Company Quick10K Filing
Westwood Holdings
Price32.23 EPS1
Shares9 P/E33
MCap287 P/FCF14
Net Debt-58 EBIT11
TEV229 TEV/EBIT20
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-04-29
10-K 2019-12-31 Filed 2020-02-20
10-Q 2019-09-30 Filed 2019-10-30
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-04-24
10-K 2018-12-31 Filed 2019-02-21
10-Q 2018-09-30 Filed 2018-10-24
10-Q 2018-06-30 Filed 2018-07-25
10-Q 2018-03-31 Filed 2018-04-25
10-K 2017-12-31 Filed 2018-02-23
10-Q 2017-09-30 Filed 2017-10-25
10-Q 2017-06-30 Filed 2017-07-26
10-Q 2017-03-31 Filed 2017-04-26
10-K 2016-12-31 Filed 2017-02-23
10-Q 2016-09-30 Filed 2016-10-26
10-Q 2016-06-30 Filed 2016-07-27
10-Q 2016-03-31 Filed 2016-04-27
10-K 2015-12-31 Filed 2016-02-25
10-Q 2015-09-30 Filed 2015-10-28
10-Q 2015-06-30 Filed 2015-07-29
10-Q 2015-03-31 Filed 2015-04-29
10-K 2014-12-31 Filed 2015-02-26
10-Q 2014-09-30 Filed 2014-10-23
10-Q 2014-06-30 Filed 2014-07-30
10-Q 2014-03-31 Filed 2014-04-17
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-10-17
10-Q 2013-06-30 Filed 2013-07-18
10-Q 2013-03-31 Filed 2013-04-18
10-K 2012-12-31 Filed 2013-02-28
10-Q 2012-09-30 Filed 2012-10-18
10-Q 2012-06-30 Filed 2012-07-19
10-Q 2012-03-31 Filed 2012-04-19
10-K 2011-12-31 Filed 2012-02-28
8-K 2020-04-29
8-K 2020-04-29
8-K 2020-02-05
8-K 2019-10-30
8-K 2019-07-31
8-K 2019-04-24
8-K 2019-04-24
8-K 2019-02-06
8-K 2018-10-24
8-K 2018-09-28
8-K 2018-07-25
8-K 2018-06-22
8-K 2018-04-25
8-K 2018-04-25
8-K 2018-04-09
8-K 2018-03-08
8-K 2018-02-08
8-K 2018-02-07

WHG 10Q Quarterly Report

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 a1q20exhibit311.htm
EX-31.2 a1q20exhibit312.htm
EX-32.1 a1q20exhibit321.htm
EX-32.2 a1q20exhibit322.htm

Westwood Holdings Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
195156117783902012201420172020
Assets, Equity
40322416802012201420172020
Rev, G Profit, Net Income
352311-1-13-252012201420172020
Ops, Inv, Fin

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____________________________________________________________________________________________________
 
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________________________________
FORM 10-Q
____________________________________________________________________________________________________
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2020
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)
____________________________________________________________________________________________________
Delaware75-2969997
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
200 CRESCENT COURT, SUITE 1200
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  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes      No  
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,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  
Shares of common stock, par value $0.01 per share, outstanding as of April 22, 2020: 8,500,061.
____________________________________________________________________________________________________
 



WESTWOOD HOLDINGS GROUP, INC.
INDEX
 
PART I
FINANCIAL INFORMATION
PAGE
Item 1.
Financial Statements
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 6.
 
 
 
 

 




WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share amounts)
(Unaudited)
March 31,
2020
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$45,116  $49,766  
Accounts receivable11,172  13,177  
Investments, at fair value37,272  50,324  
Prepaid income taxes658  1,150  
Other current assets2,168  2,544  
Total current assets96,386  116,961  
Investments8,154  8,154  
Noncurrent investments at fair value3,243  4,238  
Goodwill19,804  19,804  
Deferred income taxes3,831  2,216  
Operating lease right-of-use assets7,220  7,562  
Intangible assets, net14,833  15,256  
Property and equipment, net of accumulated depreciation of $7,570 and $7,3953,931  4,152  
Other long-term assets400  364  
Total assets$157,802  $178,707  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities$1,676  $2,145  
Dividends payable4,834  7,362  
Compensation and benefits payable2,323  9,975  
Operating lease liabilities1,622  1,584  
Accrued stock repurchases920    
Income taxes payable323  289  
Total current liabilities11,698  21,355  
Accrued dividends411  1,303  
Noncurrent operating lease liabilities7,304  7,762  
Total liabilities19,413  30,420  
Commitments and contingencies (Note 13)
Stockholders' Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 10,548,103 and outstanding 8,780,041 shares at March 31, 2020; issued 10,306,570 and outstanding 8,881,086 shares at December 31, 2019
106  103  
Additional paid-in capital206,267  203,441  
Treasury stock, at cost - 1,768,061 shares at March 31, 2020; 1,425,483 shares at December 31, 2019
(69,965) (63,281) 
Accumulated other comprehensive loss(6,185) (2,943) 
Retained earnings8,166  10,967  
Total stockholders' equity138,389  148,287  
Total liabilities and stockholders' equity$157,802  $178,707  
 
See Notes to 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 March 31,
20202019
REVENUES:
Advisory fees:
Asset-based$11,102  $16,406  
Performance-based  180  
Trust fees5,951  6,539  
Other, net(384) 737  
Total revenues16,669  23,862  
EXPENSES:
Employee compensation and benefits12,668  14,610  
Sales and marketing478  530  
Westwood mutual funds515  846  
Information technology2,031  1,977  
Professional services1,193  1,149  
General and administrative2,306  2,434  
(Gain) loss on foreign currency transactions(2,938) 820  
Total expenses16,253  22,366  
Net operating income416  1,496  
Unrealized gains (losses) on private investments(995)   
Investment income544    
Other income34    
Income (loss) before income taxes(1) 1,496  
Income tax expense (benefit)(1,103) 1,104  
Net income$1,102  $392  
Other comprehensive income (loss):
Foreign currency translation adjustments(3,242) 831  
Total comprehensive income (loss)$(2,140) $1,223  
Earnings per share:
Basic$0.13  $0.05  
Diluted$0.13  $0.05  
Weighted average shares outstanding:
Basic8,414,393  8,363,109  
Diluted8,458,473  8,455,386  
 
See Notes to Condensed Consolidated Financial Statements.

2


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the Three Months Ended March 31, 2020 and 2019
(In thousands, except share amounts)
(Unaudited)


Common Stock, ParAdditional Paid-In CapitalTreasury StockAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal
SharesAmount
Balance, December 31, 20198,881,086  $103  $203,441  $(63,281) $(2,943) $10,967  $148,287  
Net income
—  —  —  —  —  1,102  1,102  
Other comprehensive loss
—  —  —  —  (3,242) —  (3,242) 
Issuance of restricted stock, net of forfeitures
241,533  3  (3) —  —  —    
Dividends declared ($0.43 per share)
—  —  —  —  —  (3,903) (3,903) 
Stock based compensation expense
—  —  2,616  —  —  —  2,616  
Reclassification of compensation liability to be paid in shares
—  —  213  —  —  —  213  
Purchases of treasury stock
(272,059) —  —  (4,867) —  —  (4,867) 
Purchase of treasury stock under employee stock plans
(27,474) —  —  (697) —  —  (697) 
Restricted stock returned for payment of taxes
(43,045) —  —  (1,120) —  —  (1,120) 
Balance, March 31, 20208,780,041  $106  $206,267  $(69,965) $(6,185) $8,166  $138,389  


Common Stock, ParAdditional Paid-In CapitalTreasury StockAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal
SharesAmount
Balance, December 31, 20188,904,902  $102  $194,116  $(58,711) $(4,883) $30,525  $161,149  
Net income
—  —  —  —  —  392  392  
Other comprehensive income
—  —  —  —  831  —  831  
Issuance of restricted stock, net of forfeitures
158,046  2  (2) —  —  —    
Dividends declared ($0.72 per share)
—  —  —  —  —  (6,380) (6,380) 
Stock based compensation expense
—  —  3,252  —  —  —  3,252  
Reclassification of compensation liability to be paid in shares
—  —  232  —  —  232  
Purchases of treasury stock
(25,047) —  —  (981) —  —  (981) 
Restricted stock returned for payment of taxes
(62,036) —  —  (2,385) —  —  (2,385) 
Balance, March 31, 20198,975,865  $104  $197,598  $(62,077) $(4,052) $24,537  $156,110  


See Notes to Condensed Consolidated Financial Statements.

3


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$1,102  $392  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation233  212  
Amortization of intangible assets423  413  
Unrealized (gains) losses on investments1,133  (374) 
Stock based compensation expense2,616  3,252  
Deferred income taxes(1,643) 273  
Non-cash lease expense305  242  
Change in operating assets and liabilities:
Net sales of investments - trading securities12,916  16,554  
Accounts receivable1,844  2,981  
Other current assets326  (886) 
Accounts payable and accrued liabilities(469) (275) 
Compensation and benefits payable(7,356) (12,305) 
Income taxes payable475  379  
Other liabilities(383) (293) 
Net cash provided by operating activities11,522  10,565  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment(16) (71) 
Purchase of investments  (250) 
Net cash used in investing activities(16) (321) 
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock(3,947) (981) 
Purchase of treasury stock under employee stock plans(697)   
Restricted stock returned for payment of taxes(1,120) (2,385) 
Cash dividends paid(7,324) (7,686) 
Net cash used in financing activities(13,088) (11,052) 
Effect of currency rate changes on cash(3,068) 780  
Net Change in Cash and Cash Equivalents(4,650) (28) 
Cash and cash equivalents, beginning of period49,766  52,449  
Cash and cash equivalents, end of period$45,116  $52,421  
Supplemental cash flow information:
Cash paid during the period for income taxes$64  $453  
Accrued dividends$5,245  $7,980  
Accrued purchase of property and equipment$  $425  
Accrued purchases of treasury stock$920  $  

See Notes to Condensed Consolidated Financial Statements.

4


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”, “we”, “us” or “our”) was incorporated under the laws of the State of Delaware on December 12, 2001. Westwood manages investment assets and provides services for its clients through its wholly-owned subsidiaries, Westwood Management Corp. and Westwood Advisors, L.L.C. (referred to hereinafter together as “Westwood Management”), Westwood Trust and Westwood International Advisors Inc. (“Westwood International Advisors”). 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 International Advisors provides investment advisory services to institutional clients, the Westwood Funds®, other mutual funds, the UCITS Fund, individual investors and clients of Westwood Trust. Westwood Trust provides trust and custodial services and participation in self-sponsored common trust funds (“CTFs”) to institutions and high net worth individuals. Revenue is largely dependent on the total value and composition of assets under management ("AUM"). Accordingly, fluctuations in financial markets and in the composition of AUM impact our revenues and results of operations.
Westwood 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. Westwood International Advisors is registered as a portfolio manager and exempt market dealer with the Ontario Securities Commission and the Autorité des marchés financiers in Québec.
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 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, 2019, filed with the SEC. Operating results for the periods in these Condensed Consolidated Financial Statements are not necessarily indicative of 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 August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement. The purpose of this amendment is to modify, remove and add certain disclosure requirements for fair value measurements. Under ASU 2018-13, entities are required to disclose the amount of total gains or losses recognized in other comprehensive income attributable to assets and liabilities categorized within Level 3 of the fair value hierarchy. The ASU includes an incremental requirement about significant unobservable inputs for Level 3 fair value measurements. The requirement to disclose reasons for transfers between Level 1 and Level 2 was removed. Various requirements for Level 3 disclosure were also modified. The amendments in this ASU are effective for all entities for fiscal years and interim periods beginning after December 15, 2019. We adopted this ASU as of January 1, 2020, and further information is included in Note 5 "Fair Value." There was no significant impact on our Condensed Consolidated Financial Statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The purpose of this amendment is to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop
5

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments in this update are effective for public companies for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We adopted this ASU as of January 1, 2020 under the prospective transition method. Incremental costs related to hosting arrangements will be recorded on the Condensed Consolidated Balance Sheets in either other current or other long-term assets, instead of intangible assets, net. Related amortization will be recorded in information technology expense on the Condensed Consolidated Statements of Comprehensive Income (Loss), amortization of previously capitalized costs were recorded in general and administrative expense.
In May 2019, the FASB issued ASU 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. The purpose of this amendment is to amend ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that were previously recorded at amortized cost and are within the scope of ASC 326-20, Financial Instruments-Credit Losses: Amortization Cost, if the instruments are eligible for the fair value option under Accounting Standards Codification 825 - Financial Instruments. The fair value option election does not apply to held-to-maturity debt securities. The amendments in this update are effective for public companies for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We adopted this ASU as of January 1, 2020, and it did not have a significant impact on our Condensed Consolidated Financial Statements.
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 approximately 131,000 and 51,000 anti-dilutive restricted shares outstanding for the three months ended March 31, 2020 and March 31, 2019, 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 March 31,
20202019
Net income$1,102  $392  
Weighted average shares outstanding - basic8,414,393  8,363,109  
Dilutive potential shares from unvested restricted shares44,080  92,277  
Weighted average shares outstanding - diluted8,458,473  8,455,386  
Earnings per share:
Basic$0.13  $0.05  
Diluted$0.13  $0.05  

4. INVESTMENTS
During 2018, we made a $5.4 million strategic investment in 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. Following observable price changes for this investment in 2019, we recorded a gain of $2.8 million. As of March 31, 2020 there were no additional observable price changes or indicators of impairment for this investment.
Our investment in Charis, a private bank, is included in “Noncurrent investments at fair value” on our Condensed Consolidated Balance Sheets and is measured at fair value on a recurring basis. Following fair value increases resulting from market transactions, we recorded a gain of $0.6 million in 2019. In the three months ended March 31, 2020, we recorded a loss of $1.0 million, primarily as a result of a downturn in the banking industry due to global macroeconomic effects of the Coronavirus Disease 2019 ("COVID-19") pandemic.
6

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
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
March 31, 2020:
U.S. Government and Government agency obligations$27,418  $331  $  $27,749  
Money market funds5,065      5,065  
Equity funds4,666    (208) 4,458  
Total trading securities37,149  331  (208) 37,272  
Private investment fund250  13    263  
Private equity3,420    (440) 2,980  
Total investments carried at fair value$40,819  $344  $(648) $40,515  
December 31, 2019:
U.S. Government and Government agency obligations$39,074  $174  $  $39,248  
Money market funds4,592      4,592  
Equity funds6,399  85    6,484  
Total trading securities$50,065  $259  $  $50,324  
Private investment fund250  13    263  
Private equity3,420  555    3,975  
Total investments carried at fair value$53,735  $827  $  $54,562  
 
As of March 31, 2020 and December 31, 2019, approximately $4.4 million and $6.4 million, respectively, in corporate funds were invested in Westwood Funds®. See Note 8 “Variable Interest Entities.”
5. 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
Our strategic investment in InvestCloud, discussed in Note 4 “Investments,” is excluded from the recurring fair value table shown below because we have elected to apply the measurement alternative for this investment.
The following table summarizes the values of our investments measured at fair value on a recurring basis within the fair value hierarchy as of the dates indicated (in thousands):
7

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Level 1Level 2Level 3
Investments Measured at NAV (1)
Total
As of March 31, 2020:
Investments in trading securities$37,272  $  $  $  $37,272  
Private investment fund      263  263  
Private equity    2,980    2,980  
Total assets measured at fair value$37,272  $  $2,980  $263  $40,515  
As of December 31, 2019:
Investments in trading securities$50,324  $  $  $  $50,324  
Private investment fund      263  263  
Private equity    3,975    3,975  
Total assets measured at fair value$50,324  $  $3,975  $263  $54,562  
(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 market transactions. Management believes this valuation methodology is consistent with the banking industry and we will 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 March 31,
20202019
Beginning balance$3,975  $