Other Assets and Liabilities

Other assets at September 30, 2016 and December 31, 2015, are summarized in the following table.

Table 11.1 – Components of Other Assets



(In Thousands)	September 30, 2016		December 31, 2015
Margin receivable	$	96,650	$	83,191
Pledged collateral	43,802		53,600
FHLBC stock	43,393		34,437
REO	6,245		4,896
Guarantee asset	3,627		5,697
Fixed assets and leasehold improvements ⁽¹⁾	2,850		4,117
Prepaid expenses	2,017		3,640
Investment receivable	1,525		3,870
Other	7,677		4,438
Total Other Assets	$	207,786	$	197,886


(1)	Fixed assets and leasehold improvements have a basis of $5 million and accumulated depreciation of $2 million at September 30, 2016.

Accrued expenses and other liabilities at September 30, 2016 and December 31, 2015 are summarized in the following table.

Table 11.2 – Components of Accrued Expenses and Other Liabilities



(In Thousands)	September 30, 2016		December 31, 2015
Guarantee obligations	$	23,011	$	22,704
Margin payable	13,313		6,415
Accrued compensation	12,674		17,527
Residential loan and MSR repurchase reserve	6,617		6,403
Accrued operating expenses	5,958		1,845
Restructuring liabilities	3,667		—
Legal reserve	2,000		2,000
Current accounts payable	1,292		4,764
Other	1,176		8,239
Total Other Liabilities	$	69,708	$	69,897

Margin Receivable and Payable

Margin receivable and payable resulted from margin calls between us and our counterparties under derivatives, master repurchase agreements, and warehouse facilities, whereby we or the counterparty posted collateral.

Guarantee Asset, Pledged Collateral, and Guarantee Obligations

The pledged collateral, guarantee asset, and guarantee obligations presented in the tables above are related to our risk sharing arrangements with Fannie Mae and Freddie Mac. In accordance with these arrangements, we are required to pledge collateral to secure our guarantee obligations. See Note 15 for additional information on our risk sharing arrangements.

Investment Receivable and Unsettled Trades

In accordance with our policy to record purchases and sales of securities on the trade date, if the trade and settlement of a purchase or sale crosses over a quarterly reporting period, we will record an investment receivable for sales and an unsettled trades liability for purchases.

REO

The carrying value of REO at September 30, 2016, was $6 million, which includes the net effect of $8 million related to transfers into REO during the nine months ended September 30, 2016, offset by $9 million of REO liquidations, and $2 million of unrealized gains resulting from market valuation adjustments. At September 30, 2016 and December 31, 2015, there were 24 and 23 REO properties, respectively, recorded on our consolidated balance sheets, all of which were owned at consolidated Sequoia entities.

See Note 15 for additional information on the legal and residential repurchase reserves.

Restructuring Accruals

In January 2016, we announced plans to restructure certain aspects of our residential mortgage loan operations by ceasing the acquisition and aggregation of conforming loans for resale to the Agencies. Additionally, in February 2016, we announced our plans to restructure our commercial business and no longer originate commercial loans. Finally, in March 2016, we announced the departure of our President effective July 1, 2016. These restructuring activities were substantially completed during the second quarter of 2016.

In connection with these activities, we incurred restructuring expenses, including one-time termination benefits, contract termination costs, and other associated costs. During the first quarter of 2016, we established a restructuring liability and recorded restructuring charges totaling $11 million in Operating expenses on our consolidated statements of income, which included $9 million of severance related charges (including $3 million of equity compensation expense) and $2 million of contract termination costs. During the second and third quarters of 2016, minor adjustments affected the restructuring accrual and we currently expect the remaining liabilities to be substantially settled during the next nine months in accordance with the terms of outstanding contracts and employment agreements. (See table below for more details). For segment reporting, we consider these restructuring charges as corporate charges and included them in the “corporate/other” reconciling column in our business segment financial information tables in Note 22, Segment Information.

The following table presents our restructuring activities and the associated liabilities during the three and nine months ended September 30, 2016.

Table 11.3 – Activities of Restructuring Liabilities



	Three Months Ended September 30, 2016									Nine Months Ended September 30, 2016
(In Thousands)	Termination Benefits			Contract Termination Costs			Total Restructuring Liabilities			Termination Benefits			Contract Termination Costs			Total Restructuring Liabilities
Beginning balance	$	3,387		$	772		$	4,159		$	—		$	—		$	—
Costs incurred and expensed	—			4			4			8,793			1,752			10,545
Costs paid/settled	(34		)	(462		)	(496		)	(1,954		)	(1,438		)	(3,392		)
Adjustments ⁽¹⁾	—			—			—			(3,486		)	—			(3,486		)
Ending Balance	$	3,353		$	314		$	3,667		$	3,353		$	314		$	3,667


(1)	Amount represents equity compensation expense recorded during the three and nine months ended September 30, 2016 related to equity awards that were accelerated, and will be distributed in future periods.