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 September 30, 2016

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 1-31234

________________________________________________________________________________________________________

WESTWOOD HOLDINGS GROUP, INC.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________________________________

DELAWARE	75-2969997
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
200 CRESCENT COURT, SUITE 1200 DALLAS, TEXAS	75201
(Address of principal executive office)	(Zip Code)

(214) 756-6900

(Registrant’s telephone number, including area code)

________________________________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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  xNo  ¨

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  xNo  ¨

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 definition of “large accelerated filer”, “accelerated filer” and “ smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Shares of common stock, par value $0.01 per share, outstanding as of October 14, 2016: 8,799,797.

________________________________________________________________________________________________________

WESTWOOD HOLDINGS GROUP, INC.

INDEX

PART I	FINANCIAL INFORMATION	PAGE
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015	2
	Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2016	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative And Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II	OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	33
Signatures		34

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)

(Unaudited)

	September 30, 2016			December 31, 2015
ASSETS
Current Assets:
Cash and cash equivalents	$	30,692		$	22,740
Accounts receivable	22,810			19,618
Investments, at fair value	49,849			72,320
Other current assets	2,355			2,926
Total current assets	105,706			117,604
Goodwill	27,144			27,144
Deferred income taxes	10,950			11,042
Intangible assets, net	21,884			23,354
Property and equipment, net of accumulated depreciation of $4,365 and $3,687	4,014			2,192
Total assets	$	169,698		$	181,336
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	3,498		$	3,549
Dividends payable	6,146			5,749
Compensation and benefits payable	13,357			20,264
Contingent consideration	—			9,023
Income taxes payable	2,482			6,268
Total current liabilities	25,483			44,853
Accrued dividends	1,536			1,699
Deferred rent	1,827			817
Total liabilities	28,846			47,369
Commitments and contingencies (Note 12)
Stockholders' Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 9,830,612 and outstanding 8,830,021 shares at September 30, 2016; issued 9,425,309 and outstanding 8,630,687 shares at December 31, 2015	99			94
Additional paid-in capital	159,615			143,797
Treasury stock, at cost - 1,000,591 shares at September 30, 2016; 794,622 shares at December 31, 2015	(44,863		)	(34,910		)
Accumulated other comprehensive loss	(3,681		)	(4,688		)
Retained earnings	29,682			29,674
Total stockholders' equity	140,852			133,967
Total liabilities and stockholders' equity	$	169,698		$	181,336

See notes to condensed consolidated financial statements.

1

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data and share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016		2015
REVENUES:
Advisory fees:
Asset-based	$	23,447		$	24,940		$	67,928	$	76,327
Performance-based	226			—			635		2,206
Trust fees	7,690			7,973			22,798		21,044
Other, net	414			(462		)	568		(207		)
Total revenues	31,777			32,451			91,929		99,370
EXPENSES:
Employee compensation and benefits	15,637			15,686			47,239		47,507
Sales and marketing	408			419			1,423		1,310
Westwood mutual funds	755			865			2,282		2,593
Information technology	1,874			1,626			6,039		4,085
Professional services	1,903			1,178			4,707		4,281
General and administrative	2,147			2,175			7,028		5,962
Total expenses	22,724			21,949			68,718		65,738
Income before income taxes	9,053			10,502			23,211		33,632
Provision for income taxes	3,166			3,489			8,141		11,214
Net income	$	5,887		$	7,013		$	15,070	$	22,418
Other comprehensive income (loss):
Foreign currency translation adjustments	(453		)	(1,386		)	1,007		(2,541		)
Total comprehensive income	$	5,434		$	5,627		$	16,077	$	19,877
Earnings per share:
Basic	$	0.74		$	0.90		$	1.89	$	2.90
Diluted	$	0.72		$	0.87		$	1.84	$	2.78
Weighted average shares outstanding:
Basic	7,995,680			7,808,239			7,952,938		7,737,608
Diluted	8,179,956			8,037,080			8,212,468		8,076,055
Cash dividends declared per share	$	0.57		$	0.50		$	1.71	$	1.50

See notes to condensed consolidated financial statements.

2

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2016

(In thousands, except share amounts)

(Unaudited)

	Common Stock, Par				Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total
	Shares		Amount
BALANCE, January 1, 2016	8,630,687		$	94	$	143,797		$	(34,910	)	$	(4,688	)	$	29,674		$	133,967
Net income	—		—		—			—			—			15,070			15,070
Other comprehensive income	—		—		—			—			1,007			—			1,007
Issuance of common stock for acquisition	80,253		1		3,733			—			—			—			3,734
Issuance of restricted stock, net of forfeitures	325,050		4		(4		)	—			—			—			—
Dividends declared	—		—		—			—			—			(15,062		)	(15,062		)
Stock based compensation expense	—		—		12,164			—			—			—			12,164
Reclassification of compensation liability to be paid in shares	—		—		167			—			—			—			167
Tax deficiencies related to stock based compensation	—		—		(242		)	—			—			—			(242		)
Purchases of treasury stock	(117,452	)	—		—			(5,629		)	—			—			(5,629		)
Issuance of treasury stock under employee stock plans	(10,474	)	—		—			(614		)	—			—			(614		)
Restricted stock returned for payment of taxes	(78,043	)	—		—			(3,710		)	—			—			(3,710		)
BALANCE, September 30, 2016	8,830,021		$	99	$	159,615		$	(44,863	)	$	(3,681	)	$	29,682		$	140,852

See notes to condensed consolidated financial statements.

3

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	15,070		$	22,418
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	732			606
Amortization of intangible assets	1,470			951
Unrealized gains on trading investments	(676		)	484
Stock based compensation expense	12,164			12,560
Deferred income taxes	114			(1,923		)
Excess tax benefits from stock based compensation	(165		)	(1,432		)
Net sales of investments - trading securities	23,147			22,679
Other	275			(3		)
Change in operating assets and liabilities:
Accounts receivable	(2,711		)	(5,332		)
Other current assets	900			236
Accounts payable and accrued liabilities	(82		)	537
Compensation and benefits payable	(6,758		)	(2,052		)
Income taxes payable	(4,637		)	1,899
Other liabilities	154			(28		)
Net cash provided by operating activities	38,997			51,600
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,680		)	(704		)
Acquisition of Woodway, net of cash acquired	—			(24,133		)
Net cash used in investing activities	(1,680		)	(24,837		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock	(5,629		)	—
Purchase of treasury stock under employee stock plans	(614		)	(1,327		)
Restricted stock returned for payment of taxes	(3,710		)	(5,621		)
Excess tax benefits from stock based compensation	165			1,432
Payment of contingent consideration in acquisition	(5,562		)	—
Cash dividends	(14,827		)	(13,065		)
Net cash used in financing activities	(30,177		)	(18,581		)
Effect of currency rate changes on cash	812			(2,430		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	7,952			5,752
Cash and cash equivalents, beginning of period	22,740			18,131
Cash and cash equivalents, end of period	$	30,692		$	23,883
Supplemental cash flow information:
Cash paid during the period for income taxes	$	12,632		$	11,664
Common stock issued for acquisition	$	3,734		$	5,292
Non-cash accrued contingent consideration	$	—		$	9,102
Accrued dividends	$	7,682		$	6,452
Tenant allowance included in Property and equipment	$	1,128		$	—

See notes to condensed consolidated financial statements.

4

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. DESCRIPTION OF THE BUSINESS

Westwood Holdings Group, Inc. (“Westwood”, the “Company”, “we”, “us” or “our”) was incorporated under the laws of the State of Delaware on December 12, 2001. Westwood provides investment management services to institutional investors, private wealth clients and financial intermediaries through its subsidiaries, Westwood Management Corp. and Westwood Advisors, LLC (together “Westwood Management”), Westwood Trust (“Westwood Trust”), and Westwood International Advisors Inc. (“Westwood International”). Revenue is largely dependent on the total value and composition of assets under management (“AUM”). Accordingly, fluctuations in financial markets and in the composition of AUM impact revenues and results of operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and are presented in accordance with the requirements for quarterly reports on Form 10-Q and consequently do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).  The Company’s condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary in the opinion of management to present fairly our interim financial position and results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements are presented in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”).

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2015. Operating results for the periods in these condensed consolidated financial statements are not necessarily indicative of the results for any future period. The accompanying condensed consolidated financial statements include the accounts of Westwood and its subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more useful information for making decisions. The amendment addresses various aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact that the application of ASU 2016-01 will have on our consolidated financial statements and disclosures and expect to adopt the new standard in the required time frame.

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases at the commencement date, excluding short-term leases. The amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. We are currently evaluating the impact that the application of ASU 2016-02 will have on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations in ASU 2014-09. The amendment is effective for fiscal years beginning after December 14, 2017, including interim reporting periods within that reporting year. We do not expect the adoption of ASU 2016-08 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

5

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The purpose of the amendment is to simplify the accounting for share-based payment transactions, and includes changes to the accounting for the classification of awards as either equity or liabilities, classification of certain share-based payment items on the statement of cash flows, the accounting for forfeitures and certain income tax consequences. The amendment is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. Amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of tax benefits on the statement of cash flows using either a prospective or retrospective transition method. We are currently evaluating the impact that the application of ASU 2016-09 will have on our consolidated financial statements and disclosures and expect to adopt the new standard within the required time frame.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance related to identifying performance obligations and the licensing guidance in ASU 2014-09. The amendment is effective for fiscal years beginning after December 14, 2017, including interim reporting periods within that reporting year. We do not expect the adoption of ASU 2016-10 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendment addresses eight classification issues related to the statement of cash flows, including debt prepayment or debt extinguishment costs, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from settlements of insurance claims, proceeds from settlements of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and classification of separately identifiable cash flows. Adoption should be applied using the retrospective transition method. Early adoption is permitted. The amendment is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. We do not expect the adoption of ASU 2016-08 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

3. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of shares outstanding plus the effect of any dilutive shares of restricted stock granted to employees and non-employee directors. There were approximately 2,453 and 306 anti-dilutive restricted shares for the three months ended September 30, 2016 and 2015, respectively, and 2,301 and 4,750 anti-dilutive restricted shares for the nine months ended September 30, 2016 and 2015, respectively.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share and share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Net income	$	5,887	$	7,013	$	15,070	$	22,418
Weighted average shares outstanding - basic	7,995,680		7,808,239		7,952,938		7,737,608
Dilutive potential shares from unvested restricted shares	184,276		185,139		259,530		316,253
Dilutive potential shares from contingent consideration	—		43,702		—		22,194
Weighted average shares outstanding - diluted	8,179,956		8,037,080		8,212,468		8,076,055
Earnings per share:
Basic	$	0.74	$	0.90	$	1.89	$	2.90
Diluted	$	0.72	$	0.87	$	1.84	$	2.78

6

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

4. INVESTMENTS

Investment balances are presented in the table below (in thousands). All investments are carried at fair value and are accounted for as trading securities.

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
September 30, 2016:
U.S. Government and Government agency obligations	$	25,209	$	38	$	—		$	25,247
Money market funds	12,421		—		—			12,421
Equity funds	12,027		233		(79		)	12,181
Marketable securities	$	49,657	$	271	$	(79	)	$	49,849
December 31, 2015:
U.S. Government and Government agency obligations	$	50,972	$	15	$	(15	)	$	50,972
Money market funds	9,179		—		—			9,179
Equity funds	12,653		—		(484		)	12,169
Marketable securities	$	72,804	$	15	$	(499	)	$	72,320

As of September 30, 2016 and December 31, 2015, $11.1 million and $10.7 million in corporate funds, respectively, were invested in Westwood Funds®, Westwood Common Trust Funds and the UCITS Fund. See Note 8 “Variable Interest Entities.”

5. FAIR VALUE MEASUREMENTS

We determine estimated fair values for our financial instruments using available information. The fair value amounts discussed in our condensed consolidated financial statements are not necessarily indicative of either amounts realizable upon disposition of these instruments or our intent or ability to dispose of these assets. The estimated fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities, dividends payable, compensation and benefits payable and income taxes payable approximates their carrying value due to their short-term maturities. The carrying amount of investments designated as “trading” securities, primarily U.S. Government and Government agency obligations, money market funds, Westwood Funds® mutual funds, the UCITS Fund and Westwood Trust common trust fund shares, equals their fair value based on prices quoted in active markets and, with respect to common trust funds, the net asset value of the shares held as reported by each fund. Market values of our money market holdings generally do not fluctuate. The fair value of contingent consideration related to the Woodway acquisition was categorized as a level 3 liability, as the measurement of the Earn-Out Amount was based primarily on significant inputs not observable in the market. For more information about the Woodway acquisition, see Note 6 "Acquisitions, Goodwill and Other Intangibles".

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value and requires additional disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows:

• level 1 – quoted market prices in active markets for identical assets

• level 2 – inputs other than quoted prices that are directly or indirectly observable

• level 3 – significant unobservable inputs where there is little or no market activity

7

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table summarizes the values of our assets and liabilities as of the dates indicated within the fair value hierarchy (in thousands).

	Level 1		Level 2		Level 3			Total
As of September 30, 2016:
Investments in trading securities	$	46,697	$	3,152	$	—		$	49,849
Total financial instruments	$	46,697	$	3,152	$	—		$	49,849
As of December 31, 2015:
Investments in trading securities	$	69,260	$	3,060	$	—		$	72,320
Contingent consideration	—		—		(9,023		)	(9,023		)
Total financial instruments	$	69,260	$	3,060	$	(9,023	)	$	63,297

Investments categorized as level 2 assets consist of investments in common trust funds sponsored by Westwood Trust. Common trust funds are private investment vehicles comprised of commingled investments held in trusts that are valued using the Net Asset Value (“NAV”) calculated by us as administrator of the funds. The NAV is calculated using indirectly observed inputs, as the unit price is based on the market value of the underlying investments traded on an active market. We can make withdrawals from the common trust funds on a daily basis as needed for liquidity and there are no restrictions on redemption as of September 30, 2016.

Contingent consideration categorized as a level 3 liability is related to the acquisition of Woodway. As of the acquisition date, the Company estimated that the Earn-Out Amount would be $9.1 million, based on then existing facts and circumstances.

For the period subsequent to the initial measurement of the contingent consideration, changes in the fair value of the contingent consideration are recorded in "Other, net" on the condensed consolidated statements of comprehensive income. During the first quarter of 2016, the Company revised its estimate of the Earn-Out Amount to $9.3 million based on the actual revenues from the post-closing business of Woodway for the twelve month period ended March 31, 2016 and recorded a charge of $286,000 in "Other, net" on the condensed consolidated statements of comprehensive income. During the second quarter of 2016, the Company finalized the Earn-Out Amount and recorded income of $13,000 in "Other, net" on the condensed consolidated statements of comprehensive income.

The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (in thousands):

	Contingent Consideration
Beginning balance, December 31, 2015	$	9,023
Change in carrying value	273
Payment of contingent consideration	(9,296		)
Ending balance, September 30, 2016	$	—

8

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

6. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Acquisition of Woodway Financial Advisors

Westwood completed the acquisition of Woodway Financial Advisors, a Trust Company ("Woodway"), on April 1, 2015 (the "Merger"). The total Merger consideration consisted of (i) $30.6 million in cash and stock, as described below, and (ii) contingent consideration equal to the annualized revenue from the post-closing business of Woodway for the twelve-month period ending March 31, 2016 (the “Earn-Out Period”), adjusted for certain clients or accounts that have terminated, and capped at $15 million (the “Earn-Out Amount”). The final Earn-Out Amount of $9.3 million (discounted from $10.1 million due to certain required holding periods on the Westwood shares) was paid 54.84% in cash and 45.16% in shares of Westwood’s common stock, valued using the average closing price during the last 30 calendar days of the Earn-Out Period. In relation to the Merger, Westwood entered into employment agreements with certain Woodway employees, which, among other things, provided for specified compensation and benefits for the related employees.

The Merger consideration of $39.7 million consisted of (i) closing date consideration of $25.3 million paid in cash and issuance of 109,712 shares of Westwood common stock, valued at $5.3 million (discounted from $6.7 million due to certain required holding periods), and (ii) contingent consideration of $9.1 million, based on estimates and assumptions on the closing date of the acquisition, to be paid no later than 75 calendar days after the last day of the Earn-Out Period. The estimated fair value of the Earn-Out Amount was determined by using overall revenue growth projections combined with existing customer base lost revenue projections, both discounted and probability-weighted. The fair value measurement of the Earn-Out Amount was based primarily on significant inputs not observable in the market and thus represents a level 3 measurement as defined in ASC 820. See further discussion in Note 5 “Fair Value Measurements.”

The acquisition of Woodway was accounted for using the acquisition method of accounting. Accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date. As of September 30, 2016, consideration of $39.7 million has been allocated using Woodway’s historical balance sheet at March 31, 2015 based on valuations of acquired assets and assumed liabilities in connection with the acquisition.

The allocation of the purchase price is as follows (in thousands):

Cash and cash equivalents	$	1,205
Accounts receivable	936
Other current assets	253
Goodwill(i)	15,889
Identifiable intangibles(ii)	21,334
Property and equipment	197
Accounts payable and accrued liabilities	(61		)
Income tax payable	(20		)
Purchase price	$	39,733

_________________

(i) The excess of the purchase price over the fair value amounts assigned to assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition.

(ii) The fair value of the acquired identifiable intangibles consists of (in thousands, except useful lives):

Intangible Asset	Fair Value		Estimated Useful Lives
Client relationships	$	20,391	15 years
Non-compete agreements	257		3 years
Trade name	686		5 years

At the time of the acquisition, the Company believed that its enhanced market position and future growth potential were the primary factors that contributed to a total purchase price that resulted in the recognition of goodwill. As of September 30, 2016, $15.9 million of the goodwill arising from the acquisition is expected to be deductible for tax purposes.

9

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

We incurred transaction costs of $1.1 million related to the Woodway acquisition. Approximately $732,000 of those costs are included in “Professional services” on our condensed consolidated statements of comprehensive income for the nine months ended September 30, 2015.

Our consolidated results for the three months ended September 30, 2016 included "Total revenues" and "Net income" attributable to Woodway of $2.5 million and $700,000, respectively. Our consolidated results for the nine months ended September 30, 2016 included "Total revenues" and "Net income" attributable to Woodway of $7.1 million and $1.7 million, respectively.

Pro Forma Financial Information

The following unaudited pro forma results of operations for the three and nine months ended September 30, 2016 and 2015 assume that the Woodway acquisition had occurred on January 1, 2015, after giving effect to acquisition accounting adjustments relating to amortization of the valued intangible assets and to record additional compensation costs related to employment contracts entered into as a result of the acquisition. These unaudited pro forma results exclude one-time, non-recurring costs related to the acquisition, including transaction costs. This unaudited pro forma information should not be relied upon as being necessarily indicative of the historical results that would have been obtained if the Merger had actually occurred on those dates, nor of the results that may be obtained in the future.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in thousands)
Total revenues	$	31,777	$	32,451	$	91,929	$	102,063
Net income	$	5,887	$	7,013	$	15,070	$	23,328

Goodwill

Goodwill represents the excess of the cost of acquired assets over the fair value of the underlying identifiable assets at the date of acquisition. Goodwill is not amortized but is tested for impairment at least annually. We completed our annual goodwill impairment assessment during the third quarter of 2016 and determined that no impairment loss was required. No impairments were recorded during the three or nine months ended September 30, 2016 or 2015.

Other Intangible Assets

Our intangible assets represent the acquisition date fair value of acquired client relationships, trade names and non-compete agreements and internally developed software and are reflected net of amortization. In valuing these assets, we made significant estimates regarding their useful lives, growth rates and potential attrition. We periodically review intangible assets for events or circumstances that would indicate impairment. There have been no impairments on intangible assets recorded during the three or nine months ended September 30, 2016 or 2015.

10

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

7. BALANCE SHEET COMPONENTS

Property and Equipment

The following table reflects information about our property and equipment as of September 30, 2016 and December 31, 2015 (in thousands):

	As of September 30, 2016			As of December 31, 2015
Leasehold improvements	$	3,647		$	1,728
Furniture and fixtures	2,216			1,804
Computer hardware and office equipment	2,283			2,116
Construction in progress	233			231
Accumulated depreciation	(4,365		)	(3,687		)
Net property and equipment	$	4,014		$	2,192

Stockholders' Equity

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss were as follows (in thousands):

	As of September 30, 2016			As of December 31, 2015
Foreign currency translation adjustment	$	(3,681	)	$	(4,688	)
Accumulated other comprehensive loss	$	(3,681	)	$	(4,688	)

Share Repurchase Program

On July 20, 2012, our Board of Directors authorized the repurchase of up to $10 million of our outstanding common stock on the open market or in privately negotiated transactions. The share repurchase program has no expiration date and may be discontinued at any time by the Board of Directors. In July 2016, Westwood's Board of Directors authorized an additional $5.0 million of repurchases under the share repurchase program. As of September 30, 2016, approximately $9.4 million remained available under the share repurchase program.

Between July 1, 2016 and September 30, 2016, under our share repurchase program the Company repurchased 24,199 shares of our common stock at an average price of $49.92, including commissions, at an aggregate purchase price of $1.2 million. Between January 1, 2016 and September 30, 2016, under our share repurchase program the Company repurchased 117,452 shares of our common stock at an average price of $47.93, including commissions, at an aggregate purchase price of $5.6 million.

8. VARIABLE INTEREST ENTITIES

Westwood Trust sponsors common trust funds (“CTFs”) for its clients. These funds allow clients to commingle assets to achieve economies of scale. Westwood International and Westwood Management provide investment advisory services to Westwood Investment Funds PLC (the “UCITS Fund”), which was authorized on June 18, 2013 by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (“UCITS”), and which is an umbrella-type, open-ended self-managed investment company domiciled in Ireland. Westwood Management provides investment advisory services to the Westwood Funds®, a family of mutual funds, and one collective investment trust (“CITs”). Some clients of Westwood Management hold their investments in one or more of ten limited liability companies (“LLCs”). The CTFs, UCITS, Westwood Funds®, CITs and LLCs (“Westwood VIEs”) are considered variable interest entities (“VIEs”) because our clients, who hold the equity at risk, do not have a direct or indirect ability through voting or similar rights to make decisions about the funds that would have a significant effect on their success. We receive fees at market rates for managing assets in these entities.

11

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

We evaluate all of our advisory relationships and CTFs to determine whether or not we qualify as the primary beneficiary based on whether there is an obligation to absorb the majority of expected losses or a right to receive the majority of expected residual returns. Since all losses and returns are distributed to the shareholders of the Company’s VIEs, we are not the primary beneficiary and consequently the Westwood VIEs are not included in our condensed consolidated financial statements.

In May 2015, the Company provided seed investments of $5.4 million for two new Westwood mutual funds. In both December 2015 and January 2014, the Company provided seed investments of $2.0 million to two common trust funds. In October 2014, the Company provided a seed investment of €1.6 million, or $2.0 million at the prevailing exchange rate, to the UCITS Fund. These seed investments were provided for the sole purpose of showing the economic substance needed to establish the funds or sub-funds. The corporate capital invested in these funds is included in “Investments, at fair value” on our condensed consolidated balance sheet at September 30, 2016.

We have not otherwise provided any financial support we were not previously contractually obligated to provide and there are no arrangements that would require us to provide additional financial support to any of these VIEs. Our investments in the Westwood Funds®, the CTFs and the UCITS Fund are accounted for as investments in accordance with our other investments described in Note 4 “Investments.” We recognized fee revenue from the Westwood VIEs of $13.5 million and $14.0 million for the three months ended September 30, 2016 and 2015, respectively. We recognized fee revenue from the Westwood VIEs of $39.5 million and $43.3 million for the nine months ended September 30, 2016 and 2015, respectively.

The following table displays assets under management, corporate capital invested and risk of loss in each vehicle (in millions):

	As of September 30, 2016
	Assets Under Management		Corporate Investment		Amount at Risk
VIEs:
Westwood Funds®	$	3,753	$	6	$	6
Common Trust Funds	2,546		3		3
Collective Investment Trusts	48		—		—
LLCs	125		—		—
UCITS Fund	612		2		2
VIE totals	7,084		11		11
All other assets:
Private Wealth	2,656
Institutional	11,532
Total Assets Under Management	$	21,272

9. LONG-TERM INCENTIVE COMPENSATION

Restricted Stock Awards

We have issued restricted shares to our employees and non-employee directors. The Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan, as amended  (the “Plan”), reserves shares of Westwood common stock for issuance to eligible employees, directors and consultants of Westwood or its subsidiaries in the form of restricted stock. The total number of shares issuable under the Plan (including predecessor plans to the Plan) may not exceed 4,398,100 shares. At September 30, 2016, approximately 346,000 shares remain available for issuance under the Plan.

12

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table presents the total stock based compensation expense recorded for stock based compensation arrangements for the periods indicated (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Service condition stock based compensation expense	$	2,679	$	2,550	$	7,978	$	6,953
Performance condition stock based compensation expense	1,234		2,118		3,705		5,072
Stock based compensation expense under the Plan	3,913		4,668		11,683		12,025
Canadian EB Plan stock based compensation expense	169		197		481		535
Total stock based compensation expense	$	4,082	$	4,865	$	12,164	$	12,560

Restricted Stock

Under the Plan, we have granted to employees and non-employee directors restricted stock subject to service conditions, and to certain key employees restricted stock subject to both service and performance conditions.

As of September 30, 2016, there was approximately $27.3 million of unrecognized compensation cost for restricted stock grants under the Plan, which we expect to recognize over a weighted-average period of 2.4 years. Our two types of restricted stock grants under the Plan are discussed below.

Restricted Stock Subject Only to a Service Condition

We calculate compensation cost for restricted stock grants by using the fair market value of our common stock at the date of grant, the number of shares issued, an adjustment for restrictions on dividends and an estimate of shares that will not vest due to forfeitures. This compensation cost is amortized on a straight-line basis over the applicable vesting period.

The following table details the status and changes in our restricted stock grants subject only to a service condition for the nine months ended September 30, 2016:

Restricted shares subject only to a service condition:	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2016	580,469		$	56.76
Granted	259,293		47.97
Vested	(174,310	)	51.42
Forfeited	(17,896	)	56.60
Non-vested, September 30, 2016	647,556		$	54.68

13

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Restricted Stock Subject to Service and Performance Conditions

Under the Plan, certain key employees are provided agreements for grants of restricted shares that vest over multiple years provided that the annual performance goals established by the Compensation Committee of Westwood’s Board of Directors are met. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares, which historically has been based upon Westwood’s adjusted pre-tax income, as defined below. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. In most cases, the vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the final calculation of adjusted pre-tax income as derived from the Company’s audited consolidated financial statements. Certain performance grants include a scaled vesting based on actual adjusted pre-tax income. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In March 2016, the Compensation Committee established the 2016 goal for adjusted pre-tax income, which is equal to income before income taxes increased by expenses incurred for the year for (i) incentive compensation for all officers and employees, (ii) performance-based restricted stock awards, and (iii) mutual fund share incentive awards, and excludes start up, non-recurring and similar expense items, at the Compensation Committee’s discretion. Beginning in the first quarter of 2016, we concluded that it was probable that we would meet the performance goals required to vest the applicable performance based restricted shares this year and began recording expense related to those shares.

Restricted shares subject to service and performance conditions:	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2016	101,313		$	61.29
Granted	151,334		55.90
Vested	(101,313	)	61.29
Forfeited	—		—
Non-vested, September 30, 2016	151,334		$	55.90

The above amounts as of September 30, 2016 do not include 51,258 non-vested restricted shares that potentially vest over performance years subsequent to 2016 inasmuch as the Compensation Committee has not set annual performance goals for later years and therefore no grant date has been established.

Canadian Plan

The Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries (the “Canadian Plan”) provides compensation in the form of common stock for services performed by employees of Westwood International. Under the Canadian Plan, no more than $10 million CDN ($7.6 million in U.S. Dollars using the exchange rate on September 30, 2016) may be funded to the plan trustee for purchases of common stock with respect to awards granted under the Canadian Plan. At September 30, 2016, approximately $6.0 million CDN ($4.5 million in U.S. Dollars using the exchange rate on September 30, 2016) remains available for issuance under the Canadian Plan, or approximately 85,494 shares based on the closing share price of our stock of $53.11 as of September 30, 2016. During the first nine months of 2016, the trust formed pursuant to the Canadian Plan purchased in the open market 10,474 Westwood common shares for approximately $614,000. As of September 30, 2016, the trust holds 43,648 shares of Westwood common stock. As of September 30, 2016, unrecognized compensation cost related to restricted stock grants under the Canadian Plan totaled $813,000, which we expect to recognize over a weighted-average period of 1.6 years.

14

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Mutual Fund Share Incentive Awards

We grant annually to certain employees mutual fund incentive awards, which are bonus awards based on our mutual funds achieving specific performance goals. Awards granted are notionally credited to a participant account maintained by us that contains a number of mutual fund shares equal to the award amount divided by the net closing value of a fund share on the date the amount is credited to the account.

These awards vest after approximately one year of service following the year in which the participant earns the award. We begin accruing a liability for mutual fund incentive awards when we believe it is probable that the award will be earned and record expense for these awards over the service period of the award, which is approximately two years. During the year in which the amount of the award is determined, we record expense based on the expected value of the award. After the award is earned, we record expense based on the value of the shares awarded and the percentage of the vesting period that has elapsed. Our liability under these awards may increase or decrease based on changes in the value of the mutual fund shares awarded, including reinvested income from the mutual funds during the vesting period. Upon vesting, participants receive the value of the mutual fund share awards adjusted for earnings or losses attributable to the underlying mutual funds. For the three months ended September 30, 2016 and 2015, we recorded expense of $313,000 and $149,000, respectively, related to mutual fund share incentive awards. For the nine months ended September 30, 2016 and 2015, we recorded expense of $933,000 and $879,000, respectively, related to mutual fund share incentive awards. As of September 30, 2016 and December 31, 2015, we had an accrued liability of $1.4 million and $2.0 million, respectively, related to mutual fund share incentive awards.

10. INCOME TAXES

Our effective income tax rate was 35.0% for the third quarter of 2016, compared with 33.2% for the third quarter of 2015. The increase is primarily related to an adjustment related to the filing of our 2015 tax return. Our effective income tax rate was 35.1% for the first nine months of 2016, compared with 33.3% for the first nine months of 2015. The increase is primarily related to a $341,000 tax charge for uncertain tax positions related to current and prior years (net of federal benefit) recorded in the first nine months of 2016, as well as the adjustment related to the filing of our 2015 tax return in the third quarter of 2016.

As of September 30, 2016 and December 31, 2015, the Company's gross liability related to uncertain tax positions was $2.2 million and $1.6 million, respectively. A number of years may elapse before an uncertain tax position is finally resolved. To the extent that the Company has favorable tax settlements, or determines that accrued amounts are no longer needed due to a lapse in the applicable statute of limitations or other changes in circumstances, such liabilities, as well as any related interest and penalties, would be reversed as a reduction of income tax expense, net of federal tax effects, in the period such determination is made. A reconciliation of the change in recorded uncertain tax positions during the nine months ended September 30, 2016 is as follows (in thousands):

Balance at January 1, 2016	$	1,629
Additions for tax positions related to the current year	206
Additions for tax positions related to prior years	475
Reductions for tax positions related to prior years	(156		)
Balance at September 30, 2016	$	2,154

Within the next twelve months, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $2.2 million as a result of settlements with certain taxing authorities, which, if recognized, would decrease our provision for income taxes by $1.4 million.

15

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

11. RELATED PARTY TRANSACTIONS

Some of our directors, executive officers and their affiliates invest their personal funds directly in trust accounts that we manage. For the three months ended September 30, 2016 and 2015, we recorded trust fees from these accounts of $108,000 and $112,000, respectively. For the nine months ended September 30, 2016 and 2015, we recorded trust fees from these accounts of $305,000 and $334,000, respectively. There was $106,000 due from these accounts as of September 30, 2016 and no amounts due from these accounts as of December 31, 2015.

The Company engages in transactions with its affiliates in the ordinary course of business. Westwood International and Westwood Management provide investment advisory services to the UCITS Fund, which began operations in August 2013. Certain members of our management and Board of Directors serve on the Board of Directors of the UCITS Fund. Under the terms of the investment advisory agreements, the Company earns quarterly fees paid by clients of the UCITS Fund and, in certain cases, by the UCITS Fund itself. The fees are based on negotiated fee schedules applied to assets under management. These fees are commensurate with market rates and are negotiated and contracted for at arm’s length. For the three months ended September 30, 2016 and 2015, the Company earned approximately $370,000 and $298,000, respectively, in fees from the UCITS Fund. For the nine months ended September 30, 2016 and 2015, the Company earned approximately $1,021,000 and $994,000, respectively, in fees from the UCITS Fund. These fees do not include fees paid directly to Westwood International by certain clients invested in the UCITS Fund that have an investment management agreement with Westwood International. As of September 30, 2016 and December 31, 2015, $143,000 and $96,000, respectively, of these fees were unpaid and included in “Accounts receivable” on our condensed consolidated balance sheets.

12. COMMITMENTS AND CONTINGENCIES

On August 3, 2012, AGF Management Limited and AGF Investments Inc. (collectively, “AGF”) filed a lawsuit in the Ontario Superior Court of Justice against Westwood, certain Westwood employees and the executive recruiting firm of Warren International, LLC. (“Warren”). The action relates to the hiring of certain members of Westwood’s global and emerging markets investment team previously employed by AGF. AGF is alleging that the former employees breached certain obligations when they resigned from AGF and that Westwood and Warren induced such breaches. AGF is seeking an unspecified amount of damages and punitive damages of $10 million CDN in the lawsuit. On November 5, 2012, Westwood responded to AGF’s lawsuit with a counterclaim against AGF for defamation. Westwood is seeking $1 million CDN in general damages, $10 million CDN in special damages, $1 million CDN in punitive damages, and costs. On November 6, 2012, AGF filed a second lawsuit against Westwood, Westwood Management and an employee of a Westwood subsidiary, alleging that the employee made defamatory statements about AGF. In this second lawsuit, AGF is seeking $5 million CDN in general damages, $1 million CDN per defendant in punitive damages, unspecified special damages, interest and costs. The pleadings phase was completed in 2013, and we are currently in the discovery phase.

While we intend to vigorously defend both actions and pursue our counterclaims, we are currently unable to estimate the ultimate aggregate amount of monetary gain, loss or financial impact of these actions and counterclaims. Defending these actions and pursuing these counterclaims may be expensive for us, as well as time consuming for our personnel. While we do not currently believe these proceedings will have a material impact, adverse resolution of these actions and counterclaims could have a material adverse effect on our business, financial condition or results of operations and cash flows.

Our policy is to not accrue legal fees and directly related costs as part of potential loss contingencies. We have agreed with our Directors & Officers insurance provider that 50% of the defense costs related to both AGF claims, excluding Westwood’s counterclaim against AGF, are covered by insurance. We expense legal fees and directly related costs as incurred. We have received insurance proceeds of approximately $928,000 as of September 30, 2016 and recorded a receivable of $249,000 and $240,000 as of September 30, 2016 and December 31, 2015, respectively, which represents our current minimum estimate of expenses that we expect to recover under our insurance policy. This receivable is part of “Other current assets” on our condensed consolidated balance sheets.

16

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

13. SEGMENT REPORTING

We operate two segments: Advisory and Trust. These segments are managed separately based on the types of products and services offered and their related client bases. The Company’s segment information is prepared on the same basis that management reviews the financial information for operational decision-making purposes. The Company’s chief operating decision maker, our Chief Executive Officer, evaluates the performance of our segments based primarily on fee revenues and Economic Earnings. Westwood Holdings Group, Inc., the parent company of Advisory and Trust, does not have revenues and is the entity in which we record typical holding company expenses including employee compensation and benefits for holding company employees, directors’ fees and investor relations costs. All segment accounting policies are the same as those described in the summary of significant accounting policies. Intersegment balances that eliminate in consolidation have been applied to the appropriate segment.

Advisory

Our Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, the Westwood Funds®, and the UCITS Fund, as well as investment subadvisory services to mutual funds and our Trust segment. Westwood Management and Westwood International, which provide investment advisory services to clients of similar type, are included in our Advisory segment along with Westwood Advisors, LLC.

Trust

Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Trust is included in our Trust segment.

17

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

	Advisory			Trust		Westwood Holdings			Eliminations			Consolidated
	(in thousands)
Three Months Ended September 30, 2016
Net fee revenues from external sources	$	23,673		$	7,690	$	—		$	—		$	31,363
Net intersegment revenues	5,275			41		—			(5,316		)	—
Net interest and dividend revenue	128			5		—			—			133
Other, net	279			2		—			—			281
Total revenues	$	29,355		$	7,738	$	—		$	(5,316	)	$	31,777
Economic Earnings	$	10,270		$	1,690	$	(1,345	)	$	—		$	10,615
Less:   Restricted stock expense												4,082
Intangible amortization												490
Deferred taxes on goodwill												156
Net income												$	5,887
Segment assets	$	163,826		$	65,986	$	13,046		$	(73,160	)	$	169,698
Segment goodwill	$	5,219		$	21,925	$	—		$	—		$	27,144
Three Months Ended September 30, 2015
Net fee revenues from external sources	$	24,941		$	7,972	$	—		$	—		$	32,913
Net intersegment revenues	5,087			—		—			(5,087		)	—
Net interest and dividend revenue	110			—		—			—			110
Other, net	(577		)	5		—			—			(572		)
Total revenues	$	29,561		$	7,977	$	—		$	(5,087	)	$	32,451
Economic Earnings	$	11,961		$	1,592	$	(1,119	)	$	—		$	12,434
Less:   Restricted stock expense												4,865
Intangible amortization												400
Deferred taxes on goodwill												156
Net income												$	7,013
Segment assets	$	172,034		$	57,967	$	7,753		$	(71,537	)	$	166,217
Segment goodwill	$	5,219		$	19,872	$	—		$	—		$	25,091

18

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

	Advisory			Trust			Westwood Holdings			Eliminations			Consolidated
	(in thousands)
Nine Months Ended September 30, 2016
Net fee revenues from external sources	$	68,563		$	22,798		$	—		$	—		$	91,361
Net intersegment revenues	14,455			82			—			(14,537		)	—
Net interest and dividend revenue	360			9			—			—			369
Other, net	462			(263		)	—			—			199
Total revenues	$	83,840		$	22,626		$	—		$	(14,537	)	$	91,929
Economic Earnings	$	30,493		$	4,160		$	(5,559	)	$	—		$	29,094
Less:   Restricted stock expense													12,164
Intangible amortization													1,470
Deferred taxes on goodwill													390
Net income													$	15,070
Nine Months Ended September 30, 2015
Net fee revenues from external sources	$	78,534		$	21,043		$	—		$	—		$	99,577
Net intersegment revenues	14,826			—			—			(14,826		)	—
Net interest and dividend revenue	218			1			—			—			219
Other, net	(431		)	5			—			—			(426		)
Total revenues	$	93,147		$	21,049		$	—		$	(14,826	)	$	99,370
Economic Earnings	$	37,827		$	3,405		$	(5,031	)	$	—		$	36,201
Less:   Restricted stock expense													12,560
Intangible amortization													951
Deferred taxes on goodwill													272
Net income													$	22,418

We are providing a performance measure that we refer to as Economic Earnings. Both our management and Board of Directors review Economic Earnings to evaluate our ongoing performance, allocate resources and determine our dividend policy. We also believe that this performance measure is useful for management and investors when evaluating our underlying operating and financial performance and our available resources.

In calculating Economic Earnings, we add to net income the non-cash expense associated with equity-based compensation awards of restricted stock, amortization of intangible assets and the deferred taxes related to the tax-basis amortization of goodwill. Although depreciation on property and equipment is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent a decline in the value of the related assets that will ultimately require replacement.

19

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following tables provide a reconciliation of net income to Economic Earnings (in thousands, except per share and share amounts):

	Three Months Ended September 30,
	2016		2015
Net Income	$	5,887	$	7,013
Add: Stock based compensation expense	4,082		4,865
Add: Intangible amortization	490		400
Add: Tax benefit from goodwill amortization	156		156
Economic Earnings	$	10,615	$	12,434

	Nine Months Ended September 30,
	2016		2015
Net Income	$	15,070	$	22,418
Add: Stock based compensation expense	12,164		12,560
Add: Intangible amortization	1,470		951
Add: Tax benefit from goodwill amortization	390		272
Economic Earnings	$	29,094	$	36,201

14. SUBSEQUENT EVENTS

Dividend Declared

In October 2016, Westwood’s Board of Directors declared a quarterly cash dividend of $0.62 per common share, an increase of 9% from the previous quarterly dividend rate, payable on January 3, 2017 to stockholders of record on December 9, 2016.

20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Statements in this report and the Annual Report to Stockholders that are not purely historical facts, including, without limitation, statements about our expected future financial position, results of operations or cash flows, as well as other statements including, without limitation, words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “could,” “goal,” “may,” “target,” “designed,” “on track,” “comfortable with,” “optimistic” and other similar expressions, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results and the timing of some events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, the risks described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC, and those risks set forth below:

• the composition and market value of our assets under management;

• regulations adversely affecting the financial services industry;

• competition in the investment management industry;

• our investments in foreign companies;

• our ability to develop and market new investment strategies successfully;

• our ability to pursue and properly integrate acquired businesses;

• litigation risks;

• our ability to retain qualified personnel;

• our relationships with current and potential customers;

• our ability to properly address conflicts of interest;

• our ability to maintain effective information systems;

• our ability to maintain effective cyber security;

• our ability to maintain adequate insurance coverage;

• our ability to maintain an effective system of internal controls;

• our ability to maintain our fee structure in light of competitive fee pressures;

• our relationships with investment consulting firms; and

• the significant concentration of our revenues in a small number of customers.

You should not unduly rely on these forward-looking statements, which speak only as of the date of this report. We are not obligated and do not undertake an obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events or otherwise.

21

Overview

We manage investment assets and provide services for our clients through our subsidiaries, Westwood Management Corp. and Westwood Advisors, LLC (together, "Westwood Management"), Westwood International Advisors Inc. ("Westwood International") and Westwood Trust. Westwood Management provides investment advisory services to institutional investors, a family of mutual funds called the Westwood Funds®, other mutual funds, an Ireland-domiciled fund organized pursuant to the European Union’s Undertakings for Collective Investment in Transferable Securities (“UCITS”), individual investors and clients of Westwood Trust. Westwood International provides investment advisory services to institutional clients, the Westwood Funds®, other mutual funds, the UCITS Fund and clients of Westwood Trust. Westwood Trust provides trust and custodial services and participation in self-sponsored common trust funds to institutions and high net worth individuals. Our revenues are generally derived from fees based on a percentage of assets under management.

Revenues

We derive our revenues from investment advisory fees, trust fees, and other revenues. Our advisory fees are generated by Westwood Management and Westwood International, which manage client accounts under investment advisory and subadvisory agreements. Advisory fees are calculated based on a percentage of assets under management and are paid in accordance with the terms of the agreements. Advisory fees are paid quarterly in advance based on assets under management on the last day of the preceding quarter, quarterly in arrears based on assets under management on the last day of the quarter just ended, or are based on a daily or monthly analysis of assets under management for the stated period. We recognize advisory fee revenues as services are rendered. A limited number of our clients have a contractual performance-based fee component, which generates additional revenues if we outperform a specified index over a specific period of time. We record revenue from performance-based fees when we determine that the fees are probable. This determination is typically made at the end of the measurement periods. Since billing periods for our advance-paying clients coincide with the calendar quarter to which such payments relate, revenue is recognized within the quarter and our condensed consolidated financial statements contain no deferred advisory fee revenues.

Our trust fees are generated by Westwood Trust pursuant to trust or custodial agreements. Trust fees are separately negotiated with each client and are generally based on a percentage of assets under management. Westwood Trust also provides trust services to a small number of clients on a fixed fee basis. During the first quarter of 2016, Westwood Trust changed the billing terms for most of our trust clients from quarterly in advance, based on assets under management on the last day of the preceding quarter, to quarterly in arrears, based on a daily average of assets under management for the quarter. This billing change did not impact revenue recognized during the quarter, as we recognize trust fee revenues as services are rendered. Since billing periods for most of Westwood Trust’s clients coincide with the calendar quarter, revenue is fully recognized within the quarter and our condensed consolidated financial statements do not contain a significant amount of deferred revenue.

Our other revenues generally consist of interest and investment income. Although we generally invest most of our cash in U.S. Treasury securities, we also invest in equity and fixed income instruments and money market funds.

Employee Compensation and Benefits

Employee compensation and benefits costs generally consist of salaries, incentive compensation, equity-based compensation expense and benefits.

Sales and Marketing

Sales and marketing costs relate to our marketing efforts, including travel and entertainment, direct marketing and advertising costs.

Westwood Mutual Funds

Westwood Mutual Funds expenses relate to our marketing, distribution and administration of the Westwood Funds®.

22

Information Technology

Information technology expenses are generally costs associated with proprietary investment research tools, maintenance and support, computing hardware, software licenses, telecommunications and other related costs.

Professional Services

Professional services expenses generally consist of costs associated with subadvisory fees, audit, tax, legal and other professional services.

General and Administrative

General and administrative expenses generally consist of costs associated with the lease of our office space, amortization, depreciation, insurance, custody expense, Board of Directors fees, investor relations, licenses and fees, office supplies and other miscellaneous expenses.

23

Assets Under Management

Assets under management ("AUM") increased$900 million to $21.3 billion at September 30, 2016 compared with $20.4 billion at September 30, 2015 as a result of market appreciation, partially offset by net outflows, over the last twelve months. The average of beginning and ending assets under management for the third quarter of 2016 was $21.1 billion compared to $21.8 billion for the third quarter of 2015. The decrease in average assets under management is due to net outflows since September 30, 2015, as $2.3 billion market appreciation over the last twelve months offset the $2.2 billion market depreciation in the third quarter of 2015.

The following table displays assets under management as of September 30, 2016 and 2015:

					% Change
					September 30, 2016
	As of September 30,				vs.
	2016		2015		September 30, 2015
	(in millions)
Institutional	$	12,192	$	11,288	8	%
Private Wealth	5,327		5,246		2
Mutual Funds	3,753		3,841		(2	)
Total Assets Under Management(1)	$	21,272	$	20,375	4	%

________________

(1) AUM excludes $1.1 billion of assets under advisement ("AUA") as of September 30, 2016 related to our model portfolios, including approximately $800 million in a long-only convertibles fund for which we provide consulting advice but do not have direct discretionary investment authority. AUM excluded approximately $640 million of AUA as of September 30, 2015, which included assets related to our market neutral income strategy that transitioned from AUA to AUM during the fourth quarter of 2015.

• Institutional includes separate accounts of corporate pension and profit sharing plans, public employee retirement funds, Taft Hartley plans, endowments, foundations and individuals; subadvisory relationships where Westwood provides investment management services for funds offered by other financial institutions; pooled investment vehicles, including the UCITS Fund and collective investment trusts; and managed account relationships with brokerage firms and other registered investment advisors that offer Westwood products to their customers.

• Private Wealth includes assets for which Westwood Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals pursuant to trust or agency agreements and assets for which Westwood Management provides advisory services in ten limited liability companies to high net worth individuals. Investment subadvisory services are provided for the common trust funds by Westwood Management, Westwood International and external, unaffiliated subadvisors. For certain assets in this category, Westwood Trust currently provides limited custody services for a minimal or no fee, viewing these assets as potentially converting to fee-generating managed assets in the future. As an example, some assets in this category consist of low-basis stock currently held in custody for clients where we believe such assets may convert to fee-generating managed assets during an inter-generational transfer of wealth.

• Mutual Funds include the Westwood Funds®, a family of mutual funds for which Westwood Management serves as advisor. These funds are available to individual investors, as well as offered as part of our investment strategies for institutional and private wealth accounts.

24

Roll-Forward of Assets Under Management

($ millions)	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Institutional
Beginning of period assets	$	11,921		$	13,203		$	11,752		$	12,471
Inflows	420			179			1,133			1,549
Outflows(1)	(606		)	(540		)	(1,902		)	(1,516		)
Net flows	(186		)	(361		)	(769		)	33
Market appreciation (depreciation)	457			(1,554		)	1,209			(1,216		)
Net change	271			(1,915		)	440			(1,183		)
End of period assets	12,192			11,288			12,192			11,288
Private Wealth
Beginning of period assets	5,361			5,638			5,393			3,974
Inflows	104			222			274			506
Outflows	(245		)	(242		)	(626		)	(590		)
Net flows	(141		)	(20		)	(352		)	(84		)
Acquisition related	—			—			—			1,583
Market appreciation (depreciation)	107			(372		)	286			(227		)
Net change	(34		)	(392		)	(66		)	1,272
End of period assets	5,327			5,246			5,327			5,246
Mutual Funds
Beginning of period assets	3,690			4,283			3,617			3,722
Inflows	214			257			674			1,031
Outflows	(224		)	(399		)	(798		)	(657		)
Net flows	(10		)	(142		)	(124		)	374
Market appreciation (depreciation)	73			(300		)	260			(255		)
Net change	63			(442		)	136			119
End of period assets	3,753			3,841			3,753			3,841
Total
Beginning of period assets	20,972			23,124			20,762			20,167
Inflows	738			658			2,081			3,086
Outflows(1)	(1,075		)	(1,181		)	(3,326		)	(2,763		)
Net flows	(337		)	(523		)	(1,245		)	323
Acquisition related	—			—			—			1,583
Market appreciation (depreciation)	637			(2,226		)	1,755			(1,698		)
Net change	300			(2,749		)	510			208
End of period assets	$	21,272		$	20,375		$	21,272		$	20,375

________________

(1) Outflows for the three and nine months ended September 30, 2016 include approximately $30 million in an account that transitioned to our model portfolio, for which we no longer have direct discretionary investment authority. This account is now included in AUA aggregating $1.1 billion as of September 30, 2016.

25

Three months ended September 30, 2016 and 2015

The $300 millionincrease in assets under management for the three months ended September 30, 2016 was due to market appreciation of $637 million, partially offset by net outflows of $337 million. Net outflows were primarily related to our SMidCap, LargeCap Value and Market Neutral Income strategies.

The $2.7 billiondecrease in assets under management for the three months ended September 30, 2015 was due to market depreciation of $2.2 billion and net outflows of $523 million. Net flows were primarily driven by outflows in our Income Opportunity, SMid Cap and Emerging Markets strategies, partially offset by inflows in our Income Opportunity and Emerging Markets strategies.

Nine months ended September 30, 2016 and 2015

The $510 millionincrease in assets under management for the nine months endedSeptember 30, 2016 was due to market appreciation of $1.8 billion, partially offset by net outflows of $1.2 billion. Net outflows were primarily related to our SMidCap, SMidCap Plus, LargeCap Value, AllCap Value and Income Opportunity strategies.

The $208 millionincrease in assets under management for the nine months endedSeptember 30, 2015 was due to net asset inflows of $323 million and $1.6 billion of assets related to the Woodway acquisition, offset by market depreciation of $1.7 billion. Net flows were primarily driven by inflows into our Emerging Markets, Income Opportunity, MLP and SMid Cap strategies, partially offset by outflows in our LargeCap Value, SMid Cap, Income Opportunity and Emerging Markets strategies.

26

Results of Operations

The following table (dollars in thousands) and discussion of our results of operations is based upon data derived from the condensed consolidated statements of comprehensive income contained in our condensed consolidated financial statements and should be read in conjunction with those statements, included elsewhere in this report.

											% Change		% Change
											Three Months Ended		Nine Months Ended
	Three Months Ended					Nine Months Ended					September 30, 2016		September 30, 2016
	September 30,					September 30,					vs.		vs.
	2016		2015			2016		2015			September 30, 2015		September 30, 2015
Revenues
Advisory fees - asset based	$	23,447	$	24,940		$	67,928	$	76,327		(6	)%	(11	)%
Advisory fees - performance based	226		—			635		2,206			100		(71	)
Trust fees	7,690		7,973			22,798		21,044			(4	)	8
Other revenues	414		(462		)	568		(207		)	NM		NM
Total revenues	31,777		32,451			91,929		99,370			(2	)	(7	)
Expenses
Employee compensation and benefits	15,637		15,686			47,239		47,507			0		(1	)
Sales and marketing	408		419			1,423		1,310			(3	)	9
Westwood mutual funds	755		865			2,282		2,593			(13	)	(12	)
Information technology	1,874		1,626			6,039		4,085			15		48
Professional services	1,903		1,178			4,707		4,281			62		10
General and administrative	2,147		2,175			7,028		5,962			(1	)	18
Total expenses	22,724		21,949			68,718		65,738			4		5
Income before income taxes	9,053		10,502			23,211		33,632			(14	)	(31	)
Provision for income taxes	3,166		3,489			8,141		11,214			(9	)	(27	)
Net income	$	5,887	$	7,013		$	15,070	$	22,418		(16	)%	(33	)%

_________________________

NM    Not meaningful

27

Three months ended September 30, 2016 compared to three months ended September 30, 2015

Total Revenues. Our Total revenues decreased$0.7 million, or 2%, to $31.8 million for the three months ended September 30, 2016 compared with $32.5 million for the three months ended September 30, 2015. Asset-based advisory fees decreased$1.5 million, or 6%, due to lower average assets under management. Trust fees decreased$0.3 million, or 4%, primarily due to lower average assets under management.

Employee Compensation and Benefits. Employee compensation and benefits costs was relatively flat at $15.6 million for the three months ended September 30, 2016 compared with $15.7 million for the three months ended September 30, 2015, as increases in average head-count and merit increases were offset by a decrease in restricted stock expense attributable to a non-cash charge related to acceleration of stock based compensation expense for a particular grant during the third quarter of 2015.

Professional Services. Professional service expenses increased$0.7 million, or 62%, to $1.9 million for the three months ended September 30, 2016 compared to $1.2 million for the three months ended September 30, 2015, due to increased legal fees.

Provision for Income Taxes. The effective tax rate increased to 35.0% for the three months ended September 30, 2016 from 33.2% for the three months ended September 30, 2015. The increase is primarily related to an adjustment related to the filing of our 2015 tax return in the third quarter of 2016.

Nine months endedSeptember 30, 2016 compared to nine months endedSeptember 30, 2015

Total Revenues. Our total revenues decreased$7.5 million, or 7%, to $91.9 million for the nine months endedSeptember 30, 2016 compared with $99.4 million for the nine months endedSeptember 30, 2015. This decrease was primarily related to a $8.4 million, or 11%, decrease in asset-based advisory fees related to lower average assets under management due to net outflows and market depreciation and a $1.6 million decrease in performance-based fees, partially offset by a $1.8 million, or 8%, increase in Trust fees as a result of the Woodway acquisition.

Employee Compensation and Benefits. Employee compensation and benefits costs decreased slightly to $47.2 million for the nine months endedSeptember 30, 2016 compared with $47.5 million for the nine months endedSeptember 30, 2015. Incentive compensation accruals decreased $2.4 million due to lower results during the first nine months of 2016, and restricted stock expense decreased $1.3 million as a result of a third quarter 2015 non-cash charge related to acceleration of stock based compensation expense for a particular grant. These decreases were offset by an increase in compensation expenses attributable to increased average headcount and merit increases.

Information Technology. Information technology expenses increased$1.9 million, or 48%, to $6.0 million for the nine months endedSeptember 30, 2016 compared to $4.1 million for the nine months endedSeptember 30, 2015, due to costs associated with implementing new information technology platforms, increased research and support expenses and the Woodway acquisition.

General and Administrative. General and administrative expenses increased$1.0 million, or 18%, to $7.0 million for the nine months endedSeptember 30, 2016 compared to $6.0 million for the nine months endedSeptember 30, 2015, primarily due to increased rent and depreciation expenses related to the expansion of our corporate headquarters, amortization of intangibles related to the Woodway acquisition and ongoing general and administrative expenses for Woodway.

Provision for Income Taxes. The effective tax rate increased to 35.1% for the nine months endedSeptember 30, 2016 from 33.3% for the nine months endedSeptember 30, 2015. The increase is primarily related to adjustments to uncertain tax positions related to current and prior years (net of federal tax benefit) recorded in the first and third quarters of 2016.

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Supplemental Financial Information

As supplemental information, we are providing a non-U.S. generally accepted accounting principles (“non-GAAP”) performance measure that we refer to as Economic Earnings. We provide this measure in addition to, but not as a substitute for, net income reported on a U.S. generally accepted accounting principles (“GAAP”) basis. Our management and Board of Directors review Economic Earnings to evaluate our ongoing performance, allocate resources and review the dividend policy. We believe that this non-GAAP performance measure, while not a substitute for GAAP net income, is useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider this non-GAAP measure without also considering financial information prepared in accordance with GAAP.

In calculating Economic Earnings, we add to net income the non-cash expense associated with equity-based compensation awards of restricted stock, amortization of intangible assets and the deferred taxes related to the tax-basis amortization of goodwill. Although depreciation on property and equipment is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent a decline in the value of the related assets that will ultimately require replacement. In addition, we do not adjust Economic Earnings for tax deductions related to restricted stock expense or amortization of intangible assets.

The following tables provide a reconciliation of net income to Economic Earnings (in thousands, except per share and share amounts):

	Three Months Ended September 30,				% Change
	2016		2015
Net Income	$	5,887	$	7,013	(16	)%
Add: Stock based compensation expense	4,082		4,865		(16	)
Add: Intangible amortization	490		400		23
Add: Tax benefit from goodwill amortization	156		156		0
Economic Earnings	$	10,615	$	12,434	(15	)%
Diluted weighted average shares outstanding	8,179,956		8,037,080
Economic Earnings per share	$	1.30	$	1.55

	Nine Months Ended September 30,				% Change
	2016		2015
Net Income	$	15,070	$	22,418	(33	)%
Add: Stock based compensation expense	12,164		12,560		(3	)
Add: Intangible amortization	1,470		951		55
Add: Tax benefit from goodwill amortization	390		272		43
Economic Earnings	$	29,094	$	36,201	(20	)%
Diluted weighted average shares outstanding	8,212,468		8,076,055
Economic Earnings per share	$	3.54	$	4.48

29

Liquidity and Capital Resources

We fund our operations and cash requirements with cash generated from operating activities. We may also use cash from operations to pay dividends to our stockholders. As of September 30, 2016 and December 31, 2015, we had no debt. The changes in net cash provided by operating activities generally reflect the changes in earnings plus the effects of non-cash items and changes in working capital. Changes in working capital, especially accounts receivable and accounts payable, are generally the result of timing differences between collection of fees billed and payment of operating expenses.

During the nine months endedSeptember 30, 2016, cash flow provided by operating activities, principally our investment advisory business, was $39.0 million. Cash flow used in investing activities of $1.7 million during the nine months endedSeptember 30, 2016 was related to purchases of fixed assets. Cash flow used in financing activities of $30.2 million for the nine months endedSeptember 30, 2016 was due to the payment of dividends, payment of the contingent consideration related to the Woodway acquisition, repurchases of our common stock under our share repurchase plan, purchases of restricted stock returned for payment of taxes and purchases of treasury shares for our Canadian share award plan.

We had cash and investments of $80.5 million as of September 30, 2016 and $95.1 million as of December 31, 2015. Cash and cash equivalents as of September 30, 2016 and December 31, 2015 includes approximately $20 million and $13 million, respectively, of undistributed income from Westwood International that we consider to be permanently invested in Canada.  At September 30, 2016 and December 31, 2015, working capital aggregated $80.2 million and $72.8 million, respectively.

Westwood Trust must maintain cash and investments in an amount equal to the required minimum restricted capital of $4.0 million, as required by the Texas Finance Code. Restricted capital is included in Investments in the accompanying condensed consolidated balance sheets. At September 30, 2016, Westwood Trust had approximately $11.4 million in excess of its minimum capital requirement.

Our future liquidity and capital requirements will depend upon numerous factors, including our results of operations, the timing and magnitude of capital expenditures or strategic initiatives, our dividend policy and other business and risk factors described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC. We believe that current cash and short-term investment balances and cash generated from operations will be sufficient to meet both the operating and capital requirements of our ordinary business operations through at least the next twelve months. However, there can be no assurance that we will not require additional financing within this time frame. The failure to raise needed capital on attractive terms, if at all, could have a material adverse effect on our business, financial condition and results of operations.

Contractual Obligations

As of September 30, 2016, there have been no material changes outside the ordinary course of business to our contractual obligations since December 31, 2015. For information regarding our contractual obligations, refer to “Contractual Obligations” in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Critical and Significant Accounting Policies and Estimates

There have been no significant changes in our critical or significant accounting policies and estimates since December 31, 2015. Information with respect to our critical accounting policies and estimates that we believe could have the most significant effect on our reported consolidated results and require difficult, subjective or complex judgment by management are described under “Critical Accounting Policies and Estimates” in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

30

Accounting Developments

Refer to Note 2 “Summary of Significant Accounting Policies” in our condensed consolidated financial statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q for a description of recently issued accounting guidance.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our Quantitative and Qualitative Disclosures about Market Risk from those previously reported in our Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure. An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

For the quarter ended September 30, 2016, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

31

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See discussion of legal proceedings and procedures in Note 12 “Commitments and Contingencies” in our condensed consolidated financial statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

We face a number of significant risks and uncertainties in our business, including those detailed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015 and summarized in this report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These risks and uncertainties may affect our current position and future prospects and should be considered carefully in evaluating us, including making an investment in our common stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table displays information with respect to the treasury shares we purchased during the three months ended September 30, 2016:

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (1)
July 1 through September 30, 2016
Repurchase program (1)	24,199	$	49.92	24,199		$	9,370,853
Canadian Plan (2)	—	$	—	—	CDN	$	5,960,344
Employee transactions (3)	265	$	59.61	—		—

(1) On July 20, 2012, our Board of Directors authorized management to repurchase up to $10 million of our outstanding common stock on the open market or in privately negotiated transactions. In July 2016, Westwood's Board of Directors authorized an additional $5.0 million of repurchases under the share repurchase program. The share repurchase program has no expiration date and may be discontinued at any time by the Board of Directors.

(2) On April 18, 2013, our stockholders approved the Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries (the “Canadian Plan”), which contemplates a trustee purchasing up to $10 million CDN of our outstanding common stock on the open market for the purpose of making share awards to our Canadian employees. The Canadian Plan has no expiration date and may be discontinued at any time by the Board of Directors.

(3) Consists of shares of common stock tendered by an employee at the market close price on the date of vesting in order to satisfy the employee’s minimum tax withholding obligations from vested restricted shares. We anticipate having additional shares tendered in subsequent periods for the same purpose.

32

ITEM 6. EXHIBITS

31.1*	Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)
31.2*	Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a)
32.1**	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith.

33

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.

Dated:	October 26, 2016	WESTWOOD HOLDINGS GROUP, INC.
		By:	/s/ Brian O. Casey
			Brian O. Casey
			President & Chief Executive Officer
		By:	/s/ Tiffany B. Kice
			Tiffany B. Kice
			Chief Financial Officer and Treasurer

34

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

SECURITIES EXCHANGE ACT RULE 13a-14(a)

I, Brian O. Casey, certify that:

1. I have reviewed this report on Form 10-Q of Westwood Holdings 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(s) 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:

(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(s) 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.

Dated: October 26, 2016

/s/ Brian O. Casey

Brian O. Casey

President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a)

I, Tiffany B. Kice, certify that:

1. I have reviewed this report on Form 10-Q of Westwood Holdings 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(s) 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:

(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(s) 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.

Dated: October 26, 2016

/s/ Tiffany B. Kice

Tiffany B. Kice

Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION 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 Quarterly Report of Westwood Holdings Group, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian O. Casey, President & Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.78m or 78o(d)); and

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

October 26, 2016

/s/ Brian O. Casey

Brian O. Casey

President & Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Westwood Holdings Group, Inc. and will be retained by Westwood Holdings Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

CERTIFICATION 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 Quarterly Report of Westwood Holdings Group, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tiffany B. Kice, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15U.S.C. 78m or 78o(d)); and

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

October 26, 2016

/s/ Tiffany B. Kice

Tiffany B. Kice

Chief Financial Officer and Treasurer

A signed original of this written statement required by Section 906 has been provided to Westwood Holdings Group, Inc. and will be retained by Westwood Holdings Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 14, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	WESTWOOD HOLDINGS GROUP INC
Entity Central Index Key	0001165002
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		8,799,797

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 30,692	$ 22,740
Accounts receivable	22,810	19,618
Investments, at fair value	49,849	72,320
Other current assets	2,355	2,926
Total current assets	105,706	117,604
Goodwill	27,144	27,144
Deferred income taxes	10,950	11,042
Intangible assets, net	21,884	23,354
Property and equipment, net of accumulated depreciation of $4,133 and $3,687	4,014	2,192
Total assets	169,698	181,336
Current Liabilities:
Accounts payable and accrued liabilities	3,498	3,549
Dividends payable	6,146	5,749
Compensation and benefits payable	13,357	20,264
Contingent consideration	0	9,023
Income taxes payable	2,482	6,268
Total current liabilities	25,483	44,853
Accrued dividends	1,536	1,699
Deferred rent	1,827	817
Total liabilities	28,846	47,369
Commitments and contingencies
Stockholders' Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 9,823,881 and outstanding 8,847,754 shares at June 30, 2016; issued 9,425,309 and outstanding 8,630,687 shares at December 31, 2015	99	94
Additional paid-in capital	159,615	143,797
Treasury stock, at cost - 976,127 shares at June 30, 2016; 794,622 shares at December 31, 2015	(44,863)	(34,910)
Foreign currency translation adjustment	(3,681)	(4,688)
Accumulated other comprehensive loss	(3,681)	(4,688)
Retained earnings	29,682	29,674
Total stockholders' equity	140,852	133,967
Total liabilities and stockholders' equity	$ 169,698	$ 181,336

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Property and equipment, accumulated depreciation	$ 4,365	$ 3,687
Common stock, par value (dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	9,823,881	9,425,309
Common stock, shares outstanding	8,847,754	8,630,687
Treasury stock, shares	976,127	794,622

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Advisory fees:
Asset-based	$ 23,447	$ 24,940	$ 67,928	$ 76,327
Performance-based	226	0	635	2,206
Trust fees	7,690	7,973	22,798	21,044
Other, net	414	(462)	568	(207)
Total revenues	31,777	32,451	91,929	99,370
EXPENSES:
Employee compensation and benefits	15,637	15,686	47,239	47,507
Sales and marketing	408	419	1,423	1,310
Westwood mutual funds	755	865	2,282	2,593
Information technology	1,874	1,626	6,039	4,085
Professional services	1,903	1,178	4,707	4,281
General and administrative	2,147	2,175	7,028	5,962
Total expenses	22,724	21,949	68,718	65,738
Income before income taxes	9,053	10,502	23,211	33,632
Provision for income taxes	3,166	3,489	8,141	11,214
Net income	5,887	7,013	15,070	22,418
Other comprehensive income (loss):
Foreign currency translation adjustments	(453)	(1,386)	1,007	(2,541)
Total comprehensive income	$ 5,434	$ 5,627	$ 16,077	$ 19,877
Earnings per share:
Basic (dollars per share)	$ 0.74	$ 0.90	$ 1.89	$ 2.90
Diluted (dollars per share)	$ 0.72	$ 0.87	$ 1.84	$ 2.78
Weighted average shares outstanding:
Basic (shares)	7,995,680	7,808,239	7,952,938	7,737,608
Diluted (shares)	8,179,956	8,037,080	8,212,468	8,076,055
Cash dividends declared per share (dollars per share)	$ 0.57	$ 0.50	$ 1.71	$ 1.50

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands	Total	Common Stock, Par	Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
BALANCE at Dec. 31, 2015	$ 133,967	$ 94	$ 143,797	$ (34,910)	$ (4,688)	$ 29,674
BALANCE, shares at Dec. 31, 2015	8,630,687	8,630,687
Net income	$ 15,070
Other comprehensive income	1,007				1,007
Issuance of restricted stock, net of forfeitures	0	$ 4	(4)
Issuance of restricted stock, net of forfeitures, shares		325,050
Dividends declared	(15,062)					(15,062)
Stock based compensation expense	12,164		12,164
Reclassification of compensation liability to be paid in shares	167		167
Adjustments to Additional Paid in Capital, Income Tax Deficiency from Share-based Compensation	(242)		(242)
Purchases of treasury stock	$ (5,629)			(5,629)
Treasury Shares Acquired for Benefit Plan	10,474
Treasury Shares Value Acquired for Benefit Plan	$ 614			614
Purchases of treasury stock, shares	(117,452)	(117,452)
Restricted stock returned for payment of taxes	$ (3,710)			(3,710)
Restricted stock returned for payment of taxes, shares		(78,043)
BALANCE at Sep. 30, 2016	$ 140,852	$ 99	159,615	$ (44,863)	$ (3,681)	$ 29,682
BALANCE, shares at Sep. 30, 2016	8,847,754	8,830,021
Stock Issued During Period, Shares, New Issues		80,253
Stock Issued During Period, Value, New Issues	$ 3,734	$ 1	$ 3,733

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Statement of Cash Flows [Abstract]
Payments for (Proceeds from) Tenant Allowance	$ 1,128	$ 0
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	15,070	22,418
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	732	606
Amortization of intangible assets	1,470	951
Unrealized gains on trading investments	(676)	484
Stock based compensation expense	12,164	12,560
Deferred income taxes	114	(1,923)
Excess tax benefits from stock based compensation	(165)	(1,432)
Net sales of investments - trading securities	23,147	22,679
Other Operating Activities, Cash Flow Statement	275	(3)
Change in operating assets and liabilities:
Accounts receivable	(2,711)	(5,332)
Other current assets	900	236
Accounts payable and accrued liabilities	(82)	537
Compensation and benefits payable	(6,758)	(2,052)
Income taxes payable	(4,637)	1,899
Other liabilities	154	(28)
Net cash provided by operating activities	38,997	51,600
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,680)	(704)
Payments to Acquire Businesses, Net of Cash Acquired	0	24,133
Net cash used in investing activities	(1,680)	(24,837)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock	(5,629)	0
Payment for Repurchases of Stock for Benefit Plan	(614)	(1,327)
Restricted stock returned for payment of taxes	(3,710)	(5,621)
Excess tax benefits from stock based compensation	165	1,432
Other Payments to Acquire Businesses	(5,562)
Cash dividends	(14,827)	(13,065)
Net cash used in financing activities	(30,177)	(18,581)
Effect of currency rate changes on cash	812	(2,430)
NET INCREASE IN CASH AND CASH EQUIVALENTS	7,952	5,752
Cash and cash equivalents, beginning of period	22,740	18,131
Cash and cash equivalents, end of period	30,692	23,883
Supplemental cash flow information:
Cash paid during the period for income taxes	12,632	11,664
Common stock issued for acquisition	3,734	5,292
DividendsAccrued	7,682	6,452
Capital Expenditures Incurred but Not yet Paid	$ 0	$ 0

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DESCRIPTION OF THE BUSINESS

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF THE BUSINESS

DESCRIPTION OF THE BUSINESS

Westwood Holdings Group, Inc. (“Westwood”, the “Company”, “we”, “us” or “our”) was incorporated under the laws of the State of Delaware on December 12, 2001. Westwood provides investment management services to institutional investors, private wealth clients and financial intermediaries through its subsidiaries, Westwood Management Corp. and Westwood Advisors, LLC (together “Westwood Management”), Westwood Trust (“Westwood Trust”), and Westwood International Advisors Inc. (“Westwood International”). Revenue is largely dependent on the total value and composition of assets under management (“AUM”). Accordingly, fluctuations in financial markets and in the composition of AUM impact revenues and results of operations.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and are presented in accordance with the requirements for quarterly reports on Form 10-Q and consequently do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).  The Company’s condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary in the opinion of management to present fairly our interim financial position and results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements are presented in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”).

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2015. Operating results for the periods in these condensed consolidated financial statements are not necessarily indicative of the results for any future period. The accompanying condensed consolidated financial statements include the accounts of Westwood and its subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more useful information for making decisions. The amendment addresses various aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact that the application of ASU 2016-01 will have on our consolidated financial statements and disclosures and expect to adopt the new standard in the required time frame.

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases at the commencement date, excluding short-term leases. The amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. We are currently evaluating the impact that the application of ASU 2016-02 will have on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations in ASU 2014-09. The amendment is effective for fiscal years beginning after December 14, 2017, including interim reporting periods within that reporting year. We do not expect the adoption of ASU 2016-08 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The purpose of the amendment is to simplify the accounting for share-based payment transactions, and includes changes to the accounting for the classification of awards as either equity or liabilities, classification of certain share-based payment items on the statement of cash flows, the accounting for forfeitures and certain income tax consequences. The amendment is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. Amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of tax benefits on the statement of cash flows using either a prospective or retrospective transition method. We are currently evaluating the impact that the application of ASU 2016-09 will have on our consolidated financial statements and disclosures and expect to adopt the new standard within the required time frame.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance related to identifying performance obligations and the licensing guidance in ASU 2014-09. The amendment is effective for fiscal years beginning after December 14, 2017, including interim reporting periods within that reporting year. We do not expect the adoption of ASU 2016-10 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendment addresses eight classification issues related to the statement of cash flows, including debt prepayment or debt extinguishment costs, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from settlements of insurance claims, proceeds from settlements of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and classification of separately identifiable cash flows. Adoption should be applied using the retrospective transition method. Early adoption is permitted. The amendment is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. We do not expect the adoption of ASU 2016-08 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of shares outstanding plus the effect of any dilutive shares of restricted stock granted to employees and non-employee directors. There were approximately 2,453 and 306 anti-dilutive restricted shares for the three months ended September 30, 2016 and 2015, respectively, and 2,301 and 4,750 anti-dilutive restricted shares for the nine months ended September 30, 2016 and 2015, respectively.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share and share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Net income	$	5,887	$	7,013	$	15,070	$	22,418
Weighted average shares outstanding - basic	7,995,680		7,808,239		7,952,938		7,737,608
Dilutive potential shares from unvested restricted shares	184,276		185,139		259,530		316,253
Dilutive potential shares from contingent consideration	—		43,702		—		22,194
Weighted average shares outstanding - diluted	8,179,956		8,037,080		8,212,468		8,076,055
Earnings per share:
Basic	$	0.74	$	0.90	$	1.89	$	2.90
Diluted	$	0.72	$	0.87	$	1.84	$	2.78

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INVESTMENTS

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

INVESTMENTS

Investment balances are presented in the table below (in thousands). All investments are carried at fair value and are accounted for as trading securities.

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
September 30, 2016:
U.S. Government and Government agency obligations	$	25,209	$	38	$	—		$	25,247
Money market funds	12,421		—		—			12,421
Equity funds	12,027		233		(79		)	12,181
Marketable securities	$	49,657	$	271	$	(79	)	$	49,849
December 31, 2015:
U.S. Government and Government agency obligations	$	50,972	$	15	$	(15	)	$	50,972
Money market funds	9,179		—		—			9,179
Equity funds	12,653		—		(484		)	12,169
Marketable securities	$	72,804	$	15	$	(499	)	$	72,320

As of September 30, 2016 and December 31, 2015, $11.1 million and $10.7 million in corporate funds, respectively, were invested in Westwood Funds®, Westwood Common Trust Funds and the UCITS Fund. See Note 8 “Variable Interest Entities.”

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

We determine estimated fair values for our financial instruments using available information. The fair value amounts discussed in our condensed consolidated financial statements are not necessarily indicative of either amounts realizable upon disposition of these instruments or our intent or ability to dispose of these assets. The estimated fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities, dividends payable, compensation and benefits payable and income taxes payable approximates their carrying value due to their short-term maturities. The carrying amount of investments designated as “trading” securities, primarily U.S. Government and Government agency obligations, money market funds, Westwood Funds® mutual funds, the UCITS Fund and Westwood Trust common trust fund shares, equals their fair value based on prices quoted in active markets and, with respect to common trust funds, the net asset value of the shares held as reported by each fund. Market values of our money market holdings generally do not fluctuate. The fair value of contingent consideration related to the Woodway acquisition was categorized as a level 3 liability, as the measurement of the Earn-Out Amount was based primarily on significant inputs not observable in the market. For more information about the Woodway acquisition, see Note 6 "Acquisitions, Goodwill and Other Intangibles".

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value and requires additional disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows:

• level 1 – quoted market prices in active markets for identical assets

• level 2 – inputs other than quoted prices that are directly or indirectly observable

• level 3 – significant unobservable inputs where there is little or no market activity

The following table summarizes the values of our assets and liabilities as of the dates indicated within the fair value hierarchy (in thousands).

	Level 1		Level 2		Level 3			Total
As of September 30, 2016:
Investments in trading securities	$	46,697	$	3,152	$	—		$	49,849
Total financial instruments	$	46,697	$	3,152	$	—		$	49,849
As of December 31, 2015:
Investments in trading securities	$	69,260	$	3,060	$	—		$	72,320
Contingent consideration	—		—		(9,023		)	(9,023		)
Total financial instruments	$	69,260	$	3,060	$	(9,023	)	$	63,297

Investments categorized as level 2 assets consist of investments in common trust funds sponsored by Westwood Trust. Common trust funds are private investment vehicles comprised of commingled investments held in trusts that are valued using the Net Asset Value (“NAV”) calculated by us as administrator of the funds. The NAV is calculated using indirectly observed inputs, as the unit price is based on the market value of the underlying investments traded on an active market. We can make withdrawals from the common trust funds on a daily basis as needed for liquidity and there are no restrictions on redemption as of September 30, 2016.

Contingent consideration categorized as a level 3 liability is related to the acquisition of Woodway. As of the acquisition date, the Company estimated that the Earn-Out Amount would be $9.1 million, based on then existing facts and circumstances.

For the period subsequent to the initial measurement of the contingent consideration, changes in the fair value of the contingent consideration are recorded in "Other, net" on the condensed consolidated statements of comprehensive income. During the first quarter of 2016, the Company revised its estimate of the Earn-Out Amount to $9.3 million based on the actual revenues from the post-closing business of Woodway for the twelve month period ended March 31, 2016 and recorded a charge of $286,000 in "Other, net" on the condensed consolidated statements of comprehensive income. During the second quarter of 2016, the Company finalized the Earn-Out Amount and recorded income of $13,000 in "Other, net" on the condensed consolidated statements of comprehensive income.

The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (in thousands):

	Contingent Consideration
Beginning balance, December 31, 2015	$	9,023
Change in carrying value	273
Payment of contingent consideration	(9,296		)
Ending balance, September 30, 2016	$	—

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ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Acquisition of Woodway Financial Advisors

Westwood completed the acquisition of Woodway Financial Advisors, a Trust Company ("Woodway"), on April 1, 2015 (the "Merger"). The total Merger consideration consisted of (i) $30.6 million in cash and stock, as described below, and (ii) contingent consideration equal to the annualized revenue from the post-closing business of Woodway for the twelve-month period ending March 31, 2016 (the “Earn-Out Period”), adjusted for certain clients or accounts that have terminated, and capped at $15 million (the “Earn-Out Amount”). The final Earn-Out Amount of $9.3 million (discounted from $10.1 million due to certain required holding periods on the Westwood shares) was paid 54.84% in cash and 45.16% in shares of Westwood’s common stock, valued using the average closing price during the last 30 calendar days of the Earn-Out Period. In relation to the Merger, Westwood entered into employment agreements with certain Woodway employees, which, among other things, provided for specified compensation and benefits for the related employees.

The Merger consideration of $39.7 million consisted of (i) closing date consideration of $25.3 million paid in cash and issuance of 109,712 shares of Westwood common stock, valued at $5.3 million (discounted from $6.7 million due to certain required holding periods), and (ii) contingent consideration of $9.1 million, based on estimates and assumptions on the closing date of the acquisition, to be paid no later than 75 calendar days after the last day of the Earn-Out Period. The estimated fair value of the Earn-Out Amount was determined by using overall revenue growth projections combined with existing customer base lost revenue projections, both discounted and probability-weighted. The fair value measurement of the Earn-Out Amount was based primarily on significant inputs not observable in the market and thus represents a level 3 measurement as defined in ASC 820. See further discussion in Note 5 “Fair Value Measurements.”

The acquisition of Woodway was accounted for using the acquisition method of accounting. Accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date. As of September 30, 2016, consideration of $39.7 million has been allocated using Woodway’s historical balance sheet at March 31, 2015 based on valuations of acquired assets and assumed liabilities in connection with the acquisition.

The allocation of the purchase price is as follows (in thousands):

Cash and cash equivalents	$	1,205
Accounts receivable	936
Other current assets	253
Goodwill(i)	15,889
Identifiable intangibles(ii)	21,334
Property and equipment	197
Accounts payable and accrued liabilities	(61		)
Income tax payable	(20		)
Purchase price	$	39,733

_________________

(i) The excess of the purchase price over the fair value amounts assigned to assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition.

(ii) The fair value of the acquired identifiable intangibles consists of (in thousands, except useful lives):

Intangible Asset	Fair Value		Estimated Useful Lives
Client relationships	$	20,391	15 years
Non-compete agreements	257		3 years
Trade name	686		5 years

At the time of the acquisition, the Company believed that its enhanced market position and future growth potential were the primary factors that contributed to a total purchase price that resulted in the recognition of goodwill. As of September 30, 2016, $15.9 million of the goodwill arising from the acquisition is expected to be deductible for tax purposes.

We incurred transaction costs of $1.1 million related to the Woodway acquisition. Approximately $732,000 of those costs are included in “Professional services” on our condensed consolidated statements of comprehensive income for the nine months ended September 30, 2015.

Our consolidated results for the three months ended September 30, 2016 included "Total revenues" and "Net income" attributable to Woodway of $2.5 million and $700,000, respectively. Our consolidated results for the nine months ended September 30, 2016 included "Total revenues" and "Net income" attributable to Woodway of $7.1 million and $1.7 million, respectively.

Pro Forma Financial Information

The following unaudited pro forma results of operations for the three and nine months ended September 30, 2016 and 2015 assume that the Woodway acquisition had occurred on January 1, 2015, after giving effect to acquisition accounting adjustments relating to amortization of the valued intangible assets and to record additional compensation costs related to employment contracts entered into as a result of the acquisition. These unaudited pro forma results exclude one-time, non-recurring costs related to the acquisition, including transaction costs. This unaudited pro forma information should not be relied upon as being necessarily indicative of the historical results that would have been obtained if the Merger had actually occurred on those dates, nor of the results that may be obtained in the future.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in thousands)
Total revenues	$	31,777	$	32,451	$	91,929	$	102,063
Net income	$	5,887	$	7,013	$	15,070	$	23,328

Goodwill

Goodwill represents the excess of the cost of acquired assets over the fair value of the underlying identifiable assets at the date of acquisition. Goodwill is not amortized but is tested for impairment at least annually. We completed our annual goodwill impairment assessment during the third quarter of 2016 and determined that no impairment loss was required. No impairments were recorded during the three or nine months ended September 30, 2016 or 2015.

Other Intangible Assets

Our intangible assets represent the acquisition date fair value of acquired client relationships, trade names and non-compete agreements and internally developed software and are reflected net of amortization. In valuing these assets, we made significant estimates regarding their useful lives, growth rates and potential attrition. We periodically review intangible assets for events or circumstances that would indicate impairment. There have been no impairments on intangible assets recorded during the three or nine months ended September 30, 2016 or 2015.

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BALANCE SHEET COMPONENTS

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BALANCE SHEET COMPONENTS

BALANCE SHEET COMPONENTS

Property and Equipment

The following table reflects information about our property and equipment as of September 30, 2016 and December 31, 2015 (in thousands):

	As of September 30, 2016			As of December 31, 2015
Leasehold improvements	$	3,647		$	1,728
Furniture and fixtures	2,216			1,804
Computer hardware and office equipment	2,283			2,116
Construction in progress	233			231
Accumulated depreciation	(4,365		)	(3,687		)
Net property and equipment	$	4,014		$	2,192

Stockholders' Equity

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss were as follows (in thousands):

	As of September 30, 2016			As of December 31, 2015
Foreign currency translation adjustment	$	(3,681	)	$	(4,688	)
Accumulated other comprehensive loss	$	(3,681	)	$	(4,688	)

Share Repurchase Program

On July 20, 2012, our Board of Directors authorized the repurchase of up to $10 million of our outstanding common stock on the open market or in privately negotiated transactions. The share repurchase program has no expiration date and may be discontinued at any time by the Board of Directors. In July 2016, Westwood's Board of Directors authorized an additional $5.0 million of repurchases under the share repurchase program. As of September 30, 2016, approximately $9.4 million remained available under the share repurchase program.

Between July 1, 2016 and September 30, 2016, under our share repurchase program the Company repurchased 24,199 shares of our common stock at an average price of $49.92, including commissions, at an aggregate purchase price of $1.2 million. Between January 1, 2016 and September 30, 2016, under our share repurchase program the Company repurchased 117,452 shares of our common stock at an average price of $47.93, including commissions, at an aggregate purchase price of $5.6 million.

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VARIABLE INTEREST ENTITIES

9 Months Ended

Sep. 30, 2016

Variable Interest Entities [Abstract]

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

Westwood Trust sponsors common trust funds (“CTFs”) for its clients. These funds allow clients to commingle assets to achieve economies of scale. Westwood International and Westwood Management provide investment advisory services to Westwood Investment Funds PLC (the “UCITS Fund”), which was authorized on June 18, 2013 by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (“UCITS”), and which is an umbrella-type, open-ended self-managed investment company domiciled in Ireland. Westwood Management provides investment advisory services to the Westwood Funds®, a family of mutual funds, and one collective investment trust (“CITs”). Some clients of Westwood Management hold their investments in one or more of ten limited liability companies (“LLCs”). The CTFs, UCITS, Westwood Funds®, CITs and LLCs (“Westwood VIEs”) are considered variable interest entities (“VIEs”) because our clients, who hold the equity at risk, do not have a direct or indirect ability through voting or similar rights to make decisions about the funds that would have a significant effect on their success. We receive fees at market rates for managing assets in these entities.

We evaluate all of our advisory relationships and CTFs to determine whether or not we qualify as the primary beneficiary based on whether there is an obligation to absorb the majority of expected losses or a right to receive the majority of expected residual returns. Since all losses and returns are distributed to the shareholders of the Company’s VIEs, we are not the primary beneficiary and consequently the Westwood VIEs are not included in our condensed consolidated financial statements.

In May 2015, the Company provided seed investments of $5.4 million for two new Westwood mutual funds. In both December 2015 and January 2014, the Company provided seed investments of $2.0 million to two common trust funds. In October 2014, the Company provided a seed investment of €1.6 million, or $2.0 million at the prevailing exchange rate, to the UCITS Fund. These seed investments were provided for the sole purpose of showing the economic substance needed to establish the funds or sub-funds. The corporate capital invested in these funds is included in “Investments, at fair value” on our condensed consolidated balance sheet at September 30, 2016.

We have not otherwise provided any financial support we were not previously contractually obligated to provide and there are no arrangements that would require us to provide additional financial support to any of these VIEs. Our investments in the Westwood Funds®, the CTFs and the UCITS Fund are accounted for as investments in accordance with our other investments described in Note 4 “Investments.” We recognized fee revenue from the Westwood VIEs of $13.5 million and $14.0 million for the three months ended September 30, 2016 and 2015, respectively. We recognized fee revenue from the Westwood VIEs of $39.5 million and $43.3 million for the nine months ended September 30, 2016 and 2015, respectively.

The following table displays assets under management, corporate capital invested and risk of loss in each vehicle (in millions):

	As of September 30, 2016
	Assets Under Management		Corporate Investment		Amount at Risk
VIEs:
Westwood Funds®	$	3,753	$	6	$	6
Common Trust Funds	2,546		3		3
Collective Investment Trusts	48		—		—
LLCs	125		—		—
UCITS Fund	612		2		2
VIE totals	7,084		11		11
All other assets:
Private Wealth	2,656
Institutional	11,532
Total Assets Under Management	$	21,272

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LONG-TERM INCENTIVE COMPENSATION

9 Months Ended

Sep. 30, 2016

Employee Benefits and Share-based Compensation [Abstract]

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

Restricted Stock Awards

We have issued restricted shares to our employees and non-employee directors. The Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan, as amended  (the “Plan”), reserves shares of Westwood common stock for issuance to eligible employees, directors and consultants of Westwood or its subsidiaries in the form of restricted stock. The total number of shares issuable under the Plan (including predecessor plans to the Plan) may not exceed 4,398,100 shares. At September 30, 2016, approximately 346,000 shares remain available for issuance under the Plan.

The following table presents the total stock based compensation expense recorded for stock based compensation arrangements for the periods indicated (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Service condition stock based compensation expense	$	2,679	$	2,550	$	7,978	$	6,953
Performance condition stock based compensation expense	1,234		2,118		3,705		5,072
Stock based compensation expense under the Plan	3,913		4,668		11,683		12,025
Canadian EB Plan stock based compensation expense	169		197		481		535
Total stock based compensation expense	$	4,082	$	4,865	$	12,164	$	12,560

Restricted Stock

Under the Plan, we have granted to employees and non-employee directors restricted stock subject to service conditions, and to certain key employees restricted stock subject to both service and performance conditions.

As of September 30, 2016, there was approximately $27.3 million of unrecognized compensation cost for restricted stock grants under the Plan, which we expect to recognize over a weighted-average period of 2.4 years. Our two types of restricted stock grants under the Plan are discussed below.

Restricted Stock Subject Only to a Service Condition

We calculate compensation cost for restricted stock grants by using the fair market value of our common stock at the date of grant, the number of shares issued, an adjustment for restrictions on dividends and an estimate of shares that will not vest due to forfeitures. This compensation cost is amortized on a straight-line basis over the applicable vesting period.

The following table details the status and changes in our restricted stock grants subject only to a service condition for the nine months ended September 30, 2016:

Restricted shares subject only to a service condition:	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2016	580,469		$	56.76
Granted	259,293		47.97
Vested	(174,310	)	51.42
Forfeited	(17,896	)	56.60
Non-vested, September 30, 2016	647,556		$	54.68

Restricted Stock Subject to Service and Performance Conditions

Under the Plan, certain key employees are provided agreements for grants of restricted shares that vest over multiple years provided that the annual performance goals established by the Compensation Committee of Westwood’s Board of Directors are met. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares, which historically has been based upon Westwood’s adjusted pre-tax income, as defined below. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. In most cases, the vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the final calculation of adjusted pre-tax income as derived from the Company’s audited consolidated financial statements. Certain performance grants include a scaled vesting based on actual adjusted pre-tax income. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In March 2016, the Compensation Committee established the 2016 goal for adjusted pre-tax income, which is equal to income before income taxes increased by expenses incurred for the year for (i) incentive compensation for all officers and employees, (ii) performance-based restricted stock awards, and (iii) mutual fund share incentive awards, and excludes start up, non-recurring and similar expense items, at the Compensation Committee’s discretion. Beginning in the first quarter of 2016, we concluded that it was probable that we would meet the performance goals required to vest the applicable performance based restricted shares this year and began recording expense related to those shares.

Restricted shares subject to service and performance conditions:	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2016	101,313		$	61.29
Granted	151,334		55.90
Vested	(101,313	)	61.29
Forfeited	—		—
Non-vested, September 30, 2016	151,334		$	55.90

The above amounts as of September 30, 2016 do not include 51,258 non-vested restricted shares that potentially vest over performance years subsequent to 2016 inasmuch as the Compensation Committee has not set annual performance goals for later years and therefore no grant date has been established.

Canadian Plan

The Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries (the “Canadian Plan”) provides compensation in the form of common stock for services performed by employees of Westwood International. Under the Canadian Plan, no more than $10 million CDN ($7.6 million in U.S. Dollars using the exchange rate on September 30, 2016) may be funded to the plan trustee for purchases of common stock with respect to awards granted under the Canadian Plan. At September 30, 2016, approximately $6.0 million CDN ($4.5 million in U.S. Dollars using the exchange rate on September 30, 2016) remains available for issuance under the Canadian Plan, or approximately 85,494 shares based on the closing share price of our stock of $53.11 as of September 30, 2016. During the first nine months of 2016, the trust formed pursuant to the Canadian Plan purchased in the open market 10,474 Westwood common shares for approximately $614,000. As of September 30, 2016, the trust holds 43,648 shares of Westwood common stock. As of September 30, 2016, unrecognized compensation cost related to restricted stock grants under the Canadian Plan totaled $813,000, which we expect to recognize over a weighted-average period of 1.6 years.

Mutual Fund Share Incentive Awards

We grant annually to certain employees mutual fund incentive awards, which are bonus awards based on our mutual funds achieving specific performance goals. Awards granted are notionally credited to a participant account maintained by us that contains a number of mutual fund shares equal to the award amount divided by the net closing value of a fund share on the date the amount is credited to the account.

These awards vest after approximately one year of service following the year in which the participant earns the award. We begin accruing a liability for mutual fund incentive awards when we believe it is probable that the award will be earned and record expense for these awards over the service period of the award, which is approximately two years. During the year in which the amount of the award is determined, we record expense based on the expected value of the award. After the award is earned, we record expense based on the value of the shares awarded and the percentage of the vesting period that has elapsed. Our liability under these awards may increase or decrease based on changes in the value of the mutual fund shares awarded, including reinvested income from the mutual funds during the vesting period. Upon vesting, participants receive the value of the mutual fund share awards adjusted for earnings or losses attributable to the underlying mutual funds. For the three months ended September 30, 2016 and 2015, we recorded expense of $313,000 and $149,000, respectively, related to mutual fund share incentive awards. For the nine months ended September 30, 2016 and 2015, we recorded expense of $933,000 and $879,000, respectively, related to mutual fund share incentive awards. As of September 30, 2016 and December 31, 2015, we had an accrued liability of $1.4 million and $2.0 million, respectively, related to mutual fund share incentive awards.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Some of our directors, executive officers and their affiliates invest their personal funds directly in trust accounts that we manage. For the three months ended September 30, 2016 and 2015, we recorded trust fees from these accounts of $108,000 and $112,000, respectively. For the nine months ended September 30, 2016 and 2015, we recorded trust fees from these accounts of $305,000 and $334,000, respectively. There was $106,000 due from these accounts as of September 30, 2016 and no amounts due from these accounts as of December 31, 2015.

The Company engages in transactions with its affiliates in the ordinary course of business. Westwood International and Westwood Management provide investment advisory services to the UCITS Fund, which began operations in August 2013. Certain members of our management and Board of Directors serve on the Board of Directors of the UCITS Fund. Under the terms of the investment advisory agreements, the Company earns quarterly fees paid by clients of the UCITS Fund and, in certain cases, by the UCITS Fund itself. The fees are based on negotiated fee schedules applied to assets under management. These fees are commensurate with market rates and are negotiated and contracted for at arm’s length. For the three months ended September 30, 2016 and 2015, the Company earned approximately $370,000 and $298,000, respectively, in fees from the UCITS Fund. For the nine months ended September 30, 2016 and 2015, the Company earned approximately $1,021,000 and $994,000, respectively, in fees from the UCITS Fund. These fees do not include fees paid directly to Westwood International by certain clients invested in the UCITS Fund that have an investment management agreement with Westwood International. As of September 30, 2016 and December 31, 2015, $143,000 and $96,000, respectively, of these fees were unpaid and included in “Accounts receivable” on our condensed consolidated balance sheets.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

On August 3, 2012, AGF Management Limited and AGF Investments Inc. (collectively, “AGF”) filed a lawsuit in the Ontario Superior Court of Justice against Westwood, certain Westwood employees and the executive recruiting firm of Warren International, LLC. (“Warren”). The action relates to the hiring of certain members of Westwood’s global and emerging markets investment team previously employed by AGF. AGF is alleging that the former employees breached certain obligations when they resigned from AGF and that Westwood and Warren induced such breaches. AGF is seeking an unspecified amount of damages and punitive damages of $10 million CDN in the lawsuit. On November 5, 2012, Westwood responded to AGF’s lawsuit with a counterclaim against AGF for defamation. Westwood is seeking $1 million CDN in general damages, $10 million CDN in special damages, $1 million CDN in punitive damages, and costs. On November 6, 2012, AGF filed a second lawsuit against Westwood, Westwood Management and an employee of a Westwood subsidiary, alleging that the employee made defamatory statements about AGF. In this second lawsuit, AGF is seeking $5 million CDN in general damages, $1 million CDN per defendant in punitive damages, unspecified special damages, interest and costs. The pleadings phase was completed in 2013, and we are currently in the discovery phase.

While we intend to vigorously defend both actions and pursue our counterclaims, we are currently unable to estimate the ultimate aggregate amount of monetary gain, loss or financial impact of these actions and counterclaims. Defending these actions and pursuing these counterclaims may be expensive for us, as well as time consuming for our personnel. While we do not currently believe these proceedings will have a material impact, adverse resolution of these actions and counterclaims could have a material adverse effect on our business, financial condition or results of operations and cash flows.

Our policy is to not accrue legal fees and directly related costs as part of potential loss contingencies. We have agreed with our Directors & Officers insurance provider that 50% of the defense costs related to both AGF claims, excluding Westwood’s counterclaim against AGF, are covered by insurance. We expense legal fees and directly related costs as incurred. We have received insurance proceeds of approximately $928,000 as of September 30, 2016 and recorded a receivable of $249,000 and $240,000 as of September 30, 2016 and December 31, 2015, respectively, which represents our current minimum estimate of expenses that we expect to recover under our insurance policy. This receivable is part of “Other current assets” on our condensed consolidated balance sheets.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

We operate two segments: Advisory and Trust. These segments are managed separately based on the types of products and services offered and their related client bases. The Company’s segment information is prepared on the same basis that management reviews the financial information for operational decision-making purposes. The Company’s chief operating decision maker, our Chief Executive Officer, evaluates the performance of our segments based primarily on fee revenues and Economic Earnings. Westwood Holdings Group, Inc., the parent company of Advisory and Trust, does not have revenues and is the entity in which we record typical holding company expenses including employee compensation and benefits for holding company employees, directors’ fees and investor relations costs. All segment accounting policies are the same as those described in the summary of significant accounting policies. Intersegment balances that eliminate in consolidation have been applied to the appropriate segment.

Advisory

Our Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, the Westwood Funds®, and the UCITS Fund, as well as investment subadvisory services to mutual funds and our Trust segment. Westwood Management and Westwood International, which provide investment advisory services to clients of similar type, are included in our Advisory segment along with Westwood Advisors, LLC.

Trust

Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Trust is included in our Trust segment.

	Advisory			Trust		Westwood Holdings			Eliminations			Consolidated
	(in thousands)
Three Months Ended September 30, 2016
Net fee revenues from external sources	$	23,673		$	7,690	$	—		$	—		$	31,363
Net intersegment revenues	5,275			41		—			(5,316		)	—
Net interest and dividend revenue	128			5		—			—			133
Other, net	279			2		—			—			281
Total revenues	$	29,355		$	7,738	$	—		$	(5,316	)	$	31,777
Economic Earnings	$	10,270		$	1,690	$	(1,345	)	$	—		$	10,615
Less:   Restricted stock expense												4,082
Intangible amortization												490
Deferred taxes on goodwill												156
Net income												$	5,887
Segment assets	$	163,826		$	65,986	$	13,046		$	(73,160	)	$	169,698
Segment goodwill	$	5,219		$	21,925	$	—		$	—		$	27,144
Three Months Ended September 30, 2015
Net fee revenues from external sources	$	24,941		$	7,972	$	—		$	—		$	32,913
Net intersegment revenues	5,087			—		—			(5,087		)	—
Net interest and dividend revenue	110			—		—			—			110
Other, net	(577		)	5		—			—			(572		)
Total revenues	$	29,561		$	7,977	$	—		$	(5,087	)	$	32,451
Economic Earnings	$	11,961		$	1,592	$	(1,119	)	$	—		$	12,434
Less:   Restricted stock expense												4,865
Intangible amortization												400
Deferred taxes on goodwill												156
Net income												$	7,013
Segment assets	$	172,034		$	57,967	$	7,753		$	(71,537	)	$	166,217
Segment goodwill	$	5,219		$	19,872	$	—		$	—		$	25,091

	Advisory			Trust			Westwood Holdings			Eliminations			Consolidated
	(in thousands)
Nine Months Ended September 30, 2016
Net fee revenues from external sources	$	68,563		$	22,798		$	—		$	—		$	91,361
Net intersegment revenues	14,455			82			—			(14,537		)	—
Net interest and dividend revenue	360			9			—			—			369
Other, net	462			(263		)	—			—			199
Total revenues	$	83,840		$	22,626		$	—		$	(14,537	)	$	91,929
Economic Earnings	$	30,493		$	4,160		$	(5,559	)	$	—		$	29,094
Less:   Restricted stock expense													12,164
Intangible amortization													1,470
Deferred taxes on goodwill													390
Net income													$	15,070
Nine Months Ended September 30, 2015
Net fee revenues from external sources	$	78,534		$	21,043		$	—		$	—		$	99,577
Net intersegment revenues	14,826			—			—			(14,826		)	—
Net interest and dividend revenue	218			1			—			—			219
Other, net	(431		)	5			—			—			(426		)
Total revenues	$	93,147		$	21,049		$	—		$	(14,826	)	$	99,370
Economic Earnings	$	37,827		$	3,405		$	(5,031	)	$	—		$	36,201
Less:   Restricted stock expense													12,560
Intangible amortization													951
Deferred taxes on goodwill													272
Net income													$	22,418

We are providing a performance measure that we refer to as Economic Earnings. Both our management and Board of Directors review Economic Earnings to evaluate our ongoing performance, allocate resources and determine our dividend policy. We also believe that this performance measure is useful for management and investors when evaluating our underlying operating and financial performance and our available resources.

In calculating Economic Earnings, we add to net income the non-cash expense associated with equity-based compensation awards of restricted stock, amortization of intangible assets and the deferred taxes related to the tax-basis amortization of goodwill. Although depreciation on property and equipment is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent a decline in the value of the related assets that will ultimately require replacement.

The following tables provide a reconciliation of net income to Economic Earnings (in thousands, except per share and share amounts):

	Three Months Ended September 30,
	2016		2015
Net Income	$	5,887	$	7,013
Add: Stock based compensation expense	4,082		4,865
Add: Intangible amortization	490		400
Add: Tax benefit from goodwill amortization	156		156
Economic Earnings	$	10,615	$	12,434

	Nine Months Ended September 30,
	2016		2015
Net Income	$	15,070	$	22,418
Add: Stock based compensation expense	12,164		12,560
Add: Intangible amortization	1,470		951
Add: Tax benefit from goodwill amortization	390		272
Economic Earnings	$	29,094	$	36,201

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2016

Subsequent Event [Line Items]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Dividend Declared

In October 2016, Westwood’s Board of Directors declared a quarterly cash dividend of $0.62 per common share, an increase of 9% from the previous quarterly dividend rate, payable on January 3, 2017 to stockholders of record on December 9, 2016.

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INCOME TAXES (Notes)

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

10. INCOME TAXES

Our effective income tax rate was 35.0% for the third quarter of 2016, compared with 33.2% for the third quarter of 2015. The increase is primarily related to an adjustment related to the filing of our 2015 tax return. Our effective income tax rate was 35.1% for the first nine months of 2016, compared with 33.3% for the first nine months of 2015. The increase is primarily related to a $341,000 tax charge for uncertain tax positions related to current and prior years (net of federal benefit) recorded in the first nine months of 2016, as well as the adjustment related to the filing of our 2015 tax return in the third quarter of 2016.

As of September 30, 2016 and December 31, 2015, the Company's gross liability related to uncertain tax positions was $2.2 million and $1.6 million, respectively. A number of years may elapse before an uncertain tax position is finally resolved. To the extent that the Company has favorable tax settlements, or determines that accrued amounts are no longer needed due to a lapse in the applicable statute of limitations or other changes in circumstances, such liabilities, as well as any related interest and penalties, would be reversed as a reduction of income tax expense, net of federal tax effects, in the period such determination is made. A reconciliation of the change in recorded uncertain tax positions during the nine months ended September 30, 2016 is as follows (in thousands):

Balance at January 1, 2016	$	1,629
Additions for tax positions related to the current year	206
Additions for tax positions related to prior years	475
Reductions for tax positions related to prior years	(156		)
Balance at September 30, 2016	$	2,154

Within the next twelve months, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $2.2 million as a result of settlements with certain taxing authorities, which, if recognized, would decrease our provision for income taxes by $1.4 million.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and are presented in accordance with the requirements for quarterly reports on Form 10-Q and consequently do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).  The Company’s condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary in the opinion of management to present fairly our interim financial position and results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements are presented in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”).

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2015. Operating results for the periods in these condensed consolidated financial statements are not necessarily indicative of the results for any future period. The accompanying condensed consolidated financial statements include the accounts of Westwood and its subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more useful information for making decisions. The amendment addresses various aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact that the application of ASU 2016-01 will have on our consolidated financial statements and disclosures and expect to adopt the new standard in the required time frame.

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases at the commencement date, excluding short-term leases. The amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. We are currently evaluating the impact that the application of ASU 2016-02 will have on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations in ASU 2014-09. The amendment is effective for fiscal years beginning after December 14, 2017, including interim reporting periods within that reporting year. We do not expect the adoption of ASU 2016-08 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The purpose of the amendment is to simplify the accounting for share-based payment transactions, and includes changes to the accounting for the classification of awards as either equity or liabilities, classification of certain share-based payment items on the statement of cash flows, the accounting for forfeitures and certain income tax consequences. The amendment is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. Amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of tax benefits on the statement of cash flows using either a prospective or retrospective transition method. We are currently evaluating the impact that the application of ASU 2016-09 will have on our consolidated financial statements and disclosures and expect to adopt the new standard within the required time frame.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance related to identifying performance obligations and the licensing guidance in ASU 2014-09. The amendment is effective for fiscal years beginning after December 14, 2017, including interim reporting periods within that reporting year. We do not expect the adoption of ASU 2016-10 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendment addresses eight classification issues related to the statement of cash flows, including debt prepayment or debt extinguishment costs, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from settlements of insurance claims, proceeds from settlements of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and classification of separately identifiable cash flows. Adoption should be applied using the retrospective transition method. Early adoption is permitted. The amendment is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. We do not expect the adoption of ASU 2016-08 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame.

Earnings Per Share

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of shares outstanding plus the effect of any dilutive shares of restricted stock granted to employees and non-employee directors.

Fair Value Measurements

We determine estimated fair values for our financial instruments using available information. The fair value amounts discussed in our condensed consolidated financial statements are not necessarily indicative of either amounts realizable upon disposition of these instruments or our intent or ability to dispose of these assets. The estimated fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities, dividends payable, compensation and benefits payable and income taxes payable approximates their carrying value due to their short-term maturities. The carrying amount of investments designated as “trading” securities, primarily U.S. Government and Government agency obligations, money market funds, Westwood Funds® mutual funds, the UCITS Fund and Westwood Trust common trust fund shares, equals their fair value based on prices quoted in active markets and, with respect to common trust funds, the net asset value of the shares held as reported by each fund. Market values of our money market holdings generally do not fluctuate. The fair value of contingent consideration related to the Woodway acquisition was categorized as a level 3 liability, as the measurement of the Earn-Out Amount was based primarily on significant inputs not observable in the market. For more information about the Woodway acquisition, see Note 6 "Acquisitions, Goodwill and Other Intangibles".

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value and requires additional disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows:

• level 1 – quoted market prices in active markets for identical assets

• level 2 – inputs other than quoted prices that are directly or indirectly observable

• level 3 – significant unobservable inputs where there is little or no market activity

Variable Interest Entities

Westwood Trust sponsors common trust funds (“CTFs”) for its clients. These funds allow clients to commingle assets to achieve economies of scale. Westwood International and Westwood Management provide investment advisory services to Westwood Investment Funds PLC (the “UCITS Fund”), which was authorized on June 18, 2013 by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (“UCITS”), and which is an umbrella-type, open-ended self-managed investment company domiciled in Ireland. Westwood Management provides investment advisory services to the Westwood Funds®, a family of mutual funds, and one collective investment trust (“CITs”). Some clients of Westwood Management hold their investments in one or more of ten limited liability companies (“LLCs”). The CTFs, UCITS, Westwood Funds®, CITs and LLCs (“Westwood VIEs”) are considered variable interest entities (“VIEs”) because our clients, who hold the equity at risk, do not have a direct or indirect ability through voting or similar rights to make decisions about the funds that would have a significant effect on their success. We receive fees at market rates for managing assets in these entities.

We evaluate all of our advisory relationships and CTFs to determine whether or not we qualify as the primary beneficiary based on whether there is an obligation to absorb the majority of expected losses or a right to receive the majority of expected residual returns. Since all losses and returns are distributed to the shareholders of the Company’s VIEs, we are not the primary beneficiary and consequently the Westwood VIEs are not included in our condensed consolidated financial statements.

Restricted Stock Subject Only to a Service Condition

Restricted Stock Subject Only to a Service Condition

We calculate compensation cost for restricted stock grants by using the fair market value of our common stock at the date of grant, the number of shares issued, an adjustment for restrictions on dividends and an estimate of shares that will not vest due to forfeitures. This compensation cost is amortized on a straight-line basis over the applicable vesting period.

Restricted Stock Subject to Service and Performance Conditions

Restricted Stock Subject to Service and Performance Conditions

Under the Plan, certain key employees are provided agreements for grants of restricted shares that vest over multiple years provided that the annual performance goals established by the Compensation Committee of Westwood’s Board of Directors are met. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares, which historically has been based upon Westwood’s adjusted pre-tax income, as defined below. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. In most cases, the vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the final calculation of adjusted pre-tax income as derived from the Company’s audited consolidated financial statements. Certain performance grants include a scaled vesting based on actual adjusted pre-tax income. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In March 2016, the Compensation Committee established the 2016 goal for adjusted pre-tax income, which is equal to income before income taxes increased by expenses incurred for the year for (i) incentive compensation for all officers and employees, (ii) performance-based restricted stock awards, and (iii) mutual fund share incentive awards, and excludes start up, non-recurring and similar expense items, at the Compensation Committee’s discretion. Beginning in the first quarter of 2016, we concluded that it was probable that we would meet the performance goals required to vest the applicable performance based restricted shares this year and began recording expense related to those shares.

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share and share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Net income	$	5,887	$	7,013	$	15,070	$	22,418
Weighted average shares outstanding - basic	7,995,680		7,808,239		7,952,938		7,737,608
Dilutive potential shares from unvested restricted shares	184,276		185,139		259,530		316,253
Dilutive potential shares from contingent consideration	—		43,702		—		22,194
Weighted average shares outstanding - diluted	8,179,956		8,037,080		8,212,468		8,076,055
Earnings per share:
Basic	$	0.74	$	0.90	$	1.89	$	2.90
Diluted	$	0.72	$	0.87	$	1.84	$	2.78

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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment Balances

Investment balances are presented in the table below (in thousands). All investments are carried at fair value and are accounted for as trading securities.

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
September 30, 2016:
U.S. Government and Government agency obligations	$	25,209	$	38	$	—		$	25,247
Money market funds	12,421		—		—			12,421
Equity funds	12,027		233		(79		)	12,181
Marketable securities	$	49,657	$	271	$	(79	)	$	49,849
December 31, 2015:
U.S. Government and Government agency obligations	$	50,972	$	15	$	(15	)	$	50,972
Money market funds	9,179		—		—			9,179
Equity funds	12,653		—		(484		)	12,169
Marketable securities	$	72,804	$	15	$	(499	)	$	72,320

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Values of Assets Within Fair Value Hierarchy

The following table summarizes the values of our assets and liabilities as of the dates indicated within the fair value hierarchy (in thousands).

	Level 1		Level 2		Level 3			Total
As of September 30, 2016:
Investments in trading securities	$	46,697	$	3,152	$	—		$	49,849
Total financial instruments	$	46,697	$	3,152	$	—		$	49,849
As of December 31, 2015:
Investments in trading securities	$	69,260	$	3,060	$	—		$	72,320
Contingent consideration	—		—		(9,023		)	(9,023		)
Total financial instruments	$	69,260	$	3,060	$	(9,023	)	$	63,297

Reconciliation of Beginning and Ending Balances of Items Measured at Fair Value

The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (in thousands):

	Contingent Consideration
Beginning balance, December 31, 2015	$	9,023
Change in carrying value	273
Payment of contingent consideration	(9,296		)
Ending balance, September 30, 2016	$	—

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ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2016

Finite-Lived Intangible Assets [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The allocation of the purchase price is as follows (in thousands):

Cash and cash equivalents	$	1,205
Accounts receivable	936
Other current assets	253
Goodwill(i)	15,889
Identifiable intangibles(ii)	21,334
Property and equipment	197
Accounts payable and accrued liabilities	(61		)
Income tax payable	(20		)
Purchase price	$	39,733

_________________

(i) The excess of the purchase price over the fair value amounts assigned to assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition.

(ii) The fair value of the acquired identifiable intangibles consists of (in thousands, except useful lives):

Intangible Asset	Fair Value		Estimated Useful Lives
Client relationships	$	20,391	15 years
Non-compete agreements	257		3 years
Trade name	686		5 years

Business Acquisition, Pro Forma Information

This unaudited pro forma information should not be relied upon as being necessarily indicative of the historical results that would have been obtained if the Merger had actually occurred on those dates, nor of the results that may be obtained in the future.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in thousands)
Total revenues	$	31,777	$	32,451	$	91,929	$	102,063
Net income	$	5,887	$	7,013	$	15,070	$	23,328

Woodway Financial Advisors

Finite-Lived Intangible Assets [Line Items]

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination

The fair value of the acquired identifiable intangibles consists of (in thousands, except useful lives):

Intangible Asset	Fair Value		Estimated Useful Lives
Client relationships	$	20,391	15 years
Non-compete agreements	257		3 years
Trade name	686		5 years

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BALANCE SHEET COMPONENTS (Tables)

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Property and Equipment

The following table reflects information about our property and equipment as of September 30, 2016 and December 31, 2015 (in thousands):

	As of September 30, 2016			As of December 31, 2015
Leasehold improvements	$	3,647		$	1,728
Furniture and fixtures	2,216			1,804
Computer hardware and office equipment	2,283			2,116
Construction in progress	233			231
Accumulated depreciation	(4,365		)	(3,687		)
Net property and equipment	$	4,014		$	2,192

Components of Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss were as follows (in thousands):

	As of September 30, 2016			As of December 31, 2015
Foreign currency translation adjustment	$	(3,681	)	$	(4,688	)
Accumulated other comprehensive loss	$	(3,681	)	$	(4,688	)

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VARIABLE INTEREST ENTITIES (Tables)

9 Months Ended

Sep. 30, 2016

Variable Interest Entities [Abstract]

Variable Interest Entities

The following table displays assets under management, corporate capital invested and risk of loss in each vehicle (in millions):

	As of September 30, 2016
	Assets Under Management		Corporate Investment		Amount at Risk
VIEs:
Westwood Funds®	$	3,753	$	6	$	6
Common Trust Funds	2,546		3		3
Collective Investment Trusts	48		—		—
LLCs	125		—		—
UCITS Fund	612		2		2
VIE totals	7,084		11		11
All other assets:
Private Wealth	2,656
Institutional	11,532
Total Assets Under Management	$	21,272

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LONG-TERM INCENTIVE COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2016

Share Based Compensation Arrangement By Share Based Payment Award [Line Items]

Total Expense Recorded for Stock Based Compensation

The following table presents the total stock based compensation expense recorded for stock based compensation arrangements for the periods indicated (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Service condition stock based compensation expense	$	2,679	$	2,550	$	7,978	$	6,953
Performance condition stock based compensation expense	1,234		2,118		3,705		5,072
Stock based compensation expense under the Plan	3,913		4,668		11,683		12,025
Canadian EB Plan stock based compensation expense	169		197		481		535
Total stock based compensation expense	$	4,082	$	4,865	$	12,164	$	12,560

Restricted Stock Subject Only to a Service Condition

Share Based Compensation Arrangement By Share Based Payment Award [Line Items]

Status and Changes in Restricted Stock Grants that Subject to Service Condition

The following table details the status and changes in our restricted stock grants subject only to a service condition for the nine months ended September 30, 2016:

Restricted shares subject only to a service condition:	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2016	580,469		$	56.76
Granted	259,293		47.97
Vested	(174,310	)	51.42
Forfeited	(17,896	)	56.60
Non-vested, September 30, 2016	647,556		$	54.68

Restricted Shares Subject to Service and Performance Conditions

Share Based Compensation Arrangement By Share Based Payment Award [Line Items]

Status and Changes in Restricted Stock Grants that Subject to Service Condition

Under the Plan, certain key employees are provided agreements for grants of restricted shares that vest over multiple years provided that the annual performance goals established by the Compensation Committee of Westwood’s Board of Directors are met. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares, which historically has been based upon Westwood’s adjusted pre-tax income, as defined below. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. In most cases, the vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the final calculation of adjusted pre-tax income as derived from the Company’s audited consolidated financial statements. Certain performance grants include a scaled vesting based on actual adjusted pre-tax income. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In March 2016, the Compensation Committee established the 2016 goal for adjusted pre-tax income, which is equal to income before income taxes increased by expenses incurred for the year for (i) incentive compensation for all officers and employees, (ii) performance-based restricted stock awards, and (iii) mutual fund share incentive awards, and excludes start up, non-recurring and similar expense items, at the Compensation Committee’s discretion. Beginning in the first quarter of 2016, we concluded that it was probable that we would meet the performance goals required to vest the applicable performance based restricted shares this year and began recording expense related to those shares.

Restricted shares subject to service and performance conditions:	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2016	101,313		$	61.29
Granted	151,334		55.90
Vested	(101,313	)	61.29
Forfeited	—		—
Non-vested, September 30, 2016	151,334		$	55.90

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Intersegment Balances

	Advisory			Trust		Westwood Holdings			Eliminations			Consolidated
	(in thousands)
Three Months Ended September 30, 2016
Net fee revenues from external sources	$	23,673		$	7,690	$	—		$	—		$	31,363
Net intersegment revenues	5,275			41		—			(5,316		)	—
Net interest and dividend revenue	128			5		—			—			133
Other, net	279			2		—			—			281
Total revenues	$	29,355		$	7,738	$	—		$	(5,316	)	$	31,777
Economic Earnings	$	10,270		$	1,690	$	(1,345	)	$	—		$	10,615
Less:   Restricted stock expense												4,082
Intangible amortization												490
Deferred taxes on goodwill												156
Net income												$	5,887
Segment assets	$	163,826		$	65,986	$	13,046		$	(73,160	)	$	169,698
Segment goodwill	$	5,219		$	21,925	$	—		$	—		$	27,144
Three Months Ended September 30, 2015
Net fee revenues from external sources	$	24,941		$	7,972	$	—		$	—		$	32,913
Net intersegment revenues	5,087			—		—			(5,087		)	—
Net interest and dividend revenue	110			—		—			—			110
Other, net	(577		)	5		—			—			(572		)
Total revenues	$	29,561		$	7,977	$	—		$	(5,087	)	$	32,451
Economic Earnings	$	11,961		$	1,592	$	(1,119	)	$	—		$	12,434
Less:   Restricted stock expense												4,865
Intangible amortization												400
Deferred taxes on goodwill												156
Net income												$	7,013
Segment assets	$	172,034		$	57,967	$	7,753		$	(71,537	)	$	166,217
Segment goodwill	$	5,219		$	19,872	$	—		$	—		$	25,091

	Advisory			Trust			Westwood Holdings			Eliminations			Consolidated
	(in thousands)
Nine Months Ended September 30, 2016
Net fee revenues from external sources	$	68,563		$	22,798		$	—		$	—		$	91,361
Net intersegment revenues	14,455			82			—			(14,537		)	—
Net interest and dividend revenue	360			9			—			—			369
Other, net	462			(263		)	—			—			199
Total revenues	$	83,840		$	22,626		$	—		$	(14,537	)	$	91,929
Economic Earnings	$	30,493		$	4,160		$	(5,559	)	$	—		$	29,094
Less:   Restricted stock expense													12,164
Intangible amortization													1,470
Deferred taxes on goodwill													390
Net income													$	15,070
Nine Months Ended September 30, 2015
Net fee revenues from external sources	$	78,534		$	21,043		$	—		$	—		$	99,577
Net intersegment revenues	14,826			—			—			(14,826		)	—
Net interest and dividend revenue	218			1			—			—			219
Other, net	(431		)	5			—			—			(426		)
Total revenues	$	93,147		$	21,049		$	—		$	(14,826	)	$	99,370
Economic Earnings	$	37,827		$	3,405		$	(5,031	)	$	—		$	36,201
Less:   Restricted stock expense													12,560
Intangible amortization													951
Deferred taxes on goodwill													272
Net income													$	22,418

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DESCRIPTION OF THE BUSINESS (Details Textual) - USD ($)		9 Months Ended
	Apr. 01, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Date of incorporation		Dec. 12, 2001
Value after discount of common stock issued		$ 3,734,000	$ 5,292,000
Contingent consideration		$ 0		$ 9,023,000
Woodway Financial Advisors
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Cash and stock consideration transferred	$ 31,000,000
Maximum earn-out amount	15,000,000
Consideration transferred	39,700,000
Cash payment	$ 25,300,000
Common stock issued, shares	109,712
Value after discount of common stock issued	$ 5,300,000
Value of common stock issued	6,700,000
Contingent consideration	$ 9,100,000

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EARNINGS PER SHARE (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Restricted Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive restricted shares	2,453	306	2,301	4,750

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Computation of Basic and Diluted Shares
Net income	$ 5,887	$ 7,013	$ 15,070	$ 22,418
Weighted average shares outstanding - basic (shares)	7,995,680	7,808,239	7,952,938	7,737,608
Dilutive potential shares from unvested restricted shares (shares)	184,276	185,139	259,530	316,253
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares	0	43,702	0	22,194
Weighted average shares outstanding - diluted (shares)	8,179,956	8,037,080	8,212,468	8,076,055
Earnings per share:
Basic (dollars per share)	$ 0.74	$ 0.90	$ 1.89	$ 2.90
Diluted (dollars per share)	$ 0.72	$ 0.87	$ 1.84	$ 2.78

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INVESTMENTS (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Investment balances
Cost	$ 49,657	$ 72,804
Gross Unrealized Gains	271	15
Gross Unrealized Losses	(79)	(499)
Estimated Market Value	49,849	72,320
U.S. Government and Government agency obligations
Investment balances
Cost	25,209	50,972
Gross Unrealized Gains	38	15
Gross Unrealized Losses	0	(15)
Estimated Market Value	25,247	50,972
Money market funds
Investment balances
Cost	12,421	9,179
Estimated Market Value	12,421	9,179
Equity funds
Investment balances
Cost	12,027	12,653
Gross Unrealized Gains	233	0
Gross Unrealized Losses	(79)	(484)
Estimated Market Value	$ 12,181	$ 12,169

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INVESTMENTS (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Investments [Line Items]
Estimated Market Value	$ 49,849	$ 72,320
VIE
Schedule Of Investments [Line Items]
Estimated Market Value	$ 11,100	$ 10,700

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Investments in securities:
Investments in trading securities			$ 49,849	$ 72,320
Contingent consideration			0	(9,023)
Fair Value, Net Asset (Liability)			49,849	63,297
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases	$ 13	$ 286	273
Level 1
Investments in securities:
Investments in trading securities			46,697	69,260
Fair Value, Net Asset (Liability)			46,697	69,260
Level 2
Investments in securities:
Investments in trading securities			3,152	3,060
Fair Value, Net Asset (Liability)			3,152	3,060
Level 3
Investments in securities:
Investments in trading securities			0	0
Contingent consideration				(9,023)
Fair Value, Net Asset (Liability)			$ 0	$ (9,023)

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Apr. 01, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent consideration	$ 0	$ 9,023
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent consideration		$ 9,023
Woodway Financial Advisors
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent consideration			$ 9,100

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Details 3) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases	$ 13	$ 286	$ 273
SettlementofContingentConsiderationInCashAndStock			(9,296)
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability			0	$ 9,102
Contingent consideration			0		$ 9,023
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent consideration					$ 9,023
Contingent Consideration [Member] | Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Beginning balance, December 31, 2015	$ 9,300	9,023	9,023
Ending balance, June 30, 2016		$ 9,300	$ 9,296

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ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details Textual) - USD ($)		3 Months Ended			9 Months Ended
	Apr. 01, 2015	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2016	Dec. 31, 2015
Schedule Of Business Acquisitions Purchase Price Allocation [Line Items]
FinalContingentConsideration			$ 10,100,000
Value after discount of common stock issued					$ 3,734,000	$ 5,292,000
Contingent consideration		$ 0			0			$ 9,023,000
Professional services		1,903,000		$ 1,178,000	4,707,000	4,281,000
Goodwill impairment loss		0		$ 0	0	0
Woodway Financial Advisors
Schedule Of Business Acquisitions Purchase Price Allocation [Line Items]
Cash and stock consideration transferred	$ 31,000,000
Maximum earn-out amount	$ 15,000,000
Earn-out amount, percentage paid in cash	54.84%
Earn-out amount, percentage paid in shares	45.16%
Consideration transferred	$ 39,700,000
Cash payment	$ 25,300,000
Common stock issued, shares	109,712
Value after discount of common stock issued	$ 5,300,000
Value of common stock issued	6,700,000
Contingent consideration	$ 9,100,000
Number of days after the last day of the Earn-Out Period	75 days
Goodwill expected to be deductible for tax purposes		15,900,000			15,900,000
Business acquisition, transaction costs								1,100,000
Professional services						$ 732,000
Revenue of acquiree since acquisition date		2,500,000			7,100,000
Earnings of acquiree since acquisition date		700,000			1,700,000
Level 3
Schedule Of Business Acquisitions Purchase Price Allocation [Line Items]
Contingent consideration								9,023,000
Contingent Consideration [Member] | Level 3
Schedule Of Business Acquisitions Purchase Price Allocation [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value		$ 9,296,000			$ 9,296,000		$ 9,300,000	$ 9,023,000

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ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Apr. 01, 2015
Business Acquisition [Line Items]
Goodwill	$ 27,144	$ 27,144	$ 25,091
Woodway Financial Advisors
Business Acquisition [Line Items]
Cash and cash equivalents				$ 1,205
Accounts receivable				936
Other current assets				253
Goodwill				15,889
Identifiable intangibles				21,334
Property and equipment				197
Accounts payable and accrued liabilities				(61)
Income tax payable				(20)
Purchase price				$ 39,733

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ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) - Woodway Financial Advisors $ in Thousands	Apr. 01, 2015 USD ($)
Business Acquisition [Line Items]
Identifiable intangibles	$ 21,334
Customer Accounts [Member]
Business Acquisition [Line Items]
Identifiable intangibles	$ 20,391
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	15 years
Noncompete Agreements [Member]
Business Acquisition [Line Items]
Identifiable intangibles	$ 257
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	3 years
Trade Names [Member]
Business Acquisition [Line Items]
Identifiable intangibles	$ 686
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	5 years

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ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details 3) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Business Acquisition [Line Items]
Revenues	$ 31,777	$ 32,451	$ 91,929	$ 99,370
Net income	$ 5,887	7,013	$ 15,070	22,418
Woodway Financial Advisors
Business Acquisition [Line Items]
Business Acquisition, Pro Forma Net Income (Loss)		7,013		23,328
Business Acquisition, Pro Forma Revenue		$ 32,451		$ 102,063

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BALANCE SHEET COMPONENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Property and equipment
Accumulated depreciation	$ (4,365)	$ (3,687)
Net property and equipment	4,014	2,192
Leasehold improvements
Property and equipment
Property and equipment cost	3,647	1,728
Furniture and fixtures
Property and equipment
Property and equipment cost	2,216	1,804
Computer hardware and office equipment
Property and equipment
Property and equipment cost	2,283	2,116
Construction in progress
Property and equipment
Property and equipment cost	$ 233	$ 231

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BALANCE SHEET COMPONENTS (Details 1) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Components of accumulated other comprehensive loss
Foreign currency translation adjustment	$ (3,681)	$ (4,688)
Accumulated other comprehensive loss	$ (3,681)	$ (4,688)

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BALANCE SHEET COMPONENTS BALANCE SHEET COMPONENTS (Details 2) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Jul. 27, 2016
Equity [Abstract]
Stock Repurchase Program, Authorized Amount	$ 10,000	$ 10,000	$ 5,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 9,400	$ 9,400
Purchases of treasury stock, shares	24,199	117,452
Treasury Stock Acquired, Average Cost Per Share	$ 49.92	$ 47.93
Treasury Stock, Value, Acquired, Cost Method		$ 5,629

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VARIABLE INTEREST ENTITIES (Details Textual) € in Millions, $ in Millions	1 Months Ended				3 Months Ended		9 Months Ended
	May 31, 2015 USD ($) mutual_fund	Oct. 31, 2014 EUR (€)	Oct. 31, 2014 USD ($)	Jan. 31, 2014 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Number_of_Limited_Partnership Number_of_Limited_Liability_Companies	Sep. 30, 2015 USD ($)
Variable Interest Entity [Line Items]
Number of clients in which investment advisory services are provided | Number_of_Limited_Partnership							1
New Westwood mutual funds | mutual_fund	2
Fee revenues from Westwood VIEs					$ 13.5	$ 14.0	$ 39.5	$ 43.3
Westwood Mutual Fund
Variable Interest Entity [Line Items]
Amount provided to fund for the sole purpose of showing economic substance	$ 5.4
Common Trust Funds
Variable Interest Entity [Line Items]
Amount provided to fund for the sole purpose of showing economic substance				$ 2.0
UCITS Fund
Variable Interest Entity [Line Items]
Amount provided to fund for the sole purpose of showing economic substance		€ 1.6	$ 2.0
Minimum [Member]
Variable Interest Entity [Line Items]
Number of limited liability companies in which some clients hold their investments | Number_of_Limited_Liability_Companies							1
Maximum [Member]
Variable Interest Entity [Line Items]
Number of limited liability companies in which some clients hold their investments | Number_of_Limited_Liability_Companies							10

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VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Variable Interest Entities
Assets Under Management	$ 21,272,000
Estimated Market Value	49,849	$ 72,320
Westwood Funds®
Variable Interest Entities
Assets Under Management	3,753,000
Estimated Market Value	6,000
Amount at Risk	6,000
Common Trust Funds
Variable Interest Entities
Assets Under Management	2,546,000
Estimated Market Value	3,000
Amount at Risk	3,000
Collective Investment Trusts
Variable Interest Entities
Assets Under Management	48,000
UCITS Fund
Variable Interest Entities
Assets Under Management	612,000
Estimated Market Value	2,000
Amount at Risk	2,000
VIE totals
Variable Interest Entities
Assets Under Management	7,084,000
Estimated Market Value	11,100	$ 10,700
Corporate Investment [Member]
Variable Interest Entities
Estimated Market Value	11,000
Amount at Risk	11,000
Private Wealth
Variable Interest Entities
Assets Under Management	2,656,000
Institutional
Variable Interest Entities
Assets Under Management	11,532,000
LLCs
Variable Interest Entities
Assets Under Management	$ 125,000

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LONG-TERM INCENTIVE COMPENSATION (Details Textual) $ / shares in Units, CAD in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2016 CAD shares	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Amount of shares purchased in the open market			$ 5,629,000		$ 0
Purchases of treasury stock, shares | shares	24,199		117,452	117,452
Remaining unrecognized compensation cost recognized over a remaining weighted average period			2 years 5 months 12 days	2 years 5 months 12 days
Accrued liability	$ 1,400,000		$ 1,400,000			$ 2,000,000
Mutual Fund [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Mutual fund vesting period			1 year	1 year
Service period of mutual fund share incentive award			2 years	2 years
Expense related to mutual fund share incentive awards	$ 313,000	$ 149,000	$ 933,000		879,000
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total number of shares that may be issued under the stock based compensation Plan (including predecessor plans to the Plan) | shares	4,398,100		4,398,100
Shares remain available for issuance | shares	346,000		346,000
Remaining unrecognized compensation cost	$ 27,300,000		$ 27,300,000
Nonvested restricted shares | shares	647,556		647,556			580,469
Expense related to mutual fund share incentive awards	$ 4,082,000	$ 4,865,000	$ 12,164,000		$ 12,560,000
Canadian Plan | Westwood International Advisors Inc
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares remain available for issuance | shares	85,494		85,494
Share Based Compensation Arrangement By Share Based Payment Award Available For Grant, Original			$ 7,600,000	CAD 10.0
Fund purchases of common stock	$ 43,648		43,648
Purchases of common stock with respect to awards granted			$ 4,500,000	CAD 6.0
Share price | $ / shares	$ 53.11		$ 53.11
Amount of shares purchased in the open market			$ 600,000
Purchases of treasury stock, shares | shares			10,474	10,474
Remaining unrecognized compensation cost	$ 1,000,000		$ 1,000,000
Remaining unrecognized compensation cost recognized over a remaining weighted average period			1 year 7 months 13 days	1 year 7 months 13 days
Performance​ Based​ Restricted​ Shares​ For Future Performance Years
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested restricted shares | shares	51,258		51,258

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LONG-TERM INCENTIVE COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
DomesticEmployeeServiceAward [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 2,679	$ 2,550	$ 7,978	$ 6,953
Performance Shares [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	1,234	2,118	3,705	5,072
DomesticServiceAndPerformanceAward [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	3,913	4,668	11,683	12,025
CanadianEmployeeServiceAward [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	169	197	481	535
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 4,082	$ 4,865	$ 12,164	$ 12,560

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LONG-TERM INCENTIVE COMPENSATION (Details 1) - Restricted Shares Subject Only to a Service Condition - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Restricted shares subject only to a service condition:
Non-vested, beginning balance, shares	580,469
Granted (shares)	259,293
Vested (shares)	(174,310)
Forfeited (shares)	(17,896)
Non-vested, ending balance, shares	647,556
Non-vested, beginning balance, (dollars per share)	$ 56.76
Granted (dollars per share)	47.97
Vested (dollars per share)		$ 51.42
Forfeited (dollars per share)		$ 56.60
Non-vested, ending balance, (dollars per share)	$ 54.68

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LONG-TERM INCENTIVE COMPENSATION (Details 2) - Restricted Shares Subject to Service and Performance Conditions	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Restricted shares subject only to a service condition:
Non-vested, beginning balance, shares | shares	101,313
Granted (shares) | shares	151,334
Vested (shares) | shares	(101,313)
Forfeited (shares) | shares	0
Non-vested, ending balance, shares | shares	151,334
Non-vested, beginning balance, (dollars per share) | $ / shares	$ 61.29
Granted (dollars per share) | $ / shares	55.90
Vested (dollars per share) | $ / shares	61.29
Forfeited (dollars per share) | $ / shares	0.00
Non-vested, ending balance, (dollars per share) | $ / shares	$ 55.90

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RELATED PARTY TRANSACTIONS (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
UCITS Fund
Related Party Transaction [Line Items]
Fees earned from related party	$ 370,000	$ 298,000	$ 1,021,000	$ 994,000
Fees unpaid from related party	143,000		143,000		$ 96,000
Trust
Related Party Transaction [Line Items]
Due from related party	106,000		106,000		$ 0
Fees earned from related party	$ 108,000	$ 112,000	$ 305,000	$ 334,000

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COMMITMENTS AND CONTINGENCIES (Details Textual) CAD in Millions				9 Months Ended	50 Months Ended
	Nov. 06, 2012 CAD	Nov. 05, 2012 CAD	Aug. 03, 2012 CAD	Sep. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Loss Contingencies [Line Items]
Percentage of defense costs which will be covered by insurance				50.00%
Insurance proceeds | $					$ 928,000
Receivable | $				$ 249,000	$ 249,000	$ 240,000
General Damage
Loss Contingencies [Line Items]
Litigation claim for damages		CAD 1
Special Damage
Loss Contingencies [Line Items]
Litigation claim for damages		10
Punitive Damage
Loss Contingencies [Line Items]
Litigation claim for damages		CAD 1
First Lawsuit by AGF
Loss Contingencies [Line Items]
Lawsuit filing date			On August 3, 2012, AGF Management Limited and AGF Investments Inc. (collectively, “AGF”) filed a lawsuit in the Ontario Superior Court of Justice against Westwood, certain Westwood employees and the executive recruiting firm of Warren International, LLC. (“Warren”).
Litigation claim for damages			CAD 10
Second Lawsuit by AGF
Loss Contingencies [Line Items]
Lawsuit filing date	On November 6, 2012, AGF filed a second lawsuit against Westwood, Westwood Management and an employee of a Westwood subsidiary
Second Lawsuit by AGF | General Damage
Loss Contingencies [Line Items]
Litigation claim for damages	CAD 5
Second Lawsuit by AGF | Punitive Damage
Loss Contingencies [Line Items]
Litigation claim for damages	CAD 1

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SEGMENT REPORTING (Details Textual)	9 Months Ended
	Sep. 30, 2016 Segment
Segment Reporting [Abstract]
Number of operating segments	2

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SEGMENT REPORTING (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2014	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Segment Reporting Information [Line Items]
ReconciliationFromNetIncomeToNonGaapMeasure [Table Text Block]				Three Months Ended September 30,
ReconciliationFromNetIncomeToNonGaapMeasure [Table Text Block]				Nine Months Ended September 30,
Net fee revenues from external sources	$ 31,363	$ 32,913		$ 91,361	$ 99,577
Net interest and dividend revenue	133	110		369	219
Other, net	281	(572)		199	(426)
Total revenues	31,777	32,451		91,929	99,370
Economic Earnings	10,615	12,434	$ 12,434	29,094	36,201
Restricted stock expense		4,865		12,164	12,560
Intangible amortization	490	400		1,470	951
Deferred taxes on goodwill	156	156		390	272
Net income	5,887	7,013		15,070	22,418
Segment assets	169,698	166,217		169,698	166,217	$ 181,336
Segment goodwill	27,144	25,091		27,144	25,091	$ 27,144
Operating Segments | Advisory
Segment Reporting Information [Line Items]
Net fee revenues from external sources	23,673	24,941		68,563	78,534
Net intersegment revenues	5,275	5,087		14,455	14,826
Net interest and dividend revenue	128	110		360	218
Other, net	279	(577)		462	(431)
Total revenues	29,355	29,561		83,840	93,147
Economic Earnings	10,270	11,961		30,493	37,827
Segment assets	163,826	172,034		163,826	172,034
Segment goodwill	5,219	5,219		5,219	5,219
Operating Segments | Trust
Segment Reporting Information [Line Items]
Net fee revenues from external sources	7,690	7,972		22,798	21,043
Net intersegment revenues	41	0		82	0
Net interest and dividend revenue	5	0		9	1
Other, net	2	5		(263)	5
Total revenues	7,738	7,977		22,626	21,049
Economic Earnings	1,690	1,592		4,160	3,405
Segment assets	65,986	57,967		65,986	57,967
Segment goodwill	21,925	19,872		21,925	19,872
Westwood Holdings
Segment Reporting Information [Line Items]
Net fee revenues from external sources	0	0		0	0
Net intersegment revenues	0	0		0	0
Net interest and dividend revenue	0	0		0	0
Other, net	0	0		0	0
Total revenues	0	0		0	0
Economic Earnings	(1,345)	(1,119)		(5,559)	(5,031)
Segment assets	13,046	7,753		13,046	7,753
Segment goodwill	0	0		0	0
Eliminations
Segment Reporting Information [Line Items]
Net fee revenues from external sources	0	0		0	0
Net intersegment revenues	(5,316)	(5,087)		(14,537)	(14,826)
Net interest and dividend revenue	0	0		0	0
Other, net	0	0		0	0
Total revenues	(5,316)	(5,087)		(14,537)	(14,826)
Economic Earnings	0	0		0	0
Segment assets	(73,160)	(71,537)		(73,160)	(71,537)
Segment goodwill	0	0		0	0
Restricted Stock
Segment Reporting Information [Line Items]
Allocated Share-based Compensation Expense	$ 4,082	$ 4,865		$ 12,164	$ 12,560

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SUBSEQUENT EVENTS (Details Textual) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended
	Oct. 26, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Jul. 27, 2016
Subsequent Event [Line Items]
Dividends declared per share (dollars per share)		$ 0.57	$ 0.50	$ 1.71	$ 1.50
Stock Repurchase Program, Authorized Amount		$ 10.0		$ 10.0		$ 5.0
Subsequent Event [Member]
Subsequent Event [Line Items]
Dividends declared per share (dollars per share)	$ 0.62
DividendPercentageIncrease	9.00%
Dividends payable, date to be paid	Jan. 03, 2017
Dividends payable, date of record	Dec. 09, 2016

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INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Effective Income Tax Rate Reconciliation, Percent	35.00%	33.20%	35.10%	33.30%
UnrecognizedTaxBenefitsIncreasesResultingFromCurrentAndPriorPeriodTaxPositions			$ 341,000
Unrecognized Tax Benefits	$ 2,154,000		2,154,000		$ 1,629,000
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions			206,000
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions			475,000
Unrecognized Tax Benefits, Decrease Resulting from Prior Period Tax Positions			(156,000)
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit	2,200,000		2,200,000
Significant Change in Income Tax Provision is Reasonably Possible, Amount of Unrecorded Benefit	$ 1,400,000		$ 1,400,000

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Label	Element	Value
Treasury Stock [Member]
Treasury Stock, Value, Acquired, Cost Method	us-gaap_TreasuryStockValueAcquiredCostMethod	$ 1,200,000