Exhibit 99.1

 

Arbor Realty Trust Reports Second Quarter 2020 Results and Increases Quarterly Dividend to $0.31 per Share

 

Company Highlights: 

 

-	GAAP net income of $0.40 and core earnings of $0.46 per diluted common share1

-	Raised cash dividend on common stock to $0.31 per share, a 7% increase from 2Q19

-	Generated pretax income of $20.9 million from our residential mortgage banking joint venture

-	Strong liquidity position currently at approximately $450 million

 

Agency Business

 

-	Servicing portfolio of $21.58 billion, a 7% increase from 1Q20 and 11% from 2Q19

-	Strong loan origination volume of $1.40 billion, a 9% increase from 2Q19

-	Closed $727.2 million private label multifamily mortgage loan securitization generating cash of over $115 million

-	Segment income of $21.4 million

 

Structured Business

 

-	$300.5 million of loan originations and portfolio growth of 4%

-	Segment income of $30.9 million

 

Uniondale, NY, July 31, 2020 -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the second quarter ended June 30, 2020. Arbor reported net income for the quarter of $44.1 million, or $0.40 per diluted common share, compared to net income of $28.9 million, or $0.31 per diluted common share for the quarter ended June 30, 2019. Core earnings for the quarter was $60.4 million, or $0.46 per diluted common share, compared to $38.6 million, or $0.34 per diluted common share for the quarter ended June 30, 2019.¹

 

For the quarter ended June 30, 2020, the Agency Business generated revenues (excluding gains and losses on derivative instruments) of $81.1 million, compared to $59.6 million for the first quarter of 2020. Gain on sales, including fee-based services, net was $26.4 million for the quarter, reflecting a margin of 1.32% on loan sales, compared to $14.3 million and 1.49% for the first quarter of 2020. Income from mortgage servicing rights was $32.4 million for the quarter, reflecting a rate of 2.69% as a percentage of loan commitments, compared to $21.9 million and 1.73% for the first quarter of 2020.

At June 30, 2020, loans held-for-sale was $360.4 million which was primarily comprised of unpaid principal balances totaling $349.9 million, with financing associated with these loans totaling $333.5 million.

The Company completed its first private label multifamily securitization totaling $727.2 million comprised of fixed rate, 10-year first lien mortgage loans. The Company originated and sold the mortgage loans to the securitization and will be the primary servicer. The Company retained subordinate certificate interests in the securitization of $63.6 million, in satisfaction of credit risk retention requirements.

Fee-Based Servicing Portfolio

Our fee-based servicing portfolio totaled $21.58 billion at June 30, 2020, an increase of 6.9% from March 31, 2020, primarily the result of servicing rights retained on $727.2 million of private label loans, as well as $1.40 billion of new agency loan originations, net of $693.8 million in portfolio runoff during the quarter. Servicing revenue, net was $13.5 million for the quarter and consisted of servicing revenue of $25.4 million, net of amortization of mortgage servicing rights totaling $11.9 million.

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”), and includes $32.8 million for the fair value of the guarantee obligation undertaken at June 30, 2020. The Company’s provision for loss sharing associated with current expected credit losses, or “CECL,” was $2.0 million for the second quarter of 2020. At June 30, 2020, the Company’s total CECL allowance for loss-sharing obligations was $40.4 million, representing 0.26% of the Fannie Mae servicing portfolio.

Structured Business

Portfolio and Investment Activity

At June 30, 2020, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $4.97 billion, with a weighted average current interest pay rate of 5.57%, compared to $4.80 billion and 5.70% at March 31, 2020. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 6.10% at June 30, 2020, compared to 6.35% at March 31, 2020.

The average balance of the Company’s loan and investment portfolio during the second quarter of 2020, excluding loan loss reserves, was $4.81 billion with a weighted average yield of 6.16%, compared to $4.58 billion and 6.77% for the first quarter of 2020. The decrease in average yield was primarily due to lower fees on loan payoffs, a decrease in LIBOR and lower rates on originations when compared to runoff in the second quarter as compared to the first quarter.

During the second quarter of 2020, the Company recorded provision for loan losses of $10.6 million as a result of its loan review process associated with CECL. At June 30, 2020, the Company’s total allowance for loan losses was $152.8 million. The Company had six non-performing loans with a carrying value of $60.5 million, before related loan loss reserves of $16.6 million, compared to four loans with a carrying value of $8.3 million, before related loan loss reserves of $6.5 million as of March 31, 2020.

The Company recorded pretax income of $20.9 million from its joint venture investment in a residential mortgage banking business due to the historically low interest rate environment.

Financing Activity

The balance of debt that finances the Company’s loan and investment portfolio at June 30, 2020 was $4.54 billion with a weighted average interest rate including fees of 3.14% as compared to $4.70 billion and a rate of 3.68% at March 31, 2020. The average balance of debt that finances the Company’s loan and investment portfolio for the second quarter of 2020 was $4.53 billion, as compared to $4.25 billion for the first quarter of 2020. The average cost of borrowings for the second quarter of 2020 was 3.26%, compared to 4.11% for the first quarter of 2020. The decrease in average costs was primarily due to a decrease in LIBOR.

The Company is subject to various financial covenants and restrictions under the terms of its collateralized securitization vehicles, financing facilities and unsecured debt. The Company believes it was in compliance with all financial covenants and restrictions as of June 30, 2020 and as of the most recent collateralized securitization vehicle determination dates in July 2020.

Capital Markets

The Company issued $70.8 million in aggregate principal amount of 8.00% senior unsecured notes in two private placements, generating net proceeds of $69.6 million after deducting offering expenses. The notes are due in 2023 and the proceeds were used to repay secured indebtedness, make investments relating to its business and for general corporate purposes.

Dividends

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.31 per share of common stock for the quarter ended June 30, 2020. The dividend is payable on August 31, 2020 to common stockholders of record on August 17, 2020. The ex-dividend date is August 14, 2020.

The Company also announced today that its Board of Directors has declared cash dividends on the Company's Series A, Series B and Series C cumulative redeemable preferred stock reflecting accrued dividends from June 1, 2020 through August 31, 2020. The dividends are payable on August 31, 2020 to preferred stockholders of record on August 15, 2020. The Company will pay total dividends of $0.515625, $0.484375 and $0.53125 per share on the Series A, Series B and Series C preferred stock, respectively.

Earnings Conference Call

The Company will host a conference call today at 9:00 a.m. Eastern Time. A live webcast and replay of the conference call will be available at http://www.arbor.com in the investor relations section of the Company’s website. Those without web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (877) 876-9173 for domestic callers and (785) 424-1667 for international callers. Please use participant passcode ABRQ220 when prompted by the operator.

A telephonic replay of the call will be available until August 7, 2020. The replay dial-in numbers are (800) 839-5492 for domestic callers and (402) 220-2551 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, seniors housing, healthcare 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 Fannie Mae DUS® lender and Freddie Mac Optigo Seller/Servicer. Arbor’s product platform also includes CMBS, bridge, mezzanine and preferred equity lending. 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 uncertainties created by 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, 2019 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.

1. Non-GAAP Financial Measures

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 page 11 of this release.

Arbor Realty Trust Reports Second Quarter 2020 Results and Increases Quarterly Dividend to $0.31 per Share

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Operations - (Unaudited)

($ in thousands—except share and per share data)  

Arbor Realty Trust Reports Second Quarter 2020 Results and Increases Quarterly Dividend to $0.31 per Share

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

($ in thousands—except share and per share data)

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

 Statement of Operations Segment Information - (Unaudited)

(in thousands)

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

 Balance Sheet Segment Information - (Unaudited)

(in thousands)

Arbor Realty Trust Reports Second Quarter 2020 Results and Increases Quarterly Dividend to $0.31 per Share

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

Supplemental Schedule of Non-GAAP Financial Measures - (Unaudited)

Reconciliation of Core Earnings to GAAP Net Income (Loss)

 ($ in thousands—except share and per share data)