Investment Securities

3 Months Ended

Mar. 31, 2015

Investment Securities

Investment Securities

4.Investment Securities

Investment securities at March 31, 2015 and December 31, 2014 are as follows:

	Amortized		Unrealized	Unrealized
March 31, 2015	cost		gains	losses		Fair value
	(in thousands)
Available for sale securities:
Affiliated funds	$	189,089	7,065	(6,397	)	189,757
	$	189,089	7,065	(6,397	)	189,757
Trading securities:
Mortgage-backed securities						27
Common stock						76
Affiliated funds						55,521
						55,624
Total investment securities						$	245,381

	Amortized		Unrealized	Unrealized
December 31, 2014	cost		gains	losses		Fair value
	(in thousands)
Available for sale securities:
Affiliated funds	$	162,425	4,237	(5,392	)	161,270
	$	162,425	4,237	(5,392	)	161,270
Trading securities:
Mortgage-backed securities						28
Common stock						72
Affiliated funds						81,913
						82,013
Total investment securities						$	243,283

Purchases of trading securities during the three months ended March 31, 2015 were $0.3 million.  Sales of trading securities were $0.3 million for the same period.

A summary of available for sale affiliated funds with fair values below carrying values at March 31, 2015 and December 31, 2014 is as follows:

	Less than 12 months				12 months or longer			Total
			Unrealized		Fair	Unrealized		Fair	Unrealized
March 31, 2015	Fair value		losses		value	losses		value	losses
	(in thousands)
Affiliated funds	$	84,828	(6,373	)	316	(24	)	85,144	(6,397	)

	Less than 12 months				12 months or longer			Total
			Unrealized		Fair	Unrealized		Fair	Unrealized
December 31, 2014	Fair value		losses		value	losses		value	losses
	(in thousands)
Affiliated funds	$	66,858	(5,362	)	1,187	(30	)	68,045	(5,392	)

Based upon our assessment of these affiliated funds, the time frame the investments have been in a loss position and our intent to hold affiliated funds until they have recovered, we determined that a write-down was not necessary at March 31, 2015.

Mortgage-backed securities accounted for as trading and held as of March 31, 2015 mature in 2022.

Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of the asset.  Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset.  An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs that are significant to the overall valuation.  The three-level hierarchy of inputs is summarized as follows:

· Level 1 — Investments are valued using quoted prices in active markets for identical securities.

· Level 2 — Investments are valued using other significant observable inputs, including quoted prices in active markets for similar securities.

· Level 3 — Investments are valued using significant unobservable inputs, including the Company’s own assumptions in determining the fair value of investments.

Assets classified as Level 2 can have a variety of observable inputs.  These observable inputs are collected and utilized, primarily by an independent pricing service, in different evaluated pricing approaches depending upon the specific asset to determine a value.  The fair value of municipal bonds is measured based on pricing models that take into account, among other factors, information received from market makers and broker/dealers, current trades, bid-wants lists, offerings, market movements, the callability of the bond, state of issuance and benchmark yield curves.  The fair value of equity derivatives is measured based on active market broker quotes, evaluated broker quotes and evaluated prices from vendors.

Securities’ values classified as Level 3 are primarily determined through the use of a single quote (or multiple quotes) from dealers in the securities using proprietary valuation models.  These quotes involve significant unobservable inputs, and thus, the related securities are classified as Level 3 securities.

The following tables summarize our investment securities as of March 31, 2015 and December 31, 2014 that are recognized in our consolidated balance sheets using fair value measurements based on the differing levels of inputs.

March 31, 2015	Level 1		Level 2	Level 3	Total
	(in thousands)
Mortgage-backed securities	$	—	27	—	27
Common stock	76		—	—	76
Affiliated funds	245,278		—	—	245,278
Total	$	245,354	27	—	245,381

December 31, 2014	Level 1		Level 2	Level 3	Total
	(in thousands)
Mortgage-backed securities	$	—	28	—	28
Common stock	72		—	—	72
Affiliated funds	243,183		—	—	243,183
Total	$	243,255	28	—	243,283