation

6 Months Ended

Dec. 31, 2013

General And Basis Of Presentation [Abstract]

General And Basis Of Presentation

GENERAL AND BASIS OF PRESENTATION

The interim consolidated financial statements as of December 31, 2013, and for the three and six-months ended December 31, 2013 and 2012, are unaudited; however, in the opinion of management, these interim statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial position, results of operations and cash flows.  These financial statements should be read in conjunction with the audited consolidated financial statements and related notes as of and for the fiscal year ended June 30, 2013 filed on September 6, 2013 on the Annual Report on Form 10-K(the “Fiscal 2013 Form 10-K”).  Amounts as of June 30, 2013 are derived from the audited consolidated financial statements filed on the Fiscal 2013 Form 10-K.  All significant inter-company balances and transactions have been eliminated upon consolidation. 

The consolidated financial statements include the accounts of SWS Group, Inc. (“SWS Group”) and the consolidated active subsidiaries listed below (collectively with SWS Group, “SWS” or the “Company”).  Each of the subsidiaries listed below are 100% owned.

Southwest Securities, Inc.	"Southwest Securities"
SWS Financial Services, Inc.	"SWS Financial"
Southwest Financial Insurance Agency, Inc.
Southwest Insurance Agency, Inc.	collectively, “SWS Insurance”
SWS Banc Holding, Inc.	"SWS Banc"
Southwest Securities, FSB	"Bank"

Southwest Securities is a New York Stock Exchange ("NYSE") member broker/dealer.  Southwest Securities and SWS Financial are members of the Financial Industry Regulatory Authority (“FINRA”).  Southwest Securities and SWS Financial are also registered with the Securities and Exchange Commission (the "SEC") as broker/dealers under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and as registered investment advisers under the Investment Advisers Act of 1940, as amended.

SWS Insurance holds insurance agency licenses in 44 states for the purpose of facilitating the sale of insurance and annuities for Southwest Securities and its correspondents.  The Company retains no underwriting risk related to the insurance and annuity products that SWS Insurance sells. 

The Bank is a federally chartered savings bank regulated by the Office of the Comptroller of the Currency ("OCC").  The Board of Governors of the Federal Reserve System (“FRB”) supervises and regulates SWS Group and SWS Banc.  SWS Banc is a wholly- owned subsidiary of SWS Group and became the sole shareholder of the Bank in 2004.   

Reclassifications.  “Investment banking, advisory and administrative fees” on the Consolidated Statements of Comprehensive (Loss) Income of $748,000 and $1,624,000 for the three and six-months ended December 31, 2012 were reclassified to conform to the fiscal 2014 presentation.  In previous periods the amounts were presented in “Net gains on principal transactions” on the Consolidated Statements of Comprehensive (Loss) Income.

Change in Fiscal Year End and Consolidated Financial Statements. On May 23, 2013, the Board of Directors of the Company, acting on the recommendation of the Federal Reserve Bank of Dallas, approved a change to the Company’s fiscal year end from the last Friday of June to June 30th.  This change was effective for the Company’s fiscal year ended June 30, 2013.   Because the transition period was less than one month, no transition report was filed with the SEC.  

Prior to June 30, 2013, the quarterly consolidated financial statements of SWS were prepared as of the last Friday of the month, except for the second fiscal quarter which was prepared as of December 31, 2012, and the Bank’s financial statements were prepared on the last day of the quarter.  Any individually material transactions were reviewed and recorded in the appropriate quarterly period.

Acquisition Proposal.On January 9, 2014, the Company received an unsolicited acquisition proposal from Hilltop Holdings, Inc. (“Hilltop”) to acquire all of the outstanding shares of SWS Group common stock that Hilltop does not already own for $7.00 per share, with the consideration to be paid50%in cash and 50%in Hilltop common stock.  On February 3, 2014, the Company announced that its Board of Directors formed a Special Committee, comprised of independent directors not affiliated with Hilltop, Oak Hill Capital Partners III, L.P. (“OHCP”) and Oak Hill Capital Management Partners III, L.P. (collectively with OHCP, “Oak Hill”), to, among other things, carefully evaluate Hilltop’s unsolicited proposal and make a recommendation to the Company’s Board of Directors. There can be no assurance that a transaction with Hilltop or any other party will be approved or consummated.

Update of Significant Accounting Policies.  A summary of the Company’s significant accounting policies is included in “Note 1. Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in the Company’s Fiscal 2013 Form 10-K.   Except as discussed herein, there have been no significant accounting changes since June 30, 2013.

Accounting Pronouncements.  The Financial Accounting Standards Board (“FASB”) and the SEC recently issued the following accounting pronouncements, which are applicable to SWS.  Any other new accounting pronouncements that are not specifically identified in our disclosures are not applicable to SWS: 

Accounting Standards Update (“ASU”) 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”).”  In July 2013, the FASB issued ASU 2013-11 which explicitly states the guidance for the presentation of unrecognized tax benefits when a net operating loss carryforward, similar tax loss, or a tax credit carryforward exits.  This pronouncement clarifies the presentation of the unrecognized tax benefit as there is not currently a standard industry practice.  This pronouncement states an unrecognized tax benefit, or portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to the deferred tax asset for a net operating loss carryforward, a similar loss, or a tax credit carryforward.  The presentation is limited if the net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date due to tax law or the entity does not recognize its deferred tax asset.  In addition, the unrecognized tax benefit should be presented as a liability separate from the deferred tax asset.  The adoption of ASU 2013-11 will not impact the Company’s results of operations or financial position, but will impact the Company’s disclosures about the presentation of the deferred tax liability and asset.  ASU 2013- 11 is effective for annual reporting periods beginning after December 15, 2013; the Company’s first quarter of fiscal 2015.  The Company is in the process of evaluating the impact of ASU 2013-11 on its financial statements and processes.        

ASU 2014-4, “Receivables—Troubled Debt Restructuring by Creditors (“ASU 2014-04”).”  In January 2014, the FASB issued ASU 2014-04 to clarify that when an in substance repossession or  foreclosure occurs,  a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.  ASU 2014-  04 is effective for annual reporting periods beginning after December 15, 2014; the Company’s first quarter of fiscal 2016.  The Company is in the process of evaluating the impact of ASU 2014-04 on its financial statements and processes.    

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Consolidated Statements Of Financial Condition (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Consolidated Statements Of Financial Condition [Abstract]
Loans measured at fair value	$ 35,333	$ 13,757
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	33,312,140	33,312,140
Common stock, shares outstanding	32,747,990	32,629,213
Unrealized holding loss, tax	$ (5,176)	$ (2,963)
Treasury stock, shares	564,150	682,927

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Investments And Variable Interest Entities

6 Months Ended

Dec. 31, 2013

Investments And Variable Interest Entities [Abstract]

Investments And Variable Interest Entities

INVESTMENTS AND VARIABLE INTEREST ENTITIES

Investments. 

SWS has interests in four investment partnerships that it accounts for under the equity method, which approximates fair value.  One is a limited partnership venture capital fund in which SWS has invested $5,000,000.  Based on a review of the fair value of this limited partnership interest, SWS determined that its share of the investments made by the limited partnership should be valued at $517,000 as of December 31, 2013 and $513,000 as of June 30, 2013.  SWS did not record a loss or gain on this investment for the three-months ended December 31, 2013 and 2012, respectively, and recorded net gains of $4,000 and $32,000 for the six-months ended December 31, 2013 and 2012, respectively. In August 2012, SWS received cash distributions of $170,000 from this investment.  The limited partnership venture capital fund has entered into an agreement with the Small Business Administration (“SBA”) for a self-liquidation plan.

Two investments are limited partnership equity funds to which the Bank has commitments of $3,000,000 and $2,000,000, respectively, and are considered cost effective ways of meeting its obligations under the Community Reinvestment Act of 1977 ("CRA").  As of December 31, 2013 and June 30, 2013, the Bank’s recorded investments in these partnerships were $4,028,000 and $3,782,000, respectively.  During the three and six-months ended December 31, 2013, the Bank recorded net gains of $199,000 and $246,000, respectively, related to these investments.  In comparison, during the three and six-months ended December 31, 2012, the Bank recorded net gains of $936,000 and $986,000, respectively, related to these investments.  During the second quarter of fiscal 2014, the Bank received no cash distributions and during the second quarter of fiscal 2013, the Bank received $1,932,000, from these investments. 

On January 28, 2009, the Bank executed a $4,500,000 loan agreement with one of the partnerships.  The loan was amended on November 16, 2009 to increase the note amount to $5,000,000.  The loan was renewed on September 26, 2012 with a maturity date of January 2, 2013.  At December 31, 2012, the loan was paid in full.  The Bank earned approximately $55,000 and $111,000 in interest income for the three and six-months ended December 31, 2012, respectively, on the loan.   

On December 31, 2012, the Bank executed a new $5,000,000 loan agreement with one of the partnerships with a maturity date of December 31, 2015.  At December 31, 2013, the outstanding balance was $2,688,000.  The loan bears interest at a rate of 4.25% per annum and interest is due monthly. The Bank earned approximately $31,000 and $56,000 in interest income for the three and six-months ended December 31, 2013, respectively, on this loan.

In April 2012, the Bank acquired an interest in a private investment fund to obtain additional credit for its obligations under the CRA.  The Bank has committed to invest $3,000,000 in the fund and to date, has contributed $330,000 in the fund, including pursuant to a capital call on November 12, 2013 that resulted in the Bank investing $150,000.  For the three-months ended December 31, 2013, no amounts were recorded to reflect a change in market value.  For the six-months ended December 31, 2013, the Bank recorded net losses of $50,000.  There were no net gains or losses recorded by the Bank for the three and six-months ended December 31, 2012.  The recorded investment in this fund was $162,000 and $62,000 at December 31, 2013 and June 30, 2013, respectively.

The Company’s investments in and the Bank’s loans to these funds are subject to the Volcker Rule provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The final provisions of the Volcker Rule were issued in December 2013, with an effective date of April 1, 2014 and a compliance date of July 21, 2015.  Based on management’s interpretation of the final provisions of the rule, the Bank’s investments would be excluded from the definition of a “covered” fund as these investments would meet the definition of “public welfare investment” funds that are “designed primarily to promote the public welfare.” Currently, the Bank invests in these funds as a cost effective way of meeting its obligations under the CRA. One of these investments also meets the definition of a small business investment company.  According to the rule, the Company’s ownership interest in any “covered” fund would be limited to 3% of the total ownership of the fund.   The provisions of the rule would also limit the aggregate ownership of all investments in “covered” funds to 3% of Tier 1 capital of the bank holding company.  After the compliance date of July 21, 2015, the Company can request an additional two year extension from the FRB to divest “covered” fund investments to the allowable ownership levels.  Currently, the Company’s ownership percentages in the limited partnership venture capital fund, one of the limited partnership equity funds and the private investment fund are greater than 3% of the total ownership of the fund.  The aggregate ownership of all investments is less than 3% of Tier 1 capital of the bank holding company.  Management continues to study the final Volcker Rule to ensure that the Company will be in compliance prior to the compliance date of July 21, 2015.

Variable Interest Entities. 

The Company’s variable interest entity (“VIE”) policies are discussed in “Note 10. Investments and Variable Interest Entities” in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.

The loans to commercial borrowers noted in the table below meet the definition of a VIE because the legal entities have a total equity investment at risk that is not sufficient to permit the entity to finance its activities without additional subordinated financial support; however, the Company is not the primary beneficiary of the legal entities.  The Company has customary lender’s rights and remedies, as provided in the related promissory notes and loan agreements, but does not have the power to direct the activities of the legal entities that most significantly impact the borrowers’ economic performance.  In addition, the Company has not provided the borrowers with any form of support outside of the contractual loan obligations.  Accordingly, the entities are not consolidated in the Company’s financial statements.

The following table presents the carrying amount and maximum exposure to loss associated with the Company’s variable interests in unconsolidated VIEs as of December  31, 2013 and June 30, 2013 (dollars in thousands):

	December 31, 2013			June 30, 2013
	Number of VIEs	Carrying Amount of Assets	Maximum Exposure to Loss	Number of VIEs	Carrying Amount of Assets	Maximum Exposure to Loss
Loans to commercial
borrowers	11	$      5,703	$        4,336	17	$    10,639	$        9,072

The carrying amount of the Company’s recorded investment in these loans is included in loans, net of allowance for loan losses in the Consolidated Statements of Financial Condition.  See additional discussion in  “Loans and Allowance for Probable Loan Losses” for information related to the loans modified in TDRs.

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Segment Reporting (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 31, 2013 segment	Jun. 30, 2013	Dec. 31, 2012
Segment Reporting, Asset Reconciling Item [Line Items]
Number of business segments	4
Assets	$ 3,930,662	$ 3,780,373	$ 3,514,053
SWS Capital
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 20

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Regulatory Capital Requirements (Narrative) (Detail)	Dec. 31, 2013	Jun. 30, 2013
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier I risk-based capital ratio in order to be well-capitalized	6.00%	6.00%
Tier I (core) capital ratio required in order to be well-capitalized	5.00%	5.00%
Risk-based capital ratio required in order to be well-capitalized	10.00%	10.00%
Committment In Connection With Termination Of Order To Cease And Desist [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier I (core) capital ratio required in order to be well-capitalized	9.00%
Risk-based capital ratio required in order to be well-capitalized	12.00%

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Income Taxes (Summary Of Income Tax Expense (Benefit)) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Abstract]
Income tax expense at the statutory rate	$ 444	$ 5,463	$ 499	$ 2,302
Tax exempt interest	(195)	(258)	(466)	(504)
Tax exempt expense from company-owned life insurance ("COLI")	(233)	99	(533)	(107)
State income taxes, net of federal tax benefit	(132)	(370)	(12)	(349)
Non-deductible meals and entertainment	35	42	65	79
Non-deductible compensation	57	266	46	516
Valuation allowance	(367)		(156)
Other, net		(1)	(2)	(84)
Income tax expense (benefit)	$ (391)	$ 5,241	$ (559)	$ 1,853

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Document and Entity Information	6 Months Ended
	Dec. 31, 2013	Feb. 03, 2014
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	sws
Entity Registrant Name	SWS GROUP INC
Entity Central Index Key	0000878520
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,068,118

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REO And Other Repossessed Assets

6 Months Ended

Dec. 31, 2013

REO And Other Repossessed Assets [Abstract]

REO And Other Repossessed Assets

REO AND OTHER REPOSSESSED ASSETS

REO and other repossessed assets are valued at the lower of cost or market, less a selling discount and are included in other assets in the Consolidated Statements of Financial Condition.  For those investments where the REO is valued at market, the value is determined by third party appraisals or if the REO is subject to a sales contract, by the accepted sales amount.  In addition, under certain circumstances, the Bank adjusts appraised values to more accurately reflect the economic conditions of the area at the time of valuation or to reflect changes in market value occurring subsequent to the appraisal date.  There were no  subsequent write-downs required to reflect current fair value for the three-months ended December 31, 2013 and $201,000 for the six-months ended December 31, 2013 and $367,000 and $926,000 of subsequent write-downs were required for the three and six-months ended December 31, 2012, respectively.

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REO And Other Repossessed Assets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
REO And Other Repossessed Assets [Abstract]
Write-downs required to reflect current fair value	$ 0	$ 367	$ 201	$ 926

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Income Taxes (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013
Income Taxes [Abstract]
Effective income tax rate	(30.80%)	33.60%	(39.30%)	28.20%
Federal corporate tax rate			35.00%		35.00%
Decrease in valuation allowance			$ 222
Unrealized losses on securities available for sale	5,703		5,703		3,589
Deferred tax asset for federal net operating losses	11,440		11,440		10,507
Unrecognized tax benefits	135		135
Decrease in unrecognized tax benefits			160
Accrued interest and penalties included in the net liability	27		27		9
Recognized interest and penalties in income tax expense	(22)	216	18	195
Unrecognized income tax benefits that would reduce income tax expense if recognized	$ 108		$ 108		$ 286

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Consolidated Statements Of Comprehensive Loss (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Revenues:
Net revenues from clearing operations	$ 2,213	$ 2,177	$ 4,506	$ 4,316
Commissions	29,788	31,367	60,311	63,690
Interest	22,054	23,271	43,228	49,896
Investment banking, advisory and administrative fees	10,084	11,495	21,399	22,165
Net gains on principal transactions	7,465	11,170	15,640	19,652
Other	8,331	5,577	14,894	11,762
Total revenue	79,935	85,057	159,978	171,481
Interest expense	11,449	9,712	22,497	22,027
Net revenues	68,486	75,345	137,481	149,454
Non-interest expenses:
Commissions and other employee compensation	48,766	52,002	101,329	106,261
Occupancy, equipment and computer service costs	7,729	7,563	15,481	15,260
Communications	3,362	3,335	6,710	6,554
Floor brokerage and clearing organization charges	1,073	939	2,185	1,962
Advertising and promotional	612	737	1,262	1,405
(Recapture) provision for loan loss	(2,825)	(1,450)	(3,291)	(1,450)
Other	6,442	8,370	12,290	16,460
Total non-interest expenses	65,159	71,496	135,966	146,452
Unrealized (loss) gain on warrants valuation	(2,058)	11,761	(91)	3,576
Income before income tax (benefit) expense	1,269	15,610	1,424	6,578
Income tax (benefit) expense	(391)	5,241	(559)	1,853
Net income	1,660	10,369	1,983	4,725
Other comprehensive loss:
Net gains (losses) recognized in other comprehensive (loss) income, net of tax of $(296) and $0 for the three months ended December 31,, 2013 and December 31, 2012, and $99 and $0 for the six months ended December 31, 2013 and December 31, 2012, respectively, on cash flow hedging	549		(183)
Net losses recognized in other comprehensive loss, net of tax of $(2,091) and $(1,529) for the 3 months ended December 31, 2013 and December 31, 2012, respectively, and $(2,113) and $(295) for the six months ended December 31, 2013 and December 31, 2012, respectively, on available for sale securities	(3,849)	(2,833)	(3,874)	(535)
Net loss recognized in other comprehensive (loss) income	(3,300)	(2,833)	(4,057)	(535)
Comprehensive (loss) income	$ (1,640)	$ 7,536	$ (2,074)	$ 4,190
Earnings per share - basic
Net income	$ 0.05	$ 0.32	$ 0.06	$ 0.14
Weighted average shares outstanding - basic	32,955,629	32,827,652	32,943,875	32,813,910
Earnings per share - diluted
Net income	$ 0.05	$ 0.09	$ 0.06	$ 0.13
Weighted average shares outstanding - diluted	32,955,629	50,218,956	32,943,875	50,205,214

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Loans And Allowance For Probable Loan Losses

6 Months Ended

Dec. 31, 2013

Loans And Allowance For Probable Loan Losses [Abstract]

Loans And Allowance For Probable Loan Losses

LOANS AND ALLOWANCE FOR PROBABLE LOAN LOSSES

The Bank grants loans to customers primarily within Texas and New Mexico.  Although the Bank has a diversified loan portfolio, a substantial portion of its portfolio is dependent upon the general economic conditions in Texas and New Mexico.

Loans receivable at December 31, 2013 and June 30, 2013 are summarized as follows and include unamortized discounts and premiums and deferred loan fees and costs of $968,000 and $997,000 at December 31, 2013 and June 30, 2013, respectively (in thousands):

	December 31, 2013	June 30, 2013
Loans measured at fair value:
Commercial real estate	$                4,047	$                2,662
Multifamily	31,286	11,095
	35,333	13,757
Other loans receivable:
Residential construction	731	1,367
Lot and land development	5,998	8,988
1-4 family	144,738	233,947
Commercial real estate	186,522	213,452
Multifamily	91,917	88,738
Commercial loans	69,690	58,718
Consumer loans	2,736	1,959
	502,332	607,169
	537,665	620,926
Allowance for probable loan losses	(9,448)	(12,343)
	$            528,217	$            608,583

At December 31, 2013 and June 30, 2013, the 1-4 family loans included $89,583,000 and $174,037,000, respectively, of purchased mortgage loans held for investment.  The loans, which are subject to policies and procedures governing credit underwriting standards and funding requirements, consisted of participations in newly originated residential loans from various mortgage bankers nationwide purchased at par.

The analysis of the allowance for loan losses for the three and six-months ended December 31, 2013 and 2012 and the recorded investment in loans receivable at December 31, 2013 and 2012 were as follows (in thousands):

	Three-Months Ended December 31, 2013
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                  30	$                285	$           1,075	$             3,073	$           2,585	$             5,147	$               11	$       12,206
Charge-offs	-	-	-	(35)	-	(47)	-	(82)
Recoveries	5	3	9	116	-	16	-	149
Net recoveries (charge-offs)	5	3	9	81	-	(31)	-	67
(Recapture) provision charged
to operations	(29)	(164)	235	(85)	308	(3,098)	8	(2,825)
Balance at end of period	$                    6	$                124	$           1,319	$             3,069	$           2,893	$             2,018	$               19	$         9,448
Ending balance: individually
evaluated for impairment	$                    -	$                  33	$             251	$                   1	$                   -	$                161	$                  -	$            446
Ending balance: collectively
evaluated for impairment	$                    6	$                  91	$           1,068	$             3,068	$           2,893	$             1,857	$               19	$         9,002
Financing receivables:
Balance at end of period	$                731	$             5,998	$       144,738	$         186,522	$         91,917	$           69,690	$          2,736	$     502,332
Ending balance: individually
evaluated for impairment	$                578	$                995	$           7,880	$             7,159	$                   -	$             4,514	$                  -	$       21,126
Ending balance: collectively
evaluated for impairment	$                153	$             5,003	$       136,858	$         179,363	$         91,917	$           65,176	$          2,736	$     481,206

	Three-Months Ended December 31, 2012
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                187	$                975	$            3,205	$           10,591	$             2,819	$            3,106	$                9	$             20,892
Charge-offs	-	-	(12)	(410)	-	(680)	-	(1,102)
Recoveries	17	54	13	20	-	188	5	297
Net (charge-offs) recoveries	17	54	1	(390)	-	(492)	5	(805)
(Recapture) provision charged to
operations	(69)	(355)	(447)	(2,433)	(988)	2,850	(8)	(1,450)
Balance at end of period	$                135	$                674	$            2,759	$             7,768	$             1,831	$            5,464	$                6	$             18,637
Ending balance:  individually
evaluated for impairment	$                  23	$                177	$               347	$             1,179	$                    -	$            2,157	$                 -	$               3,883
Ending balance:  collectively
evaluated for impairment	$                112	$                497	$            2,412	$             6,589	$             1,831	$            3,307	$                6	$             14,754
Financing receivables:
Balance at end of period	$             2,216	$           11,458	$        438,097	$         257,514	$           48,654	$          64,179	$         1,704	$           823,822
Ending balance:  individually
evaluated for impairment	$                632	$             2,294	$          10,909	$           14,755	$                    -	$            4,317	$                 -	$             32,907
Ending balance:  collectively
evaluated for impairment	$             1,584	$             9,164	$        427,188	$         242,759	$           48,654	$          59,862	$         1,704	$           790,915

	Six-Months Ended December 31, 2013
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                  49	$                374	$           1,528	$             3,290	$           3,567	$             3,530	$                 5	$       12,343
Charge-offs	-	(4)	(97)	(51)	-	(67)	-	(219)
Recoveries	63	10	61	439	-	42	-	615
Net recoveries (charge-offs)	63	6	(36)	388	-	(25)	-	396
(Recapture) provision charged
to operations	(106)	(256)	(173)	(609)	(674)	(1,487)	14	(3,291)
Balance at end of period	$                    6	$                124	$           1,319	$             3,069	$           2,893	$             2,018	$               19	$         9,448

	Six-Months Ended December 31, 2012
	Residential Construction	Lot and Land Development	1-4 Family	Commercial Real Estate	Multifamily	Commercial	Consumer	Total
Allowance for credit losses:
Balance at beginning of period	$                350	$             1,310	$            3,235	$           10,628	$             2,866	$            4,004	$                9	$             22,402
Charge-offs	-	(182)	(163)	(1,113)	-	(1,608)	-	(3,066)
Recoveries	36	187	69	83	-	371	5	751
Net (charge-offs) recoveries	36	5	(94)	(1,030)	-	(1,237)	5	(2,315)
(Recapture) provision charged to
operations	(251)	(641)	(382)	(1,830)	(1,035)	2,697	(8)	(1,450)
Balance at end of period	$                135	$                674	$            2,759	$             7,768	$             1,831	$            5,464	$                6	$             18,637

As of December 31, 2013 and 2012, the ratio of loan loss allowance to ending loan balance, excluding purchased mortgage loans held for investment and loans measured at fair value, was 2.29%and 4.10%, respectively.  There was no loan loss allowance for purchased mortgage loans held for investment because they are held on average for 25 days or less, which substantially reduces credit risk.

Loans receivable on non-accrual status as of December 31, 2013 and June 30, 2013 were as follows (in thousands):

	December 31, 2013	June 30, 2013
Residential construction	$                  573	$                601
Lot and land development	992	2,418
1-4 family	6,485	7,792
Commercial real estate	4,076	7,611
Commercial loans	3,891	4,024
	$             16,017	$           22,446

Loans are classified as non-performing when they are 90 days or more past due as to principal or interest or when reasonable doubt exists as to timely collectibility.  The Bank uses a standardized review process to determine which loans should be placed on non-accrual status.  At the time a loan is placed on non-accrual status, previously accrued and uncollected interest is reversed against interest income.  Interest income on non-accrual loans is subsequently recognized to the extent cash payments are received for loans where full collection is likely.  For loans where full collection is not likely, interest payments are applied to the outstanding principal and interest income is only recognized if full payment is made.  The average recorded investment in non-accrual loans for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013 was approximately $18,552,000 and $25,516,000, respectively.  There was $1,000 and $8,000 of interest income recorded on the non-accrual loans, prior to being placed on non-accrual status, in the three and six-months ended December 31, 2013 and no interest income for the three-months ended December 31, 2012, and approximately $15,000 in the six-months ended December 31, 2012.

The following tables highlight the Bank’s recorded investment and unpaid principal balance for impaired loans by type as well as the related allowance, average recorded investment and interest income recognized as of December 31, 2013 and June 30, 2013 (in thousands):

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
December 31, 2013
With no related allowance recorded:
Residential construction	$               578	$               746	$                    -	$               407	$                    -
Lot and land development	45	168	-	40	-
1-4 family	6,276	8,024	-	5,217	5
Commercial real estate	7,145	8,151	-	6,261	93
Commercial loans	3,958	4,008	-	4,242	5
	18,002	21,097	-	16,167	103

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
December 31, 2013
With an allowance recorded:
Residential construction	$                   -	$                   -	$                   -	$              179	$                   -
Lot and land development	950	1,080	33	1,558	-
1-4 family	1,604	1,633	251	2,928	31
Commercial real estate	14	21	1	2,629	-
Commercial loans	556	619	161	3,036	15
	3,124	3,353	446	10,330	46

December 31, 2013
Total
Residential construction	$               578	$               746	$                    -	$               586	$                    -
Lot and land development	995	1,248	33	1,598	-
1-4 family	7,880	9,657	251	8,145	36
Commercial real estate	7,159	8,172	1	8,890	93
Commercial loans	4,514	4,627	161	7,278	20
	$          21,126	$          24,450	$               446	$          26,497	$               149

June 30, 2013
With no related allowance recorded:
Residential construction	$               383	$               471	$                    -	$               438	$                    -
Lot and land development	102	324	-	807	-
1-4 family	5,818	7,712	-	7,674	17
Commercial real estate	9,006	12,239	-	7,785	167
Commercial loans	4,430	5,092	-	1,582	26
	19,739	25,838	-	18,286	210

	Recorded Investment(1)	Unpaid Principal Balance(1)	Related Allowance	Average Recorded Investment(2)	Interest Income Recognized(3)
June 30, 2013
With an allowance recorded:
Residential construction	$               222	$               283	$                 23	$               191	$                    -
Lot and land development	2,326	2,543	233	1,879	-
1-4 family	3,543	3,870	178	6,398	67
Commercial real estate	3,265	4,188	105	10,048	15
Commercial loans	3,037	3,032	2,090	2,288	129
	12,393	13,916	2,629	20,804	211

June 30, 2013
Total
Residential construction	$               605	$               754	$                 23	$               629	$                    -
Lot and land development	2,428	2,867	233	2,686	-
1-4 family	9,361	11,582	178	14,072	84
Commercial real estate	12,271	16,427	105	17,833	182
Commercial loans	7,467	8,124	2,090	3,870	155
	$          32,132	$          39,754	$            2,629	$          39,090	$               421

____________________

(1) The difference between the unpaid principal balance and the recorded investment of impaired loans with no related allowance recorded is primarily comprised of partial charge-offs that were previously recognized.

(2) Represents the average recorded investment for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013, respectively.

(3) Represents interest income recognized on impaired loans for the six-months ended December 31, 2013 and the twelve-months ended June 30, 2013, respectively.

The Bank prepares a criticized and classified loan report that it uses to assist in calculating an adequate allowance for loan losses.  The following tables summarize this report and highlight the overall quality of the Bank’s financing receivables as of December 31, 2013 and June 30, 2013 (in thousands):

	Pass	Special Mention(1)	Substandard(2)	Total
December 31, 2013
Loans measured at fair value:
Commercial real estate	$           4,047	$                   -	$                     -	$             4,047
Multifamily	31,286	-	-	31,286
	35,333	-	-	35,333
Other loans receivable:
Residential construction	158	-	573	731
Lot and land development	4,689	-	1,309	5,998
1-4 family	137,964	38	6,736	144,738
Commercial real estate	156,321	3,512	26,689	186,522
Multifamily	91,917	-	-	91,917
Commercial loans	63,459	878	5,353	69,690
Consumer loans	2,736	-	-	2,736
	457,244	4,428	40,660	502,332
	$       492,577	$           4,428	$           40,660	$         537,665

	Pass	Special Mention(1)	Substandard(2)	Total
June 30, 2013
Loans measured at fair value:
Commercial real estate	$           2,662	$                   -	$                     -	$             2,662
Multifamily	11,095	-	-	11,095
	13,757	-	-	13,757
Other loans receivable:
Residential construction	766	-	601	1,367
Lot and land development	5,605	-	3,383	8,988
1-4 family	225,434	234	8,279	233,947
Commercial real estate	171,085	7,631	34,736	213,452
Multifamily	88,046	-	692	88,738
Commercial loans	47,680	1,324	9,714	58,718
Consumer loans	1,959	-	-	1,959
	540,575	9,189	57,405	607,169
	$       554,332	$           9,189	$           57,405	$         620,926

____________________

(1) These loans are currently protected by the current sound worth and paying capacity of the obligor, but have a potential weakness that would create a higher credit risk.

(2) These loans exhibit well-defined weaknesses that could jeopardize the ultimate collection of all or part of the debt.  Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged.  They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.  Loss potential, while existing in the aggregate for substandard assets, does not have to exist in individual assets classified as “Substandard.” 

The following tables highlight the age of the Bank’s past due financing receivables as of December 31, 2013 and June 30, 2013 (in thousands):

	30-59 Days Past Due	60-89 Days Past Due	90 Days and Greater Past Due	Total Past Due	Current	Total Financing Receivables	Recorded Investment > 90 Days and Accruing
December 31, 2013
Loans measured at fair value:
Commercial real estate	$           -	$         -	$           -	$           -	$      4,047	$           4,047	$                  -
Multifamily	-	-	-	-	31,286	31,286	-
	-	-	-	-	35,333	35,333	-
Other loans receivable:
Residential construction	-	-	-	-	731	731	-
Lot and land development	315	-	-	315	5,683	5,998	-
1-4 family	2,036	416	1,821	4,273	140,465	144,738	-
Commercial real estate	2,591	1,352	3,961	7,904	178,618	186,522	-
Multifamily	-	-	-	-	91,917	91,917	-
Commercial loans	378	124	3,676	4,178	65,512	69,690	-
Consumer loans	2	-	-	2	2,734	2,736	-
	5,322	1,892	9,458	16,672	485,660	502,332	-
	$    5,322	$  1,892	$    9,458	$  16,672	$  520,993	$       537,665	$                  -

	30-59 Days Past Due	60-89 Days Past Due	90 Days and Greater Past Due	Total Past Due	Current	Total Financing Receivables	Recorded Investment > 90 Days and Accruing
June 30, 2013
Loans measured at fair value:
Commercial real estate	$           -	$         -	$           -	$           -	$      2,662	$           2,662	$                  -
Multifamily	-	-	-	-	11,095	11,095	-
	-	-	-	-	13,757	13,757	-
Other loans receivable:
Residential construction	-	-	-	-	1,367	1,367	-
Lot and land development	173	370	80	623	8,365	8,988	-
1-4 family	914	234	2,816	3,964	229,983	233,947	-
Commercial real estate	1,396	1,153	4,826	7,375	206,077	213,452	-
Multifamily	692	-	-	692	88,046	88,738	-
Commercial loans	750	3,812	135	4,697	54,021	58,718	-
Consumer loans	-	-	-	-	1,959	1,959	-
	3,925	5,569	7,857	17,351	589,818	607,169	-
	$    3,925	$  5,569	$    7,857	$  17,351	$  603,575	$       620,926	$                  -

In certain circumstances, the Bank modifies the terms of its loans to a troubled borrower.  Modifications may include extending the maturity date, reducing the stated interest rate, rescheduling future cash flows or some combination thereof.  The Bank accounts for the modification as a troubled debt restructuring (“TDR”). 

Loans that have been modified in a TDR continue to be considered restructured until paid in full.  These loans, including loans restructured in the prior 12 months that defaulted during the period, are individually evaluated for impairment taking into consideration payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  A specific allowance for an impaired loan that has been modified in a TDR is established when the loan’s fair value is lower than its recorded investment.  In addition, the historical loss rates of loans modified in TDRs, by portfolio segment, are factored into the formula utilized to determine the general allowance for probable loan losses. 

The table below presents the recorded investment in loans modified in TDRs as of December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013	June 30, 2013
Residential construction	$                        578	$                     605
Lot and land development	1,186	4,927
1-4 family	5,890	7,690
Commercial real estate	3,146	4,574
Commercial	552	497
	$                   11,352	$                18,293

The allowance for loan losses associated with loans modified in TDRs as of December 31, 2013 and June 30, 2013, was $445,000 and $447,000, respectively.  The recorded investment includes $5,132,000 and $6,685,000 of loans on accrual status as of December 31, 2013 and June 30, 2013, respectively.  Loans modified in TDRs are placed on accrual status when a reasonable period of payment performance by the borrower demonstrates the ability and capacity to meet the restructured terms.

The following table summarizes the financial effects of loan modifications accounted for as TDRs that occurred during the three and six- months ended December 31, 2013 and 2012 (dollars in thousands):

	Three-Months Ended December 31, 2013			Six-Months Ended December 31, 2013
	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)
Commercial	-	$                         -	$                        -	1	$                    168	$                   168
	-	$                         -	$                        -	1	$                    168	$                   168

	Three-Months Ended December 31, 2012			Six-Months Ended December 31, 2012
	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment(1)
Residential construction	4	$                     648	$                    648	4	$                    648	$                    648
Lot and land development	-	-	-	7	3,228	3,228
1-4 family	4	895	882	5	1,308	1,295
Commercial real estate	2	96	96	2	96	96
Commercial	1	213	213	1	213	213
	11	$                  1,852	$                  1,839	19	$                 5,493	$                  5,480

____________

(1)Post-modification balances include direct charge-offs recorded at the time of modification.

The table below summarizes the type of loan modifications made and the post modification outstanding recorded investment for TDRs during the three and six-months ended December 31, 2013 and 2012 (in thousands):

	Amount of TDR Loan Modifications
Type of Modification	Three-Months Ended December 31, 2013	Six-Months Ended December 31, 2013
Rescheduled future cash flows	$                               -	$                           168
	$                               -	$                           168

	Amount of TDR Loan Modifications
Type of Modification	Three-Months Ended December 31, 2012	Six-Months Ended December 31, 2012
Maturity date extension	$                               -	$                           114
Reduction of the stated interest rate	60	60
Rescheduled future cash flows	-	705
Combination of maturity date extension
and rescheduling of future cash flows	701	2,646
Combination of maturity date extension
and reduction of the stated interest rate	-	26
Combination of maturity date extension,
reduction of the stated interest rate,
and rescheduling of future cash flows	1,078	1,929
	$                       1,839	$                         5,480

Loan modifications accounted for as TDRs within the previous 12 months that subsequently defaulted (a payment default is defined as a loan 60 days or more past due) during the three and six-months ended December 31, 2013 and 2012 are summarized in the following table (dollars in thousands):

	Three-Months Ended December 31, 2013		Six-Months Ended December 31, 2013
	Number of Contracts	Recorded Investment	Number of Contracts	Recorded Investment
1-4 family	2	$             272	2	$             272

	Three-Months Ended December 31, 2012		Six-Months Ended December 31, 2012
	Number of Contracts	Recorded Investment	Number of Contracts	Recorded Investment
1-4 family	2	$          1,896	2	$          1,896

The Bank has elected to measure certain loans at fair value.  See discussion in “Note 1(x). Fair Value of Financial Instruments” and“Note 1(g). Loans and Allowance for Loan Losses”in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.  The Bank recognized interest income on loans measured at fair value separately from other changes in fair value.  As of December 31, 2013, there were no loans measured at fair value on non-accrual status or 90 days or more past due and still accruing. 

The following tables summarize the amortized cost, gross unrealized gains and losses and the fair value of loans measured at fair value at December 31, 2013 and June 30, 2013 for the Bank (in thousands): 

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains (1)	Losses (1)	Value
December 31, 2013
Commercial real estate	$        4,131	$                -	$            (84)	$     4,047
Multifamily	31,152	165	(31)	31,286
	$      35,283	$           165	$          (115)	$   35,333

		Gross
	Amortized	Unrealized	Fair
	Cost	Losses (1)	Value
June 30, 2013
Commercial real estate	$        2,787	$            (125)	$      2,662
Multifamily	11,115	(20)	11,095
	$      13,902	$            (145)	$    13,757

____________

(1)  Unrealized gains (losses) are recorded in other revenues on the Consolidated Statements of Comprehensive (Loss) Income.

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Receivable From And Payable To Brokers, Dealers And Clearing Organizations

6 Months Ended

Dec. 31, 2013

Receivable From And Payable To Brokers, Dealers And Clearing Organizations [Abstract]

Receivable From And Payable To Brokers, Dealers And Clearing Organizations

RECEIVABLE FROM AND PAYABLE TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS

At December  31, 2013 and June 30, 2013, SWS had receivable from and payable to brokers, dealers and clearing organizations related to the following (in thousands):

	December 31, 2013	June 30, 2013
Receivable:
Securities failed to deliver	$               6,226	$                9,708
Securities borrowed	1,720,673	1,546,376
Correspondent broker/dealers	37,034	45,435
Clearing organizations	27,373	25,285
Other	15,883	71,670
	$        1,807,189	$         1,698,474
Payable:
Securities failed to receive	$             14,275	$              39,024
Securities loaned	1,640,922	1,471,319
Correspondent broker/dealers	12,474	16,352
Other	7,901	6,276
	$        1,675,572	$         1,532,971

SWS participates in the securities borrowing and lending business by borrowing and lending securities other than those of its clients.  SWS obtains or releases collateral as prices of the underlying securities fluctuate.  Both of these activities are reported on a gross basis by counterparty.  The following table provides information about these receivables and related collateral amounts at  December  31, 2013 and June 30, 2013.

December 31, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Securities Borrowed	$              1,720,673	$                              -	$                   1,720,673	$     (1,720,673)	$                -	$                -
Securities Loaned (1)	1,640,922	-	1,640,922	(1,640,922)	-	-

June 30, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Securities Borrowed	$              1,546,376	$                              -	$                   1,546,376	$     (1,546,376)	$                -	$                -
Securities Loaned (1)	1,471,319	-	1,471,319	(1,471,319)	-	-

____________________

(1)Under securities lending agreements, SWS had repledged $1,619,010,000 and $1,452,911,000 at December 31, 2013 and June 30, 2013, respectively.

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Advances From The Federal Home Loan Bank

6 Months Ended

Dec. 31, 2013

Advances From The Federal Home Loan Bank [Abstract]

Advances From The Federal Home Loan Bank

ADVANCES FROM THE FEDERAL HOME LOAN BANK

At December  31, 2013 and June 30, 2013, advances from the FHLB were due as follows (in thousands):

	December 31, 2013	June 30, 2013
Maturity:
Due in one year	$               14,344	$            15,486
Due in two years	3,732	1,859
Due in five years	50,986	48,956
Due in seven years	14,856	12,809
Due in ten years	4,822	8,424
Due in twenty years	9,620	10,163
	98,360	97,697
Restructuring prepayment penalty	(109)	(132)
	$               98,251	$            97,565

The advances from the FHLB had interest rates ranging from less than 1% to 6% and were collateralized by approximately $191,000,000 in qualifying loans at December  31, 2013 (calculated at September  30, 2013).  The weighted average interest rate was 2.6% at December  31, 2013.  At June 30, 2013 (calculated at March 31, 2013), the advances from the FHLB had interest rates from less than 1% to 6% and were collateralized by approximately $181,000,000 in qualifying loans.  The weighted average interest rate was 2.7% at June 30, 2013.

During the second quarter of fiscal 2013, the Bank restructured a portion of its fixed-rate FHLB advances with lower-cost FHLB advances.  Upon restructuring, the Bank incurred a $166,000 prepayment penalty, which is being amortized using the effective interest method over the contractual term of the restructured advances.  Amortization expense for the three and six-months ended December 31, 2013 was $11,000 and $23,000.  Amortization expense for the three and six-months ended December 31, 2012 was $11,000.  

At December  31, 2013, the Bank had net borrowing capacity with the FHLB of $92,568,000.

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Servicing Assets

6 Months Ended

Dec. 31, 2013

Servicing Assets [Abstract]

Servicing Assets

SERVICING ASSETS

During fiscal 2014 and 2013, the Bank sold $3,151,000 of SBA loans resulting in a gain of $264,000 and $17,664,000 of SBA loans resulting in a gain of $2,253,000, respectively.  In addition, during the three-months ended December 31, 2013, the Bank, in connection with the fiscal 2014 sales, recorded a servicing asset of $70,000.  At December 31, 2013 and June 30, 2013,the servicing assets had a value of $436,000and $412,000, respectively.  The Bank accounts for its servicing rights in accordance with ASC 860-50,“Servicing Assets and Liabilities,” at amortized cost.   The codification requires that servicing rights acquired through the origination of loans, which are sold with servicing rights retained, are recognized as separate assets.   Servicing assets are recorded as the difference between the contractual servicing fees and adequate compensation for performing the servicing, and are periodically reviewed and adjusted for any impairment.  The amount of impairment recognized, if any, is the amount by which the servicing assets exceed their fair value.  For the six-months ended December 31, 2013, the Bank recorded impairment charges for these servicing assets of $33,000.  There were no impairment charges for the three-months ended December 31, 2013 or the three and six-months ended December 31, 2012. Fair value of the servicing assets is estimated using discounted cash flows based on current market interest rates.  See “Note 1(x). Fair Value of Financial Instruments” in the Notes to the Consolidated Financial Statement in the Fiscal 2013 Form 10-Kand “Fair Value Financial Instruments”.  Servicing rights are amortized in proportion to and over the period of the related net servicing income.

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Deposits (Narrative) (Detail)	Dec. 31, 2013	Jun. 30, 2013
Deposits [Abstract]
Weighted average interest rate	0.04%	0.04%

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Securities Purchased /Sold Under Agreements To Resell/Repurchase

6 Months Ended

Dec. 31, 2013

Securities Purchased /Sold Under Agreements To Resell/Repurchase [Abstract]

Securities Purchased /Sold under Agreements to Resell/Repurchase

SECURITIES PURCHASED/SOLD UNDER AGREEMENTS TO RESELL/REPURCHASE

At December  31, 2013 and June 30, 2013, SWS held reverse repurchase agreements collateralized by U.S. government and government agency obligations and securities sold under repurchase agreements.  These securities are reported on a gross basis in the Consolidated Statements of Financial Condition. 

Securities sold under repurchase agreements, which are secured borrowings, generally mature within one to four days from the transaction date.  Securities sold under repurchase agreements are reflected at the amount of cash received in connection with the transactions.  The Company may be required to provide additional collateral based on the fair value of the underlying securities.  The Company monitors the fair value of the underlying securities on a daily basis. Interest on these amounts is accrued and is included in the Consolidated Statements of Financial Condition in other liabilities.

The following table provides information about these instruments and any related collateral amounts at December 31, 2013 and June 30, 2013. 

December 31, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Reverse
Repurchase
Agreements	$                  73,381	$                              -	$                       73,381	$         (72,866)	$                -	$            515
Repurchase
Agreements	62,314	-	62,314	(62,314)	-	-

June 30, 2013
(in thousands)				Gross amounts not offset in the statement of financial position
Description	Gross amounts of recognized assets/ liabilities	Gross amounts offset in the statement of financial position	Net amounts of assets presented in the statement of financial position	Financial instruments	Cash Collateral	Net Amount
Reverse
Repurchase
Agreements	$                  51,996	$                              -	$                       51,996	$         (51,808)	$                -	$            188
Repurchase
Agreements	37,012	-	37,012	(37,012)	-	-

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Loans And Allowance For Probable Loan Losses (Analysis Of Allowance For Probable Loan Losses And Recorded Investments In Loans Receivable) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013
Allowance for credit losses:
Balance at beginning of period	$ 12,206	$ 20,892	$ 12,343	$ 22,402
Charge-offs	(82)	(1,102)	(219)	(3,066)
Recoveries	149	297	615	751
Net recoveries (charge-offs)	67	(805)	396	(2,315)
(Recapture) provision charged to operations	(2,825)	(1,450)	(3,291)	(1,450)
Balance at end of period	9,448	18,637	9,448	18,637
Ending balance: individually evaluated for impairment	446	3,883	446	3,883
Ending balance: collectively evaluated for impairment	9,002	14,754	9,002	14,754
Financing receivables:
Balance at end of period	537,665	823,822	537,665	823,822	620,926
Ending balance: individually evaluated for impairment	21,126	32,907	21,126	32,907
Ending balance: collectively evaluated for impairment	481,206	790,915	481,206	790,915
Residential Construction [Member]
Allowance for credit losses:
Balance at beginning of period	30	187	49	350
Recoveries	5	17	63	36
Net recoveries (charge-offs)	5	17	63	36
(Recapture) provision charged to operations	(29)	(69)	(106)	(251)
Balance at end of period	6	135	6	135
Ending balance: individually evaluated for impairment		23		23
Ending balance: collectively evaluated for impairment	6	112	6	112
Financing receivables:
Balance at end of period		2,216		2,216
Ending balance: individually evaluated for impairment	578	632	578	632
Ending balance: collectively evaluated for impairment	153	1,584	153	1,584
Lot And Land Development [Member]
Allowance for credit losses:
Balance at beginning of period	285	975	374	1,310
Charge-offs			(4)	(182)
Recoveries	3	54	10	187
Net recoveries (charge-offs)	3	54	6	5
(Recapture) provision charged to operations	(164)	(355)	(256)	(641)
Balance at end of period	124	674	124	674
Ending balance: individually evaluated for impairment	33	177	33	177
Ending balance: collectively evaluated for impairment	91	497	91	497
Financing receivables:
Balance at end of period		11,458		11,458
Ending balance: individually evaluated for impairment	995	2,294	995	2,294
Ending balance: collectively evaluated for impairment	5,003	9,164	5,003	9,164
1-4 Family [Member]
Allowance for credit losses:
Balance at beginning of period	1,075	3,205	1,528	3,235
Charge-offs		(12)	(97)	(163)
Recoveries	9	13	61	69
Net recoveries (charge-offs)	9	1	(36)	(94)
(Recapture) provision charged to operations	235	(447)	(173)	(382)
Balance at end of period	1,319	2,759	1,319	2,759
Ending balance: individually evaluated for impairment	251	347	251	347
Ending balance: collectively evaluated for impairment	1,068	2,412	1,068	2,412
Financing receivables:
Balance at end of period		438,097		438,097
Ending balance: individually evaluated for impairment	7,880	10,909	7,880	10,909
Ending balance: collectively evaluated for impairment	136,858	427,188	136,858	427,188
Commercial Real Estate [Member]
Allowance for credit losses:
Balance at beginning of period	3,073	10,591	3,290	10,628
Charge-offs	(35)	(410)	(51)	(1,113)
Recoveries	116	20	439	83
Net recoveries (charge-offs)	81	(390)	388	(1,030)
(Recapture) provision charged to operations	(85)	(2,433)	(609)	(1,830)
Balance at end of period	3,069	7,768	3,069	7,768
Ending balance: individually evaluated for impairment	1	1,179	1	1,179
Ending balance: collectively evaluated for impairment	3,068	6,589	3,068	6,589
Financing receivables:
Balance at end of period		257,514		257,514
Ending balance: individually evaluated for impairment	7,159	14,755	7,159	14,755
Ending balance: collectively evaluated for impairment	179,363	242,759	179,363	242,759
Multifamily [Member]
Allowance for credit losses:
Balance at beginning of period	2,585	2,819	3,567	2,866
(Recapture) provision charged to operations	308	(988)	(674)	(1,035)
Balance at end of period	2,893	1,831	2,893	1,831
Ending balance: collectively evaluated for impairment	2,893	1,831	2,893	1,831
Financing receivables:
Balance at end of period		48,654		48,654
Ending balance: collectively evaluated for impairment	91,917	48,654	91,917	48,654
Commercial Loans [Member]
Allowance for credit losses:
Balance at beginning of period	5,147	3,106	3,530	4,004
Charge-offs	(47)	(680)	(67)	(1,608)
Recoveries	16	188	42	371
Net recoveries (charge-offs)	(31)	(492)	(25)	(1,237)
(Recapture) provision charged to operations	(3,098)	2,850	(1,487)	2,697
Balance at end of period	2,018	5,464	2,018	5,464
Ending balance: individually evaluated for impairment	161	2,157	161	2,157
Ending balance: collectively evaluated for impairment	1,857	3,307	1,857	3,307
Financing receivables:
Balance at end of period		64,179		64,179
Ending balance: individually evaluated for impairment	4,514	4,317	4,514	4,317
Ending balance: collectively evaluated for impairment	65,176	59,862	65,176	59,862
Consumer Loans [Member]
Allowance for credit losses:
Balance at beginning of period	11	9	5	9
Recoveries		5		5
Net recoveries (charge-offs)		5		5
(Recapture) provision charged to operations	8	(8)	14	(8)
Balance at end of period	19	6	19	6
Ending balance: collectively evaluated for impairment	19	6	19	6
Financing receivables:
Balance at end of period		1,704		1,704
Ending balance: collectively evaluated for impairment	2,736	1,704	2,736	1,704
Other Loans Receivable [Member]
Financing receivables:
Balance at end of period	502,332		502,332		607,169
Other Loans Receivable [Member] | Residential Construction [Member]
Financing receivables:
Balance at end of period	731		731		1,367
Other Loans Receivable [Member] | Lot And Land Development [Member]
Financing receivables:
Balance at end of period	5,998		5,998		8,988
Other Loans Receivable [Member] | 1-4 Family [Member]
Financing receivables:
Balance at end of period	144,738		144,738		233,947
Other Loans Receivable [Member] | Commercial Real Estate [Member]
Financing receivables:
Balance at end of period	186,522		186,522		213,452
Other Loans Receivable [Member] | Multifamily [Member]
Financing receivables:
Balance at end of period	91,917		91,917		88,738
Other Loans Receivable [Member] | Commercial Loans [Member]
Financing receivables:
Balance at end of period	69,690		69,690		58,718
Other Loans Receivable [Member] | Consumer Loans [Member]
Financing receivables:
Balance at end of period	$ 2,736		$ 2,736		$ 1,959

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Fair Value Of Financial Instruments (Reconciliation Of Major Classes of Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended	3 Months Ended								6 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2013 Loans [Member]	Dec. 31, 2013 Corporate Equity Securities [Member]	Sep. 30, 2013 Corporate Equity Securities [Member]	Dec. 31, 2013 Corporate Obligations [Member]	Sep. 30, 2013 Corporate Obligations [Member]	Dec. 31, 2013 Warrants [Member]	Sep. 30, 2013 Warrants [Member]	Dec. 31, 2012 Warrants [Member]	Dec. 31, 2012 Warrants [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Ending balance	$ (21,567)	$ (23,452)	$ (23,452)		$ 575	$ 625	$ 88	$ 120	$ (22,230)	$ (24,197)
Redemption/sale of security	(75)	(50)			(75)	(50)
Unrealized loss	(8)	(32)					(8)	(32)
Transfers from Level 2 to Level 3	35,333			35,333
Increase in warrants valuation (unrealized loss)	(2,058)								(2,058)
(Decrease) increase in warrants valuation (unrealized gain (loss))	4	1,967	2,162							1,967	11,761	3,576
Ending balance	$ 11,625	$ (21,567)	$ 11,625	$ 35,333	$ 500	$ 575	$ 80	$ 88	$ (24,288)	$ (22,230)

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Securities Owned And Securities Sold, Not Yet Purchased

6 Months Ended

Dec. 31, 2013

Securities Owned And Securities Sold, Not Yet Purchased [Abstract]

Securities Owned And Securities Sold, Not Yet Purchased

SECURITIES OWNED AND SECURITIES SOLD, NOT YET PURCHASED

Securities owned and securities sold, not yet purchased at December  31, 2013 and June 30, 2013 consisted of the following (in thousands):

	December 31, 2013	June 30, 2013
Securities owned:
Corporate equity securities	$                      1,200	$                      1,520
Municipal obligations	56,182	30,116
U.S. government and government agency obligations	73,883	41,529
Corporate obligations	82,896	127,899
Other	22,041	8,569
	$                  236,202	$                  209,633
Securities sold, not yet purchased:
Municipal obligations	$                             -	$                           10
U.S. government and government agency obligations	76,735	54,086
Corporate obligations	78,368	80,639
	$                  155,103	$                  134,735

Securities owned and securities sold, not yet purchased are carried at fair value.  See additional discussion in “Fair Value of Financial Instruments”.

Some of these securities were pledged to secure short-term borrowings (see “Short-Term Borrowings”) and as security deposits at clearing organizations for the Company’s clearing business.  At December  31, 2013 and June 30, 2013, securities pledged as security deposits at clearing organizations were $6,749,000 and $3,000,000, respectively.

Included in the balance of Securities owned-U.S. government and government agency obligations at December 31, 2013, are $949,000 of “to-be-announced” securities (“TBAs”). TBAs are purchase and sale agreements of forward mortgage-backed securities whose collateral remains to-be-announced until just prior to the trade settlement. The TBAs are accounted for as derivatives underAccounting Standards Codification (“ASC”) 815  “Derivatives and Hedging.” The Company does not apply hedge accounting for these TBA securities.  Accordingly, the securities are carried at fair value with unrealized and realized gains recorded in net gains on principal transactions on the Consolidated Statements of Comprehensive (Loss) Income.  All of the Company’s derivative transactions are entered into in order to facilitate customer transactions. 

In addition to the above activities related to TBAs, the Company also enters into TBAs in order to assist clients (generally small to mid-size mortgage loan originators) in hedging the interest rate risk associated with the mortgages owned by the clients.  In general, the Company will enter into a TBA purchase agreement with the client.  The Company will then immediately enter into a TBA sale agreement with identical terms and the same settlement date with a separate counter-party.  The Company earns revenue through a commission charged to the customer.  Because the Company has purchased and sold the same security, it is no longer exposed to market movements of the underlying TBA.  At December 31, 2013, the Company had unsettled TBA purchase contracts and offsetting TBA sale agreements in the notional amount of $543,317,000.

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Securities Held To Maturity

6 Months Ended

Dec. 31, 2013

Securities Held To Maturity [Abstract]

Securities Held To Maturity

SECURITIES HELD TO MATURITY

Securities held to maturity consisted of the following (in thousands):

	December 31, 2013	June 30, 2013
Government National Mortgage
Association ("GNMA") Securities	$                     14,595	$                     17,423

In March 2011, the Bank purchased GNMA securities at a cost of $35,525,000, including a premium of $525,000.  The premium is amortized over the period from the date of purchase to the stated maturity date (15 years) of the GNMA securities using the interest method.  These securities are classified as held to maturity and are accounted for at amortized cost.  The weighted average yield on this investment is expected to be 2.4% and the weighted average maturity is expected to be 2.2 years. 

The Bank recorded $21,000 and $41,000 in amortization of the premiums during the three and six-months ended December 31, 2013, respectively.  During the three and six-months ended December 31, 2013, the Bank received $1,223,000 and $3,025,000 of principal and interest payments, respectively, recording $113,000 and $238,000 in interest, respectively.

The Bank recorded $32,000 and$61,000 in amortization of the premiums during the three and six-months ended December 31, 2012, respectively.  During the three and six-months ended December31, 2012, the Bank received $2,306,000 and$4,488,000 of principal and interest payments, respectively, recording $172,000 and$359,000 in interest, respectively. 

The amortized cost, estimated fair value and unrecognized holding gain of securities held to maturity at December  31, 2013, by contractual maturity date, are shown below (in thousands).  Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties. 

	Securities Held to Maturity
	Amortized Cost	Fair Value	Unrecognized Holding gain
Due after ten years	$                     14,595	$                     14,982	$                          387

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Securities Available For Sale

6 Months Ended

Dec. 31, 2013

Securities Available For Sale [Abstract]

Securities Available For Sale

SECURITIES AVAILABLE FOR SALE

SWS Group owns shares of common stock of Westwood Group, Inc. (“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.

The following tables summarize the cost of equity securities, amortized cost of debt securities and market value of these investments at December  31, 2013 and June 30, 2013 (dollars in thousands): 

		Original/	Gross	Gross	Gross
	Shares	Amortized	Unrealized	Unrealized	Realized	Market
	Held	Cost	Gains	Losses	Losses	Value
December 2013
Westwood common stock	2,219	$              7	$           220	$                 -	$             (90)	$         137
Continuous unrealized loss less than
12 months:
U.S. government and government
agency obligations	N/A	531,733	229	(14,321)	-	517,641
Municipal obligations	N/A	44,262	85	(1,160)	-	43,187
Continuous unrealized loss for 12
months or greater:
U.S. government and government
agency obligations	N/A	19,727	-	(1,125)	-	18,602
Municipal obligations	N/A	727	-	(3)	-	724
		$   596,456	$           534	$      (16,609)	$             (90)	$   580,291

		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

In fiscal 2014 and 2013, the Bank purchased U.S. government and government agency and municipal obligations securities at a cost of $123,696,000 and $319,836,000, including a net premium of $1,093,000 and $6,279,000, respectively.  The premium is amortized over the period from the date of purchase to the stated maturity date (weighted average of 4.48 years at December  31, 2013 and 4.04 years at June 30, 2013) using the interest method. 

During the three and six-months ended December 31, 2013, the Bank recorded $597,000 and $1,177,000, respectively, in amortization of the premium and received $14,188,000 and $30,075,000, respectively, of principal and interest payments, recording $3,000,000 and $5,853,000, respectively, in interest income on these securities.  During the three and six-months ended December 31, 2012, the Bank recorded $515,000 and $908,000, respectively, in amortization of the premium and received $13,040,000 and $21,156,000, respectively, of principal and interest payments, recording $1,955,000 and $3,593,000, respectively, in interest income on these securities.

During the first half of fiscal 2014, U.S. government and municipal obligations of $15,235,000 matured and during the first half of fiscal 2013, the issuer redeemed $12,000,000 of U.S. government agency securities, purchased at a discount, at par, resulting in a gain of $7,000 in fiscal 2013.

During the second quarter of fiscal 2013, 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 from the sale of shares of U.S. Home Systems, Inc. (USHS) common stock owned by SWS Group at June 29, 2012.  Also, during the second quarter of fiscal 2013, the Bank sold $24,557,000 in securities, recognizing a gain of $95,000 in other revenue and a $62,000  ($95,000, net of tax) reclassification adjustment from accumulated other comprehensive income.

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Loans And Allowance For Probable Loan Losses (Summary Of Age Of The Bank's Past Due Financing Receivables) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	$ 5,322	$ 3,925
60-89 Days Past Due	1,892	5,569
90 Days and Greater	9,458	7,857
Total Past Due	16,672	17,351
Current	520,993	603,575
Balance at end of period	537,665	620,926	823,822
Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at end of period			2,216
Lot And Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at end of period			11,458
1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at end of period			438,097
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at end of period			257,514
Multifamily [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at end of period			48,654
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at end of period			64,179
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at end of period			1,704
Loans Measured At Fair Value [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	35,333	13,757
Balance at end of period	35,333	13,757
Loans Measured At Fair Value [Member] | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	4,047	2,662
Balance at end of period	4,047	2,662
Loans Measured At Fair Value [Member] | Multifamily [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	31,286	11,095
Balance at end of period	31,286	11,095
Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	5,322	3,925
60-89 Days Past Due	1,892	5,569
90 Days and Greater	9,458	7,857
Total Past Due	16,672	17,351
Current	485,660	589,818
Balance at end of period	502,332	607,169
Other Loans Receivable [Member] | Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	731	1,367
Balance at end of period	731	1,367
Other Loans Receivable [Member] | Lot And Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	315	173
60-89 Days Past Due		370
90 Days and Greater		80
Total Past Due	315	623
Current	5,683	8,365
Balance at end of period	5,998	8,988
Other Loans Receivable [Member] | 1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	2,036	914
60-89 Days Past Due	416	234
90 Days and Greater	1,821	2,816
Total Past Due	4,273	3,964
Current	140,465	229,983
Balance at end of period	144,738	233,947
Other Loans Receivable [Member] | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	2,591	1,396
60-89 Days Past Due	1,352	1,153
90 Days and Greater	3,961	4,826
Total Past Due	7,904	7,375
Current	178,618	206,077
Balance at end of period	186,522	213,452
Other Loans Receivable [Member] | Multifamily [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due		692
Total Past Due		692
Current	91,917	88,046
Balance at end of period	91,917	88,738
Other Loans Receivable [Member] | Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	378	750
60-89 Days Past Due	124	3,812
90 Days and Greater	3,676	135
Total Past Due	4,178	4,697
Current	65,512	54,021
Balance at end of period	69,690	58,718
Other Loans Receivable [Member] | Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	2
Total Past Due	2
Current	2,734	1,959
Balance at end of period	$ 2,736	$ 1,959

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Deposits (Bank Core Deposits) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Deposit [Line Items]
Noninterest bearing demand accounts	5.70%	5.50%
Interest bearing demand accounts	0.90%	0.80%
Savings accounts	88.60%	88.90%
Limited access money market accounts	2.00%	1.70%
Bank core deposits	100.00%	100.00%
Noninterest bearing demand accounts	$ 56,665	$ 55,221
Interest bearing demand accounts	8,652	7,723
Savings accounts	881,970	883,229
Limited access money market accounts	19,433	17,212
Bank core deposits	994,765	993,719
Certificates of Deposit Less Than $100,000 [Member]
Deposit [Line Items]
Certificates of deposit	1.70%	1.80%
Certificates of deposit, less than $100,000	16,617	17,829
Certificates of Deposit $100,000 and Greater [Member]
Deposit [Line Items]
Certificates of deposit	1.10%	1.30%
Certificates of deposit, $100,000 and greater	$ 11,428	$ 12,505

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Loans And Allowance For Probable Loan Losses (Financial Effects Of Loan Modifications Accounted For As TDRs) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Dec. 31, 2012 contract	Dec. 31, 2013 contract		Dec. 31, 2012 contract
Financing Receivable, Modifications [Line Items]
Number of Contracts	11	1		19
Pre-Modification Outstanding Recorded Investment	$ 1,852	$ 168		$ 5,493
Post-Modification Outstanding Recorded Investment	1,839	168	[1]	5,480
Residential Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	4			4
Pre-Modification Outstanding Recorded Investment	648			648
Post-Modification Outstanding Recorded Investment	648			648
Lot And Land Development [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts				7
Pre-Modification Outstanding Recorded Investment				3,228
Post-Modification Outstanding Recorded Investment				3,228
1-4 Family [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	4			5
Pre-Modification Outstanding Recorded Investment	895			1,308
Post-Modification Outstanding Recorded Investment	882			1,295
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	2			2
Pre-Modification Outstanding Recorded Investment	96			96
Post-Modification Outstanding Recorded Investment	96			96
Commercial Loans [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	1		1
Pre-Modification Outstanding Recorded Investment	213	168		213
Post-Modification Outstanding Recorded Investment	$ 213	$ 168	[1]	$ 213

[1] Post-modification balances include direct charge-offs recorded at the time of modification.

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Earnings (Loss) Per Share ("EPS") (Summary of Basic And Diluted EPS Computations) (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Earnings (Loss) Per Share ("EPS") [Abstract]
Net income	$ 1,660	$ 10,369	$ 1,983	$ 4,725
Interest expense on long-term debt		2,022		4,020
Unrealized gain on warrant valuation		(7,645)		(2,324)
Adjusted net loss	$ 1,660	$ 4,746	$ 1,983	$ 6,421
Weighted average shares outstanding - basic	32,955,629	32,827,652	32,943,875	32,813,910
Effect of dilutive securities		17,391,304		17,391,304
Weighted average shares outstanding - diluted	32,955,629	50,218,956	32,943,875	50,205,214
Earnings (loss) per share - basic	$ 0.05	$ 0.32	$ 0.06	$ 0.14
Earnings (loss) per share - diluted	$ 0.05	$ 0.09	$ 0.06	$ 0.13

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Loans And Allowance For Probable Loan Losses (Summary Of Quality Of The Bank's Financing Receivables Excluding Loans Held For Sale) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Jun. 30, 2013		Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	$ 537,665		$ 620,926		$ 823,822
Loans Measured At Fair Value [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	35,333		13,757
Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	502,332		607,169
Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees					2,216
Residential Construction [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	731		1,367
Lot And Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees					11,458
Lot And Land Development [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	5,998		8,988
1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees					438,097
1-4 Family [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	144,738		233,947
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees					257,514
Commercial Real Estate [Member] | Loans Measured At Fair Value [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	4,047		2,662
Commercial Real Estate [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	186,522		213,452
Multifamily [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees					48,654
Multifamily [Member] | Loans Measured At Fair Value [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	31,286		11,095
Multifamily [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	91,917		88,738
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees					64,179
Commercial Loans [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	69,690		58,718
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees					1,704
Consumer Loans [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	2,736		1,959
Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	492,577		554,332
Pass | Loans Measured At Fair Value [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	35,333		13,757
Pass | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	457,244		540,575
Pass | Residential Construction [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	158		766
Pass | Lot And Land Development [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	4,689		5,605
Pass | 1-4 Family [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	137,964		225,434
Pass | Commercial Real Estate [Member] | Loans Measured At Fair Value [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	4,047		2,662
Pass | Commercial Real Estate [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	156,321		171,085
Pass | Multifamily [Member] | Loans Measured At Fair Value [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	31,286		11,095
Pass | Multifamily [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	91,917		88,046
Pass | Commercial Loans [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	63,459		47,680
Pass | Consumer Loans [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	2,736		1,959
Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	4,428	[1]	9,189	[1]
Special Mention | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	4,428	[1]	9,189	[1]
Special Mention | 1-4 Family [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	38	[1]	234	[1]
Special Mention | Commercial Real Estate [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	3,512	[1]	7,631	[1]
Special Mention | Commercial Loans [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	878	[1]	1,324	[1]
Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	40,660	[2]	57,405	[2]
Substandard | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	40,660	[2]	57,405	[2]
Substandard | Residential Construction [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	573	[2]	601	[2]
Substandard | Lot And Land Development [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	1,309	[2]	3,383	[2]
Substandard | 1-4 Family [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	6,736	[2]	8,279	[2]
Substandard | Commercial Real Estate [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	26,689	[2]	34,736	[2]
Substandard | Multifamily [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees			692	[2]
Substandard | Commercial Loans [Member] | Other Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, net of premiums, discounts and deferred fees	$ 5,353	[2]	$ 9,714	[2]

[1] These loans are currently protected by the current sound worth and paying capacity of the obligor, but have a potential weakness that would create a higher credit risk.

[2] These loans exhibit well-defined weaknesses that could jeopardize the ultimate collection of all or part of the debt. Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate for substandard assets, does not have to exist in individual assets classified as “Substandard.”

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Income Taxes (Deferred Tax Assets And Deferred Tax Liabilities) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Deferred tax assets:
Employee compensation plans	$ 9,695	$ 11,378
Net operating loss carryforward	11,440	10,507
Allowance for probable loan losses	3,151	3,400
Securities available for sale	5,703	3,589
Bad debt reserve	2,103	2,177
Deferred rent	1,919	1,631
State taxes	909	909
Investment in unconsolidated ventures	643	909
Deferred income on loans	693	810
REO	287	139
Long-term debt	177
Other	1,105	513
Gross deferred tax assets	37,825	35,962
Valuation allowance	(30,648)	(30,870)
Net deferred tax assets	7,177	5,092
Deferred tax liabilities:
Interest rate swaps in cash flow hedging relationships	(528)	(626)
Fixed assets, net	(448)	(426)
Investment in unconsolidated ventures		(120)
Long-term debt		(82)
Other	(498)	(249)
Total gross deferred tax liabilities	(1,474)	(1,503)
Net deferred tax assets - included in other assets on the Consolidated Statements of Financial Condition	$ 5,703	$ 3,589

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Affiliate Transactions

6 Months Ended

Dec. 31, 2013

Affiliate Transactions [Abstract]

Affiliate Transactions

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 $994,968,000 and $993,871,000 at December  31, 2013 and June 30, 2013, respectively.  At December  31, 2013 and June 30, 2013, clients of Southwest Securities had invested $876,537,000 and $878,434,000, respectively, in Bank Insured Deposits.

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General And Basis Of Presentation (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended		0 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2013 state	Jan. 09, 2014 Subsequent Event [Member] Hilltop [Member]
Number of states in which company has licenses to facilitate the sale of insurance			44
Investment banking, advisory and administrative fees reclassified to conform to current presentation	$ 748	$ 1,624
Proposed acquisition price per share				$ 7.00
Percentage of proposed consideration to be paid in cash				50.00%
Percentage of proposed consideration to be paid in common stock				50.00%

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Short-Term Borrowings

6 Months Ended

Dec. 31, 2013

Short-Term Borrowings [Abstract]

Short-Term Borrowings

SHORT-TERM BORROWINGS

Brokerage. 

Uncommitted lines of credit

Southwest Securities has credit arrangements with commercial banks, which include broker loan lines up to $425,000,000.  These lines of credit are used primarily to finance securities owned, securities held for correspondent broker/dealer accounts, receivables in customers’ margin accounts and underwriting activities.  These lines may also be used to release pledged collateral against day loans. These credit arrangements are provided on an “as offered” basis and are not committed lines of credit.  These arrangements can be terminated at any time by the lender. Any outstanding balance under these credit arrangements is due on demand and bears interest at rates indexed to the federal funds rate (0.07% at December  31, 2013 and 0.07% at June 30, 2013). The total amount of borrowings available under these lines of credit is reduced by the amount available under the options trading unsecured letter of credit, referenced below.  At December  31, 2013, the amount outstanding under these secured arrangements was $75,000,000, which was collateralized by securities held for firm accounts valued at $126,783,000.  At June 30, 2013, the amount outstanding under these secured arrangements was $86,500,000, which was collateralized by securities held for firm accounts valued at $120,568,000. 

At December  31, 2013 and June 30, 2013, Southwest Securities had a $20,000,000 unsecured line of credit that is due on demand and bears interest at rates indexed to the federal funds rate.  This credit arrangement is provided on an “as offered” basis and is not a committed line of credit.  The total amount of borrowings available under this line of credit is reduced by the amount outstanding on the line and under any unsecured letters of credit at the time of borrowing.  At December  31, 2013 and June 30, 2013, there were no amounts outstanding on this line.  At December  31, 2013 and June 30, 2013, the total amount available for borrowing was $20,000,000.

Committed lines of credit

On January 28, 2011, Southwest Securities entered into an agreement with an unaffiliated bank for a $45,000,000 committed revolving credit facility.  The commitment fee is 37.5 basis points per annum, and when drawn, the interest rate is equal to the federal funds rate plus 125 basis points.  The agreement provides that Southwest Securities must maintain a tangible net worth of at least $150,000,000.  The agreement was renewed on January 23, 2014 and has the same terms as the initial agreement.  As of December  31, 2013,there were no outstanding amounts under the committed revolving credit facility and as of June 30, 2013, there was$45,000,000outstanding.  The secured borrowing was collateralized by securities with a value of $68,605,000 at June 30, 2013.

Letters of credit

At both December  31, 2013 and June 30, 2013, SWS had an irrevocable letter of credit agreement pledged to support customer open options positions with an options clearing organization.  Until drawn, the letter of credit bears interest at a rate of 0.5% per annum and is renewable semi-annually.  If drawn, the letter of credit bears interest at a rate of 0.5% per annum plus a fee.  At December  31, 2013 and June 30, 2013, the maximum amount available under this letter of credit agreement was $75,000,000.  At December  31, 2013, the Company hadno outstanding, undrawn letters of credit.  At June 30, 2013, the Companyhad outstanding, undrawn letters of credit of $50,000,000, bearing interest at a rate of 0.5% per annum.  Since there is no outstanding balance on the letters of credit, there is no collateral pledged at December 31, 2013.  The letter of credit was fully collateralized by marketable securities held in client and non-client margin accounts with a value of $71,035,000 at June 30, 2013. 

The Company also pledges customer securities to the Option Clearing Corporation to support open customer positions.  At December 31, 2013, the Company had pledged $86,418,000 to support these open customer positions.

In addition to using customer securities to collateralize short-term borrowings, SWS also loans client securities as collateral in conjunction with SWS’s securities lending activities.  At December  31, 2013, approximately $342,160,000 of client securities under customer margin loans was available to be pledged, of which SWS had pledged $21,912,000 under securities loan agreements.  At June 30, 2013, approximately $329,013,000 of client securities under customer margin loans was available to be pledged, of which SWS had pledged $18,408,000 under securities loan agreements.  

Banking. 

In the second quarter of fiscal 2010, the Bank entered into a secured line of credit agreement with the Federal Reserve Bank of Dallas.  This line of credit is secured by the Bank's commercial loan portfolio.  This line is due on demand and bears interest at a rate equal to the federal funds target rate plus 50 basis points.  At December  31, 2013 and June 30, 2013, the total amount available under this line was $36,627,000 and $28,267,000, respectively.  There was no amount outstanding at December  31, 2013 and June 30, 2013.

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Regulatory Capital Requirements

6 Months Ended

Dec. 31, 2013

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements

REGULATORY CAPITAL REQUIREMENTS

Brokerage.At December 31, 2013 and June 30, 2013, the net capital position of Southwest Securities was as follows (in thousands):

	December 31, 2013		June 30, 2013
Net capital	$           153,885		$        141,112
Less:  required net capital	6,574		6,843
Excess net capital	$           147,311		$        134,269
Net capital as a percent of aggregate debit items	46.8	%	41.2	%
Net capital in excess of 5% aggregate debit items	$           137,451		$        124,005

At December 31, 2013 and June 30, 2013, the net capital position of SWS Financial was as follows (in thousands):

	December 31, 2013	June 30, 2013
Net capital	$                 316	$             713
Less:  required net capital	250	250
Excess net capital	$                   66	$             463

For more information, see the discussion in “Note 18. Regulatory Capital Requirements”in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K. 

Banking. The Bank is subject to various regulatory capital requirements administered by federal agencies.  Quantitative measures, established by regulation to ensure capital adequacy, require maintaining minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in 12 CFR 165 and 12 CFR 167) to risk-weighted assets (as defined) and of Tier I (core) capital (as defined) to adjusted assets (as defined).  Federal statutes and OCC regulations have established five capital categories for federal savings banks: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. The federal banking agencies have jointly specified by regulation the relevant capital level for each category. An institution is defined as well-capitalized when its total risk-based capital ratio is at least 10.00%, its Tier I risk-based capital ratio is at least 6.00%, its Tier I (core) capital ratio is at least 5.00%, and it is not subject to any federal supervisory order or directive to meet a specific capital level.At December  31, 2013, the Bank was deemed to be well capitalized.

Until terminated on January 14, 2013, the Bank was restricted by and subject to the Order to Cease and Desist, Order No. WN-11-003, effective on February 4, 2011 (the “Order”), originally issued bythe Office of Thrift Supervision and then administered by the OCC.  In connection with the termination of the Order on January 14, 2013, the Bank committed to the OCC that the Bank would, among other things:  (i) adhere to the Bank’s written business and capital plan as amended from time to time and (ii) maintain a Tier I (core) capital ratio at least equal to nine percent (9%) and a total risk-based capital ratio of at least twelve percent (12%).

The Bank’s capital amounts and ratios at December  31, 2013 and June 30, 2013 were as follows (dollars in thousands):

	Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31, 2013
Total risk-based capital	$       183,794	27.4	%	$      53,603	8.0	%	$      67,004	10.0	%
Tier I risk-based capital	175,405	26.2		26,802	4.0		40,203	6.0
Tier I (core) capital	175,405	13.8		50,961	4.0		63,702	5.0
	Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio		Amount	Ratio		Amount	Ratio
June 30, 2013
Total risk-based capital	$       181,909	24.9	%	$      58,465	8.0	%	$      73,081	10.0	%
Tier I risk-based capital	172,734	23.6		29,233	4.0		43,849	6.0
Tier I (core) capital	172,734	13.5		51,081	4.0		63,851	5.0

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Regulatory Capital Requirements (Schedule Of Net Capital Position Of SWS Financial) (Detail) (SWS Financial Services, Inc. [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
SWS Financial Services, Inc. [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Net Capital, Total	$ 316	$ 713
Less: required net capital	250	250
Excess net capital	$ 66	$ 463

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Segment Reporting (Tables)

6 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Summary Of Operations Information By Segments

	UNAUDITED FINANCIAL INFORMATION
(in thousands)	Clearing	Retail Brokerage	Institutional Brokerage	Banking	Other Consolidated Entities	Consolidated SWS Group, Inc.
Three-months ended
December 31, 2013
Operating revenue	$     3,752	$        27,159	$          24,690	$       1,592	$                688	$           57,881
Net intersegment revenues	(180)	180	(11)	828	(817)	-
Net interest revenue	1,549	912	2,575	8,872	(3,303)	10,605
Net revenues	5,301	28,071	27,265	10,464	(2,615)	68,486
Non-interest expenses	3,962	25,068	21,316	5,140	9,673	65,159
Other losses	-	-	-	-	(2,058)	(2,058)
Depreciation and amortization	5	231	78	373	676	1,363
Net income (loss) before taxes	1,339	3,003	5,949	5,324	(14,346)	1,269
Three-months ended
December 31, 2012
Operating revenue	$     3,233	$        25,284	$          29,368	$          694	$             3,207	$           61,786
Net intersegment revenues	(166)	145	(170)	865	(674)	-
Net interest revenue	1,488	840	3,190	11,077	(3,036)	13,559
Net revenues	4,721	26,124	32,558	11,771	171	75,345
Non-interest expenses	4,836	25,596	23,219	8,799	9,046	71,496
Other gains	-	-	-	-	11,761	11,761
Depreciation and amortization	17	219	108	435	570	1,349
Net income (loss) before taxes	(115)	528	9,339	2,972	2,886	15,610

	UNAUDITED FINANCIAL INFORMATION
(in thousands)	Clearing	Retail Brokerage	Institutional Brokerage	Banking	Other Consolidated Entities	Consolidated SWS Group, Inc.
Six-months ended
December 31, 2013
Operating revenue	$     7,007	$        55,942	$          50,622	$       1,873	$             1,306	$         116,750
Net intersegment revenues	(359)	359	(11)	1,680	(1,669)	-
Net interest revenue	2,968	1,967	4,646	17,678	(6,528)	20,731
Net revenues	9,975	57,909	55,268	19,551	(5,222)	137,481
Non-interest expenses	8,863	52,655	43,114	13,032	18,302	135,966
Other losses	-	-	-	-	(91)	(91)
Depreciation and amortization	11	452	163	784	1,311	2,721
Net income (loss) before taxes	1,112	5,254	12,154	6,519	(23,615)	1,424
Assets (*)	254,852	224,261	2,064,521	1,264,071	40,050	3,847,755
Six-months ended
December 31, 2012
Operating revenue	$     6,496	$        52,481	$          59,080	$          760	$             2,768	$         121,585
Net intersegment revenues	(353)	348	(59)	1,761	(1,697)	-
Net interest revenue	3,183	1,709	6,373	22,644	(6,040)	27,869
Net revenues	9,679	54,190	65,453	23,404	(3,272)	149,454
Non-interest expenses	9,599	53,343	46,189	19,151	18,170	146,452
Other gains	-	-	-	-	3,576	3,576
Depreciation and amortization	34	438	209	866	1,194	2,741
Net income (loss) before taxes	80	847	19,264	4,253	(17,866)	6,578
Assets (*)	312,038	229,419	1,511,605	1,285,053	65,265	3,403,380

Summary Of Reconciliation Of Assets

	December 31, 2013	December 31, 2012
Amount as presented above	$         3,847,755	$         3,403,380
Reconciling items:
Unallocated assets:
Cash	19,473	24,302
Receivables from brokers, dealers and clearing
organizations	22,109	45,078
Receivable from clients, net of allowances	22,173	24,943
Other assets	29,136	19,353
Unallocated eliminations	(9,984)	(3,003)
Total assets	$         3,930,662	$         3,514,053

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Segment Reporting (Summary Of Reconciliation Of Assets) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Jun. 30, 2013	Dec. 31, 2012
Unallocated assets:
Receivables from brokers, dealers and clearing organizations	$ 1,807,189		$ 1,698,474
Receivable from clients, net of allowances	266,573		286,446
Other assets	90,869		91,160
Total assets	3,930,662		3,780,373	3,514,053
Operating Segments [Member]
Unallocated assets:
Total assets	3,847,755	[1]		3,403,380	[1]
Unallocated [Member]
Unallocated assets:
Cash	19,473			24,302
Receivables from brokers, dealers and clearing organizations	22,109			45,078
Receivable from clients, net of allowances	22,173			24,943
Other assets	29,136			19,353
Unallocated eliminations	$ (9,984)			$ (3,003)

[1] (*) Assets are reconciled to total assets as presented in the December 31, 2013 and 2012 Consolidated Statements of Financial Condition as follows (in thousands):December 31, 2013December 31, 2012Amount as presented above$         3,847,755 $         3,403,380 Reconciling items:Unallocated assets:Cash 19,473  24,302 Receivables from brokers, dealers and clearing organizations 22,109  45,078 Receivable from clients, net of allowances 22,173  24,943 Other assets 29,136  19,353 Unallocated eliminations (9,984) (3,003)Total assets$         3,930,662 $         3,514,053

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Securities Available For Sale (Tables)

6 Months Ended

Dec. 31, 2013

Securities Available For Sale [Abstract]

Cost Of Equity Securities, Amortized Cost Of Debt Securities And Market Value of Investments

		Original/	Gross	Gross	Gross
	Shares	Amortized	Unrealized	Unrealized	Realized	Market
	Held	Cost	Gains	Losses	Losses	Value
December 2013
Westwood common stock	2,219	$              7	$           220	$                 -	$             (90)	$         137
Continuous unrealized loss less than
12 months:
U.S. government and government
agency obligations	N/A	531,733	229	(14,321)	-	517,641
Municipal obligations	N/A	44,262	85	(1,160)	-	43,187
Continuous unrealized loss for 12
months or greater:
U.S. government and government
agency obligations	N/A	19,727	-	(1,125)	-	18,602
Municipal obligations	N/A	727	-	(3)	-	724
		$   596,456	$           534	$      (16,609)	$             (90)	$   580,291

		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

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Affiliate Transactions (Narrative) (Detail) (USD $)	Dec. 31, 2013	Jun. 30, 2013
Value of FDIC insured funds	$ 250,000
Core FDIC deposits	994,968,000	993,871,000
Core FDIC deposits	994,765,000	993,719,000
Southwest Securities [Member]
Core FDIC deposits	$ 876,537,000	$ 878,434,000

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Consolidated Statements Of Comprehensive Loss (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statements Of Comprehensive Loss [Abstract]
Net gains on cash flow hedging, tax	$ 296	$ 0	$ (99)	$ 0
Net holding gains (losses), tax	$ (2,091)	$ (1,529)	$ (2,113)	$ (295)

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Advances From The Federal Home Loan Bank (Schedule Of Advances From The Federal Home Loan Bank) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Advances From The Federal Home Loan Bank [Abstract]
Due in one year	$ 14,344	$ 15,486
Due in two years	3,732	1,859
Due in five years	50,986	48,956
Due in seven years	14,856	12,809
Due in ten years	4,822	8,424
Due in twenty years	9,620	10,163
Total	98,360	97,697
Restructuring prepayment penalty	(109)	(132)
Federal Home Loan Bank Advances, net	$ 98,251	$ 97,565

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Assets Segregated For Regulatory Purposes

6 Months Ended

Dec. 31, 2013

Assets Segregated For Regulatory Purposes [Abstract]

Assets Segregated For Regulatory Purposes

ASSETS SEGREGATED FOR REGULATORY PURPOSES

At December  31, 2013, SWS held cash of approximately $174,614,000 segregated in special reserve bank accounts for the exclusive benefit of customers under Rule 15c3-3 of the Exchange Act.SWS had no reserve deposits in special reserve bank accounts for the Proprietary Accounts of Introducing Brokers (the "PAIB") at December31, 2013.  

At June 30, 2013, SWS held cash of approximately $164,737,000 segregated in special reserve bank accounts for the exclusive benefit of customers under Rule 15c3-3 of the Exchange Act.    SWS had no reserve deposits in special reserve bank accounts for the PAIB at June 30, 2013.

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Loans And Allowance For Probable Loan Losses (Narrative) (Detail) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013
Accounts Notes And Loans Receivable [Line Items]
Unamortized discounts and premiums	$ 968,000		$ 968,000		$ 997,000
Allowance to ending loan balance	2.29%	4.10%	2.29%	4.10%
Maximum duration of loan held			25 days
Allowance for loan losses			445,000		447,000
Loans on accrual status	5,132,000		5,132,000		6,685,000
Average recorded investment in non-accrual loans	18,552,000		18,552,000		25,516,000
Interest income recorded on the non-accrual loans	1,000	0	8,000	15,000
1-4 Family [Member]
Accounts Notes And Loans Receivable [Line Items]
Purchased mortgage loans held for investment	$ 89,583,000		$ 89,583,000		$ 174,037,000

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Interest Rate Swaps (Detail) (USD $)	3 Months Ended	6 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Jun. 30, 2013
Derivative [Line Items]
Notional amount of interest rate swap agreements designated as cash flow hedging instruments	$ 140,000,000	$ 140,000,000	$ 100,000,000
Fair value of interest rate swap agreements included in other assets	1,856,000	1,856,000	1,789,000
Net gains on cash flow hedging ineffectiveness	349,000
Payments for Derivative Instrument, Investing Activities	12,000	12,000
Gain on interest rate swaps	351,000	160,000
Related To Fixed Rate Loan Transactions [Member]
Derivative [Line Items]
Notional amount of interest rate swap agreements designated as cash flow hedging instruments	35,300,000	35,300,000	13,902,000
Fair value of interest rate swap agreements included in other assets	$ 317,000	$ 317,000	$ 145,000

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Commitments Contingencies And Guarantees (Narrative) (Detail) (USD $)	6 Months Ended
	Dec. 31, 2013	Jun. 30, 2013
Commitments And Contingencies [Line Items]
Underwritten percentage of offering value	40.00%
Bond offering value	$ 35,000,000
Lawsuit liability	1,000,000	1,000,000
Investment liability penalty	3,000,000
Potential liability due under outstanding underwriting arrangements	368,000
Maximum potential amount of future payments for letter of credit	137,000
Revolving lines of credit, unfunded commitments	53,313,000
Unfunded new loans	18,495,000
Partnership Interest [Member]
Commitments And Contingencies [Line Items]
Investment liability penalty	1,870,000
Venture Capital Funds [Member]
Commitments And Contingencies [Line Items]
Investment liability	8,000,000
Number of possible one-year extensions	2
Investments In Private Investment Funds [Member]
Commitments And Contingencies [Line Items]
Commitment to invest in limited partnership equity funds	3,000,000
Investment in limited partnership equity funds	330,000
Limited Partnership Equity Fund 1 [Member]
Commitments And Contingencies [Line Items]
Aggregate commitment for limited partnership equity fund	3,000,000
Limited Partnership Equity Fund 2 [Member]
Commitments And Contingencies [Line Items]
Aggregate commitment for limited partnership equity fund	$ 2,000,000

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Loans And Allowance For Probable Loan Losses (Summary Of Amortized Cost, Gross Unrealized Gains And Losses And The Fair Value Of Loans Measured At Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Jun. 30, 2013		Dec. 31, 2012
Accounts Notes And Loans Receivable [Line Items]
Balance at end of period	$ 537,665		$ 620,926		$ 823,822
Commercial Real Estate [Member]
Accounts Notes And Loans Receivable [Line Items]
Balance at end of period					257,514
Multifamily [Member]
Accounts Notes And Loans Receivable [Line Items]
Balance at end of period					48,654
Loans Measured At Fair Value [Member]
Accounts Notes And Loans Receivable [Line Items]
Amortized Cost	35,283		13,902
Gross Unrealized Gains	165	[1]
Gross Unrealized Losses	(115)		(145)	[1]
Balance at end of period	35,333		13,757
Loans Measured At Fair Value [Member] | Commercial Real Estate [Member]
Accounts Notes And Loans Receivable [Line Items]
Amortized Cost	4,131		2,787
Gross Unrealized Losses	(84)		(125)	[1]
Balance at end of period	4,047		2,662
Loans Measured At Fair Value [Member] | Multifamily [Member]
Accounts Notes And Loans Receivable [Line Items]
Amortized Cost	31,152		11,115
Gross Unrealized Gains	165	[1]
Gross Unrealized Losses	(31)		(20)	[1]
Balance at end of period	$ 31,286		$ 11,095

[1] Unrealized gains (losses) are recorded in other revenues on the Consolidated Statements of Comprehensive (Loss) Income.

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Employee Benefits

6 Months Ended

Dec. 31, 2013

Employee Benefits [Abstract]

Employee Benefits

EMPLOYEE BENEFITS

Restricted Stock Plan.During the first six-months of fiscal 2014, the Board of Directors approved grants to various officers and employees totaling 199,891 shares of restricted stock with a weighted average market value of $5.64 per share.  During the first six-months of fiscal 2013,the Board of Directors approved grants to various officers and employees totaling 65,079 shares of restricted stock with a weighted average market value of $4.84 per share.  As a result of these grants, SWS recorded deferred compensation in additional paid in capital of approximately $1,443,000.  For the three and six-months ended December 31, 2013 SWS recognized compensation expense related to restricted stock grants of approximately $274,000 and $380,000, respectively.  For the three and six-months ended December 31, 2012, SWS recognized compensation expense related to restricted stock grants of approximately $266,000 and $608,000, respectively. 

Upon vesting of the shares granted under the Company’s restricted stock plans, the grantees may choose to sell a portion of their vested shares to the Company to cover the tax liabilities arising from the vesting.

During the six-months ended December 31, 2013, the Company repurchased 1,094 shares of common stock with a market value of approximately $6,100, at an average price of $5.55 per share, in connection with income tax withholding obligations arising from vesting of restricted stock awards.  During the six-months ended December 31, 2012, the Company repurchased 4,647 shares of common stock with a market value of approximately $27,000 or an average price of $5.78 per share, in connection with income tax withholding obligations arising from vesting of restricted stock awards.

At December  31, 2013, the total number of shares outstanding under the Restricted Stock Plan was 417,137 and the total number of shares available for future issuance was 2,383,016.

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Securities Held To Maturity (Schedule Of Amortized Cost And Estimated Fair Value Of Securities Held To Maturity) (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 31, 2013
Securities Held To Maturity [Abstract]
Due after ten years, Amortized cost	$ 14,595
Due after ten years, Fair value	14,982
Unrecognized holding gain	$ 387

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Securities Owned And Securities Sold, Not Yet Purchased (Tables)

6 Months Ended

Dec. 31, 2013

Securities Owned And Securities Sold, Not Yet Purchased [Abstract]

Securities Owned And Securities Sold, Not Yet Purchased

	December 31, 2013	June 30, 2013
Securities owned:
Corporate equity securities	$                      1,200	$                      1,520
Municipal obligations	56,182	30,116
U.S. government and government agency obligations	73,883	41,529
Corporate obligations	82,896	127,899
Other	22,041	8,569
	$                  236,202	$                  209,633
Securities sold, not yet purchased:
Municipal obligations	$                             -	$                           10
U.S. government and government agency obligations	76,735	54,086
Corporate obligations	78,368	80,639
	$                  155,103	$                  134,735

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Interest Rate Swaps

6 Months Ended

Dec. 31, 2013

Interest Rate Swaps [Abstract]

Interest Rate Swaps

INTEREST RATE SWAPS

The Company’s interest rate swap policies are discussed in “Note 1(m). Interest Rate Swaps in Cash Flow Hedging Relationships” in the Notes to the Consolidated Financial Statements in the Fiscal 2013 Form 10-K.

In fiscal 2013 and the first half of fiscal 2014,  the Bank entered into forward-start interest rate swaps to mitigate risk from its exposure to variability in interest payments on the Bank’s variable rate deposits.  The Bank’s forward-start interest rate swapsexchange fixed for variable interest payments beginning at a pre-specified date in the future according to the terms of the swap agreements and are designated as cash flow hedges.  As of December  31, 2013 and June 30, 2013, the notional amount of interest rate swap agreements designated as cash flow hedging instruments was $140,000,000with a net fair value of $1,856,000, and $100,000,000 with a net fair value of $1,789,000, respectively, included in other assets and other liabilities, on the Consolidated Statements of Financial Condition.  During the three-months ended December 31, 2013, the Bank recognized net gains of $349,000 in other revenue as a result of cash flow hedging ineffectiveness on the Consolidated Statements of Comprehensive (Loss) Income.

In addition, interest rate swapsare used by the Bank to manage interest rate risk on certain fixed rate loans funded with variable rate deposits which exposes the Bank to potential variability in its net interest margin.  These fixed rate loans include terms matching the interest rate swapsand are recorded at fair value under the fair value option election.  See discussion in “Loans and Allowance for Probable Loan Losses” for information regarding these loans valued at fair value.  As of December 31, 2013 and June 30, 2013, the notional amount of interest rate swapsoutstanding related to fixed rate loan transactions was $35,300,000 with a net fair value of $317,000, and $13,902,000 with a fair value of $145,000, respectively, included in other assets and other liabilities on the Consolidated Statements of Financial Condition.  During the three-months ended December 31, 2013, the Bank paid its counterparty $12,000 to terminate one interest rate swap.   

For the three and six-months ended December 31, 2013, net gains recognized in other revenue on the Consolidated Statements of Comprehensive (Loss) Income as a result of changes in fair value of the interest rate swaps,not designated as cash flow hedges, were $351,000 and $160,000, respectively.  As the Bank did not invest in interest rate swaps at December 31, 2012, there were no gains or losses recognized for the three and six-months ended December 31, 2012.

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Earnings (Loss) Per Share ("EPS") (Narrative) (Detail) (USD $)	6 Months Ended
	Dec. 31, 2013
Earnings (Loss) Per Share ("EPS") [Abstract]
Anti-dilutive shares excluded from weighted average shares calculation	17,391,304
Quarterly cash dividend paid	$ 0.01