UNIONDALE, N.Y., July 28, 2023 (GLOBE NEWSWIRE) — Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the second quarter ended June 30, 2023. Arbor reported net income for the quarter of $76.2 million, or $0.41 per diluted common share, compared to net income of $69.9 million, or $0.41 per diluted common share for the quarter ended June 30, 2022. Distributable earnings for the quarter was $114.0 million, or $0.57 per diluted common share, compared to $93.7 million, or $0.52 per diluted common share for the quarter ended June 30, 2022.
Agency Business
Loan Origination Platform
| Agency Loan Volume (in thousands) | ||||||
| Quarter Ended | ||||||
| June 30, 2023 | March 31, 2023 | |||||
| Fannie Mae | $ | 1,079,910 | $ | 795,021 | ||
| Freddie Mac | 217,884 | 101,332 | ||||
| FHA | 62,552 | 148,940 | ||||
| Private Label | 50,256 | 41,107 | ||||
| SFR-Fixed Rate | 11,837 | 5,461 | ||||
| Total Originations | $ | 1,422,439 | $ | 1,091,861 | ||
| Total Loan Sales | $ | 1,410,724 | $ | 932,699 | ||
| Total Loan Commitments | $ | 1,133,312 | $ | 1,500,110 | ||
For the quarter ended June 30, 2023, the Agency Business generated revenues of $76.7 million, compared to $80.4 million for the first quarter of 2023. Gain on sales, including fee-based services, net on the GSE/Agency business (excluding private label and SFR) was $22.2 million for the quarter, reflecting a margin of 1.67%, compared to $13.1 million and 1.72% for the first quarter of 2023. Income from mortgage servicing rights was $16.2 million for the quarter, reflecting a rate of 1.43% as a percentage of loan commitments, compared to $18.5 million and 1.23% for the first quarter of 2023.
At June 30, 2023, loans held-for-sale was $485.1 million, with financing associated with these loans totaling $463.3 million.
Fee-Based Servicing Portfolio
The Company’s fee-based servicing portfolio totaled $29.45 billion at June 30, 2023. Servicing revenue, net was $32.3 million for the quarter and consisted of servicing revenue of $48.0 million, net of amortization of mortgage servicing rights totaling $15.6 million.
| Fee-Based Servicing Portfolio ($ in thousands) | ||||||||||||
| June 30, 2023 | March 31, 2023 | |||||||||||
| UPB | Wtd. Avg. Fee |
Wtd. Avg. Life (years) |
UPB | Wtd. Avg. Fee |
Wtd. Avg. Life (years) |
|||||||
| Fannie Mae | $ | 20,002,570 | 0.489% | 7.7 | $ | 19,508,256 | 0.495% | 8.0 | ||||
| Freddie Mac | 5,245,325 | 0.248% | 8.8 | 5,180,607 | 0.247% | 9.1 | ||||||
| Private Label | 2,305,000 | 0.193% | 7.5 | 2,233,500 | 0.196% | 7.7 | ||||||
| FHA | 1,303,812 | 0.145% | 20.0 | 1,242,669 | 0.147% | 19.8 | ||||||
| Bridge | 299,578 | 0.111% | 3.5 | 467,881 | 0.116% | 2.9 | ||||||
| SFR-Fixed Rate | 290,266 | 0.200% | 5.9 | 279,712 | 0.200% | 5.9 | ||||||
| Total | $ | 29,446,551 | 0.401% | 8.4 | $ | 28,912,625 | 0.403% | 8.6 | ||||
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.5 million for the fair value of the guarantee obligation undertaken at June 30, 2023. The Company recorded a $7.6 million provision for loss sharing associated with CECL for the second quarter of 2023. At June 30, 2023, the Company’s total CECL allowance for loss-sharing obligations was $32.2 million, representing 0.16% of the Fannie Mae servicing portfolio.
Structured Business
Portfolio and Investment Activity
| Structured Portfolio Activity ($ in thousands) | ||||||||
| Quarter Ended | ||||||||
| June 30, 2023 | March 31, 2023 | |||||||
| UPB | % | UPB | % | |||||
| Bridge: | ||||||||
| Multifamily | $ | 98,530 | 47% | $ | 186,100 | 70% | ||
| SFR | 108,964 | 52% | 76,089 | 28% | ||||
| 207,494 | 99% | 262,189 | 98% | |||||
| Mezzanine/Preferred Equity | 1,500 | 1% | 5,845 | 2% | ||||
| Total Originations | $ | 208,994 | 100% | $ | 268,034 | 100% | ||
| Number of Loans Originated | 26 | 24 | ||||||
| SFR Commitments | $ | 200,182 | $ | 54,350 | ||||
| Runoff | $ | 685,220 | $ | 1,186,649 | ||||
| Structured Portfolio ($ in thousands) | ||||||||
| June 30, 2023 | March 31, 2023 | |||||||
| UPB | % | UPB | % | |||||
| Bridge: | ||||||||
| Multifamily | $ | 11,887,768 | 88% | $ | 12,034,638 | 88% | ||
| SFR | 1,023,959 | 8% | 982,026 | 7% | ||||
| Other | 256,575 | 2% | 282,275 | 2% | ||||
| 13,168,302 | 98% | 13,298,939 | 97% | |||||
| Mezzanine/Preferred Equity | 312,812 | 2% | 311,819 | 2% | ||||
| SFR Permanent | 10,493 | < 1% | 32,966 | < 1% | ||||
| Total Portfolio | $ | 13,491,607 | 100% | $ | 13,643,724 | 100% | ||
At June 30, 2023, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $13.49 billion, with a weighted average current interest pay rate of 8.76%, compared to $13.64 billion and 8.60% at March 31, 2023. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 9.07% at June 30, 2023, compared to 8.83% at March 31, 2023.
The average balance of the Company’s loan and investment portfolio during the second quarter of 2023, excluding loan loss reserves, was $13.66 billion with a weighted average yield of 9.19%, compared to $14.15 billion and 8.94% for the first quarter of 2023. The increase in average yield was primarily due to increases in the benchmark index rates in the second quarter of 2023.
During the second quarter of 2023, the Company recorded a $16.0 million provision for loan losses associated with CECL. At June 30, 2023, the Company’s total allowance for loan losses was $169.1 million. The Company had seven non-performing loans with a carrying value of $122.4 million, before loan loss reserves of $10.1 million, compared to four loans with a carrying value of $7.7 million, before loan loss reserves of $5.1 million at March 31, 2023.
Financing Activity
The balance of debt that finances the Company’s loan and investment portfolio at June 30, 2023 was $12.11 billion with a weighted average interest rate including fees of 7.25% as compared to $12.65 billion and a rate of 6.97% at March 31, 2023.
The average balance of debt that finances the Company’s loan and investment portfolio for the second quarter of 2023 was $12.46 billion, as compared to $13.02 billion for the first quarter of 2023. The average cost of borrowings for the second quarter of 2023 was 7.11%, compared to 6.69% for the first quarter of 2023. The increase in average cost was primarily due to increases in the benchmark index rates in the second 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 June 30, 2023. The dividend is payable on August 31, 2023 to common stockholders of record on August 15, 2023. The ex-dividend date is August 14, 2023.
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.
