Arbor Realty Trust Reports Third Quarter 2023 Results and Declares Dividend of $0.43 per Share

Company Highlights:

• Diversified, annuity-based operating platform with a multifamily focus that has continued to generate strong distributable earnings and dividends
  • GAAP net income of $0.41 per diluted common share
  • Distributable earnings¹ of $0.55 per diluted common share, well in excess of our current dividend, representing a 78% payout ratio
  • Declares cash dividend on common stock of $0.43 per share representing an annualized dividend of $1.72 per share
  • Strong liquidity position with ~$1 billion in cash and liquidity and ~$500 million of restricted cash in replenishable CLO vehicles with a weighted average cost of 1.70% over benchmark rates²
  • Agency loan originations of $1.15 billion and a servicing portfolio of ~$29.94 billion, up 2%
  • Structured loan originations of $240.2 million and a portfolio of ~$13.12 billion

UNIONDALE, N.Y., Oct. 27, 2023 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the third quarter ended September 30, 2023. Arbor reported net income for the quarter of $77.9 million, or $0.41 per diluted common share, compared to net income of $62.7 million, or $0.36 per diluted common share for the quarter ended September 30, 2022. Distributable earnings for the quarter was $112.2 million, or $0.55 per diluted common share, compared to $105.1 million, or $0.56 per diluted common share for the quarter ended September 30, 2022.

Agency Business

Loan Origination Platform

	Agency Loan Volume (in thousands)
	Quarter Ended
	September 30, 2023			June 30, 2023
Fannie Mae	$	721,398		$	1,079,910
Freddie Mac		339,241			217,884
Private Label		67,965			50,256
FHA		19,215			62,552
SFR-Fixed Rate		2,030			11,837
Total Originations	$	1,149,849		$	1,422,439
Total Loan Sales	$	1,275,420		$	1,410,724
Total Loan Commitments	$	1,211,347		$	1,133,312

For the quarter ended September 30, 2023, the Agency Business generated revenues of $80.8 million, compared to $76.7 million for the second quarter of 2023. Gain on sales, including fee-based services, net on the GSE/Agency business (excluding private label and SFR) was $17.7 million for the quarter, reflecting a margin of 1.48%, compared to $22.2 million and 1.67% for the second quarter of 2023. Income from mortgage servicing rights was $14.1 million for the quarter, reflecting a rate of 1.16% as a percentage of loan commitments, compared to $16.2 million and 1.43% for the second quarter of 2023.

At September 30, 2023, loans held-for-sale was $364.3 million, with financing associated with these loans totaling $354.6 million.

Fee-Based Servicing Portfolio

The Company’s fee-based servicing portfolio totaled $29.94 billion at September 30, 2023. Servicing revenue, net was $35.5 million for the quarter and consisted of servicing revenue of $51.4 million, net of amortization of mortgage servicing rights totaling $15.9 million.

	Fee-Based Servicing Portfolio ($ in thousands)
	September 30, 2023							June 30, 2023
	UPB			Wtd. Avg. Fee (bps)		Wtd. Avg. Life (years)		UPB			Wtd. Avg. Fee (bps)		Wtd. Avg. Life (years)
Fannie Mae	$	20,463,620		48.3		7.7		$	20,002,570		48.9		7.7
Freddie Mac		5,184,888		24.2		8.5			5,245,325		24.8		8.8
Private Label		2,371,475		19.2		7.3			2,305,000		19.3		7.5
FHA		1,322,832		14.5		19.9			1,303,812		14.5		20.0
Bridge		305,950		11.2		3.6			299,578		11.1		3.5
SFR-Fixed Rate		287,942		20.1		5.8			290,266		20.0		5.9
Total	$	29,936,707		39.7		8.3		$	29,446,551		40.1		8.4

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.6 million for the fair value of the guarantee obligation undertaken at September 30, 2023. The Company recorded a $1.6 million net provision for loss sharing associated with CECL for the third quarter of 2023. At September 30, 2023, the Company’s total CECL allowance for loss-sharing obligations was $34.7 million, representing 0.17% of the Fannie Mae servicing portfolio.

Structured Business

Portfolio and Investment Activity

	Structured Portfolio Activity ($ in thousands)
	Quarter Ended
	September 30, 2023						June 30, 2023
	UPB			%			UPB			%
Bridge:
Multifamily	$	92,000		38	%		$	98,530		47	%
SFR		140,379		59	%			108,964		52	%
		232,379		97	%			207,494		99	%
Mezzanine/Preferred Equity		7,779		3	%			1,500		1	%
Total Originations	$	240,158		100	%		$	208,994		100	%
Number of Loans Originated		42						26
SFR Commitments	$	429,452					$	200,182
Runoff	$	664,792					$	685,220

	Structured Portfolio ($ in thousands)
	September 30, 2023						June 30, 2023
	UPB			%			UPB			%
Bridge:
Multifamily	$	11,421,819		87	%		$	11,887,768		88	%
SFR		1,163,648		9	%			1,023,959		8	%
Other		205,505		2	%			256,575		2	%
		12,790,972		98	%			13,168,302		98	%
Mezzanine/Preferred Equity		321,729		2	%			312,812		2	%
SFR Permanent		9,694		<1%				10,493		<1%
Total Portfolio	$	13,122,395		100	%		$	13,491,607		100	%

At September 30, 2023, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $13.12 billion, with a weighted average current interest pay rate of 8.80%, compared to $13.49 billion and 8.76% at June 30, 2023. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 9.12% at September 30, 2023, compared to 9.07% at June 30, 2023.

The average balance of the Company’s loan and investment portfolio during the third quarter of 2023, excluding loan loss reserves, was $13.40 billion with a weighted average yield of 9.25%, compared to $13.66 billion and 9.19% for the second quarter of 2023.

During the third quarter of 2023, the Company recorded a $15.0 million provision for loan losses associated with CECL. At September 30, 2023, the Company’s total allowance for loan losses was $184.1 million. The Company had twelve non-performing loans with a carrying value of $137.9 million, before related loan loss reserves of $12.6 million, compared to seven loans with a carrying value of $122.4 million, before loan loss reserves of $10.1 million at June 30, 2023.

Financing Activity

The balance of debt that finances the Company’s loan and investment portfolio at September 30, 2023 was $11.86 billion with a weighted average interest rate including fees of 7.41% as compared to $12.11 billion and a rate of 7.25% at June 30, 2023.

The average balance of debt that finances the Company’s loan and investment portfolio for the third quarter of 2023 was $12.00 billion, as compared to $12.46 billion for the second quarter of 2023. The average cost of borrowings for the third quarter of 2023 was 7.37%, compared to 7.11% for the second quarter of 2023. The increase in average cost was primarily due to increases in the benchmark index rates in the third quarter of 2023.

Dividend

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.43 per share of common stock for the quarter ended September 30, 2023. The dividend is payable on November 30, 2023 to common stockholders of record on November 17, 2023. The ex-dividend date is November 16, 2023.

Earnings Conference Call

The Company will host a conference call today at 10:00 a.m. Eastern Time. A live webcast and replay of the conference call will be available at www.arbor.com in the investor relations section of the Company’s website, or you can access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are [phone] for domestic callers and [phone] for international callers. Please use participant passcode ABRQ323 when prompted by the operator.

A telephonic replay of the call will be available until November 3, 2023. The replay dial-in numbers are [phone] for domestic callers and [phone] for international callers.

About Arbor Realty Trust, Inc.

Arbor Realty Trust, Inc. (NYSE: ABR) is a nationwide real estate investment trust and direct lender, providing loan origination and servicing for multifamily, single-family rental (SFR) portfolios, and other diverse commercial real estate assets. Headquartered in New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in government-sponsored enterprise products. Arbor is a leading Fannie Mae DUS lender and Freddie Mac Optigo Seller/Servicer, and an approved FHA Multifamily Accelerated Processing (MAP) lender. Arbor’s product platform also includes bridge, CMBS, mezzanine and preferred equity loans. Rated by Standard and Poor’s and Fitch Ratings, Arbor is committed to building on its reputation for service, quality, and customized solutions with an unparalleled dedication to providing our clients excellence over the entire life of a loan.

Safe Harbor Statement

Certain items in this press release may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Arbor can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Arbor’s expectations include, but are not limited to, changes in economic conditions generally, and the real estate markets specifically, in particular, due to the severity and duration of the COVID-19 pandemic, continued ability to source new investments, changes in interest rates and/or credit spreads, and other risks detailed in Arbor’s Annual Report on Form 10-K for the year ended December 31, 2022 and its other reports filed with the SEC. Such forward-looking statements speak only as of the date of this press release. Arbor expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Arbor’s expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.

Notes

1. During the quarterly earnings conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A supplemental schedule of non-GAAP financial measures and the comparable GAAP financial measure can be found on the last page of this release.
2. Amounts reflect approximate balances as of October 25, 2023.

Contact:	Arbor Realty Trust, Inc. Paul Elenio, Chief Financial Officer 516-506-4422 [e-mail]

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Income - (Unaudited)
($ in thousands—except share and per share data)

	Quarter Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Interest income	$	336,474			$	259,778			$	1,000,159			$	627,804
Interest expense		229,180				160,452				675,749				350,079
Net interest income		107,294				99,326				324,410				277,725
Other revenue:
Gain on sales, including fee-based services, net		18,619				14,360				55,795				32,526
Mortgage servicing rights		14,109				19,408				48,769				52,287
Servicing revenue, net		35,463				22,744				97,376				64,513
Property operating income		1,450				445				4,261				1,031
Gain (loss) on derivative instruments, net		(421	)			(15,909	)			(3,582	)			10,083
Other income (loss), net		173				(6,014	)			5,099				(16,061	)
Total other revenue		69,393				35,034				207,718				144,379
Other expenses:
Employee compensation and benefits		39,810				38,811				123,518				119,736
Selling and administrative		12,367				13,225				38,574				40,960
Property operating expenses		1,479				366				4,227				1,443
Depreciation and amortization		2,286				2,078				7,297				6,092
Provision for loss sharing (net of recoveries)		1,679				412				12,528				(2,199	)
Provision for credit losses (net of recoveries)		18,652				2,274				55,047				9,700
Total other expenses		76,273				57,166				241,191				175,732
Income before extinguishment of debt, income from equity affiliates, and income taxes		100,414				77,194				290,937				246,372
Loss on extinguishment of debt		(314	)			(3,262	)			(1,561	)			(4,612	)
Income from equity affiliates		809				4,748				20,694				18,507
(Provision for) benefit from income taxes		(5,854	)			374				(19,436	)			(13,166	)
Net income		95,055				79,054				290,634				247,101
Preferred stock dividends		10,342				10,342				31,027				30,612
Net income attributable to noncontrolling interest		6,789				6,002				21,200				19,811
Net income attributable to common stockholders	$	77,924			$	62,710			$	238,407			$	196,678
Basic earnings per common share	$	0.42			$	0.37			$	1.30			$	1.21
Diluted earnings per common share	$	0.41			$	0.36			$	1.28			$	1.18
Weighted average shares outstanding:
Basic		187,023,395				170,227,553				183,340,149				162,292,235
Diluted		221,328,818				205,865,016				217,457,399				195,529,340
Dividends declared per common share	$	0.43			$	0.39			$	1.25			$	1.14

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
($ in thousands—except share and per share data)

	September 30, 2023			December 31, 2022
	(Unaudited)
Assets:
Cash and cash equivalents	$	895,298		$	534,357
Restricted cash		419,158			713,808
Loans and investments, net (allowance credit losses of $184,069 and $132,559)		12,892,796			14,254,674
Loans held-for-sale, net		364,320			354,070
Capitalized mortgage servicing rights, net		392,203			401,471
Securities held-to-maturity, net (allowance credit losses of $5,943 and $3,153)		155,172			156,547
Investments in equity affiliates		62,795			79,130
Due from related party		211,655			77,419
Goodwill and other intangible assets		92,551			96,069
Other assets		416,741			371,440
Total assets	$	15,902,689		$	17,038,985
Liabilities and Equity:
Credit and repurchase facilities	$	3,391,441		$	3,841,814
Securitized debt		7,004,634			7,849,270
Senior unsecured notes		1,332,926			1,385,994
Convertible senior unsecured notes		282,428			280,356
Junior subordinated notes to subsidiary trust issuing preferred securities		143,695			143,128
Due to related party		2,170			12,350
Due to borrowers		114,660			61,237
Allowance for loss-sharing obligations		69,261			57,168
Other liabilities		320,973			335,789
Total liabilities		12,662,188			13,967,106
Equity:
Arbor Realty Trust, Inc. stockholders' equity:
Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized, shares issued and outstanding by period:		633,684			633,684
Special voting preferred shares - 16,293,589 shares
6.375% Series D - 9,200,000 shares
6.25% Series E - 5,750,000 shares
6.25% Series F - 11,342,000 shares
Common stock, $0.01 par value: 500,000,000 shares authorized - 188,501,642 and 178,230,522 shares issued and outstanding		1,885			1,782
Additional paid-in capital		2,364,395			2,204,481
Retained earnings		104,821			97,049
Total Arbor Realty Trust, Inc. stockholders’ equity		3,104,785			2,936,996
Noncontrolling interest		135,716			134,883
Total equity		3,240,501			3,071,879
Total liabilities and equity	$	15,902,689		$	17,038,985

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Statement of Income Segment Information - (Unaudited)
(in thousands)

	Quarter Ended September 30, 2023
	Structured Business				Agency Business				Other / Eliminations(1)				Consolidated
Interest income	$	322,819			$	13,655			$	-			$	336,474
Interest expense		222,996				6,184				-				229,180
Net interest income		99,823				7,471				-				107,294
Other revenue:
Gain on sales, including fee-based services, net		-				18,619				-				18,619
Mortgage servicing rights		-				14,109				-				14,109
Servicing revenue		-				51,363				-				51,363
Amortization of MSRs		-				(15,900	)			-				(15,900	)
Property operating income		1,450				-				-				1,450
Gain (loss) on derivative instruments, net		-				(421	)			-				(421	)
Other income (loss), net		751				(578	)			-				173
Total other revenue		2,201				67,192				-				69,393
Other expenses:
Employee compensation and benefits		12,912				26,898				-				39,810
Selling and administrative		5,291				7,076				-				12,367
Property operating expenses		1,479				-				-				1,479
Depreciation and amortization		1,114				1,172				-				2,286
Provision for loss sharing (net of recoveries)		-				1,679				-				1,679
Provision for credit losses (net of recoveries)		17,243				1,409				-				18,652
Total other expenses		38,039				38,234				-				76,273
Income before extinguishment of debt, income from equity affiliates and income taxes		63,985				36,429				-				100,414
Loss on extinguishment of debt		(314	)			-				-				(314	)
Income from equity affiliates		809				-				-				809
Benefit from (provision for) income taxes		1,078				(6,932	)			-				(5,854	)
Net income		65,558				29,497				-				95,055
Preferred stock dividends		10,342				-				-				10,342
Net income attributable to noncontrolling interest		-				-				6,789				6,789
Net income attributable to common stockholders	$	55,216			$	29,497			$	(6,789	)		$	77,924
(1)  Includes income allocated to the noncontrolling interest holders not allocated to the two reportable segments.

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Balance Sheet Segment Information - (Unaudited)
(in thousands)

	September 30, 2023
	Structured Business			Agency Business			Consolidated
Assets:
Cash and cash equivalents	$	499,511		$	395,787		$	895,298
Restricted cash		410,056			9,102			419,158
Loans and investments, net		12,892,796			-			12,892,796
Loans held-for-sale, net		-			364,320			364,320
Capitalized mortgage servicing rights, net		-			392,203			392,203
Securities held-to-maturity, net		-			155,172			155,172
Investments in equity affiliates		62,795			-			62,795
Goodwill and other intangible assets		12,500			80,051			92,551
Other assets and due from related party		536,789			91,607			628,396
Total assets	$	14,414,447		$	1,488,242		$	15,902,689
Liabilities:
Debt obligations	$	11,800,537		$	354,587		$	12,155,124
Allowance for loss-sharing obligations		-			69,261			69,261
Other liabilities and due to related party		323,061			114,742			437,803
Total liabilities	$	12,123,598		$	538,590		$	12,662,188

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Reconciliation of Distributable Earnings to GAAP Net Income - (Unaudited)
($ in thousands—except share and per share data)

	Quarter Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Net income attributable to common stockholders	$	77,924			$	62,710			$	238,407			$	196,678
Adjustments:
Net income attributable to noncontrolling interest		6,789				6,002				21,200				19,811
Income from mortgage servicing rights		(14,109	)			(19,408	)			(48,769	)			(52,287	)
Deferred tax benefit		(2,433	)			(5,407	)			(6,630	)			(7,833	)
Amortization and write-offs of MSRs		18,757				26,555				58,684				81,850
Depreciation and amortization		3,957				2,666				12,310				7,846
Loss on extinguishment of debt		314				3,262				1,561				4,612
Provision for credit losses, net		16,922				2,708				57,437				10,254
Gain on derivative instruments, net		1,002				22,925				2,036				18,472
Stock-based compensation		3,047				3,085				12,141				12,327
Distributable earnings (1)	$	112,170			$	105,098			$	348,377			$	291,730
Diluted distributable earnings per share (1)	$	0.55			$	0.56			$	1.74			$	1.63
Diluted weighted average shares outstanding (1) (2)		204,016,436				187,049,617				200,185,980				179,174,194

(1)		Amounts are attributable to common stockholders and OP Unit holders. The OP Units are redeemable for cash, or at the Company's option for shares of the Company's common stock on a one-for-one basis.
(2)		The diluted weighted average shares outstanding were adjusted to exclude the potential shares issuable upon conversion and settlement of the Company's convertible senior notes principal balance. For the quarters ended September 30, 2023 and September 30, 2022, the diluted weighted average shares outstanding excluded 17,312,382 and 18,815,399 of these potentially issuable shares, respectively. For the nine months ended September 30, 2023 and September 30, 2022, the diluted weighted average shares outstanding excluded 17,271,419 and 16,355,146 of these potentially issuable shares, respectively.

The Company is presenting distributable earnings because management believes it is an important supplemental measure of the Company's operating performance and is useful to investors, analysts and other parties in the evaluation of REITs and their ability to provide dividends to stockholders. Dividends are one of the principal reasons investors invest in REITs. To maintain REIT status, REITs are required to distribute at least 90% of their REIT-taxable income. The Company considers distributable earnings in determining its quarterly dividend and believes that, over time, distributable earnings is a useful indicator of the Company's dividends per share.

The Company defines distributable earnings as net income (loss) attributable to common stockholders computed in accordance with GAAP, adjusted for accounting items such as depreciation and amortization (adjusted for unconsolidated joint ventures), non-cash stock-based compensation expense, income from MSRs, amortization and write-offs of MSRs, gains/losses on derivative instruments primarily associated with Private Label loans not yet sold and securitized, changes in fair value of GSE-related derivatives that temporarily flow through earnings (net of any tax impact), deferred tax provision (benefit), CECL provisions for credit losses (adjusted for realized losses as described below) and gains/losses on the receipt of real estate from the settlement of loans (prior to the sale of the real estate). The Company also adds back one-time charges such as acquisition costs and one-time gains/losses on the early extinguishment of debt and redemption of preferred stock.

The Company reduces distributable earnings for realized losses in the period management determines that a loan is deemed nonrecoverable in whole or in part. Loans are deemed nonrecoverable upon the earlier of: (1) when the loan receivable is settled (i.e., when the loan is repaid, or in the case of foreclosure, when the underlying asset is sold); or (2) when management determines that it is nearly certain that all amounts due will not be collected. The realized loss amount is equal to the difference between the cash received, or expected to be received, and the book value of the asset.

Distributable earnings is not intended to be an indication of the Company's cash flows from operating activities (determined in accordance with GAAP) or a measure of its liquidity, nor is it entirely indicative of funding the Company's cash needs, including its ability to make cash distributions. The Company's calculation of distributable earnings may be different from the calculations used by other companies and, therefore, comparability may be limited.