UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

____________________________________________________________________________________________________
x☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 20172022
OR
¨☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to .
Commission file number 1-31234

WESTWOOD HOLDINGS GROUP, INC.
(Exact name of registrant as specified in its charter)

____________________________________________________________________________________________________
DELAWAREDelaware75-2969997
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
200 CRESCENT COURT, SUITE 1200
DALLAS, TEXAS
75201
DALLAS,Texas75201
(Address of principal executive office)(Zip Code)
(214) 756-6900
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common stock, par value $0.01 per shareWHGNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒No  ☐
Yes  xNo  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒No  ☐
Yes  xNo  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”,filer,” “accelerated filer” andfiler,” “smaller reporting company”,company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☒
Large accelerated filer¨Accelerated filerx
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging growth company
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ¨☐No  x☒
Shares of common stock, par value $0.01 per share, outstanding as of October 13, 2017: 8,884,421.20, 2022: 8,413,223.

 



WESTWOOD HOLDINGS GROUP, INC.
INDEX
PART IFINANCIAL INFORMATIONPAGE
Item 1.Financial Statements
1
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 20172022 and 20162021
2
Condensed Consolidated Statement of Stockholders’ Equity for the Three and Nine Months Ended September 30, 20172022 and 2021
3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20172022 and 20162021
45
Notes to Condensed Consolidated Financial Statements
56
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
1915
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
2822
Item 4.
Controls and Procedures
2822
PART II
OTHER INFORMATION
2824
Item 1.
Legal Proceedings
2824
Item 1A.
Risk Factors
2824
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
2924
Item 6.
Exhibits
3025
Signatures
3126
 
 
 
 


 




WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share amounts)
(Unaudited)
September 30,
2022		December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$22,470 $15,206 
Accounts receivable9,290 11,152 
Investments, at fair value51,564 65,024 
Prepaid income taxes569 233 
Other current assets2,647 2,246 
Total current assets86,540 93,861 
Investments4,455 4,455 
Noncurrent investments at fair value4,001 4,513 
Goodwill16,401 16,401 
Deferred income taxes1,097 848 
Operating lease right-of-use assets5,286 4,868 
Intangible assets, net10,693 11,911 
Property and equipment, net of accumulated depreciation of $9,096 and $8,6371,717 2,114 
Other long-term assets797 634 
Total assets$130,987 $139,605 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities$2,876 $2,637 
Dividends payable1,726 1,800 
Compensation and benefits payable5,900 9,530 
Operating lease liabilities1,484 1,409 
Income taxes payable— 466 
Total current liabilities11,986 15,842 
Accrued dividends554 1,133 
Noncurrent operating lease liabilities4,940 4,724 
Total long-term liabilities5,494 5,857 
Total liabilities17,480 21,699 
Commitments and contingencies (Note 10)
Stockholders' Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 11,058,937 and outstanding 8,410,659 shares at September 30, 2022; issued 10,658,644 and outstanding 8,253,491 shares at December 31, 2021110 107 
Additional paid-in capital199,594 195,187 
Treasury stock, at cost - 2,648,278 shares at September 30, 2022; 2,405,154 shares at December 31, 2021(85,227)(81,750)
Retained earnings (accumulated deficit)(970)4,362 
Total stockholders' equity113,507 117,906 
Total liabilities and stockholders' equity$130,987 $139,605 
 
  September 30,
2017		 December 31, 2016
   
ASSETS    
Current assets:    
Cash and cash equivalents $51,436
 $33,679
Accounts receivable 22,163
 23,429
Investments, at fair value 48,093
 56,485
Income taxes receivable 2,744
 —
Other current assets 6,261
 2,364
Total current assets 130,697
 115,957
Goodwill 27,144
 27,144
Deferred income taxes 9,473
 10,903
Intangible assets, net 19,945
 21,394
Property and equipment, net of accumulated depreciation of $5,354 and $4,590 4,103
 4,280
Total assets $191,362
 $179,678
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable and accrued liabilities $2,851
 $2,641
Accrued litigation settlement 8,018
 —
Dividends payable 6,666
 6,679
Compensation and benefits payable 14,126
 17,200
Income taxes payable 722
 3,148
Total current liabilities 32,383
 29,668
Accrued dividends 1,495
 1,767
Deferred rent 2,055
 2,174
Total liabilities 35,933
 33,609
Commitments and contingencies (Note 12) 
 
Stockholders' Equity:    
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 9,986,076 and outstanding 8,884,421 shares at September 30, 2017; issued 9,801,938 and outstanding 8,810,375 shares at December 31, 2016 100
 98
Additional paid-in capital 176,329
 162,730
Treasury stock, at cost - 1,101,655 shares at September 30, 2017; 991,563 shares at December 31, 2016 (50,910) (44,353)
Accumulated other comprehensive loss (1,849) (4,287)
Retained earnings 31,759
 31,881
Total stockholders' equity 155,429
 146,069
Total liabilities and stockholders' equity $191,362
 $179,678

See notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.


1


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data and share amounts)
(Unaudited)
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
REVENUES:        
Advisory fees:        
Asset-based $25,334
 $23,447
 $73,619
 $67,928
Performance-based —
 226
 1,417
 635
Trust fees 7,858
 7,690
 23,570
 22,798
Other, net 300
 414
 1,265
 568
Total revenues 33,492
 31,777
 99,871
 91,929
EXPENSES:        
Employee compensation and benefits 15,601
 15,637
 48,875
 47,239
Sales and marketing 457
 408
 1,447
 1,423
Westwood mutual funds 977
 755
 2,749
 2,282
Information technology 1,855
 1,874
 5,494
 6,039
Professional services 1,681
 1,903
 4,495
 4,707
Legal settlement 4,009
 —
 4,009
 —
General and administrative 3,160
 2,147
 8,697
 7,028
Total expenses 27,740
 22,724
 75,766
 68,718
Income before income taxes 5,752
 9,053
 24,105
 23,211
Provision for income taxes 1,620
 3,166
 7,013
 8,141
Net income $4,132
 $5,887
 $17,092
 $15,070
Other comprehensive income (loss):        
Foreign currency translation adjustments 1,297
 (453) 2,438
 1,007
Total comprehensive income $5,429
 $5,434
 $19,530
 $16,077
         
Earnings per share:        
Basic $0.51
 $0.74
 $2.10
 $1.89
Diluted $0.49
 $0.72
 $2.05
 $1.84
Weighted average shares outstanding:        
Basic 8,171,809
 7,995,680
 8,136,350
 7,952,938
Diluted 8,420,749
 8,179,956
 8,350,926
 8,212,468
         
Cash dividends declared per share $0.62
 $0.57
 $1.86
 $1.71
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
REVENUES:
Advisory fees:
Asset-based$10,474 $12,011 $33,244 $33,846 
Performance-based— — — 1,959 
Trust fees5,177 5,952 16,257 18,233 
Other, net(245)(103)(1,276)(375)
Total revenues15,406 17,860 48,225 53,663 
EXPENSES:
Employee compensation and benefits9,526 10,268 28,993 32,053 
Sales and marketing335 292 1,326 892 
Westwood mutual funds615 814 1,812 1,573 
Information technology2,170 1,937 5,934 6,190 
Professional services1,660 726 4,655 3,471 
General and administrative2,182 1,779 6,570 5,893 
Total expenses16,488 15,816 49,290 50,072 
Net operating income (loss)(1,082)2,044 (1,065)3,591 
Realized gains on private investments— — — 8,371 
Net change in unrealized appreciation (depreciation) on private investments(249)(13)(511)(2,124)
Net investment income104 131 93 562 
Other income206 198 598 390 
Income (loss) before income taxes(1,021)2,360 (885)10,790 
Income tax provision154 481 618 3,840 
Net income (loss)$(1,175)$1,879 $(1,503)$6,950 
Total comprehensive income (loss)$(1,175)$1,879 $(1,503)$6,950 
Earnings (loss) per share:
Basic$(0.15)$0.24 $(0.19)$0.88 
Diluted$(0.15)$0.24 $(0.19)$0.88 
Weighted average shares outstanding:
Basic7,794,060 7,887,259 7,867,555 7,886,359 
Diluted7,794,060 7,956,081 7,867,555 7,933,860 
 

See notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.


2


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the NineThree Months Ended September 30, 20172022 and 2021
(In thousands, except share amounts)
(Unaudited)

Common Stock, ParAdditional Paid-In CapitalTreasury StockRetained Earnings (Accumulated Deficit)Total
SharesAmount
Balance, June 30, 20228,511,014 $111 $198,084 $(83,970)$1,493 $115,718 
Net loss— — — — (1,175)(1,175)
Issuance of restricted stock, net of forfeitures(911)(1)1 — — — 
Dividends declared ($0.15 per share)— — — — (1,288)(1,288)
Stock-based compensation expense— — 1,509 — — 1,509 
Purchases of treasury stock(99,444)— — (1,257)— (1,257)
Balance, September 30, 20228,410,659 $110 $199,594 $(85,227)$(970)$113,507 

Common Stock, ParAdditional Paid-In CapitalTreasury StockRetained EarningsTotal
SharesAmount
Balance, June 30, 20218,324,702 $108 $213,362 $(80,551)$1,757 $134,676 
Net income— — — — 1,879 1,879 
Issuance of restricted stock, net of forfeitures(2,336)— — — — — 
Return of capital ($2.50 per share)— — (20,823)— — (20,823)
Dividends declared ($0.10 per share)— — — — (867)(867)
Stock-based compensation expense— — 1,362 — — 1,362 
Purchases of treasury stock(25,502)— — (499)— (499)
Balance, September 30, 20218,296,864 $108 $193,901 $(81,050)$2,769 $115,728 




  Common Stock, Par 
Additional
Paid-In
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 Total
  Shares Amount     
BALANCE, December 31, 2016 8,810,375
 $98
 $162,730
 $(44,353) $(4,287) $31,881
 $146,069
Cumulative effect of accounting change —
 —
 711
 —
 —
 (711) —
Net income —
 —
 —
 —
 —
 17,092
 17,092
Other comprehensive income —
 —
 —
 —
 2,438
 —
 2,438
Issuance of restricted stock, net of forfeitures 184,138
 2
 (2) —
 —
 —
 —
Dividends declared —
 —
 —
 —
 —
 (16,503) (16,503)
Stock based compensation expense —
 —
 12,298
 —
 —
 —
 12,298
Reclassification of compensation liability to be paid in shares —
 —
 592
 —
 —
 —
 592
Purchases of treasury stock (23,822) —
 —
 (1,326) —
 —
 (1,326)
Restricted stock returned for payment of taxes (86,270) —
 —
 (5,231) —
 —
 (5,231)
BALANCE, September 30, 2017 8,884,421
 $100
 $176,329
 $(50,910) $(1,849) $31,759
 $155,429


See notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.


3


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the Nine Months Ended September 30, 2022 and 2021
(In thousands, except share amounts)
(Unaudited)

Common Stock, ParAdditional Paid-In CapitalTreasury StockRetained Earnings (Accumulated Deficit)Total
SharesAmount
Balance, December 31, 20218,253,491 $107 $195,187 $(81,750)$4,362 $117,906 
Net loss— — — — (1,503)(1,503)
Issuance of restricted stock, net of forfeitures400,292 3 (3)— — — 
Dividends declared ($0.45 per share)— — — — (3,829)(3,829)
Stock-based compensation expense— — 4,410 — — 4,410 
Purchases of treasury stock(205,521)— — (2,851)— (2,851)
Restricted stock returned for payment of taxes(37,603)— — (626)— (626)
Balance, September 30, 20228,410,659 $110 $199,594 $(85,227)$(970)$113,507 

Common Stock, ParAdditional Paid-In CapitalTreasury StockRetained Earnings (Accumulated Deficit)Total
SharesAmount
Balance, December 31, 20208,326,948 $105 $210,268 $(77,967)$(1,695)$130,711 
Net income— — — — 6,950 6,950 
Issuance of restricted stock, net of forfeitures158,134 3 (3)— — — 
Return of capital ($2.50 per share)— — (20,823)— — (20,823)
Dividends declared ($0.30 per share)— — — — (2,486)(2,486)
Stock-based compensation expense— — 4,459 — — 4,459 
Purchases of treasury stock(136,859)— — (2,199)— (2,199)
Restricted stock returned for payment of taxes(51,359)— — (884)— (884)
Balance, September 30, 20218,296,864 $108 $193,901 $(81,050)$2,769 $115,728 

See Notes to Condensed Consolidated Financial Statements.

4

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$(1,503)$6,950 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation488 571 
Amortization of intangible assets1,218 1,218 
Net change in unrealized depreciation on investments1,822 2,425 
Realized gains on private investments— (8,371)
Stock-based compensation expense4,410 4,459 
Deferred income taxes(252)477 
Non-cash lease expense800 923 
Gain on asset disposition— (148)
Change in operating assets and liabilities:
Net sales of trading securities12,149 11,191 
Accounts receivable1,862 (335)
Other current assets(562)(15)
Accounts payable and accrued liabilities246 1,149 
Compensation and benefits payable(3,622)(430)
Income taxes payable(810)2,191 
Other liabilities(927)(1,195)
Net cash provided by operating activities15,319 21,060 
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of investments— 9,258 
Sale of property and equipment— 501 
Purchase of property and equipment(123)(114)
Purchase of investments— (15)
Net cash (used in) provided by investing activities(123)9,630 
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock(2,851)(2,164)
Restricted stock returned for payment of taxes(626)(884)
Cash dividends paid(4,459)(22,125)
Net cash used in financing activities(7,936)(25,173)
Effect of currency rate changes on cash4 (72)
NET CHANGE IN CASH AND CASH EQUIVALENTS7,264 5,445 
Cash and cash equivalents, beginning of period15,206 13,016 
Cash and cash equivalents, end of period$22,470 $18,461 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes$1,807 $506 
Accrued dividends$2,280 $2,481 
Additional operating lease right-of-use assets$1,217 $— 
  Nine Months Ended September 30,
  2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $17,092
 $15,070
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 722
 732
Amortization of intangible assets 1,449
 1,470
Unrealized gains on trading investments (539) (676)
Stock based compensation expense 12,298
 12,164
Deferred income taxes 1,481
 114
Excess tax benefits from stock based compensation —
 (165)
Other —
 275
Change in operating assets and liabilities:    
Net sales of investments - trading securities 8,931
 23,147
Accounts receivable 1,686
 (2,711)
Other current assets (3,881) 900
Accounts payable and accrued liabilities 178
 (82)
Accrued litigation settlement 8,018
 —
Compensation and benefits payable (2,696) (6,758)
Income taxes receivable/payable (5,181) (4,637)
Other liabilities (111) 154
Net cash provided by operating activities 39,447
 38,997
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of property and equipment (537) (1,680)
Net cash used in investing activities (537) (1,680)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Purchases of treasury stock —
 (5,629)
Purchase of treasury stock under employee stock plans (1,326) (614)
Restricted stock returned for payment of taxes (5,231) (3,710)
Excess tax benefits from stock based compensation —
 165
Payment of contingent consideration in acquisition —
 (5,562)
Cash dividends paid (16,787) (14,827)
Net cash used in financing activities (23,344) (30,177)
Effect of currency rate changes on cash 2,191
 812
Net Change in Cash and Cash Equivalents 17,757
 7,952
Cash and cash equivalents, beginning of period 33,679
 22,740
Cash and cash equivalents, end of period $51,436
 $30,692
     
Supplemental cash flow information:    
Cash paid during the period for income taxes $10,245
 $12,632
Common stock issued for acquisition $—
 $3,734
Accrued dividends $8,161
 $7,682
Tenant allowance included in property and equipment $—
 $1,128


See notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.


45


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF THE BUSINESS
Westwood Holdings Group, Inc. (“Westwood”, the “Company”“the Company”, “we”, “us” or “our”) was incorporated under the laws of the State of Delaware on December 12, 2001. Westwood manages investment assets and provides investment management services to institutional investors, private wealthfor its clients and financial intermediaries through its wholly-owned subsidiaries, Westwood Management Corp. and Westwood Advisors, L.L.C. (together(referred to hereinafter together as “Westwood Management”) and Westwood Trust.
Westwood Management provides investment advisory services to institutional clients, a family of mutual funds called the Westwood Funds®, other mutual funds, individual investors and clients of Westwood Trust. Westwood Trust provides trust and Westwood International Advisors Inc.custodial services and participation in self-sponsored common trust funds (“Westwood International”CTFs”). to institutions and high net worth individuals. Revenue is largely dependent on the total value and composition of assets under management (“AUM”("AUM"). Accordingly, fluctuations in financial markets and in the composition of AUM impact our revenues and results of operations.
DivestitureWestwood Management is registered with the Securities and Exchange Commission ("SEC") as an investment advisor ("RIA") under the Investment Advisers Act of 1940. Westwood Trust is chartered and regulated by the Texas Department of Banking.
Pending Acquisition
On May 26, 2022, we announced our Omaha Operations
On September 6, 2017, we entered intoacquisition of Salient Partners' ("Salient") asset management business for an agreementupfront payment of $35.0 million on closing, with deferred payments of up to sell the Omaha-based component of our Private Wealth business. The sale is expected to close on December 31, 2017,$25.0 million over several years, subject to usualsatisfaction of certain revenue retention and growth targets. The transaction is subject to customary closing conditions, including fund shareholder and the receiptother client approvals.
Salient is a real asset and alternative investment firm that offers a suite of regulatory approval from the Nebraska Department of Banking. We expect to receive proceeds of $7 million to $10.5 million, subject to client consentsstrategies focused on energy and net working capital requirements; however, we do not expect to record a material gain or loss on the sale within our Consolidated Statement of Comprehensive Income. The sale will reduce our goodwillinfrastructure, real estate and intangible assets but is not expected to have a material impact to our Consolidated Balance Sheet. The component is reported within both our Advisory and Trust segments. The sale does not represent a major strategic shift in our business and does not qualify for discontinued operations reporting.tactical alternative investments.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements are unaudited and are presented in accordance with the requirements for quarterly reports on Form 10-Q and consequently do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).  The Company’s Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) necessary in the opinion of management to present fairly our interim financial position and results of operations and cash flows for the periods presented. The accompanying Condensed Consolidated Financial Statements are presented in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”).SEC.
The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC.2021. Operating results for the periods in these condensed consolidated financial statementsCondensed Consolidated Financial Statements are not necessarily indicative of the results for any future period. The accompanying Condensed Consolidated Financial Statements include the accounts of Westwood and its subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.
Recent Accounting Pronouncements
Recently Adopted
In March 2016,3. REVENUE
Revenue Recognition
Revenues are recognized when the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The purpose of the amendment is to simplify the accounting for share-based payment transactions,performance obligation (the investment management and includes changesadvisory or trust services provided to the accounting forclient) defined by the classificationinvestment advisory or sub-advisory agreement is satisfied. For each performance obligation, we determine at contract inception whether the revenue satisfies over time or at a point in time. We derive our revenues from investment advisory fees, trust fees and other sources of awardsrevenues such as either equity or liabilities, classificationgains and losses from our seed money investments into new investment strategies. The "Other, net” revenues on our Condensed Consolidated Statements of certain share-based payment itemsComprehensive Income (Loss)are the unrealized gains and losseson our seed money investments, and our seed money investments are included in the statement of cash flows, the accounting for forfeitures"Investments, at fair value" on our Condensed Consolidated Balance Sheets. Advisory and certain income tax consequences. The amendment is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively. The amendment related to forfeitures, where an entity may account for forfeitures as they occur, should betrust
6
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

fees are calculated based on a percentage of AUM and the performance obligation is realized over the current calendar quarter. Once clients receive our investment advisory services we have an enforceable right to payment.
applied retrospectivelyAdvisory Fee Revenues
Our advisory fees are generated by meansWestwood Management which manages client accounts under investment advisory and sub-advisory agreements. Advisory fees are typically calculated based on a percentage of a cumulative-effect adjustment to equity atAUM and are paid in accordance with the beginningterms of the periodagreements. Advisory fees are paid quarterly in which the guidance is adopted. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of tax benefitsadvance based on AUM on the statement of cash flows using either a prospective or retrospective transition method.
We adopted ASU 2016-09 effective January 1, 2017. The following summarizes the effectslast day of the adoptionpreceding quarter, quarterly in arrears based on AUM on the last day of the quarter just ended or are based on a daily or monthly analysis of AUM for the stated period. We recognize advisory fee revenues as services are rendered. Since our advance paying clients' billing periods coincide with the calendar quarter to which such payments relate, revenue is recognized within the quarter and our Condensed Consolidated Financial Statements:Statements contain no deferred advisory fee revenues. Advisory clients typically consist of institutional and mutual fund accounts.
Income Taxes - Upon adoptionInstitutional investors include separate accounts of this standard, all excess tax benefits(i) corporate pension and tax deficiencies,profit sharing plans, public employee retirement funds, Taft-Hartley plans, endowments, foundations and individuals; (ii) subadvisory relationships where Westwood provides investment management services for funds offered by other financial institutions; (iii) pooled investment vehicles including tax benefitscollective investment trusts; and (iv) managed account relationships with brokerage firms and other registered investment advisors that offer Westwood products to their customers.
Mutual funds include the Westwood Funds®, a family of dividends on share-based payment awards,mutual funds for which Westwood Management serves as advisor. These funds are recognizedavailable to individual investors, as income tax expense or benefit in the consolidated statement of comprehensive income. The tax effects of exercised or vested awards are treatedwell as discrete items in the reporting period in which they occur. As a result, the Company recognized discrete adjustments to income tax expense in the first nine months of 2017 of $1.0 million related to excess tax benefits, decreasing our effective tax rate for the first nine months of 2017 to 29.1%. Without the adjustment, our effective tax rate would have been 33.0%. The Company did not have any unrecognized excess tax benefitsoffered as of December 31, 2016 and therefore there was no cumulative-effect adjustment to retained earnings related to income taxes. The Company adopted the amendments related to the recognition of excess tax benefits and tax shortfalls prospectively, with no adjustments made to prior periods.
Forfeitures - Prior to adoption, stock-based compensation expense was recognized on a straight-line basis, net of estimated forfeitures, such that expense was recognized for stock-based awards that were expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption of this standard, the Company no longer applies an estimated forfeiture rate and instead accounts for forfeitures as they occur. The Company applied the modified retrospective adoption approach, resulting in a $711,000 cumulative-effect reduction to “Retained earnings” with the offset to “Additional paid-in-capital” on January 1, 2017.
Statements of Cash Flows - The Company historically accounted for excess tax benefits on the consolidated statements of cash flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The change in cash flow classification associated with excess tax benefits was adopted prospectively, resulting in the classification of the $1.0 million excess tax benefit as an operating activity during the nine months ended September 30, 2017. No change in classification was necessary for the presentation of restricted stock returned for payment of taxes, as the Company has historically presented such payments as a financing activity. The Company adopted this portion of the standard on a prospective basis, with no adjustments made to prior periods.
Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. Under the new standard, the Company is no longer required to estimate the tax effect of anticipated windfall benefits or shortfalls when projecting proceeds available for share repurchases in calculating dilutive shares. The Company utilized the modified retrospective adoption approach, with no adjustments made to prior periods.
Not Yet Adopted
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which
resulted from a joint project by the FASB and the International Accounting Standards Board to clarify the principles for
recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards
("IFRS"). The ASU will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Retrospective application is required, with the entity either applying the change to each prior reporting period presented or applying the cumulative effect of each prior reporting period presented at the date of initial application. Management has completed a detailed review of the terms and conditions of our current contracts, including performance based fees, and we do not anticipate a significant change in the timing of revenue recognized. As part of our reviewinvestment strategies for institutional investors and wealth management accounts.
Arrangements with Performance-Based Obligations
A limited number of our advisory clients have a contractual performance-based fee component in their contracts, which generates additional revenues if we analyzedoutperform a specified index over a specific period of time, and a limited number of our current business processmutual fund offerings have fees that generate additional revenues if we outperform specified indices over specific periods of time.
The revenue is based on future market performance and internal controlsis subject to factors outside our control. We cannot conclude that a significant reversal in the cumulative amount of revenue recognized will not occur during the measurement period, and do not anticipate implementing new procedurestherefore the revenue is recorded at the end of the measurement period if the performance obligation has been satisfied.
Trust Fee Revenues
Our trust fees are generated by Westwood Trust pursuant to successfully adopttrust or custodial agreements. Trust fees are separately negotiated with each client and are generally based on a percentage of AUM. Westwood Trust also provides trust services to a small number of clients on a fixed fee basis. The fees for most of our trust clients are calculated quarterly in arrears, based on a daily average of AUM for the standard. We expect to enhancequarter, or monthly, based on the month-end value of AUM. Since billing periods for most of Westwood Trust’s clients coincide with the calendar quarter, revenue is fully recognized within the quarter and add additional disclosures surroundingour Condensed Consolidated Financial Statements contain no deferred advisory fee revenues.
Revenue Disaggregated
Sales taxes are excluded from revenues. The following table presents our revenue process including disaggregation of revenue and information about performance obligations that will help provide the financial statement users a better understanding of the nature, amount, timing and potential uncertainty of the revenue being recognized.disaggregated by account type (in thousands). In 2021, we recast certain prior year revenues related to performance-based fees.
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Advisory Fees:
Institutional$6,247 $7,579 $19,928 $23,662 
Mutual Funds4,029 4,232 12,718 11,648 
Wealth Management198 200 598 495 
Trust Fees5,177 5,952 16,257 18,233 
Other, net(245)(103)(1,276)(375)
Total revenues$15,406 $17,860 $48,225 $53,663 

7
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendment eliminates step two from the goodwill impairment test in order to simplify the subsequent measurement of goodwill. Under step two, an entity had to perform procedures to determine the fair value of its assets and liabilities at the impairment testing date following procedures required to determine the fair value of assets acquired and liabilities assumed in a business combination. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. The amendment is effective, on a prospective basis, for annual or interim periods beginning after December 15, 2019, with early adoption permitted. We do not expect the amendment to have a material impact on our Consolidated Financial Statements and expect to adopt the standard within the required time frame.
In May 2017, the FASB issued ASU 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting.The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modified accounting under ASC 718. The purpose of the amendment is to reduce diversity, cost and complexity in practice when analyzing and applying these modifications. The ASU is effective for periods beginning after December 15, 2017. We do not expect the amendment to have a material impact on our Consolidated Financial Statements and expect to adopt the standard within the required time frame.
3. EARNINGS PER SHARE
Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of shares outstanding plus the effect of any dilutive shares of restricted stock granted to employees and non-employee directors. There were no anti-dilutive restricted shares outstanding for the three months ended September 30, 2017. There were approximately 2,453 anti-dilutive restricted shares outstanding for the three months ended September 30, 2016, and 8,800 and 2,301 anti-dilutive restricted shares outstanding for the nine months ended September 30, 2017 and 2016, respectively.
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share and share amounts):
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Net income $4,132
 $5,887
 $17,092
 $15,070
         
Weighted average shares outstanding - basic 8,171,809
 7,995,680
 8,136,350
 7,952,938
Dilutive potential shares from unvested restricted shares 248,940
 184,276
 214,576
 259,530
Weighted average shares outstanding - diluted 8,420,749
 8,179,956
 8,350,926
 8,212,468
         
Earnings per share:        
Basic $0.51
 $0.74
 $2.10
 $1.89
Diluted $0.49
 $0.72
 $2.05
 $1.84
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

4. INVESTMENTS
All investments are carried at fair value and are accounted for as trading securities. Investment balances are presentedserve clients primarily in the table below (in thousands):
  Cost 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Market
Value
September 30, 2017:        
U.S. Government and Government agency obligations $26,093
 $12
 $(14) $26,091
Money market funds 9,925
 —
 —
 9,925
Equity funds 11,510
 578
 (11) 12,077
  $47,528
 $590
 $(25) $48,093
December 31, 2016:        
U.S. Government and Government agency obligations $30,275
 $—
 $(2) $30,273
Money market funds 14,127
 —
 —
 14,127
Equity funds 12,057
 204
 (176) 12,085
  $56,459
 $204
 $(178) $56,485
As of September 30, 2017 and December 31, 2016, $10.6 million and $11.0 millionUnited States, as well as in corporate funds, respectively, were invested in Westwood Funds®, Westwood Common Trust Funds and Westwood Investment Funds PLC (the “UCITS Fund”). See Note 8 “Variable Interest Entities”.
5. FAIR VALUE MEASUREMENTS
We determine estimated fair values for our financial instruments using available information. The fair value amounts discussed in our Condensed Consolidated Financial Statements are not necessarily indicative of either amounts realizable upon disposition of these instruments or our intent or ability to dispose of these assets. The estimated fair value of cash and cash equivalents, accounts receivable, income taxes receivable, other current assets, accounts payable and accrued liabilities, dividends payable, compensation and benefits payable and income taxes payable approximates their carrying value due to their short-term maturities. The carrying amount of investments designated as “trading” securities, primarily U.S. Government and Government agency obligations, money market funds, Westwood Funds® mutual funds, the UCITS Fund and Westwood Trust common trust fund shares, equals their fair value based on prices quoted in active markets and, with respect to common trust funds, the net asset value of the shares held as reported by each fund. Market values of our money market holdings generally do not fluctuate.
ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value and requires disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows:
level 1 – quoted market prices in active markets for identical assets
level 2 – inputs other than quoted prices that are directly or indirectly observable
level 3 – significant unobservable inputs where there is little or no market activity
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

The following table summarizes the values of our assets and liabilities as of the dates indicated within the fair value hierarchy (in thousands):
  Level 1 Level 2 Level 3 
Investments Measured at NAV (1)
 Total
As of September 30, 2017:          
Investments in trading securities $45,836
 $—
 $—
 $2,257
 $48,093
Total financial instruments $45,836
 $—
 $—
 $2,257
 $48,093
           
As of December 31, 2016:          
Investments in trading securities $53,319
 $—
 $—
 $3,166
 $56,485
Total financial instruments $53,319
 $—
 $—
 $3,166
 $56,485
           
(1) Comprised of certain investments measured at fair value using net asset value (“NAV”) as a practical expedient. These investments were recategorized and are no longer included within Level 2 of the valuation hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on our consolidated balance sheets.
6. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the cost of acquired assets over the fair value of the underlying identifiable assets at the date of acquisition. Goodwill is not amortized but is tested for impairment at least annually. We completed our annual goodwill impairment assessment during the third quarter of 2017 and determined that no impairment loss was required. No impairments on goodwill were recorded during the three or nine months ended September 30, 2017 or 2016.
Other Intangible Assets
Our intangible assets represent the acquisition date fair value of acquired client relationships, trade names, non-compete agreements and internally developed software and are reflected net of amortization. In valuing these assets, we made significant estimates regarding their useful lives, growth rates and potential attrition. We periodically review intangible assets for events or circumstances that would indicate impairment. No impairments on intangible assets were recorded during the three or nine months ended September 30, 2017 or 2016.

7. STOCKHOLDERS' EQUITY
Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss were as follows (in thousands):
  As of September 30, 2017 As of December 31, 2016
Foreign currency translation adjustment $(1,849) $(4,287)
Accumulated other comprehensive loss $(1,849) $(4,287)
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

8. VARIABLE INTEREST ENTITIES
We have evaluated all of our advisory relationships with the UCITS Fund, the Westwood Funds®, limited liability companies (“LLCs”) and our relationship as sponsor of the Common Trust Funds (“CTFs”) to determine whether each of these entities is a variable interest entity (“VIE”) or voting ownership entity (“VOE”). Based on our analysis, we determined that the LLCs and CTFs were VIEs, as the at-risk equity holders do not have the ability to direct the activities that most significantly impact the entity’s economic performance, and the Company and its representatives have a majority control of the entities' respective boards of directors and can influence the respective entities' management and affairs. Although we have related parties on the UCITS Fund board of directors, the shareholders have rights to remove the current directors with a simple majority vote, so we determined the UCITS Fund is not a VIE. As the Company and its representatives do not have representation on the Westwood Funds® independent board of directors, which directs the activities that most significantly impact the entity's economic performance, we determined that the Westwood Funds® were not VIEs. Therefore, the UCITS Fund and the Westwood Funds® should be analyzed under the VOE consolidation method. Based on our analysis of our seed investments in these entities for the periods ending September 30, 2017 and December 31, 2016, we have not consolidated the LLCs or CTFs under the VIE method or the UCITS Fund or the Westwood Funds® under the VOE method, and therefore the financial results of these entities are not included in the Company’s consolidated financial results.
As of September 30, 2017 and December 31, 2016, the Company had seed investments in aggregate of approximately $10.6 million and $11.0 million, respectively, in the CTFs, the Westwood Funds, and the UCITS Fund. These seed investments were provided for the sole purpose of showing the economic substance needed to establish the funds or sub-funds. The Company's seed investments in these funds are included in “Investments, at fair value” on our Condensed Consolidated Balance Sheet at September 30, 2017.
Otherwise, we have not provided any financial support we were not previously contractually obligated to provide, and there are no arrangements that would require us to provide additional financial support to any of these entities. Our seed investments in the above-mentioned Westwood Funds®, the UCITS Fund and the CTFs are accounted for as investments in accordance with our other investments described in Note 4 “Investments.” We recognized fee revenue from the Westwood VIEs and Westwood VOEs of approximately $13.2 million and $13.5 million for the three months ended September 30, 2017 and 2016, respectively. We recognized fee revenue from the Westwood VIEs and Westwood VOEs of approximately $39.1 million and $39.5 million for the nine months ended September 30, 2017 and 2016, respectively.
The following table displays the assets under management, the amounts of our seed investments that are included in “Investments, at fair value” on our consolidated balance sheets, and the risk of loss in each vehicle (in millions):
  As of September 30, 2017
  Assets
Under
Management		 Corporate
Investment		 Amount at Risk
VIEs/VOEs:      
Westwood Funds® $4,144
 $6
 $6
Common Trust Funds 2,602
 2
 2
LLCs 113
 —
 —
UCITS Fund 595
 2
 2
All other assets:      
Private Wealth 3,107
    
Institutional 13,063
    
Total Assets Under Management $23,624
    
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

9. LONG-TERM INCENTIVE COMPENSATION
Restricted Stock Awards
We have issued restricted shares to our employees and non-employee directors. The Fourth Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan, as amended (the “Plan”), reserves shares of Westwood common stock for issuance to eligible employees, directors and consultants of Westwood or its subsidiaries in the form of restricted stock. In April 2017, stockholders approved an additional 250,000 shares to be authorized under the Plan, increasing the total number of shares issuable under the Plan (including predecessor plans to the Plan) to 4,648,100 shares. At September 30, 2017, approximately 433,000 shares remain available for issuance under the Plan.
international locations. The following table presents the total stock-based compensation expense recorded for stock-based compensation arrangements for the periods indicatedour revenue disaggregated by our clients' geographical locations (in thousands):
Three Months Ended September 30, 2022AdvisoryTrustOtherTotal
Canada$285 $— $— $285 
United States10,189 5,177 (245)15,121 
Total$10,474 $5,177 $(245)$15,406 
Three Months Ended September 30, 2021AdvisoryTrustOtherTotal
Canada$293 $— $— $293 
United States11,718 5,952 (103)17,567 
Total$12,011 $5,952 $(103)$17,860 

Nine Months Ended September 30, 2022AdvisoryTrustOtherTotal
Canada$879 $— $— $879 
United States32,365 16,257 (1,276)47,346 
Total$33,244 $16,257 $(1,276)$48,225 
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Service condition stock-based compensation expense $2,591
 $2,679
 $7,828
 $7,978
Performance condition stock-based compensation expense 1,454
 1,234 3,949
 3,705
Stock-based compensation expense under the Plan 4,045
 3,913 11,777
 11,683
Canadian Plan stock-based compensation expense 188
 169
 521
 481
Total stock-based compensation expense $4,233
 $4,082
 $12,298
 $12,164
Nine Months Ended September 30, 2021AdvisoryTrustPerformance-basedOtherTotal
Canada$866 $— $— $— $866 
Europe638 — 262 — 900 
United States32,352 18,233 1,687 (375)51,897 
Total$33,856 $18,233 $1,949 $(375)$53,663 


Restricted Stock
Under the Plan, we have granted to employees and non-employee directors restricted stock subject to service conditions, and to certain key employees restricted stock subject to both service and performance conditions.
As of September 30, 2017, there was approximately $26.3 million of unrecognized compensation cost for restricted stock grants under the Plan, which we expect to recognize over a weighted-average period of 2.2 years. Our two types of restricted stock grants under the Plan are discussed below.
Restricted Stock Subject Only to a Service Condition
We calculate compensation cost for restricted stock grants by using the fair market value of our common stock at the date of grant, the number of shares issued and an adjustment for restrictions on dividends. This compensation cost is amortized on a straight-line basis over the applicable vesting period. As discussed in Note 2 “Summary of Significant Accounting Policies,” the Company made an accounting policy election to account for forfeitures as they occur effective upon the adoption of ASU 2016-09 on January 1, 2017.
The following table details the status and changes in our restricted stock grants subject only to a service condition for the nine months ended September 30, 2017:

 Shares Weighted Average
Grant Date Fair Value
Non-vested, January 1, 2017 607,501
 $54.67
Granted 143,460
 61.20
Vested (182,085) 57.43
Forfeited (36,579) 55.11
Non-vested, September 30, 2017 532,297
 $55.46




WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Restricted Stock Subject to Service and Performance Conditions
Under the Plan, certain key employees were provided agreements for grants of restricted shares that vest over multiple year periods subject to achieving annual performance goals established by the Compensation Committee of Westwood’s Board of Directors. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares. For 2017, the goal is based on Income before income tax from our audited consolidated statement of comprehensive income for fiscal 2017. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. The vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the Income before income tax from the Company’s audited consolidated financial statements. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In March 2017, the Compensation Committee established the fiscal 2017 goal for our Chief Executive Officer and Chief Investment Officer as Income before income taxes of $24.0 million for 50% of their respective awards, and an Income before income taxes target of $34.0 million (ranging from 25% of target for threshold performance of $30.3 million to 185% of target for maximum performance of $42.5 million) for the remaining 50% of their respective awards. For all other restricted stock grants subject to performance conditions, the Compensation Committee established the fiscal 2017 goal as Income before income taxes of at least $24.0 million. These performance grants allow the Compensation Committee to exclude certain items, including legal settlements, from the Income before income taxes target. At the Committee's discretion, we excluded the $4.0 million legal settlement expense recorded during the third quarter of 2017 from our forecasted Income before income taxes target and concluded that it was probable that we would exceed the target performance goals required to vest the applicable percentage of the performance-based restricted shares this year and continued recording expense related to the shares expected to vest.
The following table details the status and changes in our restricted stock grants subject to service and performance conditions for the nine months ended September 30, 2017:
  Shares Weighted Average
Grant Date Fair Value
Non-vested, January 1, 2017 153,620
 $55.90
Granted 157,877
 54.86
Vested (102,367) 56.58
Forfeited (45,675) 55.86
Non-vested, September 30, 2017 163,455
 $55.87
The above amounts as of September 30, 2017 do not include 16,313 non-vested restricted shares that potentially vest over performance years subsequent to 2017 inasmuch as the Compensation Committee has not set annual performance goals for later years and therefore no grant date has been established.
Canadian Plan
The Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries (the “Canadian Plan”) provides compensation in the form of common stock for services performed by employees of Westwood International. Under the Canadian Plan, no more than $10 million CDN ($8.0 million in U.S. Dollars using the exchange rate on September 30, 2017) may be funded to the plan trustee for purchases of common stock with respect to awards granted under the Canadian Plan. At September 30, 2017, approximately $4.3 million CDN ($3.4 million in U.S. Dollars using the exchange rate on September 30, 2017) remains available for issuance under the Canadian Plan, or approximately 51,200 shares based on the closing share price of our stock of $67.27 as of September 30, 2017. During the first nine months of 2017, the trust formed pursuant to the Canadian Plan purchased in the open market 23,822 Westwood common shares for approximately $1.3 million. As of September 30, 2017, the trust holds 55,418 shares of Westwood common stock. As of September 30, 2017, unrecognized compensation cost related to restricted stock grants under the Canadian Plan totaled $864,000, which we expect to recognize over a weighted-average period of 1.8 years.
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Mutual Fund Share Incentive Awards
We grant annually to certain employees mutual fund incentive awards, which are bonus awards based on our mutual funds achieving specific performance goals. Awards granted are notionally credited to a participant account maintained by us that contains a number of mutual fund shares equal to the award amount divided by the net closing value of a fund share on the date the amount is credited to the account.
For awards earned prior to 2017, the award vested after approximately one year of service following the year in which the participant earned the award. Beginning in 2017, the award vests after approximately two years of service following the year in which the participant earned the award. We begin accruing a liability for mutual fund incentive awards when we believe it is probable that the award will be earned and record expense for these awards over the service period of the award, which is either two or three years. During the year in which the amount of the award is determined, we record expense based on the expected value of the award. After the award is earned, we record expense based on the value of the shares awarded and the percentage of the vesting period that has elapsed. Our liability under these awards may increase or decrease based on changes in the value of the mutual fund shares awarded, including reinvested income from the mutual funds during the vesting period. Upon vesting, participants receive the value of the mutual fund share awards adjusted for earnings or losses attributable to the underlying mutual funds. For the three months ended September 30, 2017 and 2016, we recorded expense of approximately $281,000 and $313,000, respectively, related to mutual fund share incentive awards. For the nine months ended September 30, 2017 and 2016, we recorded expense of approximately $819,000 and $933,000, respectively, related to mutual fund share incentive awards. As of September 30, 2017 and December 31, 2016, we had an accrued liability of approximately $1.5 million and $1.7 million, respectively, related to mutual fund share incentive awards.
10. INCOME TAXES
Our effective income tax rate was 28.2% for the third quarter of 2017, compared with 35.0% for the third quarter of 2016. The decrease is primarily related to the tax impact of our legal settlement with AGF (see further discussion in Note 12 “Commitments and Contingencies”) in the third quarter of 2017 and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the third quarter of 2016. Our effective income tax rate was 29.1% for the first nine months of 2017, compared with 35.1% for the first nine months of 2016. The decrease is primarily related to the adoption of ASU 2016-09 Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires recognition of excess tax benefits related to employees' restricted stock vesting to be recorded within income tax expense. Prior to adoption of ASU 2016-09, excess tax benefits were recorded through Additional paid-in capital, with no impact to the effective tax rate or our consolidated statement of comprehensive income. See further discussion in Note 2 “Summary of Significant Accounting Policies.” The remaining decrease is related to the tax impact of our legal settlement with AGF (see further discussion in Note 12 “Commitments and Contingencies”) in the third quarter of 2017 and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the first and third quarters of 2016.
As of September 30, 2017 and December 31, 2016, the Company's gross liability related to uncertain tax positions was $196,000 and $2.5 million, respectively. A number of years may elapse before an uncertain tax position is finally resolved. To the extent that the Company has favorable tax settlements, or determines that accrued amounts are no longer needed due to a lapse in the applicable statute of limitations or other changes in circumstances, such liabilities, as well as any related interest and penalties, would be reversed as a reduction of income tax expense, net of federal tax effects, in the period such determination is made. A reconciliation of the change in recorded uncertain tax positions during the nine months ended September 30, 2017 is as follows (in thousands):
Balance at January 1, 2017 $2,462
   Additions for tax positions related to the current year 68
   Additions for tax positions related to prior years —
   Reductions for tax positions related to prior years (768)
   Payments for tax positions related to prior years (1,566)
Balance at September 30, 2017 $196
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Within the next twelve months, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $196,000 as a result of settlements with certain taxing authorities, which, if recognized, would decrease our provision for income taxes by $130,000.
11. RELATED PARTY TRANSACTIONS
Some of our directors, executive officers and their affiliates invest their personal funds directly in trust accounts that we manage. For the three months ended September 30, 2017 and 2016, we recorded trust fees from these accounts of $92,000 and $108,000, respectively. For the nine months ended September 30, 2017 and 2016, we recorded trust fees from these accounts of $277,000 and $305,000, respectively. There was $92,000 and $97,000 due from these accounts as of September 30, 2017 and December 31, 2016, respectively.
The Company engages in transactions with its affiliates in the ordinary course of business. Westwood International and Westwood Management provide investment advisory services to the UCITS Fund and the Westwood Funds®. Certain members of our management serve on the board of directors of the UCITS Fund, and we have capital invested in three of the Westwood Funds®. Under the terms of the investment advisory agreements, the Company earns quarterly fees paid by clients of the fund or by the funds directly. The fees are based on negotiated fee schedules applied to assets under management. These fees are commensurate with market rates. For the three months ended September 30, 2017 and 2016, the Company earned approximately $1.1 million and $370,000, respectively, in fees from the affiliated funds. For the nine months ended September 30, 2017 and 2016, the Company earned approximately $2.8 million and $1.0 million, respectively, in fees from the affiliated funds. These fees do not include fees paid directly to Westwood International by certain clients invested in the UCITS Fund that have an investment management agreement with Westwood International. As of September 30, 2017 and December 31, 2016, $398,000 and $270,000, respectively, of these fees were unpaid and included in “Accounts receivable” on our Condensed Consolidated Balance Sheets.
12. COMMITMENTS AND CONTINGENCIES
On August 3, 2012, AGF Management Limited and AGF Investments Inc. (collectively, “AGF”) filed a lawsuit in the Ontario Superior Court of Justice against Westwood, certain Westwood employees and the executive recruiting firm of Warren International, LLC (“Warren”). The action related to the hiring of certain members of Westwood’s global and emerging markets investment team previously employed by AGF. AGF alleged that the former employees breached certain obligations when they resigned from AGF and that Westwood and Warren induced such breaches. AGF was seeking an unspecified amount of damages and punitive damages of $10 million CDN in the lawsuit. On November 5, 2012, Westwood responded to AGF’s lawsuit with a counterclaim against AGF for defamation. Westwood was seeking $1 million CDN in general damages, $10 million CDN in special damages, $1 million CDN in punitive damages, and costs. On November 6, 2012, AGF filed a second lawsuit against Westwood, Westwood Management and an employee of a Westwood subsidiary, alleging that the employee made defamatory statements about AGF. In this second lawsuit, AGF was seeking $5 million CDN in general damages, $1 million CDN per defendant in punitive damages, unspecified special damages, interest and costs.
On October 13, 2017, we reached a settlement with AGF that provides for the dismissal of all claims, with prejudice and without any admission of liability. We have agreed to pay AGF a one-time payment of $10 million CDN, half of which is expected to be covered by our insurance. During the third quarter of 2017, we recorded a net $4.0 million ($5 million CDN) charge related to the settlement and associated insurance coverage, with an $8.0 million ($10 million CDN) settlement liability recorded in “Accrued lawsuit settlement” and a $4.0 million ($5 million CDN) receivable from our insurance provider included in “Other current assets” on our Condensed Consolidated Balance Sheets at September 30, 2017.
Our policy is to not accrue legal fees and directly related costs as part of potential loss contingencies. We have agreed with our Directors & Officers insurance provider that 50% of the defense costs related to both AGF claims, excluding Westwood’s counterclaim against AGF, are covered by insurance. We expense legal fees and directly related costs as incurred. We received insurance proceeds of approximately $276,000 and $928,000 during the nine months ended September 30, 2017 and 2016, respectively. We had a receivable of approximately $113,000 and $186,000 as of September 30, 2017 and December 31, 2016, respectively, which represents our current minimum estimate of expenses that we expect to recover under our insurance policy. This receivable is part of “Other current assets” on our Condensed Consolidated Balance Sheets.
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

13.4. 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. Earnings, a non-GAAP measurement. We define Economic Earnings as net income (loss) plus non-cash equity-based compensation expense, amortization of intangible assets and deferred taxes related to goodwill. Although depreciation on fixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent an allocation of the decline in the value of the related assets that will ultimately require replacement. In addition, we do not adjust Economic Earnings for tax deductions related to restricted stock expense or amortization of intangible assets.
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 (i) corporate retirementpension and profit sharing plans, public employee retirement funds, Taft-Hartley plans, endowments, foundations and individuals, (ii) subadvisory relationships where Westwood provides investment management services to the Westwood Funds®Funds®, funds offered by other financial institutions and the UCITS Fund, as well as investment subadvisory services to mutual funds andoffered by our Trust segment.segment and (iii) pooled investment vehicles, including collective investment
8
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
trusts. Westwood Management Corp. and Westwood International, which provideprovides investment advisory services to similar clients of similar type, areand is included in our Advisory segment along with Westwood Advisors, L.L.C.segment.
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.
(in thousands)AdvisoryTrustWestwood
Holdings		EliminationsConsolidated
Three Months Ended September 30, 2022
Net fee revenues from external sources$10,474 $5,177 $— $— $15,651 
Net intersegment revenues450 83 — (533)— 
Other, net(245)— — — (245)
Total revenues$10,679 $5,260 $— $(533)$15,406 
September 30, 2022 segment assets$227,781 $48,600 $28,676 $(174,070)$130,987 
September 30, 2022 segment goodwill$— $16,401 $— $— $16,401 
Three Months Ended September 30, 2021
Net fee revenues from external sources$12,011 $5,952 $— $— $17,963 
Net intersegment revenues576 93 — (669)— 
Other, net(103)— — — (103)
Total revenues$12,484 $6,045 $— $(669)$17,860 
September 30, 2021 segment assets$215,903 $57,503 $12,261 $(150,405)$135,262 
September 30, 2021 segment goodwill$— $16,401 $— $— $16,401 


(in thousands)AdvisoryTrustWestwood HoldingsEliminationsConsolidated
Nine Months Ended September 30, 2022
Net fee revenues from external sources$33,244 $16,257 $— $— $49,501 
Net intersegment revenues1,563 261 — (1,824)— 
Other, net(1,276)— — — (1,276)
Total revenues$33,531 $16,518 $— $(1,824)$48,225 
Nine Months Ended September 30, 2021
Net fee revenues from external sources$35,805 $18,233 $— $— $54,038 
Net intersegment revenues1,876 261 — (2,137)— 
Other, net(375)— — — (375)
Total revenues$37,306 $18,494 $— $(2,137)$53,663 

5. INVESTMENTS
During 2018, we made a $5.4 million strategic investment in InvestCloud, a digital financial services provider ("InvestCloud"), which is included in “Investments” on our Condensed Consolidated Balance Sheets. This investment represents an equity interest in a private company without a readily determinable fair value. The Company has elected to apply the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes.
9
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Following InvestCloud's recapitalization in the first quarter of 2021, we recorded a realized gain of approximately $8.3 million when our originally purchased shares were redeemed. Following this redemption we re-invested $4.4 million of our proceeds into newly-issued shares of InvestCloud.
Our investment in Charis, the parent company of Westwood Private Bank ("Charis"), is included in “Noncurrent investments at fair value” on our Condensed Consolidated Balance Sheets and is measured at fair value on a recurring basis.
In the nine months ended September 30, 2022, we reported unrealized losses of approximately $0.6 million following fair value decreases resulting from market transactions. In the nine months ended September 30, 2021, we recorded unrealized gains of approximately $0.7 million, following fair value increases resulting from market transactions.
In 2019 we made a $0.3 million investment in Westwood Hospitality Fund I, LLC, a private investment fund. Our investment is included in “Noncurrent investments at fair value” on our Condensed Consolidated Balance Sheets and is measured at fair value on a recurring basis using net asset value (“NAV”) as a practical expedient.
All other investments are carried at fair value on a recurring basis and are accounted for as trading securities.
Investments carried at fair value are presented in the table below (in thousands):
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value
September 30, 2022:
U.S. Government and Government agency obligations$33,931 $— $(557)$33,374 
Money market funds12,760 128 — 12,888 
Equity funds4,861 — (779)4,082 
Equities1,276 — (188)1,088 
Exchange-traded bond funds155 — (23)132 
Total trading securities52,983 128 (1,547)51,564 
Private investment fund265 — (40)225 
Private equity3,420 356 — 3,776 
Total investments carried at fair value$56,668 $484 $(1,587)$55,565 
December 31, 2021:
U.S. Government and Government agency obligations$39,926 $— $(491)$39,435 
Money market funds19,661 — — 19,661 
Equity funds4,135 158 (7)4,286 
Equities1,296 206 — 1,502 
Exchange-traded bond funds140 — — 140 
Total trading securities65,158 364 (498)65,024 
Private investment fund265 — (121)144 
Private equity3,420 949 — 4,369 
Total investments carried at fair value$68,843 $1,313 $(619)$69,537 
6. FAIR VALUE MEASUREMENTS
ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value and requires disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows:
•Level 1 – quoted market prices in active markets for identical assets
•Level 2 – inputs other than quoted prices that are directly or indirectly observable
•Level 3 – significant unobservable inputs where there is little or no market activity
10
(in thousands) Advisory Trust Westwood
Holdings		 Eliminations Consolidated
Three Months Ended September 30, 2017          
Net fee revenues from external sources $25,334
 $7,858
 $—
 $—
 $33,192
Net intersegment revenues 2,026
 57
 —
 (2,083) —
Net interest and dividend revenue 111
 43
 —
 —
 154
Other, net 157
 (11) —
 —
 146
Total revenues $27,628
 $7,947
 $—
 $(2,083) $33,492
Economic Earnings $8,786
 $1,560
 $(1,356) $—
 $8,990
Less:   Restricted stock expense         4,233
Intangible amortization         469
Deferred taxes on goodwill         156
Net income         $4,132
           
Segment assets $208,444
 $73,170
 $18,388
 $(108,640) $191,362
Segment goodwill $5,219
 $21,925
 $—
 $—
 $27,144
           
Three Months Ended September 30, 2016          
Net fee revenues from external sources $23,673
 $7,690
 $—
 $—
 $31,363
Net intersegment revenues 5,275
 41
 —
 (5,316) —
Net interest and dividend revenue 128
 5
 —
 —
 133
Other, net 279
 2
 —
 —
 281
Total revenues $29,355
 $7,738
 $—
 $(5,316) $31,777
Economic Earnings $10,270
 $1,690
 $(1,345) $—
 $10,615
Less:   Restricted stock expense         4,082
Intangible amortization         490
Deferred taxes on goodwill         156
Net income         $5,887
           
Segment assets $163,826
 $65,986
 $13,046
 $(73,160) $169,698
Segment goodwill $5,219
 $21,925
 $—
 $—
 $27,144
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

(in thousands) Advisory Trust Westwood
Holdings		 Eliminations Consolidated
Nine Months Ended September 30, 2017          
Net fee revenues from external sources $75,036
 $23,570
 $—
 $—
 $98,606
Net intersegment revenues 6,050
 160
 —
 (6,210) —
Net interest and dividend revenue 391
 67
 —
 —
 458
Other, net 811
 (4) —
 —
 807
Total revenues $82,288
 $23,793
 $—
 $(6,210) $99,871
Economic Earnings $31,372
 $4,528
 $(4,592) $—
 $31,308
Less:   Restricted stock expense         12,298
Intangible amortization         1,449
Deferred taxes on goodwill         469
Net income         $17,092
           
Nine Months Ended September 30, 2016          
Net fee revenues from external sources $68,563
 $22,798
 $—
 $—
 $91,361
Net intersegment revenues 14,455
 82
 —
 (14,537) —
Net interest and dividend revenue 360
 9
 —
 —
 369
Other, net 462
 (263) —
 —
 199
Total revenues $83,840
 $22,626
 $—
 $(14,537) $91,929
Economic Earnings $30,493
 $4,160
 $(5,559) $—
 $29,094
Less:   Restricted stock expense         12,164
Intangible amortization         1,470
Deferred taxes on goodwill         390
Net income         $15,070
We are providing a performance measure thatOur strategic investment in InvestCloud, discussed in Note 5 “Investments,” is excluded from the recurring fair value table shown below because we referhave elected to as Economic Earnings. Our management andapply the Board of Directors review Economic Earnings to evaluate our ongoing performance, allocate resources and determine our dividend policy. We also believe thatmeasurement alternative for this performance measure is useful for management and investors when evaluating our underlying operating and financial performance and our available resources.
In calculating Economic Earnings, we add to net income the non-cash expense associated with equity-based compensation awards of restricted stock, 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.investment.
The following tables providetable summarizes the values of our investments measured at fair value on a reconciliationrecurring basis within the fair value hierarchy as of Net income to Economic Earningsthe dates indicated (in thousands):
Level 1Level 2Level 3
Investments Measured at NAV (1)
Total
As of September 30, 2022:
Investments in trading securities$51,564 $— $— $— $51,564 
Private investment fund— — — 225 225 
Private equity— — 3,776 — 3,776 
Total assets measured at fair value$51,564 $— $3,776 $225 $55,565 
As of December 31, 2021:
Investments in trading securities$65,024 $— $— $— $65,024 
Private investment fund— — — 144 144 
Private equity— — 4,369 — 4,369 
Total assets measured at fair value$65,024 $— $4,369 $144 $69,537 
(1) Comprised of certain investments measured at fair value using net asset value ("NAV") as a practical expedient. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on our Condensed Consolidated Balance Sheets.

Our investment in Charis is included within Level 3 of the fair value hierarchy as we value that investment utilizing inputs not observable in the market. Our investment is measured at fair value on a recurring basis using a market approach based on a price to tangible book value multiple range that is determined to be reasonable in the current environment, or on market transactions. Management believes this valuation methodology is consistent with the banking industry and we reevaluate our methodology and inputs on a quarterly basis.
The following table summarizes the changes in Level 3 investments measured at fair value on a recurring basis for the periods presented (in thousands):
Fair Value using Significant Unobservable Inputs (Level 3)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Beginning balance$4,024 $4,087 $4,369 $3,431 
Unrealized gains (losses) on private investments(248)(13)(593)643 
Ending balance$3,776 $4,074 $3,776 $4,074 

The September 30, 2022 private investment fair value of $3.8 million was valued using a market approach based on a price to tangible book value multiple, with unobservable book value multiples ranging from $1.47 to $1.99 per share, with a weighted average of $1.66 per share. Significant increases (decreases) in book value multiples in isolation would have resulted in a significantly higher (lower) fair value measurement.

7. INCOME TAXES
  Three Months Ended September 30,
  2017 2016
Net income $4,132
 $5,887
Add: Stock-based compensation expense 4,233
 4,082
Add: Intangible amortization 469
 490
Add: Tax benefit from goodwill amortization 156
 156
Economic Earnings $8,990
 $10,615
Our effective income tax rate differed from the 21% statutory rate for the three and nine months ended 2022 and 2021 due to permanent differences between book and tax restricted stock expense based on a decrease in our stock price between the restricted stock grant and vesting dates.
8. EARNINGS (LOSS) PER SHARE
11
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of shares outstanding plus the effect of any dilutive shares of restricted stock granted to employees and non-employee directors. There were approximately 150,000 and 40,000 anti-dilutive restricted shares outstanding for the three months ended September 30, 2022 and September 30, 2021, respectively. There were approximately 108,000 and 138,000 anti-dilutive restricted shares outstanding for the nine months ended September 30, 2022 and September 30, 2021, respectively.
The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share and share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income (loss)$(1,175)$1,879 $(1,503)$6,950 
Weighted average shares outstanding - basic7,794,060 7,887,259 7,867,555 7,886,359 
Dilutive potential shares from unvested restricted shares— 68,822 — 47,501 
Weighted average shares outstanding - diluted7,794,060 7,956,081 7,867,555 7,933,860 
Earnings (loss) per share:
Basic$(0.15)$0.24 $(0.19)$0.88 
Diluted$(0.15)$0.24 $(0.19)$0.88 

9. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the cost of acquired assets over the fair value of the underlying identifiable assets at the date of acquisition. Goodwill is not amortized but is tested for impairment at least annually. We completed our most recent annual goodwill impairment assessment during the third quarter of 2022, and determined that no goodwill impairment related to the Trust segment was required. There was no goodwill impairment in the Trust segment during the three months ended September 30, 2022 or September 30, 2021.
Other Intangible Assets
Our intangible assets represent the acquisition date fair value of acquired client relationships, trade names, non-compete agreements and internally developed software and are reflected net of amortization. In valuing these assets, we made significant estimates regarding their useful lives, growth rates and potential attrition. We periodically review intangible assets for events or circumstances that would indicate impairment. No intangible asset impairments were recorded during the three and nine months ended September 30, 2022 or September 30, 2021.
10. LEASES
In the third quarter of 2022 we recorded additional right-of-use assets of $1.2 million as we have expanded our Houston, Texas office space and extended one of our leases. As of September 30, 2022 there have been no other material changes outside the ordinary course of business to our leases since December 31, 2021. For information regarding our leases, refer to Note 11 “Leases” in Part IV, Item 15. “Exhibits, Financial Statement Schedules” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

11. STOCKHOLDERS' EQUITY
Share Repurchase Program
As of September 30, 2022, we have $1.9 million of shares that may yet be repurchased under our plan.
12
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
  Nine Months Ended September 30,
  2017 2016
Net Income $17,092
 $15,070
Add: Stock-based compensation expense 12,298
 12,164
Add: Intangible amortization 1,449
 1,470
Add: Tax benefit from goodwill amortization 469
 390
Economic Earnings $31,308
 $29,094
During the three months ended September 30, 2022, the Company repurchased 99,444 shares of our common stock at an average price of $12.64 per share, including commissions, for an aggregate purchase price of $1.3 million under our share repurchase plan. During the three months ended September 30, 2021, the Company repurchased 25,502 shares of our common stock at an average price of $19.57 per share, including commissions, for an aggregate purchase price of $0.5 million under our share repurchase plan.
During the nine months ended September 30, 2022, the Company repurchased 169,630 shares of our common stock at an average price of $13.47 per share, including commissions, for an aggregate purchase price of $2.3 million under our share repurchase plan. During the nine months ended September 30, 2021, the Company repurchased 136,859 shares of our common stock at an average price of $16.07 per share, including commissions, for an aggregate purchase price of $2.2 million under our share repurchase plan.
Open Market Repurchases
During the nine months ended September 30, 2022, the Company repurchased 35,891 shares of our common stock on the open market at an average price of $15.75 per share, including commissions, for an aggregate purchase price of $0.6 million.
12. VARIABLE INTEREST ENTITIES
We evaluated (i) our relationship as sponsor of the Common Trust Funds (“CTFs”) and managing member of the private equity funds Westwood Hospitality Fund I, LLC and Westwood Technology Opportunities Fund I, LP (collectively the “Private Funds”), (ii) our advisory relationships with the Westwood Funds®, and (iii) our investments in InvestCloud and Charis discussed in Note 5 “Investments” (“Private Equity”) to determine whether each of these entities is a variable interest entity (“VIE”) or voting ownership entity (“VOE”).
Based on our analyses, we determined that the CTFs and Private Funds were VIEs, as the at-risk equity holders do not have the ability to direct the activities that most significantly impact the entities' economic performance, and the Company and its representatives have a majority control of the entities' respective boards of directors and can influence the respective entities' management and affairs.
Based on our analyses, we determined the Westwood Funds® and Private Equity (i) have sufficient equity at risk to finance the entities' activities independently, (ii) have the obligation to absorb losses, the right to receive residual returns and the right to direct the activities of the entities that most significantly impact the entities' economic performance, and (iii) are not structured with disproportionate voting rights.
Based on our analyses of our investments in these entities for the periods ended September 30, 2022 and December 31, 2021, we have not consolidated the CTFs or Private Funds under the VIE method or the Westwood Funds® or Private Equity under the VOE method.
We recognized fee revenue from the Westwood VIEs and Westwood VOEs as follows (in millions):
Three Months EndedNine Months Ended
September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Fee Revenues$4.9 $5.5 $15.7 $15.8 

13
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
The following table displays the AUM and the risk of loss in each vehicle (in millions):
As of September 30, 2022
Assets
Under
Management		Corporate
Investment		Amount at Risk
VIEs/VOEs:
Westwood Funds®$2,428 $— $— 
Common Trust Funds674 — — 
Private Funds11 0.2 0.2 
Private Equity— 8.2 8.2 
All other assets:
Wealth Management2,843 
Institutional5,510 
Total Assets Under Management$11,466 

13. RELATED PARTY TRANSACTIONS
The Company engages in transactions with its affiliates in the ordinary course of business. Westwood Management provides investment advisory services to the Westwood Funds®. Under the terms of the investment advisory agreements, the Company earns quarterly fees paid by clients of the fund or by the funds directly. The fees are based on negotiated fee schedules applied to AUM. For the three and nine months ended September 30, 2022 and September 30, 2021, the Company earned immaterial fees from the affiliated funds.
One of our directors serves as a consultant to the Company under a consulting agreement. We recorded immaterial expenses related to this agreement for both the three and nine months ended September 30, 2022 and September 30, 2021.
14. SUBSEQUENT EVENTS
DividendDividends Declared
InOn October 2017, Westwood’s26, 2022, the Board of Directors declared a quarterly cash dividend of $0.68$0.15 per share of common share, an increase of 10% from the previous quarterly dividend rate,stock payable on January 2, 20183, 2023 to stockholders of record on December 8, 2017.2, 2022.
AGF Lawsuits
On October 13, 2017, we reached a settlement with AGF regarding their lawsuits and our related counterclaim. See Note 12 “Commitments and Contingencies” for additional discussion of the settlement.
14


ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Statements in this report and the Annual Report to Stockholders that are not purely historical facts, including, without limitation, statements about our expected future financial position, results of operations or cash flows, as well as other statements including, without limitation, words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “could,” “goal,” “potentially,” “may,” “target,” “designed,” “on track,” “comfortable with,” “optimistic”“designed” and other similar expressions, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results and the timing of some events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, the risks described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC,2021 and those risks set forth below:
•the composition and market value of our assets under management;AUM;
regulations adversely affecting the financial services industry;
competition in the investment management industry;
our assets under management includes investments in foreign companies;
our ability to develop and market new investment strategies successfully;
our relationships with current and potential customers;
our ability to retain qualified personnel;
our ability to maintain effective cyber security;
our ability to maintain effective information systems;
our ability to pursue and properly integrate acquired businesses;
litigation risks;
our ability to properly address conflicts of interest;
our ability to maintain adequate insurance coverage;
our ability to maintain an effective system of internal controls;
•our ability to maintain our fee structure in light of competitive fee pressures;
•risks associated with actions of activist stockholders;
•distributions to our common stockholders have included and may in the future include a return of capital;
•inclusion of foreign company investments in our AUM;
•regulations adversely affecting the financial services industry;
•our ability to maintain effective cyber security;
•litigation risks;
•our ability to develop and market new investment strategies successfully;
•our reputation and our relationships with current and potential customers;
•our ability to attract and retain qualified personnel;
•our ability to perform operational tasks;
•our ability to select and oversee third-party vendors;
•our dependence on the operations and funds of our subsidiaries;
•our ability to maintain effective information systems;
•our ability to prevent misuse of assets and information in the possession of our employees and third-party vendors, which could damage our reputation and result in costly litigation and liability for our clients and us;
•our stock is thinly traded and may be subject to volatility;
•our organizational documents contain provisions that may prevent or deter another group from paying a premium over the market price to our stockholders to acquire our stock;
•competition in the investment consulting firms;management industry;
•our ability to avoid termination of client agreements and the related investment redemptions;
•the significant concentration of our revenues in a small number of customers.customers;
•our relationships with investment consulting firms;
•the continuing effects of the COVID-19 pandemic;
•our ability to identify and execute on our strategic initiatives;
•our ability to declare and pay dividends;
•our ability to fund future capital requirements on favorable terms;
•our ability to properly address conflicts of interest;
•our ability to maintain adequate insurance coverage; and
15

•our ability to maintain an effective system of internal controls.
You should not unduly rely on these forward-looking statements, which speak only as of the date of this report. We are not obligated and do not undertake an obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events or otherwise.

Overview
We manage investment assets and provide services for our clients through our subsidiaries, Westwood Management Corp. and Westwood Advisors, L.L.C. (each of which is an SEC-registered investment advisor and referred to hereinafter together as “Westwood Management”), Westwood International Advisors Inc. (“Westwood International”) and Westwood Trust. Westwood Management provides investment advisory services to institutional investors, a family of mutual funds called the Westwood Funds®, other mutual funds, an Ireland-domiciled fund organized pursuant to the European Union’s Undertakings for Collective Investment in Transferable Securities (the “UCITS Fund”), individual investors and clients of Westwood Trust. Westwood International provides investment advisory services to institutional clients, the Westwood Funds®, other mutual funds, the UCITS Fundindividuals and clients of Westwood Trust. Westwood Trust provides trust and custodial services and participation in self-sponsored common trust funds to institutions and high net worth individuals. Our revenues are generally derived from fees based on a percentage of assets under management.AUM.
Divestiture of our Omaha OperationsPending Acquisition
On September 6, 2017,May 26, 2022, we entered intoannounced our acquisition of Salient's asset management business for an agreementupfront payment of $35.0 million on closing, with deferred payments of up to sell the Omaha-based component of our Private Wealth business. The sale is expected to close on December 31, 2017,$25.0 million over several years, subject to usualsatisfaction of certain revenue retention and growth targets. The transaction is subject to customary closing conditions, including fund shareholder and the receipt of regulatory approval from the Nebraska Department of Banking. Weother client approvals, and we currently expect to receive proceedsclose the transaction in the fourth quarter of $7 million2022.
Salient is a real asset and alternative investment firm that offers a suite of strategies focused on energy and infrastructure, real estate and tactical alternative investments. The acquisition would add complementary, highly differentiated investment capabilities to $10.5 million, subjectus, and expand and enhance our multi-asset program, and we also foresee many opportunities to client consents and net working capital requirements; however, we do not expect to record a material gain or losscollaborate on the sale within our Consolidated Statement of Comprehensive Income. The sale will reduce our goodwill and intangible assets but is not expected to have a material impact to our Consolidated Balance Sheet. The component is reported within both our Advisory and Trust segments. The sale does not represent a major strategic shift in our business and does not qualify for discontinued operations reporting.new strategies.
Revenues
We derive our revenues from investment advisory fees, trust fees and other revenues. Our advisory fees are generated by Westwood Management and Westwood International, which managemanages client accounts under investment advisory and subadvisory agreements. Advisory fees are typically calculated based on a percentage of assets under managementAUM and are paid in accordance with the terms of the agreements. Advisory fees are paid quarterly in advance based on assets under managementAUM on the last day of the preceding quarter, quarterly in arrears based on assets under managementAUM on the last day of the quarter just ended or are based on a daily or monthly analysis of assets under managementAUM for the stated period. We recognize advisory fee revenues as services are rendered. A limited numberCertain of our clients have a contractual performance-based fee component in their contracts, which generates additional revenues if we outperform a specified index over a specific period of time. We record revenues fromrevenue for performance-based fees at the end of the measurement period. Since our advance paying clients'clients’ billing periods coincide with the calendar quarter to which such payments relate, revenue is recognized within the quarter, and our Condensed Consolidated Financial Statements contain no deferred advisory fee revenues.
Our trust fees are generated by Westwood Trust pursuant to trust or custodial agreements. Trust fees are separately negotiated with each client and are generally based on a percentage of assets under management.AUM. Westwood Trust also provides trust services to a small number of clients on a fixed fee basis. During the first quarter of 2016, Westwood Trust changed the billing terms for most of our trust clients from quarterly in advance, based on assets under management on the last day of the preceding quarter, tofees are primarily calculated quarterly in arrears based on a daily average of assets under managementAUM for the quarter. Since billing periods for most of Westwood Trust’sTrust's clients coincide with the calendar quarter, revenue is fully recognized within the quarter, and our Condensed Consolidated Financial Statements do not contain a significant amount ofno deferred trustadvisory fee revenues.
Our other revenues generallyprimarily consist of interestinvestment gains and investment income. Although we generally invest most oflosses from our cash in U.S. Treasury securities, we also invest in equity and fixed income instruments and money market funds, including seed money forinvestments into new investment strategies.
Employee Compensationcompensation and Benefitsbenefits
Employee compensation and benefits costsexpenses generally consist of salaries, incentive compensation, equity-based compensation expense and benefits.
Sales and Marketing

marketing
Sales and marketing costsexpenses relate to our marketing efforts, including travel and entertainment, direct marketing and advertising costs.
Westwood Mutual Fundsmutual funds
Westwood Mutual Fundsmutual funds expenses relate to our marketing, distribution and administration of the Westwood Funds®.
16

Information Technologytechnology
Information technology expenses are generally costs associated with proprietary investment research tools, maintenance and support, computing hardware, software licenses, telecommunications and other related costs.
Professional Servicesservices
Professional services expenses generally consist of costs associated with subadvisory fees, audit, tax, legal and other professional services.
Legal Settlement
Legal settlement expenses consist of settlements related to litigation claims, net of any portions covered by our insurance policies.
General and Administrativeadministrative
General and administrative expenses generally consist of costs associated with the lease of our office space, amortization, depreciation, insurance, custody expense, Board of DirectorsDirectors' fees, investor relations, licenses and fees, office supplies and other miscellaneous expenses.

Realized gains on private investments
Realized gains on private investments includes amounts by which the net proceeds from the sale or redemption of our private investments exceeded costs.
Net change in unrealized appreciation (depreciation) on private investments
Net change in unrealized appreciation (depreciation) on private investments includes changes in the value of our private equity investments.
Net investment income
Net investment income primarily includes interest and dividend income on fixed income securities and money market funds.
Other Income
Other income primarily consists of income from the sublease of a portion of our corporate offices.
Assets Under Management
Assets under management (“AUM”) increasedAUM decreased $2.3 billion to $23.6$11.5 billion at September 30, 20172022 compared with $21.3$13.8 billion at September 30, 2016 as a result of market appreciation, partially offset by net outflows over the last twelve months.2021. The average of beginning and ending assets under managementAUM for the third quarter of 20172022 was $23.1$11.8 billion compared to $21.1$14.1 billion for the third quarter of 2016. The increase in average assets under management is due to market appreciation over the last twelve months and $713 million in a long-only convertibles fund that transitioned from assets under advisement (“AUA”) to AUM during the third quarter of 2017.2021.
The following tabletable displays assets under managementAUM as of September 30, 20172022 and 2016:2021 (in millions):
As of September 30,
20222021Change
Institutional(1)
$5,510 $6,701 (18)%
Wealth Management(2)
3,528 4,236 (17)
Mutual Funds(3)
2,428 2,863 (15)
Total AUM(4)
$11,466 $13,800 (17)%

      % Change
    September 30, 2017
  As of September 30, vs.
  2017 2016 September 30, 2016
  (in millions)  
Institutional $13,658
 $12,192
 12%
Private Wealth 5,822
 5,327
 9
Mutual Funds 4,144
 3,753
 10
Total Assets Under Management(1)
 $23,624
 $21,272
 11%
________________
(1)AUM excludes $362 million of AUA as of September 30, 2017 related to our model portfolios, for which we provided consulting advice but for which we did not have direct discretionary investment authority. During the third quarter of 2017, approximately $713 million related to a long-only convertibles fund transitioned from AUA to AUM. AUM excluded approximately $1.1 billion of AUA as of September 30, 2016 related to model portfolios, including the long-only convertibles fund, for which we provided consulting advice but for which we did not have direct discretionary investment authority.

(1)Institutional includes (i) separate accounts of corporate pension and profit sharing plans, public employee retirement funds, Taft HartleyTaft-Hartley plans, endowments, foundations and individuals; (ii) subadvisory relationships where Westwood provides investment management services for funds offered by other financial institutions; (iii) pooled investment vehicles, including the UCITS Fund and collective investment trusts; and (iv) managed account relationships with brokerage firms and other registered investment advisors that offer Westwood products to their customers.
Private (2)Wealth Management includes assets for which Westwood Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals pursuant to trust or agency agreements and assets for which Westwood Advisors, L.L.C. provides advisory services in ten limited liability companies to high net worth individuals. Investment subadvisory services are provided for the common trust funds by Westwood Management Westwood International and external unaffiliated subadvisors. For certain assets in this category Westwood Trust currently provides limited custodycustodial services for a minimal or no fee, viewing these assets as potentially converting to fee-generating managed assets in the future. As an example, some assets in this category consist of low-basis stock currently held in custody for clients where we believe such assets may convert to fee-generating managed assets upon an inter-generational transfer of wealth.
(3)Mutual Funds include the Westwood Funds®Funds®, a family of mutual funds for which Westwood Management serves as advisor. These funds are available to individual investors, institutional investors and wealth management accounts.
(4)AUM excludes $298 million and $283 million of assets under advisement (“AUA”) as well as offered as part of September 30, 2022 and 2021, respectively, related to our model portfolios for which we provided consulting advice but for which we did not have direct discretionary investment strategies for institutional and private wealth accounts.authority.

Roll-Forward of Assets Under Management
17

  Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017 2016 2017 2016
Institutional        
Beginning of period assets $12,773
 $11,921
 $11,911
 $11,752
Inflows(1)
 1,113
 420
 2,173
 1,133
Outflows (659) (606) (1,954) (1,902)
Net flows 454
 (186) 219
 (769)
Market appreciation 431
 457
 1,528
 1,209
Net change 885
 271
 1,747
 440
End of period assets $13,658
 $12,192
 $13,658
 $12,192
         
Private Wealth        
Beginning of period assets $5,685
 $5,361
 $5,520
 $5,393
Inflows 194
 104
 509
 274
Outflows (216) (245) (710) (626)
Net flows (22) (141) (201) (352)
Market appreciation 159
 107
 503
 286
Net change 137
 (34) 302
 (66)
End of period assets $5,822
 $5,327
 $5,822
 $5,327
         
Mutual Funds        
Beginning of period assets $4,092
 $3,690
 $3,810
 $3,617
Inflows 293
 214
 792
 674
Outflows (334) (224) (803) (798)
Net flows (41) (10) (11) (124)
Market appreciation 93
 73
 345
 260
Net change 52
 63
 334
 136
End of period assets $4,144
 $3,753
 $4,144
 $3,753
         
Total        
Beginning of period assets $22,550
 $20,972
 $21,241
 $20,762
Inflows 1,600
 738
 3,474
 2,081
Outflows (1,209) (1,075) (3,467) (3,326)
Net flows 391
 (337) 7
 (1,245)
Market appreciation 683
 637
 2,376
 1,755
Net change 1,074
 300
 2,383
 510
End of period assets $23,624
 $21,272
 $23,624
 $21,272
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2022202120222021
Institutional
Beginning of period assets$5,889 $7,123 $7,037 $6,567 
Inflows60 64 175 1,797 
Outflows(216)(401)(476)(779)
Net client flows(156)(337)(301)1,018 
Global Convertibles transition— — — (1,593)
Market appreciation (depreciation)(223)(85)(1,226)709 
Net change(379)(422)(1,527)134 
End of period assets$5,510 $6,701 $5,510 $6,701 
Wealth Management
Beginning of period assets$3,676 $4,427 $4,420 $4,335 
Inflows145 98 341 241 
Outflows(177)(238)(466)(655)
Net client flows(32)(140)(125)(414)
Market appreciation (depreciation)(116)(51)(767)315 
Net change(148)(191)(892)(99)
End of period assets$3,528 $4,236 $3,528 $4,236 
Mutual Funds
Beginning of period assets$2,570 $2,857 $3,046 $2,143 
Inflows182 248 592 1,004 
Outflows(219)(194)(637)(565)
Net client flows(37)54 (45)439 
Market appreciation (depreciation)(105)(48)(573)281 
Net change(142)6 (618)720 
End of period assets$2,428 $2,863 $2,428 $2,863 
Total AUM
Beginning of period assets$12,135 $14,407 $14,503 $13,045 
Inflows387 410 1,108 3,042 
Outflows(612)(833)(1,579)(1,999)
Net client flows(225)(423)(471)1,043 
Global Convertibles transition— — — (1,593)
Market appreciation (depreciation)(444)(184)(2,566)1,305 
Net change(669)(607)(3,037)755 
End of period assets$11,466 $13,800 $11,466 $13,800 
________________
(1)Institutional inflows include approximately $713 million of assets related to a long-only convertibles fund, which transitioned from AUA to AUM during the third quarter of 2017.


Three months ended September 30, 2017 and 20162022 compared to the three months ended September 30, 2021
The $1.1$0.7 billion increasedecrease in assets under managementAUM for the three months ended September 30, 20172022 was due to market appreciationdepreciation of $683 million$0.4 billion and net inflowsoutflows of $391 million.$0.2 billion. Net inflowsoutflows were primarily related to approximately $713 million in our Strategic Global Convertibles strategy that transitioned from AUA to AUM in the third quarter of 2017, as well as net inflows to our Market Neutral Income and Emerging Markets strategies. Inflows were partially offset by net outflows to our SMidCap strategies, Income Opportunity strategy and LargeCap Value strategy.

The $300 million increase$0.6 billion decrease in assets under managementAUM for the three months ended September 30, 20162021 was due to net outflows of $337 million partially offset by$0.4 billion and market appreciationdepreciation of $637 million.$0.2 billion. Net outflows were primarily related to our SMidCap strategies and LargeCap Value strategy,and SmallCap Value strategies.
Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021
The $3.0 billion decrease in AUM for the nine months ended September 30, 2022 was due to market depreciation of $2.6 billion and net outflows of $0.5 billion. Net outflows were primarily related to our LargeCap Value and Income Opportunity strategies.
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The $0.8 billion increase in AUM for the nine months ended September 30, 2021 was due to market appreciation of $1.3 billion offset by net outflows of $0.6 billion. Net outflows were primarily related to the outflow of $1.6 billion from the closure of two Global Convertibles accounts. In the fourth quarter of 2020 we made the decision to exit the stand-alone convertibles business and our Global Convertibles team reverted to Aviva Investors, the firm from which they had previously joined Westwood. As a result, $1.6 billion in two sub-advised Global Convertibles mandates returned to Aviva as of April 1, 2021. These outflows were partially offset by net inflows to our SmallCap Value Market Neutral Income, and Emerging Markets strategies.
Nine months ended September 30, 2017 and 2016
The $2.4 billion increase in assets under management for the nine months ended September 30, 2017 was due to market appreciation of $2.4 billion and net inflows of of $7 million. Net inflows were primarily related to approximately $713 million in our Strategic Global Convertibles strategy that transitioned from AUA to AUM in the third quarter of 2017 and net inflows to our SmallCap Value, Market Neutral Income, and Emerging Markets strategies, partially offset by net outflows to our SMidCap strategies and LargeCap Value strategy.
The $510 million increase in assets under management for the nine months ended September 30, 2016 was due to market appreciation of $1.8 billion, offset by net outflows of $1.2 billion. Net outflows were primarily related to our SMidCap, SmidCap Plus, LargeCap Value, AllCap Value and Income Opportunity strategies.
Results of Operations
The following table (dollars in thousands) and discussion of our results of operations isare based upon data derived from the condensed consolidated statementsCondensed Consolidated Statements of comprehensive incomeComprehensive Income contained in our condensed consolidated financial statementsCondensed Consolidated Financial Statements and should be read in conjunction with those statements included elsewhere in this report.
          % Change % Change
          Three Months Ended Nine Months Ended
  Three Months Ended Nine Months Ended September 30, 2017 September 30, 2017
  September 30, September 30, vs. vs.
  2017 2016 2017 2016 September 30, 2016 September 30, 2016
Revenues:            
Advisory fees: asset-based $25,334
 $23,447
 $73,619
 $67,928
 8 % 8 %
Advisory fees: performance-based —
 226
 1,417
 635
 (100) 123
Trust fees 7,858
 7,690
 23,570
 22,798
 2
 3
Other revenues 300
 414
 1,265
 568
 NM NM
Total revenues 33,492
 31,777
 99,871
 91,929
 5
 9
Expenses:            
Employee compensation and benefits 15,601
 15,637
 48,875
 47,239
 —
 3
Sales and marketing 457
 408
 1,447
 1,423
 12
 2
Westwood mutual funds 977
 755
 2,749
 2,282
 29
 20
Information technology 1,855
 1,874
 5,494
 6,039
 (1) (9)
Professional services 1,681
 1,903
 4,495
 4,707
 (12) (5)
Legal settlement 4,009
 —
 4,009
 —
 100
 100
General and administrative 3,160
 2,147
 8,697
 7,028
 47
 24
Total expenses 27,740
 22,724
 75,766
 68,718
 22
 10
Income before income taxes 5,752
 9,053
 24,105
 23,211
 (36) 4
Provision for income taxes 1,620
 3,166
 7,013
 8,141
 (49) (14)
Net income $4,132
 $5,887
 $17,092
 $15,070
 (30)% 13 %
Three Months EndedNine Months Ended
September 30,September 30,
20222021Change20222021Change
Revenues:
Advisory fees: asset-based$10,474 $12,011 (13)%$33,244 $33,846 (2)%
Advisory fees: performance-based— — NM— 1,959 (100)
Trust fees: asset-based5,177 5,952 (13)16,257 18,233 (11)
Other, net(245)(103)138 (1,276)(375)240 
Total revenues15,406 17,860 (14)48,225 53,663 (10)
Expenses:
Employee compensation and benefits9,526 10,268 (7)28,993 32,053 (10)
Sales and marketing335 292 15 1,326 892 49 
Westwood mutual funds615 814 (24)1,812 1,573 15 
Information technology2,170 1,937 12 5,934 6,190 (4)
Professional services1,660 726 129 4,655 3,471 34 
General and administrative2,182 1,779 23 6,570 5,893 11 
Total expenses16,488 15,816 4 49,290 50,072 (2)
Net operating income (loss)(1,082)2,044 (1,065)3,591 
Realized gains on private investments— — NM— 8,371 (100)
Net change in unrealized appreciation (depreciation) on private investments(249)(13)1,815 (511)(2,124)(76)
Net investment income104 131 (21)93 562 (83)
Other income206 198 4 598 390 53 
Income (loss) before income taxes(1,021)2,360 (885)10,790 
Income tax provision154 481 (68)618 3,840 (84)
Net income (loss)$(1,175)$1,879 (163)%$(1,503)$6,950 (122)%
_________________________
NM    Not meaningful

Three months ended September 30, 20172022 compared to three months ended September 30, 20162021
Total Revenuesrevenues. Our Total revenues increased $1.7decreased $2.5 million, or 5%14%, to $33.5$15.4 million for the three months ended September 30, 20172022 compared with $31.8$17.9 million for the three months ended September 30, 2016.2021. Asset-based advisory fees increased $1.9decreased $1.5 million, or 8%13%, and Trust fees increased $0.2decreased $0.8 million, or 2%13%, both primarily related to lower average AUM.
Employee compensation and benefits. Employee compensation and benefits decreased $0.8 million to $9.5 million compared with $10.3 million for 2021 due to lower commissions and incentive compensation.
Professional services. Professional services increased $1.0 million, or 129%, to $1.7 million compared with $0.7 million for 2021 primarily due to higher average assets under management due to asset appreciation.
Legal Settlement. We recorded a net $4.0approximately $0.6 million chargein expenses related to a legal settlement and associated insurance coverage recorded duringour pending acquisition of Salient.
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Income tax provision. Our effective tax rate differed from the 21% statutory rate for the third quarter of 2017. See further discussion of the settlement in Note 12 “Commitments and Contingencies” to our Condensed Consolidated Financial Statements included in Part I. Financial Information.
General and Administrative. General and administrative costs increased $1.1 million, or 47.2%, to $3.2 million for the three months ended September 30, 2017 compared with $2.1 million for the three months ended September 30, 2016,2022 primarily due to permanent differences between book and tax restricted stock expense based on a $0.9 million foreign currency transaction loss recorded in the third quarter of 2017 as a result of a 4% decrease in our stock price between the Canadian dollar exchange rate.restricted stock grant and vesting dates.
Provision for Income Taxes. The effective tax rate decreased to 28.2% for the three months ended September 30, 2017 from 35.0% for the three months ended September 30, 2016. The decrease is primarily related to the tax impact of our legal settlement with AGF in the third quarter of 2017 and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the third quarter of 2016.
Nine months ended September 30, 20172022 compared to nine months ended September 30, 20162021
Total Revenuesrevenues. Our Total revenues increased $8.0decreased $5.5 million, or 9%10%, to $99.9$48.2 million for the nine months ended September 30, 20172022 compared with $91.9$53.7 million for the nine months ended September 30, 2016. This increase was2021. Asset-based advisory fees decreased $0.6 million, or 2% and Trust fees decreased $1.9 million, or 11%, both primarily related to a $5.7 million, or 8%, increase in Asset-based advisory fees and a $0.8 million, or 3%, increase in Trust fees related to higherlower average assets under management due to market appreciation.AUM. Performance-based advisory fees increased by $0.8 million.
Employee Compensation and Benefits. Employee compensation and benefits costs increaseddecreased $2.0 million due to $48.9 million forreflecting lower performance fees in the nine months ended September 30, 20172022.
Employee compensation and benefits. Employee compensation and benefits decreased $3.1 million to $29.0 million compared with $47.2$32.1 million for the nine months ended September 30, 2016. The increase is2021 due to higherlower incentive compensation and performance-based restricted stock expensecommissions.
Sales and marketing. Sales and marketing expenses increased $0.4 million, or 49%, to $1.3 million compared with $0.9 million for 2021 as a resultin-person sales activities continued to return to pre-COVID-19 levels.
Professional services. Professional services increased $1.2 million, or 34%, to $4.7 million compared with $3.5 million for 2021 primarily due to approximately $1.3 million in expenses related to our pending acquisition of improved pre-tax income as compared to the prior year, as well as merit increases.Salient.
Legal Settlement.Realized gains on private investments. We recorded a net $4.0realized gain of approximately $8.4 million charge related to a legal settlement and associated insurance coverage recorded during the third quarter of 2017. See further discussion of the settlementfollowing InvestCloud's recapitalization in Note 12 “Commitments and Contingencies” to our Condensed Consolidated Financial Statements included in Part I. Financial Information.
General & Administrative. General and administrative expenses increased $1.7 million, or 24%, to $8.7 million
for the nine months ended September 30, 2017 compared to $7.0 million for the nine months ended September 30, 2016,
primarily due to a $1.6 million foreign currency transaction loss recorded in the first nine months of 2017 as a result of an 8% decrease in the Canadian dollar exchange rate.
Provision for Income Taxes. The effective tax rate decreased to 29.1% for the nine months ended September 30, 2017 from 35.1% for the nine months ended September 30, 2016. During the first quarter of 2017, we2021.
Net change in unrealized appreciation (depreciation) on private investments. We recorded a $1.0$2.8 million adjustmentnet change in unrealized depreciation to income tax expensereflect the recognition of previously recorded unrealized gains in connection with InvestCloud's recapitalization in the first quarter of 2021, partially offset by $0.7 million of fair value increases related to excessour investment in Charis.
Income tax benefits as a result of the adoption of ASU 2016-09 Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which decreased our effective tax rate to 29.1%provision. Without the adjustment, ourThe effective tax rate for the nine months ended September 30, 2016 would have been 33.0%. Prior2022 differed from the 21% statutory rate for 2022 primarily due to adoption of ASU 2016-09, excesspermanent differences between book and tax benefits were recorded through Additional paid-in capital, with no impact torestricted stock expense based on a decrease in our stock price between the effective tax rate. The remaining decrease is related to the tax impact of our legal settlement with AGF in the third quarter of 2017restricted stock grant and adjustments to uncertain tax positions (net of federal tax benefit) recorded in the first and third quarters of 2016.vesting dates.


Supplemental Financial Information
As supplemental information, we provide a non-U.S. generally accepted accounting principles (“non-GAAP”)are providing non-GAAP performance measuremeasures that we refer to as Economic Earnings.Earnings and Economic EPS. We provide this measurethese measures in addition to, but not as a substitute for, net income (loss) and earnings (loss) per share, which are reported on a U.S. generally accepted accounting principles (“GAAP”)GAAP basis. Our management and Board of Directors review Economic Earnings and Economic EPS to evaluate our ongoing performance, allocate resources, and review theour dividend policy. We believe that thisthese non-GAAP performance measure,measures, while not a substitutesubstitutes for GAAP net income is(loss) or earnings (loss) per share, are useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider thisthese non-GAAP measuremeasures without also considering financial information prepared in accordance with GAAP.
In calculatingWe define Economic Earnings we add back toas net income the(loss) plus non-cash expense associated with equity-based compensation awards of restricted stock,expense, amortization of intangible assets and deferred taxes related to the tax-basis amortization of goodwill. Although depreciation on property and equipmentfixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent aan allocation of the decline in the value of the related assets that will ultimately require replacement. In addition, we do not adjust Economic Earnings for tax deductions related to restricted stock expense or amortization of intangible assets. Economic EPS represents Economic Earnings divided by diluted weighted average shares outstanding.
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The following tables provide a reconciliation of Netnet income (loss) to Economic Earnings and Economic Earnings by segment (in thousands, except share and per share amounts):
Three Months Ended September 30,ChangeNine Months Ended September 30,
2022202120222021Change
Net income (loss)$(1,175)$1,879 (163)%$(1,503)$6,950 (122)%
Stock-based compensation expense1,509 1,362 11 4,410 4,459 (1)
Intangible amortization407 406 — 1,218 1,218 — 
Tax benefit from goodwill amortization59 59 — 177 177 — 
Economic Earnings$800 $3,706 (78)%$4,302 $12,804 (66)%
Earnings (loss) per share$(0.15)$0.24 (163)%$(0.19)$0.88 (122)%
Stock-based compensation expense0.19 0.17 12 0.57 0.56 2 
Intangible amortization0.05 0.05 — 0.15 0.15 — 
Tax benefit from goodwill amortization0.01 0.01 — 0.02 0.02 — 
Economic Earnings per share$0.10 $0.47 (79)%$0.55 $1.61 (66)%
Diluted weighted average shares outstanding7,794,060 7,956,081 7,867,555 7,933,860 
Economic Earnings by Segment:
Advisory$3,590 $4,416 (19)%$11,428 $14,885 (23)%
Trust769 2,015 (62)2,396 6,507 (63)
Westwood Holdings(3,559)(2,725)31 (9,522)(8,588)11 
Consolidated$800 $3,706 (78)%$4,302 $12,804 (66)%

  Three Months Ended September 30, %
Change
  2017 2016 
Net income $4,132
 $5,887
 (30)%
Add: Stock-based compensation expense 4,233
 4,082
 4
Add: Intangible amortization 469
 490
 (4)
Add: Tax benefit from goodwill amortization 156
 156
 —
Economic Earnings $8,990
 $10,615
 (15)%
Diluted weighted average shares outstanding 8,420,749
 8,179,956
  
Economic Earnings per share $1.07
 $1.30
  
  Nine Months Ended September 30, %
Change
  2017 2016 
Net Income $17,092
 $15,070
 13 %
Add: Stock-based compensation expense 12,298
 12,164
 1
Add: Intangible amortization 1,449
 1,470
 (1)
Add: Tax benefit from goodwill amortization 469
 390
 20
Economic Earnings $31,308
 $29,094
 8 %
Diluted weighted average shares outstanding 8,350,926
 8,212,468
  
Economic Earnings per share $3.75
 $3.54
  

Liquidity and Capital Resources
We fund our operations and cash requirements with cash generated from operating activities. We may also use cash from operations to pay dividends to our stockholders. We reinstated a dividend in the first quarter of 2021, following a suspension in the second quarter of 2020 as we preserved capital and enhanced our financial flexibility amid the uncertainties created by the COVID-19 pandemic.
Our announced acquisition of Salient's asset management business will require an upfront cash payment of $35.0 million upon closing, and subsequent deferred payments of up to $25.0 million over several years, upon satisfaction of certain revenue retention and growth targets. Those payments are expected to be made from a combination of cash on hand, cash flows from operations and equity.
As of September 30, 20172022 and December 31, 2016,2021, we had no debt. The changes in net cash provided by operating activities generally reflect the changes in earnings plus the effects of non-cash items and changes in working capital.capital, including liquidation of investments used to cover current liabilities. Changes in working capital, especially accounts receivable and accounts payable, are generally the result of timing differences between collection of fees billed and payment of operating expenses.
During the nine months ended September 30, 2017,2022, cash flow provided by operating activities principally our investment advisory business, was $39.4$15.3 million, which included net sales of $12.1 million of current investments and a $1.9 million change in accounts receivable, partially offset by a reduction in compensation and benefits payable of $3.6 million. During the nine months ended September 30, 2021, cash flow provided by operating activities was $21.1 million, which included net sales of $11.2 million of current investments, a $2.2 million change in income taxes payable, and a $1.1 million change in accounts payable and accrued liabilities, partially offset by decreases of $1.2 million in other liabilities and $0.4 million in compensation and benefits payable.
Cash flow used in investing activities of $537,000 during the nine months ended September 30, 20172022 was for purchases of property and equipment. Cash flow provided by investing activities during the nine months ended September 30, 2021 was related to purchases
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realized gains on private investments and the sale of fixed assets. property and equipment following the sublease of a portion of our Dallas, Texas corporate office space.
Cash flowflows used in financing activities of $23.3$7.9 million for the nine months ended September 30, 2017 was due to2022 reflected the payment of dividends, purchases oftreasury stock repurchases and restricted stock returned for the payment of taxes. Cash flows used in financing activities of $25.2 million for the nine months ended September 30, 2021 reflected the payment of dividends, including those treated as a return of capital for accounting purposes, treasury stock repurchases and restricted stock returned for the payment of taxes and purchases of treasury shares for our Canadian share award plan.
We had cash and short-term investments of $99.5$74.0 million as of September 30, 20172022 and $90.2$80.2 million as of December 31, 2016. Cash and cash equivalents as of2021. At September 30, 20172022 and December 31, 2016 includes approximately $30 million and $20 million, respectively, of undistributed income from Westwood International that we consider to be permanently invested in Canada.  At September 30, 2017 and December 31, 2016,2021, working capital aggregated $98.3$74.6 million and $86.3$78.0 million, respectively.
Westwood Trust mustis required to maintain cash and investments in an amount equal to the minimum restricted capital of $4.0 million, as required by the Texas Finance Code. Restricted capital is included in Investments in the accompanying Condensed Consolidated Balance Sheets. At September 30, 2017,2022, Westwood Trust had approximately $20.4$15.6 million in excess of its minimum capital requirement.
Our future liquidity and capital requirements will depend upon numerous factors, including our results of operations, the timing and magnitude of capital expenditures or strategic initiatives, our dividend policy and other business and risk factors described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC.2021. We believe that current cash and short-term investment balances andplus cash generated from operations will be sufficient to meet both the operating and capital requirements of our ordinary business operations through at least the next twelve months. However,months, however there can be no assurance that we will not require additional financing within this time frame. The failureFailure to raise needed capital on attractive terms, if at all, could have a material adverse effect on our business, financial condition and results of operations.
Contractual Obligations
As of September 30, 2017,2022, there have been no material changes outside of the ordinary course of business to our contractual obligations since December 31, 2016.2021. For information regarding our contractual obligations, refer to “Contractual Obligations” in Part II, Item 7. “Management’s“Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2021.
Critical and Significant Accounting Policies and Estimates
Effective January 1, 2017, we adopted ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. Refer to Note 2 “Summary of Accounting Policies” in our Condensed Consolidated Financial Statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q for a detailed description of the adoption of ASU 2016-09.
Otherwise, thereThere have been no significant changes in our critical or significant accounting policies and estimates since December 31, 2016.2021. Information with respect to our critical accounting policies and estimates that we believe could have the most significant effect on our reported consolidated results and require difficult, subjective or complex judgment by management areis described under “Critical Accounting Policies and Estimates” in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2021.

Accounting Developments
Refer to Note 2 “Summary of Significant Accounting Policies” in our condensed consolidated financial statementsCondensed Consolidated Financial Statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q for a description of recently issued accounting guidance.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes in our Quantitative and Qualitative Disclosures about Market Risk from those previously reported in our Annual Report on Form 10-K for the year ended December 31, 2016.2021.
ITEM 4.CONTROLS AND PROCEDURES
ITEM 4.    CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (1) is recorded, processed,
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summarized and reported within the time periods specified in the SEC’s rules and forms and (2) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure. An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
ForDuring the quarter ended September 30, 2017,2022, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Due to our significant investments in cloud-based systems, the impact of our employees working remotely did not hinder the execution of our internal control processes and procedures.
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PART II. OTHER INFORMATION
 
ITEM 1.
LEGAL PROCEEDINGS
On October 13, 2017, we reached a settlement with AGF regarding their lawsuits and our related counterclaim. See additional discussion of the settlement and our legal proceedings and procedures in Note 12 “Commitments and Contingencies” in our condensed consolidated financial statements included in Part I, Item 1.    “Financial Statements” of this Quarterly Report on Form 10-Q.LEGAL PROCEEDINGS
None.
ITEM 1A.RISK FACTORS
We faceITEM 1A.    RISK FACTORS
Our business and future results may be affected by a number of significant risks and uncertainties that should be considered carefully. In addition, this report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in our business,such forward-looking statements as a result of certain factors, including those detailed under “Risk Factors”the risks described in ourPart I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20162021 and summarizedthe risks set forth below.
There have been no material changes to the risk factors previously disclosed in the Form 10-K. You should carefully consider the following risks and the risks included in the Company’s Annual Report on Form 10-K, together with all of the other information in this report under “Management’s DiscussionQuarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and Analysisthe related notes included elsewhere in this Quarterly Report on Form 10-Q. The occurrence of Financial Conditionany single risk or any combination of risks could materially and Results of Operations.” These risks and uncertainties mayadversely affect our current positionbusiness, financial condition, results of operations, cash flows and future prospects and should be considered carefully in evaluating us, including making an investment inthe trading price of our common stock.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our share repurchase program has no expiration date and may be discontinued at any time by the Board of Directors. Between July 1, 2022 and September 30, 2022, under the share repurchase program, the Company repurchased 99,444 shares of our common stock at an average price of $12.64 per share, including commissions, for an aggregate purchase price of $1.3 million.
The following table displays information with respect to the treasury shares we purchased during the three months ended September 30, 2017:2022:
Total
number of
shares
purchased		Average
price paid
per share		Total number of shares purchased as part of publicly announced plans or programs
Maximum number (or
approximate dollar value)
of shares that may yet be
purchased under the
plans or programs (1)
Repurchase program (1)
$1,900,000 
July 202282,749 $12.60 82,749 
August 202216,695 $12.86 16,695 

(1)These purchases relate to the share repurchase program and were authorized in April 2020.

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Period 
Total
number of
shares
purchased
 
Average
price paid
per share
 
Total number
of shares
purchased as
part of publicly
announced
plans or
programs
 
Maximum number (or
approximate
dollar value)
of shares that
may yet be
purchased
under the
plans or
programs (1)
Repurchase program (1)
 —
 $—
 —
 $9,366,000
Canadian Plan (2)
 —
 $—
 —
CDN$4,296,000
Employee transactions (3)
        
July 1-31, 2017 713
 $59.97
 —
 —


(1)On July 20, 2012, our Board of Directors authorized management to repurchase up to $10.0 million of our outstanding common stock on the open market or in privately negotiated transactions. In July 2016, Westwood's Board of Directors authorized an additional $5.0 million of repurchases under the share repurchase program. The share repurchase program has no expiration date and may be discontinued at any time by the Board of Directors.
(2)On April 18, 2013, our stockholders approved the Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries (the “Canadian Plan”), which contemplates a trustee purchasing up to $10.0 million CDN of our outstanding common stock on the open market for the purpose of making share awards to our Canadian employees. The Canadian Plan has no expiration date and may be discontinued at any time by the Board of Directors.
(3)Consists of shares of common stock tendered by an employee at the market close price on the date of vesting in order to satisfy the employee’s minimum tax withholding obligations from vested restricted shares. We anticipate having additional shares tendered in subsequent periods for the same purpose.


ITEM 6.    EXHIBITS
ITEM 6.EXHIBITS
31.1*
31.2*
32.1**
32.2**
101.INS*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
*101*Filed herewith.The following financial information from Westwood Holdings Group, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2022, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021; (iii) Condensed Consolidated Statements of Stockholders' Equity; (iv) Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2022 and 2021; and (v) Notes to the Condensed Consolidated Financial Statements.
**104*Furnished herewith.Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)

*    Filed herewith.

**    Furnished herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated:October 26, 2022WESTWOOD HOLDINGS GROUP, INC.
Dated:October 25, 2017WESTWOOD HOLDINGS GROUP, INC.
By:
By:/s/ Brian O. Casey
Brian O. Casey
President and Chief Executive Officer
By:/s/ Tiffany B. KiceMurray Forbes III
Tiffany B. KiceMurray Forbes III
Chief Financial Officer and Treasurer


31
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