GlobeNewswire Inc | Oct 30, 2020 08:15AM EDT

October 30, 2020

CompanyHighlights:

-- Diversified operating platform with a multifamily focus that continues to produce strong core earnings and dividends in all cyclesGAAP net income of $0.72 and core earnings of $0.50 per diluted common share1Raised cash dividend on common stock to $0.32per share, our second consecutive increase, representing a 6.7% increase year-to-dateContinued strong performance from our residential mortgage banking joint venture generating pretax income of $32.3 million

Agency Business

-- Grew our servicing portfolio to $22.56 billion, a 4.5% increase from 2Q20, and 12.5% year-to-date -- GSE loan originationsof $1.47billion, a 10.1% increase from 3Q19 -- Segment income of $40.7 million

Structured Business

-- Loan portfolio surpasses $5.00 billion on $291.8 million of loan originations -- Segment income of $55.2 million

UNIONDALE, N.Y., Oct. 30, 2020 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the third quarter ended September 30, 2020. Arbor reported net income for the quarter of $82.0 million, or $0.72 per diluted common share, compared to net income of $34.0 million, or $0.35 per diluted common share for the quarter ended September 30, 2019. Core earnings for the quarter was $67.1 million, or $0.50 per diluted common share, compared to $43.1 million, or $0.37 per diluted common share for the quarter ended September 30, 2019.1

These outstanding third quarter results reflect the successful execution of our business strategy and the versatile operating platform we have developed. Arbor continues to be very well positioned to succeed in the current economic climate. Our business model gives us diversified opportunities for growth and has allowed us to outperform in the commercial mortgage REIT space, said Ivan Kaufman, founder, chairman and CEO of Arbor Realty Trust.

Our continued momentum and excellent results have once again allowed us to increase our dividend to 32 cents a share our second consecutive quarterly dividend increase. It is a true testament to the value of our franchise and the many diverse income streams we have created that we are able to succeed in any market cycle.

Agency Business

Loan Origination Platform

Agency Loan Volume (in thousands) Quarter Ended September 30, June 30, 2020 2020Originations: Fannie Mae $ 1,117,679 $ 1,140,181 Freddie Mac 252,014 135,720 FHA 100,345 75,533 Private Label 5,840 49,122 Total Originations $ 1,475,878 $ 1,400,556 Total Loan Sales $ 1,219,462 $ 1,992,889 Total Loan Commitments $ 1,528,551 $ 1,206,723

For the quarter ended September 30, 2020, the Agency Business generated revenues (excluding gains and losses on derivative instruments) of $81.8 million, compared to $81.1 million for the second quarter of 2020. Gain on sales, including fee-based services, net was $19.9 million for the quarter, reflecting a margin of 1.63% on loan sales, compared to $26.4 million and 1.32% for the second quarter of 2020. Income from mortgage servicing rights was $42.4 million for the quarter, reflecting a rate of 2.77% as a percentage of loan commitments, compared to $32.4 million and 2.69% for the second quarter of 2020.

At September 30, 2020, loans held-for-sale was $631.1 million which was primarily comprised of unpaid principal balances totaling $617.9 million, with financing associated with these loans totaling $567.6 million.

Fee-Based Servicing Portfolio

Our fee-based servicing portfolio totaled $22.56 billion at September 30, 2020, an increase of 4.5% from June 30, 2020, primarily the result of $1.48 billion of new agency loan originations, net of $490.4 million in portfolio runoff during the quarter. Servicing revenue, net was $13.3 million for the quarter and consisted of servicing revenue of $25.7 million, net of amortization of mortgage servicing rights totaling $12.4 million.

Fee-Based Servicing Portfolio ($ in thousands) As of September 30, 2020 As of June 30, 2020 Wtd. Wtd. Wtd. Avg. Wtd. Avg. UPB Avg. Life UPB Avg. Life Fee (in Fee (in years) years)Fannie $ 16,462,041 0.516 % 8.4 $ 15,672,931 0.505 % 8.2MaeFreddie 4,687,197 0.288 % 10.4 4,560,382 0.295 % 10.6MacFHA 685,263 0.171 % 20.4 621,487 0.154 % 19.6Private 727,063 0.200 % 9.4 727,132 0.200 % 9.5LabelTotal $ 22,561,564 0.448 % 9.2 $ 21,581,932 0.441 % 9.1

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (loss-sharing obligations), and includes $33.2 million for the fair value of the guarantee obligation undertaken at September 30, 2020. The Company recorded a $2.5 million reversal of provision for loss sharing associated with current expected credit losses, or CECL, for the third quarter of 2020. At September 30, 2020, the Companys total CECL allowance for loss-sharing obligations was $38.0 million, representing 0.23% of the Fannie Mae servicing portfolio.

Structured Business

Portfolio and Investment Activity

-- Significant income generated by our residential mortgage banking joint venture -- Originated 13 loans totaling $291.8 million, and consisted primarily of multifamily bridge loans totaling $235.1 million -- Payoffs and pay downs on 15 loans totaling $206.0 million -- Portfolio growth of $124.7 million, or 2.5%

The Company recorded pretax income of $32.3 million from its significant joint venture investment in a residential mortgage banking business as a result of the continued historically low interest rate environment. Pretax income from this investment for the nine months ended September 30, 2020 totaled $56.1 million.

At September 30, 2020, the loan and investment portfolios unpaid principal balance, excluding loan loss reserves, was $5.10 billion, with a weighted average current interest pay rate of 5.39%, compared to $4.97 billion and 5.57% at June 30, 2020. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 5.93% at September 30, 2020, compared to 6.10% at June 30, 2020.

The average balance of the Companys loan and investment portfolio during the third quarter of 2020, excluding loan loss reserves, was $4.98 billion with a weighted average yield of 5.98%, compared to $4.81 billion and 6.16% for the second quarter of 2020. The decrease in average yield was primarily due to several factors including an increase in non-performing and modified loans, lower accelerated fees on loan payoffs and lower rates on originations when compared to runoff in the third quarter as compared to the second quarter.

During the third quarter of 2020, the Company recorded a reversal of its provision for loan losses of $6.1 million as a result of its loan review process associated with CECL. At September 30, 2020, the Companys total allowance for loan losses was $146.7 million. The Company had eight non-performing loans with a carrying value of $62.9 million, before related loan loss reserves of $9.1 million, compared to six loans with a carrying value of $60.5 million, before related loan loss reserves of $16.6 million as of June 30, 2020.

Financing Activity

The balance of debt that finances the Companys loan and investment portfolio at September 30, 2020 was $4.52 billion with a weighted average interest rate including fees of 3.09% as compared to $4.54 billion and a rate of 3.14% at June 30, 2020. The average balance of debt that finances the Companys loan and investment portfolio for the third quarter of 2020 was $4.59 billion, as compared to $4.53 billion for the second quarter of 2020. The average cost of borrowings for the third quarter of 2020 was 3.06%, compared to 3.26% for the second 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 September 30, 2020 and as of the most recent collateralized securitization vehicle determination dates in October 2020.

Dividends

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.32 per share of common stock for the quarter ended September 30, 2020, representing an increase of 6.7% year-to-date. The dividend is payable on November 30, 2020 to common stockholders of record on November 16, 2020. The ex-dividend date is November 13, 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 September 1, 2020 through November 30, 2020. The dividends are payable on November 30, 2020 to preferred stockholders of record on November 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 10:00 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 Companys 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) 876-9176 for domestic callers and (785) 424-1670 for international callers. Please use participant passcode ABRQ320 when prompted by the operator.

A telephonic replay of the call will be available until November 6, 2020. The replay dial-in numbers are (800) 839-5679 for domestic callers and (402) 220-2566 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. Arbors product platform also includes CMBS, bridge, mezzanine and preferred equity lending. Rated by Standard and Poors 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 managements 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 Arbors 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 Arbors 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 Arbors 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.

Contacts: Investors: Media:Arbor Realty Trust, Inc. The Ruth Group Bonnie HabyanPaul Elenio, Chief Financial Daniel Kontoh-Boateng/James Chief MarketingOfficer Salierno Officer516-506-4422 646-536-7019/7028 516-506-4615pelenio@arbor.com dboateng@theruthgroup.com bhabyan@arbor.com jsalierno@theruthgroup.com

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Income - (Unaudited)($ in thousands?except share and per share data) Quarter Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Interest $ 81,701 $ 80,509 $ 253,307 $ 233,957 incomeInterest 37,888 48,064 129,172 138,213 expense Net interest 43,813 32,445 124,135 95,744 income Other revenue: Gain on sales,including 19,895 21,298 60,566 51,897 fee-basedservices, netMortgageservicing 42,357 29,911 96,708 62,852 rightsServicing 13,348 13,790 40,156 39,954 revenue, netPropertyoperating 1,033 2,237 3,976 8,187 incomeLoss onderivative (753 ) (5,003 ) (58,852 ) (6,726 )instruments,netOther income, 1,050 325 3,404 1,314 net Total other 76,930 62,558 145,958 157,478 revenue Other expenses:Employeecompensation 32,962 32,861 101,652 93,647 and benefitsSelling and 9,356 10,882 29,013 31,122 administrativePropertyoperating 1,300 2,563 4,778 7,649 expensesDepreciationand 1,922 1,841 5,830 5,663 amortizationImpairmentloss on real - - - 1,000 estate ownedProvision forloss sharing (2,227 ) 735 21,706 1,557 (net ofrecoveries)Provision forcredit losses (7,586 ) - 59,510 - (net ofrecoveries) Total other 35,727 48,882 222,489 140,638 expenses Income beforeextinguishment of debt, saleof realestate, equityaffiliates, 85,016 46,121 47,604 112,584 and incometaxes Loss onextinguishment - - (3,546 ) (128 )of debtLoss on sale (1,868 ) - (1,868 ) - of real estateIncome fromequity 32,358 3,718 56,758 9,133 affiliatesProvision for (17,785 ) (6,623 ) (15,493 ) (10,963 )income taxes Net income 97,721 43,216 83,455 110,626 Preferredstock 1,888 1,888 5,665 5,665 dividendsNet incomeattributableto 13,836 7,363 11,012 19,429 noncontrollinginterestNet incomeattributable $ 81,997 $ 33,965 $ 66,778 $ 85,532 to commonstockholders Basic earningsper common $ 0.72 $ 0.36 $ 0.60 $ 0.95 shareDilutedearnings per $ 0.72 $ 0.35 $ 0.59 $ 0.93 common share Weightedaverage shares outstanding: Basic 113,766,446 94,486,839 111,775,436 89,899,074 Diluted 133,997,087 117,468,044 132,401,315 113,033,968 Dividendsdeclared per $ 0.31 $ 0.29 $ 0.91 $ 0.84 common share

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Balance Sheets($ in thousands?except share and per share data) September 30, December 31, 2020 2019 (Unaudited) Assets: Cash and cash equivalents $ 192,204 $ 299,687 Restricted cash 110,263 210,875 Loans and investments, net (allowance forcredit losses: $146,745 and $71,069, 4,910,872 4,189,960 respectively)Loans held-for-sale, net 631,138 861,360 Capitalized mortgage servicing rights, net 335,235 286,420 Securities held-to-maturity, net (allowance for 118,260 88,699 credit losses: $1,628 and $0, respectively)Investments in equity affiliates 82,322 41,800 Real estate owned, net 2,894 13,220 Due from related party 23,814 10,651 Goodwill and other intangible assets 106,716 110,700 Other assets 175,500 125,788 Total assets $ 6,689,218 $ 6,239,160 Liabilities and Equity: Credit facilities and repurchase agreements $ 1,449,940 $ 1,678,288 Collateralized loan obligations 2,516,032 2,130,121 Debt fund - 68,629 Senior unsecured notes 662,289 319,799 Convertible senior unsecured notes, net 266,706 284,152 Junior subordinated notes to subsidiary trust 141,470 140,949 issuing preferred securitiesDue to related party 802 13,100 Due to borrowers 76,304 79,148 Allowance for loss-sharing obligations 71,160 34,648 Other liabilities 181,279 134,299 Total liabilities 5,365,982 4,883,133 Equity: Arbor Realty Trust, Inc. stockholders' equity: Preferred stock, cumulative, redeemable, $0.01par value: 100,000,000 shares authorized;special voting preferred shares; 17,632,371and 20,369,265 shares issued andoutstanding,respectively; 8.25% Series A, $38,788 aggregateliquidation preference;1,551,500 shares issued 89,472 89,501 and outstanding; 7.75% Series B, $31,500aggregateliquidation preference; 1,260,000shares issued and outstanding; 8.50% SeriesC,$22,500 aggregate liquidation preference;900,000 shares issued and outstandingCommon stock, $0.01 par value: 500,000,000shares authorized; 115,930,351 and 109,706,214 1,159 1,097 shares issued and outstanding, respectivelyAdditional paid-in capital 1,222,945 1,154,932 Accumulated deficit (120,539 ) (60,920 )Total Arbor Realty Trust, Inc. stockholders? 1,193,037 1,184,610 equity Noncontrolling interest 130,199 171,417 Total equity 1,323,236 1,356,027 Total liabilities and equity $ 6,689,218 $ 6,239,160

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Statement of Income Segment Information - (Unaudited)(in thousands) Quarter Ended September 30, 2020 Structured Agency Other / Business Business Eliminations Consolidated ^(1) Interest $ 75,471 $ 6,230 $ - $ 81,701 incomeInterest 35,252 2,636 - 37,888 expense Net interest 40,219 3,594 - 43,813 income Other revenue: Gain on sales,including - 19,895 - 19,895 fee-basedservices, netMortgageservicing - 42,357 - 42,357 rightsServicing - 25,764 - 25,764 revenueAmortization - (12,416 ) - (12,416 )of MSRsServicing - 13,348 - 13,348 revenue, netPropertyoperating 1,033 - - 1,033 incomeGain (loss) onderivative 118 (871 ) - (753 )instruments,netOther income, 1,052 - - 1,052 net Total other 2,203 74,729 - 76,932 revenue Other expenses:Employeecompensation 8,874 24,089 - 32,963 and benefitsSelling and 4,665 4,691 - 9,356 administrativePropertyoperating 1,300 - - 1,300 expensesDepreciationand 598 1,324 - 1,922 amortizationProvision forloss sharing - (2,227 ) - (2,227 )(net ofrecoveries)Provision forcredit losses (6,065 ) (1,521 ) - (7,586 )(net ofrecoveries) Total other 9,372 26,356 - 35,728 expenses Income beforesale of realestate, equity 33,050 51,967 - 85,017 affiliates,and incometaxes Loss on sale (1,868 ) - - (1,868 )of real estateIncome fromequity 32,358 - - 32,358 affiliatesProvision for (6,494 ) (11,292 ) - (17,786 )income taxes Net income 57,046 40,675 - 97,721 Preferredstock 1,888 - - 1,888 dividendsNet incomeattributableto - - 13,836 13,836 noncontrollinginterestNet income(loss)attributable $ 55,158 $ 40,675 $ (13,836 ) $ 81,997 to commonstockholders ^(1) Includes certain income or expenses not allocated to the two reportablesegments. Amount reflects income attributableto the noncontrolling interestholders.

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Balance Sheet Segment Information - (Unaudited)(in thousands) September 30, 2020 Structured Agency Consolidated Business BusinessAssets: Cash and cash $ 103,655 $ 88,549 $ 192,204 equivalentsRestricted cash 103,412 6,851 110,263 Loans and investments, 4,910,872 - 4,910,872 netLoans held-for-sale, - 631,138 631,138 netCapitalized mortgage - 335,235 335,235 servicing rights, netSecurities 20,000 98,260 118,260 held-to-maturity, netInvestments in equity 82,322 - 82,322 affiliatesGoodwill and other 12,500 94,216 106,716 intangible assetsOther assets 154,509 47,699 202,208 Total assets $ 5,387,270 $ 1,301,948 $ 6,689,218 Liabilities: Debt obligations $ 4,468,886 $ 567,551 $ 5,036,437 Allowance for - 71,160 71,160 loss-sharing obligationsOther liabilities 194,289 64,096 258,385 Total liabilities $ 4,663,175 $ 702,807 $ 5,365,982

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)

Quarter Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net incomeattributable $ 81,997 $ 33,965 $ 66,778 $ 85,532 to commonstockholders Adjustments: Net incomeattributableto 13,836 7,363 11,012 19,429 noncontrollinginterestIncome frommortgage (42,357 ) (29,911 ) (96,708 ) (62,852 )servicingrightsDeferred taxprovision 3,853 2,223 (5,172 ) (1,026 )(benefit)Amortizationand write-offs 15,456 18,904 48,739 52,558 of MSRsDepreciationand 2,867 2,789 8,731 8,504 amortizationLoss onextinguishment - - 3,546 128 of debtProvision forcredit losses, (11,137 ) 431 79,144 1,021 netLoss onderivative 753 5,003 44,113 6,726 instruments,netStock-based 1,854 2,316 7,286 7,574 compensation Core earnings $ 67,122 $ 43,083 $ 167,469 $ 117,594 ^(1) Diluted coreearnings per $ 0.50 $ 0.37 $ 1.26 $ 1.04 share ^(1) Dilutedweightedaverage shares 133,997,087 117,468,044 132,401,315 113,033,968 outstanding ^(1) ^(1) Amounts are attributable to common stockholders and OP Unit holders. TheOP Units are redeemable for cash, or at the Company's option for shares of theCompany's common stock on a one-for-one basis.

Beginning in the first quarter of 2020, the Company is presenting core earningsas its non-GAAP financial measure in replacement of adjusted funds fromoperations ("AFFO"). Core earnings is comparable to our previous AFFO metric,revised to exclude provisions for credit losses (including CECL) related to ourstructured loan portfolio, securities held-to-maturity and loss-sharingobligations related to the Fannie Mae program. The Company is presenting coreearnings because management believes it is important supplemental measure ofthe Company?s operating performance and is frequently used by peers, analysts,investors and other parties in the evaluation of REITs. Prior period amountspresented above have been conformed to reflect this change.

The Company defines core earnings as net income (loss) attributable to commonstockholders (computed in accordance with GAAP) adjusted for accounting itemssuch as depreciation and amortization (adjusted for unconsolidated jointventures), non-cash stock-based compensation expense, income from mortgageservicing rights ("MSRs"), amortization and write-offs of MSRs, gains andlosses on derivative instruments primarily associated with private label loansthat have not yet been sold and securitized, the tax impact on cumulative gainsor losses on derivative instruments associated with private label loans thatwere sold during the periods presented, changes in fair value of GSE-relatedderivatives that temporarily flow through earnings, deferred tax (benefit)provision, CECL provisions for credit losses (excluding specifically reservedprovisions for loss-sharing) and the amortization of the convertible seniornotes conversion option. The Company also adds back one-time charges such asacquisition costs and one-time gains or losses on the early extinguishment ofdebt.

Core earnings is not intended to be an indication of the Company's cash flowfrom operating activities (determined in accordance with GAAP) or a measure ofits liquidity, nor is it entirely indicative of funding the Company's cashneeds, including its ability to make cash distributions. The Company?scalculation of core earnings may be different from the calculations used byother companies and, therefore, comparability may be limited.