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, 2017

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, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company”, and “emerging growth 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	¨
		Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act.			¨

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 13, 2017: 8,884,421.

________________________________________________________________________________________________________

WESTWOOD HOLDINGS GROUP, INC.

INDEX

PART I	FINANCIAL INFORMATION	PAGE
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and 2016	2
	Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2017	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6.	Exhibits	30
Signatures		31

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)

(Unaudited)

	September 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	51,436		$	33,679
Accounts receivable	22,163			23,429
Investments, at fair value	48,093			56,485
Income taxes receivable	2,744			—
Other current assets	6,261			2,364
Total current assets	130,697			115,957
Goodwill	27,144			27,144
Deferred income taxes	9,473			10,903
Intangible assets, net	19,945			21,394
Property and equipment, net of accumulated depreciation of $5,354 and $4,590	4,103			4,280
Total assets	$	191,362		$	179,678
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,851		$	2,641
Accrued litigation settlement	8,018			—
Dividends payable	6,666			6,679
Compensation and benefits payable	14,126			17,200
Income taxes payable	722			3,148
Total current liabilities	32,383			29,668
Accrued dividends	1,495			1,767
Deferred rent	2,055			2,174
Total liabilities	35,933			33,609
Commitments and contingencies (Note 12)
Stockholders' Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 9,986,076 and outstanding 8,884,421 shares at September 30, 2017; issued 9,801,938 and outstanding 8,810,375 shares at December 31, 2016	100			98
Additional paid-in capital	176,329			162,730
Treasury stock, at cost - 1,101,655 shares at September 30, 2017; 991,563 shares at December 31, 2016	(50,910		)	(44,353		)
Accumulated other comprehensive loss	(1,849		)	(4,287		)
Retained earnings	31,759			31,881
Total stockholders' equity	155,429			146,069
Total liabilities and stockholders' equity	$	191,362		$	179,678

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,
	2017		2016			2017		2016
REVENUES:
Advisory fees:
Asset-based	$	25,334	$	23,447		$	73,619	$	67,928
Performance-based	—		226			1,417		635
Trust fees	7,858		7,690			23,570		22,798
Other, net	300		414			1,265		568
Total revenues	33,492		31,777			99,871		91,929
EXPENSES:
Employee compensation and benefits	15,601		15,637			48,875		47,239
Sales and marketing	457		408			1,447		1,423
Westwood mutual funds	977		755			2,749		2,282
Information technology	1,855		1,874			5,494		6,039
Professional services	1,681		1,903			4,495		4,707
Legal settlement	4,009		—			4,009		—
General and administrative	3,160		2,147			8,697		7,028
Total expenses	27,740		22,724			75,766		68,718
Income before income taxes	5,752		9,053			24,105		23,211
Provision for income taxes	1,620		3,166			7,013		8,141
Net income	$	4,132	$	5,887		$	17,092	$	15,070
Other comprehensive income (loss):
Foreign currency translation adjustments	1,297		(453		)	2,438		1,007
Total comprehensive income	$	5,429	$	5,434		$	19,530	$	16,077
Earnings per share:
Basic	$	0.51	$	0.74		$	2.10	$	1.89
Diluted	$	0.49	$	0.72		$	2.05	$	1.84
Weighted average shares outstanding:
Basic	8,171,809		7,995,680			8,136,350		7,952,938
Diluted	8,420,749		8,179,956			8,350,926		8,212,468
Cash dividends declared per share	$	0.62	$	0.57		$	1.86	$	1.71

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, 2017

(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, December 31, 2016	8,810,375		$	98	$	162,730		$	(44,353	)	$	(4,287	)	$	31,881		$	146,069
Cumulative effect of accounting change	—		—		711			—			—			(711		)	—
Net income	—		—		—			—			—			17,092			17,092
Other comprehensive income	—		—		—			—			2,438			—			2,438
Issuance of restricted stock, net of forfeitures	184,138		2		(2		)	—			—			—			—
Dividends declared	—		—		—			—			—			(16,503		)	(16,503		)
Stock based compensation expense	—		—		12,298			—			—			—			12,298
Reclassification of compensation liability to be paid in shares	—		—		592			—			—			—			592
Purchases of treasury stock	(23,822	)	—		—			(1,326		)	—			—			(1,326		)
Restricted stock returned for payment of taxes	(86,270	)	—		—			(5,231		)	—			—			(5,231		)
BALANCE, September 30, 2017	8,884,421		$	100	$	176,329		$	(50,910	)	$	(1,849	)	$	31,759		$	155,429

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,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	17,092		$	15,070
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	722			732
Amortization of intangible assets	1,449			1,470
Unrealized gains on trading investments	(539		)	(676		)
Stock based compensation expense	12,298			12,164
Deferred income taxes	1,481			114
Excess tax benefits from stock based compensation	—			(165		)
Other	—			275
Change in operating assets and liabilities:
Net sales of investments - trading securities	8,931			23,147
Accounts receivable	1,686			(2,711		)
Other current assets	(3,881		)	900
Accounts payable and accrued liabilities	178			(82		)
Accrued litigation settlement	8,018			—
Compensation and benefits payable	(2,696		)	(6,758		)
Income taxes receivable/payable	(5,181		)	(4,637		)
Other liabilities	(111		)	154
Net cash provided by operating activities	39,447			38,997
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(537		)	(1,680		)
Net cash used in investing activities	(537		)	(1,680		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock	—			(5,629		)
Purchase of treasury stock under employee stock plans	(1,326		)	(614		)
Restricted stock returned for payment of taxes	(5,231		)	(3,710		)
Excess tax benefits from stock based compensation	—			165
Payment of contingent consideration in acquisition	—			(5,562		)
Cash dividends paid	(16,787		)	(14,827		)
Net cash used in financing activities	(23,344		)	(30,177		)
Effect of currency rate changes on cash	2,191			812
Net Change in Cash and Cash Equivalents	17,757			7,952
Cash and cash equivalents, beginning of period	33,679			22,740
Cash and cash equivalents, end of period	$	51,436		$	30,692
Supplemental cash flow information:
Cash paid during the period for income taxes	$	10,245		$	12,632
Common stock issued for acquisition	$	—		$	3,734
Accrued dividends	$	8,161		$	7,682
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, L.L.C. (together “Westwood Management”), 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.

Divestiture of our Omaha Operations

On September 6, 2017, we entered into an agreement to sell the Omaha-based component of our Private Wealth business. The sale is expected to close on December 31, 2017, subject to usual and customary closing conditions and the receipt of regulatory approval from the Nebraska Department of Banking. We expect to receive proceeds of $7 million to $10.5 million, subject to client consents and net working capital requirements; however, we do not expect to record a material gain or loss on the sale within our Consolidated Statement of Comprehensive Income. The sale will reduce our goodwill and intangible assets but is not expected to have a material impact to our Consolidated Balance Sheet. The component is reported within both our Advisory and Trust segments. The sale does not represent a major strategic shift in our business and does not qualify for discontinued operations reporting.

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, 2016, filed with the SEC. 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

Recently Adopted

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (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 in 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. Amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively. The amendment related to forfeitures, where an entity may account for forfeitures as they occur, should be

5

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

applied retrospectively by means of a cumulative-effect adjustment to equity at the beginning of the period in which the guidance is adopted. 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 adopted ASU 2016-09 effective January 1, 2017. The following summarizes the effects of the adoption on our Condensed Consolidated Financial Statements:

Income Taxes - Upon adoption of this standard, all excess tax benefits and tax deficiencies, including tax benefits of dividends on share-based payment awards, are recognized as income tax expense or benefit in the consolidated statement of comprehensive income. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. As a result, the Company recognized discrete adjustments to income tax expense in the first nine months of 2017 of $1.0 million related to excess tax benefits, decreasing our effective tax rate for the first nine months of 2017 to 29.1%. Without the adjustment, our effective tax rate would have been 33.0%. The Company did not have any unrecognized excess tax benefits as of December 31, 2016 and therefore there was no cumulative-effect adjustment to retained earnings related to income taxes. The Company adopted the amendments related to the recognition of excess tax benefits and tax shortfalls prospectively, with no adjustments made to prior periods.

Forfeitures - Prior to adoption, stock-based compensation expense was recognized on a straight-line basis, net of estimated forfeitures, such that expense was recognized for stock-based awards that were expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption of this standard, the Company no longer applies an estimated forfeiture rate and instead accounts for forfeitures as they occur. The Company applied the modified retrospective adoption approach, resulting in a $711,000 cumulative-effect reduction to “Retained earnings” with the offset to “Additional paid-in-capital” on January 1, 2017.

Statements of Cash Flows - The Company historically accounted for excess tax benefits on the consolidated statements of cash flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The change in cash flow classification associated with excess tax benefits was adopted prospectively, resulting in the classification of the $1.0 million excess tax benefit as an operating activity during the nine months ended September 30, 2017. No change in classification was necessary for the presentation of restricted stock returned for payment of taxes, as the Company has historically presented such payments as a financing activity. The Company adopted this portion of the standard on a prospective basis, with no adjustments made to prior periods.

Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. Under the new standard, the Company is no longer required to estimate the tax effect of anticipated windfall benefits or shortfalls when projecting proceeds available for share repurchases in calculating dilutive shares. The Company utilized the modified retrospective adoption approach, with no adjustments made to prior periods.

Not Yet Adopted

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which

resulted from a joint project by the FASB and the International Accounting Standards Board to clarify the principles for

recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards

("IFRS"). The ASU will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Retrospective application is required, with the entity either applying the change to each prior reporting period presented or applying the cumulative effect of each prior reporting period presented at the date of initial application. Management has completed a detailed review of the terms and conditions of our current contracts, including performance based fees, and we do not anticipate a significant change in the timing of revenue recognized. As part of our review we analyzed our current business process and internal controls and do not anticipate implementing new procedures to successfully adopt the standard. We expect to enhance and add additional disclosures surrounding our revenue process including disaggregation of revenue and information about performance obligations that will help provide the financial statement users a better understanding of the nature, amount, timing and potential uncertainty of the revenue being recognized.

6

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendment eliminates step two from the goodwill impairment test in order to simplify the subsequent measurement of goodwill. Under step two, an entity had to perform procedures to determine the fair value of its assets and liabilities at the impairment testing date following procedures required to determine the fair value of assets acquired and liabilities assumed in a business combination. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. The amendment is effective, on a prospective basis, for annual or interim periods beginning after December 15, 2019, with early adoption permitted. We do not expect the amendment to have a material impact on our Consolidated Financial Statements and expect to adopt the standard within the required time frame.

In May 2017, the FASB issued ASU 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting.The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modified accounting under ASC 718. The purpose of the amendment is to reduce diversity, cost and complexity in practice when analyzing and applying these modifications. The ASU is effective for periods beginning after December 15, 2017. We do not expect the amendment to have a material impact on our Consolidated Financial Statements 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 no anti-dilutive restricted shares outstanding for the three months ended September 30, 2017. There were approximately 2,453 anti-dilutive restricted shares outstanding for the three months ended September 30,2016, and 8,800 and 2,301 anti-dilutive restricted shares outstanding for the nine months ended September 30, 2017 and 2016, 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,
	2017		2016		2017		2016
Net income	$	4,132	$	5,887	$	17,092	$	15,070
Weighted average shares outstanding - basic	8,171,809		7,995,680		8,136,350		7,952,938
Dilutive potential shares from unvested restricted shares	248,940		184,276		214,576		259,530
Weighted average shares outstanding - diluted	8,420,749		8,179,956		8,350,926		8,212,468
Earnings per share:
Basic	$	0.51	$	0.74	$	2.10	$	1.89
Diluted	$	0.49	$	0.72	$	2.05	$	1.84

7

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

4. INVESTMENTS

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

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
September 30, 2017:
U.S. Government and Government agency obligations	$	26,093	$	12	$	(14	)	$	26,091
Money market funds	9,925		—		—			9,925
Equity funds	11,510		578		(11		)	12,077
	$	47,528	$	590	$	(25	)	$	48,093
December 31, 2016:
U.S. Government and Government agency obligations	$	30,275	$	—	$	(2	)	$	30,273
Money market funds	14,127		—		—			14,127
Equity funds	12,057		204		(176		)	12,085
	$	56,459	$	204	$	(178	)	$	56,485

As of September 30, 2017 and December 31, 2016, $10.6 million and $11.0 million in corporate funds, respectively, were invested in Westwood Funds®, Westwood Common Trust Funds and Westwood Investment Funds PLC (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, income taxes 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.

ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value and requires 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

8

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		Investments Measured at NAV(1)		Total
As of September 30, 2017:
Investments in trading securities	$	45,836	$	—	$	—	$	2,257	$	48,093
Total financial instruments	$	45,836	$	—	$	—	$	2,257	$	48,093
As of December 31, 2016:
Investments in trading securities	$	53,319	$	—	$	—	$	3,166	$	56,485
Total financial instruments	$	53,319	$	—	$	—	$	3,166	$	56,485
(1) Comprised of certain investments measured at fair value using net asset value (“NAV”) as a practical expedient. These investments were recategorized and are no longer included within Level 2 of the valuation hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on our consolidated balance sheets.

6. GOODWILL AND OTHER INTANGIBLE ASSETS

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 2017 and determined that no impairment loss was required. No impairments on goodwill were recorded during the three or nine months ended September 30, 2017 or 2016.

Other Intangible Assets

Our intangible assets represent the acquisition date fair value of acquired client relationships, trade names, 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. No impairments on intangible assets were recorded during the three or nine months ended September 30, 2017 or 2016.

7. STOCKHOLDERS' EQUITY

Accumulated Other Comprehensive Loss

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

	As of September 30, 2017			As of December 31, 2016
Foreign currency translation adjustment	$	(1,849	)	$	(4,287	)
Accumulated other comprehensive loss	$	(1,849	)	$	(4,287	)

9

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

8. VARIABLE INTEREST ENTITIES

We have evaluated all of our advisory relationships with the UCITS Fund, the Westwood Funds®, limited liability companies (“LLCs”) and our relationship as sponsor of the Common Trust Funds (“CTFs”) to determine whether each of these entities is a variable interest entity (“VIE”) or voting ownership entity (“VOE”). Based on our analysis, we determined that the LLCs and CTFs were VIEs, as the at-risk equity holders do not have the ability to direct the activities that most significantly impact the entity’s economic performance, and the Company and its representatives have a majority control of the entities' respective boards of directors and can influence the respective entities' management and affairs. Although we have related parties on the UCITS Fund board of directors, the shareholders have rights to remove the current directors with a simple majority vote, so we determined the UCITS Fund is not a VIE. As the Company and its representatives do not have representation on the Westwood Funds® independent board of directors, which directs the activities that most significantly impact the entity's economic performance, we determined that the Westwood Funds® were not VIEs. Therefore, the UCITS Fund and the Westwood Funds® should be analyzed under the VOE consolidation method. Based on our analysis of our seed investments in these entities for the periods ending September 30, 2017 and December 31, 2016, we have not consolidated the LLCs or CTFs under the VIE method or the UCITS Fund or the Westwood Funds® under the VOE method, and therefore the financial results of these entities are not included in the Company’s consolidated financial results.

As of September 30, 2017 and December 31, 2016, the Company had seed investments in aggregate of approximately $10.6 million and $11.0 million, respectively, in the CTFs, the Westwood Funds, and 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 Company's seed investments in these funds are included in “Investments, at fair value” on our Condensed Consolidated Balance Sheet at September 30, 2017.

Otherwise, we have not 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 entities. Our seed investments in the above-mentioned Westwood Funds®, the UCITS Fund and the CTFs are accounted for as investments in accordance with our other investments described in Note 4 “Investments.” We recognized fee revenue from the Westwood VIEs and Westwood VOEs of approximately $13.2 million and $13.5 million for the three months ended September 30, 2017 and 2016, respectively. We recognized fee revenue from the Westwood VIEs and Westwood VOEs of approximately $39.1 million and $39.5 million for the nine months ended September 30, 2017 and 2016, respectively.

The following table displays the assets under management, the amounts of our seed investments that are included in “Investments, at fair value” on our consolidated balance sheets, and the risk of loss in each vehicle (in millions):

	As of September 30, 2017
	Assets Under Management		Corporate Investment		Amount at Risk
VIEs/VOEs:
Westwood Funds®	$	4,144	$	6	$	6
Common Trust Funds	2,602		2		2
LLCs	113		—		—
UCITS Fund	595		2		2
All other assets:
Private Wealth	3,107
Institutional	13,063
Total Assets Under Management	$	23,624

10

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

9. LONG-TERM INCENTIVE COMPENSATION

Restricted Stock Awards

We have issued restricted shares to our employees and non-employee directors. The Fourth 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. In April 2017, stockholders approved an additional 250,000 shares to be authorized under the Plan, increasing the total number of shares issuable under the Plan (including predecessor plans to the Plan) to 4,648,100 shares. At September 30, 2017, approximately 433,000 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,
	2017		2016		2017		2016
Service condition stock-based compensation expense	$	2,591	$	2,679	$	7,828	$	7,978
Performance condition stock-based compensation expense	1,454		1,234		3,949		3,705
Stock-based compensation expense under the Plan	4,045		3,913		11,777		11,683
Canadian Plan stock-based compensation expense	188		169		521		481
Total stock-based compensation expense	$	4,233	$	4,082	$	12,298	$	12,164

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, 2017, there was approximately $26.3 million of unrecognized compensation cost for restricted stock grants under the Plan, which we expect to recognize over a weighted-average period of 2.2 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 and an adjustment for restrictions on dividends. This compensation cost is amortized on a straight-line basis over the applicable vesting period. As discussed in Note 2 “Summary of Significant Accounting Policies,” the Company made an accounting policy election to account for forfeitures as they occur effective upon the adoption of ASU 2016-09 on January 1, 2017.

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, 2017:

	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2017	607,501		$	54.67
Granted	143,460		61.20
Vested	(182,085	)	57.43
Forfeited	(36,579	)	55.11
Non-vested, September 30, 2017	532,297		$	55.46

11

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 were provided agreements for grants of restricted shares that vest over multiple year periods subject to achieving annual performance goals established by the Compensation Committee of Westwood’s Board of Directors. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares. For 2017, the goal is based on Income before income tax from our audited consolidated statement of comprehensive income for fiscal 2017. 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. The vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the Income before income tax from the Company’s audited consolidated financial statements. 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 2017, the Compensation Committee established the fiscal 2017 goal for our Chief Executive Officer and Chief Investment Officer as Income before income taxes of $24.0 million for 50% of their respective awards, and an Income before income taxes target of $34.0 million (ranging from 25% of target for threshold performance of $30.3 million to 185% of target for maximum performance of $42.5 million) for the remaining 50% of their respective awards. For all other restricted stock grants subject to performance conditions, the Compensation Committee established the fiscal 2017 goal as Income before income taxes of at least $24.0 million. These performance grants allow the Compensation Committee to exclude certain items, including legal settlements, from the Income before income taxes target. At the Committee's discretion, we excluded the $4.0 million legal settlement expense recorded during the third quarter of 2017 from our forecasted Income before income taxes target and concluded that it was probable that we would exceed the target performance goals required to vest the applicable percentage of the performance-based restricted shares this year and continued recording expense related to the shares expected to vest.

The following table details the status and changes in our restricted stock grants subject to service and performance conditions for the nine months ended September 30, 2017:

	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2017	153,620		$	55.90
Granted	157,877		54.86
Vested	(102,367	)	56.58
Forfeited	(45,675	)	55.86
Non-vested, September 30, 2017	163,455		$	55.87

The above amounts as of September 30, 2017 do not include 16,313 non-vested restricted shares that potentially vest over performance years subsequent to 2017 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 ($8.0 million in U.S. Dollars using the exchange rate on September 30, 2017) may be funded to the plan trustee for purchases of common stock with respect to awards granted under the Canadian Plan. At September 30, 2017, approximately $4.3 million CDN ($3.4 million in U.S. Dollars using the exchange rate on September 30, 2017) remains available for issuance under the Canadian Plan, or approximately 51,200 shares based on the closing share price of our stock of $67.27 as of September 30, 2017. During the first nine months of 2017, the trust formed pursuant to the Canadian Plan purchased in the open market 23,822 Westwood common shares for approximately $1.3 million. As of September 30, 2017, the trust holds 55,418 shares of Westwood common stock. As of September 30, 2017, unrecognized compensation cost related to restricted stock grants under the Canadian Plan totaled $864,000, which we expect to recognize over a weighted-average period of 1.8 years.

12

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.

For awards earned prior to 2017, the award vested after approximately one year of service following the year in which the participant earned the award. Beginning in 2017, the award vests after approximately two years of service following the year in which the participant earned 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 either two or three 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, 2017 and 2016, we recorded expense of approximately $281,000 and $313,000, respectively, related to mutual fund share incentive awards. For the nine months ended September 30, 2017 and 2016, we recorded expense of approximately $819,000 and $933,000, respectively, related to mutual fund share incentive awards. As of September 30, 2017 and December 31, 2016, we had an accrued liability of approximately $1.5 million and $1.7 million, respectively, related to mutual fund share incentive awards.

10. INCOME TAXES

Our effective income tax rate was 28.2% for the third quarter of 2017, compared with 35.0% for the third quarter of 2016. The decrease is primarily related to the tax impact of our legal settlement with AGF (see further discussion in Note 12 “Commitments and Contingencies”) in the third quarter of 2017 and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the third quarter of 2016. Our effective income tax rate was 29.1% for the first nine months of 2017, compared with 35.1% for the first nine months of 2016. The decrease is primarily related to the adoption of ASU 2016-09 Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires recognition of excess tax benefits related to employees' restricted stock vesting to be recorded within income tax expense. Prior to adoption of ASU 2016-09, excess tax benefits were recorded through Additional paid-in capital, with no impact to the effective tax rate or our consolidated statement of comprehensive income. See further discussion in Note 2 “Summary of Significant Accounting Policies.” The remaining decrease is related to the tax impact of our legal settlement with AGF (see further discussion in Note 12 “Commitments and Contingencies”) in the third quarter of 2017 and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the first and third quarters of 2016.

As of September 30, 2017 and December 31, 2016, the Company's gross liability related to uncertain tax positions was $196,000 and $2.5 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, 2017 is as follows (in thousands):

Balance at January 1, 2017	$	2,462
Additions for tax positions related to the current year	68
Additions for tax positions related to prior years	—
Reductions for tax positions related to prior years	(768		)
Payments for tax positions related to prior years	(1,566		)
Balance at September 30, 2017	$	196

13

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Within the next twelve months, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $196,000 as a result of settlements with certain taxing authorities, which, if recognized, would decrease our provision for income taxes by $130,000.

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, 2017 and 2016, we recorded trust fees from these accounts of $92,000 and $108,000, respectively. For the nine months ended September 30, 2017 and 2016, we recorded trust fees from these accounts of $277,000 and $305,000, respectively. There was $92,000 and $97,000 due from these accounts as of September 30, 2017 and December 31, 2016, respectively.

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 and the Westwood Funds®. Certain members of our management serve on the board of directors of the UCITS Fund, and we have capital invested in three of the Westwood Funds®. Under the terms of the investment advisory agreements, the Company earns quarterly fees paid by clients of the fund or by the funds directly. The fees are based on negotiated fee schedules applied to assets under management. These fees are commensurate with market rates. For the three months ended September 30, 2017 and 2016, the Company earned approximately $1.1 million and $370,000, respectively, in fees from the affiliated funds. For the nine months ended September 30, 2017 and 2016, the Company earned approximately $2.8 million and $1.0 million, respectively, in fees from the affiliated funds. 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, 2017 and December 31, 2016, $398,000 and $270,000, 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 related to the hiring of certain members of Westwood’s global and emerging markets investment team previously employed by AGF. AGF alleged that the former employees breached certain obligations when they resigned from AGF and that Westwood and Warren induced such breaches. AGF was 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 was 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 was seeking $5 million CDN in general damages, $1 million CDN per defendant in punitive damages, unspecified special damages, interest and costs.

On October 13, 2017, we reached a settlement with AGF that provides for the dismissal of all claims, with prejudice and without any admission of liability. We have agreed to pay AGF a one-time payment of $10 million CDN, half of which is expected to be covered by our insurance. During the third quarter of 2017, we recorded a net $4.0 million ($5 million CDN) charge related to the settlement and associated insurance coverage, with an $8.0 million ($10 million CDN) settlement liability recorded in “Accrued lawsuit settlement” and a $4.0 million ($5 million CDN) receivable from our insurance provider included in “Other current assets” on our Condensed Consolidated Balance Sheets at September 30, 2017.

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 received insurance proceeds of approximately $276,000 and $928,000 during the nine months ended September 30, 2017 and 2016, respectively. We had a receivable of approximately $113,000 and $186,000 as of September 30, 2017 and December 31, 2016, 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.

14

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 Corp. and Westwood International, which provide investment advisory services to clients of similar type, are included in our Advisory segment along with Westwood Advisors, L.L.C.

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.

15

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

(in thousands)	Advisory		Trust			Westwood Holdings			Eliminations			Consolidated
Three Months Ended September 30, 2017
Net fee revenues from external sources	$	25,334	$	7,858		$	—		$	—		$	33,192
Net intersegment revenues	2,026		57			—			(2,083		)	—
Net interest and dividend revenue	111		43			—			—			154
Other, net	157		(11		)	—			—			146
Total revenues	$	27,628	$	7,947		$	—		$	(2,083	)	$	33,492
Economic Earnings	$	8,786	$	1,560		$	(1,356	)	$	—		$	8,990
Less:   Restricted stock expense												4,233
Intangible amortization												469
Deferred taxes on goodwill												156
Net income												$	4,132
Segment assets	$	208,444	$	73,170		$	18,388		$	(108,640	)	$	191,362
Segment goodwill	$	5,219	$	21,925		$	—		$	—		$	27,144
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

16

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

(in thousands)	Advisory		Trust			Westwood Holdings			Eliminations			Consolidated
Nine Months Ended September 30, 2017
Net fee revenues from external sources	$	75,036	$	23,570		$	—		$	—		$	98,606
Net intersegment revenues	6,050		160			—			(6,210		)	—
Net interest and dividend revenue	391		67			—			—			458
Other, net	811		(4		)	—			—			807
Total revenues	$	82,288	$	23,793		$	—		$	(6,210	)	$	99,871
Economic Earnings	$	31,372	$	4,528		$	(4,592	)	$	—		$	31,308
Less:   Restricted stock expense												12,298
Intangible amortization												1,449
Deferred taxes on goodwill												469
Net income												$	17,092
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

We are providing a performance measure that we refer to as Economic Earnings. Our management and the 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):

	Three Months Ended September 30,
	2017		2016
Net income	$	4,132	$	5,887
Add: Stock-based compensation expense	4,233		4,082
Add: Intangible amortization	469		490
Add: Tax benefit from goodwill amortization	156		156
Economic Earnings	$	8,990	$	10,615

17

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

	Nine Months Ended September 30,
	2017		2016
Net Income	$	17,092	$	15,070
Add: Stock-based compensation expense	12,298		12,164
Add: Intangible amortization	1,449		1,470
Add: Tax benefit from goodwill amortization	469		390
Economic Earnings	$	31,308	$	29,094

14. SUBSEQUENT EVENTS

Dividend Declared

In October 2017, Westwood’s Board of Directors declared a quarterly cash dividend of $0.68 per common share, an increase of 10% from the previous quarterly dividend rate, payable on January 2, 2018 to stockholders of record on December 8, 2017.

AGF Lawsuits

On October 13, 2017, we reached a settlement with AGF regarding their lawsuits and our related counterclaim. See Note 12 “Commitments and Contingencies” for additional discussion of the settlement.

18

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, 2016, 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 assets under management includes investments in foreign companies;

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

• our relationships with current and potential customers;

• our ability to retain qualified personnel;

• our ability to maintain effective cyber security;

• our ability to maintain effective information systems;

• our ability to pursue and properly integrate acquired businesses;

• litigation risks;

• our ability to properly address conflicts of interest;

• 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.

19

Overview

We manage investment assets and provide services for our clients through our subsidiaries, Westwood Management Corp. and Westwood Advisors, L.L.C. (each of which is an SEC-registered investment advisor and referred to hereinafter together as “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 (the “UCITS Fund”), 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.

Divestiture of our Omaha Operations

On September 6, 2017, we entered into an agreement to sell the Omaha-based component of our Private Wealth business. The sale is expected to close on December 31, 2017, subject to usual and customary closing conditions and the receipt of regulatory approval from the Nebraska Department of Banking. We expect to receive proceeds of $7 million to $10.5 million, subject to client consents and net working capital requirements; however, we do not expect to record a material gain or loss on the sale within our Consolidated Statement of Comprehensive Income. The sale will reduce our goodwill and intangible assets but is not expected to have a material impact to our Consolidated Balance Sheet. The component is reported within both our Advisory and Trust segments. The sale does not represent a major strategic shift in our business and does not qualify for discontinued operations reporting.

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 in their contracts, which generates additional revenues if we outperform a specified index over a specific period of time. We record revenues from performance-based fees at the end of the measurement period. Since our advance paying clients' billing periods 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. 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 trust fee revenues.

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, including seed money for new investment strategies.

Employee Compensation and Benefits

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

Sales and Marketing

20

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®.

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.

Legal Settlement

Legal settlement expenses consist of settlements related to litigation claims, net of any portions covered by our insurance policies.

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.

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Assets Under Management

Assets under management (“AUM”) increased$2.3 billion to $23.6 billion at September 30, 2017 compared with $21.3 billion at September 30, 2016 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 2017 was $23.1 billion compared to $21.1 billion for the third quarter of 2016. The increase in average assets under management is due to market appreciation over the last twelve months and $713 million in a long-only convertibles fund that transitioned from assets under advisement (“AUA”) to AUM during the third quarter of 2017.

The following table displays assets under management as of September 30, 2017 and 2016:

					% Change
					September 30, 2017
	As of September 30,				vs.
	2017		2016		September 30, 2016
	(in millions)
Institutional	$	13,658	$	12,192	12	%
Private Wealth	5,822		5,327		9
Mutual Funds	4,144		3,753		10
Total Assets Under Management(1)	$	23,624	$	21,272	11	%

________________

(1) AUM excludes $362 million of AUA as of September 30, 2017 related to our model portfolios, for which we provided consulting advice but for which we did not have direct discretionary investment authority. During the third quarter of 2017, approximately $713 million related to a long-only convertibles fund transitioned from AUA to AUM. AUM excluded approximately $1.1 billion of AUA as of September 30, 2016 related to model portfolios, including the long-only convertibles fund, for which we provided consulting advice but for which we did not have direct discretionary investment authority.

• 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 Advisors, L.L.C. 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 upon 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.

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Roll-Forward of Assets Under Management

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Institutional
Beginning of period assets	$	12,773		$	11,921		$	11,911		$	11,752
Inflows(1)	1,113			420			2,173			1,133
Outflows	(659		)	(606		)	(1,954		)	(1,902		)
Net flows	454			(186		)	219			(769		)
Market appreciation	431			457			1,528			1,209
Net change	885			271			1,747			440
End of period assets	$	13,658		$	12,192		$	13,658		$	12,192
Private Wealth
Beginning of period assets	$	5,685		$	5,361		$	5,520		$	5,393
Inflows	194			104			509			274
Outflows	(216		)	(245		)	(710		)	(626		)
Net flows	(22		)	(141		)	(201		)	(352		)
Market appreciation	159			107			503			286
Net change	137			(34		)	302			(66		)
End of period assets	$	5,822		$	5,327		$	5,822		$	5,327
Mutual Funds
Beginning of period assets	$	4,092		$	3,690		$	3,810		$	3,617
Inflows	293			214			792			674
Outflows	(334		)	(224		)	(803		)	(798		)
Net flows	(41		)	(10		)	(11		)	(124		)
Market appreciation	93			73			345			260
Net change	52			63			334			136
End of period assets	$	4,144		$	3,753		$	4,144		$	3,753
Total
Beginning of period assets	$	22,550		$	20,972		$	21,241		$	20,762
Inflows	1,600			738			3,474			2,081
Outflows	(1,209		)	(1,075		)	(3,467		)	(3,326		)
Net flows	391			(337		)	7			(1,245		)
Market appreciation	683			637			2,376			1,755
Net change	1,074			300			2,383			510
End of period assets	$	23,624		$	21,272		$	23,624		$	21,272

________________

(1) Institutional inflows include approximately $713 million of assets related to a long-only convertibles fund, which transitioned from AUA to AUM during the third quarter of 2017.

Three months ended September 30, 2017 and 2016

The $1.1 billionincrease in assets under management for the three months ended September 30, 2017 was due to market appreciation of $683 million and net inflows of $391 million. Net inflows were primarily related to approximately $713 million in our Strategic Global Convertibles strategy that transitioned from AUA to AUM in the third quarter of 2017, as well as net inflows to our Market Neutral Income and Emerging Markets strategies. Inflows were partially offset by net outflows to our SMidCap strategies, Income Opportunity strategy and LargeCap Value strategy.

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

Nine months ended September 30, 2017 and 2016

The $2.4 billionincrease in assets under management for the nine months endedSeptember 30, 2017 was due to market appreciation of $2.4 billion and net inflows of of $7 million. Net inflows were primarily related to approximately $713 million in our Strategic Global Convertibles strategy that transitioned from AUA to AUM in the third quarter of 2017 and net inflows to our SmallCap Value, Market Neutral Income, and Emerging Markets strategies, partially offset by net outflows to our SMidCap strategies and LargeCap Value strategy.

The $510 millionincrease in assets under management for the nine months endedSeptember 30, 2016 was due to market appreciation of $1.8 billion, 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.

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, 2017		September 30, 2017
	September 30,				September 30,				vs.		vs.
	2017		2016		2017		2016		September 30, 2016		September 30, 2016
Revenues:
Advisory fees: asset-based	$	25,334	$	23,447	$	73,619	$	67,928	8	%	8	%
Advisory fees: performance-based	—		226		1,417		635		(100	)	123
Trust fees	7,858		7,690		23,570		22,798		2		3
Other revenues	300		414		1,265		568		NM		NM
Total revenues	33,492		31,777		99,871		91,929		5		9
Expenses:
Employee compensation and benefits	15,601		15,637		48,875		47,239		—		3
Sales and marketing	457		408		1,447		1,423		12		2
Westwood mutual funds	977		755		2,749		2,282		29		20
Information technology	1,855		1,874		5,494		6,039		(1	)	(9	)
Professional services	1,681		1,903		4,495		4,707		(12	)	(5	)
Legal settlement	4,009		—		4,009		—		100		100
General and administrative	3,160		2,147		8,697		7,028		47		24
Total expenses	27,740		22,724		75,766		68,718		22		10
Income before income taxes	5,752		9,053		24,105		23,211		(36	)	4
Provision for income taxes	1,620		3,166		7,013		8,141		(49	)	(14	)
Net income	$	4,132	$	5,887	$	17,092	$	15,070	(30	)%	13	%

_________________________

NM    Not meaningful

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Three months ended September 30, 2017 compared to three months ended September 30, 2016

Total Revenues. Our Total revenues increased$1.7 million, or 5%, to $33.5 million for the three months ended September 30, 2017 compared with $31.8 million for the three months ended September 30, 2016. Asset-based advisory fees increased$1.9 million, or 8%, and Trust fees increased$0.2 million, or 2%, primarily due to higher average assets under management due to asset appreciation.

Legal Settlement. We recorded a net $4.0 million charge related to a legal settlement and associated insurance coverage recorded during the third quarter of 2017. See further discussion of the settlement in Note 12 “Commitments and Contingencies” to our Condensed Consolidated Financial Statements included in Part I. Financial Information.

General and Administrative. General and administrative costs increased$1.1 million, or 47.2%, to $3.2 million for the three months ended September 30, 2017 compared with $2.1 million for the three months ended September 30, 2016, primarily due to a $0.9 million foreign currency transaction loss recorded in the third quarter of 2017 as a result of a 4% decrease in the Canadian dollar exchange rate.

Provision for Income Taxes. The effective tax rate decreased to 28.2% for the three months ended September 30, 2017 from 35.0% for the three months ended September 30, 2016. The decrease is primarily related to the tax impact of our legal settlement with AGF in the third quarter of 2017 and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the third quarter of 2016.

Nine months endedSeptember 30, 2017 compared to nine months endedSeptember 30, 2016

Total Revenues. Our Total revenues increased$8.0 million, or 9%, to $99.9 million for the nine months endedSeptember 30, 2017 compared with $91.9 million for the nine months endedSeptember 30, 2016. This increase was primarily related to a $5.7 million, or 8%, increase in Asset-based advisory fees and a $0.8 million, or 3%, increase in Trust fees related to higher average assets under management due to market appreciation. Performance-based advisory fees increased by $0.8 million.

Employee Compensation and Benefits. Employee compensation and benefits costs increased to $48.9 million for the nine months endedSeptember 30, 2017 compared with $47.2 million for the nine months endedSeptember 30, 2016. The increase is due to higher incentive compensation and performance-based restricted stock expense as a result of improved pre-tax income as compared to the prior year, as well as merit increases.

Legal Settlement. We recorded a net $4.0 million charge related to a legal settlement and associated insurance coverage recorded during the third quarter of 2017. See further discussion of the settlement in Note 12 “Commitments and Contingencies” to our Condensed Consolidated Financial Statements included in Part I. Financial Information.

General & Administrative. General and administrative expenses increased$1.7 million, or 24%, to $8.7 million

for the nine months endedSeptember 30, 2017 compared to $7.0 million for the nine months endedSeptember 30, 2016,

primarily due to a $1.6 million foreign currency transaction loss recorded in the first nine months of 2017 as a result of an 8% decrease in the Canadian dollar exchange rate.

Provision for Income Taxes. The effective tax rate decreased to 29.1% for the nine months endedSeptember 30, 2017 from 35.1% for the nine months endedSeptember 30, 2016. During the first quarter of 2017, we recorded a $1.0 million adjustment to income tax expense related to excess tax benefits as a result of the adoption of ASU 2016-09 Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which decreased our effective tax rate to 29.1%. Without the adjustment, our effective tax rate for the nine months endedSeptember 30, 2016 would have been 33.0%. Prior to adoption of ASU 2016-09, excess tax benefits were recorded through Additional paid-in capital, with no impact to the effective tax rate. The remaining decrease is related to the tax impact of our legal settlement with AGF in the third quarter of 2017 and adjustments to uncertain tax positions (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 provide 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 back to net income the non-cash expense associated with equity-based compensation awards of restricted stock, amortization of intangible assets and 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 share and per share amounts):

	Three Months Ended September 30,				% Change
	2017		2016
Net income	$	4,132	$	5,887	(30	)%
Add: Stock-based compensation expense	4,233		4,082		4
Add: Intangible amortization	469		490		(4	)
Add: Tax benefit from goodwill amortization	156		156		—
Economic Earnings	$	8,990	$	10,615	(15	)%
Diluted weighted average shares outstanding	8,420,749		8,179,956
Economic Earnings per share	$	1.07	$	1.30

	Nine Months Ended September 30,				% Change
	2017		2016
Net Income	$	17,092	$	15,070	13	%
Add: Stock-based compensation expense	12,298		12,164		1
Add: Intangible amortization	1,449		1,470		(1	)
Add: Tax benefit from goodwill amortization	469		390		20
Economic Earnings	$	31,308	$	29,094	8	%
Diluted weighted average shares outstanding	8,350,926		8,212,468
Economic Earnings per share	$	3.75	$	3.54

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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, 2017 and December 31, 2016, 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, 2017, cash flow provided by operating activities, principally our investment advisory business, was $39.4 million. Cash flow used in investing activities of $537,000 during the nine months endedSeptember 30, 2017 was related to purchases of fixed assets. Cash flow used in financing activities of $23.3 million for the nine months endedSeptember 30, 2017 was due to the payment of dividends, 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 $99.5 million as of September 30, 2017 and $90.2 million as of December 31, 2016. Cash and cash equivalents as of September 30, 2017 and December 31, 2016 includes approximately $30 million and $20 million, respectively, of undistributed income from Westwood International that we consider to be permanently invested in Canada.  At September 30, 2017 and December 31, 2016, working capital aggregated $98.3 million and $86.3 million, respectively.

Westwood Trust must maintain cash and investments in an amount equal to the 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, 2017, Westwood Trust had approximately $20.4 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, 2016, 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, 2017, there have been no material changes outside the ordinary course of business to our contractual obligations since December 31, 2016. 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, 2016.

Critical and Significant Accounting Policies and Estimates

Effective January 1, 2017, we adopted ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. Refer to Note 2 “Summary of 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 detailed description of the adoption of ASU 2016-09.

Otherwise, there have been no significant changes in our critical or significant accounting policies and estimates since December 31, 2016. 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, 2016.

27

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, 2016.

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, 2017, 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.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On October 13, 2017, we reached a settlement with AGF regarding their lawsuits and our related counterclaim. See additional discussion of the settlement and our 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 fiscal year ended December 31, 2016 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.

28

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, 2017:

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)
Repurchase program (1)	—	$	—	—		$	9,366,000
Canadian Plan (2)	—	$	—	—	CDN	$	4,296,000
Employee transactions (3)
July 1-31, 2017	713	$	59.97	—		—

(1) On July 20, 2012, our Board of Directors authorized management to repurchase up to $10.0 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 $10.0 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.

29

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.

30

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 25, 2017	WESTWOOD HOLDINGS GROUP, INC.
		By:	/s/ Brian O. Casey
			Brian O. Casey
			President and Chief Executive Officer
		By:	/s/ Tiffany B. Kice
			Tiffany B. Kice
			Chief Financial Officer and Treasurer

31

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 25, 2017

/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 25, 2017

/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, 2017 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 25, 2017

/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, 2017 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 25, 2017

/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.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 13, 2017
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, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		8,884,421

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current Assets:
Cash and cash equivalents	$ 51,436	$ 33,679
Accounts receivable	22,163	23,429
Investments, at fair value	48,093	56,485
Income Taxes Receivable, Current	2,744	0
Other current assets	6,261	2,364
Total current assets	130,697	115,957
Goodwill	27,144	27,144
Deferred income taxes	9,473	10,903
Intangible assets, net	19,945	21,394
Property and equipment, net of accumulated depreciation of $5,354 and $4,590	4,103	4,280
Total assets	191,362	179,678
Current liabilities:
Accounts payable and accrued liabilities	2,851	2,641
Estimated Litigation Liability, Current	8,018	0
Dividends payable	6,666	6,679
Compensation and benefits payable	14,126	17,200
Income taxes payable	722	3,148
Total current liabilities	32,383	29,668
Accrued dividends	1,495	1,767
Deferred rent	2,055	2,174
Total liabilities	35,933	33,609
Commitments and contingencies
Stockholders' Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 9,986,076 and outstanding 8,884,421 shares at September 30, 2017; issued 9,801,938 and outstanding 8,810,375 shares at December 31, 2016	100	98
Additional paid-in capital	176,329	162,730
Treasury stock, at cost - 1,101,655 shares at September 30, 2017; 991,563 shares at December 31, 2016	(50,910)	(44,353)
Foreign currency translation adjustment	(1,849)	(4,287)
Accumulated other comprehensive loss	(1,849)	(4,287)
Retained earnings	31,759	31,881
Total stockholders' equity	155,429	146,069
Total liabilities and stockholders' equity	$ 191,362	$ 179,678

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Property and equipment, accumulated depreciation	$ 5,354	$ 4,590
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	9,986,076	9,801,938
Common stock, shares outstanding	8,884,421	8,810,375
Treasury stock, shares	1,101,655	991,563

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Advisory fees:
Asset-based	$ 25,334	$ 23,447	$ 73,619	$ 67,928
Performance-based	0	226	1,417	635
Trust fees	7,858	7,690	23,570	22,798
Other, net	300	414	1,265	568
Total revenues	33,492	31,777	99,871	91,929
EXPENSES:
Employee compensation and benefits	15,601	15,637	48,875	47,239
Sales and marketing	457	408	1,447	1,423
Westwood mutual funds	977	755	2,749	2,282
Information technology	1,855	1,874	5,494	6,039
Professional services	1,681	1,903	4,495	4,707
Legal settlement expense	4,009	0	4,009	0
General and administrative	3,160	2,147	8,697	7,028
Total expenses	27,740	22,724	75,766	68,718
Income before income taxes	5,752	9,053	24,105	23,211
Provision for income taxes	1,620	3,166	7,013	8,141
Net income	4,132	5,887	17,092	15,070
Other comprehensive income (loss):
Foreign currency translation adjustments	1,297	(453)	2,438	1,007
Total comprehensive income	$ 5,429	$ 5,434	$ 19,530	$ 16,077
Earnings per share:
Basic (dollars per share)	$ 0.51	$ 0.74	$ 2.10	$ 1.89
Diluted (dollars per share)	$ 0.49	$ 0.72	$ 2.05	$ 1.84
Weighted average shares outstanding:
Basic (shares)	8,171,809	7,995,680	8,136,350	7,952,938
Diluted (shares)	8,420,749	8,179,956	8,350,926	8,212,468
Cash dividends declared per share (dollars per share)	$ 0.62	$ 0.57	$ 1.86	$ 1.71

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2017 - USD ($)	Total	Common Stock, Par	Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification			$ 711,000			$ (711,000)
BALANCE at Dec. 31, 2016	$ 146,069,000	$ 98,000	162,730,000	$ (44,353,000)	$ (4,287,000)	31,881,000
BALANCE, shares at Dec. 31, 2016	8,810,375	8,810,375
Net income	$ 17,092,000
Other comprehensive income	2,438,000				2,438,000
Issuance of restricted stock, net of forfeitures	0	$ 2,000	(2,000)
Issuance of restricted stock, net of forfeitures, shares		184,138
Dividends declared	(16,503,000)					(16,503,000)
Stock based compensation expense	12,298,000		12,298,000
Reclassification of compensation liability to be paid in shares	592,000		592,000
Purchases of treasury stock	(1,326,000)			(1,326,000)
Purchases of treasury stock, shares		(23,822)
Restricted stock returned for payment of taxes	(5,231,000)			(5,231,000)
Restricted stock returned for payment of taxes, shares		(86,270)
BALANCE at Sep. 30, 2017	$ 155,429,000	$ 100,000	$ 176,329,000	$ (50,910,000)	$ (1,849,000)	$ 31,759,000
BALANCE, shares at Sep. 30, 2017	8,884,421	8,884,421

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 17,092	$ 15,070
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	722	732
Amortization of intangible assets	1,449	1,470
Unrealized gains on trading investments	(539)	(676)
Stock based compensation expense	12,298	12,164
Deferred income taxes	1,481	114
Excess tax benefits from stock based compensation	0	(165)
Other Operating Activities, Cash Flow Statement	0	275
Change in operating assets and liabilities:
Net sales of investments - trading securities	8,931	23,147
Accounts receivable	1,686	(2,711)
Other current assets	(3,881)	900
Accounts payable and accrued liabilities	178	(82)
Increase (decrease) in accrued litigation liability	8,018	0
Compensation and benefits payable	(2,696)	(6,758)
Income taxes receivable/payable	(5,181)	(4,637)
Other liabilities	(111)	154
Net cash provided by operating activities	39,447	38,997
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(537)	(1,680)
Net cash used in investing activities	(537)	(1,680)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock	0	(5,629)
Payment for Repurchases of Stock for Benefit Plan	(1,326)	(614)
Restricted stock returned for payment of taxes	(5,231)	(3,710)
Excess tax benefits from stock based compensation	0	165
Other Payments to Acquire Businesses	0	(5,562)
Cash dividends paid	(16,787)	(14,827)
Net cash used in financing activities	(23,344)	(30,177)
Effect of currency rate changes on cash	2,191	812
Net Change in Cash and Cash Equivalents	17,757	7,952
Cash and cash equivalents, beginning of period	33,679	22,740
Cash and cash equivalents, end of period	51,436	30,692
Supplemental cash flow information:
Cash paid during the period for income taxes	10,245	12,632
Common stock issued for acquisition	0	3,734
Payments for (Proceeds from) Tenant Allowance	0	1,128
DividendsAccrued	$ 8,161	$ 7,682

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DESCRIPTION OF THE BUSINESS

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2017

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, L.L.C. (together “Westwood Management”), 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.

Divestiture of our Omaha Operations

On September 6, 2017, we entered into an agreement to sell the Omaha-based component of our Private Wealth business. The sale is expected to close on December 31, 2017, subject to usual and customary closing conditions and the receipt of regulatory approval from the Nebraska Department of Banking. We expect to receive proceeds of $7 million to $10.5 million, subject to client consents and net working capital requirements; however, we do not expect to record a material gain or loss on the sale within our Consolidated Statement of Comprehensive Income. The sale will reduce our goodwill and intangible assets but is not expected to have a material impact to our Consolidated Balance Sheet. The component is reported within both our Advisory and Trust segments. The sale does not represent a major strategic shift in our business and does not qualify for discontinued operations reporting.

Date of incorporation

Dec. 12, 2001

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2017

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, 2016, filed with the SEC. 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

Recently Adopted

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (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 in 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. Amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively. The amendment related to forfeitures, where an entity may account for forfeitures as they occur, should be applied retrospectively by means of a cumulative-effect adjustment to equity at the beginning of the period in which the guidance is adopted. 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 adopted ASU 2016-09 effective January 1, 2017. The following summarizes the effects of the adoption on our Condensed Consolidated Financial Statements:

Income Taxes - Upon adoption of this standard, all excess tax benefits and tax deficiencies, including tax benefits of dividends on share-based payment awards, are recognized as income tax expense or benefit in the consolidated statement of comprehensive income. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. As a result, the Company recognized discrete adjustments to income tax expense in the first nine months of 2017 of $1.0 million related to excess tax benefits, decreasing our effective tax rate for the first nine months of 2017 to 29.1%. Without the adjustment, our effective tax rate would have been 33.0%. The Company did not have any unrecognized excess tax benefits as of December 31, 2016 and therefore there was no cumulative-effect adjustment to retained earnings related to income taxes. The Company adopted the amendments related to the recognition of excess tax benefits and tax shortfalls prospectively, with no adjustments made to prior periods.

Forfeitures - Prior to adoption, stock-based compensation expense was recognized on a straight-line basis, net of estimated forfeitures, such that expense was recognized for stock-based awards that were expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption of this standard, the Company no longer applies an estimated forfeiture rate and instead accounts for forfeitures as they occur. The Company applied the modified retrospective adoption approach, resulting in a $711,000 cumulative-effect reduction to “Retained earnings” with the offset to “Additional paid-in-capital” on January 1, 2017.

Statements of Cash Flows - The Company historically accounted for excess tax benefits on the consolidated statements of cash flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The change in cash flow classification associated with excess tax benefits was adopted prospectively, resulting in the classification of the $1.0 million excess tax benefit as an operating activity during the nine months ended September 30, 2017. No change in classification was necessary for the presentation of restricted stock returned for payment of taxes, as the Company has historically presented such payments as a financing activity. The Company adopted this portion of the standard on a prospective basis, with no adjustments made to prior periods.

Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. Under the new standard, the Company is no longer required to estimate the tax effect of anticipated windfall benefits or shortfalls when projecting proceeds available for share repurchases in calculating dilutive shares. The Company utilized the modified retrospective adoption approach, with no adjustments made to prior periods.

Not Yet Adopted

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which

resulted from a joint project by the FASB and the International Accounting Standards Board to clarify the principles for

recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards

("IFRS"). The ASU will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Retrospective application is required, with the entity either applying the change to each prior reporting period presented or applying the cumulative effect of each prior reporting period presented at the date of initial application. Management has completed a detailed review of the terms and conditions of our current contracts, including performance based fees, and we do not anticipate a significant change in the timing of revenue recognized. As part of our review we analyzed our current business process and internal controls and do not anticipate implementing new procedures to successfully adopt the standard. We expect to enhance and add additional disclosures surrounding our revenue process including disaggregation of revenue and information about performance obligations that will help provide the financial statement users a better understanding of the nature, amount, timing and potential uncertainty of the revenue being recognized.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendment eliminates step two from the goodwill impairment test in order to simplify the subsequent measurement of goodwill. Under step two, an entity had to perform procedures to determine the fair value of its assets and liabilities at the impairment testing date following procedures required to determine the fair value of assets acquired and liabilities assumed in a business combination. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. The amendment is effective, on a prospective basis, for annual or interim periods beginning after December 15, 2019, with early adoption permitted. We do not expect the amendment to have a material impact on our Consolidated Financial Statements and expect to adopt the standard within the required time frame.

In May 2017, the FASB issued ASU 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting.The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modified accounting under ASC 718. The purpose of the amendment is to reduce diversity, cost and complexity in practice when analyzing and applying these modifications. The ASU is effective for periods beginning after December 15, 2017. We do not expect the amendment to have a material impact on our Consolidated Financial Statements and expect to adopt the standard within the required time frame.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2017

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 no anti-dilutive restricted shares outstanding for the three months ended September 30, 2017. There were approximately 2,453 anti-dilutive restricted shares outstanding for the three months ended September 30,2016, and 8,800 and 2,301 anti-dilutive restricted shares outstanding for the nine months ended September 30, 2017 and 2016, 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,
	2017		2016		2017		2016
Net income	$	4,132	$	5,887	$	17,092	$	15,070
Weighted average shares outstanding - basic	8,171,809		7,995,680		8,136,350		7,952,938
Dilutive potential shares from unvested restricted shares	248,940		184,276		214,576		259,530
Weighted average shares outstanding - diluted	8,420,749		8,179,956		8,350,926		8,212,468
Earnings per share:
Basic	$	0.51	$	0.74	$	2.10	$	1.89
Diluted	$	0.49	$	0.72	$	2.05	$	1.84

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INVESTMENTS

9 Months Ended

Sep. 30, 2017

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

INVESTMENTS

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

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
September 30, 2017:
U.S. Government and Government agency obligations	$	26,093	$	12	$	(14	)	$	26,091
Money market funds	9,925		—		—			9,925
Equity funds	11,510		578		(11		)	12,077
	$	47,528	$	590	$	(25	)	$	48,093
December 31, 2016:
U.S. Government and Government agency obligations	$	30,275	$	—	$	(2	)	$	30,273
Money market funds	14,127		—		—			14,127
Equity funds	12,057		204		(176		)	12,085
	$	56,459	$	204	$	(178	)	$	56,485

As of September 30, 2017 and December 31, 2016, $10.6 million and $11.0 million in corporate funds, respectively, were invested in Westwood Funds®, Westwood Common Trust Funds and Westwood Investment Funds PLC (the “UCITS Fund”). See Note 8 “Variable Interest Entities”

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2017

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, income taxes 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.

ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value and requires 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		Investments Measured at NAV(1)		Total
As of September 30, 2017:
Investments in trading securities	$	45,836	$	—	$	—	$	2,257	$	48,093
Total financial instruments	$	45,836	$	—	$	—	$	2,257	$	48,093
As of December 31, 2016:
Investments in trading securities	$	53,319	$	—	$	—	$	3,166	$	56,485
Total financial instruments	$	53,319	$	—	$	—	$	3,166	$	56,485
(1) Comprised of certain investments measured at fair value using net asset value (“NAV”) as a practical expedient. These investments were recategorized and are no longer included within Level 2 of the valuation hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on our consolidated balance sheets.

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BALANCE SHEET COMPONENTS

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BALANCE SHEET COMPONENTS

STOCKHOLDERS' EQUITY

Accumulated Other Comprehensive Loss

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

	As of September 30, 2017			As of December 31, 2016
Foreign currency translation adjustment	$	(1,849	)	$	(4,287	)
Accumulated other comprehensive loss	$	(1,849	)	$	(4,287	)

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VARIABLE INTEREST ENTITIES

9 Months Ended

Sep. 30, 2017

Variable Interest Entities [Abstract]

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

We have evaluated all of our advisory relationships with the UCITS Fund, the Westwood Funds®, limited liability companies (“LLCs”) and our relationship as sponsor of the Common Trust Funds (“CTFs”) to determine whether each of these entities is a variable interest entity (“VIE”) or voting ownership entity (“VOE”). Based on our analysis, we determined that the LLCs and CTFs were VIEs, as the at-risk equity holders do not have the ability to direct the activities that most significantly impact the entity’s economic performance, and the Company and its representatives have a majority control of the entities' respective boards of directors and can influence the respective entities' management and affairs. Although we have related parties on the UCITS Fund board of directors, the shareholders have rights to remove the current directors with a simple majority vote, so we determined the UCITS Fund is not a VIE. As the Company and its representatives do not have representation on the Westwood Funds® independent board of directors, which directs the activities that most significantly impact the entity's economic performance, we determined that the Westwood Funds® were not VIEs. Therefore, the UCITS Fund and the Westwood Funds® should be analyzed under the VOE consolidation method. Based on our analysis of our seed investments in these entities for the periods ending September 30, 2017 and December 31, 2016, we have not consolidated the LLCs or CTFs under the VIE method or the UCITS Fund or the Westwood Funds® under the VOE method, and therefore the financial results of these entities are not included in the Company’s consolidated financial results.

As of September 30, 2017 and December 31, 2016, the Company had seed investments in aggregate of approximately $10.6 million and $11.0 million, respectively, in the CTFs, the Westwood Funds, and 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 Company's seed investments in these funds are included in “Investments, at fair value” on our Condensed Consolidated Balance Sheet at September 30, 2017.

Otherwise, we have not 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 entities. Our seed investments in the above-mentioned Westwood Funds®, the UCITS Fund and the CTFs are accounted for as investments in accordance with our other investments described in Note 4 “Investments.” We recognized fee revenue from the Westwood VIEs and Westwood VOEs of approximately $13.2 million and $13.5 million for the three months ended September 30, 2017 and 2016, respectively. We recognized fee revenue from the Westwood VIEs and Westwood VOEs of approximately $39.1 million and $39.5 million for the nine months ended September 30, 2017 and 2016, respectively.

The following table displays the assets under management, the amounts of our seed investments that are included in “Investments, at fair value” on our consolidated balance sheets, and the risk of loss in each vehicle (in millions):

	As of September 30, 2017
	Assets Under Management		Corporate Investment		Amount at Risk
VIEs/VOEs:
Westwood Funds®	$	4,144	$	6	$	6
Common Trust Funds	2,602		2		2
LLCs	113		—		—
UCITS Fund	595		2		2
All other assets:
Private Wealth	3,107
Institutional	13,063
Total Assets Under Management	$	23,624

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LONG-TERM INCENTIVE COMPENSATION

9 Months Ended

Sep. 30, 2017

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 Fourth 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. In April 2017, stockholders approved an additional 250,000 shares to be authorized under the Plan, increasing the total number of shares issuable under the Plan (including predecessor plans to the Plan) to 4,648,100 shares. At September 30, 2017, approximately 433,000 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,
	2017		2016		2017		2016
Service condition stock-based compensation expense	$	2,591	$	2,679	$	7,828	$	7,978
Performance condition stock-based compensation expense	1,454		1,234		3,949		3,705
Stock-based compensation expense under the Plan	4,045		3,913		11,777		11,683
Canadian Plan stock-based compensation expense	188		169		521		481
Total stock-based compensation expense	$	4,233	$	4,082	$	12,298	$	12,164

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, 2017, there was approximately $26.3 million of unrecognized compensation cost for restricted stock grants under the Plan, which we expect to recognize over a weighted-average period of 2.2 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 and an adjustment for restrictions on dividends. This compensation cost is amortized on a straight-line basis over the applicable vesting period. As discussed in Note 2 “Summary of Significant Accounting Policies,” the Company made an accounting policy election to account for forfeitures as they occur effective upon the adoption of ASU 2016-09 on January 1, 2017.

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, 2017:

	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2017	607,501		$	54.67
Granted	143,460		61.20
Vested	(182,085	)	57.43
Forfeited	(36,579	)	55.11
Non-vested, September 30, 2017	532,297		$	55.46

Restricted Stock Subject to Service and Performance Conditions

Under the Plan, certain key employees were provided agreements for grants of restricted shares that vest over multiple year periods subject to achieving annual performance goals established by the Compensation Committee of Westwood’s Board of Directors. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares. For 2017, the goal is based on Income before income tax from our audited consolidated statement of comprehensive income for fiscal 2017. 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. The vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the Income before income tax from the Company’s audited consolidated financial statements. 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 2017, the Compensation Committee established the fiscal 2017 goal for our Chief Executive Officer and Chief Investment Officer as Income before income taxes of $24.0 million for 50% of their respective awards, and an Income before income taxes target of $34.0 million (ranging from 25% of target for threshold performance of $30.3 million to 185% of target for maximum performance of $42.5 million) for the remaining 50% of their respective awards. For all other restricted stock grants subject to performance conditions, the Compensation Committee established the fiscal 2017 goal as Income before income taxes of at least $24.0 million. These performance grants allow the Compensation Committee to exclude certain items, including legal settlements, from the Income before income taxes target. At the Committee's discretion, we excluded the $4.0 million legal settlement expense recorded during the third quarter of 2017 from our forecasted Income before income taxes target and concluded that it was probable that we would exceed the target performance goals required to vest the applicable percentage of the performance-based restricted shares this year and continued recording expense related to the shares expected to vest.

The following table details the status and changes in our restricted stock grants subject to service and performance conditions for the nine months ended September 30, 2017:

	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2017	153,620		$	55.90
Granted	157,877		54.86
Vested	(102,367	)	56.58
Forfeited	(45,675	)	55.86
Non-vested, September 30, 2017	163,455		$	55.87

The above amounts as of September 30, 2017 do not include 16,313 non-vested restricted shares that potentially vest over performance years subsequent to 2017 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 ($8.0 million in U.S. Dollars using the exchange rate on September 30, 2017) may be funded to the plan trustee for purchases of common stock with respect to awards granted under the Canadian Plan. At September 30, 2017, approximately $4.3 million CDN ($3.4 million in U.S. Dollars using the exchange rate on September 30, 2017) remains available for issuance under the Canadian Plan, or approximately 51,200 shares based on the closing share price of our stock of $67.27 as of September 30, 2017. During the first nine months of 2017, the trust formed pursuant to the Canadian Plan purchased in the open market 23,822 Westwood common shares for approximately $1.3 million. As of September 30, 2017, the trust holds 55,418 shares of Westwood common stock. As of September 30, 2017, unrecognized compensation cost related to restricted stock grants under the Canadian Plan totaled $864,000, which we expect to recognize over a weighted-average period of 1.8 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.

For awards earned prior to 2017, the award vested after approximately one year of service following the year in which the participant earned the award. Beginning in 2017, the award vests after approximately two years of service following the year in which the participant earned 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 either two or three 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, 2017 and 2016, we recorded expense of approximately $281,000 and $313,000, respectively, related to mutual fund share incentive awards. For the nine months ended September 30, 2017 and 2016, we recorded expense of approximately $819,000 and $933,000, respectively, related to mutual fund share incentive awards. As of September 30, 2017 and December 31, 2016, we had an accrued liability of approximately $1.5 million and $1.7 million, respectively, related to mutual fund share incentive awards.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2017

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, 2017 and 2016, we recorded trust fees from these accounts of $92,000 and $108,000, respectively. For the nine months ended September 30, 2017 and 2016, we recorded trust fees from these accounts of $277,000 and $305,000, respectively. There was $92,000 and $97,000 due from these accounts as of September 30, 2017 and December 31, 2016, respectively.

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 and the Westwood Funds®. Certain members of our management serve on the board of directors of the UCITS Fund, and we have capital invested in three of the Westwood Funds®. Under the terms of the investment advisory agreements, the Company earns quarterly fees paid by clients of the fund or by the funds directly. The fees are based on negotiated fee schedules applied to assets under management. These fees are commensurate with market rates. For the three months ended September 30, 2017 and 2016, the Company earned approximately $1.1 million and $370,000, respectively, in fees from the affiliated funds. For the nine months ended September 30, 2017 and 2016, the Company earned approximately $2.8 million and $1.0 million, respectively, in fees from the affiliated funds. 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, 2017 and December 31, 2016, $398,000 and $270,000, 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, 2017

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 related to the hiring of certain members of Westwood’s global and emerging markets investment team previously employed by AGF. AGF alleged that the former employees breached certain obligations when they resigned from AGF and that Westwood and Warren induced such breaches. AGF was 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 was 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 was seeking $5 million CDN in general damages, $1 million CDN per defendant in punitive damages, unspecified special damages, interest and costs.

On October 13, 2017, we reached a settlement with AGF that provides for the dismissal of all claims, with prejudice and without any admission of liability. We have agreed to pay AGF a one-time payment of $10 million CDN, half of which is expected to be covered by our insurance. During the third quarter of 2017, we recorded a net $4.0 million ($5 million CDN) charge related to the settlement and associated insurance coverage, with an $8.0 million ($10 million CDN) settlement liability recorded in “Accrued lawsuit settlement” and a $4.0 million ($5 million CDN) receivable from our insurance provider included in “Other current assets” on our Condensed Consolidated Balance Sheets at September 30, 2017.

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 received insurance proceeds of approximately $276,000 and $928,000 during the nine months ended September 30, 2017 and 2016, respectively. We had a receivable of approximately $113,000 and $186,000 as of September 30, 2017 and December 31, 2016, 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, 2017

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 Corp. and Westwood International, which provide investment advisory services to clients of similar type, are included in our Advisory segment along with Westwood Advisors, L.L.C.

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.

(in thousands)	Advisory		Trust			Westwood Holdings			Eliminations			Consolidated
Three Months Ended September 30, 2017
Net fee revenues from external sources	$	25,334	$	7,858		$	—		$	—		$	33,192
Net intersegment revenues	2,026		57			—			(2,083		)	—
Net interest and dividend revenue	111		43			—			—			154
Other, net	157		(11		)	—			—			146
Total revenues	$	27,628	$	7,947		$	—		$	(2,083	)	$	33,492
Economic Earnings	$	8,786	$	1,560		$	(1,356	)	$	—		$	8,990
Less:   Restricted stock expense												4,233
Intangible amortization												469
Deferred taxes on goodwill												156
Net income												$	4,132
Segment assets	$	208,444	$	73,170		$	18,388		$	(108,640	)	$	191,362
Segment goodwill	$	5,219	$	21,925		$	—		$	—		$	27,144
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

(in thousands)	Advisory		Trust			Westwood Holdings			Eliminations			Consolidated
Nine Months Ended September 30, 2017
Net fee revenues from external sources	$	75,036	$	23,570		$	—		$	—		$	98,606
Net intersegment revenues	6,050		160			—			(6,210		)	—
Net interest and dividend revenue	391		67			—			—			458
Other, net	811		(4		)	—			—			807
Total revenues	$	82,288	$	23,793		$	—		$	(6,210	)	$	99,871
Economic Earnings	$	31,372	$	4,528		$	(4,592	)	$	—		$	31,308
Less:   Restricted stock expense												12,298
Intangible amortization												1,449
Deferred taxes on goodwill												469
Net income												$	17,092
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

We are providing a performance measure that we refer to as Economic Earnings. Our management and the 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):

	Three Months Ended September 30,
	2017		2016
Net income	$	4,132	$	5,887
Add: Stock-based compensation expense	4,233		4,082
Add: Intangible amortization	469		490
Add: Tax benefit from goodwill amortization	156		156
Economic Earnings	$	8,990	$	10,615

	Nine Months Ended September 30,
	2017		2016
Net Income	$	17,092	$	15,070
Add: Stock-based compensation expense	12,298		12,164
Add: Intangible amortization	1,449		1,470
Add: Tax benefit from goodwill amortization	469		390
Economic Earnings	$	31,308	$	29,094

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2017

Subsequent Event [Line Items]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Dividend Declared

In October 2017, Westwood’s Board of Directors declared a quarterly cash dividend of $0.68 per common share, an increase of 10% from the previous quarterly dividend rate, payable on January 2, 2018 to stockholders of record on December 8, 2017.

AGF Lawsuits

On October 13, 2017, we reached a settlement with AGF regarding their lawsuits and our related counterclaim. See Note 12 “Commitments and Contingencies” for additional discussion of the settlement.

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INCOME TAXES (Notes)

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

10. INCOME TAXES

Our effective income tax rate was 28.2% for the third quarter of 2017, compared with 35.0% for the third quarter of 2016. The decrease is primarily related to the tax impact of our legal settlement with AGF (see further discussion in Note 12 “Commitments and Contingencies”) in the third quarter of 2017 and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the third quarter of 2016. Our effective income tax rate was 29.1% for the first nine months of 2017, compared with 35.1% for the first nine months of 2016. The decrease is primarily related to the adoption of ASU 2016-09 Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires recognition of excess tax benefits related to employees' restricted stock vesting to be recorded within income tax expense. Prior to adoption of ASU 2016-09, excess tax benefits were recorded through Additional paid-in capital, with no impact to the effective tax rate or our consolidated statement of comprehensive income. See further discussion in Note 2 “Summary of Significant Accounting Policies.” The remaining decrease is related to the tax impact of our legal settlement with AGF (see further discussion in Note 12 “Commitments and Contingencies”) in the third quarter of 2017 and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the first and third quarters of 2016.

As of September 30, 2017 and December 31, 2016, the Company's gross liability related to uncertain tax positions was $196,000 and $2.5 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, 2017 is as follows (in thousands):

Balance at January 1, 2017	$	2,462
Additions for tax positions related to the current year	68
Additions for tax positions related to prior years	—
Reductions for tax positions related to prior years	(768		)
Payments for tax positions related to prior years	(1,566		)
Balance at September 30, 2017	$	196

Within the next twelve months, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $196,000 as a result of settlements with certain taxing authorities, which, if recognized, would decrease our provision for income taxes by $130,000.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2017

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, 2016, filed with the SEC. 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

Recently Adopted

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (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 in 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. Amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively. The amendment related to forfeitures, where an entity may account for forfeitures as they occur, should be applied retrospectively by means of a cumulative-effect adjustment to equity at the beginning of the period in which the guidance is adopted. 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 adopted ASU 2016-09 effective January 1, 2017. The following summarizes the effects of the adoption on our Condensed Consolidated Financial Statements:

Income Taxes - Upon adoption of this standard, all excess tax benefits and tax deficiencies, including tax benefits of dividends on share-based payment awards, are recognized as income tax expense or benefit in the consolidated statement of comprehensive income. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. As a result, the Company recognized discrete adjustments to income tax expense in the first nine months of 2017 of $1.0 million related to excess tax benefits, decreasing our effective tax rate for the first nine months of 2017 to 29.1%. Without the adjustment, our effective tax rate would have been 33.0%. The Company did not have any unrecognized excess tax benefits as of December 31, 2016 and therefore there was no cumulative-effect adjustment to retained earnings related to income taxes. The Company adopted the amendments related to the recognition of excess tax benefits and tax shortfalls prospectively, with no adjustments made to prior periods.

Forfeitures - Prior to adoption, stock-based compensation expense was recognized on a straight-line basis, net of estimated forfeitures, such that expense was recognized for stock-based awards that were expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption of this standard, the Company no longer applies an estimated forfeiture rate and instead accounts for forfeitures as they occur. The Company applied the modified retrospective adoption approach, resulting in a $711,000 cumulative-effect reduction to “Retained earnings” with the offset to “Additional paid-in-capital” on January 1, 2017.

Statements of Cash Flows - The Company historically accounted for excess tax benefits on the consolidated statements of cash flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The change in cash flow classification associated with excess tax benefits was adopted prospectively, resulting in the classification of the $1.0 million excess tax benefit as an operating activity during the nine months ended September 30, 2017. No change in classification was necessary for the presentation of restricted stock returned for payment of taxes, as the Company has historically presented such payments as a financing activity. The Company adopted this portion of the standard on a prospective basis, with no adjustments made to prior periods.

Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. Under the new standard, the Company is no longer required to estimate the tax effect of anticipated windfall benefits or shortfalls when projecting proceeds available for share repurchases in calculating dilutive shares. The Company utilized the modified retrospective adoption approach, with no adjustments made to prior periods.

Not Yet Adopted

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which

resulted from a joint project by the FASB and the International Accounting Standards Board to clarify the principles for

recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards

("IFRS"). The ASU will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Retrospective application is required, with the entity either applying the change to each prior reporting period presented or applying the cumulative effect of each prior reporting period presented at the date of initial application. Management has completed a detailed review of the terms and conditions of our current contracts, including performance based fees, and we do not anticipate a significant change in the timing of revenue recognized. As part of our review we analyzed our current business process and internal controls and do not anticipate implementing new procedures to successfully adopt the standard. We expect to enhance and add additional disclosures surrounding our revenue process including disaggregation of revenue and information about performance obligations that will help provide the financial statement users a better understanding of the nature, amount, timing and potential uncertainty of the revenue being recognized.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendment eliminates step two from the goodwill impairment test in order to simplify the subsequent measurement of goodwill. Under step two, an entity had to perform procedures to determine the fair value of its assets and liabilities at the impairment testing date following procedures required to determine the fair value of assets acquired and liabilities assumed in a business combination. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. The amendment is effective, on a prospective basis, for annual or interim periods beginning after December 15, 2019, with early adoption permitted. We do not expect the amendment to have a material impact on our Consolidated Financial Statements and expect to adopt the standard within the required time frame.

In May 2017, the FASB issued ASU 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting.The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modified accounting under ASC 718. The purpose of the amendment is to reduce diversity, cost and complexity in practice when analyzing and applying these modifications. The ASU is effective for periods beginning after December 15, 2017. We do not expect the amendment to have a material impact on our Consolidated Financial Statements 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, income taxes 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.

ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value and requires 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

We have evaluated all of our advisory relationships with the UCITS Fund, the Westwood Funds®, limited liability companies (“LLCs”) and our relationship as sponsor of the Common Trust Funds (“CTFs”) to determine whether each of these entities is a variable interest entity (“VIE”) or voting ownership entity (“VOE”). Based on our analysis, we determined that the LLCs and CTFs were VIEs, as the at-risk equity holders do not have the ability to direct the activities that most significantly impact the entity’s economic performance, and the Company and its representatives have a majority control of the entities' respective boards of directors and can influence the respective entities' management and affairs. Although we have related parties on the UCITS Fund board of directors, the shareholders have rights to remove the current directors with a simple majority vote, so we determined the UCITS Fund is not a VIE. As the Company and its representatives do not have representation on the Westwood Funds® independent board of directors, which directs the activities that most significantly impact the entity's economic performance, we determined that the Westwood Funds® were not VIEs. Therefore, the UCITS Fund and the Westwood Funds® should be analyzed under the VOE consolidation method. Based on our analysis of our seed investments in these entities for the periods ending September 30, 2017 and December 31, 2016, we have not consolidated the LLCs or CTFs under the VIE method or the UCITS Fund or the Westwood Funds® under the VOE method, and therefore the financial results of these entities are not included in the Company’s consolidated financial results.

Restricted Stock Subject Only To A Service Condition Policy [Text Block]

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 and an adjustment for restrictions on dividends. 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 were provided agreements for grants of restricted shares that vest over multiple year periods subject to achieving annual performance goals established by the Compensation Committee of Westwood’s Board of Directors. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares. For 2017, the goal is based on Income before income tax from our audited consolidated statement of comprehensive income for fiscal 2017. 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. The vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the Income before income tax from the Company’s audited consolidated financial statements. 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 2017, the Compensation Committee established the fiscal 2017 goal for our Chief Executive Officer and Chief Investment Officer as Income before income taxes of $24.0 million for 50% of their respective awards, and an Income before income taxes target of $34.0 million (ranging from 25% of target for threshold performance of $30.3 million to 185% of target for maximum performance of $42.5 million) for the remaining 50% of their respective awards. For all other restricted stock grants subject to performance conditions, the Compensation Committee established the fiscal 2017 goal as Income before income taxes of at least $24.0 million. These performance grants allow the Compensation Committee to exclude certain items, including legal settlements, from the Income before income taxes target. At the Committee's discretion, we excluded the $4.0 million legal settlement expense recorded during the third quarter of 2017 from our forecasted Income before income taxes target and concluded that it was probable that we would exceed the target performance goals required to vest the applicable percentage of the performance-based restricted shares this year and continued recording expense related to the shares expected to vest.

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2017

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,
	2017		2016		2017		2016
Net income	$	4,132	$	5,887	$	17,092	$	15,070
Weighted average shares outstanding - basic	8,171,809		7,995,680		8,136,350		7,952,938
Dilutive potential shares from unvested restricted shares	248,940		184,276		214,576		259,530
Weighted average shares outstanding - diluted	8,420,749		8,179,956		8,350,926		8,212,468
Earnings per share:
Basic	$	0.51	$	0.74	$	2.10	$	1.89
Diluted	$	0.49	$	0.72	$	2.05	$	1.84

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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Investment Balances

Investment balances are presented in the table below (in thousands):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
September 30, 2017:
U.S. Government and Government agency obligations	$	26,093	$	12	$	(14	)	$	26,091
Money market funds	9,925		—		—			9,925
Equity funds	11,510		578		(11		)	12,077
	$	47,528	$	590	$	(25	)	$	48,093
December 31, 2016:
U.S. Government and Government agency obligations	$	30,275	$	—	$	(2	)	$	30,273
Money market funds	14,127		—		—			14,127
Equity funds	12,057		204		(176		)	12,085
	$	56,459	$	204	$	(178	)	$	56,485

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2017

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		Investments Measured at NAV(1)		Total
As of September 30, 2017:
Investments in trading securities	$	45,836	$	—	$	—	$	2,257	$	48,093
Total financial instruments	$	45,836	$	—	$	—	$	2,257	$	48,093
As of December 31, 2016:
Investments in trading securities	$	53,319	$	—	$	—	$	3,166	$	56,485
Total financial instruments	$	53,319	$	—	$	—	$	3,166	$	56,485
(1) Comprised of certain investments measured at fair value using net asset value (“NAV”) as a practical expedient. These investments were recategorized and are no longer included within Level 2 of the valuation hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on our consolidated balance sheets.

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BALANCE SHEET COMPONENTS (Tables)

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Components of Accumulated Other Comprehensive Loss

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

	As of September 30, 2017			As of December 31, 2016
Foreign currency translation adjustment	$	(1,849	)	$	(4,287	)
Accumulated other comprehensive loss	$	(1,849	)	$	(4,287	)

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VARIABLE INTEREST ENTITIES (Tables)

9 Months Ended

Sep. 30, 2017

Variable Interest Entities [Abstract]

Variable Interest Entities

The following table displays the assets under management, the amounts of our seed investments that are included in “Investments, at fair value” on our consolidated balance sheets, and the risk of loss in each vehicle (in millions):

	As of September 30, 2017
	Assets Under Management		Corporate Investment		Amount at Risk
VIEs/VOEs:
Westwood Funds®	$	4,144	$	6	$	6
Common Trust Funds	2,602		2		2
LLCs	113		—		—
UCITS Fund	595		2		2
All other assets:
Private Wealth	3,107
Institutional	13,063
Total Assets Under Management	$	23,624

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LONG-TERM INCENTIVE COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2017

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,
	2017		2016		2017		2016
Service condition stock-based compensation expense	$	2,591	$	2,679	$	7,828	$	7,978
Performance condition stock-based compensation expense	1,454		1,234		3,949		3,705
Stock-based compensation expense under the Plan	4,045		3,913		11,777		11,683
Canadian Plan stock-based compensation expense	188		169		521		481
Total stock-based compensation expense	$	4,233	$	4,082	$	12,298	$	12,164

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, 2017:

	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2017	607,501		$	54.67
Granted	143,460		61.20
Vested	(182,085	)	57.43
Forfeited	(36,579	)	55.11
Non-vested, September 30, 2017	532,297		$	55.46

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

The following table details the status and changes in our restricted stock grants subject to service and performance conditions for the nine months ended September 30, 2017:

	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2017	153,620		$	55.90
Granted	157,877		54.86
Vested	(102,367	)	56.58
Forfeited	(45,675	)	55.86
Non-vested, September 30, 2017	163,455		$	55.87

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Intersegment Balances

(in thousands)	Advisory		Trust			Westwood Holdings			Eliminations			Consolidated
Three Months Ended September 30, 2017
Net fee revenues from external sources	$	25,334	$	7,858		$	—		$	—		$	33,192
Net intersegment revenues	2,026		57			—			(2,083		)	—
Net interest and dividend revenue	111		43			—			—			154
Other, net	157		(11		)	—			—			146
Total revenues	$	27,628	$	7,947		$	—		$	(2,083	)	$	33,492
Economic Earnings	$	8,786	$	1,560		$	(1,356	)	$	—		$	8,990
Less:   Restricted stock expense												4,233
Intangible amortization												469
Deferred taxes on goodwill												156
Net income												$	4,132
Segment assets	$	208,444	$	73,170		$	18,388		$	(108,640	)	$	191,362
Segment goodwill	$	5,219	$	21,925		$	—		$	—		$	27,144
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

(in thousands)	Advisory		Trust			Westwood Holdings			Eliminations			Consolidated
Nine Months Ended September 30, 2017
Net fee revenues from external sources	$	75,036	$	23,570		$	—		$	—		$	98,606
Net intersegment revenues	6,050		160			—			(6,210		)	—
Net interest and dividend revenue	391		67			—			—			458
Other, net	811		(4		)	—			—			807
Total revenues	$	82,288	$	23,793		$	—		$	(6,210	)	$	99,871
Economic Earnings	$	31,372	$	4,528		$	(4,592	)	$	—		$	31,308
Less:   Restricted stock expense												12,298
Intangible amortization												1,449
Deferred taxes on goodwill												469
Net income												$	17,092
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

ReconciliationFromNetIncomeToNonGaapMeasure [Table Text Block]

The following tables provide a reconciliation of Net income to Economic Earnings (in thousands):

	Three Months Ended September 30,
	2017		2016
Net income	$	4,132	$	5,887
Add: Stock-based compensation expense	4,233		4,082
Add: Intangible amortization	469		490
Add: Tax benefit from goodwill amortization	156		156
Economic Earnings	$	8,990	$	10,615

	Nine Months Ended September 30,
	2017		2016
Net Income	$	17,092	$	15,070
Add: Stock-based compensation expense	12,298		12,164
Add: Intangible amortization	1,449		1,470
Add: Tax benefit from goodwill amortization	469		390
Economic Earnings	$	31,308	$	29,094

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INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block]

A reconciliation of the change in recorded uncertain tax positions during the nine months ended September 30, 2017 is as follows (in thousands):

Balance at January 1, 2017	$	2,462
Additions for tax positions related to the current year	68
Additions for tax positions related to prior years	—
Reductions for tax positions related to prior years	(768		)
Payments for tax positions related to prior years	(1,566		)
Balance at September 30, 2017	$	196

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DESCRIPTION OF THE BUSINESS Omaha Operations Divestiture (Details) $ in Millions	9 Months Ended
	Sep. 30, 2017 USD ($)
Minimum [Member]
Cash Proceeds From Divestiture [Line Items]
Proceeds from Divestiture of Businesses	$ 7.0
Maximum [Member]
Cash Proceeds From Divestiture [Line Items]
Proceeds from Divestiture of Businesses	$ 10.5

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Provision for income taxes	$ 1,620	$ 3,166	$ 7,013	$ 8,141
Effective Income Tax Rate Reconciliation, Percent	28.20%	35.00%	29.10%	35.10%
Adoption of ASU 2016-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Tax rate excluding ASU 2016-09 adoption			33.00%
Provision for income taxes			$ 1,000
Effective Income Tax Rate Reconciliation, Percent			29.10%

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EARNINGS PER SHARE (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Restricted Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive restricted shares	0	2,453	8,800	2,301

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Computation of Basic and Diluted Shares
Net income	$ 4,132	$ 5,887	$ 17,092	$ 15,070
Weighted average shares outstanding - basic (shares)	8,171,809	7,995,680	8,136,350	7,952,938
Dilutive potential shares from unvested restricted shares (shares)	248,940	184,276	214,576	259,530
Weighted average shares outstanding - diluted (shares)	8,420,749	8,179,956	8,350,926	8,212,468
Earnings per share:
Basic (dollars per share)	$ 0.51	$ 0.74	$ 2.10	$ 1.89
Diluted (dollars per share)	$ 0.49	$ 0.72	$ 2.05	$ 1.84

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INVESTMENTS (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Investment balances
Cost	$ 47,528	$ 56,459
Gross Unrealized Gains	590	204
Gross Unrealized Losses	(25)	(178)
Estimated Market Value	48,093	56,485
U.S. Government and Government agency obligations
Investment balances
Cost	26,093	30,275
Gross Unrealized Gains	12	0
Gross Unrealized Losses	(14)	(2)
Estimated Market Value	26,091	30,273
Money market funds
Investment balances
Cost	9,925	14,127
Estimated Market Value	9,925	14,127
Equity funds
Investment balances
Cost	11,510	12,057
Gross Unrealized Gains	578	204
Gross Unrealized Losses	(11)	(176)
Estimated Market Value	$ 12,077	$ 12,085

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INVESTMENTS (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule Of Investments [Line Items]
Estimated Market Value	$ 48,093	$ 56,485
VIE
Schedule Of Investments [Line Items]
Estimated Market Value	$ 10,600	$ 11,000

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Investments in securities:
Investments in trading securities	$ 48,093	$ 56,485
Fair Value, Net Asset (Liability)	48,093	56,485
Inputs, Net Asset Value [Member]
Investments in securities:
Investments in trading securities	2,257	3,166
Level 1
Investments in securities:
Investments in trading securities	45,836	53,319
Fair Value, Net Asset (Liability)	45,836	53,319
Level 2
Investments in securities:
Investments in trading securities	0	0
Fair Value, Net Asset (Liability)	0	0
Level 3
Investments in securities:
Investments in trading securities	0	0
Fair Value, Net Asset (Liability)	$ 0	$ 0

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ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, Impairment Loss	$ 0	$ 0	$ 0	$ 0
Impairment of Intangible Assets (Excluding Goodwill)	$ 0	$ 0	$ 0	$ 0

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BALANCE SHEET COMPONENTS (Details 1) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Components of accumulated other comprehensive loss
Foreign currency translation adjustment	$ (1,849)	$ (4,287)
Accumulated other comprehensive loss	$ (1,849)	$ (4,287)

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VARIABLE INTEREST ENTITIES (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Variable Interest Entity [Line Items]
Trading Securities	$ 48,093		$ 48,093		$ 56,485
Fee revenues from Westwood VIEs	13,200	$ 13,500	39,100	$ 39,500
VIE
Variable Interest Entity [Line Items]
Trading Securities	10,600		10,600		$ 11,000
Common Trust Funds
Variable Interest Entity [Line Items]
Trading Securities	2,000		2,000
UCITS Fund
Variable Interest Entity [Line Items]
Trading Securities	$ 2,000		$ 2,000

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VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Variable Interest Entities
Assets Under Management	$ 23,624,000
Estimated Market Value	48,093	$ 56,485
Westwood Funds®
Variable Interest Entities
Assets Under Management	4,144,000
Estimated Market Value	6,000
Amount at Risk	6,000
Common Trust Funds
Variable Interest Entities
Assets Under Management	2,602,000
Estimated Market Value	2,000
Amount at Risk	2,000
UCITS Fund
Variable Interest Entities
Assets Under Management	595,000
Estimated Market Value	2,000
Amount at Risk	2,000
Private Wealth
Variable Interest Entities
Assets Under Management	3,107,000
Institutional
Variable Interest Entities
Assets Under Management	13,063,000
LLCs
Variable Interest Entities
Assets Under Management	$ 113,000

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LONG-TERM INCENTIVE COMPENSATION (Details Textual) $ / shares in Units, CAD in Millions		3 Months Ended			9 Months Ended
	Apr. 26, 2017 shares	Sep. 30, 2017 USD ($) $ / shares shares	Sep. 30, 2017 CAD shares	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) $ / shares shares	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($) shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Provision for income taxes		$ 1,620,000		$ 3,166,000	$ 7,013,000	$ 8,141,000
Amount of shares purchased in the open market					0	5,629,000
Remaining unrecognized compensation cost recognized over a remaining weighted average period		2 years 2 months 10 days	2 years 2 months 10 days
Accrued liability		$ 1,500,000			1,500,000		$ 1,700,000
Mutual Fund [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Mutual fund vesting period		1 year	1 year
Expense related to mutual fund share incentive awards		$ 281,000		313,000	$ 819,000	933,000
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Shares Purchased for Award | shares	250,000
Total number of shares that may be issued under the stock based compensation Plan (including predecessor plans to the Plan) | shares		4,648,100			4,648,100
Shares remain available for issuance | shares		433,000			433,000
Remaining unrecognized compensation cost		$ 26,300,000			$ 26,300,000
Nonvested restricted shares | shares		532,297			532,297		607,501
Expense related to mutual fund share incentive awards		$ 4,233,000		$ 4,082,000	$ 12,298,000	$ 12,164,000
Canadian Plan | Westwood International Advisors Inc
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares remain available for issuance | shares		51,200			51,200
Share Based Compensation Arrangement By Share Based Payment Award Available For Grant, Original		$ 8,000,000	CAD 10.0
Fund purchases of common stock		55,418			$ 55,418
Purchases of common stock with respect to awards granted		$ 3,400,000	CAD 4.3
Share price | $ / shares		$ 67.27			$ 67.27
Amount of shares purchased in the open market		$ 1,300,000
Purchases of treasury stock, shares | shares		23,822	23,822
Remaining unrecognized compensation cost		$ 864,000			$ 864,000
Remaining unrecognized compensation cost recognized over a remaining weighted average period		1 year 10 months 3 days	1 year 10 months 3 days
Performance​ Based​ Restricted​ Shares​ For Future Performance Years
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested restricted shares | shares		16,313			16,313
Share-based Compensation Award, First 50% of CEO and CIO Award | Target [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share Pretax Income Goal					$ 24,000,000
Share-based Compensation Award, Second 50% of CEO and CIO Award | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share Pretax Income Goal					$ 30,300,000
Percentage of Pretax income Goal Earned					25.00%
Share-based Compensation Award, Second 50% of CEO and CIO Award | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share Pretax Income Goal					$ 42,500,000
Percentage of Pretax income Goal Earned					185.00%
Share-based Compensation Award, Second 50% of CEO and CIO Award | Target [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share Pretax Income Goal					$ 34,000,000
Share-based Compensation Award, All Other Performance Grants | Target [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share Pretax Income Goal					$ 24,000,000

XML

LONG-TERM INCENTIVE COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
DomesticEmployeeServiceAward [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 2,591	$ 2,679	$ 7,828	$ 7,978
Performance Shares [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	1,454	1,234	3,949	3,705
DomesticServiceAndPerformanceAward [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	4,045	3,913	11,777	11,683
CanadianEmployeeServiceAward [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	188	169	521	481
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 4,233	$ 4,082	$ 12,298	$ 12,164

XML

LONG-TERM INCENTIVE COMPENSATION (Details 1) - Restricted Shares Subject Only to a Service Condition	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Restricted shares subject only to a service condition:
Non-vested, beginning balance, shares | shares	607,501
Granted (shares) | shares	143,460
Vested (shares) | shares	(182,085)
Forfeited (shares) | shares	(36,579)
Non-vested, ending balance, shares | shares	532,297
Non-vested, beginning balance, (dollars per share) | $ / shares	$ 54.67
Granted (dollars per share) | $ / shares	61.20
Vested (dollars per share) | $ / shares	57.43
Forfeited (dollars per share) | $ / shares	55.11
Non-vested, ending balance, (dollars per share) | $ / shares	$ 55.46

XML

LONG-TERM INCENTIVE COMPENSATION (Details 2) - Restricted Shares Subject to Service and Performance Conditions	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Restricted shares subject only to a service condition:
Non-vested, beginning balance, shares | shares	153,620
Granted (shares) | shares	157,877
Vested (shares) | shares	(102,367)
Forfeited (shares) | shares	(45,675)
Non-vested, ending balance, shares | shares	163,455
Non-vested, beginning balance, (dollars per share) | $ / shares	$ 55.90
Granted (dollars per share) | $ / shares	54.86
Vested (dollars per share) | $ / shares	56.58
Forfeited (dollars per share) | $ / shares	55.86
Non-vested, ending balance, (dollars per share) | $ / shares	$ 55.87

XML

RELATED PARTY TRANSACTIONS (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
UCITS Fund
Related Party Transaction [Line Items]
Fees earned from related party	$ 1,100,000	$ 370,000	$ 2,800,000	$ 1,021,000
Fees unpaid from related party	398,000		398,000		$ 270,000
Trust
Related Party Transaction [Line Items]
Due from related party	92,000		92,000		$ 97,000
Fees earned from related party	$ 92,000	$ 108,000	$ 277,000	$ 305,000

XML

COMMITMENTS AND CONTINGENCIES (Details Textual) CAD in Millions				3 Months Ended			9 Months Ended
	Nov. 06, 2012 CAD	Nov. 05, 2012 CAD	Aug. 03, 2012 CAD	Sep. 30, 2017 USD ($)	Sep. 30, 2017 CAD	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2017 CAD	Sep. 30, 2016 USD ($)	Sep. 30, 2017 CAD	Dec. 31, 2016 USD ($)
Loss Contingencies [Line Items]
Estimated Litigation Liability, Current | $				$ 8,018,000			$ 8,018,000				$ 0
Legal settlement expense | $				$ 4,009,000		$ 0	4,009,000		$ 0
Percentage of defense costs which will be covered by insurance				50.00%	50.00%
Insurance proceeds | $							276,000		$ 928,000
Receivable | $				$ 113,000			113,000				$ 186,000
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]
Estimated Litigation Liability, Current				8,000,000			8,000,000			CAD 10
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
One-time litigation payment								CAD 10
Legal settlement expense				4,000,000	CAD 5
Receivable				$ 4,000,000			$ 4,000,000			CAD 5
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

XML

SEGMENT REPORTING (Details Textual)	3 Months Ended
	Sep. 30, 2017 Segment
Segment Reporting [Abstract]
Number of operating segments	2

XML

SEGMENT REPORTING (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Dec. 31, 2016

Jun. 30, 2016

Segment Reporting Information [Line Items]

ReconciliationFromNetIncomeToNonGaapMeasure [Table Text Block]

The following tables provide a reconciliation of Net income to Economic Earnings (in thousands):

	Three Months Ended September 30,
	2017		2016
Net income	$	4,132	$	5,887
Add: Stock-based compensation expense	4,233		4,082
Add: Intangible amortization	469		490
Add: Tax benefit from goodwill amortization	156		156
Economic Earnings	$	8,990	$	10,615

	Nine Months Ended September 30,
	2017		2016
Net Income	$	17,092	$	15,070
Add: Stock-based compensation expense	12,298		12,164
Add: Intangible amortization	1,449		1,470
Add: Tax benefit from goodwill amortization	469		390
Economic Earnings	$	31,308	$	29,094

Net fee revenues from external sources

$ 33,192

$ 31,363

$ 98,606

$ 91,361

Net interest and dividend revenue

154

133

458

369

Other, net

146

281

807

199

Total revenues

33,492

31,777

99,871

91,929

Economic Earnings

8,990

10,615

31,308

29,094

Intangible amortization

469

490

1,449

1,470

Deferred taxes on goodwill

156

156

469

390

Net income

4,132

5,887

17,092

15,070

Segment assets

191,362

191,362

$ 179,678

$ 169,698

Segment goodwill

27,144

27,144

$ 27,144

27,144

Operating Segments | Advisory

Segment Reporting Information [Line Items]

Net fee revenues from external sources

25,334

23,673

75,036

68,563

Net intersegment revenues

2,026

5,275

6,050

14,455

Net interest and dividend revenue

111

128

391

360

Other, net

157

279

811

462

Total revenues

27,628

29,355

82,288

83,840

Economic Earnings

8,786

10,270

31,372

30,493

Segment assets

208,444

208,444

163,826

Segment goodwill

5,219

5,219

5,219

Operating Segments | Trust

Segment Reporting Information [Line Items]

Net fee revenues from external sources

7,858

7,690

23,570

22,798

Net intersegment revenues

57

41

160

82

Net interest and dividend revenue

43

5

67

9

Other, net

(11)

2

(4)

(263)

Total revenues

7,947

7,738

23,793

22,626

Economic Earnings

1,560

1,690

4,528

4,160

Segment assets

73,170

73,170

65,986

Segment goodwill

21,925

21,925

21,925

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

(1,356)

(1,345)

(4,592)

(5,559)

Segment assets

18,388

18,388

13,046

Segment goodwill

0

0

0

Eliminations

Segment Reporting Information [Line Items]

Net fee revenues from external sources

0

0

0

0

Net intersegment revenues

(2,083)

(5,316)

(6,210)

(14,537)

Net interest and dividend revenue

0

0

0

0

Other, net

0

0

0

0

Total revenues

(2,083)

(5,316)

(6,210)

(14,537)

Economic Earnings

0

0

0

0

Segment assets

(108,640)

(108,640)

(73,160)

Segment goodwill

0

0

$ 0

Restricted Stock

Segment Reporting Information [Line Items]

Allocated Share-based Compensation Expense

$ 4,233

$ 4,082

$ 12,298

$ 12,164

XML

SUBSEQUENT EVENTS (Details Textual) - $ / shares		3 Months Ended		9 Months Ended
	Oct. 25, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Subsequent Event [Line Items]
Dividends declared per share (dollars per share)		$ 0.62	$ 0.57	$ 1.86	$ 1.71
Subsequent Event [Member]
Subsequent Event [Line Items]
Dividends declared per share (dollars per share)	$ 0.68
Dividends payable, date to be paid	Jan. 02, 2018
Dividends payable, date of record	Dec. 08, 2017

XML

INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Effective Income Tax Rate Reconciliation, Percent	28.20%	35.00%	29.10%	35.10%
Unrecognized Tax Benefits	$ 196,000		$ 196,000		$ 2,462,000
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions			68,000
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions			0
Unrecognized Tax Benefits, Decrease Resulting from Prior Period Tax Positions			(768,000)
Unrecognized Tax Benefits, Increase Resulting from Settlements with Taxing Authorities			1,566,000
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit	196,000		196,000
Significant Change in Income Tax Provision is Reasonably Possible, Amount of Unrecorded Benefit	$ 130,000		$ 130,000
Adoption of ASU 2016-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Effective Income Tax Rate Reconciliation, Percent			29.10%