INVESTMENT SECURITIES

9 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

INVESTMENT SECURITIES

Components of investment securities are as follows (in thousands):

	June 30, 2013		September 30, 2012
Available-for-sale securities	$	22,949	$	19,468
Trading securities	8,202		3,064
Total investment securities, at fair value	$	31,151	$	22,532

Available-for-sale securities.  The following table discloses the pre-tax unrealized gains (losses) relating to the Company’s investments in available-for-sale securities (in thousands):

	Cost or Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
June 30, 2013:
Equity securities	$	34,219	$	175	$	(16,906	)	$	17,488
CLO securities	4,574		1,074		(187		)	5,461
Total	$	38,793	$	1,249	$	(17,093	)	$	22,949
September 30, 2012:
Equity securities	$	33,260	$	86	$	(17,649	)	$	15,697
CLO securities	2,484		1,302		(15		)	3,771
Total	$	35,744	$	1,388	$	(17,664	)	$	19,468

Equity securities.  The Company holds approximately 2.8 million shares of RSO common stock (together with options to acquire 2,166 shares at an exercise price of $15.00 per share expiring in March 2015).  The Company also holds 18,972 shares of The Bancorp, Inc. ("TBBK") (NASDAQ: TBBK) common stock.  These investments are pledged as collateral for the Company’s secured corporate credit facilities. During the three months ended March 31, 2013, the Company purchased 10,000 shares of Resource Real Estate Diversified Income Fund, a new publicly traded investment entity that it sponsored and manages ("RREDX") (NASDAQ: RREDX), for $100,000.

CLO securities.  The collateralized loan obligation ("CLO") securities represent the Company’s retained equity interests in seven and four CLO issuers that it directly and/or through its joint venture has structured and managed at June 30, 2013 and September 30, 2012, respectively.  The fair value of these retained interests is impacted by the fair value of the investments held by the respective CLO issuers, which are sensitive to interest rate fluctuations and credit quality determinations. The Company is required to maintain a minimum investment of $2.0 million (par value) in the subordinated notes of one of the CLO issuers, Apidos CLO II.

Trading securities.  The Company began purchasing investment securities classified as trading securities during fiscal 2012. For the three and nine months endedJune 30, 2013, the Company had net realized gains from sales of trading securities of $1.2 million and $2.0 million, respectively, as well as, unrealized losses on these securities totaling $243,000 and unrealized gains of $666,000, respectively, which were included in Financial Fund Management Revenues on the consolidated statements of operations. For the three and nine months endedJune 30, 2012, the Company had unrealized gains on trading securities of $175,000.

During the nine months endedJune 30, 2012, the Company sold 33,509 shares of TBBK stock held in a Rabbi Trust for the Supplemental Employment Retirement Plan ("SERP") for its former Chief Executive Officer and recognized net gains of $22,000, which were included in Other Income, Net on the consolidated statements of operations.

Unrealized losses, along with the related fair values and 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 Loss			Number of Securities	Fair Value		Unrealized Loss			Number of Securities
June 30, 2013:
Equity securities	$	97	$	(3	)	1	$	12,718	$	(17,417	)	1
CLO securities	2,202		(187		)	2	—		—			—
Total	$	2,299	$	(190	)	3	$	12,718	$	(17,417	)	1
September 30, 2012:
Equity securities	$	—	$	—		—	$	12,161	$	(17,976	)	1
CLO securities	1,274		(15		)	1	—		—			—
Total	$	1,274	$	(15	)	1	$	12,161	$	(17,976	)	1

The unrealized loss in RSO common stock reflected in the above table is considered to be a temporary impairment due to market factors and not reflective of credit deterioration. In making that determination, the Company considered its role as the external manager of RSO and the value of its management contract, which includes a substantial fee to the Company if it is terminated as the manager. As a consequence, and because of its intent and ability to hold its investment in RSO, the Company does not consider this unrealized loss to be an other-than-temporary impairment.

 Other-than-temporary impairment losses. In the nine months endedJune 30, 2013 and 2012, the Company recorded charges of $214,000 and $74,000, respectively, for the other-than-temporary impairment of certain of its investments in CLOs, primarily those with investments in bank loans.