SEGMENT REPORTING

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

We operate two segments: Advisory and Trust. These segments are managed separately based on the types of products and services offered and their related client bases. The Company’s segment information is prepared on the same basis that management reviews the financial information for operational decision-making purposes. The Company’s chief operating decision maker, our Chief Executive Officer, evaluates the performance of our segments based primarily on fee revenues and economic earnings. Westwood Holdings Group, Inc., the parent company of Advisory and Trust, does not have revenues and is the entity in which we record typical holding company expenses including employee compensation and benefits for holding company employees, directors’ fees and investor relations costs. All segment accounting policies are the same as those described in the summary of significant accounting policies. Intersegment balances that eliminate in consolidation have been applied to the appropriate segment.

Advisory

Our Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, the Westwood Funds®, and the UCITS Fund, as well as investment subadvisory services to mutual funds and our Trust segment. Westwood Management and Westwood International, which provide investment advisory services to clients of similar type, are included in our Advisory segment along with Westwood Advisors, LLC.

Trust

Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Trust is included in our Trust segment.

	Advisory			Trust		Westwood Holdings			Eliminations			Consolidated
	(in thousands)
Three Months Ended June 30, 2015
Net fee revenues from external sources	$	29,376		$	7,921	$	—		$	—		$	37,297
Net intersegment revenues	6,111			—		—			(6,111		)	—
Net interest and dividend revenue	59			—		—			—			59
Other revenue	(45		)	—		—			—			(45		)
Total revenues	$	35,501		$	7,921	$	—		$	(6,111	)	$	37,311
Economic Earnings	$	15,149		$	1,309	$	(2,106	)	$	—		$	14,352
Less:   Restricted stock expense												4,017
Intangible amortization												462
Deferred taxes on goodwill												78
Net income												$	9,795
Segment assets	$	157,681		$	58,166	$	11,239		$	(70,977	)	$	156,109
Segment goodwill	$	5,219		$	17,691	$	—		$	—		$	22,910
Three Months Ended June 30, 2014
Net fee revenues from external sources	$	25,538		$	5,151	$	—		$	—		$	30,689
Net intersegment revenues	3,283			—		—			(3,283		)	—
Net interest and dividend revenue	43			—		—			—			43
Other revenue	173			—		—			—			173
Total revenues	$	29,037		$	5,151	$	—		$	(3,283	)	$	30,905
Economic Earnings	$	11,868		$	1,111	$	(1,271	)	$	—		$	11,708
Less:   Restricted stock expense												2,989
Intangible amortization												90
Deferred taxes on goodwill												38
Net income												$	8,591
Segment assets	$	109,769		$	15,876	$	16,825		$	(27,277	)	$	115,193
Segment goodwill	$	5,219		$	6,036	$	—		$	—		$	11,255

	Advisory		Trust		Westwood Holdings			Eliminations			Consolidated
	(in thousands)
Six Months Ended June 30, 2015
Net fee revenues from external sources	$	53,593	$	13,071	$	—		$	—		$	66,664
Net intersegment revenues	9,738		—		—			(9,738		)	—
Net interest and dividend revenue	108		1		—			—			109
Other revenue	146		—		—			—			146
Total revenues	$	63,585	$	13,072	$	—		$	(9,738	)	$	66,919
Economic Earnings	$	25,866	$	1,813	$	(3,911	)	$	—		$	23,768
Less:   Restricted stock expense											7,695
Intangible amortization											552
Deferred taxes on goodwill											116
Net income											$	15,405
Six Months Ended June 30, 2014
Net fee revenues from external sources	$	46,290	$	10,179	$	—		$	—		$	56,469
Net intersegment revenues	6,664		—		—			(6,664		)	—
Net interest and dividend revenue	165		1		—			—			166
Other revenue	218		1		—			—			219
Total revenues	$	53,337	$	10,181	$	—		$	(6,664	)	$	56,854
Economic Earnings	$	22,607	$	1,333	$	(3,063	)	$	—		$	20,877
Less:   Restricted stock expense											6,468
Intangible amortization											180
Deferred taxes on goodwill											76
Net income											$	14,153

We are providing a non-U.S. generally accepted accounting principles (“non-GAAP”) performance measure that we refer to as Economic Earnings. We provide this measure in addition to, but not as a substitute for, net income reported on a U.S. generally accepted accounting principles (“GAAP”) basis. Both our management and Board of Directors review Economic Earnings to evaluate our ongoing performance, allocate resources and review dividend policy. We believe that this non-GAAP performance measure, while not a substitute for GAAP net income, is useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider this non-GAAP measure without considering financial information prepared in accordance with GAAP.

In calculating Economic Earnings, we add to net income the non-cash expense associated with equity-based compensation awards of restricted stock and stock options, amortization of intangible assets and the deferred taxes related to the tax-basis amortization of goodwill. Although depreciation on property and equipment is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent a decline in the value of the related assets that will ultimately require replacement. See our reconciliation of Net income to Economic Earnings in Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Supplemental Financial Information."