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.”

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.

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 Company’s 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 portfolio’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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.

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.