Valuation of Financial Instruments by Pricing Observability Levels |
The following table summarizes the valuation of the Company’s financial instruments by pricing observability levels defined in ASC 820 as of December 31, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Counterparty | | | | | | | | | | and Cash | | | | | | | | | | Collateral | | | (Dollars in thousands) | Level I | | Level II | | Level III | | Netting (1) | | Total | Assets: | | | | | | | | | | Financial instruments and other inventory positions owned: | | | | | | | | | | Corporate securities: | | | | | | | | | | Equity securities | $ | 39,711 |
| | $ | 14,386 |
| | $ | — |
| | $ | — |
| | $ | 54,097 |
| Convertible securities | — |
| | 80,784 |
| | — |
| | — |
| | 80,784 |
| Fixed income securities | — |
| | 10,002 |
| | 100 |
| | — |
| | 10,102 |
| Municipal securities: | | | | | | | | | | Taxable securities | — |
| | 232,379 |
| | — |
| | — |
| | 232,379 |
| Tax-exempt securities | — |
| | 459,432 |
| | 1,433 |
| | — |
| | 460,865 |
| Short-term securities | — |
| | 61,964 |
| | 656 |
| | — |
| | 62,620 |
| Asset-backed securities | — |
| | 12 |
| | 119,799 |
| | — |
| | 119,811 |
| U.S. government agency securities | — |
| | 304,737 |
| | — |
| | — |
| | 304,737 |
| Derivative contracts | 19 |
| | 351,589 |
| | 691 |
| | (313,666 | ) | | 38,633 |
| Total financial instruments and other inventory positions owned: | 39,730 |
| | 1,515,285 |
| | 122,679 |
| | (313,666 | ) | | 1,364,028 |
| | | | | | | | | | | Cash equivalents | 101,629 |
| | — |
| | — |
| | — |
| | 101,629 |
| | | | | | | | | | | Investments at fair value | 20,690 |
| | — |
| | 49,240 |
| | — |
| | 69,930 |
| Total assets | $ | 162,049 |
| | $ | 1,515,285 |
| | $ | 171,919 |
| | $ | (313,666 | ) | | $ | 1,535,587 |
| | | | | | | | | | | Liabilities: | | | | | | | | | | Financial instruments and other inventory positions sold, but not yet purchased: | | | | | | | | | | Corporate securities: | | | | | | | | | | Equity securities | $ | 69,205 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 69,205 |
| Fixed income securities | — |
| | 24,021 |
| | — |
| | — |
| | 24,021 |
| U.S. government agency securities | — |
| | 120,084 |
| | — |
| | — |
| | 120,084 |
| U.S. government securities | 291,320 |
| | — |
| | — |
| | — |
| | 291,320 |
| Derivative contracts | 1,889 |
| | 324,065 |
| | 6,643 |
| | (324,394 | ) | | 8,203 |
| Total financial instruments and other inventory positions sold, but not yet purchased: | $ | 362,414 |
| | $ | 468,170 |
| | $ | 6,643 |
| | $ | (324,394 | ) | | $ | 512,833 |
|
| | (1) | Represents cash collateral and the impact of netting on a counterparty basis. The Company had no securities posted as collateral to its counterparties. |
The following table summarizes the valuation of the Company’s financial instruments by pricing observability levels defined in ASC 820 as of December 31, 2012: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Counterparty | | | | | | | | | | and Cash | | | | | | | | | | Collateral | | | (Dollars in thousands) | Level I | | Level II | | Level III | | Netting (1) | | Total | Assets: | | | | | | | | | | Financial instruments and other inventory positions owned: | | | | | | | | | | Corporate securities: | | | | | | | | | | Equity securities | $ | 3,180 |
| | $ | 13,298 |
| | $ | — |
| | $ | — |
| | $ | 16,478 |
| Convertible securities | — |
| | 44,978 |
| | — |
| | — |
| | 44,978 |
| Fixed income securities | — |
| | 33,668 |
| | — |
| | — |
| | 33,668 |
| Municipal securities: | | | | | | | | | | Taxable securities | — |
| | 164,059 |
| | — |
| | — |
| | 164,059 |
| Tax-exempt securities | — |
| | 416,760 |
| | 1,429 |
| | — |
| | 418,189 |
| Short-term securities | — |
| | 67,672 |
| | 656 |
| | — |
| | 68,328 |
| Asset-backed securities | — |
| | 24 |
| | 116,171 |
| | — |
| | 116,195 |
| U.S. government agency securities | — |
| | 304,259 |
| | — |
| | — |
| | 304,259 |
| U.S. government securities | 4,966 |
| | — |
| | — |
| | — |
| | 4,966 |
| Derivative contracts | — |
| | 595,486 |
| | 827 |
| | (555,838 | ) | | 40,475 |
| Total financial instruments and other inventory positions owned: | 8,146 |
| | 1,640,204 |
| | 119,083 |
| | (555,838 | ) | | 1,211,595 |
| | | | | | | | | | | Cash equivalents | 51,346 |
| | — |
| | — |
| | — |
| | 51,346 |
| | | | | | | | | | | Investments at fair value | 5,810 |
| | — |
| | 33,245 |
| | — |
| | 39,055 |
| Total assets | $ | 65,302 |
| | $ | 1,640,204 |
| | $ | 152,328 |
| | $ | (555,838 | ) | | $ | 1,301,996 |
| | | | | | | | | | | Liabilities: | | | | | | | | | | Financial instruments and other inventory positions sold, but not yet purchased: | | | | | | | | | | Corporate securities: | | | | | | | | | | Equity securities | $ | 25,362 |
| | $ | 1,728 |
| | $ | — |
| | $ | — |
| | $ | 27,090 |
| Convertible securities | — |
| | 1,015 |
| | — |
| | — |
| | 1,015 |
| Fixed income securities | — |
| | 19,314 |
| | — |
| | — |
| | 19,314 |
| Municipal securities: | | | | | | | | |
|
| Short-term securities | — |
| | 60 |
| | — |
| | — |
| | 60 |
| U.S. government agency securities | — |
| | 73,724 |
| | — |
| | — |
| | 73,724 |
| U.S. government securities | 231,043 |
| | — |
| | — |
| | — |
| | 231,043 |
| Derivative contracts | — |
| | 569,764 |
| | 5,218 |
| | (570,027 | ) | | 4,955 |
| Total financial instruments and other inventory positions sold, but not yet purchased: | $ | 256,405 |
| | $ | 665,605 |
| | $ | 5,218 |
| | $ | (570,027 | ) | | $ | 357,201 |
|
| | (1) | Represents cash collateral and the impact of netting on a counterparty basis. The Company had no securities posted as collateral to its counterparties. |
|
Changes in Fair Value Associated with Level III Financial Instruments |
The following tables summarize the changes in fair value associated with Level III financial instruments during the years ended December 31, 2013 and 2012: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at | | | | | | | | | | Realized | | Unrealized | | Balance at | | December 31, | | | | | | Transfers | | Transfers | | gains/ | | gains/ | | December 31, | (Dollars in thousands) | 2012 | | Purchases | | Sales | | in | | out | | (losses) (1) | | (losses) (1) | | 2013 | Assets: | | | | | | | | | | | | | | | | Financial instruments and other inventory positions owned: | | | | | | | | | | | | | | | | Corporate securities: | | | | | | | | | | | | | | | | Fixed income securities | $ | — |
| | $ | 100 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 100 |
| Municipal securities: | | | | | | | | | | | | | | | | Tax-exempt securities | 1,429 |
| | 1 |
| | — |
| | — |
| | — |
| | — |
| | 3 |
| | 1,433 |
| Short-term securities | 656 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 656 |
| Asset-backed securities | 116,171 |
| | 227,634 |
| | (238,860 | ) | | — |
| | — |
| | 17,105 |
| | (2,251 | ) | | 119,799 |
| Derivative contracts | 827 |
| | 5 |
| | (2,382 | ) | | — |
| | — |
| | 2,377 |
| | (136 | ) | | 691 |
| Total financial instruments and other inventory positions owned: | 119,083 |
| | 227,740 |
| | (241,242 | ) | | — |
| | — |
| | 19,482 |
| | (2,384 | ) | | 122,679 |
| | | | | | | | | | | | | | | | | Investments at fair value | 33,245 |
| | 16,825 |
| | (10,358 | ) | | — |
| | (619 | ) | | 5,949 |
| | 4,198 |
| | 49,240 |
| Total assets | $ | 152,328 |
| | $ | 244,565 |
| | $ | (251,600 | ) | | $ | — |
| | $ | (619 | ) | | $ | 25,431 |
| | $ | 1,814 |
| | $ | 171,919 |
| | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | Financial instruments and other inventory positions sold, but not yet purchased: | | | | | | | | | | | | | | | | Derivative contracts | $ | 5,218 |
| | $ | (5,702 | ) | | $ | 457 |
| | $ | — |
| | $ | — |
| | $ | 5,232 |
| | $ | 1,438 |
| | $ | 6,643 |
| Total financial instruments and other inventory positions sold, but not yet purchased: | $ | 5,218 |
| | $ | (5,702 | ) | | $ | 457 |
| | $ | — |
| | $ | — |
| | $ | 5,232 |
| | $ | 1,438 |
| | $ | 6,643 |
|
| | (1) | Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income on the consolidated statements of operations. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at | | | | | | | | | | Realized | | Unrealized | | Balance at | | December 31, | | | | | | Transfers | | Transfers | | gains/ | | gains/ | | December 31, | (Dollars in thousands) | 2011 | | Purchases | | Sales | | in | | out | | (losses) (1) | | (losses) (1) | | 2012 | Assets: | | | | | | | | | | | | | | | | Financial instruments and other inventory positions owned: | | | | | | | | | | | | | | | | Corporate securities: | | | | | | | | | | | | | | | | Fixed income securities | $ | 2,815 |
| | $ | 1,995 |
| | $ | (4,594 | ) | | $ | — |
| | $ | — |
| | $ | (118 | ) | | $ | (98 | ) | | $ | — |
| Municipal securities: | | | | | | | | | | | | | | | | Tax-exempt securities | 3,135 |
| | 1,550 |
| | (2,997 | ) | | 266 |
| | — |
| | (1,156 | ) | | 631 |
| | 1,429 |
| Short-term securities | 175 |
| | 650 |
| | — |
| | — |
| | — |
| | — |
| | (169 | ) | | 656 |
| Asset-backed securities | 53,088 |
| | 125,844 |
| | (69,623 | ) | | 38 |
| | — |
| | 487 |
| | 6,337 |
| | 116,171 |
| Derivative contracts | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 827 |
| | 827 |
| Total financial instruments and other inventory positions owned: | 59,213 |
| | 130,039 |
| | (77,214 | ) | | 304 |
| | — |
| | (787 | ) | | 7,528 |
| | 119,083 |
| | | | | | | | | | | | | | | | | Investments at fair value | 21,341 |
| | 15,003 |
| | (2,394 | ) | | — |
| | (266 | ) | | 1,595 |
| | (2,034 | ) | | 33,245 |
| Total assets | $ | 80,554 |
| | $ | 145,042 |
| | $ | (79,608 | ) | | $ | 304 |
| | $ | (266 | ) | | $ | 808 |
| | $ | 5,494 |
| | $ | 152,328 |
| | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | Financial instruments and other inventory positions sold, but not yet purchased: | | | | | | | | | | | | | | | | Corporate securities: | | | | | | | | | | | | | | | | Convertible securities | $ | 1,171 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (1,171 | ) | | $ | — |
| | $ | — |
| | $ | — |
| Fixed income securities | 900 |
| | (897 | ) | | — |
| | — |
| | — |
| | (49 | ) | | 46 |
| | — |
| Derivative contracts | 3,594 |
| | (6,549 | ) | | — |
| | — |
| | — |
| | 6,549 |
| | 1,624 |
| | 5,218 |
| Total financial instruments and other inventory positions sold, but not yet purchased: | $ | 5,665 |
| | $ | (7,446 | ) | | $ | — |
| | $ | — |
| | $ | (1,171 | ) | | $ | 6,500 |
| | $ | 1,670 |
| | $ | 5,218 |
|
| | (1) | Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income on the consolidated statements of operations |
|