Securities Available For Sale

12 Months Ended

Jun. 30, 2014

Securities Available For Sale [Abstract]

Securities Available For Sale

9.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 June  30, 2014 and 2013 (dollars in thousands): 

		Original/	Gross	Gross	Gross
	Shares	Amortized	Unrealized	Unrealized	Realized	Market
	Held	Cost	Gains	Losses	Losses	Value
June 2014
Westwood common stock	2,219	$              7	$           216	$                 -	$             (90)	$         133
Continuous unrealized loss less than
12 months:
U.S. government and government
agency obligations	N/A	204,265	869	(476)	-	204,658
Municipal obligations	N/A	24,982	325	(8)	-	25,299
Continuous unrealized loss for 12
months or greater:
U.S. government and government
agency obligations	N/A	254,643	-	(6,788)	-	247,855
Municipal obligations	N/A	17,125	-	(222)	-	16,903
		$   501,022	$         1,410	$        (7,494)	$             (90)	$   494,848

		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 $177,085,000 and $319,836,000, including a net premium of $2,335,000 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 4.13 years at June 30, 2014 and 4.51 years at June 30, 2013) using the interest method.

During fiscal 2014, 2013 and 2012, the Bank recorded $2,407,000,$1,868,000 and $744,000, respectively, in amortization of the premium and received $62,629,000, $47,129,000 and $16,718,000, respectively, of principal and interest payments, recording $12,640,000, $7,585,000 and $2,393,000, respectively, in interest income on these securities.

During fiscal 2014, U.S. government and municipal obligations of $37,635,000 matured and the issuer redeemed $7,500,000 of U.S. government agency securities, purchased at a discount, at par, resulting in no gain.  During fiscal 2013, municipal obligations of $495,000 matured and the issuer redeemed $41,500,000 of U.S. government agency securities, purchased at a discount, at par, resulting in a gain of $20,000.

During fiscal 2013, the Company recognized a realized gain of $3,550,000 in net gains on principal transactions and a $2,308,000  (the $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.In fiscal 2014, 2013 and 2012, the Bank sold $91,926,000,  $25,788,000and $66,936,000, respectively, in U.S. government and government agency securities, recognizing gains of $781,000,$100,000 and $557,000, respectively, in other revenue, a $508,000  (the $781,000 net of tax),$65,000  (the $100,000 net of tax) and $362,000 (the $557,000 net of tax), respectively, reclassification adjustment from accumulated other comprehensive income, respectively.

For the U.S. government and government agency obligations which were in a continuous unrealized loss position for 12 months or longer as of June 30, 2014, the Bank reviewed the circumstances of the loss position and determined that a permanent impairment was not necessary.  The Bank conducts an other-than-temporary impairment (“OTTI”) analysis on a quarterly basis.  A decline in the fair market value of the security below the recorded amount and the severity and duration of the decline triggers the OTTI analysis. For securities where the decline in fair market value is below the amortized cost, OTTI would be recognized if: (i) the Bank had the intent to sell the security, (ii) the Bank determines that it is more likely than not that the Bank would be required to sell the security before recovery of its amortized cost and (iii) the Bank does not expect to recover the entire amortized cost of the security.  In estimating the Bank’s ability to recover the amortized cost basis of a security, the Bank considers the length of time the fair market value of the security has been less than the amortized cost, the extent to which the fair market value of the security is less than the amortized cost, the overall performance of the security and the financial condition of the issuer.