INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

NOTE 7 - INVESTMENT SECURITIES

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

	September 30, 2015		December 31, 2014
Available-for-sale securities	$	8,905	$	9,065
Trading securities	1,313		475
Total investment securities, at fair value	$	10,218	$	9,540

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
As of September 30, 2015:
CLO securities	$	7,360	$	1,156	$	(77	)	$	8,439
Equity securities	432		37		(3		)	466
Total	$	7,792	$	1,193	$	(80	)	$	8,905
As of December 31, 2014:
CLO securities	$	6,962	$	1,228	$	(176	)	$	8,014
Equity securities	888		163		—			1,051
Total	$	7,850	$	1,391	$	(176	)	$	9,065

CLO securities.  The CLO securities represent the Company’s retained equity interests in 14 and 12 CLO issuers that CVC Credit Partners has sponsored and manages at September 30, 2015 and December 31, 2014, respectively (see Note 8).  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. For the three months ended September 30, 2015, the Company adjusted its assumptions with respect to the fair value calculations of its CLO securities based on a change in market conditions, principally to increase the constant default rate in year one and two and decrease the prepayment speed in year one, which resulted in an impairment charge of $151,000.

Equity securities.  The Company holds 18,972 shares of TBBK common stock.  This investment is pledged as collateral for one of the Company’s secured corporate credit facilities. The Company also holds approximately 10,808 shares of DIF with a cost basis of $109,000. The Company has an investment of $215,000 in CIF, a new interval fund, whose registration statement with respect to the offer and sale of its shares of beneficial interest was declared effective by the SEC on April 17, 2015. In July 2015, the Company sold its investment in RREGPS (749,976 units) for $677,400, which approximated its cost basis.

Trading securities. The Company had net gains on trading securities of $45,000 and $72,000 for the three and nine months ended September 30, 2015, respectively, including unrealized gains of $45,000 and $87,000 for the three and nine months ended September 30, 2015, respectively, which are included in Financial Fund Management Revenues on the consolidated statements of operations. The Company had net gains on trading securities of $855,000 and $1.8 million during the three and nine months ended September 30, 2014, respectively, including unrealized losses of $231,000 and $111,000 respectively.

Unrealized losses on available-for-sale securities, along with their related fair value, 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 Losses			Number of Securities	Fair Value		Unrealized Losses			Number of Securities
September 30, 2015
CLO securities	$	1,095	$	(45	)	2	$	883	$	(32	)	2
Equity securities	106		(3		)	1	—		—			—
Total	$	1,201	$	(48	)	3	$	883	$	(32	)	2
December 31, 2014
CLO securities	$	2,643	$	(176	)	4	$	—	$	—		—
Equity securities	—		—			—	—		—			—
Total	$	2,643	$	(176	)	4	$	—	$	—		—