FAIR VALUE

For a discussion of our valuation methodologies for assets, liabilities measured at fair value, and the fair value hierarchy, see Note 2 on pages 102 - 107 of our 2014 Form 10-K. There have been no material changes to our valuation methodologies since our year ended September 30, 2014.

Assets and liabilities measured at fair value on a recurring and nonrecurring basis are presented below:



March 31, 2015	Quoted prices in active markets for identical assets (Level 1) ⁽¹⁾		Significant other observable inputs (Level 2) ⁽¹⁾		Significant unobservable inputs (Level 3)			Netting adjustments ⁽²⁾			Balance as of March 31, 2015
	(in thousands)
Assets at fair value on a recurring basis:
Trading instruments:
Municipal and provincial obligations	$	4,955	$	239,564	$	—		$	—		$	244,519
Corporate obligations	15,899		80,174		—			—			96,073
Government and agency obligations	38,717		125,291		—			—			164,008
Agency mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”)	603		139,800		—			—			140,403
Non-agency CMOs and asset-backed securities (“ABS”)	—		51,800		10			—			51,810
Total debt securities	60,174		636,629		10			—			696,813
Derivative contracts	—		121,414		—			(79,697		)	41,717
Equity securities	36,790		5,579		14			—			42,383
Other	657		15,181		780			—			16,618
Total trading instruments	97,621		778,803		804			(79,697		)	797,531
Available for sale securities:
Agency MBS and CMOs	—		240,488		—			—			240,488
Non-agency CMOs	—		87,362		—			—			87,362
Other securities	2,028		—		—			—			2,028
Auction rate securities (“ARS”):
Municipals	—		—		89,614		⁽³⁾	—			89,614
Preferred securities	—		—		112,448			—			112,448
Total available for sale securities	2,028		327,850		202,062			—			531,940
Private equity investments	—		—		220,944		⁽⁴⁾	—			220,944
Other investments ⁽⁵⁾	206,888		1,172		916			—			208,976
Derivative instruments associated with offsetting matched book positions	—		421,850		—			—			421,850
Deposits with clearing organizations⁽⁶⁾	23,592		—		—			—			23,592
Other assets:
Derivatives - forward foreign exchange contracts	—		8,000		—			—			8,000
Other assets	—		—		2,196		⁽⁷⁾	—			2,196
Total other assets	—		8,000		2,196			—			10,196
Total assets at fair value on a recurring basis	$	330,129	$	1,537,675	$	426,922		$	(79,697	)	$	2,215,029

Assets at fair value on a nonrecurring basis:
Bank loans, net:
Impaired loans	$	—	$	30,566	$	51,444		$	—		$	82,010
Loans held for sale⁽⁸⁾	—		49,130		—			—			49,130
Total bank loans, net	—		79,696		51,444			—			131,140
Other real estate owned (“OREO”)⁽⁹⁾	—		1,196		—			—			1,196
Total assets at fair value on a nonrecurring basis	$	—	$	80,892	$	51,444		$	—		$	132,336

(continued on next page)



March 31, 2015	Quoted prices in active markets for identical assets (Level 1) ⁽¹⁾		Significant other observable inputs (Level 2) ⁽¹⁾		Significant unobservable inputs (Level 3)		Netting adjustments ⁽²⁾			Balance as of March 31, 2015
	(in thousands)
	(continued from previous page)
Liabilities at fair value on a recurring basis:
Trading instruments sold but not yet purchased:
Municipal and provincial obligations	$	4,482	$	394	$	—	$	—		$	4,876
Corporate obligations	33		18,615		—		—			18,648
Government obligations	284,821		—		—		—			284,821
Agency MBS and CMOs	1,834		—		—		—			1,834
Total debt securities	291,170		19,009		—		—			310,179
Derivative contracts	—		105,050		—		(79,028		)	26,022
Equity securities	34,387		1		—		—			34,388
Other securities	2		1,749		—		—			1,751
Total trading instruments sold but not yet purchased	325,559		125,809		—		(79,028		)	372,340
Derivative instruments associated with offsetting matched book positions	—		421,850		—		—			421,850
Trade and other payables:
Derivative contracts⁽¹⁰⁾	—		2,481		—		—			2,481
Other liabilities	—		—		58		—			58
Total trade and other payables	—		2,481		58		—			2,539
Total liabilities at fair value on a recurring basis	$	325,559	$	550,140	$	58	$	(79,028	)	$	796,729

(1)

We had $600 thousand and $1.1 million in transfers of financial instruments from Level 1 to Level 2 during the three and six months ended March 31, 2015, respectively. These transfers were a result of a decrease in availability and reliability of the observable inputs utilized in the respective instruments’ fair value measurement. We had $1.1 million in transfers of financial instruments from Level 2 to Level 1 during the six months ended March 31, 2015. These transfers were a result of an increase in availability and reliability of the observable inputs utilized in the respective instruments’ fair value measurement. Our policy is that the end of each respective quarterly reporting period determines when transfers of financial instruments between levels are recognized.

(2)

For derivative transactions not cleared through an exchange, and where permitted, we have elected to net derivative receivables and derivative payables and the related cash collateral received and paid when a legally enforceable master netting agreement exists (see Note 13 for additional information regarding offsetting financial instruments). Deposits associated with derivative transactions cleared through an exchange are included in deposits with clearing organizations on our Condensed Consolidated Statements of Financial Condition.


(3)	Includes $62 million of Jefferson County, Alabama Limited Obligation School Warrants ARS.

(4)

The portion of these investments we do not own is approximately $56 million as of March 31, 2015 and are included as a component of noncontrolling interest in our Condensed Consolidated Statements of Financial Condition. The weighted average portion we own is approximately $165 million or 75% of the total private equity investments of $221 million included in our Condensed Consolidated Statements of Financial Condition.


(5)	Other investments include $143 million of financial instruments that are related to obligations to perform under certain deferred compensation plans (see Note 2 on page 114, and Note 24 on page 173, of our 2014 Form 10-K for further information regarding these plans).


(6)	Consists of deposits we provide to clearing organizations or exchanges that are in the form of marketable securities.


(7)	Includes forward commitments to purchase GNMA or FNMA (as hereinafter defined) MBS arising from our fixed income public finance operations, and to a much lesser extent, other certain commitments. See Note 2 on page 104, and Note 21 on page 167 of our 2014 Form 10-K, as well as Note 15 in this report, for additional information regarding the GNMA or FNMA MBS commitments.


(8)	Includes individual loans classified as held for sale, which were recorded at a fair value lower than cost.


(9)	Represents the fair value of foreclosed properties which were measured at a fair value subsequent to their initial classification as OREO. The recorded value in the Condensed Consolidated Statements of Financial Condition is net of the estimated selling costs.


(10)	Consists of RJ Bank Interest Hedges (as hereinafter defined), see Note 12 for additional information.



September 30, 2014	Quoted prices in active markets for identical assets (Level 1) ⁽¹⁾		Significant other observable inputs (Level 2) ⁽¹⁾		Significant unobservable inputs (Level 3)			Netting adjustments ⁽²⁾			Balance as of September 30, 2014
	(in thousands)
Assets at fair value on a recurring basis:
Trading instruments:
Municipal and provincial obligations	$	11,407	$	192,482	$	—		$	—		$	203,889
Corporate obligations	1,989		109,939		—			—			111,928
Government and agency obligations	7,376		93,986		—			—			101,362
Agency MBS and CMOs	247		127,172		—			—			127,419
Non-agency CMOs and ABS	—		58,364		11			—			58,375
Total debt securities	21,019		581,943		11			—			602,973
Derivative contracts	—		89,923		—			(61,718		)	28,205
Equity securities	28,834		5,264		44			—			34,142
Corporate loans	—		990		—			—			990
Other	566		10,208		2,309			—			13,083
Total trading instruments	50,419		688,328		2,364			(61,718		)	679,393

Available for sale securities:
Agency MBS and CMOs	—		267,720		—			—			267,720
Non-agency CMOs	—		91,918		—			—			91,918
Other securities	1,916		—		—			—			1,916
ARS:
Municipals	—		—		86,696		⁽³⁾	—			86,696
Preferred securities	—		—		114,039			—			114,039
Total available for sale securities	1,916		359,638		200,735			—			562,289

Private equity investments	—		—		211,666		⁽⁴⁾	—			211,666
Other investments ⁽⁵⁾	212,753		1,267		1,731			—			215,751
Derivative instruments associated with offsetting matched book positions	—		323,337		—			—			323,337
Other assets:
Derivative contracts	—		2,462		—			—			2,462
Other assets	—		—		787		⁽⁶⁾	—			787
Total other assets	—		2,462		787			—			3,249
Total assets at fair value on a recurring basis	$	265,088	$	1,375,032	$	417,283		$	(61,718	)	$	1,995,685

Assets at fair value on a nonrecurring basis:
Bank loans, net:
Impaired loans	$	—	$	34,799	$	55,528		$	—		$	90,327
Loans held for sale⁽⁷⁾	—		22,611		—			—			22,611
Total bank loans, net	—		57,410		55,528			—			112,938
OREO⁽⁸⁾	—		768		—			—			768
Total assets at fair value on a nonrecurring basis	$	—	$	58,178	$	55,528		$	—		$	113,706

(continued on next page)



September 30, 2014	Quoted prices in active markets for identical assets (Level 1) ⁽¹⁾		Significant other observable inputs (Level 2) ⁽¹⁾		Significant unobservable inputs (Level 3)		Netting adjustments ⁽²⁾			Balance as of September 30, 2014
	(in thousands)
	(continued from previous page)
Liabilities at fair value on a recurring basis:
Trading instruments sold but not yet purchased:
Municipal and provincial obligations	$	11,093	$	554	$	—	$	—		$	11,647
Corporate obligations	29		15,304		—		—			15,333
Government obligations	187,424		—		—		—			187,424
Agency MBS and CMOs	738		—		—		—			738
Total debt securities	199,284		15,858		—		—			215,142
Derivative contracts	—		75,668		—		(63,296		)	12,372
Equity securities	10,884		2		—		—			10,886
Total trading instruments sold but not yet purchased	210,168		91,528		—		(63,296		)	238,400

Derivative instruments associated with offsetting matched book positions	—		323,337		—		—			323,337
Other liabilities	—		—		58		—			58
Total liabilities at fair value on a recurring basis	$	210,168	$	414,865	$	58	$	(63,296	)	$	561,795

(1)

We had $800 thousand in transfers of financial instruments from Level 1 to Level 2 during the year ended September 30, 2014. These transfers were a result of a decrease in availability and reliability of the observable inputs utilized in the respective instruments’ fair value measurement. We had $1.3 million in transfers of financial instruments from Level 2 to Level 1 during the year ended September 30, 2014. These transfers were a result of an increase in availability and reliability of the observable inputs utilized in the respective instruments’ fair value measurement. Our policy is that the end of each respective quarterly reporting period determines when transfers of financial instruments between levels are recognized.

(2)


(3)	Includes $58 million of Jefferson County, Alabama Limited Obligation School Warrants ARS.

(4)

The portion of these investments we do not own is approximately $55 million as of September 30, 2014 and are included as a component of noncontrolling interest in our Condensed Consolidated Statements of Financial Condition. The weighted average portion we own is approximately $157 million or 74% of the total private equity investments of $212 million included in our Condensed Consolidated Statements of Financial Condition.


(5)	Other investments include $144 million of financial instruments that are related to obligations to perform under certain deferred compensation plans (see Note 2 on page 114, and Note 24 on page 173, of our 2014 Form 10-K for further information regarding these plans).


(6)	Primarily comprised of forward commitments to purchase GNMA or FNMA (as hereinafter defined) MBS arising from our fixed income public finance operations (see Note 2 on page 104, and Note 21 on page 167 of our 2014 Form 10-K for additional information).


(7)	Includes individual loans classified as held for sale, which were recorded at a fair value lower than cost.


(8)	Represents the fair value of foreclosed properties which were measured at a fair value subsequent to their initial classification as OREO. The recorded value in the Condensed Consolidated Statements of Financial Condition is net of the estimated selling costs.

The adjustment to fair value of the nonrecurring fair value measures for the six months ended March 31, 2015 resulted in a $222 thousand additional provision for loan losses relating to impaired loans and $149 thousand in other losses relating to loans held for sale and OREO. The adjustment to fair value of the nonrecurring fair value measures for the six months ended March 31, 2014 resulted in a $176 thousand reversal of provision for loan losses relating to impaired loans and $1.5 million in other losses relating to loans held for sale and OREO.

Changes in Level 3 recurring fair value measurements

The realized and unrealized gains and losses for assets and liabilities within the Level 3 category presented in the tables below may include changes in fair value that were attributable to both observable and unobservable inputs.

Additional information about Level 3 assets and liabilities measured at fair value on a recurring basis is presented below:



Three months ended March 31, 2015 Level 3 assets at fair value (in thousands)
	Financial assets																									Financial liabilities
	Trading instruments								Available for sale securities							Private equity, other investments and other assets										Payables- trade and other
	Non- agency CMOs & ABS			Equity securities		Other				ARS – municipals			ARS - preferred securities			Private equity investments				Other investments			Other assets			Other liabilities
Fair value December 31, 2014	$	11		$	14	$	5,264			$	85,814		$	112,955		$	208,674			$	1,564		$	2,407		$	(58	)
Total gains (losses) for the period:
Included in earnings	—			—		(20		)		2			25			14,414			⁽¹⁾	41			(211		)	—
Included in other comprehensive income	—			—		—				3,843			(282		)	—				—			—			—
Purchases and contributions	—			—		11,358				—			—			2,241				—			—			—
Sales	—			—		(15,822		)		(45		)	—			—				—			—			—
Redemptions by issuer	—			—		—				—			(250		)	—				(663		)	—			—
Distributions	(1		)	—		—				—			—			(4,385		)		(26		)	—			—
Transfers: ⁽²⁾
Into Level 3	—			—		—				—			—			—				—			—			—
Out of Level 3	—			—		—				—			—			—				—			—			—
Fair value March 31, 2015	$	10		$	14	$	780			$	89,614		$	112,448		$	220,944			$	916		$	2,196		$	(58	)

Change in unrealized gains (losses) for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period	$	—		$	—	$	—			$	3,843		$	(282	)	$	14,414			$	41		$	(211	)	$	—

(1)

Primarily results from valuation adjustments of certain private equity investments. Since we only own a portion of these investments, our share of the net valuation adjustments resulted in a gain of $9.8 million which is included in net income attributable to RJF (after noncontrolling interests). The noncontrolling interests’ share of the net valuation adjustments was a gain of approximately $4.6 million.


(2)	Our policy is that the end of each respective quarterly reporting period determines when transfers of financial instruments between levels are recognized.



Six months ended March 31, 2015 Level 3 assets at fair value (in thousands)
	Financial assets																									Financial liabilities
	Trading instruments									Available for sale securities							Private equity, other investments and other assets									Payables- trade and other
	Non- agency CMOs & ABS			Equity securities			Other				ARS – municipals			ARS - preferred securities			Private equity investments				Other investments			Other assets		Other liabilities
Fair value September 30, 2014	$	11		$	44		$	2,309			$	86,696		$	114,039		$	211,666			$	1,731		$	787	$	(58	)
Total gains (losses) for the period:
Included in earnings	—			5			(40		)		2			25			17,060			⁽¹⁾	81			1,409		—
Included in other comprehensive income	—			—			—				2,961			(1,366		)	—				—			—		—
Purchases and contributions	—			20			23,333				—			—			6,343				—			—		—
Sales	—			—			(24,822		)		(45		)	—			—				—			—		—
Redemptions by issuer	—			—			—				—			(250		)	—				(673		)	—		—
Distributions	(1		)	—			—				—			—			(14,125		)		(223		)	—		—
Transfers: ⁽²⁾
Into Level 3	—			—			—				—			—			—				—			—		—
Out of Level 3	—			(55		)	—				—			—			—				—			—		—
Fair value March 31, 2015	$	10		$	14		$	780			$	89,614		$	112,448		$	220,944			$	916		$	2,196	$	(58	)

Change in unrealized gains (losses) for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period	$	—		$	5		$	—			$	2,961		$	(1,366	)	$	17,060			$	81		$	1,409	$	—

(1)

Primarily results from valuation adjustments of certain private equity investments. Since we only own a portion of these investments, our share of the net valuation adjustments resulted in a gain of $12.2 million which is included in net income attributable to RJF (after noncontrolling interests). The noncontrolling interests’ share of the net valuation adjustments was a gain of approximately $4.9 million.


(2)	Our policy is that the end of each respective quarterly reporting period determines when transfers of financial instruments between levels are recognized.



Three months ended March 31, 2014 Level 3 assets at fair value (in thousands)
	Financial assets																										Financial liabilities
	Trading instruments								Available for sale securities									Private equity, other investments and other assets									Payables- trade and other
	Non- agency CMOs & ABS		Equity securities			Other			Non- agency CMOs			ARS – municipals			ARS - preferred securities			Private equity investments				Other investments			Other assets		Other liabilities
Fair value December 31, 2013	$	13	$	35		$	4,199		$	46		$	108,458		$	112,122		$	209,977			$	1,949		$	15	$	(1,417	)
Total gains (losses) for the period:
Included in earnings	—		5			(32		)	—			63			44			13				48			—		1,335
Included in other comprehensive income	—		—			—			6			1,849			374			—				—			—		—
Purchases and contributions	—		23			3,185			—			—			—			5,317				—			—		—
Sales	—		(26		)	(4,649		)	—			—			—			—				—			—		—
Redemptions by issuer	—		—			—			—			(410		)	(325		)	—				(28		)	—		—
Distributions	—		—			—			(14		)	—			—			(5,329		)		(181		)	—		—
Transfers: ⁽¹⁾
Into Level 3	—		—			—			—			—			—			—				—			—		—
Out of Level 3	—		—			—			—			—			—			(18,577		)	⁽²⁾	—			—		—
Fair value March 31, 2014	$	13	$	37		$	2,703		$	38		$	109,960		$	112,215		$	191,401			$	1,788		$	15	$	(82	)

Change in unrealized gains (losses) for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period	$	—	$	5		$	(32	)	$	—		$	63		$	44		$	13			$	60		$	—	$	—


(1)	Our policy is that the end of each respective quarterly reporting period determines when transfers of financial instruments between levels are recognized.


(2)	The transfers out of Level 3 were primarily comprised of the portion of private equity investments which do not represent equity investments, whose balances were transferred to cash and cash equivalents or other receivables on our Condensed Consolidated Statements of Financial Condition, and whose carrying values approximate fair value.



Six months ended March 31, 2014 Level 3 assets at fair value (in thousands)
		Financial assets																														Financial liabilities
	Trading instruments										Available for sale securities									Private equity, other investments and other assets												Payables- trade and other
		Non- agency CMOs & ABS			Equity securities			Other			Non- agency CMOs			ARS – municipals			ARS - preferred securities			Private equity investments				Other investments			Other receivables			Other assets		Other liabilities
Fair value September 30, 2013		$	14		$	35		$	3,956		$	78		$	130,934		$	110,784		$	216,391			$	4,607		$	2,778		$	15	$	(60	)
Total gains (losses) for the period:
Included in earnings		—			4			(201		)	(27		)	5,584			44			4,781			⁽¹⁾	73			(2,778		)	—		(22		)
Included in other comprehensive income		—			—			—			21			938			1,712			—				—			—			—		—
Purchases and contributions		—			24			10,448			—			—			—			9,332				63			—			—		—
Sales		—			(26		)	(11,500		)	—			(370		)	—			(7,076		)		(2,698		)	—			—		—
Redemptions by issuer		—			—			—			—			(27,126		)	(325		)	—				(28		)	—			—		—
Distributions		(1		)	—			—			(34		)	—			—			(13,450		)		(229		)	—			—		—
Transfers: ⁽²⁾
Into Level 3		—			—			—			—			—			—			—				—			—			—		—
Out of Level 3		—			—			—			—			—			—			(18,577		)	⁽³⁾	—			—			—		—
Fair value March 31, 2014		$	13		$	37		$	2,703		$	38		$	109,960		$	112,215		$	191,401			$	1,788		$	—		$	15	$	(82	)

Change in unrealized gains (losses) for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period		$	20		$	4		$	(201	)	$	(27	)	$	938		$	1,712		$	4,781			$	166		$	—		$	—	$	(22	)

(1) Primarily results from valuation adjustments of certain private equity investments. Since we only own a portion of these investments, our share of the net valuation adjustments resulted in a gain of $4.4 million which is included in net income attributable to RJF (after noncontrolling interests). The noncontrolling interests’ share of the net valuation adjustments was a gain of approximately $400 thousand.


(2)	Our policy is that the end of each respective quarterly reporting period determines when transfers of financial instruments between levels are recognized.


(3)	The transfers out of Level 3 were primarily comprised of the portion of private equity investments which do not represent equity investments, whose balances were transferred to cash and cash equivalents or other receivables on our Condensed Consolidated Statements of Financial Condition, and whose carrying values approximate fair value.

As of March 31, 2015, 8.9% of our assets and 3.9% of our liabilities are instruments measured at fair value on a recurring basis. Instruments measured at fair value on a recurring basis categorized as Level 3 as of March 31, 2015 represent 19% of our assets measured at fair value. In comparison, as of March 31, 2014, 8.7% and 3% of our assets and liabilities, respectively, represented instruments measured at fair value on a recurring basis. Instruments measured at fair value on a recurring basis categorized as Level 3 as of March 31, 2014 represented 21% of our assets measured at fair value. Level 3 instruments as a percentage of total financial instruments decreased by 2% as compared to March 31, 2014, a result of the increase in total instruments measured at fair value on a recurring basis as of March 31, 2015. As of March 31, 2015, the balances of our level 3 assets have increased compared to March 31, 2014 primarily as a result of the increase in the value of our private equity investments since March 31, 2014.

Gains and losses included in earnings are presented in net trading profit and other revenues in our Condensed Consolidated Statements of Income and Comprehensive Income as follows:



For the three months ended March 31, 2015	Net trading profit			Other revenues
	(in thousands)
Total (losses) gains included in revenues	$	(20	)	$	14,271
Change in unrealized gains for assets held at the end of the reporting period	$	—		$	17,805



For the six months ended March 31, 2015	Net trading profit			Other revenues
	(in thousands)
Total (losses) gains included in revenues	$	(35	)	$	18,577
Change in unrealized gains for assets held at the end of the reporting period	$	5		$	20,145



For the three months ended March 31, 2014	Net trading profit			Other revenues
	(in thousands)
Total (losses) gains included in revenues	$	(27	)	$	1,503
Change in unrealized (losses) gains for assets held at the end of the reporting period	$	(27	)	$	180



For the six months ended March 31, 2014	Net trading profit			Other revenues
	(in thousands)
Total (losses) gains included in revenues	$	(197	)	$	7,655
Change in unrealized (losses) gains for assets held at the end of the reporting period	$	(177	)	$	7,548

Quantitative information about level 3 fair value measurements

The significant assumptions used in the valuation of level 3 financial instruments are as follows (the table that follows includes the significant majority of the financial instruments we hold that are classified as level 3 measures):



Level 3 financial instrument	Fair value at March 31, 2015 (in thousands)		Valuation technique(s)	Unobservable input	Range (weighted-average)
Recurring measurements:
Available for sale securities:
ARS:
Municipals	$	61,500	Recent trades	Observed trades (in inactive markets) of in-portfolio securities	94% of par - 94% of par (94% of par)
				Comparability adjustments^(a)	+/- 3% of par (+/- 3% of par)
Municipals	$	10,505	Income or market approach:
			Scenario 1 - recent trades	Observed trades (in inactive markets) of in-portfolio securities	70% of par - 70% of par (70% of par)
			Scenario 2 - discounted cash flow	Average discount rate^(b)	5.10% - 6.94% (6.02%)
				Average interest rates applicable to future interest income on the securities^(c)	1.49% - 3.19% (2.34%)
				Prepayment year^(d)	2017 - 2024 (2021)
				Weighting assigned to outcome of scenario1/ scenario 2	20%/80%
Municipals	$	17,609	Discounted cash flow	Average discount rate^(b)	3.32% - 5.94% (3.84%)
				Average interest rates applicable to future interest income on the securities^(c)	1.28% - 4.25% (1.41%)
				Prepayment year^(d)	2017 - 2024 (2020)
Preferred securities	$	112,448	Discounted cash flow	Average discount rate^(b)	3.43% - 4.91% (4.13%)
				Average interest rates applicable to future interest income on the securities^(c)	1.88% - 3.21% (1.99%)
				Prepayment year^(d)	2015 - 2019 (2019)
Private equity investments:	$	46,402	Income or market approach:
			Scenario 1 - income approach - discounted cash flow	Discount rate^(b)	13% - 17.5% (15.9%)
				Terminal growth rate of cash flows	3% - 3% (3%)
				Terminal year	2016 - 2018 (2017)
			Scenario 2 - market approach - market multiple method	EBITDA Multiple^(e)	4.75 - 7.5 (6.3)
				Weighting assigned to outcome of scenario 1/scenario 2	72%/28%
	$	174,542	Transaction price or other investment-specific events^(f)	Not meaningful^(f)	Not meaningful^(f)
Nonrecurring measurements:
Impaired loans: residential	$	24,075	Discounted cash flow	Prepayment rate	7 yrs. - 12 yrs. (10.3 yrs.)
Impaired loans: corporate	$	27,369	Appraisal, discounted cash flow, or distressed enterprise value^(g)	Not meaningful^(g)	Not meaningful^(g)

The text of the footnotes in the above table are on the following page.

The text of the footnotes to the table on the previous page are as follows:


(a)	Management estimates that market participants apply this range of either discount or premium, as applicable, to the limited observable trade data in order to assess the value of the securities within this portfolio segment.


(b)	Represents discount rates used when we have determined that market participants would take these discounts into account when pricing the investments.


(c)	Future interest rates are projected based upon a forward interest rate path, plus a spread over such projected base rate that is applicable to each future period for each security within this portfolio segment. The interest rates presented represent the average interest rate over all projected periods for securities within the portfolio segment.


(d)	Assumed year of at least a partial redemption of the outstanding security by the issuer.


(e)	Represents amounts used when we have determined that market participants would use such multiples when pricing the investments.


(f)	Certain direct private equity investments are valued initially at the transaction price until either our annual review, significant transactions occur, new developments become known, or we receive information from the fund manager that allows us to update our proportionate share of net assets, when any of which indicate that a change in the carrying values of these investments is appropriate.


(g)	The valuation techniques used for the impaired corporate loan portfolio as of March 31, 2015 were appraisals less selling costs for the collateral dependent loans, and either discounted cash flows or distressed enterprise value for the remaining impaired loans that are not collateral dependent.

Qualitative disclosure about unobservable inputs

For our recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the sensitivity of the fair value measurement to changes in significant unobservable inputs and interrelationships between those unobservable inputs are described below:

Auction rate securities:

One of the significant unobservable inputs used in the fair value measurement of auction rate securities presented within our available for sale securities portfolio relates to judgments regarding whether the level of observable trading activity is sufficient to conclude markets are active. Where insufficient levels of trading activity are determined to exist as of the reporting date, then management’s assessment of how much weight to apply to trading prices in inactive markets versus management’s own valuation models could significantly impact the valuation conclusion. The valuation of the securities impacted by changes in management’s assessment of market activity levels could be either higher or lower, depending upon the relationship of the inactive trading prices compared to the outcome of management’s internal valuation models.

The future interest rate and maturity assumptions impacting the valuation of the auction rate securities are directly related. As short-term interest rates rise, due to the variable nature of the penalty interest rate provisions embedded in most of these securities in the event auctions fail to set the security’s interest rate, then a penalty rate that is specified in the security increases. These penalty rates are based upon a stated interest rate spread over what is typically a short-term base interest rate index. Management estimates that at some level of increase in short-term interest rates, issuers of the securities will have the economic incentive to refinance (and thus prepay) the securities. Therefore, the short-term interest rate assumption directly impacts the input related to the timing of any projected prepayment. The faster and steeper short-term interest rates rise, the earlier prepayments will likely occur and the higher the fair value of the security.

Private equity investments:

The significant unobservable inputs used in the fair value measurement of private equity investments relate to the financial performance of the investment entity and the market’s required return on investments from entities in industries in which we hold investments. Significant increases (or decreases) in our investment entities’ future economic performance will have a directly proportional impact on the valuation results. The value of our investment moves inversely with the market’s expectation of returns from such investments. Should the market require higher returns from industries in which we are invested, all other factors held constant, our investments will decrease in value. Should the market accept lower returns from industries in which we are invested, all other factors held constant, our investments will increase in value.

Fair value option

The fair value option is an accounting election that allows the reporting entity to apply fair value accounting for certain financial assets and liabilities on an instrument by instrument basis. As of March 31, 2015, we have elected not to choose the fair value option for any of our financial assets or liabilities not already recorded at fair value.

Other fair value disclosures

Many, but not all, of the financial instruments we hold are recorded at fair value in the Condensed Consolidated Statements of Financial Condition. Refer to Note 5 on pages 131 - 132 of our 2014 Form 10-K for discussion of the methods and assumptions we apply to the determination of fair value of our financial instruments that are not otherwise recorded at fair value.

The estimated fair values by level within the fair value hierarchy and the carrying amounts of our financial instruments that are not carried at fair value are as follows:



	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total estimated fair value		Carrying amount
	(in thousands)
March 31, 2015
Financial assets:
Bank loans, net⁽¹⁾	$	—	$	38,848	$	11,854,431	$	11,893,279	$	11,935,121

Financial liabilities:
Bank deposits	$	—	$	10,921,350	$	353,769	$	11,275,119	$	11,272,013
Corporate debt	$	378,700	$	958,688	$	—	$	1,337,388	$	1,188,916

September 30, 2014
Financial assets:
Bank loans, net⁽¹⁾	$	—	$	23,678	$	10,738,136	$	10,761,814	$	10,857,662

Financial liabilities:
Bank deposits	$	—	$	9,684,221	$	344,234	$	10,028,455	$	10,028,924
Corporate debt	$	366,100	$	955,170	$	—	$	1,321,270	$	1,190,836


(1)	Excludes all impaired loans and loans held for sale which have been recorded at fair value in the Condensed Consolidated Statements of Financial Condition at March 31, 2015 and September 30, 2014, respectively.