INVESTMENT SECURITIES

6 Months Ended

Mar. 31, 2012

INVESTMENT SECURITIES [Abstract]

INVESTMENT SECURITIES

NOTE 6 − INVESTMENT SECURITIES

Components of the Company's investment securities are as follows (in thousands):

	March 31,		September 30,
	2012		2011
Available-for-sale securities	$	16,483	$	14,884
Trading securities		−		240
Total investment securities, at fair value	$	16,483	$	15,124

Available-for-sale securities.  The following table discloses the pre-tax unrealized gains (losses) relating to the Company's investments in equity and collateralized debt obligation ("CDO") securities (in thousands):

	Cost or Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
March 31, 2012:
Equity securities	$	32,653	$	82	$	(18,938	)	$	13,797
CDO securities		1,450		1,236		−			2,686
Total	$	34,103	$	1,318	$	(18,938	)	$	16,483
September 30, 2011:
Equity securities	$	32,411	$	27	$	(19,910	)	$	12,528
CDO securities		1,039		1,317		−			2,356
Total	$	33,450	$	1,344	$	(19,910	)	$	14,884

Equity Securities.  The Company holds 2.5 million shares of RSO common stock as well as options to acquire an additional 2,166 shares (exercise price of $15.00 per share; expiration in March 2015).  The Company also holds 18,972 shares of The Bancorp, Inc. ("TBBK") (NASDAQ: TBBK) common stock.  A portion of these investments are pledged as collateral for the Company's two secured corporate credit facilities.

CDO securities.  The CDO securities represent the Company's retained equity interest in three CDO issuers that it has sponsored and manages.  The fair value of these retained interests is impacted by the fair value of the investments held by the respective CDO issuers, which are sensitive to interest rate fluctuations and credit quality determinations.

Trading Securities.  The Company held an additional 33,509 shares of TBBK common stock valued at $240,000 as of September 30, 2011, in a Rabbi Trust for the Supplemental Employment Retirement Plan ("SERP") for its former Chief Executive Officer.  The Company sold 6,992 and 33,509 of TBBK shares held in the Trust during the three and six months ended March 31, 2012, respectively, and recognized gains of $5,000 and $22,000, respectively.  The SERP holds no remaining shares of TBBK stock as of March 31, 2012.  During the three and six months ended March 31, 2011, the Company had sold 24,500 and 44,725 shares of TBBK, respectively, and recognized gains of $87,000 and $96,000, respectively.  In addition, the Company also recorded an unrealized trading loss of $173,000 for the three months ended March 31, 2011 and an unrealized trading gain of $201,000 for the six months ended March 31, 2011.

Other-than-temporary impairment losses.  The Company recorded a $74,000 charge for the other-than-temporary impairment of one of its investments in CDOs, primarily invested in bank loans, in the three and six months ended March 31, 2012.  There were no other-than-temporary impairment charges in the three and six months ended March 31, 2011.

Unrealized losses along with the related fair value, aggregated by the length of time the investments were in a continuous unrealized loss position, are as follows (in thousands, except number of securities):

	Less than 12 Months						More than 12 Months
	Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses			Number of Securities
March 31, 2012:
Equity securities	$	−	$	−		−	$	13,607	$	(18,938	)		1
CDO securities		−		−		−		−		−			−
Total	$	−	$	−		−	$	13,607	$	(18,938	)		1
September 30, 2011:
Equity securities	$	−	$	−		−	$	12,393	$	(19,910	)		1
CDO securities		−		−		−		−		−			−
Total	$	−	$	−		−	$	12,393	$	(19,910	)		1

The unrealized losses in RSO common stock reflected in the above table are considered to be temporary impairments due to market factors and not reflective of credit deterioration.  The Company considers its role as the external manager of RSO and the value of its management contract, which includes a substantial fee for termination of the manager.  Further, because of its intent and ability to hold its investment in RSO, the Company does not consider the unrealized losses to be other-than-temporary impairments.