Arbor Realty Trust, Inc. Q4 FY2025 earnings call

• The company is focused on resolving non-performing and sub-performing loans, aiming to add back up to $100 million of annual income. Delinquencies decreased by over $130 million from the last quarter. • The agency platform had a strong fourth quarter origination, with a $5 billion full-year volume in 2025, and is optimistic for 2026 due to a large pipeline and GSE cap increase. • Balance sheet lending is being selective with larger deals. • The SFR business is performing exceptionally well with no delinquent loans and mid-teens returns. • Construction lending has a large pipeline and is expected to grow in 2026. • The company has been preserving book value and has a $120 million buyback plan, having purchased ~$20 million of stock in the last few months under a 10B5 plan.

In the fourth quarter, distributable earnings were $46.3 million or $0.22 per share. The agency platform had $1.6 billion in origination volume in the fourth quarter, with a full-year 2025 volume of $5 billion, which is a 13.5% increase from 2024. The servicing portfolio grew 8% in 2025 to approximately $36.2 billion, generating $20 million in mortgage servicing rights income in the fourth quarter. The balance sheet lending investment portfolio grew to $12.1 billion at December 31st, with an all-in yield of 7.08%. The SFR business originated approximately $580 million in the fourth quarter and $1.6 billion in 2025. The construction lending closed out the year with around $500 million of production and has a large pipeline for 2026. The agency business generates approximately 50% of net revenues.

• The company expects to resolve the majority of non-interest-earning assets over the next few quarters, adding back up to $100 million to the annual run rate. • Agency origination aims for similar levels to 2025 if market conditions remain. • Servicing fees are expected to bottom out towards the end of 2026. • Construction lending expects to produce between $750 million and $1 billion in 2026. • Net interest income is projected to stay in a range in the first quarter and increase in the second, third, and fourth quarters as loans are resolved.

• Non-interest-earning assets are currently dragging on earnings. • There could be potential new delinquencies as the company works through the cycle. • Interest rate changes can impact origination and earnings. • Political noise regarding institutional single-family home purchase could potentially affect the SFR business (though the company believes it won't be significantly affected). • Certain markets like Houston, Atlanta, and parts of Florida have weaknesses due to various factors such as immigration and economic issues.

Q: Regarding GSE business, how are 2026 originations thought about relative to the $5 billion number?

A: The pipeline is fairly strong, and the company is feeling comfortable targeting similar levels to last year if market conditions remain.

Q: On the servicing portfolio, what is the outlook for compression and bottoming out?

A: Compression is due to shorter product and normalized fees, and it is expected to start bottoming out towards the end of 2026.

Q: On the SFR book, any credit issues?

A: The SFR book is performing exceptionally well with no delinquent loans, and has mid-teens returns.

Q: On the delinquent/REO book, any geographic color?

A: Certain markets like Houston, Atlanta, and parts of Florida have weaknesses due to factors such as immigration and economic conditions.

Q: On credit headwinds and dividend, what are the thoughts?

A: The company thinks the worst is behind, the board looks at the dividend from a long-term perspective, and the company is working to resolve delinquencies to get the run rate up