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Other assets and other liabilities

9 Months Ended

Sep. 30, 2022

Note 19. Other assets and other liabilities

The table below presents the composition of other assets and other liabilities.


(in thousands)	September 30, 2022		December 31, 2021
Other assets:
Deferred tax asset	$	3,601	$	3,601
Deferred loan exit fees		34,746		25,923
Accrued interest		37,147		21,873
Goodwill		37,559		31,470
Due from servicers		22,114		23,729
Right-of-use lease asset		1,863		2,402
Intangible assets		13,622		14,842
Deferred financing costs		2,955		3,840
PPP fee receivable		338		407
Receivable from third party		41,742		29,298
Receivable from related parties		318		—
Other assets		17,025		14,713
Other assets	$	213,030	$	172,098
Accounts payable and other accrued liabilities:
Deferred tax liability	$	11,986	$	11,986
Accrued salaries, wages and commissions		35,248		42,715
Accrued interest payable		37,670		22,278
Servicing principal and interest payable		10,108		19,100
Repair and denial reserve		12,461		19,725
Payable to related parties		6,469		5,232
Accrued professional fees		884		4,324
Lease payable		2,003		3,002
Deferred LSP revenue		151		286
Accrued PPP related costs		4,294		12,460
Other liabilities		49,878		42,303
Total accounts payable and other accrued liabilities	$	171,152	$	183,411

Goodwill

The table below presents the carrying value of goodwill by reportable segment.


(in thousands)	September 30, 2022		December 31, 2021
SBC Lending and Acquisitions	$	26,353	$	20,264
Small Business Lending		11,206		11,206
Total	$	37,559	$	31,470

During September 2022, the Company recorded a measurement period adjustment based on the updated valuations obtained by decreasing net assets acquired by $62.7 million and decreasing the fair value of the CERs issued by $59.3 million, with the remainder of the offset recorded as a $3.4 million increase to goodwill. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Mosaic Mergers.

Intangible assets

The table below presents information on intangible assets.


(in thousands)	September 30, 2022		December 31, 2021		Estimated Useful Life
Customer Relationships - Red Stone	$	6,383	$	6,651	19 years
Internally developed software - Knight Capital		1,953		2,428	6 years
Trade name - Red Stone		2,500		2,500	Indefinite life
SBA license		1,000		1,000	Indefinite life
Broker network - Knight Capital		422		622	4.5 years
Favorable lease		550		640	12 years
Trade name - Knight Capital		452		562	6 years
Trade name - GMFS		362		439	15 years
Total intangible assets	$	13,622	$	14,842

The amortization expense related to intangible assets was $0.4 million and $1.2 million for the three and nine months ended September 30, 2022 and $0.4 million and $1.0 million for the three and nine months ended September 30, 2021. Such amounts are recorded as other operating expenses in the consolidated statements of income.

The table below presents accumulated amortization for finite-lived intangible assets.


(in thousands)	September 30, 2022
Internally developed software - Knight Capital	$	1,847
Favorable lease		930
Trade name - GMFS		860
Broker network - Knight Capital		778
Trade name - Knight Capital		428
Customer Relationship - Red Stone		418
Total accumulated amortization	$	5,261

The table below presents amortization expense related to finite-lived intangible assets for the subsequent five years.


(in thousands)	September 30, 2022
2022	$	406
2023		1,599
2024		1,390
2025		1,144
2026		477
Thereafter		5,106
Total	$	10,122

Loan indemnification reserve

A liability has been established for potential losses related to representations and warranties made by GMFS for loans sold with a corresponding provision recorded for loan indemnification losses. The liability is included in accounts payable and other accrued liabilities in the Company's consolidated balance sheets and the provision for loan indemnification losses is included in variable expenses on residential mortgage banking activities, in the Company's consolidated statements of income. In assessing the adequacy of the liability, management evaluates various factors including historical repurchases and indemnifications, historical loss experience, known delinquent and other problem loans, outstanding repurchase demand, historical rescission rates and economic trends and conditions in the industry. Actual losses incurred are reflected as a reduction of the reserve liability. As of September 30, 2022 and December 31, 2021, the loan indemnification reserve was $3.2 million and $4.0 million, respectively.

Due to the uncertainty in the various estimates underlying the loan indemnification reserve, there is a range of losses in excess of the recorded loan indemnification reserve that is reasonably possible. The estimate of the range of possible losses for representations and warranties does not represent a probable loss, and is based on current available information, significant judgment, and a number of assumptions that are subject to change. As of September 30, 2022 and December 31, 2021, the reasonably possible loss above the recorded loan indemnification reserve was not material.