GlobeNewswire Inc | Jul 31, 2020 08:00AM EDT

July 31, 2020

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, N.Y., July 31, 2020 (GLOBE NEWSWIRE) -- 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

Agency Business

Loan Origination Platform

Agency Loan Volume (in thousands) Quarter Ended June 30, 2020 March 31, 2020Originations: Fannie Mae $ 1,140,181 $ 581,973Freddie Mac 135,720 199,711FHA 75,533 17,944Private Label 49,122 282,345Total Originations $ 1,400,556 $ 1,081,973 Total Loan Sales $ 1,992,889 $ 957,060 Total Loan Commitments $ 1,206,723 $ 1,267,219

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.

Fee-Based Servicing Portfolio ($ in thousands) As of June 30, 2020 As of March 31, 2020 Wtd. Wtd. Wtd. UPB Avg. Avg. UPB Wtd. Avg. Fee Life (in Avg. Fee Life (in years) years)Fannie $ 15,672,931 0.505 % 8.2 $ 14,946,922 0.493 % 8.0MaeFreddie 4,560,382 0.295 % 10.6 4,570,521 0.294 % 10.6MacFHA 621,487 0.154 % 19.6 679,685 0.152 % 19.1Private 727,132 0.200 % 9.5 - - -LabelTotal $ 21,581,932 0.441 % 9.1 $ 20,197,128 0.436 % 8.9

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 Companys 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 Companys 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

-- Originated 20 loans totaling $300.5 million, of which $296.0 million was funded at June 30, 2020, and consisted primarily of 17 multifamily bridge loans totaling $298.8 million -- Payoffs and pay downs on 20 loans totaling $159.2 million -- Portfolio growth of $171.6 million, or 3.6%

At June 30, 2020, the loan and investment portfolios 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 Companys 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 Companys 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 Companys 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 Companys 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 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) 876-9173 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. 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 Alexander Lobo Chief MarketingOfficer 646-536-7037 Officer516-506-4422 alobo@theruthgroup.com 516-506-4615pelenio@arbor.com bhabyan@arbor.com

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Operations - (Unaudited) ($ in thousands?except share and per share data) Quarter Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Interest $ 83,080 $ 82,171 $ 171,606 $ 153,448 incomeInterest 41,302 48,284 91,284 90,149 expense Net interest 41,778 33,887 80,322 63,299 income Other revenue: Gain on sales,including 26,366 14,211 40,671 30,600 fee-basedservices, netMortgageservicing 32,417 18,709 54,351 32,941 rightsServicing 13,506 12,612 26,809 26,164 revenue, netPropertyoperating 751 3,147 2,943 5,950 income(Loss) gain onderivative (7,368 ) 742 (58,099 ) (1,723 ) instruments,netOther income, 1,049 651 2,351 989 net Total other 66,721 50,072 69,026 94,921 revenue Other expenses:Employeecompensation 34,438 29,022 68,690 60,786 and benefitsSelling and 8,606 10,481 19,658 20,242 administrativePropertyoperating 1,035 2,691 3,478 5,086 expensesDepreciationand 1,961 1,909 3,908 3,821 amortizationImpairmentloss on real - 1,000 - 1,000 estate ownedProvision forloss sharing 2,395 368 23,932 822 (net ofrecoveries)Provision forcredit losses 12,714 - 67,096 - (net ofrecoveries) Total other 61,149 45,471 186,762 91,757 expenses Income (loss) beforeextinguishment of debt, income from equity affiliates 47,350 38,488 (37,414 ) 66,463 and income taxesLoss onextinguishment (1,592 ) - (3,546 ) (128 ) of debtIncome fromequity 20,408 3,264 24,401 5,415 affiliates(Provisionfor) benefit (12,077 ) (4,350 ) 2,293 (4,341 ) from incometaxes Net income 54,089 37,402 (14,266 ) 67,409 (loss) Preferredstock 1,888 1,888 3,777 3,777 dividendsNet income(loss)attributable to 8,110 6,598 (2,824 ) 12,066 noncontrollinginterestNet income(loss)attributable $ 44,091 $ 28,916 $ (15,219 ) $ 51,566 to commonstockholders Basic earnings(loss) per $ 0.40 $ 0.32 $ (0.14 ) $ 0.59 common shareDilutedearnings $ 0.40 $ 0.31 $ (0.14 ) $ 0.57 (loss) percommon share Weightedaverage shares outstanding: Basic 110,745,572 89,955,923 110,768,992 87,567,171 Diluted 131,882,398 113,624,384 131,166,018 110,779,680 Dividendsdeclared per $ 0.30 $ 0.28 $ 0.60 $ 0.55 common share



ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Balance Sheets ($ in thousands?except share and per share data) June 30, December 31, 2020 2019 (Unaudited) Assets: Cash and cash equivalents $ 384,182 $ 299,687 Restricted cash 94,847 210,875 Loans and investments, net(allowance for credit losses of 4,800,176 4,189,960 $152,811 and $71,069, respectively)

Loans held-for-sale, net 360,372 861,360 Capitalized mortgage servicing 313,288 286,420 rights, netSecurities held-to-maturity, net(allowance for credit losses of 119,019 88,699 $3,148 and $0, respectively)Investments in equity affiliates 64,991 41,800 Real estate owned, net 12,990 13,220 Due from related party 8,416 10,651 Goodwill and other intangible 108,040 110,700 assetsOther assets 123,803 125,788 Total assets $ 6,390,124 $ 6,239,160 Liabilities and Equity: Credit facilities and repurchase $ 1,235,613 $ 1,678,288 agreementsCollateralized loan obligations 2,514,524 2,130,121 Debt fund - 68,629 Senior unsecured notes 661,757 319,799 Convertible senior unsecured notes, 265,244 284,152 netJunior subordinated notes tosubsidiary trust issuing preferred 141,295 140,949 securitiesDue to related party 584 13,100 Due to borrowers 70,132 79,148 Allowance for loss-sharing 73,220 34,648 obligationsOther liabilities 169,979 134,299 Total liabilities 5,132,348 4,883,133 Equity: Arbor Realty Trust, Inc. stockholders' equity:Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized;special voting preferred shares;20,369,265 and 20,484,094 shares issued andoutstanding, respectively; 8.25% Series A, $38,788 aggregate liquidation preference;1,551,500 shares issued andoutstanding; 7.75% Series B, $31,500 aggregateliquidation preference; 1,260,000 shares issued and outstanding; 8.50% Series C,$22,500 aggregate liquidation preference; 89,500 89,501 900,000 shares issued and outstandingCommon stock, $0.01 par value:500,000,000 shares authorized; 112,211,461and 109,706,214 shares issued and 1,122 1,097 outstanding, respectivelyAdditional paid-in capital 1,182,449 1,154,932 Accumulated deficit (167,165 ) (60,920 ) Total Arbor Realty Trust, Inc. 1,105,906 1,184,610 stockholders? equity Noncontrolling interest 151,870 171,417 Total equity 1,257,776 1,356,027 Total liabilities and equity $ 6,390,124 $ 6,239,160

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Statement of Operations Segment Information - (Unaudited) (in thousands) Quarter Ended June 30, 2020 Structured Agency Other / Business Business Eliminations Consolidated ^(1) Interest $ 74,295 $ 8,785 $ - $ 83,080 incomeInterest 36,739 4,563 - 41,302 expenseNet interest 37,556 4,222 - 41,778 income Other revenue: Gain on sales,including - 26,366 - 26,366 fee-basedservices, netMortgageservicing - 32,417 - 32,417 rightsServicing - 25,397 - 25,397 revenueAmortization - (11,891 ) - (11,891 ) of MSRsPropertyoperating 751 - - 751 incomeLoss onderivative (294 ) (7,074 ) - (7,368 ) instruments,netOther income, 990 59 - 1,049 netTotal other 1,447 65,274 - 66,721 revenue Other expenses:Employeecompensation 9,161 25,277 - 34,438 and benefitsSelling and 3,533 5,073 - 8,606 administrativePropertyoperating 1,035 - - 1,035 expensesDepreciationand 629 1,332 - 1,961 amortizationProvision forloss sharing - 2,395 - 2,395 (net ofrecoveries)Provision forcredit losses 10,558 2,156 - 12,714 (net ofrecoveries)Total other 24,916 36,233 - 61,149 expenses Income beforeextinguishment of debt, income fromequityaffiliates and 14,087 33,263 - 47,350 income taxesLoss onextinguishment (1,592 ) - - (1,592 ) of debtIncome fromequity 20,408 - - 20,408 affiliatesProvision for (164 ) (11,913 ) - (12,077 ) income taxes Net income 32,739 21,350 - 54,089 Preferredstock 1,888 - - 1,888 dividendsNet incomeattributableto - - 8,110 8,110 noncontrollinginterestNet income(loss)attributable $ 30,851 $ 21,350 $ (8,110 ) $ 44,091 to commonstockholders ^(1) Includes certain income or expenses not allocated to the two reportable segments. Amount reflects income attributableto thenoncontrolling interestholders.

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Balance Sheet Segment Information - (Unaudited) (in thousands) June 30, 2020 Structured Agency Consolidated Business BusinessAssets: Cash and cash equivalents $ 268,467 $ 115,715 $ 384,182 Restricted cash 90,457 4,390 94,847 Loans and investments, net 4,800,176 - 4,800,176 Loans held-for-sale, net - 360,372 360,372 Capitalized mortgage - 313,288 313,288 servicing rights, netSecurities 20,000 99,019 119,019 held-to-maturity, netInvestments in equity 64,991 - 64,991 affiliatesGoodwill and other 12,500 95,540 108,040 intangible assetsOther assets 107,134 38,075 145,209 Total assets $ 5,363,725 $ 1,026,399 $ 6,390,124 Liabilities: Debt obligations $ 4,484,961 $ 333,472 $ 4,818,433 Allowance for loss-sharing - 73,220 73,220 obligationsOther liabilities 185,378 55,317 240,695 Total liabilities $ 4,670,339 $ 462,009 $ 5,132,348

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 June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net income(loss)attributable $ 44,091 $ 28,916 $ (15,219 ) $ 51,566 to commonstockholders Adjustments: Net income(loss)attributable 8,110 6,598 (2,824 ) 12,066 tononcontrollinginterestIncome frommortgage (32,417 ) (18,709 ) (54,351 ) (32,941 ) servicingrightsDeferred taxprovision 10,879 918 (9,025 ) (3,250 ) (benefit)Amortizationand write-offs 15,542 16,914 33,283 33,654 of MSRsDepreciationand 2,906 2,853 5,863 5,717 amortizationLoss onextinguishment 1,592 - 3,546 128 of debtProvision for 15,109 368 91,028 822 credit losses(Gain) loss onderivative (7,371 ) (742 ) 43,360 1,723 instruments,netStock-based 1,915 1,502 5,432 5,258 compensation Core earnings $ 60,356 $ 38,618 $ 101,093 $ 74,743 ^(1) Diluted coreearnings per $ 0.46 $ 0.34 $ 0.77 $ 0.67 share ^(1) Dilutedweightedaverage shares 131,882,398 113,624,384 131,166,018 110,779,680 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 the Company'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-sharing obligations 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 gains or 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, provisions for credit losses (including CECL) and the amortizationof the convertible senior notes conversion option. The Company also adds backone-time charges such as acquisition costs and one-time gains or losses on theearly extinguishment of debt. 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 cash needs, 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.