INVESTMENT SECURITIES

9 Months Ended

Jun. 30, 2012

INVESTMENT SECURITIES [Abstract]

INVESTMENT SECURITIES

NOTE 6 − INVESTMENT SECURITIES

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

	June 30,		September 30,
	2012		2011
Available-for-sale securities	$	16,469	$	14,884
Trading securities		3,411		240
Total investment securities, at fair value	$	19,880	$	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
June 30, 2012:
Equity securities	$	32,806	$	71	$	(19,092	)	$	13,785
CDO securities		1,312		1,372		−			2,684
Total	$	34,118	$	1,443	$	(19,092	)	$	16,469
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 2.6 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 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 equity interest in three CDO issuers that it has sponsored and manages.  The fair value of these interests are 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 purchased investment securities classified as trading securities during fiscal 2012.  The Company had net unrealized gains and interest on these securities totaling $178,000 during the three and nine months ended June 30, 2012, which is included in Financial Fund Management revenue on the consolidated statements of operations.

At September 30, 2011, the Company held 33,509 shares of TBBK common stock in a Rabbi Trust for the Supplemental Employment Retirement Plan ("SERP") for its former Chief Executive Officer valued at $240,000, which it classified as trading securities.  The Company sold all of the plan's TBBK shares during the nine months ended June 30, 2012 and recognized a gain of $22,000.

During the three and nine months ended June 30, 2011, the Company had sold 20,400 and 65,125 shares of TBBK it held, respectively, and recognized gains of $57,000 and $153,000, respectively.  In addition, the Company also recorded unrealized trading gains of $19,000 and $220,000 for the three and nine months ended June 30, 2011, respectively (see Note 17).

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, during the nine months ended June 30, 2012.  The Company did not record any impairment charges during the same period in fiscal 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
June 30, 2012:
Equity securities	$	−	$	−		−	$	13,606	$	(19,092	)		1
CDO securities		−		−		−		−		−			−
Total	$	−	$	−		−	$	13,606	$	(19,092	)		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.