Segment Reporting

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Reporting

12. 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 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.

					Westwood
	Advisory		Trust		Holdings			Eliminations			Consolidated
Three Months Ended March 31, 2015
Net fee revenues from external sources	$	24,217	$	5,150	$	—		$	—		$	29,367
Net intersegment revenues		3,627		—		—			(3,627	)		—
Net interest and dividend revenue		49		—		—			—			49
Other revenue		191		1		—			—			192
Total revenues	$	28,084	$	5,151	$	—		$	(3,627	)	$	29,608
Economic Earnings	$	10,717	$	503	$	(1,804	)	$	—		$	9,416
Less:   Restricted stock expense												3,678
Intangible amortization												90
Deferred taxes on goodwill												38
Net income											$	5,610
Segment assets	$	146,948	$	15,327	$	10,914		$	(46,331	)	$	126,858
Segment goodwill	$	5,219	$	6,036	$	—		$	—		$	11,255
Three Months Ended March 31, 2014
Net fee revenues from external sources	$	20,752	$	5,028	$	—		$	—		$	25,780
Net intersegment revenues		3,381		—		—			(3,381	)		—
Net interest and dividend revenue		122		1		—			—			123
Other revenue		45		1		—			—			46
Total revenues	$	24,300	$	5,030	$	—		$	(3,381	)	$	25,949
Economic Earnings	$	10,739	$	222	$	(1,792	)	$	—		$	9,169
Less:   Restricted stock expense												3,479
Intangible amortization												90
Deferred taxes on goodwill												38
Net income											$	5,562
Segment assets	$	102,777	$	14,957	$	11,253		$	(27,572	)	$	101,415
Segment goodwill	$	5,219	$	6,036	$	—		$	—		$	11,255

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.