We measure certain financial assets and liabilities at fair value on a recurring basis, including financial instruments owned, available-for-sale securities, investments, financial instruments sold, but not yet purchased, and derivatives.

We generally utilize third-party pricing services to value Level 1 and Level 2 available-for-sale investment securities, as well as certain derivatives designated as cash flow hedges. We review the methodologies and assumptions used by the third-party pricing services and evaluate the values provided, principally by comparison with other available market quotes for similar instruments and/or analysis based on internal models using available third-party market data. We may occasionally adjust certain values provided by the third-party pricing service when we believe, as the result of our review, that the adjusted price most appropriately reflects the fair value of the particular security.

Following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value. The descriptions include an indication of the level of the fair value hierarchy in which the assets or liabilities are classified.

When available, the fair value of financial instruments is based on quoted prices in active markets and reported in Level 1. Level 1 financial instruments include highly liquid instruments with quoted prices, such as equity securities listed in active markets, corporate fixed income securities, and U.S. government securities.

If quoted prices are not available for identical instruments, fair values are obtained from pricing services, broker quotes, or other model-based valuation techniques with observable inputs, such as the present value of estimated cash flows, and reported as Level 2. The nature of these financial instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Level 2 financial instruments include U.S. government agency securities, mortgage-backed securities, corporate fixed income and equity securities infrequently traded, state and municipal securities, sovereign debt, and asset-backed securities, which primarily include collateralized loan obligations.

We have identified Level 3 financial instruments to include certain asset-backed securities and loans with unobservable pricing inputs. Level 3 financial instruments have little to no pricing observability as of the report date. These financial instruments do not have active two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Investments carried at fair value primarily include corporate equity securities, auction-rate securities (“ARS”), and private company investments.

Corporate equity securities are primarily valued based on quoted prices in active markets and reported in Level 1.

ARS are primarily valued based upon our expectations of issuer redemptions and using internal discounted cash flow models that utilize unobservable inputs. ARS are primarily reported as Level 3 assets. Private company investments are primarily valued based upon internally developed models. These valuations require significant management judgment due to the absence of quoted market prices, the inherent lack of liquidity, and their long-term nature. Typically, the initial costs of these investments are considered to represent fair market value, as such amounts are negotiated between willing market participants. Private company investments are primarily reported as Level 3 assets.

Investments at fair value include investments in funds, including certain money market funds that are measured at net asset value (“NAV”). The Company uses NAV to measure the fair value of its fund investments when (i) the fund investment does not have a readily determinable fair value and (ii) the NAV of the investment fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the underlying investments at fair value.

The Company’s investments in funds measured at NAV include partnership interests, mutual funds, private equity funds, and money market funds. Private equity funds primarily invest in a broad range of industries worldwide in a variety of situations, including leveraged buyouts, recapitalizations, growth investments and distressed investments. The private equity funds are primarily closed-end funds in which the Company’s investments are generally not eligible for redemption. Distributions will be received from these funds as the underlying assets are liquidated or distributed.

The general and limited partnership interests in investment partnerships were primarily valued based upon NAVs received from third-party fund managers. The various partnerships are investment companies, which record their underlying investments at fair value based on fair value policies established by management of the underlying fund. Fair value policies at the underlying fund generally require the funds to utilize pricing/valuation information, including independent appraisals, from third-party sources. However, in some instances, current valuation information for illiquid securities or securities in markets that are not active may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable. In these instances, fund management may perform model-based analytical valuations that may be used as an input to value these investments.

The table below presents the fair value of our investments in, and unfunded commitments to, funds that are measured at NAV as of March 31, 2021 and December 31, 2020 (in thousands):

	March 31, 2021				December 31, 2020
	Fair value of investments		Unfunded commitments		Fair value of investments		Unfunded commitments
Money market funds	$	22,590	$	—	$	34,192	$	—
Mutual funds		6,422		—		7,152		—
Partnership interests		4,129		2,139		3,744		2,520
Private equity funds		2,002		1,203		1,489		1,203
Total	$	35,143	$	3,342	$	46,577	$	3,723

Financial instruments sold, but not purchased, recorded at fair value based on quoted prices in active markets and other observable market data include highly liquid instruments with quoted prices, such as U.S. government securities, equity and fixed income securities listed in active markets, which are reported as Level 1.

If quoted prices are not available, fair values are obtained from pricing services, broker quotes, or other model-based valuation techniques with observable inputs, such as the present value of estimated cash flows, and reported as Level 2. The nature of these financial instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Level 2 financial instruments include agency mortgage-backed securities not actively traded, corporate fixed income, sovereign debt securities, and state and municipal securities.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2021, are presented below (in thousands):

	March 31, 2021
	Total		Level 1		Level 2		Level 3
Financial instruments owned:
U.S. government securities	$	61,918	$	61,918	$	—	$	—
U.S. government agency securities		166,501		—		166,501		—
Agency mortgage-backed securities		254,203		—		254,203		—
Corporate securities:
Fixed income securities		223,545		220		223,325		—
Equity securities		82,402		71,714		10,688		—
State and municipal securities		162,083		—		162,083		—
Other ⁽¹⁾		30,630		—		16,353		14,277
Total financial instruments owned		981,282		133,852		833,153		14,277
Available-for-sale securities:
U.S. government agency securities		3,645		—		3,645		—
State and municipal securities		2,428		—		2,428		—
Mortgage-backed securities:
Agency		1,003,691		—		1,003,691		—
Commercial		87,439		—		87,439		—
Non-agency		3,658		—		3,658		—
Corporate fixed income securities		711,559		—		711,559		—
Asset-backed securities		377,708		—		377,708		—
Total available-for-sale securities		2,190,128		—		2,190,128		—
Investments:
Corporate equity securities		35,518		33,517		1		2,000
Auction rate securities		12,959		—		—		12,959
Other		58,515		10,349		6,338		41,828
Investments in funds and partnerships measured at NAV		12,553
Total investments		119,545		43,866		6,339		56,787
Cash equivalents measured at NAV		22,590
	$	3,313,545	$	177,718	$	3,029,620	$	71,064

	March 31, 2021
	Total		Level 1		Level 2		Level 3
Liabilities:
Financial instruments sold, but not yet purchased:
U.S. government securities	$	287,820	$	287,820	$	—	$	—
Agency mortgage-backed securities		121,648		—		121,648		—
Corporate securities:
Fixed income securities		185,728		680		185,048		—
Equity securities		34,443		34,443		—		—
Other ⁽²⁾		15,123		—		15,123		—
Total financial instruments sold, but not yet purchased	$	644,762	$	322,943	$	321,819	$	—

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2020, are presented below (in thousands):

	December 31, 2020
	Total		Level 1		Level 2		Level 3
Financial instruments owned:
U.S. government securities	$	46,900	$	46,900	$	—	$	—
U.S. government agency securities		56,450		—		56,450		—
Agency mortgage-backed securities		216,434		—		216,434		—
Corporate securities:
Fixed income securities		194,575		4,474		190,101		—
Equity securities		67,593		62,979		4,614		—
State and municipal securities		96,150		—		96,150		—
Other ⁽¹⁾		15,926		—		4,642		11,284
Total financial instruments owned		694,028		114,353		568,391		11,284
Available-for-sale securities:
U.S. government agency securities		4,361		—		4,361		—
State and municipal securities		2,453		—		2,453		—
Mortgage-backed securities:
Agency		793,410		—		793,410		—
Commercial		95,613		—		95,613		—
Non-agency		4,569		—		4,569		—
Corporate fixed income securities		631,758		—		631,758		—
Asset-backed securities		698,133		—		698,133		—
Total available-for-sale securities		2,230,297		—		2,230,297		—
Investments:
Corporate equity securities		29,496		29,496		—		—
Auction rate securities		12,933		—		—		12,933
Other		59,048		10,342		6,593		42,113
Investments in funds and partnerships measured at NAV		12,385
Total investments		113,862		39,838		6,593		55,046
Cash equivalents measured at NAV		34,192
	$	3,072,379	$	154,191	$	2,805,281	$	66,330

	December 31, 2020
	Total		Level 1		Level 2		Level 3
Liabilities:
Financial instruments sold, but not yet purchased:
U.S. government securities	$	91,974	$	91,974	$	—	$	—
Agency mortgage-backed securities		141,227		—		141,227		—
Corporate securities:
Fixed income securities		162,626		4,094		158,532		—
Equity securities		30,848		30,848		—		—
Other ⁽²⁾		11,303		—		11,303		—
Total financial instruments sold, but not yet purchased	$	437,978	$	126,916	$	311,062	$	—

The following table summarizes the changes in fair value associated with Level 3 financial instruments during the three months ended March 31, 2021 (in thousands):

	Three Months Ended March 31, 2021
	Financial instruments owned			Investments
	Other			Corporate Equity Securities		Auction Rate Securities		Other
Balance at December 31, 2020	$	11,284		$	—	$	12,933	$	42,113
Unrealized gains/(losses)		(21	)		—		26		(285	)
Purchases		3,014			2,000		—		—
Net change		2,993			2,000		26		(285	)
Balance at March 31, 2021	$	14,277		$	2,000	$	12,959	$	41,828

The results included in the table above are only a component of the overall investment strategies of our company. The table above does not present Level 1 or Level 2 valued assets or liabilities. The changes in unrealized gains/(losses) recorded in earnings for the three months ended March 31, 2021, relating to Level 3 assets still held at March 31, 2021, were immaterial.

The fair value of certain Level 3 assets was determined using various methodologies, as appropriate, including third-party pricing vendors and broker quotes. These inputs are evaluated for reasonableness through various procedures, including due diligence reviews of third-party pricing vendors, variance analyses, consideration of current market environment, and other analytical procedures.

The fair value for our auction rate securities was determined using an income approach based on an internally developed discounted cash flow model. The discounted cash flow model utilizes two significant unobservable inputs: discount rate and workout period. Significant increases in any of these inputs in isolation would result in a significantly lower fair value. On an ongoing basis, management verifies the fair value by reviewing the appropriateness of the discounted cash flow model and its significant inputs.

The following reflects the fair value of financial instruments as of March 31, 2021 and December 31, 2020, whether or not recognized in the consolidated statements of financial condition at fair value (in thousands).

	March 31, 2021				December 31, 2020
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	1,425,511	$	1,425,511	$	2,279,274	$	2,279,274
Cash segregated for regulatory purposes		95,074		95,074		172,932		172,932
Securities purchased under agreements to resell		470,025		470,025		217,930		217,930
Financial instruments owned		981,282		981,282		694,028		694,028
Available-for-sale securities		2,190,128		2,190,128		2,230,297		2,230,297
Held-to-maturity securities		4,761,401		4,765,024		4,117,384		4,107,960
Bank loans		12,091,713		12,168,119		11,006,760		11,088,058
Loans held for sale		330,521		330,521		551,248		551,248
Investments		119,545		119,545		113,862		113,862
Financial liabilities:
Securities sold under agreements to repurchase	$	208,228	$	208,228	$	190,955	$	190,955
Bank deposits		18,715,133		18,527,784		17,396,497		17,192,722
Financial instruments sold, but not yet purchased		644,762		644,762		437,978		437,978
Senior notes		1,112,672		1,228,983		1,112,409		1,265,669
Debentures to Stifel Financial Capital Trusts		60,000		46,444		60,000		41,071

The following tables present the estimated fair values of financial instruments not measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 (in thousands):

	March 31, 2021
	Total		Level 1		Level 2		Level 3
Financial assets:
Cash	$	1,402,921	$	1,402,921	$	—	$	—
Cash segregated for regulatory purposes		95,074		95,074		—		—
Securities purchased under agreements to resell		470,025		424,621		45,404		—
Held-to-maturity securities		4,765,024		—		4,598,600		166,424
Bank loans		12,168,119		—		12,168,119		—
Loans held for sale		330,521		—		330,521		—
Financial liabilities:
Securities sold under agreements to repurchase	$	208,228	$	—	$	208,228	$	—
Bank deposits		18,527,784		—		18,527,784		—
Senior notes		1,228,983		1,228,983		—		—
Debentures to Stifel Financial Capital Trusts		46,444		—		—		46,444

	December 31, 2020
	Total		Level 1		Level 2		Level 3
Financial assets:
Cash	$	2,245,082	$	2,245,082	$	—	$	—
Cash segregated for regulatory purposes		172,932		172,932		—		—
Securities purchased under agreements to resell		217,930		164,094		53,836		—
Held-to-maturity securities		4,107,960		—		3,943,944		164,016
Bank loans		11,088,058		—		11,088,058		—
Loans held for sale		551,248		—		551,248		—
Financial liabilities:
Securities sold under agreements to repurchase	$	190,955	$	—	$	190,955	$	—
Bank deposits		17,192,722		—		17,192,722		—
Senior notes		1,265,669		1,265,669		—		—
Debentures to Stifel Financial Capital Trusts		41,071		—		—		41,071

The following, as supplemented by the discussion above, describes the valuation techniques used in estimating the fair value of our financial instruments as of March 31, 2021 and December 31, 2020.

Securities purchased under agreements to resell are collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The carrying values at March 31, 2021 and December 31, 2020 approximate fair value due to their short-term nature.

Securities held to maturity are recorded at amortized cost based on our company’s positive intent and ability to hold these securities to maturity. Securities held to maturity include agency mortgage-backed securities, asset-backed securities, consisting of collateralized loan obligation securities and corporate fixed income securities. The estimated fair value, included in the above table, is determined using several factors; however, primary weight is given to discounted cash flow modeling techniques that incorporated an estimated discount rate based upon recent observable debt security issuances with similar characteristics.

The fair values of mortgage loans and commercial loans were estimated using a discounted cash flow method, a form of the income approach. Discount rates were determined considering rates at which similar portfolios of loans, with similar remaining maturities, would be made and considering liquidity spreads applicable to each loan portfolio based on the secondary market.

Loans held for sale consist of fixed-rate and adjustable-rate residential real estate mortgage loans intended for sale. Loans held for sale are stated at lower of cost or market value. Market value is determined based on prevailing market prices for loans with similar characteristics or on sale contract prices.

Securities sold under agreements to repurchase are collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The carrying values at March 31, 2021 and December 31, 2020 approximate fair value due to the short-term nature.

The fair value of interest-bearing deposits, including certificates of deposits, demand deposits, savings, and checking accounts, was calculated by discounting the future cash flows using discount rates based on the replacement cost of funding of similar structures and terms.

The fair value of our senior notes is estimated based upon quoted market prices.

The fair value of our trust preferred securities is based on the discounted value of contractual cash flows. We have assumed a discount rate based on similar type debt instruments.

These fair value disclosures represent our best estimates based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding future expected losses, current economic conditions, risk characteristics of the various instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in the above methodologies and assumptions could significantly affect the estimates.